Fixing the Housing Market

October 17, 2008

By Joel Persinger
YourRealEstateDude.com

There is an old saying that goes like this, “Lord help us when the day comes that a politician can outthink an entrepreneur.” Over the last seven or eight weeks I have given this saying a great deal of thought. Bank after bank has failed, the stock market has been riding a rollercoaster that has frightened most everyone and politicians everywhere have been promising to fix everything, even though in large part, they helped create the problems in the first place.

All of this turmoil has given rise to an election year in which throngs of people seem to be gravitating toward more and bigger government. But, can the government really fix things? Are politicians truly adept at solving the very problems they bring about? The simple and direct answer to these questions is, “No.” The actions taken by politicians are in direct proportion to the number of votes they feel might be gained or lost as a result. Thus, such actions are generally calculated to make voters happy rather than to offer real solutions. After all, the problem being solved is political damage control.

By contrast, entrepreneurs are always looking for ways to provide solutions to problems in order to make a living by doing so. This means that the solution MUST address a real problem and provide a real, workable solution in order to be a success. This is precisely why there has never been and will never be a politician who can outthink an entrepreneur, and this is precisely what is great about this country. We are a country of inventors, a nation of entrepreneurial thinkers, a people who love a good puzzle and have the talent and skill to solve it. Our forefathers new this and had the good sense to stay out of the way. They knew we needed a government, but they also understood how oppressive governments can be. So, they rebelled against the tyranny of the English aristocracy and created a governmental structure meant to support free thinking and the free flow of the inventive and entrepreneurial spirit that is America.

So, if we fast forward to 2008 and compare the solutions to the problems in our current real estate market, we find that government solutions don’t work any better now than they did when the country was formed. Government, at all levels, has floundered in its attempt to address the issues affecting the real estate market. In fact, while more than one “government bail-out” has been implemented, none have accomplished the goals set out for them. Worse yet, none of these government solutions are self-supporting. They all spend money that the government doesn’t have.

In the meantime, free thinking business folks have hammered out real solutions that work, make money and create jobs. Here are just two examples:

Loan modification: One new company with a mission to negotiate the restructuring of home loans on behalf of homeowners who cannot make their mortgage payments is Debt Advisory Alliance. They are a private company which, by all reports, is having significant success in helping their clients stay in their homes by negotiating a modification of the terms of their home loan directly with the lender. My staff and I attended a meeting with this company last week and we were very impressed!

Short sales: Some enterprising real estate brokers have made a science out of helping people by negotiating directly with the lender in order to get their homes sold for less than what is owed. The key is that some brokers have become experts at this and are quite successful at negotiation away much of the bad consequences that would normally afflict the homeowner after the sale. Such things include, negotiating away the lender’s option to chase the homeowner for the balance of the money owed. Since we work with an investor who buys short sales, this is a good chunk of the business that we do in my office. So, I know that it works.

While nobody has a perfect solution for the problems that face the real estate industry, it has been my experience that quick thinking entrepreneurs will end up providing the answers, while quick talking politicians will only manage to get elected or re-elected. Keeping that in mind when you’re looking for someone to help you or when you’re heading to the ballot box could make finding real help a whole lot easier.