BOOST your appraisal!!

BOOST your appraisal!!

            In this depressed market many sellers have anger due to lowered values that just don’t seem to be on the rise.  If you are selling in today’s market and wish to obtain the highest price possible, it is mandatory that you fully understand the value of your home as well as what features you offer above and beyond your current competition and more importantly what sets you apart from your recent sold comparables.   Sold comparable information is driving the market, and while it is important that we maintain fair market value it is just as crucial that we understand and educate buyers and appraisers on what exactly WE are offering.

Knowing and understanding your comps

            Any agent worth his or her weight is going to refer to sold comparables the instant a buyer has interest.  This is par for the course in terms of protecting your buyers as an agent.  However, many agents don’t fully understand each and every comp.  How could they?  We certainly can’t expect them to know the ins and outs of each recent sale in our area.  We can however educate them.  If a home similar to yours recently sold for 20% less then your anticipated sales price, it is your listing agents job to explain this to buyers as well as appraisers.  The low sale could have been a gut job flip opportunity, or could have had mold damage, or was possibly an uncared for short sale.  Without understanding these factors yourself and making them known to the buyer/appraiser you are faltering out of the gate.

Non-MLS Sales

            The MLS is without a doubt the driving force in the Residential Real Estate industry.   However, just as not all cars are sold at dealerships, many homes are sold without the help of the MLS.  While this may not be a huge “oh yea” moment for you (I’ve heard of FSBO’s before) many agents forget to do their research outside of the MLS.   If a great comp does exist that is not being factored into your appraisal or comparative market analysis you could easily be giving money away.  Be sure either your agent or yourself understand what has happened outside the MLS.  There may be nothing there, but panning for gold can be a big payoff for a bit of time.

Lot Premiums

            Some of you may have shopped for new homes in the past.  Many will remember the big Plexiglas overhead map showing available lots as well as sold properties.  It is normal and expected to pay an additional fee for a premium lot.  In some communities a water lot can sell for as high as $100,000.  In “normal” sized communities that number may be $45,000.  The point is that premium lots always have a premium cost attached to them.  While this theme may continue in resale values, it is never equivalent to builder premiums.  If you have a premium lot, either on water, or oversized, or backing zero neighbors – whatever it is, promote it!  Remember, it’s not only the house you’re selling – it’s also the property.

            Selling in this market can be demanding, but the best way to strategize is to be prepared.  Knowing and understanding TRUE MARKET VALUE for your particular home will better prepare you for success.

Tough Market? Get Creative!!

Tough Market?  Get Creative!!

            As buyers and sellers try to navigate our current Real Estate market many are found distraught by a lack of offers, or an inability to find the “perfect” house.  While this market does have it’s disadvantages to both parties, either can be successful by being more creative with their offerings and/or offers.  It never hurts to be creative and think (how cliché) out of the box.  Doing so can bring you to the finish line with your needs and wants fully in tact.

Seller Creativity

            As the economy crumbled, largely due to the Real Estate burst, many buyers in the market were left with fewer funds available for purchase.  Whether their savings, 401 or portfolio declined or their ability to finance has been reduced, these buyers just don’t have the ability to renovate or rehab a home the way they’d like.   Seller contributions are not a new trend, but being creative with these contributions can be.  A buyer will gladly finance a new kitchen, pool or roof within a 30 year mortgage rather then coming out of pocket.  If your home lacks a certain “panache” that today’s buyer desires, it may be a good idea to contribute these features either before or after closing.   The thought of taking a task like this on can be intimidating, but in this market it can and will pay off.

Buyer Creativity

            Regardless of market, buyers and many agents are scared to ask for sufficient contributions.  Feeling that the request may leave a bad taste in sellers’ mouth, most won’t even ask.  We need to remind ourselves that this is in fact a buyers market, and many sellers do understand this.  While they are all trying to achieve the highest price possible, you simply don’t know until you ask.  A contribution of closings costs, or a renovation credit may not be the norm, but are generally open to discussion in today’s market.  If you’ve found that house would be just perfect if…..  let the sellers agent know what your thinking, we are here to make the deal work, give it a go, you don’t know unless you ask.

Financing Creativity

            Lynn Whitefall of Goldstar Financial is one of the most creative mortgage brokers I know and had this to say about staying creative with financing in this market – “some creative things I use to help buyers qualify are using money that would be used for down payment to pay down credit card debt to qualify for their desired price range.   A lot of time credit card debt eats too far into the debt ratio and eliminates the purchasing power; so this allows them to qualify for more and have an overall lower monthly obligation. With Interest rates so low we can reduce the principal quickly. “

           
            Success in this market simply calls for creative thinking; don’t be afraid to do so.  Work with a team that pushes the limits and remains creative.  Staying on the forefront of people’s minds while offering them what they want is step one to success.  Break out of that box and throw some “crazy” ideas out, you never know what’s going to work until you try!

Surviving the buyers market in a sellers shoes

Surviving the buyers market in a sellers shoes

            It’s no secret that we have been in a buyers market for quite some time now.  While this can be extremely frustrating for the seller in today’s market, there are ways to prepare and triumph.  With a sound strategy in place, anyone can sell in this market; but like most things in life, it takes work, care and time.  So hike up your pants, roll up your sleeves, and let’s get that home SOLD!

Know your hold costs

            The #1 factor to be aware of in a buyers market are your monthly hold costs.  As days on market climb, your potential net descends.   As shelf life is inherently longer in a buyers market this is a factor that cannot be ignored.   When factoring in hold costs, an offer of $340,000 in your first week is greater then $350,000 6 months from list.   A $3000 monthly hold cost is a fair average for a $350,000 home.  That’s $18,000 after 6 months.  In essence, the 2^nd offer 6 months later is a relative $332,000.  If you had settled for $340,000 on the first offer you would have saved $8000!  It is imperative that you know your hold costs and factor them into all negotiations.

Get Real

            The biggest problem we face in today’s Real Estate market is the continuing effect of the bubble bursting.  While it’s unfortunate, it is, as they say, what it is.   We cannot fool ourselves into believing our homes are worth what they were in the good ‘ole days.  We HAVE to be realistic with today’s market and price accordingly.  We always want to maximize our potential dollar but pricing out of market is simply the wrong way to do so.  Understanding true market value, pricing accordingly and making your home stand out is the way to success in a buyers market. 

Market effectively and consistently

            Marketing mediums have and continue to change at a rapid pace.   A buyers market clearly carries more inventory then is standard.  Thus we need to STAND OUT from the crowd!  With so much competition around be sure to work with an agent who understands marketing to not only today’s buyers, but to your specific buyer base.  This is not the type of market where one ad in a Sunday paper is effective. There needs to be a consistent flow of effective marketing until you reach your goal.  Without it, you are going to be lost in the pack.

            We cannot control the markets we find ourselves in we can only act accordingly.  Remember that selling is possible in any market.  Make a plan, hire the right agent and your sale will be a success! 

Make sure your FLIP isn’t a FLOP

             With the market in the proverbial port-a-potty there are many opportunities available for the savvy investor.  Flipping homes has become 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 about how 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 – that you’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?

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

Your first concern is a true and realistic budget.  In these preparations I prefer to be overly conservative to better protect my investors and myself.   Your obvious first calculation needs to be your pre determined total budget.  Be fair and be realistic.  If you are lucky enough to have access to unlimited funds, don’t take the approach that “funds aren’t an issue”.  Funds are ALWAYS an issue, without a firm loyalty to the budget you set yourself up for nothing but failure.

We now need a “Flipping Itinerary”, and this is not the time to remember that episode when the HGTV crew flipped a house in under 24 hours.  Take into consideration actual sale timelines 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 best intentions in hand and will renovate in the most attractive way possible.  However, there are variables that can and probably will arise that you can’t prepare for.  The best way to prepare for the unknowns is to build in additional time.   Time is money, so calculate all hold costs and be precise.  Hold costs are a valuable piece of information as time progresses.

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

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

– Home buying 101-

Get your priorities in order!!

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

First things First

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

Patience is a Virtue

            Now that 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 when purchasing in this market – we are no longer in the “bidding war” days of homes being sold within hours.  This market is full of inventory and you need sufficient time to do your due diligence.   Give yourself 3-9 months depending on your situation to search and understand the market.  I always remind my buyers that you won’t know a great deal when you see it if you have had nothing to compare it to.  So be sure that you view enough property to really understand fair market value for your particular wants and needs.  r

Do you really need that?

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

            Keep these tips in mind, remember to stay patient and I assure you….YOUR PERSITANCE WILL PAY OFF!!

Closing on your own?

Closing on your own?

            When asked by the general public my thoughts about selling or buying on your own, I often give this exact answer – “I have no doubt that you can find a home or a buyer on your own, the doubt I have is if you can get past the closing table without professional help”.  The closing 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 on your own, there are many factors that you need to be aware of.

            The closing maze can be a long, confusing and daunting process.   You will start to hear references regarding 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 and will cause great stress if you don’t know how to handle them, especially if you don’t even know what they are!  This is certainly not the time to cross your fingers and hope for the best.

            Staying abreast of these issues is crucial if you plan to close on time, or at all.  Any one of these issues or other unknown factors can easily prolong or destroy a closing.  By gaining knowledge of the process or simply working with a professional you put yourself in a much more protected state.  A great idea is to calendar all events taking place from date of contract.  Be sure your escrowed funds are deposited in time and accounted for, that appraisal and inspection issues are handled properly and in a timely manner.  You also want proof that title is “cleared to close” prior to loading the moving truck.  Small issues in a transaction can have drastic ripple effects, it’s imperative that you keep your ducks in a row until the last page is signed and notarized.

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

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

Renovate or Depreciate?

Renovate or Depreciate?

            With the market in its current condition many homeowners are contemplating renovating their home vs. selling their home.   With equity lines quickly becoming the next word to be deleted from Webster’s dictionary, this decision is much more difficult then it was 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?

            The first question a homeowner should ask him/herself is – “what is true Fair Market Value for my home?”  This can be a daunting exercise, as it requires total honesty with your self.  As we all know, most homeowners feel their 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.

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

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