How to Get a Lender to Accept Your Real Estate Short Sale

In this unstable economy, real estate is plummeting and people are losing their homes left and right. What does this mean for the average real estate investor? Money! Not only can an investor help a homeowner in distress, but he or she can pocket some money as well. Sounds great, but there is the pesky little obstacle of getting the lender to agree to accept a lower price than what the homeowner actually owes!

The first step you need to take is to determine what the Fair Market Value of the home is. You can do this by researching recently sold comparable homes. What did they sell for? The average of these “comps” is your Fair Market Value, or FMV. You will need access to the MLS for pulling comps. You can easily enlist the help of a Realtor friend. Be sure your comps are very similar to your investment property in size, location, age and condition. You don’t want the lender to have any reason to refute your comps.

 

After you have 6 comps available, you will need to find the “average.” The easiest way to do this is to throw out the highest and lowest number and average the remaining four to get your price.

 

Next, you need to compute the “After Repair Value” or ARV. This is the value of the home after all repairs have been completed. You can find average repair costs by using the help of a GC or carpenter. There are also many software programs out there that will help you make a spreadsheet of costs.

 

You need to keep in mind that the final BPO or Broker’s Price Opinion is what really sways the lender. It is usually written by a well-known BPO specialist in the community, someone who knows the market very well and knows how to find the value of a home with a high accuracy rate. That person will sometimes simply drive by the property, or go inspect the inside.

 

With short sales, the investor will low-ball the home to get a short sale started with the lender. He or she will offer maybe 60% of the FMV or ARV of the home. Just because a home is headed toward foreclosure, it doesn’t mean that it is necessarily a great investment. You need to look out for properties that need repairs, have more than one mortgage, have liens, and have homeowners who cannot afford the payments. The last one is very important. Banks will work with people who are genuinely in financial distress. Please don’t waste your time on homeowners who simply do not want to pay or are using the money for things like vacations and other frivolous expenses.

 

You can either look for nice looking homes, homes with need of minor repairs, or downright damaged homes. Each type has its pros and cons. One factor that seriously helps or harms your ability to get a short sale through is the type of financing a home has. Conventional loans are the best, as they are flexible and willing to work with short sale investors. FHA and other government backed loans are very difficult to work with, as they have set requirements that are hard to meet.

 

As long as you follow this basic advice, you should have no problem sorting out the goods deals from the bad.

Rent to Own Your Home

Renting to Own your own home is a dream for many tenants. It’s not a mystery and, for most tenants, it’s doable with a little planning. And, with any contract, it’s a good idea to get legal advice before you sign something.

The basic agreement is what’s usually known as a “Lease-Option”; that is, you have a Lease for the current use of the property and an Option to purchase it at a later date at a set price. The tricky part is setting the price now for the future purchase.

 

One way to look at this is to ask who’s risking what? Essentially, a Lease Option is a bet. In a Lease-Option, Landlords are betting that the market will go stay the same or go down in the future, and that by setting the price now, they will get more money than they would if they sold the house later. Tenants are betting the opposite: that, in the term of the agreement, the market will go up and that they’d have to pay more for the same house later on than if they get the price locked in now.

 

Leases are about setting the price of the use of the property for a determined period of time, and paying that amount in monthly installments, starting with the first month and ending with the last month of the lease. A Lease-Option is that and more: the most common variation that I’ve seen in nearly 20 years as an Attorney and Real Estate Broker is an add-on arrangement that, in broad terms, (1) sets the price for the future sale of the property; and (2) sets the date for the purchase to take place; and (3) determines the downpayment, which is then usually divided into monthly installments over the life of the lease that are then added on to the rent paid now. Is it more complicated than that? Yes, and this article is only an outline to get you started.

 

Before you enter into a Lease (or any other contract), you need to think about what you want and what you are willing to pay (i.e., risk) to get what you want. A simple way to start is to make a chart for yourself to help you see what you want. Take a blank piece of paper. Draw a line across the top of the paper so that you can write a few lines above it; then draw a vertical line down the center of the page. On the top left side, write; ” what” and the top right side, write: “how much.” In the column under ‘what’, start making notes about where you want to live; what kind of house you’d like to buy; what features you’d like to have and so on. On the right column under “how much”; either write in how much money you’d be willing to spend today for that or, if you don’t know right now, simply put in ‘$” for the minimum you’d spend and $$ or more $$$$’s if you’d be willing to spend more for that. You get the idea. Then, go back and number down the left side of the page the items you’ve listed in the order of their importance to you. The point of this very simple exercise is for what you want to appear to you, even if you hadn’t really thought about it that way before.

 

So, once you know what you want, you can begin to bargain for it, knowing that the more important it is to you, generally speaking, the more you’re going to be willing to pay for it. Another thing to know is, even though you may have a verbal agreement with your landlord based on your being a “month to month tenant” without a current lease, any agreement that will last longer than a year will have to be in writing to be enforceable in court if anything goes wrong. All investments – whether it’s a lease, or an agreement to buy, or stocks etc. – have an element of risk which is why you need to get it all in writing before you sign anything or spend any money.

 

How and for how much you set the price is between you and the landlord/seller based on many factors including how much risk each side wants to take. There are many methods to determining price. The internet is a wonderful resource tool plus a competent local Realtor can help you by explaining what the current prices to similar properties are and why knowing what the “comparables” are is important to you in setting the purchase price.

 

Getting what you want means that you know what you want and what you don’t want. Getting what you want your way means having control over what you agree to. No one can – or should – do that for you. It’s your money.

Dealing with Real Estate Agents

Each time I buy or sell a house, I have to deal with real estate agents. There is no real way to avoid this. When I’m selling, I have to deal with one to sell my place and many more who show my home to prospective buyers. When I’m buying a house, I again have one who shows me the houses I’m interested in buying plus all of the ones who have the houses listed that I want to buy. When I’m selling my house, I have to select a real estate agent. Many questions come to mind. Do I choose the one I dealt with last? The one who helped me buy this place? Do I find someone new? Do I search for a real estate agent who is cheaper, that is, who doesn’t charge the full 7 percent commission? Do I throw an arrow at a picture and choose the unlucky sap that I pierce?

This has been a dilemma and it’s hard! I really have a problem with paying such a high commission. And when you’re the seller is when you pay the commission. The last time I sold a house, I chose a real estate agent I’d used before because he charged less than the 7 percent. Granted the 7 percent commission is split between the seller’s (my) real estate agent and the buyer’s real estate agent but still. I think a $7,000 fee when selling a $100,000 house is a boatload of money! I get angry when I think about this money that I lose so I simply choose to not think about it. It gets me nowhere after all. So I just pull a Scarlett O’Hara and think to myself “I’ll think about that tomorrow.” I could get my real estate license and save (or keep) my portion of the commission. I could have saved thousands of dollars over the years. Could-a should-a would-a.

 

When I’m buying a home, I have to choose someone who I want to sit in a car with and drive around looking at places that I frankly, will probably make fun of to a degree. “Did you see all of that crap stacked in the bathtub? Do they ever bathe?” Or “I really liked that condo but why would anyone paint a kitchen orange?” To which the real estate agent, defender of all decorating mishaps, might say “Oh, paint is cheap. You can always paint it!” Seriously, having to watch my tongue while viewing houses in the presence of a real estate agent, especially a prissy woman or a man who never says a negative thing, just adds to the stress of buying. And house hunting is stressful. For one thing, it’s a huge purchase. I take longer to pick out a good pair of shoes.

 

I try them on, walk around the store, look at my feet from all angels in those little tilted mirrors, feel my big toe, generally makes sure I can live with these things that cost, oh, around fifty to one-hundred dollars. But with a house, I walk in, make mental judgments about the throw pillows on the couch, wonder if they have a nice liquor assortment, open the medicine cabinets (to see how much room there is, not to snoop! Never to snoop!), and basically kick the tires like it’s a Big Wheels I’m buying. Why can’t we spend the night like on that one HGTV show? Take a shower and see if we really like that feature? Sit at the table in the morning and listen to the neighborhood waking up? But I have an idea that the real estate agents I’ve dealt with in the past would tell me I’m welcome to drive over in the morning to check all this out. “Just sit in your car. That’s a good idea. You’ll see what it’s like. Now, would you like to make an offer on this place we just spend ten minutes in?”

How to Buy REO Homes

REO means real estate owned by the bank; these properties are a great deal for investors, who are looking for cheap or low budget properties. Foreclosure and REO are two different terms – in foreclosure properties bank tried to sell the properties in an auction but didn’t find the prospective buyer. So, when foreclosure property is not purchased by new buyer then bank becomes the owner of the foreclosure property. Naturally, now bank is not interested in keeping the REO properties with them, this will make a great deal for investors. REO properties are really good way to make money for investors; bank does not earn any profit. If you are looking for properties to invest then it’s always better to invest and look for REO homes. REO is good deal, because you can get property at the lower rate than the market value. It helps you to cut hassles of searching down sales and dealing with lenders.

Why investors invest in REO’s?

 

REO homes when compared to other forms of real estate investments, serves as a better option for investors to invest as they can own a cheap property, later it would generate a lot of money. Today, the number of REO’s has increased vividly in numbers which allows prospective investors to hand pick properties that meet their specific needs and investment purposes. These properties have become a lucrative business deal for real estate investors.

 

Advantages of Buying Foreclosure Homes-

Risk is minimum- REO properties belong to the bank’s inventory, which is a non-performing asset. The bank wants to get rid of encumbrances of foreclosure homes, when some properties are unable to find any buyer at auction. Bank can’t keep these properties with them for longer period; they sell it off at very low prices than current market price.    Bank is open to negotiate- as when compared to foreclosure properties banks are not interested in negotiating the terms, they arrange an auction and sell the property to highest paid bidder. Whereas in REO properties banks are open to negotiate the terms and conditions attached to the deal with the investors. For REO properties bank offers better financing options than they would offer on foreclosure properties.    Flexibility is more- when buying REO homes it becomes an easy task as banks act as a lending institution it becomes flexible to settle the terms and conditions of the loan more efficiently and in a faster time frame.    Below market value- it’s a key benefit investment for buyers looking for homes, as they can own a good deal at lower rate than current market value. The REO homes are hot cakes because, taxes attached to the property are being paid by the bank and they want to get rid this non-performing asset as soon as possible.    Great returns- when you buy properties owned by the bank at low price, you can re-sell the property at higher rate than bank. You can generate more money and fetch higher returns on REO homes.    Availability- as when compared to foreclosure properties, REO properties are easy to locate and chances of availability is more. You just have to search on different banks sites- they have separate REO list of properties in your area or nearby area. If you require any help REO department and agents will guide you and solve your property matters.

Why does the bank sell an REO at low price?

 

Basically, a bank is a lending institution and is not set up to buy or sell properties. They provide loans to the people, but they are not equipped to buy and sell properties. The bank is not familiarized to deal with buying and selling properties. As this is not their regular course of action it takes time for them to proceed. When an owner of the property is not able to pay the installments, bank forecloses the property. But, it becomes difficult for the bank to meet repair expenses or any other miscellaneous cost. First, the bank loses out the money over a bad-debt and then federal government penalizes them on each and every REO homes. As the bank is loosing so much money on REO, they decide to sell it quick and at low value.

 

REO homes are profitable investments, as buyer owns a low priced property which can be sold at much higher price in the future. Before buying REO homes remember to research well about the property.

Real Estate Investments: Take Time to Weigh Investing Options

Real estate investments can be a blessing or a curse, especially in today’s market. Buyers, sellers and investors are constantly weighing their options and planning strategies. Few people want to lose money on investments or pay more than necessary. After all the definition of investment is the act of contributing money in order to gain profit.

Numerous real estate investments exist. Investors can purchase physical properties or paper real estate notes. Properties can range from a tiny parcel of raw land to a multi-billion dollar resort that caters to the rich and famous.

 

Many individuals are opting to purchase distressed properties such as foreclosure, bank owned and short sale homes. These properties generally require elbow grease and hours of physical labor to return them to their original luster. Some people prefer the hands-on, do-it-yourself approach, while others hire contractors to perform necessary tasks.

 

Distressed properties can make exceptional real estate investments as long as buyers fully calculate the true costs. This is particularly true for DIY people because they rarely factor in the cost of their time. If the job becomes larger than anticipated and contractors must be brought in, the buyer is already losing money on their investment.

 

Foreclosure homes are oftentimes purchased for the purpose of house flipping. Rehabbing and flipping houses is not for the faint of heart. Very few auction properties are in perfect condition. Most are in need of serious repairs or total renovations. Weigh this real estate investment option carefully unless you are exceptionally skilled in home repairs or able to purchase the house significantly under market value.

 

A lesser known, but generally lucrative real estate investment is that of probate properties. Probate is the legal process used to sort out and finalize matters when a person dies. If the decedent executed a legal Will and beneficiaries are in agreement, probate typically lasts between six and nine months.

 

If the decedent died intestate (without a Will) or family disputes erupt, probate can drag on for years. During probate the decedent’s estate is responsible for paying outstanding debts. If the decedent owns real estate with a mortgage note, the estate must continue paying toward the loan or face losing the property to foreclosure.

 

Many probate homes are owned outright. Oftentimes, beneficiaries do not want to be saddled with the responsibility of maintaining the home throughout probate. In some instances, the estate cannot afford to pay utilities, homeowners insurance and property taxes.

 

Probate properties can be profitable gems, but locating them requires a bit of detective work. Last Will and Testaments must be filed through the probate court. These documents are public records and can be viewed by anyone who wishes to see them.

 

The last will contains information about the estate administrator and real estate holdings. By locating the property address, additional information can be discovered by reviewing property deeds and tax records.

 

If the estate is small and few assets exist, this is a sign the estate could be in financial straits. Contact the estate administrator to discuss the option of purchasing the property. Most people do not realize they can sell real estate held in probate. Estate administrators are oftentimes relieved to learn they can sell the house and relieve financial burdens from the estate.

 

These are but a few real estate investment opportunities. The Internet provides a wealth of information about the various types of investment properties, along with financing techniques and investing strategies.

 

Take time to become educated about the opportunities available. Start small and learn as much as you can. Doing so could allow you to own a private island, beach bungalow or penthouse condo where you can spend your golden years doing whatever you desire!

Staging Your Home For Sale

Staging is what you do after you’ve de-cluttered, cleaned, repaired, painted and before you list your home for sale. Staging is all about small details. It adds emotional appeal, the spark that says “buy me.”

Before you list your house, look at it objectively. What features do you want to highlight? Decide on the desirable feature or focal point for each major room, then decide how you can draw the eye that direction when someone enters.

 

If there’s an attractive fireplace, add an interesting vignette of artwork, candles, or unique pieces on the mantel to draw attention to it.

 

Paint can also make an element “pop.” Whether it’s a mantel, the woodwork, or the back of built-in bookshelves, a different paint color draws attention.

 

Are there elements to which you don’t want to draw attention, like an awkwardly sized window or a poor view? Consider covering the window with blinds or drapes. Small rooms can be expanded with mirrors. Put one above a fireplace or over a table. A mirror on the wall facing the door of a small bathroom can give the room depth.

 

Look at each room with a fresh eye. Move furniture around until you have a pleasing arrangement. A wall lined with couches and chairs is typically not an appealing grouping. Perhaps place the couch in the center of the room facing the fireplace, or put the bed on an angle in the corner of the bedroom. Remove some furniture if the room seems crowded. Smaller furniture pieces will make a room seem larger.

 

Arrange vignettes of conversation areas. Use an area rug to pull pieces together.

 

Slipcover the sofa and chairs to freshen them if necessary. Buy pillows, particularly made of soft fabrics and in complimentary colors, to make the room pop. Place lamps in dark corners.

 

Instead of placing all the books upright in rows on the bookshelves, stack some on their sides, grouped by color and top them with a piece of pottery or a picture. Use baskets to hide things you don’t want seen. Group decorative items in odd numbers.

 

In the kitchen, oil wood cabinets to restore their luster. Consider buying new knobs and drawer pulls. Clear counters, except for a few decorative accents, like an attractive bowl of fresh fruit, a vase of fresh flowers, or a few attractive cookbooks.

 

Take an objective look at the bathroom faucets and replace if necessary. Vanities and counters can be a relatively inexpensive replacement if a bath needs to be updated.

 

Buy new towels for the baths and put them out only during showings. An attractive basket or stack of towels on the tub or counter looks nice. Add a basket of decorative soaps or spa-type lotions.

 

When showing your house, open blinds and curtains and turn on the lights. Make the rooms as light and bright as possible. Have fresh flowers in several rooms, especially the entry.

 

Be aware of scents. Put cinnamon sticks in a bowl of water in a warm oven. On the other hand, make sure odors that might be objectionable aren’t apparent. Don’t use heavily scented air fresheners. They don’t appeal to everyone.

 

By taking a thoughtful, objective look at your house before listing, you can move your home from “for sale” to “sold” in a crowded market.

Green Building and the Faltering Mortgage Market: Environmentally Sound Homes in a Recovering Economy

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Green building became a strong selling point for many condominiums and apartment buildings during the height of the real estate markets. The additional $500,000+ of construction costs were passed on to consumers, who readily paid for an investment in the environment. Not only could they feel good about themselves for supporting green Building, but they could also expect significant appreciation on that investment. Fast forward to today’s real estate market and environmentally friendly buildings seem challenged to make a case for long-term viability.

Green Building and LEED Certification

While not all green buildings are LEED certified, LEED certification provides a set of guidelines that ensure a building meets a set standard for environmental efficiency. In late 2007 and early 2008 consumers could expect to pay a premium for a LEED certified building; however, these consumers could also expect to benefit from these buildings in numerous ways. First, consumers expected to be able to charge future buyers the same premium, if not more, that they paid. Second, LEED certified and green buildings tended to be more energy efficient, saving consumers substantial money on heating and electric bills. Last, consumers were able to generally feel good about doing something positive for the environment.

Today consumers can still expect LEED certified buildings to save them significant dollars in utilities; however, they can also still expect to pay a premium. Builders must not only pay for the additional design and construction of these buildings, but they must also pay for consultants to certify the buildings.

Green Building and the 2009/2010 Real Estate Market

For many builders, it did not make sense to reverse course and redesign a cheaper, non-environmentally friendly building. As they struggle to compete with cheaper buildings that did not cater to the environment, many have found that consumers now place very little value on green building. Falling home prices do not seem to mix well with environmentally-friendly building. Even though finding low mortgage rates has never been easier, consumers are not willing to pay an additional $10,000-$30,000 for a green building.

It is important to note that as real estate price increased many municipalities began to mandate greener building. States, like California, at the forefront of this movement created substantial building mandates. Perhaps this also speaks to why consumers have very little willingness to pay substantially more for LEED certified buildings.

In the long run, green building and LEED certification will certainly save consumers money and be a valued asset to many builders. However, consumers have stated with their consumption patterns that in tough economic times, they will sacrifice the additional bells and whistles for a sound affordable home. Expect green building to make a comeback when the housing market recovers.

Custom-Made Business Cards: Making the Most of Your Business Card Investment

If you have taken the time, energy and invested the cash into your own custom-made business cards, then you’ll want to get them into the hands of your potential customers right away. The point of having a snazzy representation of your business on a wallet-sized piece of paper is to give these custom-made business cards out to as many people as possible; keeping them stashed away in your desk isn’t going to help anyone.

But how, and to whom, do you give out your custom-made business cards? If you are in need of some recipient ideas, look no further. All of these suggestions are easy, straightforward, and will get your custom-made business cards into the hands of decision makers within days – and will most likely increase your sales to boot.

Post ‘Em

Wherever people gather is where you should post a couple of your custom-made business cards. And make sure to post several, and not just one, to encourage people to take them. Think about it: it’s easier for someone to slip your custom-made business card in their wallet than it is for that same person to take their pen and paper out and write down the necessary information, and then put it somewhere they’ll find it later. Additionally, if there are several business cards left, interested parties won’t hesitate to take one – as long as it’s not the last.

With this in mind, take some thumbtacks whenever you leave the house. Whenever you’re in the area of a grocery store, thrift shop, school, mall, recreational center, library or other general community area where people meet, tack up some of your business cards for all to see.

Mail ‘Em

Whenever you pay a bill or send a letter, put one or two of your custom-made business cards into the envelope. The person on the receiving end may need your services, and you’ll be in a prime position to get their attention when they least expect it. Similarly to the previous suggestion, try putting more than one card into the envelope, just in case the recipient wants to give one to someone else as well.

Pass ‘Em Out

Take a bunch of your custom-made business cards with you everywhere you go. When you pay a cashier, leave one of your custom-made business cards behind with your payment. If you stop to talk to someone while walking your dog, give them one of your custom-made business cards, too. It’s easy to get creative with this idea – all that limits you is the amount of new people you encounter on a daily or weekly basis.

Create the Perfect Business Card: Creating Memorable and Useful Free Business Cards

Just because you choose to make free business cards doesn’t mean that customers, and sales, will pour in the door. You need to actually make business cards that not only fit your budget (free, or pretty close to it), but ones that attract business as well. Not an easy task.

First of all, make sure that your free business cards include the basics, first: business name, address, phone, fax, email, the employee’s name and title. Then, add any color, design or logo features that your customer associates with your business.

Next, find the Unique Selling Proposition (or USP as it’s known in marketing circles) for your business. In other words, this is the top selling feature for your business, or benefit to the customer, to doing business with you. This could be something along the lines of, “Get it Write, Everytime!” for a writer, or, “No Job Too Small” for a plumber. Then, make sure that the USP is prominently displayed on the free business card you are creating.

Then make an offer for something free on your business card. It doesn’t have to be big, or expensive, but it has to have value for your potential customers. Make a trial something-or-other, free taster or seminars are usually good bets to have on your free business cards, but feel free to get creative here to garner even more attention.

Finally, review the following suggestions to ensure your business card packs the most marketing punch possible, and that your client refer to it often – keeping your business name at the forefront of their mind:

  • Is it obvious from the free business cards you created what your business does, and who your customer is?
  • Create a buying discount co-op on the back of your free business cards: ask other businesses that are supportive or work in tandem with you, and offer discounts for each one right on your card(s).
  • Add anything that is useful to the consumer on your free business card: a writer could create a list of common grammar mistakes, an electrician can detail what to do in an electrical emergency, and so on. Tailor your ideas to your business’ specific products and services.
  • Add something unusual to your free business cards to create excitement and interest: a baby’s footprint on the back of a kid’s shoe store business card, for instance.

And remember, if any of these tips you want to use were accidentally missed during printing, you can easily purchase some sticky labels created with all of the necessary information, and add it to the back of each and every free business card you’ve made.

Rainy Day Funds: Alaska’s Experience and the Permanent Fund

Most states in the nation have adopted some form of a Rainy Day Fund (RDF) to mitigate downturns in the economy. RDF’s are established to help governments stabilize operating budgets by saving in boom times and using the RDF savings to cover expenses during recessions. The resource-based economy of the State of Alaska has a history of following this sort of a boom and bust cycle. In 1976, the State of Alaska began making payments into the Alaska Permanent Fund in part to save for a rainy day. It would be an understatement to say the fund could now to fund any state fiscal gap. Jackstadt and Lee point out in their paper, Economic Sustainability: The Sad Case of Alaska, that Alaska was one of the few states that could have produced a permanently sustainable economy. The political means to develop this type of economy was never up for the task. It also demonstrates the danger associated with depending on politics to implement long-term economic policy.

Many scholars point out that being fiscally conservative dictates saving for a rainy day when surplus revenues are available. Political conservatives are likely to rebate taxes in situations were there are surpluses to the treasury. Establishment of mechanisms for funding appropriations to a RDF will ensure their success. RDF’s are a double-edged sword for many states. There needs to be political support to establish a RDF and political pressure to spend from the fund increases as the fund grows. States need to judge their vulnerability to recession and how their revenue base is dependant on the economic cycle.

The generally accepted norm for a RDF is 5% of the annual general fund expenditures of a state. Funding formulas that are not constitutionally mandated will allow state legislatures to ignore required appropriations. There are many ways to determine funding levels for RDF’s. Suggestions include spending 99% of the approved budget and retaining 1% to cover the cash reserve and emergencies. States can skim off excess revenue that occur during the year, taking those funds that are beyond forecast revenue into the RDF. One state gauges deposits to its fund based on the growth of personal income. Taxes collected on personal income beyond 2.5% in one year go to the RDF. Literature suggests revenue diverted to a fund will dampen unsustainable growth.

States vary widely on requirements for tapping their RDFs. One method is the use of super majority vote of the legislature. Virginia allows use of its RDF when projected revenues drop below 2% of estimate. The government is then only allowed to recoup half of the shortfall. The purpose of most RDFs is to cushion short-term drops in revenue and not to attempt to recession-proof an economy. Tight constrictions on the use of RDF resources can also mean the loss of other economic opportunities. Virginia, Alaska, Colorado, Delaware, Louisiana, Oklahoma, South Carolina and Texas have instituted constitutional protections to protect the RFDs against all but true emergencies.

Knight and Levinson (1999) summarize the impacts of RDFs on state fund balances. RDF balances boost overall savings. States that have successful RDF programs also have higher rates of savings. RDF balances seem to increase total saving on a dollar-for-dollar basis. States with fully funded RDFs experience less volatile fiscal cycles. Budget stabilization funds have real impacts on state fiscal policy and economic wellbeing