Investing in real estate is defined by two types of people: actual investors and aspiring investors. How do you move from aspiring to actual? There is no limit to the number of seminars, books on tape, laws of attraction and generally anything else that might have a remote connection to real estate investing. The only limit it seems is self imposed – how much do you want to spend invest?

This past Tuesday (for the life of me I don’t know why all of the clubs meet on Tuesday) I had the opportunity to attend another free get together. Unlike the real estate investor meeting I attended a few weeks, this meeting was held at the Pasadena downtown library. At the last meeting I had to buy dinner, this time I didn’t even have to check out a library book. I just showed up.

While the crowd gathered, the speaker had set up his laptop and portable speakers to play motivational music. I heard the music to “Top Gun”, “Eye of the Tiger” and “We will Rock You”. If I didn’t know better I would have thought I was at a Lakers game.

The speaker Lloyd Segal, markets himself as “California’s Leading Foreclosure Expert” and is also the author of the book, Stop Foreclosure Now.

The attendance settled in around 25-30 and included a diverse group of people. If I am going to sit for two hours, my hope is the speaker is engaging and entertaining. I was lucky, because he was both. The presentation was delivered in an interactive PowerPoint format with demonstrations and audience participation and feedback encouraged.

The presentation started with an example of Mr. & Mrs. Smith are losing their home today at 10:00am, and progressed to an explanation of how the auction / bidding process takes place at the LA County courthouse. He then went on to explain the foreclosure process in California with a time line of events.

He then proceeded to offer several different scenarios where homeowners are facing foreclosure and showed you as an investor how to “help the homeowners” through a difficult situation. I liked the fact that Mr. Segal stressed the importance of dealing with the property owners in a respectful manner. He also went on to say that you will probably find banks these days to be very negotiable and willing to make deals on their non-performing assets, which are costing them thousands of dollars.

Why Free Seminars?

People do not conduct seminars for free. My guess is you probably wouldn’t either. There is usually another agenda, to sell books, tapes or another seminar. The free 2 hour meetings are merely a teaser in hopes that you will pay for the more in-depth seminar at a later date.

Personally, I think Mr. Segal’s methods work and the good part is that you have a very small investment in his full day seminar to find out for yourself. If you never buy a distressed property at least you have educated yourself to the process and to me that is worth something.

I am considering signing up for the Saturday seminar. If I do attend, I will provide a review of the meeting. I have a feeling it will definitely be worthwhile.

Is the local Pasadena housing market better or worse than other real estate markets across the country? The factors that must be considered are the number of homes that sell compared to the number of homes that enter the foreclosure process. An increased number of home sales will indicate that consumers are returning to the market and the underlying fundamentals mentioned above are beginning to provide a foundation in which overall consumer confidence is increasing.

The Pasadena home sales for the month of December were just recently reviewed including the median prices and number of units that were sold. I took the single family home sales and plotted them on a map. If you scroll you mouse over the “green pin” and click you can also access the recorded sales price below.

To give you an idea of the disparity that exists in the Pasadena housing market, the second map includes the number of homes where a “Notice of Default” has been filed.

As you can see the problem becomes pretty defined when displayed in a visual context. In addition this may help you understand why the median price of a Pasadena home has declined about $200,000 in the last 12 months.

It was none of those. Just another house which had completed the foreclosure process and was now owned by the bank or more appropriately, Fannie Mae. Wow was this listing agent clever. I would have to trust my assumptions due to the fact that emails and phone calls to the agent and his company went unreturned. This must be the new consumer centric real estate models I have heard about. If consumer centric is defined as enhancing marketing practices to improve effectiveness in reaching consumers, this company represents the new paradigm in how real estate will evolve into the 21st century. I don’t know about you, but when I call a business and my phone call goes into a continuous voice mail loop, I know immediately this is a company I want to work with. Furthermore, my intentions are confirmed when emails and faxes do not receive a response.

I thought real estate was a service industry. To that I have to say “where’s the beef”? In this fast paced, bottom line, results oriented, electronic delivery text message world in which we do business these days, is it possible to reduce the 5 P’s of Marketing (product, price, promotion, place and people) down to only 1, which is price? This strategy can be effective if the price makes people take notice. A price that is about 20% below the other houses in the market area is an effective use of this strategy. Just like the old song from Badfinger……”If you want it here it is come and get it, but you better hurry because its going fast”.

Actually when you think about it hasn’t the number one retailer in the world used this low price strategy? To their credit, Wal Mart does do other promotional vehicles and a broad product assortment, but they have built their reputation on having the lowest price. Are we preparing to enter the Wal Martization of the housing industry as bank owned properties populate the landscape?

Bank owned or REO properties occupy a different thought process. Banks are taking huge loses on real estate and when a property is re-acquired through foreclosure they have one priority which is to sell it immediately if not sooner. No color flyer, no flowered painted picture description, no open houses, no staging, and no just baked cookie aroma. Just price it low and watch it go. Sans the emotional appeal.

Is it effective? Sure seems to be. Many of these properties receive multiple offers and bid up very close to the actual comps in the area. The bank gets a solid buyer with good financials and a quick escrow. Wal Mart gets a satisfied customer with a full shopping cart.

What is Happening in Pasadena?

The chart below indicates the amount of monthly foreclosure activity. For the most part, the foreclosure filings have steadily been increasing for about a year now. The activity appears to have peaked in August, however the data could be about to change. The largest number of adjustable rate mortgages are set to reset in late 2007 to early 2008 with many of those being subprime.

Foreclosure Activity by Zip Code

Analyzing the activity in Pasadena, the greatest numbers are found in zip codes 91103 and 91104. Overall there are 259 properties that are in some stage of the foreclosure process. These consist of single family, condo/townhome, multi-family or commercial. The majority are single family homes followed by townhomes or condominiums. This represents approximately 95% of the foreclosure market.

The zip codes of 91103, 91104, 91106 and 91107 represent 90% of the current activity and you can see how the numbers are growing month by month. Also many homes are in the initial “preforeclosure” stage. This means that the homeowner has missed one to several payments and a notice of default has been filed. This period will allow a property owner an opportunity to correct the situation. Sometimes a home is sold or refinanced while it is in the default process. The important thing for someone to understand is that there are options available. Most lenders do not want to foreclose and take the property back. The worst thing someone can do is to ignore a dire situation and hope it goes away.