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RISMEDIA, September 1, 2009—The Dow Jones Economic Sentiment Indicator (ESI) reached its highest level in a year rising to 35.5 in August, the sixth consecutive monthly increase. The ESI’s continued improvement lends guarded support to the growing view that the U.S. economy may be moving out of recession and into a period of recovery. 

“In addition to the ESI’s positive trend, we’ve seen several months of positive movement in the Leading Economic Index and industrial production which have in the past signaled a move to economic growth,” said Dow Jones Newswires ‘Money Talks’ columnist Alen Mattich. “The continued improvement of the ESI coupled with the gains of other leading indicators is a sign that the U.S. economy continues to steer a course towards recovery.” 

Mattich points out, however, that it would be premature to call an end to the recession. “It will be months before the National Bureau of Economic Research determines the timing of the recession’s trough and a return to growth. We continue to wait for the ESI to reach the upper 30s before anticipating an end to the recession and thereafter for it to reach the upper 40s before sentiment suggests the recovery is sustainable,” Mattich said. 

The National Bureau of Economic Research (NBER) is the official arbiter of U.S. economic cycles, identifying the dates of peaks and troughs that frame economic recession or expansion. On December 1, 2008, the NBER announced that it had determined the current recession began a full year earlier, in December 2007. The NBER’s determination that November 2001 marked the end of the U.S. economy’s previous recession was announced on October 21, 2003, 23 months after the economic recovery had begun. 

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the coverage of 15 major daily newspapers in the U.S. It uses a numerical scale from 0 to 100 to express the balance of sentiment in articles about the economy. The ESI represents one of the most comprehensive and far-reaching examinations of media coverage as an economic indicator. The ESI’s back-testing to 1990 shows that the ESI clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators. Unlike some other indicators where 50 is a clear break-point between recession and recovery, the ESI needs to be read with reference to longer trends. Based on the ESI’s performance since 1990, previous recoveries have been marked by substantial month-to-month gains, with a jump of three points seeming to be a sign of significant improvement. A drop below 50 marks the point at which there is a clear risk of a slowdown. 

For more information, visit www.dowjones.com. 

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RISMEDIA, September 1, 2009—(MCT)-Even the most responsible borrowers slip up sometimes. Maybe a utility bill went unpaid after you moved and the missed payment went into collections. Or, perhaps there are unpaid library fines or parking tickets in collections that are hanging onto your credit history and affecting your FICO credit score, which is widely used by lenders to evaluate your ability to repay a debt. With the newest version of the FICO credit-scoring system, however, minor delinquencies are now overlooked in calculating creditworthiness. Under the updated scoring model, called FICO 08, small, missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score. Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago—and if their credit history is otherwise unblemished, says FICO, formerly Fair Isaac Corp., which developed the FICO scoring system.

“There’s more flexibility with missing a payment,” said Careen Foster, director of global scoring product management for FICO. “If you have a more habitual pattern of paying accounts late, you’re more likely to get penalized for that.” If a consumer’s credit usage is high, that will be more likely to hurt his or her score with FICO 08. But getting close to your credit-card limits—even if you always pay on time—is penalized in some way in every FICO score, not only the recent edition, Foster said.

The new system has been available at all three credit bureaus—Experian, TransUnion and Equifax—since last month. The changes were made to provide lenders with a better risk assessment of borrowers, said John Ulzheimer, president of consumer education for Credit.com, a consumer education and advocacy site. FICO decided that one small library fine didn’t really predict whether a consumer was likely to default, for example.

With the changes, individuals who pose a low credit risk will probably see their scores rise a bit, and those who are high risk could see their scores drop, he adds.

FICO 08 also addresses “piggybacking,” a practice used by credit-repair companies to help people improve their scores, Ulzheimer said. In piggybacking, an individual pays to become an authorized user on a stranger’s account. The account holder gets paid for allowing the person to be associated with the account, and the new authorized user is able to improve his or her credit score.

“It was a practice to misrepresent what your credit looks like to your bank,” Foster said. FICO 08 aims to single out individuals who are named as authorized sources through deceptive means, Ulzheimer said. Those people won’t see their credit scores rise as a result. But the scores of legitimate authorized users will be treated as they always have been.

Borrowers shouldn’t expect their credit to be graded by this new scale on every loan they now apply for. Not all lenders have adopted the new model, though more than 400 lenders are using or testing FICO 08, the company said. In a statement, Equifax said, “Currently, many lenders and businesses are validating the new score within their systems, and adoption will vary by financial institution based on business requirements and market need.”

Many credit-card companies, auto lenders, regional banks and credit unions may have already adopted FICO 08, Ulzheimer said. But for mortgages, lenders doing traditional conforming loans backed by Freddie Mac and Fannie Mae likely haven’t made the move yet, he said. That’s because they’re waiting for Freddie and Fannie to approve its use. Freddie Mac and Fannie Mae “are essentially the lender, they’re the ones that set the underwriting criteria,” he said. Ulzheimer said he expects Freddie and Fannie to adopt FICO 08 by the end of the year. Fannie declined to comment on FICO 08; Freddie wasn’t able to provide a comment prior to publication.

While FICO 08 will help consumers’ credit scores in some cases, people still should take steps to improve their credit. Granted, it’s impossible for consumers to calculate their FICO scores themselves, said Rodney Anderson, of Rodney Anderson Lending Services in Plano, Texas. “It’s almost like the Coca-Cola formula. No one has access to the Coca-Cola formula, no one has access to the FICO formula,” he said. But by being proactive, you can start to work toward a higher score, something that will serve you well every time you apply for a loan.

Some suggestions for improving your credit score:

-Monitor your credit reports and correct errors. Look not only for negative events on your record, but also examine the credit limits to make sure they’re accurate. If the credit limits appear lower on the report than they actually are, that has the potential to hurt your score.

-Pay bills on time and keep card balances low. Your payment history, and the amount you owe on your accounts as a ratio of the amount of credit you have access to, are important components of your score. FICO 08 is more sensitive to high credit usage, and consumers may see a lower score if their reported balance on one or more cards is near the account’s limit.

-Take on new credit only when you need it. Some credit cards come with great offers, including a percentage off your bill if you sign up for one at the cash register. If you accept, make sure you’re getting a big enough benefit to make it worthwhile—taking on additional credit could end up dinging your score.

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, September 1, 2009—A survey of buyers and sellers of real estate revealed that, from their point of view, one of the most valuable services real estate practitioners provide is our ability to negotiate on their behalf. From my experience, it appears that, in many cases, the clients are getting less than they are paying for.

Are you a good negotiator? Do you frequently succeed in closing the gap between the parties’ expectations and reality? Have you mastered the skills necessary to arriving at a solid meeting of the minds? Do you love the pressure and high drama of the negotiating table?

More than one observer has suggested that other cultures are more comfortable bargaining, and actually enjoy the social interaction as a separate benefit of the negotiation process. One possible explanation is that we are a comparatively new culture, established after the development of monetary systems.

To a certain extent, we have a “price-tag” mentality. And, we are conditioned, to a certain extent, not to ask for concessions by that elitist quote, “If you have to ask how much a thing costs, you can’t afford it.”

In the absence of such systems, the value of a thing is far from standardized. Value is the product of the deal made between the parties.

In real estate, for several years, market conditions eliminated the need to negotiate. No price was too high. Sellers had all the power. Negotiating skills have been gathering dust. More recently, it was understood to be a buyer’s market and the seller would have to take whatever he or she could get.

Then came the declining market and the balance shifted from seller to buyer, and buyers wanted and continue to want bargains. This added a sort of “take it or leave it” attitude to the dynamic.

The market is on the move again, and it may be time to beef up those negotiation skills so here are some thoughts to consider.

Empathy

The better we understand the other party, the more likely we are to bridge the gap.

Face to Face

The point of negotiation is to get signatures on paper. You cannot do that on the phone. You lose the benefit of eye contact and the nuances of communication. Not to mention, you could have a bad connection.

Timing

Make sure you have ample time. Do not begin to negotiate until they are ready. No checkbook, no deal. If they leave the negotiating table without making a commitment, you’ll have to start all over again.

Self-awareness and emotional control

It’s not personal…it’s business. Do not become caught up in the emotion. Like a mediator, your goal is to get the parties to come to mutual agreement. That takes a lot of patience. It’s a chess match, not a therapy session.

Know your bottom line.

What do you want? State it clearly. Work toward what is best for all parties, not just getting your way at all costs.

Counter everything

In many cases, the psychology of negotiating isn’t about money or a low price, it is about the security of not having overpaid or paid more than necessary. When we accept an offer, we can leave doubt. By countering, even the most insignificant detail, we make them say “yes” to us, and they are less likely to want to renegotiate during escrow or just before closing.

Commitment to succeed

Negotiating successfully requires a sort of mutual surrender. Both parties must willingly accept that in order to find a middle ground, something must be given up. It isn’t really a win/win…it’s a lose/lose…but with the greater goal of the mutual benefits of striking a deal.

Willingness to walk away

Occasionally, no middle ground can be found and the parties cannot be brought together. Sometimes, the best deal is no deal. If you begin the process with that in mind, you’ll negotiate from a position of strength.

Remember to remain flexible and look for a wide range of options. Our clients are counting on us and negotiating is something a computer cannot do. Let’s give them their money’s worth.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

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RISMEDIA, September 1, 2009—Nearly one-third of all existing homes sold recently were either short sales or foreclosures, according to National Association of Realtors® data. To help Realtors meet the needs of home buyers and sellers who need these services, NAR has launched a new Short Sales and Foreclosure Certification Program (SFR).

“Foreclosures and short sales can offer opportunities for home buyers, but it’s extremely important to have the help of a real estate professional like a Realtor for these kinds of purchases,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Realtors add value to the real estate transaction with their extensive knowledge and market insights, and this new certification will help them serve a growing need.”

The SFR certification program is offered by the Real Estate Buyer’s Agent Council of NAR. The program includes training on how to manage short-sale, foreclosure, and real-estate owned transactions, and provides resources to help Realtors stay current on national and state-specific information as the market for these distressed properties evolves.

To earn the certification, Realtors must complete a one-day education program, either in-person or online, as well as three one-hour Webinars. The certification program will be offered at the REALTORS Conference & Expo in San Diego, Nov. 13-16.

“As Realtors, we believe that any family that loses their home to foreclosure is one family too many,” said McMillan. “Unfortunately, there are situations in which people just cannot afford to keep their homes. A short sale can help families protect their credit by avoiding a foreclosure. When a foreclosed or REO property is sold, it helps the surrounding community by reducing the impact of those properties on home values in the immediate area.”

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

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RISMEDIA, September 1, 2009—(MCT)-U.S. consumer sentiment improved in late August, but not quite enough to exceed the reading from July, according to a survey released by the University of Michigan and Reuters.

Sentiment rose to a revised 65.7 from a reading of 63.2 in early August, but was slightly down from the July reading of 66.0. This is the second straight monthly decline in sentiment. Economists surveyed by MarketWatch were expecting consumer sentiment to rise slightly to 64.0.

The preliminary August reading was the lowest since March 2009. Analysts thought the drop overstated the concerns about economic conditions- large job losses, weak income growth, falling house prices, rising energy prices, and too much debt remain pressing concerns for consumers, analysts said. As a result, consumers have the grimmest assessment of their personal finances since the Great Depression, said Richard Curtin, the director of the Reuters survey. Spending is expected to remain in low gear, Curtin added.

Just 16% of all consumers reported that their finances had improved in August, the smallest proportion since the question was first asked in 1946. The current conditions index fell to 66.6 in August from 70.5 in July. The expectations index rose to 65.0 in August from 63.2 in the prior month. In a separate report, the Commerce Department said consumer spending increased 0.2% last month, while incomes were unchanged.

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

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Mr. Resnick, the chairman and chief executive of Jack Resnick & Sons, owns and manages more than five million square feet of commercial space along with more than 1,500 apartments.

Sarah Milstein, Tony Stubblebine and Eggs spent the summer in two sublets in New York. Furnished sublets and rentals are on the rise in New York, thanks to situations ranging from job loss to wanderlust and combinations of the two.

Builders covet a green certification, but many buildings do not save as much energy as their designs predicted.

Areas that tasted the excesses of the housing boom are suffering as the influx of people moving from the Rust Belt has slowed.