Its not uncommon for a reader of this blog to wrongfully accuse us of being overly pessimitic about the housing market. You see, they think that the only time you can make money in real estate is when the housing market is going up…..up….up.

I understand why they think like this. On the surface it makes sense that its easier to sell homes and be successful in real estate in a housing bubble. And maybe for agents with low to no real skills, this true.

But, what is happening now….late 2008…is a massive shift in our industry.

A shift towards agents who embrace learning the skills that this market demands. Case in point, 2 years ago we were the first coaching company to tell Realtors that knowing how to do short sales would become not just necessary but, required. (Now, I am not bragging when I tell you this…but, Harris Real Estate University is now the #1 online real estate university. We have over 30,000 agents participating in a HREU program every day. Guess what one of our top programs is…..yep, Agent Short Sale Secrets.) We were widely ridiculed for telling agents to learn how to do short sales. Literally, we were called ‘fools’ for telling agents to learn how to become their markets short sale expert. Guess what happened, now short sales are one of the best ways to sell a home in this market. The word ’short sale’ is now being used in Realtor’s ads as a selling benefit. On for-sale yard signs throughout the country agents have replaced the typical sign riders..’4 bedroom, 3 bath’ with the word ‘Short Sale’. Agents who know how to offer short sales to their sellers are making a fortune.

And, its going to only get better for these agents. This new breed of agents share the mindset of service and learning whatever it takes to help their sellers. The agents who are the leading, top producers across the country are almost always different agents who were the top sellers in the previous market.

Then came REOS. Believe it or not the REO opportunity is still in front of us. Many will tell you that the banks have already selected their agents to list their REOs. The simple fact is that the greatest numbers of REOs havent even hit the market yet. We have been predicting on this blog that the housing bottom wont be widely reached until 2011-2013. Why, because the simply massive volume of foreclosures that will be coming on the market in late 09-2011. Agents, learn how to list REOS.

Loan Mods. No question that the incoming administration is going to be throwing fuel on the loan mod fire. (Watch this free How To Start Your Own Loan Mod Business Now) Lead by the FDIC loan mods are the first line of defense against foreclosures. YES, early loan mod programs had dubius results. But, there will be a new breed of loan mod programs fully endorsed by the fed that will (more or less) make it so the lenders have to create easy, streamlined loan mods. Please understand that maybe 3 our of 10 upside down sellers you speak with will actually close on a loan mod. That leave 7 that will become….short sale listings.

Again, we will often get blog comments about how we are overly pessimistic about the housing markets. To those agents who feel this way I challenge you to:

1) Question yourself why you think the only way to be successful in real estate is in a bubble market. Whereby the reality is that there is actually more opportunity in a market like the one we are in now.

2) Why you may be reluctant to learn what this market requires. Do you think that somehow the ‘clouds will clear’ and the market will magically become like it was 2000-2008 all over again? That market will never happen again. Ever. If you have made it through 07 and 08 you have already proven that you have the gumption to become successful Realtor in this market. Now, take action and learn what this market demands. The greatest opportunities are still in front of us.

3) Learn the facts. Study what the non-real estate economists are saying about the macro economy. Unlike my fellow real estate bloggers, I like Laurence Yung the NARs economist. He has the toughest job in real estate and we need to support him vs tearing him down. How would you like to be the guy who has to constantly tout ‘buying a home’ in the midst of the greatest housing downturn in history. Here are a few facts for you…Credit Suisse forecasts more than 8 million mortgages will go through foreclosure over the next four years. That’s roughly 16% of U.S. households with mortgages. Analysts Rod Dubitsky and Larry Yang write that foreclosures could climb to 10.2 million if the recession is severe.

On the other hand, if banks do many successful loan modifications to help borrowers afford their mortgage —  the forecast drops to 6.3 million.

Yet while those are big numbers it’s worth noting that 32% of all owner-occupied households, or roughly 23.9 million, have no mortgage at all, according to Census data.

All things being equal, Credit Suisse estimates 1.8 million mortgages will have entered foreclosure by the end of this year.

Here’s a clip from the report, which is not available online as far as I can tell (emphasis added):

Despite some initial signs that subprime foreclosures were near a plateau, the combination of severe weakening in the economy, continued decline in home prices, steady increase in delinquencies, particularly in the prime mortgage space, ensure that foreclosure numbers, absent more dramatic intervention, will march steadily higher. While loan modifications and similar interventions (such as the Hope for Homeowners FHA refinancing program) could help to reduce the march of foreclosures, the proliferation of generally timid loan mod programs with confusing loan features raises significant doubt as to whether the current loan mod momentum is sufficient to reduce foreclosures materially. Further, though mortgage walkaways have been important, the disease hasn’t infected the general population. However, should the downward spiral in home prices, neighborhood condition and equity deterioration continue, more and more mainstream borrowers are likely to walk away from their homes. Thus far, the population of subprime borrowers in the US is relatively small. However, the severe recession that appears more and more likely, coupled with the collapse of confidence in housing and resultant foreclosures and the impact on credit scores, risks transforming the US into a subprime society. That is, the deeper the foreclosure crisis penetrates into the gene pool, the greater the percentage of American consumers with impaired credit, and therefore limited ability to access credit. Therefore, foreclosures aren’t only a housing-related phenomenon and should foreclosures spread, a large percentage of of the population could suffer impaired credit, which in turn would hurt credit availability.

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