Greetings! 

Let's say you are a season ticket holder for a major professional sport team. You can't go to an upcoming game and neither can any of your friends. You don't want to get stuck with the ticket and take a loss. So, what do you do? You sell your ticket to a ticket broker, who will normally pay you face value. At this point, you are made whole. You are off the risk. You have transferred the risk to the ticket broker.

The ticket broker is now 100% invested in the risk. He will attempt to sell your ticket at a premium, and, if successful, will make a profit. On the other hand, if he can't sell your ticket at all, or sells it for less than his investment, he suffers a loss. This is his price of doing business.

This is the secondary market at work. The pricing for the ticket is dictated by the marketplace, and the degree of desirability for that particular event. The more desirable the event, the higher the price for the ticket. Simple as that. When a new buyer is willing to pay the broker's price, he is satisfied because he has a seat location for an event he wants to attend. The broker is happy because he made a profit. The season ticket holder is happy because he transferred the risk and was made whole. All parties benefit.

The same principle applies in the world of owner carryback notes. A note holder decides he wants to sell his note for cash and transfer the risk to a notebuyer.The notebuyer, via his due diligence, offers a price he feels is fair and prudent. But, the notebuyer will not discover everything he needs to know about the note until he actually owns it and starts receiving payments. Most of the time the transaction works out. Sometimes it does not. Sometimes it turns into a disaster, and the notebuyer has a big mess on his hands. This is the price of doing business. This is the secondary market at work. This is democracy, with the parties accepting the good and the bad.

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"You are a life manager, and you have one client - you. Ask yourself, "How am I doing?"  ...  Dr. Phil.

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                           Hiring is Weak

The Labor Department reported last month something most Americans instinctively know - the labor market is weak. The July employment report showed 162,000 jobs created, with many of these jobs in low paying retail and restaurant work. Our country needs skilled and technically trained workers filling skilled and technically oriented positions. Before the recession, new hires were averaging 5 million to 5.5 million monthly - now, the range is 4.2 million to 4.5 million every month. Ouch!

Moody's Analytics points out several factors in this less than dynamic job market: Our aging workforce is clinging to its jobs, companies have implemented labor-saving technologies, and there are fewer start-ups adding new workers.

Says Moody's: " I really cannot see where we're going to get back to where we were before the recession."

Many folks feel the real issue in our country is jobs, not housing. See an article on www.StreetTalkLine.com, "If Housing is Booming - Why Do We Need Another Fix?" Lance Roberts, August 6, 2013.

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"In matters of style, swim with the current. In matters of principle, stand like a rock." ...Thomas Jefferson

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Owner Carryback Opportunity in a Changing Housing Market

A July 22, 2013 report by CNBC.com Business News reporter Diana Click began this way: "They swarmed the distressed housing market buying thousands of foreclosed properties and pushing prices higher and faster than anyone expected. Now investors are pulling back dissuaded by the higher prices they themselves brought about."

15% of June 2013 sales were by investors, according to the National Association of Realtors. This is the 4th consecutive month investor sales have fallen. N.A.R. says this is the lowest investor share since tracking began in October 2008.

It appears from these numbers that current homeowners are slowly starting to drive the market. But the problems for first time homebuyers persist. They typically make up 40%-45% of the market, but N.A.R. says they are currently around 29%. We know the problems - they are competing in a market with limited inventory against investors with lots of cash; they typically need financing to purchase a home; and, they usually have difficulty coming up with a sizeable downpayment.

The market needs these folks and herein lies the opportunity for the tuned in seller and his real estate broker. Selectively, offer an owner carryback. The first time homebuyer may be a solid citizen with a relatively new family and new job. He can come up with a downpayment but not 20%. He has decent credit but not sterling credit.

If this new buyer has a strong connection to the area and our seller does not need to cash out immediately, the prospect for a soundly constructed owner carryback sale exists, and should be examined. The seller should meet the potential buyer, and if comfortable with the buyer's situation, and with his broker's guidance, decide on the terms that will protect the seller and commit the buyer. A 3rd party servicing company can be used to collect and monitor the payments. And, should the seller ultimately decide to cash out, he should find a receptive notebuyer willing to pay top dollar for a desirable and solid note.

This way the seller can play a small role in helping a first time homebuyer and get our "normal" housing market back on track.

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Notice in a Health Food Store window: "Closed Due to Illness."

Sign in a Safari Park: "Elephants, please stay in your car."

                                Source: Publishing Poynters

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       More Americans Living Alone - and Liking It

The U.S. Census Bureau reports that in 1970, 17% of Americans lived alone. In 2012, that number was 27%. Married couples represented 71% of U.S. households in 1970, 49% last year.

Author Eric Klinenberg says, "The rise of living alone is the greatest social change of the last 50 years."

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The California Association of Realtors reports that only 36% of Californians could afford a single family home at the state's median price in the 2nd quarter of 2013. The median price was $415,770 and required a minimum income of $79,910 annually. The record high was 56% in the 1st quarter of 2012.

Richard Green, Director of USC's Lusk Center for Real Estate says,"People are not making more money, except at the high end. ... The broader problem is not housing.. it's income."

Jobs, Jobs, Jobs!

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A sign on a repair shop door: "We can repair anything." (Please knock hard on the door - the doorbell does not work.) ......Publishing Poynters

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The Annual Monterey Car Auction set a record with over $300 million dollars in rare vehicles being sold. The big winner? $27.5 million for a rare 1967 Ferrari 275 GTB/4*S N.A.R.T. Spider.

What recession?

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If you enjoyed this Newsletter, tell a friend.

If you know how I can make it better, tell me.

Thanks for reading

 Denny Stanz

CA Broker # 01915404