A recent study by the Duke University Fuqua School of Business and the American Marketing Association found that Chief Marking Officers of U.S. companies plan on increasing their use of social media in their marketing campaigns in the future.

The current level of spending among the 249 CMOs who responded to the survey is about 7.1% of their marketing budgets, and they plan to spend about 10.1% on social media marketing next year.  That number is projected to rise 17.5% over the next five years.

The director of the research project, Duke University’s Christine Moorman, said the study dispels the myth that social media marketing is just a fad, although the growth trend is more muted than markers expected a few years ago because of the recession. 

Marketers are looking at a little different mix of metrics to justify social media as a part of the marketing budget than they were a few years ago.  Financial metrics are less important now than customer relationship metrics.

Among the metrics that are considered site visits and page views are still the top indicators.  Counting the number of followers or friends has jumped in importance as a metric compared to past CMO surveys. Counting the number of friends jumped to 34.1% of the respondents compared to 24% in the August 2010 survey.  Counting the social buzz was marked as an important metric by 20.5% in 2011 and 15.7% in 2010. Sales or revenue per customer were relatively unimportant measures, and were even less important to respondents in 2011 than in 2010.

This survey is an important indicator that Agents and Investors need to pay attention to social media as an important means of marketing their services.  Every brokerage and every real estate investment company needs not only a company website, but also a Facebook Fan Page, a blog with articles of importance to clientele, and a presence on sites such as LinkedIn and Twitter.  In addition to counting site and page visits, measure the growth and success of the social interaction by counting new friends, pages liked or buzzed, repeat visits, as well as conversion rate from friend to buyer or client.  Social media can increase buyer, seller and colleague contact lists rapidly and lead to acceptance of your company as the go-to expert in your area or niche. 

 In the initial phases of a new industry typically there are many players and the small players often give rise to innovation.  This was the case, for example, in the beginning of the auto industry where there were many hundreds of companies around the world.  In a maturing industry business is generally characterized by just a few well financed and well structured competitors. The automobile industry has certainly matured to one where there are only about 14 players world-wide. The rest were acquired or died because they could not continue to compete with the big fish.

Because the real estate marketplace is so local, there is room for more big fish in each small market.  How does a Broker get positioned to be one of the “big fish” in the local marketplace?  The key to becoming a big fish is to act like one.

Many of the most successful brokerages are franchises of major national chains.  Franchising provides a huge advantage to a brokerage because it assures that the business will be structured appropriately, meets all legal requirements, has standardized marketing, and can tap into an extensive national marketplace for referrals. These national models, however, are generic and are directed to meet typical consumer or commercial investor needs, and not so much specialized niche needs.

Independent brokerages can compete successfully with the big fish by first, matching the franchise brands in organization and marketing excellence, and then beating them within local niche markets.  For example, independent brokerages that began working with distressed homeowners early in the housing crisis often got a huge head start over the more traditional franchise brokerages and have maintained the advantage in many markets in working Short Sales and in getting REO business from Lenders. 

Brokers who have trolled the real estate Investor market have had to adapt their commission models and to make more outside the box offers on behalf of Investor clients than the traditional brokerages would normally allow.  The flexibility of small boutique brokerages often attracts more business among Investors than do traditional agencies.

In summary, to swim with the big fish in your real estate market, plan on becoming the go-to agency within a niche of that market and plan structure and marketing to support that niche very professionally.

 A Negotiator friend of one of our associates recently mentioned that he had received a visit from both state and federal regulators.  The state regulator wanted to be sure that he was not practicing real estate without a license through his Short Sale negotiation business.  The feds were concerned that there was no fraudulent activity with regard to how the distressed seller was treated.  Fortunately, this Negotiator got a clean bill of health from both state and federal agencies. 

This Negotiator offers a service for a specific fee, and that fee is charged to the Buyer, not the Seller. All the costs associated with the service can be documented and are related to the typical amount of time and effort spent on the negotiation process.  Had this Negotiator asked for a percentage commission based on the sale price, he believes he would have been in trouble with the state for practicing real estate without a license.  He also is careful to always work through the Agent who is representing the Owner and also any Agent working with the Buyer.

This Negotiator makes sure he has a limited power of attorney signed by the homeowner and a completed hardship package from the Owner before he sends in paperwork to the Lender. His written agreement with the Homeowner makes it clear that his fee is paid by the Buyer, not the Seller and that he is not representing the Seller as a Real Estate Agent. When the Buyer is lined up the offer goes in through the Buyer’s Agent, along with an independent inspection report that the Buyer pays for.  That limited power of attorney and the disclosures that made it clear the Negotiator is not representing the Seller in the sales transaction and is not charging the Seller a fee are key to keeping this Negotiator free of a fraud charge.

Before taking on the role of Negotiator, consult an attorney and understand all state and federal laws regarding Short Sale transactions.  Some states may require that a Short Sale Negotiator be a Real Estate Agent or Attorney while others allow independent service providers provided they follow specific rules that protect the distressed Homeowner.  An easier and less time-consuming option is to use The Agents Advantage Short Sale Engine to automate the Short Sale process and to use our Negotiator team to get all your deals closed with Lenders. We stay on top of all regulations concerning the Short Sale process to assure that each deal will pass legal muster.

 The New Bottom Line, a campaign representing community action and faith-based groups, has published a report on how to resolve the housing crisis called “The Win-Win Solution.” The report concludes that the way to produce 1 million jobs annually with little, or no, impact on taxpayers would be to require lenders to implement an aggressive principal reduction program.

The New Bottom Line argues that the lenders have already been given a bailout that was designed to loosen up lending and give banks some cushion to deal with distressed homeowners.  Lenders received $14 trillion in tax-funded bailouts.  Homeowners received little to none of the benefit of the TARP program.  Meanwhile, approximately 23% of all homeowners owe more than their homes are worth to a tune of $709 billion.  The campaign calculated that $71 billion per year could be saved from mortgage expense and put back into the economy if the lenders implement a massive principal write-down program. 

The cost to lenders to resolve this problem is just a drop in the bucket compared to the bailout they were given.  It amounts to about half the amount that the top six lenders spent in compensation and bonuses in 2010 ($146 billion).

To calculate the impact on jobs the report relies on a study by Robert Pollin and Heidi Garret-Peltier “that showed that giving Americans a $1 billion tax break for personal consumption would create 14,800 jobs, which translates to$67,658 per job.” The assumption is that reducing monthly mortgage payments on average by $543 per month would have a similar impact as a tax cut on personal consumption.  If $71 billion in annual savings is divided by $67,658 per job, then an aggressive loan modification plan should create 1.05 million jobs per year.

Some argue that there is a moral dilemma associated with a mass principal forgiveness program.  That problem can be mitigated by including an equity share program that gives back some of the equity to Fannie Mae or Freddie Mac when the home is resold, or requires some form of repayment if the refinanced home is sold in less than a designated number of years. People who might otherwise take advantage of a principal reduction program will pass it by if the negatives outweigh the positives.

It comes down to whether we want to pay the price quickly and put a little more spending money into the hands of millions of American families in the process, or we want to slog it out for the long-term until the economy recovers on its own.  If Congress decides on the slow approach, we need to be prepared to hunker down for many years to come. If Congress takes the initiative to make the fast approach happen this will have the same impact as a massive tax cut without the consequences on government programs.

More jobs will allow more people to buy new homes, cars and other goods and should soon bring about a sustainable recovery.

On the positive side of any effort to make refinancing easier and more affordable certainly when the financial burden is eased for families they are less likely to choose foreclosure as an option.  They are more likely to ride out the years of a home mortgage being more than the value of the home and wait until some equity returns to the equation before selling.

On the other hand, if the government were to help fund a massive program of principal reduction, then the housing recovery could occur much more quickly because it would not only free up income for people who want to stay in their homes, but also price homes where those who want to sell can expect to find a buyer without the owner having to bring money to the closing table.

A massive refinance program only works on a piece of the equation—helping families to weather the current slow economic times.  It does not help get the housing market back on track with sales, because approximately 25% of the homes in the U.S. will still be under water even after refinancing.  Those who want to retire and downsize will still be stuck in place; those who want to move up to a larger home will be forced to stay put unless they are willing to sell their current home at a loss.

Millions of families could receive a meaningful principal reduction for the approximately $30 billion still unspoken for in the TARP fund that were originally allocated to help struggling homeowners. 

We learned this week that approximately 4.5 million American families hold HELOCs that are dragging their equity into negative territory.  What if some of the TARP funds were dedicated to settling these HELOC loans at 10% on the dollar with lenders, or even paying off the home equity line altogether with a  low interest or forgivable unsecured loan?  That would cut family expenses and free homeowners to consider selling the home on their own time table, not the banks.

Another proposal that is being touted as one that will directly help buyers to come back to the market is renewal of the Homebuyer Tax Credit.  The National Mortgage Complaint Center maintains that home values will continue to sag unless a more or less permanent Homebuyer Tax Credit is initiated.  The NMCC says that the credit should be raised to $15,000 and should be open to all qualified homebuyers not just first timers.

Who are the winners and losers with the Obama refinance proposal?  Estimates indicate the GSEs will save about $3.9 billion, but the Federal Reserve will lose $4.5 billion, and private investors will lose about $15 billion if homeowners refinance out of higher interest loans now.  In a deal that will potentially help 2.9 million homeowners, but will cost the government about $600 million and private investors about $15 billion, what’s the real likelihood this plan will make it through a spending-adverse, business-friendly Republican House of Representatives?

 We’ve commented before rather pessimistically about the viability of homeownership given the current environment of tight lending standards, low consumer confidence and continuing high unemployment.

We ran across another expert in the field of home ownership demographics, Cheryl Russell, who agrees that the long term trend is toward renting, not owning.  Russell is a demographer, and the editor of a defining work on home ownership, Americans and Their Homes. Russell has made a career of studying the housing and general spending habits of Americans at every age group and finds them generally scared off by the whole housing crisis.  She believes the effects will be with the housing market for at least the next twenty years.

Russell was one of the experts crying in the wilderness prior to the housing crisis describing with a demographer’s detailed analysis how there was complete lack of congruity between household incomes and housing prices, and she recognized that this mismatch would inevitably lead to the housing market crash.  In the 1990’s, on the other hand, boomers were reaching their peak home buying age, and they were moving into the housing market in droves.  Homeownership reached its peak.  Then the mortgage industry “juiced” the market leading to hyper-inflated prices and then inevitably the bubble burst.

Right now, every age group is side-lined when it comes to the housing market.  The 25-29 year olds are less able to buy than in previous generations, and they are deciding not to buy as a rule.  The 30-34 age group is the key to the future of housing, and they are saying “no” to the market in record numbers.  Both age groups, really for the first time in history, are saddled with heavy student loan and credit card debt.  It will be next to impossible for either group to also save for a mortgage on top of their other debts.

The boomer group is stuck.  They’d like to retire and move, but they can’t because of severely impaired home values and reduced retirement incomes. Russell says, "The percent of people who are 65-plus who have mortgages has increased to 27 percent….It went up from 18 percent in 1999. Many of these people are going to be struggling with mortgage payments."

Russell believes the saving grace is rentals.  She predicts that single family residences that can rehabbed to include two master bedrooms will be the ticket out for boomers who currently have homes they’d like to sell.  Many younger people will have the income and the desire to rent more spacious and upscale homes, but they’ll choose to go in with roommates who want equal accommodations.

While opportunities may be fading for Agents and Investors in selling to Homeowners, the outlook for selling to Investors who want to rehab and buy and hold will be expanding for the foreseeable future.

 The word has finally gotten out to the powers-that-be at the nation’s mortgage banks that Short Sales are an effective and less expensive way to eliminate a non-performing asset. 

RealtyTrac reports that Short Sales are increasing as a percentage of total home sales in many markets.  RealtyTrac reported particularly significant increases in Short Sales in California, Colorado, Georgia, Michigan, and Nevada.  In Colorado Short Sales were 17% of all sales in the second quarter of 2011 compared to 10% the same time last year.  In California the 2^nd quarter Short Sale percentage was 25, compared to 18% a year before.

Bank of America is on track to complete 100,000 Short Sales in 2011, more than double its output in 2009.  Nationwide Short Sales peaked in 2009 at 16% of the marketplace.

A Wells Fargo analyst speculated that the reason for the increase in Short Sale business was because there are fewer bank owned properties for Investors to consider forcing more Investors back into the Short Sale market.

Selling via Short Sale is a clear advantage for Lenders.  The average Short Sale sells at a 21% discount, according to RealtyTrac, while the average REO gives the Lender an average 40% hit.

A recent Moody’s study showed that Short Sales are a much shorter wait period before property is liquidated than a foreclosure, and foreclosure periods continue to get longer.  That’s why Moody’s says Short Sales have increased dramatically as the liquidation method of choice for most Lenders.  Short Sales have gone over the last two years from being only 8% of the loss liquidation market to 25% as of midyear 2011. 

More efficient loss mitigation is cited by Moody’s as the main reason why Short Sales are now the preferred distress loan liquidation method for Lenders and their Investors.  The process has gotten more streamlined while the process to foreclose has gotten longer and more complex.  Months and even years go by when a Lender chooses foreclosure instead of cooperating in a Short Sale.

In the past loss severity averaged about 60% of the existing loan amount.  Now, the length of time to foreclose is taking loss severities up, but the actual numbers are staying pretty steady because of the mitigating impact of more Short Sales on the numbers. 

Meanwhile, liquidation by foreclosure timeline by January 2011 had reached 22 months compared to 17 months in 2010 and 15 months in 2009.  The glut of foreclosed properties in many states combined with the uncertainty of legal action has helped to raise the loss severity dramatically.  Participating in more Short Sales has been the one safety valve Lenders have had to help control the costs of foreclosure.

 A writer for Money and Markets, Gavin Magor, has tracked what has been happening recently in the mortgage insurance market, and it’s not a pretty picture. Only two insurers have shown a profit in the last two years: United Guaranty Residential (an AIG subsidiary) showed profits in 2011 and 2010 and Mortgage Guaranty Mortgage Company showed a profit in 2010. Losses in 2010 were an astronomical 154% of premiums earned for a loss of $2.4 billion. 

Generally, anyone with a mortgage that is more than 80% LTV must pay for mortgage insurance until the mortgage is paid down to that 80% level.  When a homeowner defaults, the insurer is responsible for reimbursing the lender/investor for the loss.

Weiss Ratings has recently reviewed and revised the 34 largest mortgage insurers including subsidiaries of MGIC Investment Corporation (MTG), Radian Group (RDN), Genworth Financial (GNW), PMI Group (PMI), American International Group (AIG) and Old Republic International Corporation (ORI). These six insurers wrote 80% of the $4.4 billion of premiums in 2010, and they accounted for 71% of the losses in 2010 ($1.7 billion).  There is no improvement showing through the first quarter of 2011 where the losses were $618 million for these 34 providers, on track for another loss of $2.4 billion for 2011.

Nineteen of the 34 rated insurers are viewed as weak or very weak by Weiss, a rating system that has proven extremely accurate in predicting banks and insurers most likely to fail.  Only six received a rating of Good.  Losses are absolutely unsustainable, and Weiss says, it is only a matter of time before these weaker insurers decide to stop writing mortgage insurance for the vast majority of loans in order to keep from running out of capital.

Imagine the consequences if mortgage insurers fail to guarantee loans at the lower end of the scale—those with less than a 20% down payment.  Alternative mortgages will become scarce and fewer people will qualify for loans.  Homeowners will be unable to move up because they will not be able to find buyers for starter homes (except for cash buyer investors who will turn many of these homes into rentals.)  The American Dream will become a thing of the past. The housing crisis will linger, and may get worse again.

What’s the solution? We know that direct bailout of failing mortgage insurers is unlikely.  A small White House advisory group is working on strategies to shore up the housing market without massive bailouts.  Another first time home buyer credit to assist with down payments is one idea being discussed.

The best option is for lenders to significantly step up loan modification programs, including principal reduction whenever that is the key to providing a sustainable reduction.  Keeping more homeowners in their homes and resolving mortgage delinquencies before they lead to default will reduce mortgage insurer losses and begin to heal that industry.

 CNBC’s John Melloy believes the debt debate may have just been a distraction from the main problem: the worsening economic situation in the U.S. and globally.  He believes the stock market caught on to the threat of another recession last week and the markets took their most severe tumble since 2008 as a result.

The economy has virtually stopped growing. The bond market is acting as if we are already in another recession. The Gross Domestic Product (GDP) grew only 1.3% last quarter after it was predicted that it would grow by 1.8%. The first quarter GDP was downgraded to a growth of just .4%.

Jason Trennert of Strategas Research Partners believes the debt bill is a political accommodation, not something that will help the country’s economic situation, and might hurt it by severely cutting the government’s ability to stimulate the economy. He believes the debt bill increases the odds of recession in 2012 by 35% and in 2013 by 60%.

A conservative analyst who believes the U.S. will hit a “perfect storm” for recession in 2013 is Nouriel Roubini, one of the leading predictors of the 2008 crash. Roubini believes the government will merely “kick the can down the road” for the next 18 months and the poor economic condition will hit a point of no return in 2013. There will be massive economic drag in 2012 that will eventually begin to wear down corporate earnings.  Corporate earnings have been the bright spot in the economy to date. Roubini believes the recession will be another world-wide problem.  Even China is working on an economic bubble that will burst by 2013.

On the short term Roubini predicts that the GDP will continue to produce very low levels of growth at around 2% per year, and unemployment and housing will continue to hold back the economy. The debt crisis will eventually get out of hand world-wide and by 2013 no nation will be able to control the problem without severely cutting spending and raising taxes.

What does the prediction of another recession in 2013 mean for the housing market? If sufficient foreclosure inventory has been absorbed by that point, then there is a chance that the housing market could actually lead the country out of recession and that cash Investors could have a very substantial part in making that happen.  On the other hand, with even more stringent lending requirements in place both first time home buying and home buying in higher cost markets will stagnate, as will new home building.  There will be a resurgence of foreclosures and Short Sales as unemployment climbs again.  This time, however, the government may provide a stop-gap by allowing former homeowners to rent long term, thus staving off some of the declines in home value that have plagued us as a result of the 2008 recession.

No one has a crystal ball to predict exactly when the next recession will come or its precise impact.  On average they occur every 5 years, and 2013 would be the fifth year since the 2008 recession.  We need to be prepared for the inevitable.  

 In judicial foreclosure states, also sometimes called Lien Theory states, a homeowner may bring action to “Quiet the Title” if there is any indication that irregularities in the loan processing or transfer of title process may have clouded the title.  In Lien Theory states homeowners hold both legal and equitable title and therefore may bring an action as a plaintiff in a Quiet Title Action.

Since at least 75 to 80% of all mortgages have bifurcated the deed and the mortgage documents through electronic mortgage transfer, have failed to have documents properly notarized, or display one or more of other numerous documentation problems, there are a very large number of homeowners who may be able to argue successfully for rescission of the mortgage holder’s lien on the property and therefore uncloud the title.  If the homeowner and his or her attorney have done their homework, they can come to court with written proof that the mortgage holder did not properly secure the loan.

This, of course, does not guarantee that every judge in every Lien Theory state will be sympathetic to the argument.  The judge may still rule in favor of the lender—who in this type of case will be the defendant, not the plaintiff as in a foreclosure lawsuit.  The court may allow the lender to submit amended documentation, or they may rule that the widespread practice of electronic reassignment of mortgage liens is, in fact, a legal transfer.

At the very least, a Quiet Title Action can buy some time for a family struggling to complete a Short Sale and can guarantee that once a Short Sale is completed there will no longer be any question about the legitimacy of the title.  Frequently, a Quiet Title Action will induce a lender to be a little quicker and more generous in settling a Short Sale, or coming to the table with a more generous Loan Modification plan.

Given the mortgage documentation mess, it is a wise idea for anyone, at least anyone in a Lien Theory state, to file a motion for a Quite Title Action before trying to sell a property.  It just may save the deal from being declared invalid sometime in the future, and it may become increasingly necessary in order to obtain title insurance. 

In Title Theory (non-judicial foreclosure) states the strategy of quieting the title in order to possibly gain rescission of a faulty mortgage lien is not very likely to work because the mortgage holder retains the legal ownership (the homeowner retains just equitable interest) and the lender is the one who must bring any motion to Quiet the Title.  A lender is hardly going to agree to this strategy if they have dirty laundry to hide.