Whats This about a Housing Bubble?
May 23, 2008
In his recent testimony, Alan Greenspan warned against the possiblity that we have seen home prices plateau. The bursting of the “bubble” could cause a big hit to the U.S. economy. But, why should we worry?
Well, as we all know, house prices are up across the country…over 10% in the last year, including over 25% in some markets. Additionally, house prices have risen over 70% since 1994, more than double the increase of renting during that time period. Demand for houses is high, as interest rates have stayed low. This has created an investment market for houses.
Now, the average homeowner can use the equity in his/her home to finance the purchase of one or more additional houses. One statistic showed that 13% of houses are currently unoccupied, due to investors gobbling them up, hoping the prices will continue to skyrocket.
But can these prices last? Once the supply of houses exceeds demand, we could see a rapid drop in prices, as people look to sell their extra homes. Higher interest rates or falling prices could scare away potential buyers, creating a housing market crash.
Cant Rent a Work Zone
May 22, 2008
So you’ve picked up your first (or third, or tenth) income property, and it’s a real fixer-upper. You’ve got a great team of contractors, and you know what they need to do and how much time and money it’s going to cost to make it happen. The renovations are going to put you in the red and you’re going to need to get a tenant in there ASAP. So as soon as you have the plan worked out with the contractors you run an ad and start showing the place, right? Not if you don’t want to throw away money, you don’t!
Prospective tenants lack imagination, and this is never so evident as when you’re showing them a place that is missing walls, is covered in construction dust, badly needs a paint job, has a gutted bathroom . . . you get the idea? "Curb appeal" is a concept that refers to the attractiveness of the outside of a house. Equally important is what I call "Foyer Appeal," which is how the inside looks when you’re standing in the front door. If your curb appeal is poor (which is likely while you’re renovating, since your money is best spent on the inside problems first), half of your appointments will be no-shows because they assume the outside is representative of the inside. On the flip side, poor foyer appeal will turn off the ones that actually walk in the door. No matter how clearly you explain what work you’ve got planned, the best you’re going to get is, "I’d like to see it again when it’s finished," and you’ll be lucky if a third of them offer that level of commitment.
How to Get Started in the Real Estate Game Fixing and Flipping Houses
May 21, 2008
If you’re looking to get started investing in real estate by fixing and flipping houses, you’ll want to know what to type of property to buy. Many real estate investors make millions turning ugly houses into dollhouses. On the other hand, some inexperienced investors lose money buying houses that just don’t turn a profit.
Three Tips to Help You Find the Perfect Fixer
1. Learn Your Market
Your first task, exploring your market, helps you know a bargain house when you see one. Look at houses for sale in your area. Keep track of sales and how long the houses take to sell. Ask about the terms of these sales because this helps you understand how sellers market their property. For instance, if a seller paid closing costs for the buyer, did the price rise from the listed price accordingly? Or, did the seller come down on the price and pay the buyer’s costs, too. Examine the sales that sell quickly. What home features and financing options prompted the fast sale?
Also, look at model homes. Buyer often chose resale homes because they can’t wait for a new home to be finished. But, these buyers like the amenities found in newer homes. When you transform your fixer, you’ll know what buyers desire and you’ll make informed makeover choices.
Why Average Sale Price Statistics are Misleading
May 20, 2008
One of the most common statistics used when gauging the strength of an area’s real estate market is the average sale price of its homes, but looking into that figure more deeply reveals just how misleading it can be.
When listing a home for sale, most realtors establish a price for the home based on market comps of the area - taking into account what other houses sold for and how the home they are listing compares to those. That price is a gross sale price, however, and doesn’t reflect what the home owner actually receives from the sale. The difference between the gross sale price and the amount with which the seller actually gets to walk away from closing is affected by a number of factors.
Most people would be surprised to discover that home owners in hot U.S. real estate markets like California, Florida or Las Vegas often receive offers for their homes that actually exceed the asking price. That is because in almost all other U.S. cities, statistics suggest that a realtor usually secures an average sales price of only 92 to 95% of the listing price. In addition, a number of other costs must be subtracted from that figure as well:
We Buy Houses Scams ? How to Spot Them and How to Avoid Them
May 19, 2008
There are many reasons why a home owner would want to sell a house fast. Job change, relocation, debt problems, divorce and inheritance are just a few. Unfortunately, people in need also tend to attract predators who have no problem profiting from someone else’s misfortune.
If you’re looking to sell a house fast, here are a few scams to be on the lookout for and how to avoid becoming a victim yourself.
Equity Skimming
One of the most common types of “we buy houses” scams allows the “buyer” of the home to make off with most or all of your equity. It begins with you transferring your home’s deed to the “buyer.” The buyer may then have you make payments to him instead of the mortgage company, or he may have you move out so he can begin renting out the house.
There are several ways the buyer can then profit from this transaction. First, he receives some sort of payment every month - whether from you or from the renter. Second, he can use the equity in your home to secure home equity loans or other lines of financing. Third, he can simply resell the house without satisfying the outstanding mortgage.
How To Find a Real Estate Agent
May 19, 2008
You may be of the opinion that you don’t need a real estate agent and that using one will add to the cost of buying your new home.
The fact is that a real estate agent’s fees are typically paid by the seller of the home. So, as a buyer, you can get the services of a professional real estate agent without having to directly pay for it. Please confirm this in any paperwork or contracts that a real estate agent may provide because policies vary greatly by state and company. Be sure to ask about fees when you interview agents.
Most real estate agents may work with buyers and sellers but often they specialize in working with one or the other. Make sure the agent that you choose has experience working with buyers and with no down payment transactions.
Be careful if you are speaking with a real estate agent and they don’t seem to recognize terms like "Down Payment Assistance Program".
Start making a list of possible real estate agents to interview with referrals from your lender, friends and family.
Real Estate Investors - Red Alert
May 18, 2008
How’s the real estate marketing doing? Is the huge jump in home prices that is evident in some areas symptoms of a value bubble? Good questions, yes?
Two things to keep in mind when surveying the market:
1. All real estate is local, 2. Real estate is cyclical.
Here in Arizona some residential areas have seen as much as a 30% jump in value in the last 8 to 12 months. The word about increasing Arizona home values has spread across the country. We recently sold a home to an out of state buyer who never looked at the property. His agent is just buying homes, because the buyer is sure prices will continue to escalate.
In the case of another of our houses a buyer offered $2,000 above our asking price on the day we posted a for sale sign on the property. We were asking more than we expected to get!
At the same time we received a telephone call from a relative living in California. He was very excited because his brother-in-law was sure he would get rich by buying a couple of Arizona homes. Should her do the same, he asked?
Real Estate: The Consumers Will Have The Final Word!
May 17, 2008
"The first step toward change is awareness. The second step is acceptance". –Nathaniel Branden
Change is good for the consumer and for the real estate industry. It fuels competition and drives innovation and efficiency. Yet, the real estate industry has seen little change during the last 50 years. Indeed, other than marginally lower commissions as a result of the introduction of "discount brokerage models," the change is imperceptible.
Will the industry survive as we know it today? What will it take to thrive in the future?
Technology and changing consumer behavior will be the driving forces behind change, but not the only forces. What matters is what the consumers want — not what we think they want.
We searched for answers. We went from denial, to awareness, and finally to acceptance. The lessons were harsh but clear. We needed to listen and learn from the consumer. Here is what we learned and want to share with you.
Legislation and regulation can’t stop evolution and innovation.
Commercial Real Estate Industry - Is the Condo Craze Over, or Just Gaining Steam
May 16, 2008
Over the last two years there has been so much condo activity that many commercial real estate lenders are starting to express concern over the future stability of condo markets. Some lenders have recently found themselves over allocated in condominiums as a result of the recent activity and have therefore become wary of all but the best opportunities.
While the best opportunities (typically in Florida, Southern California and select destination markets) are still attractive, developers in smaller markets are finding condos much more difficult to finance in recent months.
The reality is that many of the lenders expressing concern over the current state of affairs in the condo market are the lenders that have been the least active and have less knowledge about the asset class. Lenders familiar with the condo market are not as concerned about the opinions of their peers, but rather with the fundamentals of the projects and sponsors they underwrite.
Projects that demonstrate that they underwrite according to the following guidelines should be able to find financing even with the caution currently being expressed by some in the lending community:
Getting Ready to Sell Your Property
May 15, 2008
We all have had the experience of someone important coming to the house and whether the visitor is an in-law, an old friend, or business associate you know the drill: Have the house in “show” condition.
For investors the situation is much the same: First impressions count!!!! Even though you may not be able to tell a book by its cover, you’ll probably pay more for a book if the cover is inviting, and attractive.
If you have a home is for sale or soon to be for sale, in addition to a general cleaning here are some steps you can take to benefit from that all-important first look:
1. Start with the outside. Mow the law, prune bushes, remove dead branches and get rid of outdoor furniture you don’t intend to move.
2. Paint the front door and window frames, or at least clean them up.
3. Check for leaks. A drip may not seem important, but does it suggest poor maintenance in those places that maybe the buyer can’t see? Eliminate buyer worries and fix the little items which may be seen as clues relating to the general condition and upkeep of the house.
