What’s Ahead For Real Estate and Rates in 2010?

As the real estate market begins to show signs of life and recovery I’ve been getting a lot of clients and Realtors(R) asking me what’s ahead for real estate and mortgage rates in 2010. I’ve been doing a lot of research and man there are a lot of differing opinions out there on what will move mortgage rates and what experts are predicting for 2010. I’ve boiled it down and I’m going to make it simple for you to understand.

Rates are going up in 2010, no doubt about it. Here’s why:

1. The US Government and the Federal Reserve are wrapping up their Mortgage-Backed Security Purchase Program and when all is said and done they will be the proud owner of $1,250,000,000,000.00 (or $1.25 Trillion) in mortgage loans funded through Fannie, Freddie and Ginnie Mae. The purchase program announced late 2008, was effective in dropping the 30 year rate from the 6.25% to 6.50% range to around 5.00% for almost all of 2009. The Fed has already drastically reduced the funding of this program, as a result rates have begun to rise and by the end of the 1st quarter in 2010 the program will end and rates will return to the range they were in prior to the program’s inception.

2. The US Government’s MASSIVE fiscal deficit has the Treasury auctioning off record levels of Treasury Notes. The sale of these notes is how our Government funds the US debt. Unfortunately for us, not only are we going more and more in debt as a country, but the sale of these Treasury Notes is in direct competition to raising money for mortgages. In other words there is only so much money to go around in the world. If more is going to finance the US Government’s debt, then less goes into funding mortgages and Wall St. has to raise rates to find investors for new loans.

3. INFLATION is the 4 letter word for mortgage rates. You see as an owner of a mortgage at say 5% interest, you have a fixed rate of return every year (5%) for your investment. But when the costs of goods and services you’re buying and using are going up, your 5% return buys less and less every year. So what do you do? You adjust the rate you want to receive to cover the increase in costs and services. If inflation goes up 2%, you might want 7% instead of the 5% you wanted last year. We’ve seen relatively low inflation thus far, but rest assured it is coming. History tells us that virtually every extended period of low interest rates is followed by inflation.

Low interest rates are to the economy like coal is to an old steam engine locomotive; you keep adding more and more getting the train up to speed to reach your destination by the scheduled time. Well this train, which is the US Economy, doesn’t have any brakes, so as the Fed starts to raise interest rates to slow down the economy it’s virtually like trying to stop a train at the correct station with no brakes. Can you imagine trying to add just the right amount of coal that you get to the station on time but you have to coast into the station and stop with no brakes? Exactly, it’s virtually impossible and that’s what the Federal Reserve is doing with the economy, they need to get things moving and get us there on time but history tells us we don’t have the brakes to slow things down, the economy is turning all this liquidity (money) so fast that inflation is almost a foregone conclusion at some point in our future.

4. So where does this leave real estate for 2010? This will largely depend on your location, the local employment picture and the number of foreclosures in that area. What I’m seeing here it Salt Lake County (Utah) is a steady increase in demand and some appreciation is already being seen in established sub-markets that aren’t still suffering from oversupply by speculators and builders run wild. I’m forecasting a continued shakeout of foreclosures for many Salt Lake areas and homes appreciation ranging from -5% to + 3% depending on your sub-market. I believe the first six months of 2010 will be relatively hot for the Salt Lake market, we’ll have a temporary slowdown as rates are rising through the summer and we see the tax credit expire in June. Towards the end of the year things will get back on track as people continue to realize this could be there last chance to get in on a deal.

I think most importantly the market is signaling us that the bottom is near and this could be the best opportunity to get in. Today interest rates on a 30 or 15 year fixed mortgage are virtually at an all time low, the Federal and State governments are throwing huge amounts of money at you and me to buy a home and all indicators point to us being at the tail end of things. I find this quote by Warren Buffet particularly interesting and applicable at this moment, “We simply try to be fearful when others are greedy and to be greedy only when others are fearful”

If you want to cash in on this opportunity you need to get moving!

How to Sell Your Real Estate and Mortgage Notes on eBay

Marketing your real estate to your end buyer is as important as finding a motivated seller. It is true that you make money in real estate when you buy and not when you sell. As long as you buy low enough you can always resell it and make a profit. During recession and unavailability of credit new marketing strategies need to be implemented to get more exposure to cash buyers. eBay is one of the best ways not only to create exposure for your property but also to increase traffic to your web site and build buyer’s list. eBay is particularly popular for those selling unique homes, vacation homes, or investment properties. eBay has over 147 million active buyers and is opened 24/7! According to eBay, there are over 370,000 page views in real estate section daily!

If you are not familiar with eBay, you would need to register, create seller’s account, link your PayPal account to eBay and add all billing information… it might take a few days. You also want to build positive rating as it gives credibility to you as a seller and you can do that by simply buying items on eBay first. You can also obtain eBay SquareTrade seal and even open and eBay store to look more professional.


eBay search is based on key words you put in the TITLE of the auction. There are 80 characters allowed so make sure to include keywords that not only best describe your property but also include important listing details: location, condo, single family, oceanfront, land, investment, seller financing, owner will carry, FSBO (For Sale By Owner), renovated, turn key, rental, etc. Omit unimportant details such as color, year built, garden, fireplace; words like “wow”, “look”; omit punctuation marks and asterisks. Think in terms of common sense: if you wanted to buy a property what would you put in search box? Include exactly that in your title and make it specific. Your title does not necessarily have to make perfect sense but rather include as many keywords as possible. I usually use all capital letters as it is easier to read and see. It does not make any difference in the search engine optimization. Use simple words and do not overcomplicate things. eBay is international auction based web site and many people with limited knowledge of English will come across your listing. Make it accessible and understandable for your international buyers as well, especially for vacation homes and investment properties.

If you want more listing visibility, include keywords that could be misspelled in your description. These words can be included in white color so they become invisible inside the listing but are still searchable by search engines. Because bids in real estate section on eBay are non-binding it is necessary to include as much information as possible about the settlement, deposits, inspections, financing and any other contingencies. Full disclosure is always a plus. You can also include a video about your property if you have one. It is allowed as long as you don’t include links to other web sites.


Before you list your property look for similar listings on eBay. When listing item on eBay, eBay makes it very easy to compare your item (not real estate) as it provides you with the summary of similar items sold and the price range. This feature is not available for real estate so try to figure it out on your own.


Pictures are worth a million words…so so true. Use as many pictures as possible in your listing. There are other free services available that can save you tons of money. Auctiva is one of them, it allows you to include as many images as possible, use professionally looking template and even schedule a listing for FREE!


In “About Me” page you can include information about your company and links to your web site. eBay does NOT allow to include links to your web site within a listing and this policy is strictly enforced. Not only eBay can remove the listing due to policy violation but your account can be temporarily blocked and even suspended. Take your time to research eBay policies first if you are not sure. However, you CAN include your phone number in your listing and I highly recommend it. I usually include my personal cell phone number or 1-800 number that gets forwarded to my cell. They key is that if you have a serious cash buyer, you want to talk to them first before they call another seller. You want to be available and be able to answer their questions and also get their contact information. Put them on your buyer’s list and sell them your next property if they don’t buy this one.


Determine the price you want your real estate to be auctioned off. Your price would need to attract attention. If you plan on reselling your real estate at a retail price the chances of success are very low unless it is a unique property and being marketed as one. eBay shoppers are savvy and are looking for a great deal. Listing real estate on eBay is not cheap, it costs from $150-450 to list your item whether it is auction style or ad format (as of 1.10.12). If you have more than one property to sell and they are similar, list only one of them and either refer all interested buyers to your web site or have it ready to be e-mailed. If your properties are in different markets it will make sense to list each property that can potentially represent each market or certain search criteria for the best exposure.


There are 3 types: “Auction style” format, “Classified Ad” Listings, and “Other Real Estate”.

Auction Style can be used to list real estate and also great for seller financed properties. Auction can have a minimum opening bid and can not only be for real estate but also for downpayment only. There is a possibility of “Notice Fee” when the auction type listing ends and it applies whether or not the sale was finalized.

When you list the item in “Classified Ad” format, there are no bids. Interested buyers are asked to fill out contact form and their information is sent to you. Duration for this type of auction is between 30 to 90 days. If you want to avoid the hassle of relisting your property, take advantage of the 90 day ad format listing. Because there is no bidding, neither buyer nor seller can leave feedback.


Within eBay’s “Other Real Estate” pages, eBay sellers are permitted to advertise for sale certain purchase money notes and mortgages (referred to in these rules as “mortgage notes”). These mortgage notes are created when, in a real estate transaction preceding the offer of the mortgage note on the eBay site, a purchaser of certain real estate obtains financing for all or a portion of a property from the seller, and executes a note in favor of the seller secured by a mortgage on the real property being purchased. A mortgage note created in this manner may be advertised for sale on eBay (in either the Auction format or Classified Ad format) if the following requirements are satisfied:

• the mortgage note must have arisen in connection with a bona fide real estate transaction;
• the interest offered constitutes the entire indebtedness under the note;
• the purchaser will receive the mortgage note by unconditional endorsement, without recourse, together with a full assignment of the mortgage securing the note, both of which the purchaser will hold until satisfaction of the note;
• the mortgage note is offered without any interposed services or other enhancements to be provided by the seller; and,
• the sale of the mortgage note complies with all applicable law.

All mortgage notes are required to be offered only in the “Other Real Estate” category.


One of the reasons why there is only a listing fee and no final value fee (when the item sells) is that buyers who place bids on eBay are not legally obligated to purchase it. Bids are considered binding on ALL other items except for real estate and motor vehicles. For a contract to be legally binding in real estate, the buyer will need to sign (or in some cases e-sign) a contract and have a consideration (earnest money deposit). So in other words even when you list real estate in auction format and people bid on it, they are not legally obligated to buy it. It allows you to create a buyer’s list and advertise your property. The actual “sales” part will take place at settlement or when you convey the deed over to your buyer for agreed upon price.

Real Estate and Franchising

It is often discussed in Business Management Program or MBA School history books that Ray Kroc’s McDonalds was successful due to the fact that they controlled the real estate underneath every store, and the appreciation was their true asset. There is some truth to this, but that is not the only thing that made Ray Kroc successful.

Nevertheless, a business-person who can control their costs through owning the real estate and their business location, has a huge advantage and franchisors know the value of being able to control the real estate. Most franchisors, which sell franchised outlets that include locations, at minimum want to have a master lease, which allows them to terminate a franchisee, kick them out and control the location, until they put in a new franchisee.

Franchisors often have site selection teams, and now there are tools used by Commercial Real Estate people, along with ESRI software, can give location intelligence in a heartbeat. Smaller Franchisors just starting out use all sorts of strategies, some use very simple solutions, as all you need is someone who knows how to run it, in a room with a computer, online, even a stay at home mom, former Real Estate person. Then quick overview of the area or territory from locals. Large franchisors of course, have large real-estate departments.

Not all Franchised businesses need locations, those that do, well their franchisees can use help in securing funding, but owning the real estate does not “Always” make sense. When it does, it pays to have a real-estate person to be a go-between with franchisees, franchisors and locals who understand the market. Real Estate is a big part of modern day franchising for many franchised companies.