The entire structure of our U.S. economy is based upon the principle of free market conditions. This means that markets are pretty much left to regulate themselves and create built-in balancing mechanisms that ensure that the market is not overheating and it is not stagnating.

In the real estate market the balancing mechanism is provided by foreclosures which basically take properties which are gridlocked into a non-payment situation that only damages the market, the lender and the economy and, through the process of foreclosure, auction and sale, process them into properties that generate liquidity for almost everyone concerned and which free the house owner from a situation that was only getting worse and worse.

Now suppose, within this mechanism you throw in a disregard for the self-regulating tendency of the market and allow lenders to pretty much do as they please. You then create conditions which are not countenanced by the set up of the market which is geared to the creation of win-win scenarios.

An imbalance in the way money is lent and properties are acquired leads to those same properties being lost which means that the win-win scenario that normally leads to a balance in the real estate system now becomes a win-lose situation with the lender making more and more profit and borrowers constantly losing out.

Such one-sided equations lead to exactly the wrong types of foreclosures, properties which could have been saved or maybe never bought by their original owners in the first place. The wrong type of anything is damaging to the market because it flies against the conventions that were set up originally and, as a result, damages both our economic model and the trust which the mortgage lending market requires in order to function properly.

With all this of course comes the $1 billion question of what should be done? Some advocates for legislative intervention have voiced the opinion that the Federal Government needs to step in. Others have voiced the opinion that the market should be left alone to reform itself, stating that the reason it got into this mess in the first place is because of overly complicated legislature governing the accessibility of mortgage loans to minorities and disadvantaged groups.

Whichever way we decide to go the fact remains we need to do it fast. I see far too many foreclosures coming into the market that are decidedly of the wrong type which means that the news for the economy is not that great. It is important we address that fast and worry about the niceties later on otherwise we will risk losing so many of the gains we have made as a nation in the 21st century.

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Every home owner preparing to sell their property will need to consider whether it is wiser to sell their home FSBO, (For Sale by Owner), or to use a real estate agent. The most obvious advantage of selling your home FSBO is to avoid paying the real estate agent’s commission of 6% allowing both the seller and buyer to save money. But while most of us may be excited at the opportunity to save that kind of money when selling our home, there are other considerations that may outweigh the potential savings. Selling your home FSBO will require a considerable amount of stress, and as the buyer, you will also need to painstakingly go through every detail throughout the entire sales process. To market your property to potential buyers is not as hard as you think it might be. Today, there are lots of effective channels which you can use to market your property. Other than attempting to sell your property to an individual, you should also try selling to companies. Nowadays, there are companies who like to invest in houses privately with vendors. These companies will usually pay cash for your home and ensure a quick transaction.

But if you lack the experience and the required skills to follow through with the sales process, you will probably be more comfortable working with a qualified real estate agent than going the FSBO route. Select the right estate agent who has the potential to sell your type of property - not the one who offers the highest valuation of your home. Look at their books to check if they have sold properties similar to yours in the area.

Signage encourages home shoppers to immediately call you or your agent. If your home is a corner plot, put up two signs. Talk to your neighbor whose home is located at the corner of a busy street, asking for permission to put a sign in that yard with an arrow pointing toward yours. The signs should include you phone number and the phone number of the agent’s office and the agent’s cell or voice mail number. Print advertising reaches buyers who read newspapers and internet ads reach the computer users. Insert ads in major newspapers on a Sunday but some newspapers also publish “picture classifieds” on other days. Advertise in local newspapers where you can possibly run a larger ad for less money and that will more closely target those searching homes in your area. Advertising in Real estate publications will also be useful.

If you are a direct seller, you can buy mailing lists from list brokers for a small fee. If you are represented by an estate agent, talk to him about a direct mail program. You should direct mail to your neighbors as they may have friends and relatives who might want to buy homes nearer to them. You must send mailers to agents who represent buyers in your neighborhood and to those who live in neighboring areas who may wish to relocate to your neighborhood. However, since most buyers are represented by an agent, it is a good idea to invite as many agents and brokers as possible to view your home. Local agents who linger around your home will better remember details to later describe to buyers. The best way to entice an agent to hang around is food and it does not cost much as sandwiches and tea will suffice.

One important thing to remember when negotiating your offer with the potential buyer is to take your time and not appear impatient. Do not make the buyer feel that you are in desperately wanting to close the sale as this will usually result in a low offer.

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The great debate, right now, is whether the Fed should step in and regulate foreclosures or should we let the free market regulate itself through its own controls, checks and balances.

First let’s establish that under the Home Ownership & Equity Protection Act of 1994, the Fed has the power to set such regulation which compels lenders to tighten up on their lending practices and establish a more transparent lending process that is a lot less predatory than some we see at the moment.

According to ACORN, as one of the nation’s top three regulating agencies for the financial industry, the Fed has a responsibility to prevent abusive lending practices. Its president, Maude Hurd has often gone on record to say that ‘The Fed could step in right now and help stem the tide of foreclosures; American homeowners shouldn’t have to wait for Congress to pass new legislation.’
Some of the recommendations made to the Fed by ACORN include:
• Eliminating prepayment penalties on subprime mortgages
• Barring lender approvals for loans a borrower cannot afford
• Limiting use of no documentation/stated income loans
At the moment Congress has not decided one way or another and neither has the Fed decided to make a stand and force lenders to adopt stricter practices and this has left many potential homeowners exposed to lending practices which may, in turn, lead them into situations where they could not meet their debts.
Owning a home is part of the great American Dream and, potentially, anything that is done to make it harder for people to achieve it strikes at the very heart of a sacred cow. However there is a lot to be said against accepting lending behavior that only serves to increase the profits of the lender. Predatory lending practices which do not permit American home owners to fully understand their financial commitment and, as a result, later on lose their home, ultimately, harm the economy at large.
An economy where the number of foreclosures disproportionately reflects the number of new and established home buyers is an economy that is teetering on the verge of a recession with a real shrinkage of services in terms of building new homes, developing them or fixing them and this has a knock-on effect on the retail trade.
It may well be that the market will see sense and predatory lending practices will stop as lending organizations and institutions begin to self-regulate their industry, but if that does not happen the Fed will need to step in or risk having the great American economy go into a fatal tailspin. 

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