Real Estate Done Right

Make sure your FLIP isn’t a FLOP

2012-01-17T12:08:00.001-08:00

With the market in the proverbialport-a-potty there are many opportunities available for the savvyinvestor. Flipping homes hasbecome a trend popularized by TLCA&EHGTV. It looks SO easy doesn’t it? Even Vanilla ICE is doing it! A little extra coin in the savings account, a story abouthow you once helped your neighbor build a tree fort and you’re off. Let’s make some money!!

Whoa there big fella….

Ok, ok, I know you hung your new flatscreen and have every episode of“Flip this House” Tivo’d, but there may be a chance – just a chance – thatyou’re going to get in over your head. Let’s get a plan in order first huh? How about a little due diligence? Fair enough?

Whethera certified general contractor, Donald Trump, or a driving range pro, there arevariables that must be accounted for prior to putting pen to paper, or shall wesay putting your money where your mouth is. Without completing your due diligence you are simply puttingyourself in a compromised situation. You may come out unscathed, but why start off in the wrong directionwhen you don’t have to?

Yourfirst concern is a true and realistic budget. In these preparations I prefer to be overly conservative tobetter protect my investors and myself. Your obvious first calculation needs to be your predetermined total budget. Be fairand be realistic. If you are luckyenough to have access to unlimited funds, don’t take the approach that “fundsaren’t an issue”. Funds are ALWAYSan issue, without a firm loyalty to the budget you set yourself up for nothingbut failure.

Wenow need a “Flipping Itinerary”, and this is not the time to remember thatepisode when the HGTV crew flipped a house in under 24 hours. Take into consideration actual saletimelines in your area for comparable homes – then add 30%. Patience is a true virtue in this game,and being prepared ahead of time only makes it easier. I’m sure you have the absolute bestintentions in hand and will renovate in the most attractive way possible. However, there are variables that canand probably will arise that you can’t prepare for. The best way to prepare for the unknowns is to build inadditional time. Time ismoney, so calculate all hold costs and be precise. Hold costs are a valuable piece of information as timeprogresses.

It’srenovation time! The hands aredirty and the journey has begun. We’ve stuck to our itinerary and our budget is in tact, this isn’t sobad! While you sink into the rehabbe sure to always keep quality in check. Just as you got this wonderful idea to flip, chances are high that yourbuyers are watching the same program. Today’s buyer is incredibly savvy, researching on lineis second nature to most, if you try to “cheat” you will probably pay for it inone way or the other. So make sureyour permitting is correct and deeds and liens are cleared. A great idea for a little extra moneyis to have an inspection done on the home by and unknown source. These inspections are in the $300 rangeand will save you a lot of headaches in future negotiations.

Flippingcan be fun and it can certainly be profitable. Just be sure to keep your ducks in a row and remember, inthe end, it’s business; and you need to be prudent.

– Home buying 101-

2011-12-27T12:29:00.000-08:00

Get your prioritiesin order!!

ManI hated that phrase when I was young! However, if you are in the stages of purchasing your first home, it’ssound advice. Many first timehomebuyers go into the purchase process without laying out a predetermined gameplan of their true wants and needs. And with the amount of inventory on themarket today, that’s like giving your kids the keys to Toys R Us and saying“pick one”. Without a sound “planof attack” in place you may be quickly overwhelmed and end up making badchoices; like picking a Yo-Yo instead of a trampoline.

First things First

Rightoff the bat you need to decide what your #1 priority is in a home and why. It can range from school system to the typeof kitchen installed. This willgive you and your agent a base to start with. These parameters can obviously change at anytime, but it’s thebest way to get started. With thisbase created we can start our home search with defined parameters, reducing theoverwhelming effect today’s inventory levels can have on you. This will also allow you to quickly geton the road and into some homes instead of sitting on Realtor.com for months.

Patience is a Virtue

Nowthat we “have our priorities in order DAD”we need to give ourselves time. The best way to do this is to remain calm…. Just chillax! Patience is the name of the game whenpurchasing in this market – we are no longer in the “bidding war” days of homesbeing sold within hours. Thismarket is full of inventory and you need sufficient time to do your duediligence. Give yourself 3-9months depending on your situation to search and understand the market. I always remind my buyers that youwon’t know a great deal when you see it if you have had nothing to compare itto. So be sure that you viewenough property to really understand fair market value for your particularwants and needs. r

Do you really needthat?

Ioften see buyer frustration when wants and needs are to “tight”. What I mean by tight is that the buyersmay be unwilling to budge a bit from their wants and needs. We need to keep in mind that theaverage homeowner lives in their first home for only 8 years. You may be able to “scrap” orhold off on a few of your original parameters in trade of something else. For example, if you can part with apool, you can usually get more space or an upgraded home for a similar price. If you have small children that wont beattending school for 5 years or more, it may be worth it to get a larger/nicerhome in a lower rated school district. Rationalizing these wants and needs in an honestformat is a great way to acquire the best home available in your budget.

Keepthese tips in mind, remember to stay patient and I assure you….YOUR PERSITANCEWILL PAY OFF!!

Closing on your own?

2011-11-07T11:37:00.001-08:00

Closing on your own?

Whenasked by the general public my thoughts about selling or buying on your own, Ioften give this exact answer – “I have no doubt that you can find a home or abuyer on your own, the doubt I have is if you can get past the closing tablewithout professional help”. Theclosing process is truly the meat and potatoes of any Real Estate transaction;we are not simply taking the home to the register and swiping our card. While you may decide to sell or buy onyour own, there are many factors that you need to be aware of.

Theclosing maze can be a long, confusing and daunting process. You will start to hear referencesregarding terms you may have never heard before. “The funds aren’t seasoned” – “It’s still in Underwriting”– “The package hasn’t been processed” – “The estopple hasn’t arrived” –etc. These events can andwill cause great stress if you don’t know how to handle them, especially if youdon’t even know what they are! This is certainly not the time to cross your fingers and hopefor the best.

Stayingabreast of these issues is crucial if you plan to close on time, or atall. Any one of these issues orother unknown factors can easily prolong or destroy a closing. By gaining knowledge of the process orsimply working with a professional you put yourself in a much more protectedstate. A great idea is to calendarall events taking place from date of contract. Be sure your escrowed funds are deposited in time andaccounted for, that appraisal and inspection issues are handled properly and ina timely manner. You also wantproof that title is “cleared to close” prior to loading the moving truck. Small issues in a transaction can havedrastic ripple effects, it’s imperative that you keep your ducks in a row untilthe last page is signed and notarized.

Whiletruly closing on your own is possible today, I highly advise against it. Forms from your local office store orsomething you found on Google is not going to give you the peace of mind andprotection you need in a Real Estate transaction. Due to the fact that mostReal Estate transactions have multiple facets to them, it can be intimidatingto try to “solve the puzzle” on your own. To help ease that intimidation factor it’s best thatyou hire a title agent to conduct your closing. Either buyer or seller can choose the title agent dependingon how contract was drafted. Ifyou can’t choose, be sure to familiarize yourself with the agent chosen and besure to start a friendly rapport. The agent understands the process fully and in most cases is happy toanswer any questions that may arise. Remember, the title agent is here to provide a service, be sure to putthat service to use.

Theclosing maze is one that you may think you can tackle on your own, but let’sall remember the recent story of the woman who needed to be rescued in a cornmaze. It looked easy at first.

Renovate or Depreciate?

2011-10-18T08:41:00.001-07:00

Renovate orDepreciate?

Withthe market in its current condition many homeowners are contemplatingrenovating their home vs. selling their home. With equity lines quickly becoming the next word to bedeleted from Webster’s dictionary, this decision is much more difficult then itwas just a few years ago. Will I recoup my costs? Should I just buy a renovated house? Can I rent my house and then buy? Do I want to go through a renovation?

Thefirst question a homeowner should ask him/herself is – “what is true Fair Market Value for myhome?” This can be a dauntingexercise, as it requires total honesty with your self. As we all know, most homeowners feeltheir home is worth much more then it is. To be sure you have a realistic idea of what F.M.V (Fair Market Value)is for your particular home be sure to do the right research.

TIP – ZILLOW is wrong,call a Realtor.

Nowthat you have a fair idea as to what you can expect to obtain in this market you must calculateyour projected renovation budget. If you want to recoup your rehab costs in thesale of your home you must be sure that anticipated appreciation is in linewith your budgeted amount. Forexample, if a F.M.V of $300,000 home has a $30,000 kitchen renovation that homeneeds to appreciate by 4% each year for 3 years to “repay” the renovation. Amore conservative equation may be to calculate using your current appreciation along with your anticipated renovationbudget. This will give you abetter understanding of how long you will have to remain in the home to havethe home pay for the kitchen. If the number makes you cringe – it’s time to sell.

Weare currently in a remarkable buyers market. The option of selling and purchasing may work for you, evenif you have to sell at a loss. Ifyou have to take $25,000 to the closing table to sell your home but then obtaina dream home for $50,000 under F.M.V – it’s a relative wash. Being able to “roll” a new kitchenand/or bath renovation into a mortgage is also very attractive, giving betterrates and longer terms on the money “spent”. There are tremendous deals to be had; while youcontemplate it’s always worth taking a look at new inventory as well as meetingwith professionals.

Short Sales, Foreclosures and REO’s….., oh my.

2011-09-20T12:39:00.001-07:00

Short Sales,Foreclosures and REO’s….., oh my.

TheReal Estate market has become a jungle entangled with unknowns; whether it be aforeclosure or REO many of today’s buyers don’t know what they are gettingthemselves into. Without anavailable mapping system to explain each and every transaction on acase-by-case analysis, most are left in the dark. Without access that “map” ora firm understanding of each and every listing you approach you can easily putyourself at risk. It’s not as easyas just finding the perfect house anymore. If you are home shopping be sure you or the Realtor you areworking with knows what’s what.

Short Sales

Wehave all heard the term short sale by now, it’s almost as common as Charlie’s“Winning”. A short sale is inessence when the homeowners mortgage lender allows said homeowner to sell theirresidence at a lower price then currently due on their original mortgage. If you are underwater, the bank willtake the loss. As common as thistransaction has become, many buyers still don’t understand the full storyinvolved. Many short sales canstill be a waste of time, but there are others that CAN be great deals, youneed to map it out. The mostimportant factor to look for is if the short sale is approved or not. Listing agents will advertise this, if they don’t you can simply callthem and ask how far along the process is. This will give a fair barometer on your chances of success.

Foreclosures

Atrue foreclosure is a court sale, so generally you won’t see foreclosures aslisted property. (This may beargued as some counties do now pre-advertise the sale prior to auction) When purchasing at thecourthouse, you may hear that the sale is on the “Courthouse Steps”, you willneed to pay the entire portion of the purchase in cash within 24 to 48 hoursdepending on County. This willtake this option off the table for most homebuyers, as this is an investor-saturatedworld. We all know cash is king. However, if you are looking at ahome that was a foreclosure be sure to ask about open liens prior to making anoffer. You don’t want to find out25 days in that there is an open electrical permit and the home can’t closewithout inspection and possible code violations. $$$ It adds up.

REO’s

AnREO is a bank owned home, which may make you say – then REO is a dumb name… itstands for “Real Estate Owned” – as in Real Estate owned by the bank. This means that the previous ownereither could not sell short, or the bank would not allow it. In some cases the bank may want thehome back due to equity involved, if they stand to make some money – trust methey’re taking it. Some REO’showever are homes that no one else wanted. My first question when viewing an REO is “why is it here” asin why has someone else not grabbed it yet. The owner couldn’t sell, the courthouse vultures didn’t biteand now the bank is sitting on it. Unless you are ready willing and able to do significant home repairs,you may want to leave these to the investors.

Thereare plenty of wonderful “standard” sales on the market today, and the shortsales and foreclosures of 2009 and 10 have lowered values significantly. Be sure to always look for the best deal, just remember thebest deal isn’t always a short sale or the like. If you have any questions about this article oranything at all Real Estate related please email me at rick@rickrapp.com

Maintenance = Money!!

2011-08-01T08:08:00.001-07:00

Maintenance = Money!!

In this disaster of an economy we are all looking for ways to not only save money, but also how to MAKE money. As homeowners, we are all Real Estate investors and should act accordingly in regard to maintaining that investment. Just as you would hope to have full faith and trust in how your board of directors maintains the company representing your shares, you should be giving the same attention deserved to your own personal investment. This attention will always pay off in the long run, proper maintenance of any and all investments is rule #1 for any investor, and as a home owner – that’s what you are!

How often do you see a homeowner whom rarely maintains their home out in the yard cleaning up and have the instant assumption – “they must be selling”. While an enigma to me, it’s a very common occurrence. Notwithstanding that the thought process is on par and intelligent from a home seller prospective; It is somewhat penny smart and dollar stupid. Not for the assumption that you won’t get your “rehab” costs back at closing, but simply for the overall fair market value that has been lowered due to the past neglection of beautification. (yes I made up “neglection”)

It’s the simple theory of “Sum of its parts”. It’s easy to picture a great home in a rotten neighborhood; the value of that home will differ significantly if it were simply sitting on a different lot in a neighborhood of maintained homes, correct? This added value is a non-controllable situation from a homeowner’s perspective; the only controlled factor is the homeowner’s own personal property.

Unfortunately we cannot push a homeowner to maintain their home, what we can do however is set an example. We can maintain our own homes to the best of our ability and hope that our neighbors will follow suit. A community with a higher percentage of maintained homes simply holds a stronger combined fair market value. This is why maintenance = money!! Whether we are selling now or in 30 years, the better we maintain our property, the higher our community’s fair market value will be, resulting in a higher average price per square foot when we are ready to sell!

If there is anything to love about Hurricane’s, for me it’s the way communities and neighbors come together in a time of great need. Neighbors helping neighbors is always a great American feeling. Keep that feeling alive all year long by maintaining your property, not just for you – but for your community! It’s a selfless way to MAKE MORE MONEY!!

What to look for in a listing agent

2011-06-29T11:51:00.001-07:00

What to look for in a listing agent

As we continue to recover from the recent Real Estate bubble burst it has become imperative that sellers and buyers alike work with professional and knowledgeable agents in any and all Real Estate transactions. Working with a neighbor or friend just to “spare their feelings” simply puts you in a compromised position in this market. We need to remember; “friends are friends and business is business”. Selling Real Estate in this economy demands knowledge of current conditions and the ability to adapt to rapidly changing marketing techniques.

Understanding of current market conditions

This market is different then any market we’ve experienced in quite some time, and for numerous reasons. Loans are much more difficult to obtain and foreclosures and short sales continue to flood the market. Determining current market value and truly understanding market conditions is a “science” that changes on a daily basis. When selling your home be sure that your agent has a STRONG understanding of what is happening in your particular market, and how to best position your property to obtain the highest possible price in the shortest amount of time.

Ability to advertise in a medium visible to your buyers

It’s no secret that technological marketing has taken newspapers by the throat and basically choked them out. As technologies rapidly change, the mediums we use to advertise change with them. Staying on the forefront of technology is the key to a successful marketing campaign. Having an agent that knows what the hot trends are, as well as the knowledge and creativity to implement them is crucial in this market. When interviewing make it essential that you discuss marketing techniques used by the agent and be sure they have a strong understanding of how to best market to your particular buyer base.

Full understanding of product

Whether you are selling a home or a toothbrush you should have a full understanding of what you are selling. Be sure that your listing agent takes note of what separates your home from the rest, and confirm that they convey those differences to potential buyers. You never know what the tipping point is going to be for a certain prospect. It may be as simple as wanting attic access or as involved as needing an automatic standby generator. It is imperative that your agent know AND point out every detail that makes your home special. Standing out can help you in getting out.

Understanding of your buyer base

Knowing your customer is rule #1 in my book. What do customers in your market desire? What type of incentives will bring the most bang for the buck? How can I appeal more to my specific buyer base? These are questions some sellers may never think of asking, thus the need for an agent that understands. Different demographics call for different marketing approaches, be sure that your listing agent understands your typical buyer base and knows how to communicate with them most effectively.

By using these four simple tips you should be able to be sure that the agent you pick is the one best suited to sell your property. And remember - It’s not personal, it’s business.

Why you need a Real Estate buyers agent

2011-06-06T07:50:00.001-07:00

Why you ~~want~~ need a buyers agent

Under Bidding

The key to winning in this market is knowing what true Fair Market Value is, if you’ve read some other articles of mine you’ll note I drill this point in often. If you don’t have a GREAT concept of what true F.M.V is, you shouldn’t even be placing an offer on a property. I’ve seen a ton of it this year; buyers losing deals and getting completely frustrated “no one will accept my offer, don’t the banks just want to unload these homes?” These are the buyers who are trying to Trump (double entendre) the banks by UNDER bidding at ridiculous amounts. Some with offers up to 50% below current asking price. You can do this all day long; it’s a free country, but your wasting a lot of time.

When banks finally approve a short sale they issue what is called a “demand letter”. This “demand letter” (are you thinking of Austin Powers?) states what the bank has decided they are willing to accept. These are often very fair numbers, though not always “steals”, they are often good deals. Any future closing is generally going to be within a small percentage of this demand letter number. Now as always, there are exceptions to the rule, but in general it’s a good barometer. Without having a full understanding of not only how the process works but also what true F.M.V is for that particular property, you put yourself at risk. That is if you truly want to acquire the property.

Where’s the Beef?

“Hey Rick, where are all the deals?” -- why do people ask me this all the time? Because I know! Good Real Estate agents are the heartbeat of the Real Estate industry. Knowing not only where a deal is, but also why it is a deal is an aptitude grown from experience and a strong understanding of current market conditions. Making moves without access to this knowledge and understanding is akin to putting $50,000 on 14 the second you walk into a casino. There’s a chance, but......

An agent on your side will provide the critical info you didn’t even know you needed. Kind of like someone telling you that 14’s already hit twice the last 9 turns.

Pro advice is always nice…

This can be a very stressful market for anyone in the Real Estate market. If you’re selling your worried you won’t get the maximum amount possible and if you’re buying you are having a difficult time sifting through excess inventory. However, when you find an agent that offers the service you need and deserve the stress of this market will dissipate immediately. Having access to a professional 24/7 is similar to having an attorney on your side in court. Agents are here to guide and protect you in your transaction. Take use of that, it’s well worth it.

If you have any questions or topics that you’d like discussed in this blog please email me at rick@rickrapp.com

Real Estate in the news - what’s the truth in it all?

2011-05-02T10:56:00.001-07:00

Lately I’ve been asked on a daily basis, “What’s really up with the market?” People are reading an article on Monday stating that the market is continuing to decline and then wake up the next day to an article in the same paper reporting increases in property values. How can homeowners and the public in general get a fair idea of what is really going on in today’s market with such conflicting stories being run? It’s a fair question – “what’s the truth in it all?”

It is my opinion that fair market values are climbing at a slow but steady pace. We are seeing increases in certain areas due to buyers’ willingness to pay fair market value for specific homes in the 2011 market. Maintained and Renovated homes can command a slightly hire price in this market. The reason we are seeing this is due largely in part to the fact that a very sizable percentage of available inventory is… well its junk.

When a ready willing and able buyer hits the streets to start viewing in this market it generally goes something like this – “oh my god, did people really live like this?” - “Uh…how much do you think it would cost to replace…. everything” - “I can’t breath, can we go now?”. Sounds comical, I know – but it’s funny because it’s true! I’ve seen things in homes that I wouldn’t dare speak of, never mind write of…

You can picture how buyers in today’s market would be willing to pay a slightly higher “Fair Market Value” for a home that has been renovated and cared for. This is why we are seeing slight increases in certain areas. The “value” of a well maintained home has climbed which in turn raises FMV for a certain sector of homes.

To be broken down it’s really easy to understand. With lending so tight, rehabbing a home to your liking is no longer an option for many. The days of buying a home, getting a home equity line and making it your Kingdom are over. Today’s homebuyers have most of their funds tied up in the purchase with little to no reserves for renovations. If we can provide what they desire, we can charge a premium, while not a large premium it is an increase, and these small increases over time are what bring us back. This is our slow and steady climb back to a more stable market.

Foreclosures may not be ending anytime soon, but that does not necessarily mean that our Fair Market Values need to continue to decline. Because there is so much “junk” inventory, good inventory can shine in this market and in turn; can command a higher price.

If you are buying or selling in this market, be sure to conduct your research and do your homework. There is a ton to take into consideration to fully understand what true fair market value on any particular property is. If you’re unsure, hire a professional; it’s what we do!!

If you have any Real Estate questions that you’d like answered in this blog please email me at rick@rickrapp.com

Is now the time to Flip?

2011-04-07T14:53:00.003-07:00

Is now the time to FLIP?

In the past six months I’ve been involved with sales that provided very attractive returns to Real Estate investors, some as high as 23% and one in as short as three months. So I have to report that yes, now is the time to flip. Prices are low and buyers are willing to pay a premium for a rehabbed home.

While most buyers in the market today are using all of their cash funds for the purchase, rehabbing a home on their own is simply out of the question. Banks are requiring larger down payments to obtain loans and credit has dried up. In this market, the only way for many buyers to get an updated home is to buy one. “Rolling the Rehab” into the mortgage makes it possible for these buyers to get what they desire while still remaining within their preset spending limit.

Buying at the right time in the right place makes it possible for investors to see a large return on their investment. The great thing is that everyone wins in this environment. Vacant homes get owners, buyers get the home they want for the price they anticipated and investors have a chance to put their money to work in a way that provides better returns then the 1.99% CD at their local bank.

OK, you’re excited, but Hold Your Horses!!

Opportunities to invest and profit in this market are out there, but they’re certainly not everywhere. As with any investment strategy, we need to be cautious when getting into the flipping game. Proper due diligence needs to be achieved prior, during and after the purchase.

Any and all factors come into account when flipping Real Estate, and simply finding a “cheap home” won’t get you far. You need to be sure to take into consideration your true hold costs, maximum future appraised vale, upcoming sales fees, association regulations… you get the point. It’s a big pie and you need to properly strategize before digging in. If you get this wrong, the pain in your stomach isn’t going to be cured with Ta Ta Ta Ta TUMS.

Don’t have the funds to take advantage? Some REIT’s are available with buy-ins as low as $50,000. For some investors this is the perfect opportunity as the fund manager handles all due diligence and management of the project. The investor simply sits back and reaps the returns available in today’s market.

With the amount of REO and short sale properties available in today’s market there really hasn’t been a better time to flip in quite a while.

Buying in 2011

2011-03-01T08:30:00.000-08:00

“My oh my how the market has changed”

Market conditions are not a secret to anyone. While stories, facts and figures may be dramatized a bit in the media; on a whole American’s have a fair understanding of where the Real Estate market stands. If you plan on buying in 2011 there are factors that you must take into consideration before and during your home search regardless of what you hear on TV or read online. When markets change, strategies change and we simply cannot buy with strategies used during the boom.

Know your purchasing power, don’t guess… KNOW.

A few years back purchasing power was basically up to you. Banks where nudging you with their elbow in a crowded room asking, “Hey you, you want to buy a house? How much do you need?” Terms like “no-doc loans” and “stated income” flooded the market, buyers could simply tell the bank what they made without any form of proof and the loan would be approved!! No proof of income!! NONE!! ….I digress.

In today’s market we all know that lending practices have been restructured and loans are now as hard to obtain as a Harvard MBA; and because of this it is IMPERITVE that you get pre-approved prior to even logging onto Realtor.com. Find out what your true purchase power is, speak to a mortgage broker and learn where you stand as a purchaser before you become a buyer.

Knowing your true limit will protect you before during and after the home buying process. Being knowledgeable and honest with yourself about your true purchase power will make the process much less stressful, as you will be able to negotiate faster without putting yourself in an uncomfortable situation. By not overextending yourself due to passion and emotions, your future mortgage payments will always be in line with your predetermined plan. In this day and age, planning for your financial future is as important as your health.

Find a knowledgeable agent

Don’t just grab a friend or family member with a license and tell them you want to buy a house. Choosing the right agent for your purchase is as vital as finding a home with a roof. I could write analogy’s for days but the bottom line is that this is probably the largest purchase you’ll make, it’s not the time to put a transaction of that size in the hands of a friend just to spare their feelings. I am not saying not to work with friends or family, just be sure they can provide the service you need and deserve.

A professional agent will provide continuous due diligence during the purchase process. There is much more to being a buyer’s agent then simply opening a front door. Working with a professional Realtor® will save you time, frustration and most importantly, money. Ask your agent what kind of services they provide as a buyers agent, and what you can expect if you work with them exclusively.

Give yourself time

Possibly the best Ying to the booms Yang for buyers is the amount of time you can take in today’s market to find your home. There is truly no reason to feel rushed, unless of course you have personal issues, the market is allowing a bit more “tire kicking” time. It’s been a bear for sellers and agents as transactions are reduced in return, but it is what it is, and as a buyer – you can take advantage.

It’s really never good to rush, it’s one of those motherly quotes you can remember as a child “don’t rush Ricky”. What happened to the market during the boom, what were all the buyers doing then? They were rushing, and they all have their bellyaches now, just like Mom promised. We can slow down in 2011. We can analyze, and in turn, we then strategize. By taking time to conduct our research we are better suited to negotiate, always insuring that our best interests are in hand.

2011 allows you as a buyer to purchase with bona fide care and knowledge. It truly is a great time to buy. This will ALWAYS be South Florida and people will continue to funnel here from across the country for centuries to come. With the correct team and strategy in place there hasn’t been a better time to take advantage!

Selling in 2011

2011-02-02T08:46:00.001-08:00

Speculation, media reports and common gossip has lead, in my opinion, to a more volatile market then necessary. The constant onslaught of negative media has had a direct effect on the Real Estate market on a National and Local level. So what’s the truth in it all? Where does the market actually stand and what can we expect moving forward?

Reporting from the front lines I can tell you that the Real Estate market is not as dreadful as generally reported. Homes are selling, people are buying and banks are lending. In December alone last year I closed 5 transactions. The important factor of that stat however is not the amount of homes sold in a short period, but the types of transactions involved. Of those 5 closing, one was FHA financed, two were conventional loans with 25% + down and two were relocation clients. What can we take from this information? That homes are selling, but only when sold correctly.

What do I mean by “correctly”? As I break down each of these sales they all have one thing in common – they were all priced (or sold) according to market conditions and true “Fair Market Value”. Selling at Fair Market value allows FHA financing to take place as there will not be appraisal issues. It allows buyers with significant cash down to move forward as they will be aware they are getting a fair deal, and appraisals are never more of an issue then they are with re-lo’s. If these homes weren’t priced correctly they would have never closed.

A large problem in today’s market, and in my mind the most detrimental problem, is the lack of acceptance sellers have of the times we are in. 2005 is long behind us, but many homeowners have continued to base their perceived values on stats from the bubble. Thus resulting in a stagnant market.

If sellers would become more realistic on a whole, we could turn this market around in a year. Now I understand, many sellers can’t sell for fair market value. They are simply “stuck”, upside down on their mortgage with limited options. In my opinion these homeowners should simply take their homes off the market if they are unable to sell for fair market value. Realtors are to blame for this as well. Many agents will “buy” a listing by making false promises of what a seller can expect. This leads to even more severe consequences as seller becomes frustrated with lowball offers, but refuses to sell for true value. In turn buyers don’t move on properly priced homes because they feel if they wait a bit, the over priced seller will eventually drop – but they never plan to. By not cooperating with market conditions our buyer base depletes, and out of frustration many buyers simply give up.

Both buyers and sellers have false hopes in this market, and that is the main problem we are facing. Buyers want more home, sellers want more money. There has yet to be a full compromise between buyer and seller on a broader scale. Without compromise we simply cannot rebound. For this market to truly bounce back we all need to face reality.

If you are interested in selling in this market be sure you work with an agent who is both honest and knowledgeable about TRUE market conditions, and more importantly, be honest with yourself about your homes value.

And please, always keep in mind – “Current market sets value”. There is just no getting around it.

Why you want an agent - Direction, Protection and Attention

2010-11-12T06:52:00.000-08:00

In the days of the computer world and internet accessibility to a multitude of information many home buyers and sellers are asking the question lately - "do I really need an agent"?

Need? No.

Want? Yes.

The availability of pertinent information on-line has made the home buying experience a bit easier then it was just a decade ago - however, this does NOT in any way correlate to the demise of the Real Estate agent. While sites like Realtor.com, Zillow and the like do provide some "good" information they do not provide what is necessary to successfully close a transaction on your own. Finding a home and verifying value is of course a part of the home search and selling process, albeit a very small one. This due diligence process is simply a small piece of the pie.

Why work with an agent? Quite simply for three crucial factors - Direction, Protection and Attention.

Direction

I've often stated that "selling the home is the easy part" and what I mean by that is plain and simple - It IS easy to sell a home or find a home to buy. Obtaining a seller or buyer with your specific needs may be daunting and may take some time, but generally anyone can do it in the technology age. The days of print advertising, MLS "book" (listings were once listed in actual broker books before the internet), and a Rolodex full of buyers is no longer necessary to get your home under contract. There are plenty of sites offering help in doing so - so why do you need an agent? Direction.

An agent can and will direct you through the maze of a successful closing. It takes full time knowledge and experience to know what pitfalls to look out for. A "virgin" homebuyer simply doesn't know these procedures and can and will often put themselves in a sticky situation with either the lender, mortgage holder, title company, inspection agent, escrow account holder, appraisal work, contract deadlines, etc. Not knowing the correct "direction" to move in a transaction can quickly put you back to square one - often scratching your head wondering what you did wrong.

Think of an agent as your guide - your Sherpa in the Real Estate journey. Would you climb Everest for the first time without a guide? Then why would you put such a large transaction in your own hands?

Protection

An agent also serves as true protection in your Real Estate transaction. Even if you know the way, if not properly trained to watch out for red flags throughout the sales and/or purchase process a buyer or seller can easily slip down a slippery slope.

The list goes on and on, I've dealt with horror stories throughout my career and luckily with time, knowledge and patience I have been able to get through them all - protecting my clients the whole way. Without my knowledge in these situations these people would be out not only a home they had their eye on but in a few instances they would have been out tens of thousands of dollars.

Did your buyer neglect to place the correct amount of funds in escrow?

What retribution do you have?

Did the seller take items out of the house that you had originally stated in contract?

What do you do now?

Did the appraisal come back lower then contract price?

Is anyone at fault?

Will the buyers not release escrow out of backing out of a deal after 3 weeks?

Are you due that money?

Did the inspection report come back showing matters unknown to seller?

Who has to repair?

Will the HOA not approve your sale just days before closing?
Now what?

Protection in these transactions is crucial - we are talking LARGE purchases here people!!

Don't go it alone.

Attention

We all need attention in this fast paced world. Cell phones, email, G4 speeds and the like have made our world move FAST. An agents job is obviously to stay on top of the entire transaction from contract to close. This has become tougher and tougher for sellers and/or buyers to maintain on their own. With most buyers/sellers having full time jobs themselves keeping up with the transaction is simply impossible. Without having a "wing-man" giving you the attention you need and deserve you can and will put yourself in a situation that may at that point become unsolvable.

I can't speak for all agents, but my main goal when working with any buyers or sellers is to offer my complete and undivided attention WHENEVER they need it. True 24/7 availability and service, if you can't move quickly in this environment you don't stand a chance. And if you have a full time job, you simply can't move quickly without an agent on your wing.

Having a trusted professional looking out for your best interests and giving the attention you need and deserve is priceless - well that's not true..... it's 3%

Rick Rapp

"Real Estate Done Right"

Is the rebound in sight?

2010-11-09T09:29:00.000-08:00

This past month has felt like a complete turn around compared to market conditions in early 2010. Buyers are active, inventory levels are dropping and some sellers are becoming more realistic and understanding of current fair market value.

It took some time, and will of course take some more - but I feel we are close. I have actually starting seeing some appreciation in certain communities here in South Florida. I NEVER thought I would use that word again!! "Appreciation" - it has a nice ring to it, doesn't it?

So what factors are playing into this rebound?

Short Sales and the understanding of them

In my opinion, the full understanding of short sales by a larger percentage of agents and buyers has had a significant increase. What was, just a short time ago, an often misunderstood process is now almost decipherable to most people. Buyers realize that sometimes it's just not worth the wait and that the fact of the matter is that you may NEVER close on a short sale home. This has had a direct effect on home buyers simply skipping over non approved short sales in favor of standard, or approved short sales that can actually close within their lock time frame. Agents in general have also become better versed in the short sale process and most can navigate the process with ease at this point. What this has done has moved what was once a "waiting on short sale" buyer to other homes - thus increasing sales levels and lowering inventory levels.

Seller Acceptance

For quite some time now many sellers have not been able to accept that the bubble actually burst. Still focused on drastically overvalued sales in their communities they still feel their home is worth 30-40% more then it actually is. While this belief is still held strongly in some sellers it is starting to dissipate for many others. This acceptance has and will help the market tremendously. By acknowledging that things simply are no longer what they were and coming to terms with what true Fair Market Value is sellers who want to sell will sell, and those who are or were testing the market - won't. By removing these market "testers" we drop inventory levels even further. This in turn allows buyers to focus only on inventory that is actually obtainable. Because the buyer is no longer wasting time trying to purchase homes from unreal sellers, this speeds up the buyers process - in turn helping the market to rebound.

Days on Market

With seller acceptance factoring into the rebound we can only assume that this also plays a large part in the decline of days on market for properly priced homes. Its not so much the fact of homes selling quicker, but the direct effect that has on buyer perception and in turn reaction time. There is simply nothing more motivating than losing a home that you had your heart set on only because you thought you could take your time - "it's not going anywhere in this market" - famous....last.....words. Once a buyer loses a home to another the reaction time gets cut in half, when they find a home they like again - they ACT. Again - this plays a critical part in any market rebound.

100% Financing

Ok Ok - the days of 100% financing are gone....aren't they? Actually no, they're not. FHA financing is in essence the same thing as that dirty phrase "One Hundred Percent Financing" oh man, I can almost picture the devil himself curling his index finger invitingly me to sign here for my dream house for NO MONEY DOWN.... Whoa - (slap in face) got a bit off track -

FHA financing does allow a buyer to buy a home with only 3% down AND they allow for a 6% credit from the seller at close. SO...if you put down 3% and get back 6% - how much did you actually put down? And in essence that would be what? Yes, 100% financing.

This is NOT a bad thing though people!! FHA financing is saving the market one closing at a time!! While interest rates may be extremely low at this time, loans are harder then ever to obtain. You need stellar credit, at least 20% down and STRONG income verification. Due to the economic times we are in (depression) not many Americans can qualify for these conventional loans - but you know what they can qualify for? DING DING DING!! That's right....an FHA loan!! So now we have buyers that can actually buy - all due to our wonderful country, let's keep that in mind sellers when we see these FHA buyers - ok?

This market WILL turn around - we all know that, the question is when. The good news in my eyes is that it seems it will be sooner then later, what I once estimated to be 5-7 years I now estimate at 3 to 5. Hang in their homeowners!!

Rick Rapp

"Real Estate Done Right"

www.RickRapp.com

Making your home a "Top 10" home

2010-08-11T10:55:00.000-07:00

Since creating my South Florida Top Ten Real Estate Deal's list (http://www.RicksTopTen.com) I've been asked on numerous occasions how a home seller can make their home a Top 10 home. While the simple answer is price competitively for your market, there is a bit more to it. Here are 5 factors that you can implement in your home selling strategy to maximize your profit.

1. Is the Price Right Bob?

     Many home sellers in today's market have yet to come to terms with where the market is as a whole. No matter the amount of media attention the bursting of the bubble received, too many sellers just don't get the point..

     Listen, facts are facts and it is what it is. The bubble BURST......and hard!! Inflated prices do nothing in this market but waste time and build frustration for sellers. What your home was worth a few years back has absolutely no effect on current pricing. As a seller you need to factor in what your immediate competition is and take a long hard look at what homes are CLOSING for in this market.....not ASKING PRICE - SALES PRICE!!!

     A great way to do your own due diligence is to simply log onto Realtor.com and take a peak at your local immediate competition. What are sellers of homes in your area with similar features and square footage asking? Put yourself in the buyers shoes and imagine that you are looking to purchase yourself.

     After reviewing what local competition is, price competitively to offer buyers the most BANG for their BUCK!! Buyers in today's market DEMAND value and know that they are in the drivers seat....not you.

     If you want to take your "research" even further, ask your agent to take you on a home tour of your competition.   (This is also a great way to see how dedicated they are to selling your home) Preview in person as though you were a buyer and ask yourself..... "if I can buy this home for this much, how much would I pay for mine?"

     We all think our homes are worth more and offer more... They're OUR homes, of course we think they're great!! We need to take ourselves out of our own shoes however when selling in a buyers market and become a buyer instead of a seller............. be the ball Noonan..

2. Cleanliness is next to godliness

     With the amount of competition sellers face in today's market making your home "Show Ready" is no longer important.....it is IMPERITIVE!!

   I can't tell you the amount of homes I've shown that I felt the need to dowse myself in Purell after leaving. If you're home doesn't show in a good light do you really think you're going to get top dollar or strong showing traffic? The buyers first impression is extremely important, you only have one chance you know... But the agents impression is almost MORE crucial to your successful sale. If an agent gets a bad impression of your home, what are the chances he or she will want to bring clients to your home again? If you answered SLIM you win the prize....

     I know I know.....keeping you home in pristine shape for the duration of your listing isn't easy. It can get stressful and feel like another full time job, I get it. But it WILL pay off in spades!! If you get an additional $10,000 because the home shows well that's not to bad is it? Was it worth it to clean a bit more then usual, get paid for it AND enjoy the benefits of living in a clean and pristine home?

3. Phew, what a view!!

     Growing up my father used to enjoy walking down our driveway and looking up at our home which sat on a high hill in Rhode Island. He'd have a beer or an Iced Tea, sometimes with my Mom in tow and would simply look at the house, enjoying the curb appeal it had and would exclaim "Phew what a view"!!

     Yea Rick, great story....what's your point?

      My point is that curb appeal is a MUST if you want to entice people to buy your home. Never mind the actual view from the road when you pull up to the house, but keep in mind.....the INTERNET.

     The internet? What does that have to do with curb appeal? Close to 90% of home buyers search for their home on-line, and what do they look at while searching? Pictures of your home taken by your Realtor and published to the MLS. If the pictures don't show strong curb appeal your home will not receive the amount of traffic necessary to sell in a timely and profitable manner in this environment.

     You see it all the time. The neighbor who....out of nowhere, starts planting flowers, pressure cleaning his roof, painting his exterior, trimming trees, etc.

What do you generally ask him?

"Selling"?

And generally the answer is yes.

     Why people wait until they are ready to sell to maintain their property is beyond me, but again - it is what it is - and at least these sellers get it- BUYERS WANT VALUE!! A great way to show value is to have a manicured property which anyone (including yourself) will enjoy to walk up to.

     Maximize your curb appeal and you WILL maximize your sales price....promise.

4. Who took that picture?

     Nothing makes me question an agents professionalism more then bad photos of a listed home. If your agent shot your home in less then 30 minutes....the pictures aren't good enough!!

     Again, back to that wonderful network of computers called.....the INTERNET. Buyers are previewing your home on line before they even think about going to see it in person. If a single guy or girl joins a dating site what do they generally do? Scour for hours for the best possible photo(s) they can find of themselves to place in their profile, why? Because they are "selling" themselves on-line!!! (don't take that the wrong way, no hate mail please)

     When some, but definitely not all, agents take and post pictures of their new listings they neglect to give the process the importance it deserves. I've seen pictures of toilet bowels, cats (yes literally a picture of a cat, nothing about the house, just a cat), dirty dish filled sinks, etc. I could post pictures but will save the embarrassment for those at fault.

    Make sure your agent takes your pictures with care - realize the importance they serve in the home selling process. You don't have to expect your agent to be Ansel Adams, just be sure they give it their best shot. And if something is in the picture that shouldn't be......just move it!!

5. I want a Hamburger, no I want a Hot Dog.....

Buyers know fully at this point that they are in control, we as sellers can either fight this new reality or cope with it and cooperate. I like the old credo "If you can't beat 'em.... join 'em" and to sell in this market, you should like it to!

Buyers are picky today, so much so that they can often confuse themselves with what their true wants and needs are in a home. To combat this indecision sellers can and should offer prospective buyers of their home some sort of incentive. Have a home priced perfectly for an FHA buyer? Offer to pay closing costs. Have a great home on the intracoastal? Throw in a Jet-Ski. Selling a home with older appliances? Offer buyers a two year paid warranty....

There are a ton of incentives you can offer, and the great thing is that it's totally up to you and only limited by your creativity!! Listen to what buyers say when they preview your home, or ask your agent for feedback after they show your home. Do buyers keep complaining about the worn out carpet in the bedroom? Replace it!! Or offer a credit at closing to do so... These small incentives will add up to a faster and more profitable sale in your near future.....promise ;)

Selling in today's market is a challenge, accept the challenge and move forward!!!!

For more info on selling in this market or anything Real Estate related please do not hesitate to contact me at rick@rickrapp.com

Rick Rapp

"Real Estate Done Right"

http://www.RickRapp.com

Sellers, Buyers and FHA loans

2010-06-17T07:42:00.000-07:00

100% Financing!!!

Stated Income!!!

No Income verification!!!

No closing costs!!!

It was only a few years back when mortgage brokers were not only advertising these types of loans, but were actually closing them as well.... What a wonderful time for all........right?

If it seems to good to be true...

..it probably is. These loans put ALL OF US at risk and as you all know we are paying the price now - ALL OF US!! The bailout with tax dollars, the inability of banks to redirect those T.A.R.P funds back to us, the rampant foreclosures across the Nation, the unemployment rate, the tedious and frustrating short sales....

These loans hurt us all

....and guess what.... They are still around!!! AND "sponsored" by the U.S.A!!
......sort of..

FHA Loans

FHA loans are loans guaranteed and backed by the Federal Government. As a means to allow first time home buyers access to financing, in general they are a good idea - good for the American citizens, good for the Real Estate market - good for America. These loans keep the market moving, and can be very helpful to qualified first time buyers. While they do not advertise, promote or process stated income - they DO allow no closing costs and 100% financing. It's a non-complicated system to get the 100%. You see, FHA will allow a buyer to finance 97% of the purchase price of the home. HOWEVER, they will also allow the seller to contribute 3% to buyer for closing costs... so what's 3 + 97 ???? Mmm Hmmmm....

Buyers do still have to come to the table with at least 3.5% percent of value - but the loan can be 100% in essence..

Should I accept an FHA loan offer?

There really isn't much of a reason not to, as long as you are agreeable to your sales price you are going to net the same amount regardless of the loan your buyer obtains. You will probably see a lower escrow amount with an FHA buyer, and that can pose some risk, but if your agent stays on top of the transaction and works closely with buyers lender......all should be copacetic.

Banks love FHA loans!!

Because the gov. is guaranteeing the loan banks truly love FHA... they pose little to no risk of repayment, if buyer defaults - ring the White House and the checks in the mail (sort of).

They are not going anywhere

FHA loans are here to stay - so it's best to be informed of what they are and how they work. For a seller they are nothing to be scared of, just pay close attention to the transaction.

In this market we are seeing more FHA loans then usual as the banks have basically tighten and tied their purse strings - it's one of the last viable options to purchase a home.

For more info on FHA loans please feel free to contact me.

Rick Rapp

Real Estate Done Right

rick@rickrapp.com

Price your home according to market conditions........Please?

2010-06-14T11:10:00.000-07:00

How many homeowners are currently overpriced compared to market??

TO MANY!!!

People, people, people...... we are living, selling and buying in a much different time then we grew accustom to just a few years ago. With short sales. foreclosures, distressed sales, etc. we have experienced a severe depreciation effect - YES - the bubble burst....

Is that really news to anyone?

Unless you spent the past 3 years on the I.S.S it really shouldn't be... Why then, are SO many homes priced out of the market? What is the thought process here? What is the strategy?

You are wasting your time!!!!

And more importantly, you are wasting the time of others - and in turn are now contributing to the Real Estate market we are all currently experiencing.

Would you pay $5.00 for a gallon of gas?

Of course not!! Am I crazy to even ask? Unfortunately if you are overpriced for the market, buyers will have the same gut reaction as you just had.... $450,000 for this home, when the one down the street JUST closed for $290,000??? What is this guy nuts? Why is he wasting my time, does he think I'm a jerk?

You are chasing the market!!

The longer you stay priced over and above fair market value the more you waste financially and emotionally. The added stress will take its toll on you - you will start pointing fingers - start believing that this market is truly "in the dumps" and may very possibly say "just take if off the market"

You are going to quit a race that you never entered!!!

Some of the list price's I see now a days really astounds me.... I don't know if its the doing of a bad agent that is simply "buying the listing" (this means to tell a seller you can far exceed market conditions, they then list with you in hopes of obtaining false hopes).

Or is it the homeowner that's just "sticking to his guns" - if that's the case, and you are NOT WILLING to accept current fair market value for your home.....

TAKE IT OFF THE MARKET!!!!

One of my favorite quotes came from an old friend of mine, now I'm sure he heard it elsewhere but it really condenses where I am coming from.....

"Market sets price, we do not"

This is true on so many levels, whether talking about homes, cars or broccoli - pricing is set by current demand for that product....not a tough concept to grasp.

If you really want to sell in this market - if you are serious about getting to a closing table......

PRICE ACCORDINGLY

If you are unsure if you are priced correctly - or if your agent has misinformed you on fair market value.....get in the car and drive!!!

Get on Realtor.com or look in the newspaper.....or contact me directly - find all comparable properties within a 5 mile radius (there should be plenty with the inventory levels we are experiencing) and PREVIEW THEM!!!

THESE HOMES ARE YOUR DIRECT COMPETITION!!!

Compare your pricing to these specific homes.....are they "nicer" then your home? Do they have additional upgrades? More square footage? An extra bedroom, a nicer view??? If so, re evaluate where you stand price wise - it is truly in YOUR best interest....

and if your agent doesn't know what they are doing??? Get rid of them!!! It's a privilege to sell your home, not a right...

For more information or help on correctly pricing your home in this environment please feel free to contact me directly.

rick@rickrapp.com

www.RickRapp.com

Real Estate Done Right!!