Mitch Goldstein | Coach Mitch | May 28th, 2008Foreclosures hurt Revere municipal auctions revenue
ItemLive.com By Thor Jourgensen May 26, 2008
REVERE-The wave of mortgage-driven home foreclosures is impacting the city’s ability to make money from another type of foreclosure: municipal property tax takings.
Revere, like many other communities, auctions off homes and other properties taken by the city after owners fail to pay their taxes and their property ends up in Land Court proceedings.
Sales of tax foreclosure property netted over $1.5 million for the city since 2005 but Chief Financial Officer George Anzuoni is not sure how much money a May 15 City Hall auction will generate.
He said foreclosure auctions scheduled almost every day across the state have provided plenty of property for prospective bidders to purchase.
“We’re competing against those auctions and definitely affected by property values.”
The onset of the foreclosure crisis in 2006, driven by widespread sub prime rate mortgage borrowing, heralded a drop in home values.
See entire article at: http://www.thedailyitemoflynn.com/articles/2008/05/12/news/news12.txt
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Coach Mitch’s REFLECTIONS
Now is the time to invest in tax delinquent property
Dealing in tax delinquent property is always a good investment because the selling price can be far below the current market value. However, now-a-days, it is especially well priced.
Foreclosures everywhere
If it seems like just yesterday that the real estate mentality was, “Up, up, up”; that’s because it was. The warning signs of a coming down market were very visible. They were audible, also. Many real estate gurus, including me, predicted that there was a real estate “bubble” and it was going to burst.
In May 2006, I was a featured speaker in a major seminar series entitled, “The Real Estate Bubble.” I outlined the opportunity in tax delinquent real estate and showed how it was likely that property could be gotten at 10% – 50% of its Fair Market Value on a regular basis. Why pay more?
Opportunities abound
Although we are in a foreclosure meltdown, there are still very many opportunities. In fact, hard times are when the real deals happen. Circumstances engulf folks and someone will benefit. Why not you?
Be careful
A marketplace that is sliding downward can be a disaster. You purchase at an amount that seems to be good, only to find that the market continues to go down. In a down market, you MUST purchase at a RIDICULOUSLY LOW PRICE in order to be able to resell at a higher price.
Market psychology is fickle. As soon as the general population feels that the bottom is falling out of the marketplace, they turn into rabid bargain hunters.
It’s interesting
Just a few short months ago, the marketplace in real estate was booming. The CW, Conventional Wisdom, was that real estate could only continue to go UP. I have several clients who are caught in this trap of having paid too much for a property and they cannot now sell it without sustaining a significant loss.
People are emotional
If you told someone who wanted to buy a particular house that the market price was too high, they would probably have said, “The market is strong. Prices are still going up.” Certainly, that is what the Realtors were saying, even though the foreclosure pitfall scenario was in plain sight. Emotion and greed won over the intellectual argument. It will always be thus. Remember that.
People are strange
All the sales training books will declare that you should make a personal connection when first meeting the potential seller or client. Get the people to like you. Make a good first impression. Smile. Look them straight in the eye. Make a positive emotional connection.
How would you react
If a buyers first words were, “Let’s get down to business. I know that you are in a poor financial situation. I am prepared to buy your property. I will give you 20% of its current value. Sign the contract quickly, please. I’m a busy man.”
I’m sure you realize that this approach will not be successful, but why not? Although unspoken, this is exactly what many buyers are thinking and feeling.
Sell the SIZZLE – NOT the STEAK
Have you ever heard this maxim? It was all the rage when I was taking marketing courses in collage – a lifetime ago. I didn’t truly understand it at the time. I did understand that humans can more easily be sold something by using emotion but I didn’t get the idea that humans are primarily emotional beings. So much so, that we will convince ourselves of something even though there are better choices.
I have always been more analytical than most. I am conceptual. As a result, I see Step #10 immediately. I don’t need to go through Steps #1-9 to see Step #10.
I am susceptible to a good sales pitch, just like anyone else. It has been said that the easiest sale is to another salesman. Con men are successful because they appeal to our greed. Women are successful because they know how to manipulate men into doing what they want us to do; mostly, by making men feel guilty or by flirting and appealing to our fantasies.
Empathy
In the same way, someone in a poor financial situation will “give away” their property if you appeal to their sense of helplessness by being empathetic.
You become empathetic asking questions.
- “How did this happen?
- Have you asked your relatives and friends for money to pay the taxes?
- What will you do now?
- Where will you live?
- What other options do you have?
- What schools will the kids attend?
- How do the kids feel about this situation?, etc.”
All these questions are geared to get some valuable information but their primary function is to get a positive emotional response so that the seller will like you. After all, we are more likely to do business with whom we like.
Coach Mitch’s “Ridiculously Simple System…”
My real estate investment system focuses on two primary ideas:
- We should deal with those who are WILLING and ABLE to “give away” their property.
- We should make the most out of each sales opportunity by using good sales techniques.
See Coach Mitch’s “Ridiculously Simple System…” ™ for details.
Smooth sailing,
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