Money Making Real Estate Investing in the Modern World

Relocation: Condition and Price

2008-02-13T19:37:00.000-08:00

Would you be interested in move in condition homes with recent updates that can be purchased for sixty five to seventy five cents on the dollar? Have an agent show you some relocation company owned homes.
What does a Relocation company do and why do they own homes? Short answer; they assist transferring employees with their move. For instance, if Jane Doe has accepted a job promotion that would move her from Glencoe, IL, to Grapevine, TX her company may provide a relocation package to her. The Relocation Company will hire the Realtors, Attorneys, Home Inspectors, and other services to make Jane’s move easier. In some cases the Relocation Company will guarantee the sale of Jane’s home within a specific time period. Should it not sell they will buy it from her; this is known as “taking the buyout option”.
Since the market has cooled in recent years, relocation firms have a tremendous amount of real estate in their portfolios. These homes are pure liability. Utilities, interest, maintenance, insurance payments on hundreds of homes can be millions of dollars a year. As a result there is a lot of pressure to get them sold. The companies will typically improve condition AND lower price until it goes under contract.
This is where you the savvy real estate investor come in. Being fully approved for any finance you need is the leg up you will need. Identify the home and use your leverage, offer a quick close (maybe 10-15 days) in exchange for a lower price. Just like Foreclosures, it might take a few days to get a response, so be patient. After your offer is accepted, go forward with your property inspections. It has been my experience that unlike foreclosures, relocation companies will work with you on home inspection issues.
Are these opportunities harder to find? Yes, in fact many times the only way to know is word of mouth. Any full time agent who prides themselves on knowing the inventory should be able to readily identify these great deals for you. So get your mortgage ready, contact your Realtor and get out there before the coming spring buyers beat you to these great deals.
Next up: Short Sales

Don't you worry about me!

2008-01-20T14:16:00.000-08:00

I can see why people gasp when I tell them what I do for a living (manage a real estate office) after watching the news. Sometimes, I even sense sympathy, as if they are think, "oh you poor thing, you must need a warm coat and a bowl of soup." I am here to tell you, regardless of what the media reports people still buy and sell homes! Everyone needs a place to live.
What gets lost in the translation to the consumer is how numbers are reported in the media. They treat real estate the same way shares of stock are treated. A share of IBM is a share of IBM. A three bedroom home in Gurnee, IL, is NOT the as a three bedroom in Benbrook, TX. Sales figures that are reported almost always are NATIONAL numbers. Think abut how sales slumps in the northeast Atlantic coast states and southern California can drag down the national average.
Now I may not know what is going on in your market, but if the economic underpinnings in your neck of woods are strong, chances are real estate is doing alright. Things like local job stability, taxes, schools, and future economic development are far more important to you than the national housing figures.
To find out what is going in your market, check the websites of your local real estate brokerages. Look for sales figures. Thirty to sixty days on the market, homes selling for ninety-three percent of list price or more, and more listings selling than not are all good signs. We have been spoiled by the boom of a few years ago, homes selling in a few days for above list price, but those conditions were very unique and not likely to return any time soon.
One final thought, one interesting National fact, 2007 was the FIFTH biggest year in homes sold on record.

Oppurtunities in Real Estate

2008-01-20T14:12:00.000-08:00

The inventory of real estate for today’s home buyer is staggering. With a little insight and good advice, your dream home maybe more attainable than you know. There are four opportunities I will touch on over the next few days: Foreclosures, Relocation, Short Sales, and Stale listings.

Foreclosures
Nationally, foreclosures are on the rise, thus banks are becoming home owners more and more. This is the last thing they want. As a result they will liquidate these properties for a low price. Sounds like easy pickings, right? Well yes and no.
You will find that most homes are in need of repair and usually the list price takes this into account. This low list price brings out many investors, so a bidding war can result. When formulating a price strategy, determine what the home would sell for if the repairs were made and subtract the cost of repairs from that number, not the list price. For example: Let’s say you are considering a foreclosed home listed at $170,000 and needs an estimated $20,000 in repair and improvements to bring it up to the neighborhood norms. If the neighborhood has a recent sales history of $200,000 for homes similar to the one in question, start there. So spending $170,000 would be a good deal ($170,000 plus 20,000 equals $190,000). Too many times I see people lose good deals because in their mind the want the repair costs to come off the LIST price and get out bid by more knowledgeable investors. I remember a saying I learned in Texas, “Pigs get fed, hogs get slaughtered.”
A few other points on foreclosures; a lot of banks will not take a contract contingent on the sale of another home. Be patient, it may take the bank days, even weeks to respond to your offer. Remember you may be dealing with layers of corporate America. Get a home inspection done, but don’t expect much in the way of repairs or credit in lieu of repairs. Finally, if you are borrowing money to buy a foreclosure, be prepared to show a true pre-approval, or even be pre-approved by the bank selling the foreclosure.
Get a Buyer’s agent to assist you. You will not get a better deal without one. In fact, many HUD foreclosures require you to have an agent qualified by HUD submit your bid. Look for a Realtor who knows the area and has experience with HUD and other bank owned homes. If their office takes a lot of bank listings, even better. Full time realtors typically know about upcoming office listings before they go on the market. That should give you an advantage over the others scouring for deals without a full time agent.

To sum it all up, bank owned real estate can be lucrative, but get good advice and listen to it. Be reasonable in your expectations and you will be rewarded.

Next up: Relo Homes

Return to Normalcy

2008-01-20T14:06:00.000-08:00

Welcome back normal real estate market rules. Like it or not, the forces that defined real estate prior to the boom are back in effect. Sure technology has made communication easier and faster, but it is still a business of human to human contact and pricing is still more of an art than science.
No longer can owners add five percent to the last sale, stick a sign in the ground and wait for the multiple offers to roll in. If there were a good blanket rule, you need to be as close to the middle of the pack or lower to have the best shot. Another important strategy to consider is pay attention to how search engines address price. When possible, price it so it comes in multiple price searches. For instance Realtor.com has preset price of $125,000. Pricing your home at 126,000 means anyone looking at homes for $125,000 or less will not find it. Trying $125,000 means that you will be seen by both consumers looking above and below. Also, being close to the starting point means your home pops up earlier in the list.
Not only must the price be right, but condition and function must also be spot on. Fresh neutral paint, clean, odor free, and in good order are critical. Do you have pets? Chances are non pet owners will smell them, take steps to minimize this. Think before you make your favorite curry fish dinner. Although it sounds divine, the lingering odor will drive your buyers out in droves. Have all the appliances and systems checked over by a professional. Keep the receipts for all the improvements and inspections out for your potential buyers to see. They will be impressed with how diligent you are as a homeowner and help justify your price.

People often ask me if putting in another bathroom or other addition makes sense as far as helping to sell their home. It comes down to what features are the expected norm in your market. If most of the homes in your neighborhood have two and a half bathrooms and your home has only one, it might make sense to look into a bath addition. Realtors have access to Return on Investment reports for you area. Ask for one before entering into any home improvements.

That is my bit for now. Next time, good stuff for buyers. I would to hear from you, let me know what you think, and hear your stories. You know where to find me. Or go to www.JPMackey.com.