Editor's Note-Good marketing tip from Jim Mazziotti of Exit Realty in Bend, Oregon
Fellow Realtors....I need your help. You see, I am a Principal Broker and Owner of a real estate company in Bend, Oregon. I am constantly working for my clients to make sure that their listing with me receives the very best EXPOSURE possible. I use the traditional methods to "get the word out" on every one of my listings....and the one I value the most is the very one who is actually working hard to STOP ME from informing more than 1000 local Realtors directly by email that I have a new listing!
Let me set this up for you. I am a member of our local Board of Realtors and a part of the MLS. Our MLS, like yours, has a website ( http://www.centraloregonrealtors.com/) that provides services for each member Realtor (ours uses Rappatoni). So, when I list a property it appears on the MLS.... and for the Realtors each new listing shows up in a new listing section of the MLS site and on a hotsheets section as well.
Get the picture?
Read more...
Sunday, April 29, 2007
Do You Work With Real Estate Investors or Real Estate Speculators?
I was reading the Active Rain Real Estate Network, like I often do and happened to read the Marketing REO Properties... Why Bother?! post from an agent out of Wichita, Kansas. The author basically stated that she marketed REO properties the same way as a regular listing and had found success. It was generally a good post.
The comments though were another story.
Phyllis Mathouser out of Exterer, New Hampshire wrote:
and Rudy Baker out of Burlington, North Carolina replied:
So you have one agent saying that buyers "look down" on REO's and low offer the banks which she is sure they would not do to "regular" sellers. But the icing on the cake comes from Rudy Baker who says its "perfectly proper to laugh" at the other agent when the offer comes in too low. Way to build up your network there Rudy!
I'm sorry for sounding a bit angry, but in my nearly ten years of working as a real estate investor, I have not found many agents who truly understand how to work with real estate investors. A real estate investor needs to take many variables into consideration when making an offer.
The comments though were another story.
Phyllis Mathouser out of Exterer, New Hampshire wrote:
I have my first REO listing and although I treat it just like my other listings, I find the attitude of other agents and buyers is different. They look "down" at it and one buyer actually hit the bank with an offer more than $100,000 under asking price. The listing price was where it should be for the location, condition etc. I am sure they wouldn't have done this to the "regular" seller.
and Rudy Baker out of Burlington, North Carolina replied:
It is perfectly proper to laugh at the other agent when they present offers like that. All I can say is welcome to our world. I don't get a lot of that....anymore. I flat out ask the other agent if they really think that that offer should be taken seriously and thank them for wasting my time. I have found out that cuts a whole lot of it. There really is a lack of education for and by buyers agents and the new buyers to foreclosures. Shows like flip this house and all really have hurt our industry and I think they will continue to feed the foreclosure rate... I have been seeing a rash of foreclosed homes that have come back on again as foreclosures....with remodel work started, obviously a flip gone wrong. People hear foreclosure and they assume steal. I have found the prices actually going up and the margin (read market value discount) going down. The bottom line is there are so many the lenders are not willing to take as much of a loss. Please let me know if I am wrong here.... This is a trend that I have seen in my market and I am interested to know if there are other regions affected as mine is. We are at 25% here (1 out of 4...scary)
So you have one agent saying that buyers "look down" on REO's and low offer the banks which she is sure they would not do to "regular" sellers. But the icing on the cake comes from Rudy Baker who says its "perfectly proper to laugh" at the other agent when the offer comes in too low. Way to build up your network there Rudy!
I'm sorry for sounding a bit angry, but in my nearly ten years of working as a real estate investor, I have not found many agents who truly understand how to work with real estate investors. A real estate investor needs to take many variables into consideration when making an offer.
- How many months am I going to have to hold this property before I sell it?
- What will my return on my investmentgoing to be?
- How can I guard against any downturn in the market?
- What will my selling costs be?
- Will the buyer ask for any concessions?
- What are my financing costs going to be?
- Do I have to remodel the property and if so how much is that going to cost me?
This list grows depending on the investment criteria of the investor. Real estate agents must realize that an investor is taking a risk. There are countless of speculators who take the leap without looking and fail miserably.
People who invest in stocks and mutual funds get a myriad of prospectuses and disclosures to help them make a wise decision. What do real estate investors get?
Oh wait, I know. Real estate investors and their agents get laughed at and "thanked for wasting" the listing agent's time.
And by the way, Rudy Baker states in his Active Rain profile that he likes to "work with first time homebuyers, investors etc."
Sorry to break the news to you Rudy, but you like to work with speculators not investors. I'm sure one of your "investors" is in here somewhere.
Friday, April 27, 2007
Why Every Agent Should Be Like Mike
The true measure of a great real estate agent comes not from how many sales he closes, but from how many he doesn't. Now before the you-know-what hits the proverbial fan let me explain.
I have been contemplating investing in my backyard for sometime now. The area is fairly new and there is an abundance of inventory. As a matter of fact there are plenty of homes that have been listed for more than 100 days. Though I have been investing since 1998, I have never invested in a down market and I figured this would be a great opportunity to get my feet wet.
After browsing through several MLS's, I found a great property that had been taken back by the lender. It needed minor cosmetic work and I ran the numbers and called my agent to discuss. Being an investor himself, he asked me what my goal was for this particular property.
So I told him.
(Insert Benny Hill theme music here)
My goal was to buy using a hard money loan. There would be no payments for the first 6 months, so if purchased correctly, all holding costs and selling costs would be absorbed by the loan. My offer was to be nearly 37% below asking price. I would then do the minor cosmetic work and put it back on the market at a bargain price.
I was already counting the money, when my plan was stopped in its tracks. My agent Mike, who has specialized in REO, since the 1980's, uttered two simple words,
"Be patient."
He shared with me information on the market forecast for my particular area, which is predicted to be hit hard. (Heck, I've already seen evidence of that right next door.) He adviced to hold off on flipping for now and concentrate on cash-flow whether it be from lease-options or buying under market.He had seen this type of market in Texas before and now was not the time to make quick decisions.
Great advice from a great agent.
This is the type of agent you should strive to become. Don't look for the quick commission. Become a trusted advisor and as your investor clients flourish, so will you.
(Insert Benny Hill theme music again and this time turn it up loud)
And by the way, I forgot to mention that Mike called the listing agent on the property anyway and was informed that the bank had turned down an offer that came in $10,000 under listing price. In this market, that's crazy.
Happy selling.
I have been contemplating investing in my backyard for sometime now. The area is fairly new and there is an abundance of inventory. As a matter of fact there are plenty of homes that have been listed for more than 100 days. Though I have been investing since 1998, I have never invested in a down market and I figured this would be a great opportunity to get my feet wet.
After browsing through several MLS's, I found a great property that had been taken back by the lender. It needed minor cosmetic work and I ran the numbers and called my agent to discuss. Being an investor himself, he asked me what my goal was for this particular property.
So I told him.
(Insert Benny Hill theme music here)
My goal was to buy using a hard money loan. There would be no payments for the first 6 months, so if purchased correctly, all holding costs and selling costs would be absorbed by the loan. My offer was to be nearly 37% below asking price. I would then do the minor cosmetic work and put it back on the market at a bargain price.
I was already counting the money, when my plan was stopped in its tracks. My agent Mike, who has specialized in REO, since the 1980's, uttered two simple words,
"Be patient."
He shared with me information on the market forecast for my particular area, which is predicted to be hit hard. (Heck, I've already seen evidence of that right next door.) He adviced to hold off on flipping for now and concentrate on cash-flow whether it be from lease-options or buying under market.He had seen this type of market in Texas before and now was not the time to make quick decisions.
Great advice from a great agent.
This is the type of agent you should strive to become. Don't look for the quick commission. Become a trusted advisor and as your investor clients flourish, so will you.
(Insert Benny Hill theme music again and this time turn it up loud)
And by the way, I forgot to mention that Mike called the listing agent on the property anyway and was informed that the bank had turned down an offer that came in $10,000 under listing price. In this market, that's crazy.
Happy selling.
Thursday, April 26, 2007
Take A Ride on The Real Estate Roller Coaster
The guys over at Speculative Bubble have created a virtual roller coaster of the road we have taken in house prices. The prices are adjusted for inflation.
It's worth hanging on until the end to realize just how big a drop the market can take. This graph here is even more telling.
Good Work!
It's worth hanging on until the end to realize just how big a drop the market can take. This graph here is even more telling.
Good Work!
Marketing Tip-Do You Know What Your Prospect to Customer Ratio Is?
How Many Prospects Does It Take To Generate One New Client?
Every real estate agent or any business for that matter has a conversion ratio. The conversion ratio refers to the percentage of prospects who become your customers.
If your marketing skills are astronomical you may have a 2:1 ratio. (In other words it takes two prospects to generate one new customer) Or you may have a 50:1 or even a 500:1 ratio.
It's hard to predict what your specific ratio will be, since the ratio depends on many variables such as:
Even though it's difficult to predict what your prospect to customer ratio should be, that doesn’t mean that you should be in the dark as to what your ratio is.
Why is this important?
Well once you know what your ratio is, you can pretty much predict how much business you are going to bring in. Once you are able to forecast your sales then only one question remains.
“Can you improve your prospect to customer ratio?”
If the answer is yes, then what are you waiting for?
Happy selling.
Every real estate agent or any business for that matter has a conversion ratio. The conversion ratio refers to the percentage of prospects who become your customers.
If your marketing skills are astronomical you may have a 2:1 ratio. (In other words it takes two prospects to generate one new customer) Or you may have a 50:1 or even a 500:1 ratio.
It's hard to predict what your specific ratio will be, since the ratio depends on many variables such as:
- The number of competitors
- Your local housing market
- Your experience
- Your marketing budget
Even though it's difficult to predict what your prospect to customer ratio should be, that doesn’t mean that you should be in the dark as to what your ratio is.
Why is this important?
Well once you know what your ratio is, you can pretty much predict how much business you are going to bring in. Once you are able to forecast your sales then only one question remains.
“Can you improve your prospect to customer ratio?”
If the answer is yes, then what are you waiting for?
Happy selling.
Wednesday, April 25, 2007
After Spending Big to Strike It Rich, Some Speculators Coming Up Broke as Market Cools
Editor's Note: I wrote about Casey Serin a few weeks ago. His story is not uncommon among real estate speculators. Learn from it and steer your clients away from making the wrong decision.
Sacramento, Calif., not far from where prospectors sought quick riches in the gold rush more than a century ago, another speculative boom is going bust. This time, however, it's not the lure of precious metals — it's real estate.
"The market was hot, and I decided to give it a shot," said Casey Serin, a modern-day speculator who hoped to strike it rich quick by buying homes, fixing them up and then flipping them for a profit.
Read more...
Sacramento, Calif., not far from where prospectors sought quick riches in the gold rush more than a century ago, another speculative boom is going bust. This time, however, it's not the lure of precious metals — it's real estate.
"The market was hot, and I decided to give it a shot," said Casey Serin, a modern-day speculator who hoped to strike it rich quick by buying homes, fixing them up and then flipping them for a profit.
Read more...
Targeting 100 Plus Market-Part 2
Editor's Note-I promised this article on Sunday, but things have been a bit hectic.
According to Zip Realty, there are over 668 homes for sale in my zip code. Out of those 688, Redfin says there are roughly 100 that have been listed for over 100 days. Things aren't moving as fast as they used to. My next door neighbor who has listed his home for over 100 days, has just dropped the price from $599,000 to $500,000. They want to move out of state and they are desperate to sell.
Things are getting bad around here.
Some of the bubble guys are claiming that all hell is going to break loose. They claim that home prices are going to drop nearly 40% in some areas. And they may be right. Making money in real estate when home prices are going up is easy. I did it for nearly ten years now. In those ten years, I think I learned a thing or two.
The real test starts now.
Targeting the REO's
The key here is positioning. My offers are going to be substantially lower that what the listing price may show. The reasons are many, but my offer will have to take into consideration, holding costs,selling costs, days-on-market, price-to-rent ratios, plus my profit. Granted some will get turned down, but the bank's loss can not become my loss as well.
Targeting the Lease Option Market
Among the "100 Club" listings there are some with low loan-to-value. I don't want to market to those with large loans, because I will be certain to fail if I do. Currently homes are leasing anywhere from $2000-$2400 per month. It would be asinine of me to think that I can option a home for $4000 a month and then turn around go a lease it for more than that.
The median income in my area is roughly $70,000 and $2000 is just about the range that the rental market will support. I also need to guard against a severe market reduction in home prices. If I option a property for $500,000 and then a year later when I choose to exercise the option, the home is only worth $450,000, then what have I accomplished?
Nothing.
Not only do I set up my buyer for failure, but I also ruin a potential great relationship with real estate agent.
Targeting the Realtors
Though my goal is to keep investing in this down market, my ultimate goal is to build a network of real estate agents who will feed me quality leads. About 95% of all real estate transactions go through real estate agents, so it makes sense to go where the big fish are. The biggest hurdle I have to overcome is to train them to think like I do. They will have to understand that most transactions will not meet my investment criteria. That will be the easy part. The hard part will be to find quality real estate agents who know how to position my offers and have strong negotiation skill. Unlike most sellers, I have no problem paying 6% to 7% commission, but the only way I could do that is to get a great deal on the buying end.
According to Zip Realty, there are over 668 homes for sale in my zip code. Out of those 688, Redfin says there are roughly 100 that have been listed for over 100 days. Things aren't moving as fast as they used to. My next door neighbor who has listed his home for over 100 days, has just dropped the price from $599,000 to $500,000. They want to move out of state and they are desperate to sell.
Things are getting bad around here.
Some of the bubble guys are claiming that all hell is going to break loose. They claim that home prices are going to drop nearly 40% in some areas. And they may be right. Making money in real estate when home prices are going up is easy. I did it for nearly ten years now. In those ten years, I think I learned a thing or two.
The real test starts now.
Targeting the REO's
The key here is positioning. My offers are going to be substantially lower that what the listing price may show. The reasons are many, but my offer will have to take into consideration, holding costs,selling costs, days-on-market, price-to-rent ratios, plus my profit. Granted some will get turned down, but the bank's loss can not become my loss as well.
Targeting the Lease Option Market
Among the "100 Club" listings there are some with low loan-to-value. I don't want to market to those with large loans, because I will be certain to fail if I do. Currently homes are leasing anywhere from $2000-$2400 per month. It would be asinine of me to think that I can option a home for $4000 a month and then turn around go a lease it for more than that.
The median income in my area is roughly $70,000 and $2000 is just about the range that the rental market will support. I also need to guard against a severe market reduction in home prices. If I option a property for $500,000 and then a year later when I choose to exercise the option, the home is only worth $450,000, then what have I accomplished?
Nothing.
Not only do I set up my buyer for failure, but I also ruin a potential great relationship with real estate agent.
Targeting the Realtors
Though my goal is to keep investing in this down market, my ultimate goal is to build a network of real estate agents who will feed me quality leads. About 95% of all real estate transactions go through real estate agents, so it makes sense to go where the big fish are. The biggest hurdle I have to overcome is to train them to think like I do. They will have to understand that most transactions will not meet my investment criteria. That will be the easy part. The hard part will be to find quality real estate agents who know how to position my offers and have strong negotiation skill. Unlike most sellers, I have no problem paying 6% to 7% commission, but the only way I could do that is to get a great deal on the buying end.
The Dow Jones Breaks All Records and It's Time For Real Estate Agents to Celebrate
Today the Dow Jones industrial average rose past 13,000 for the first time in its history and now its time to celebrate.
Why?
Think about it. All the real estate speculators who migrated to real estate after the last bear market are now going to begin to speculate on stocks rather than real estate. The herd has just thinned itself out.
I know you may lose some clients, but you would have lost them anyway. If they were speculators rather than investors, then they are more than likely losing their shirts right about now.
Now you will have more time to cultivate a quality investor client list that will keep your income steady in this "down" market.
Happy selling.
Why?
Think about it. All the real estate speculators who migrated to real estate after the last bear market are now going to begin to speculate on stocks rather than real estate. The herd has just thinned itself out.
I know you may lose some clients, but you would have lost them anyway. If they were speculators rather than investors, then they are more than likely losing their shirts right about now.
Now you will have more time to cultivate a quality investor client list that will keep your income steady in this "down" market.
Happy selling.
Sunday, April 22, 2007
Targeting the 100 Plus Market
I've never invested in a down market. I was lucky enough to began my real estate ventures nearly 10 years ago. I was in my late 20's and I purchased a 2 bedroom with 2 full bathrooms in Long Beach California. The condo was a REO property and I picked it up for a measly $60,000. Long Beach was just starting to come out of the real estate crash of the early 90's and I was a naive young investor. That same condo would be listed for nearly $300,000 today.
Little did I know that within a year the market was going to explode. I took advantage of the appreciating marketplace and made a killing. Any mistakes that I made were covered by the market. Come to think of it, I never really lost any money.
Well that was then and this is now. A day doesn't seem to go by where there is an article written about the how bad things are getting in the real estate market. There are even blogs written about the struggles of real estate speculators and even the agents themselves. I'm not sure if the authors of these types of blogs are investors or agents, but they get a kick out the mistakes that these people have made.
I refuse to add fuel to their fire.
I know that in this type of market I cannot afford to speculate. I cannot afford to even consider that any home that I purchase will even appreciate. I have to purchase "correctly", so any potential down-shift in the market will be absorbed. There is even talk on some of these bubble blogs that the bottom will not be hit until 2009!
I can't afford to wait that long. I have been sitting in the sidelines being a landlord for almost two years and it's time to make a move. I have two goals this year. The first one is to double my real estate cashflow to $3000 per month. The second one is to pay off my home equity line of credit. (The line of credit is not a large amount, I just hate owing it.)
So what does that have to do with targeting the 100 plus market? Well alot and it's not targeting people over the age of 100 if that's what you think. Get real, how many of them are out there any way?
There are agents out there who have listings in my area that have been sitting on the market for over 100 days. There are 98 of them to be accurate. They are competing with 300 other homes who have in on the market less that 100 days and they are competing with the countless of new developments as well.
Don't you think that among those 98 there could be a potential deal perhaps?
Tune in tommorrow and I'll tell you my plan of attack.
Little did I know that within a year the market was going to explode. I took advantage of the appreciating marketplace and made a killing. Any mistakes that I made were covered by the market. Come to think of it, I never really lost any money.
Well that was then and this is now. A day doesn't seem to go by where there is an article written about the how bad things are getting in the real estate market. There are even blogs written about the struggles of real estate speculators and even the agents themselves. I'm not sure if the authors of these types of blogs are investors or agents, but they get a kick out the mistakes that these people have made.
I refuse to add fuel to their fire.
I know that in this type of market I cannot afford to speculate. I cannot afford to even consider that any home that I purchase will even appreciate. I have to purchase "correctly", so any potential down-shift in the market will be absorbed. There is even talk on some of these bubble blogs that the bottom will not be hit until 2009!
I can't afford to wait that long. I have been sitting in the sidelines being a landlord for almost two years and it's time to make a move. I have two goals this year. The first one is to double my real estate cashflow to $3000 per month. The second one is to pay off my home equity line of credit. (The line of credit is not a large amount, I just hate owing it.)
So what does that have to do with targeting the 100 plus market? Well alot and it's not targeting people over the age of 100 if that's what you think. Get real, how many of them are out there any way?
There are agents out there who have listings in my area that have been sitting on the market for over 100 days. There are 98 of them to be accurate. They are competing with 300 other homes who have in on the market less that 100 days and they are competing with the countless of new developments as well.
Don't you think that among those 98 there could be a potential deal perhaps?
Tune in tommorrow and I'll tell you my plan of attack.
The Housing Bubble Blog-We Have To Pay The Price For The Great Gains
The Press Enterprise reports from California. “Inland home foreclosures this year have increased more than ninefold over the same period a year ago, driven by flat appreciation and sagging home sales. Ana Ibarra and her husband, Guillermo Macias, adore their five-bedroom house in a new tract of executive-style homes in north Fontana.”
“But Ibarra said the couple doesn’t have enough money to furnish the house. Ibarra said she and Macias, a 30-year-old commercial plumber, together earn about $5,400 a month after taxes. Since moving into their new house in December, they have spent $4,000 a month of that on the house’s interest-only mortgage, property taxes and homeowner insurance.”
“They have wiped out their savings. What’s more, they are responsible for a $2,000-a-month mortgage payment on another house they own in south Fontana. They rent that three-bedroom house.”
Read more...
“But Ibarra said the couple doesn’t have enough money to furnish the house. Ibarra said she and Macias, a 30-year-old commercial plumber, together earn about $5,400 a month after taxes. Since moving into their new house in December, they have spent $4,000 a month of that on the house’s interest-only mortgage, property taxes and homeowner insurance.”
“They have wiped out their savings. What’s more, they are responsible for a $2,000-a-month mortgage payment on another house they own in south Fontana. They rent that three-bedroom house.”
Read more...
Saturday, April 21, 2007
Broker Agent News-The Sub-Prime Crisis and How it Affects You - Part One
Have you seen the headlines? Top national news story a few week's ago:
New Century Financial Corp., the second largest sub-prime mortgage lender, is broke. They can't pay the creditors who are demanding money and rumor is that we'll be hearing about bankruptcy soon. Even the New York Stock Exchange has suspended trading for the company, once a giant among lenders.
It finally happened.
The sub-prime market was being pushed to its edge for months - by lenders with unethical predatory tactics - and now it's getting ready to collapse in on itself. These predatory tactics included ridiculous mortgage programs being offered to consumers who literally cannot afford them.
Read more...
New Century Financial Corp., the second largest sub-prime mortgage lender, is broke. They can't pay the creditors who are demanding money and rumor is that we'll be hearing about bankruptcy soon. Even the New York Stock Exchange has suspended trading for the company, once a giant among lenders.
It finally happened.
The sub-prime market was being pushed to its edge for months - by lenders with unethical predatory tactics - and now it's getting ready to collapse in on itself. These predatory tactics included ridiculous mortgage programs being offered to consumers who literally cannot afford them.
Read more...
Branding is for McDonald's Not For Agents
Branding is for McDonald's Not For Agents
Most agents have a limited marketing budget and must maximize every marketing dollar to ensure that every dollar you spent will bring back more money in return.
The "What is Your Brand" article over at Realty Times seems to think differently. The author states that "we must spend our time and money developing and maintaining" your brand just like the masters Nike and McDonald's.
This is just plain wrong.
Most agents have a limited marketing budget and must maximize every marketing dollar to ensure that every dollar you spent will bring back more money in return.
The "What is Your Brand" article over at Realty Times seems to think differently. The author states that "we must spend our time and money developing and maintaining" your brand just like the masters Nike and McDonald's.
This is just plain wrong.
Nike and McDonald's have millions of dollars set aside for marketing and most real estate agents don't. While making people aware of your name is nice, you have to expect more from your marketing efforts. You want your phone to ring. You want to get e-mails from prospects. You want get listings.
Branding alone is not enough.
If you are skeptical about this point, just ask yourself how many real estate ads you can remember. What about the agent's name, do you remember that? I can't remember a single one. Sure I can remember the company names such as Century 21 and Coldwell Banker, but what good does that do you as an agent?
It is possible to build "awareness", but at a much smaller and much profitable scale. You simply have to focus your marketing on people that can actually help you grow your business. Your goal is not get every man, woman, and child in your farm area to know your name. Frankly you can't afford it. Instead focus on niches as I've stated before here, here, and here.
How do you do this? Ok here is a quick and dirty marketing plan.
- Identify your prospects-These prospects must have a problem that you can solve. There must be enough of these people who can afford your service in order for you to be successful
- Have an Offer-Must be specifically targeted at your prospects so they know it's for them and must be an offer "they can't refuse".
- Call to action- Tell them what they need to do to contact you. Make it easy and give them more than one way to get a hold of you.
- Have A Consistent Message-Whether you decide to hold a presentation, or direct mail or build a website. Each method of delivery or "vehicle" must clearly focus on your offer.
Friday, April 20, 2007
Don't Let Your Clients Fall Prey to the Gurus
You just never know what you find on the Internet. And in the case of this article by Dominate Preforeclosures , the stuff you find is basically worthless.
For instance the author claims that he made over $50,000 dollars in five weeks by buying a home from a couple who was in financial trouble. After negotiating to buy the home for $145,000, the author was able to secure a loan from a private lender for $175,000. After rehabbing the property, he was able to sell it in two days for $230,000 without a real estate agent. According to the author, he received a check for $51,515.69 at closing.
Is a deal like this possible? Perhaps. Did it actually happen? Not likely.
Here are the clues I found which have convinced me this story is a false one. And agents take down notes so you know what to tell your clients who may fall for stories like the one above.
Clue # 1- The Math is All Wrong
Before he "flipped" the home, the author claims he obtained a loan from a private lender for $175,000 based on the home's "real market value". The private lender will more than likely have been a hard money lender, unless this guy has a rich uncle. So if the home was worth $230,000 after he rehabbed and he obtained a loan for $175,000, he is looking at a loan to value of 76%. I hate to break it to this guy, but most hard money lenders only lend up to 65% of the after rehab value. And to top it all of the points they charge can be anywhere from 7% to 12% of the loan.
Let's give him the benefit of the doubt that he does get a hard money loan at 76% LTV. That means he would have to pay up to $21,000 on points alone. Did I forget to add the 14% interest rate most hard money lenders charge? How about the six months in pre-paid taxes to the county? How about the mortgage payments? How about any transaction costs?
If this guy is leaving all those costs out, who know what else he is leaving out. Without knowing most of the details of this supposed transaction his "profit" is already slashed nearly in half.
Clue # 2- The Time line is Too Short
The author states that "he went to bat for the couple" and negotiated with the bank to release the lien on the house for less than what the couple owed. This is what's known as a short sale. This process typically takes weeks from beginning to end. So the author is expecting to believe that he was able to negotiate the short sale with the bank, rehab the house and then sell the house all in a matter of five weeks? A short sale is a difficult transaction for even experienced investors, not too mention for newbie investors. For all you agents that specialize in short sales, you know what I am talking about.
Clue # 3- Too Good To Be True
I visited the website of the author and found the the sales pitch was just to good to be true. There were no real pitfalls mentioned. He is pitching investing in pre-foreclosures by the use of short sales. As I mentioned above, short sales are not for the faint-of-heart and should really be left to seasoned professional. I also noticed that the author posts a copy of a check from a title company in Helena, Montana. I did a quick search on Realty Times and found that the market in Helena is still a seller's market, so ask yourself why the sellers gave up over $80,000 worth of equity if the market was on their side. In addition why would the bank discount so much as well if the market was on their side as well? It doesn't make sense.
Advice your clients to use common sense whenever they read anything on real estate investing. Sometimes it's easy to catch a B.S. artist, but sometimes it's not. Help guide them in their investing ventures which not only helps them, but also helps you build a steady income.
Happy selling.
For instance the author claims that he made over $50,000 dollars in five weeks by buying a home from a couple who was in financial trouble. After negotiating to buy the home for $145,000, the author was able to secure a loan from a private lender for $175,000. After rehabbing the property, he was able to sell it in two days for $230,000 without a real estate agent. According to the author, he received a check for $51,515.69 at closing.
Is a deal like this possible? Perhaps. Did it actually happen? Not likely.
Here are the clues I found which have convinced me this story is a false one. And agents take down notes so you know what to tell your clients who may fall for stories like the one above.
Clue # 1- The Math is All Wrong
Before he "flipped" the home, the author claims he obtained a loan from a private lender for $175,000 based on the home's "real market value". The private lender will more than likely have been a hard money lender, unless this guy has a rich uncle. So if the home was worth $230,000 after he rehabbed and he obtained a loan for $175,000, he is looking at a loan to value of 76%. I hate to break it to this guy, but most hard money lenders only lend up to 65% of the after rehab value. And to top it all of the points they charge can be anywhere from 7% to 12% of the loan.
Let's give him the benefit of the doubt that he does get a hard money loan at 76% LTV. That means he would have to pay up to $21,000 on points alone. Did I forget to add the 14% interest rate most hard money lenders charge? How about the six months in pre-paid taxes to the county? How about the mortgage payments? How about any transaction costs?
If this guy is leaving all those costs out, who know what else he is leaving out. Without knowing most of the details of this supposed transaction his "profit" is already slashed nearly in half.
Clue # 2- The Time line is Too Short
The author states that "he went to bat for the couple" and negotiated with the bank to release the lien on the house for less than what the couple owed. This is what's known as a short sale. This process typically takes weeks from beginning to end. So the author is expecting to believe that he was able to negotiate the short sale with the bank, rehab the house and then sell the house all in a matter of five weeks? A short sale is a difficult transaction for even experienced investors, not too mention for newbie investors. For all you agents that specialize in short sales, you know what I am talking about.
Clue # 3- Too Good To Be True
I visited the website of the author and found the the sales pitch was just to good to be true. There were no real pitfalls mentioned. He is pitching investing in pre-foreclosures by the use of short sales. As I mentioned above, short sales are not for the faint-of-heart and should really be left to seasoned professional. I also noticed that the author posts a copy of a check from a title company in Helena, Montana. I did a quick search on Realty Times and found that the market in Helena is still a seller's market, so ask yourself why the sellers gave up over $80,000 worth of equity if the market was on their side. In addition why would the bank discount so much as well if the market was on their side as well? It doesn't make sense.
Advice your clients to use common sense whenever they read anything on real estate investing. Sometimes it's easy to catch a B.S. artist, but sometimes it's not. Help guide them in their investing ventures which not only helps them, but also helps you build a steady income.
Happy selling.
Tuesday, April 17, 2007
Buyer's Market Strategy for the California Foreclosure Market
Mortgage lenders filed 46,760 notices of default from January through March, marking an increase of 23.1 percent from the previous quarter and 148 percent from the year-earlier period, according to a report by DataQuick Information Systems, a real estate information service.
As I read this article from CNN Money, I started thinking about something that I read over a year ago in Ward Hannigan's Foreclosure Forum website. Ward give tips on how to invest in foreclosures during a buyer's market. And please don't confuse Ward with your run-of-the mill real estate guru. He is a non-sense investor out of San Diego, California. His knowledge on the California foreclosure market is extensive. He even references the different California Foreclosure Codes to warn would be investors about what not to do.
Go ahead and visit his site. You'll be glad you did and your investor clientele will be much better for it.
Wrong Ways to Invest in Real Estate
With real estate showing signs of a rebound, investing in real property becomes more popular.
Like any other endeavor, there's a right way and a wrong way to go about it.
Here's a look at seven lethal missteps investors often take:
1. Planning as you go. Andy Heller, co-author of "Buy Even Lower: The Regular People's Guide to Real Estate Riches," says the lack of a plan is the biggest mistake he sees new investors make. Buying a house and then figuring out what to do with it is working backward, Heller says. Doug Crowe, a Chicago-based real estate investor, says the best way to solve the problem is to have lots of activity and make offers on multiple properties. You must also have multiple exit strategies. Some investors buy a property with the intention of selling it or renting it out. What if it doesn't sell? What if the rental market stalls? If Plan A is to rehab the house and then sell it, Plan B could be to offer it as a lease-purchase. Plan C might be to rent it out and Plan D could involve selling to another investor at a below-market price.
2. Thinking "get rich quick." That kind of thinking is fueled by "self-appointed gurus on infomercials who make it sound easy to get rich in real estate," says Eric Tyson, co-author of "Real Estate Investing for Dummies." "These gurus don't talk about all that hard work. You have to be smart, you have to be willing to work, and you have to understand your risk tolerance."
Read more...
Like any other endeavor, there's a right way and a wrong way to go about it.
Here's a look at seven lethal missteps investors often take:
1. Planning as you go. Andy Heller, co-author of "Buy Even Lower: The Regular People's Guide to Real Estate Riches," says the lack of a plan is the biggest mistake he sees new investors make. Buying a house and then figuring out what to do with it is working backward, Heller says. Doug Crowe, a Chicago-based real estate investor, says the best way to solve the problem is to have lots of activity and make offers on multiple properties. You must also have multiple exit strategies. Some investors buy a property with the intention of selling it or renting it out. What if it doesn't sell? What if the rental market stalls? If Plan A is to rehab the house and then sell it, Plan B could be to offer it as a lease-purchase. Plan C might be to rent it out and Plan D could involve selling to another investor at a below-market price.
2. Thinking "get rich quick." That kind of thinking is fueled by "self-appointed gurus on infomercials who make it sound easy to get rich in real estate," says Eric Tyson, co-author of "Real Estate Investing for Dummies." "These gurus don't talk about all that hard work. You have to be smart, you have to be willing to work, and you have to understand your risk tolerance."
Read more...
Dr. Housing Bubble.com-The Four Horsemen of the Housing Apocalypse
Yes, the title is rather dramatic but we will see some major shifts in housing this year. The cracks are already forming and it is only a matter of time that things are forced to adjust. The Fed, bankers, lenders, realtors, and all those involved in the housing syndicate are not going to shake this thing up so it will have to be an outside force.
Read more...
Read more...
BiggerPockets.com-Looking to Advertise Real Estate Effectively? Stop Being Like Everyone Else. Be Different!
Doesn’t it seem like every realtor has the same website design, the same blog content, the same business cards . . . basically, the same everything?
Doesn’t it seem like all the real estate investors are spinning their wheels with the same marketing, same bandit signs, etc . . . ?
You get the point!
Read more...
Doesn’t it seem like all the real estate investors are spinning their wheels with the same marketing, same bandit signs, etc . . . ?
You get the point!
Read more...
Monday, April 16, 2007
The Number of Real Estate Agents is Shrinking: Will You Be Among the Those Who Quit?
According to Inman News, the membership in the National Association of Realtors will drop after nine consecutive years of growth. Some of the industry welcome the news since they feel that fewer agents is better for the industry.
Glenn Dorfman the COO of the Minnesota Association of Realtors told members that the field was overcrowded.
Glenn Dorfman the COO of the Minnesota Association of Realtors told members that the field was overcrowded.
"When the number of agents chasing transactions outnumbers the available resources two things happen: the price of the service falls as people discount rates to get the business; the quality of the service delivered to the consumer is reduced. We're not telling you to quit the industry, but if you are thinking the market will spring back to the levels of the recent past, it probably won't anytime soon," and "perhaps it is time to take a minute, review your business plan and determine if real estate is where your talents are best served"
Will you be among those that decide to pack it in?
You don't have to if you alter your marketing plan and target investors. Investors typically buy several properties in a single year. Do your regular clients do that?
I don't think so.
Read more...
Broker Agent News Ranks the Top 12 Lead Generating Sources
Broker Agent News just ranked the 12 different sources of leads in order of importance. Not suprisingly contacting past clients came in at number one. Since past client basically buy a home every 5-7 years, why not make your past clients investors who buy 5-7 properties per year?
Read more...
Read more...
The Ultimate Niche Continued-Building Your Business by Targeting Baby Boomers
Last week I wrote about marketing to those baby boomers who did not have enough money to retire and wanted to include real estate to supplement their retirement portfolio. Well if you're still not convinced check out Jeff Brown's website. Jeff is areal estate agent out of San Diego, California and he has put together a marketing plan that is exactly what I I have talked about.
His blog includes case studies, podcasts and several other resources to convince a prospect that real estate is a viable alternative to supplement their retirement plan.
Heck, since San Diego is roughly an hour away from where I live, I might just give Jeff a call!
His blog includes case studies, podcasts and several other resources to convince a prospect that real estate is a viable alternative to supplement their retirement plan.
Heck, since San Diego is roughly an hour away from where I live, I might just give Jeff a call!
Sunday, April 15, 2007
I'm Going Back to Investing-Part 2
By the summer of 2006, I was thoroughly frustrated with this building. I had become emotionally attached not only to the investment, but to the tenants as well. It was normal for me to let the rent due date slip if the had issues, because I knew they would eventually pay up. In essence, I became less of a landlord and more of a caretaker.
I put the property up for sale that summer knowing full well that it was probable that I would lose some money after all expenses. Well my hunches were right. Most offers came in about 30K or so under the list price.
Since I was not really not desperate, I decided to wait it out. By Christmas time of that year, I realized that the offers were pretty much going to be around the same range so I waited until the listing ran out and took a step back and put my investor hat on again. It had been sometime since I had worn that hat and it became clear that I had to take myself out of the equation.
I contacted several property managers and finally decided on one agency who had several buildings under management near my property. As I walked out of the property manager's office I felt like a burden had been taken off of me. No longer did I have to worry about collecting rents or getting the late-night call from a tenant.
I could once again concentrate on investing.
I put the property up for sale that summer knowing full well that it was probable that I would lose some money after all expenses. Well my hunches were right. Most offers came in about 30K or so under the list price.
Since I was not really not desperate, I decided to wait it out. By Christmas time of that year, I realized that the offers were pretty much going to be around the same range so I waited until the listing ran out and took a step back and put my investor hat on again. It had been sometime since I had worn that hat and it became clear that I had to take myself out of the equation.
I contacted several property managers and finally decided on one agency who had several buildings under management near my property. As I walked out of the property manager's office I felt like a burden had been taken off of me. No longer did I have to worry about collecting rents or getting the late-night call from a tenant.
I could once again concentrate on investing.
Saturday, April 14, 2007
I'm Going Back to Investing
I'm tired of being a landlord and going back to being an investor. From 1998 until 2005, I was an active real estate investor. I typically would buy or sell 5 to 7 properties a year in the Long Beach, California area.
Those were pretty good times until I bought my 6 unit property. My original plan was to clean it up and do some minor renovations and quickly sell it
I knew going in that the property needed roughly 70K worth of improvements. The outside needed landscaping and painting. All the windows, needed replacing too. On the inside, the units needed the bathrooms and kitchens redone. They needed new flooring and new doors. The plumbing, heating and electrical needed to be upgrade as well.
I proceeded to put in 15K worth of cosmetic fixes as planned in order to quickly turn it over. The current market would bring me nearly 100% return on my initial investment!
I decided to do all the work myself to save a bit of money. (big mistake) From my previous experience I calculated that I would be done in about two months or so. As I was working I talked to the tenants and generally began to taking a liking to them.
I heard their stories as to how the former owner ignored their requests to fix up minor things. Since I did not want to be known as a "slumlord", I begin to fix some things at their request in addition to what I originally planned. Well the two months turned to three months and then 12 months and then 18 months. The market had turned by then and my original projected sales cost of nearly 800K was now unrealistic. My 100% projected return had vanished and was now projected to be 5%. My budget had nearly tripled as well to roughly 45K!
All my investing activities stopped and I was spending every weekend fixing up the property. I don't think there was a time were a tenant did not "casually bump into me", to talk about the stuffed up sink or the leaking toilet. This would take me away from my rehabbing duties and on to being a handyman.
Did I forget to mention that I recruited some of the tenants to help me do some manual labor in return for discounted rent? Another big mistake as they expected this discount every month.
By this time I was frustrated and decided to put it on the market in September of 2006. I figured I could take out my initial investment and put it to good work out-of-state.
Part 2 tomorrow.
Those were pretty good times until I bought my 6 unit property. My original plan was to clean it up and do some minor renovations and quickly sell it
I knew going in that the property needed roughly 70K worth of improvements. The outside needed landscaping and painting. All the windows, needed replacing too. On the inside, the units needed the bathrooms and kitchens redone. They needed new flooring and new doors. The plumbing, heating and electrical needed to be upgrade as well.
I proceeded to put in 15K worth of cosmetic fixes as planned in order to quickly turn it over. The current market would bring me nearly 100% return on my initial investment!
I decided to do all the work myself to save a bit of money. (big mistake) From my previous experience I calculated that I would be done in about two months or so. As I was working I talked to the tenants and generally began to taking a liking to them.
I heard their stories as to how the former owner ignored their requests to fix up minor things. Since I did not want to be known as a "slumlord", I begin to fix some things at their request in addition to what I originally planned. Well the two months turned to three months and then 12 months and then 18 months. The market had turned by then and my original projected sales cost of nearly 800K was now unrealistic. My 100% projected return had vanished and was now projected to be 5%. My budget had nearly tripled as well to roughly 45K!
All my investing activities stopped and I was spending every weekend fixing up the property. I don't think there was a time were a tenant did not "casually bump into me", to talk about the stuffed up sink or the leaking toilet. This would take me away from my rehabbing duties and on to being a handyman.
Did I forget to mention that I recruited some of the tenants to help me do some manual labor in return for discounted rent? Another big mistake as they expected this discount every month.
By this time I was frustrated and decided to put it on the market in September of 2006. I figured I could take out my initial investment and put it to good work out-of-state.
Part 2 tomorrow.
Coppyblogger-The Secret to Effective Content Promotion
Editor's note-I often find great articles and tips on blogging and investing from websites that don't focus soley on real estate. Here's a great article on how to increase your readership from the guys over at Coppyblogger.com.
Hugh published the above as The Two Immutable Laws of Blogging back in January of 2006. I tried to be a bit more specific with The 5 Immutable Laws of Persuasive Blogging in February of this year.
At the core, Hugh was dead on. My five immutable laws focused more on creating content that has something in it for the reader. This post is focused on creating a promotion that has something in it for the linkerati who you hope will promote your content. Rather than a “how to” post, I’m going to give you a concrete illustration.
Read more...
Hugh published the above as The Two Immutable Laws of Blogging back in January of 2006. I tried to be a bit more specific with The 5 Immutable Laws of Persuasive Blogging in February of this year.
At the core, Hugh was dead on. My five immutable laws focused more on creating content that has something in it for the reader. This post is focused on creating a promotion that has something in it for the linkerati who you hope will promote your content. Rather than a “how to” post, I’m going to give you a concrete illustration.
Read more...
Friday, April 13, 2007
Realty Times-Flipping Houses in a Down Market
My team and I flip houses in Michigan, where the housing market is currently experiencing a significant slump. Wherever these dips in the market occur, they often discourage investors, particularly novice investors, from flipping, but you don't need to get discouraged. With the right adjustments, you can flip houses profitably in a depressed market. I suggest three strategies for successfully flipping houses in a down market:
- Focus on foreclosures.
- Look for deeper discounts.
- Buy and hold.
Buyers in charge
NEW YORK (Money Magazine) -- You'll find no better experts on the real estate boom and bust than Joyce and Louis Bertulfo. Between 2004 and 2006 the couple successfully navigated a hot San Jose housing market, buying and selling two homes for a profit.
By the time they relocated to Tampa with their three children this January, however, the winds had shifted. The pace of home sales in the area had fallen by 40 percent from a year earlier. Prices were already softening.
Russell Shaw-"This Is The Best Market We've Ever Had"
I just heard an audio presentation by Russel Shaw over at the Bloodhound Blog and let me tell you this guy is a great speaker. He is basicall pushing STAR POWER System seminars, but don't let that stop you from listening to this podcast.
He mentions that when the market was hot in Phoenix there was 35 days of inventory compared to the 10 months of inventory they have now and things weren't that good.
Why?
He said agents were not really needed. When sales went up, there was a downward pressure on commissions because all a seller had to do was put up a sign on his lawn and an offer would be made.
A buyer's agent was in hell, because you could write 10 offers in a row, all above asking price and they would all be rejected.
Anyway go listen to it now because he is a much better speaker than I am a writer.
He mentions that when the market was hot in Phoenix there was 35 days of inventory compared to the 10 months of inventory they have now and things weren't that good.
Why?
He said agents were not really needed. When sales went up, there was a downward pressure on commissions because all a seller had to do was put up a sign on his lawn and an offer would be made.
A buyer's agent was in hell, because you could write 10 offers in a row, all above asking price and they would all be rejected.
Anyway go listen to it now because he is a much better speaker than I am a writer.
Thursday, April 12, 2007
Area Foreclosures Ranked-So Where Are My Leads?
Editor's Note- I am having trouble getting decent leads especially in my local area of Riverside County, California, but the report below says that my area is 13th in the country. Oh well. Anyway here is a decent article from the Foreclosure Report.
A report from the LA Times. "The congressional Joint Economic Committee released a report today detailing the local impact of high-risk sub-prime mortgages and foreclosures. California ranked 14th in the nation for foreclosures per household last year, one for every 86 households, according to RealtyTrac.""Colorado's foreclosure rate was the highest, one per 33 households, followed by Georgia, Nevada and Texas. The average national foreclosure rate was one per 92 households.""Among metro areas, Detroit had the highest foreclosure rate last year, with 40,219 total foreclosures, followed by Atlanta, Indianapolis, Denver and Dallas, according to RealtyTrac.""Two California metro areas made the top 20. Stockton ranked 11th with 5,153 foreclosures, one per 37 households. Riverside-San Bernardino-Ontario ranked 13th with 30,255 foreclosures, or one per 39 households."
Read more...
A report from the LA Times. "The congressional Joint Economic Committee released a report today detailing the local impact of high-risk sub-prime mortgages and foreclosures. California ranked 14th in the nation for foreclosures per household last year, one for every 86 households, according to RealtyTrac.""Colorado's foreclosure rate was the highest, one per 33 households, followed by Georgia, Nevada and Texas. The average national foreclosure rate was one per 92 households.""Among metro areas, Detroit had the highest foreclosure rate last year, with 40,219 total foreclosures, followed by Atlanta, Indianapolis, Denver and Dallas, according to RealtyTrac.""Two California metro areas made the top 20. Stockton ranked 11th with 5,153 foreclosures, one per 37 households. Riverside-San Bernardino-Ontario ranked 13th with 30,255 foreclosures, or one per 39 households."
Read more...
Wednesday, April 11, 2007
Flipping Versus Holding - Which is Better for Your Investors?
Some investors focus on flipping, while others hold on to properties. Which technique does your investor prefer?
It really depends on your investors' long-term strategy. If your investor is looking to get money out of the property, then it is obvious flipping will be the technique they should employ. If they are looking to build wealth over the long term then they should hold on to the property as long as it meets their required rate of return. In either event your investor should buy the property "correctly" to minimize the effect of a falling market.
But what type of strategy is right for your investor? An article by Bill Bronchik helps them answer that question for themselves. Here is a sample questionnaire from Bill that will help you guide them in the right direction. Happy selling.
It really depends on your investors' long-term strategy. If your investor is looking to get money out of the property, then it is obvious flipping will be the technique they should employ. If they are looking to build wealth over the long term then they should hold on to the property as long as it meets their required rate of return. In either event your investor should buy the property "correctly" to minimize the effect of a falling market.
But what type of strategy is right for your investor? An article by Bill Bronchik helps them answer that question for themselves. Here is a sample questionnaire from Bill that will help you guide them in the right direction. Happy selling.
- Do I need additional income now or in the future?
- Am I in a high-income tax bracket that would be adversely affected by more income now?
- Does my local real estate market present opportunities to acquire bargains, yet still command high rents that would cover my expenses if I need to hold on to the properties?
- Do I have other income or savings that I could tap into in case my rental properties become vacant or need major repairs?
- Is the local real estate market rising or falling at this time?
- Does bringing in income now or later fit into my short-term and long-term financial goals?
Does Your Marketing Suck?
If the money your spending on marketing isn’t growing your business and bringing more money in return, then you have marketing that…sucks.
Why mince words right? In fact, the “marketing most real estate agents do, has little to do with what is needed to grow their business. Just last Christmas, I had an experience that, while unusual, illustrates perfectly the problem with so-called real estate marketing.
It was Saturday morning, and I answered the doorbell. At the door, was a well-dressed man and another guy dressed as Santa Claus. The man introduced himself as “my neighborhood realtor” and asked if I had any kids that I wanted to pose with Santa Claus. I called my two daughters and let them take the picture. A few days later I received the picture in my mailbox with “compliments from my neighborhood realtor”.
That was it. I never again heard from the agent and I know he still around. Just the other day, I saw his picture on a grocery cart.
No Joke
This situation is far too typical and it’s because most agents haven’t determined what is to be accomplished before they start spending money on marketing. It also explains the premise of this lesson. Most real estate marketing does suck. There is no call to action. There is no marketing message and no powerful headline. In short, it is a waste of time and money.
At its essence, real estate marketing, means that you need to do everything possible to guarantee that every dollar you spend in marketing will bring back more money in return. Your marketing plan should make certain that every tactic and tool reinforces every other one you are using. This means that your direct marketing campaign should be a funnel to your phone and/or website. This means that the message you are trying to get out on your blog, should be the same one you say on your business card. Get the picture?
If you don’t employ a marketing plan that meets the criteria above, then your marketing will suck. It really doesn’t matter if we are talking marketing at one of the big firms or one of the smaller independent ones. Size is irrelevant.
Happy selling
Tuesday, April 10, 2007
Subprime Blame Game
Some 2.4 million homeowners are in danger of losing their homes, many because of bad subprime loans. Critics are pointing their fingers at who is responsible - here are the main targets.
- Mortgage brokers are charged with steering borrowers to loans they couldn't afford.
- Appraisers are charged with inflating appraisals put home buyers in immediate jeopardy.
- Regulators such as The Federal Reserve are charged that they did not use the authority granted them under the Home Ownership and Equity Protection Act to prohibit substandard lending practices.
- Lenders are charged with relaxing underwriting standards far too much and made loans they should have known would not be repaid.
- Wall Street is charged with buying securitized loans with no regard for whether they met underwriting standards.
- Real estate agents are charged with feeding the frenzy.
- Borrowers are charged with being careless.
Ten Tax Tips For Your Real Estate Investors
Editor's Note:Now that tax season is upon us here is a timely article from Forbes.com that you may want to forward to your investor client base.
As real estate developers and investors do business throughout 2007, they may face complex tax issues that can strain resources and drain profits. They should keep in mind these tax tips, which can possibly help them save money in the long run.
Read more...
As real estate developers and investors do business throughout 2007, they may face complex tax issues that can strain resources and drain profits. They should keep in mind these tax tips, which can possibly help them save money in the long run.
Read more...
Broker Agent News Interview-21 Things I Wish My Broker Had Told Me
Editor's Note-Here's an older audio interview from Michael Krisa, "That Interview Guy" over at Broker Agent News.
Frank Cook is a veteran reporter who has written about real estate for the past 20 years. He was a consumer columnist for United Press International before launching his own industry newsletter (Real Estate Intelligence Report) almost 15 years ago. He has been quoted in articles published in newspapers from the Seattle Times to the Miami Herald and from the Los Angeles Times to the Washington Post.
Cook's first book, written for new real estate agents, is entitled 21 Things I Wish My Broker Had Told Me
which has turned into a surprised best seller for the Dearborn Publishing Company. His second book You're Not Buying That House Are You? is a humor-filled book for first-time home buyers that helps guide them through the real estate process.
Click here to listen to this interview.
Frank Cook is a veteran reporter who has written about real estate for the past 20 years. He was a consumer columnist for United Press International before launching his own industry newsletter (Real Estate Intelligence Report) almost 15 years ago. He has been quoted in articles published in newspapers from the Seattle Times to the Miami Herald and from the Los Angeles Times to the Washington Post.
Cook's first book, written for new real estate agents, is entitled 21 Things I Wish My Broker Had Told Me
which has turned into a surprised best seller for the Dearborn Publishing Company. His second book You're Not Buying That House Are You? is a humor-filled book for first-time home buyers that helps guide them through the real estate process.Click here to listen to this interview.
Monday, April 9, 2007
The Ultimate Real Estate Niche
(CNN) -- In the 1960s and '70s they burned their bras and draft cards, marched on Washington, founded Earth Day and vowed never to trust anyone over the age of 30.
That was then and this is now. The fact is that many Baby Boomers failed to appropriately plan for retirement. While some have opted to continue working or starting new businesses. Some Boomers are in denial and ignoring the 800 pound gorilla in their living room.
The remaining Boomers who have not planned appropriately for retirement are feverishly trying to close the "Retirement Gap"
Why not include real estate as part of their retirement portfolio.?
Regardless of the market, real estate may be the quickest way to make up the gap, whether it be from accumulating equity or building a retirement income from cashflow?
I gave you a few headlines to give you ideas but did not elaborate as to how to establish a marketing plan.
The first thing you need to do is identify your market within your farm area. Find out what clubs, churches or associations they attend and begin a database.
The next thing you need to do is find out if you can buy or rent a mailing list affordably. If you find that it is to expensive to buy or rent a list, then find an alternative emthod of collecting names. The latter method will take more time, but once you find where Boomers gather, then go there and do what you need to do to build a database. Get creative.
The last step is to establish yourself as a trusted advisor. Remember that these people cannot afford to be speculators. They need to be taught how to invest appropriately. If you do not have the knowledge as to how to invest, then go get the knowledge.
First of all stay away from the gurus. There are several websites that give free information, such as REI Club or Creative Real Estate Online. You can also find a mentor within your brokerage or contact a real estate investor such as myself who can teach you how to work with investors.
My information is free, so if you wish you can give me a holler.
Happy Selling.
Sunday, April 8, 2007
Real Estate Agents:What Investors Are Looking For In An Agent
This post is directed at the real estate agents out there. There sometimes can be an uneasy relationship between agents and investors; investors have a unique perspective which often is different from other homebuyers.
Real estate investors represent a special group of clients for agents. As the field gets crowed both with agents (10,000 new Realtors® every year!) and technological innovations, finding a niche will be important for agents who want to thrive as the market evolves.
Read more...
Real estate investors represent a special group of clients for agents. As the field gets crowed both with agents (10,000 new Realtors® every year!) and technological innovations, finding a niche will be important for agents who want to thrive as the market evolves.
Read more...
An Easter Sunday Bonus From You Tube.
Here's a very educational series of short videos that show an actual rehab. Recommend it to your prospects who are thinking of fixing and flipping properties. Have a Happy Easter.
Actual Rehab-Part 1
Actual Rehab-Part 2
Actual Rehab-Part 3
Actual Rehab-Part 4
Actual Rehab-Part 5
Actual Rehab-Part 1
Actual Rehab-Part 2
Actual Rehab-Part 3
Actual Rehab-Part 4
Actual Rehab-Part 5
The Possibilities with Seattle Foreclosures
Editor's Note-Here's a quick article that you can forward to your investor client base who is comfortable investing out of state. They should employ a buy and hold strategy at this point. According to CNN Money the median home price in Seattle is $363,000, so make sure that the rent can support the mortgage payment, taxes, insurance, etc...
Buyers are enjoying them selves since the past year. Most states experienced a considerable increase in foreclosure rates particularly because of the large numbers of sub prime loans that are defaulting. Seattle Foreclosures are among the thousands of foreclosed properties that are offering great return potential. If you are in the market for hot investment properties, let Seattle foreclosures provide you with many possibilities.
Read more...
Buyers are enjoying them selves since the past year. Most states experienced a considerable increase in foreclosure rates particularly because of the large numbers of sub prime loans that are defaulting. Seattle Foreclosures are among the thousands of foreclosed properties that are offering great return potential. If you are in the market for hot investment properties, let Seattle foreclosures provide you with many possibilities.
Read more...
Wrong Advice Alert-How a First Time House Flip Went Bad
I just finished reading How a First Time House Flip Went Bad over at Flipping Online. I would rename the article, How a First Time House Flip Went Bad and How Our Advice Will Make Your Second One Worst.
The writer points out six mistakes and what could be done better the next time, but the advice is a bit amateurish. (Note to the reader-the article states 7 mistakes, but the author missed number 5 so there are actually six)
Let's start with the first mistake the writer points out:
Another mistake that was pointed out was this:
I know that some investors consider real estate agents the enemy. I don't. They are my most important lead generating resource as well as giving me maximum exposure for my properties. I have better uses of my time than to waste it to show a house or pre-qualify potential buyers. My offers will always have a 6-7% commission factored in. It is imperative that I get as many agents showing the property as possible to get a quick and if it takes an extra point then so be it.
Earlier in the article the writer mentions that the "property sat for another month" once the investor listed the property as if that was a bad thing. My goodness is seems that the agent did a fine job, by moving the listing in one month don't you think?
As you build your investor client base, become a trusted advisor and guide your clients away from this type of advice. Mention to them that a real estate investment is not a trivial matter, and they should analyze each deal as much as they would when buying stocks and bonds.
Understand that by putting this extra effort and learning to work with investors properly, you will have an investor client base that will earn you a steady income.
Happy selling.
The writer points out six mistakes and what could be done better the next time, but the advice is a bit amateurish. (Note to the reader-the article states 7 mistakes, but the author missed number 5 so there are actually six)
Let's start with the first mistake the writer points out:
Firstly, putting 10% is OK, but not ideal. John should have used private money or have financed the property at 100%. That money could have been used for fix up rather than being tied up in the property.This is too general a statement and it reeks of late night infomercial advice. An experienced investor will put in as little or as much as it takes to make a maximum return.
Another mistake that was pointed out was this:
Excuse me?John listed with a realtor too early. The property should have been for sale by owner from day one and John should have tried to market the property himself.
I know that some investors consider real estate agents the enemy. I don't. They are my most important lead generating resource as well as giving me maximum exposure for my properties. I have better uses of my time than to waste it to show a house or pre-qualify potential buyers. My offers will always have a 6-7% commission factored in. It is imperative that I get as many agents showing the property as possible to get a quick and if it takes an extra point then so be it.
Earlier in the article the writer mentions that the "property sat for another month" once the investor listed the property as if that was a bad thing. My goodness is seems that the agent did a fine job, by moving the listing in one month don't you think?
As you build your investor client base, become a trusted advisor and guide your clients away from this type of advice. Mention to them that a real estate investment is not a trivial matter, and they should analyze each deal as much as they would when buying stocks and bonds.
Understand that by putting this extra effort and learning to work with investors properly, you will have an investor client base that will earn you a steady income.
Happy selling.
Saturday, April 7, 2007
RSS Pieces Blog-A Year's Worth of Real Estate Blog Ideas, 5
From the guys over at RSS Pieces.com-
Part 5 in this list of real estate blog ideas covers everything from homeowners insurance and natural disasters to blogging listings and local business news. Learn how to create linkable resource posts that give background on your town while offering up quality sources for additional information that children can use for school papers and adults can reference in times of need. See how Realtors across the real estate blogosphere are giving content a unique spin with these 10 real estate blog ideas. 50 down, 314 ¼ real estate blog content ideas left to go!
Read more...
Part 5 in this list of real estate blog ideas covers everything from homeowners insurance and natural disasters to blogging listings and local business news. Learn how to create linkable resource posts that give background on your town while offering up quality sources for additional information that children can use for school papers and adults can reference in times of need. See how Realtors across the real estate blogosphere are giving content a unique spin with these 10 real estate blog ideas. 50 down, 314 ¼ real estate blog content ideas left to go!
Read more...
Don't Run Away From All Buyers
In his “Home Sellers Should Run from These Buyer Types” article, Marshal Loeb writes about the types of buyers in the home buying marketplace. He states that there are basically three types of buyers.
- Dream home Buyers who will pay you full price for a home they like.
- Great-Home Shoppers who will typically offer under the asking price.
- Bargain Hunters who thrive on finding the best price and may be looking for a fixer-upper.
He goes on to further breakdown these groups by writing thinly-veiled descriptions of real estate speculators, I mean investors.
One such type of buyer to stay away from is called the Zero-percent Downer. He reasons that if the home-selling price is high, then the mortgage company will have trouble getting a proper appraisal and therefore the sale will not go through. What?
The sales price has nothing to do with the Zero percent Downer. If the price is too high, the mortgage company will have trouble approving the loan whether the buyer puts down zero or ten percent. It is up to the agent, who in agreement with the seller and the current market place determines the listing price. Maybe Marshall Loeb meant to say that 100% financing is more difficult to obtain since the sub-prime loan market is in shambles. I can buy that logic, but his initial premise is ridiculous at best.
As a real estate agent, you should keep someone who has the ability to structure an offer that will be acceptable to all parties involved as an option for those hard-to-sell properties. Just because a buyer wants to keep his out-of-pocket expenses to a minimum does not mean you should avoid him.
Another type of buyer Marshal Loeb states that should be avoided is the Sight-Unseen buyer who makes an offer based only on photos. Mr. Loeb thinks that something shady is up and the property will be tied up without making a decision, but I disagree with him.
When working for or with real estate investors, you will notice that they do make offers sight unseen. There is nothing wrong with that, but as a real estate agent you have to keep this type of offer under control. For the most part the “Sight Unseen” buyer will add a clause that the offer is contingent on a physical inspection. I suggest you give the Sight Unseen “ buyer no more than 5-7 days after the offer has been approved to complete his inspection and all other due diligence in order to avoid delays in the sale of the home.
Real Estate investors should not be buyer’s you need to stay away from. Instead, you keep them in mind whenever the circumstances are appropriate and would result in the sale of your listing.
Until the next time and of course happy selling.
Friday, April 6, 2007
The Foreclosure Market is Heating Up in Dallas
Looks like the foreclosure market is heating up in Dallas. According to
this article, prices are expected to decline more than 5%.
this article, prices are expected to decline more than 5%.
"So far they aren't dumping foreclosures, agents who sell the properties say. 'They are cutting prices,but so far not a lot,' said Connie Zetterlund, a Dallas residential agent who specializes in sales of foreclosed homes. 'But because of what is in the pipeline, I think we will be seeing some price cuts. When a neighborhood has so many foreclosures, they have to do something to sell the properties."This is good news for your investors who could buy at a discount and then hold the properties until home prices begin to rise.
The Lead Generation Shootout-How to Compete With New Online Real Estate Models
(This is Part 1 of a two-part series from Inman News.)
Real estate is being transformed by changes so profound that it may rip the industry apart. If you're still hanging on to 20th century prospecting and by referral techniques as the only tools in your lead-generation toolbox, the coming changes may wash you out of the business if you are unwilling to adapt.
The rate of change in our industry is staggering, yet it doesn't begin to approach what is coming. The riptide of change threatens to put you out of business if you are unprepared. This will be especially true for older agents who still struggle to answer e-mail, who have never sent a text message or who have never played an online game.
Read more...
Real estate is being transformed by changes so profound that it may rip the industry apart. If you're still hanging on to 20th century prospecting and by referral techniques as the only tools in your lead-generation toolbox, the coming changes may wash you out of the business if you are unwilling to adapt.
The rate of change in our industry is staggering, yet it doesn't begin to approach what is coming. The riptide of change threatens to put you out of business if you are unprepared. This will be especially true for older agents who still struggle to answer e-mail, who have never sent a text message or who have never played an online game.
Read more...
Have You Ever Been Betrayed By Your So-Called Friend?
Have you ever come to the conclusion that your good friend isn't really a friend at all?
I just did.
In my innocence I thought that the my mortgage broker was my friend, but now I know he was just after the commission. During the boom times, I put in a lot of business through him and he was all smiles. Hell, he even sent me monthly e-mail updates on the condition of the market. I thought he cared, but I was wrong.
A recent post in the popular blog, Lending Clarity.com, showed me the true face of my so-called friend the mortgage broker. I guess he thought I was out of business and had me confused with my distant cousins the "Speculators".
The Speculators are a bad lot. The continually ruin the party for the rest of us investors and our so-called friends the mortgage brokers lump us all together.
Didn't you know that like every other professional investor, I weigh all the risks as well as the rewards?
Didn't you know that I take into account all my projected costs, including mortgage payments, taxes, selling costs and all other expenses associated with the property before I make an offer?
Didn't you know that I have exit strategies to avoid the problems the Speculators typically get themselves into?
Now I know your true colors Mr. Mortgage broker.
But don't worry, I will still keep you in my rolodex and use you every now and then when it makes financial sense. I hear that creative financing is making a come back and that will certainly cut into your profits.
Thank goodness creative financing still keeps my true friends the sellers, buyers and real estate agents happy and I don't need you as much as I thought Mr. Mortgage Broker.
And no, flipping is not dead and neither is real estate investing regardless of the market. The only thing that has changed is the strategies and our friendship Mr. Mortgage Broker.
I just did.
In my innocence I thought that the my mortgage broker was my friend, but now I know he was just after the commission. During the boom times, I put in a lot of business through him and he was all smiles. Hell, he even sent me monthly e-mail updates on the condition of the market. I thought he cared, but I was wrong.
A recent post in the popular blog, Lending Clarity.com, showed me the true face of my so-called friend the mortgage broker. I guess he thought I was out of business and had me confused with my distant cousins the "Speculators".
The Speculators are a bad lot. The continually ruin the party for the rest of us investors and our so-called friends the mortgage brokers lump us all together.
Didn't you know that like every other professional investor, I weigh all the risks as well as the rewards?
Didn't you know that I take into account all my projected costs, including mortgage payments, taxes, selling costs and all other expenses associated with the property before I make an offer?
Didn't you know that I have exit strategies to avoid the problems the Speculators typically get themselves into?
Now I know your true colors Mr. Mortgage broker.
But don't worry, I will still keep you in my rolodex and use you every now and then when it makes financial sense. I hear that creative financing is making a come back and that will certainly cut into your profits.
Thank goodness creative financing still keeps my true friends the sellers, buyers and real estate agents happy and I don't need you as much as I thought Mr. Mortgage Broker.
And no, flipping is not dead and neither is real estate investing regardless of the market. The only thing that has changed is the strategies and our friendship Mr. Mortgage Broker.
Thursday, April 5, 2007
Flippers still profit in real estate slowdown
Most home buyers are keepers, owning their houses and condos for five or more years. However, even as residential sales prices currently "stagnate" or "plateau" in most cities, according to the latest statistics from the National Association of Realtors and other sources, flippers continue to profit.
WHAT IS A REAL ESTATE FLIPPER?
There is no official definition, but a real estate flipper is a buyer who acquires a property and holds title less than 12 months. Other names for property flippers are "quick turn specialists" and "speculators."
Read more...
WHAT IS A REAL ESTATE FLIPPER?
There is no official definition, but a real estate flipper is a buyer who acquires a property and holds title less than 12 months. Other names for property flippers are "quick turn specialists" and "speculators."
Read more...
How to See A Property Through An Investor's Eyes
A successful San Fransisco real estate investor creates a website in 2006 and begins dispensing real estate advice through his blog. His story is both encouraging and his advice is well-meaning.
His advice is also dead wrong.
Happy selling.
His advice is also dead wrong.
I hate to be a critic, but a recent post on the Real Estate Weblog website drew my attention. The premise of the post, " How to See A Property Through an Investor's Eye" was good, but as I kept reading something didn't hit me quite right.
The post stated that the investor purchased a 4-plex in Albuquerque, New Mexico for $170K. According to the investor, once he spends $15K for rehab costs, the 4-plex would be worth $200K and he would net $500 per month cash flow. At a glance the investor has just made $15K in equity plus $6K in annual cash flow. Not too shabby right?
Wrong.
When you are working with real estate investors, you must advice your client that he or she needs to consider all holding and selling costs in order to truly calculate his cash-on-cash return.
In the example above we will make the following assumptions:
- Rehab cost at 15K, though final rehab expenses are always higher.
- Assume that the investor flips the property after rehab and he gets his asking price. Right now the Albuquerque market is appreciating at 7.7% , so we will give him the benefit of the doubt and will put his projected sales price at 215K.
- Assume he has a no-money down interest-only loan at 7% interest.
- All units are rented during rehab.
- Projected sales price x 6% commission equals $12.9K
- Projected sales price x transaction costs @ 2% equals $4.3K.
- Projected rehab costs equal $15K
- Interim mortgage costs @ 5 months ( 2months rehab plus 3 months on market) equal $4.9K
- Interim propert taxes @ 5 months equal $885.
- Loan pre-payment penalty @ 6months equal $5.1K.
- Contribution to buyer's costs in seller market @1% equal $2.1K
- Loan pay-off equals $170K
The grand total of his debits will be approimately $215,100 and if you take that away from his sales price he owes escrow $100. Since the investor received $2500 dollars in cash-flow while he was rehabbing the property, his profit is a whopping $2400.
That's unacceptable to most investors.
I've often told you that real estate investing is all about the numbers. So an offer just under listing price is for the most part not the most prudent thing to do for an investor. Advice your investor clients to use an net sheet when calculating profit and always advice them to be conservative and not speculative. Once you guide him through a profitable endeavor, you can be sure he will do business with you again and again.Happy selling.
Wednesday, April 4, 2007
10 ways to become a better blogger
If nobody bothers to read your blog posts, you might as well just scribble your thoughts on a cocktail napkin. But if you truly want to share your ideas and opinions, check out these pointers for crafting an engaging blog and building a loyal following.
Read more...
Read more...
Web-Based Maps Provide Data for Your Investors
Like many cities, Portland, Ore., lets you look at local maps on its Web site. But Portland's maps tell you a lot more than how to get around town.
The city makes available free Web-based maps showing things such as land zoning, the frequency of different types of crime, wildfire risks, airport-related noise levels and the location of sewers.
Much of the data can also be downloaded and viewed in free software such as Google Inc.'s Earth application. This allows you to zoom through a three-dimensional depiction of Portland, with relevant locations -- such as sites zoned for commercial use -- highlighted in color.
Read more...
The city makes available free Web-based maps showing things such as land zoning, the frequency of different types of crime, wildfire risks, airport-related noise levels and the location of sewers.
Much of the data can also be downloaded and viewed in free software such as Google Inc.'s Earth application. This allows you to zoom through a three-dimensional depiction of Portland, with relevant locations -- such as sites zoned for commercial use -- highlighted in color.
Read more...
Content for Your Real Estate Blog
Here's a look at what's new in real-estate markets across the U.S. from around the Web that you may put on your blog.
(Some links may require registration or subscriptions.)
(Some links may require registration or subscriptions.)
See How Easily You Can Capture the Boomer Market
I am going to give you three headlines for your next lead generation campaign and it will be targeted towards the baby boomer generation.
Make this part of your blogging and postcard campaign and become the first one in your farm area to go after this niche. There is plenty of content available that you will be able to use.
Happy selling.
- Have you ever thought about increasing your income after retirement?
- If You Don't Plan For Your Retirement Now, You'll Hate Yourself Later.
- You Don’t Have to Be Rich to Retire on a Guaranteed Income for the Rest of Your Life.
Make this part of your blogging and postcard campaign and become the first one in your farm area to go after this niche. There is plenty of content available that you will be able to use.
Happy selling.
Tuesday, April 3, 2007
Realize Big Returns with Real Estate
The title of the this article reminded me of a late night informercial and after reading it, I don't think I was wrong.
As real estate agents, you will run across many beginner investors who will try to use the techniques they have learned from the real estate gurus. If I were you I would become familiar with them as well or at the very least the terms that you will hear. Terms such as "Lease-Options", "Subject-to", etc.. Who knows?
Among all the investors you will run into, maybe you will find a client worth his weight in gold.
As real estate agents, you will run across many beginner investors who will try to use the techniques they have learned from the real estate gurus. If I were you I would become familiar with them as well or at the very least the terms that you will hear. Terms such as "Lease-Options", "Subject-to", etc.. Who knows?
Among all the investors you will run into, maybe you will find a client worth his weight in gold.
Seven Reasons Why Investors Are Great Clients
Imagine an untapped market of clients that buy more than one property per year, frequently sell directly after buying, and have marketing budgets you can spend to sell the property faster. It's not a fantasy. I'm talking about real estate investors.
In this Realty Times article, Jon Morrow writes about the seven big benefits to working with them.
Read more...
In this Realty Times article, Jon Morrow writes about the seven big benefits to working with them.
Read more...
After Five Years of Record Breaking Sales, Today’s Shifting Markets May Come As a Relief.
In today's environment, real estate practitioners will find that with a little more work and creativity they can still attract buyers and sellers — in any market.
Listen to this REALTOR® Magazine podcast as Senior Editor Mariwyn Evans talks with author Robert Sharoff about his February article "What are Consumer's Thinking? Turn Any Market Into a Go."
Listen now..
Listen to this REALTOR® Magazine podcast as Senior Editor Mariwyn Evans talks with author Robert Sharoff about his February article "What are Consumer's Thinking? Turn Any Market Into a Go."
Listen now..
Monday, April 2, 2007
Niche Website of the Millennium-Newlywed Homebuyer.com
Mike Martin of Northwood Realty Services in Wexford, PA gets the Niche Website of the Millennium Award. He has created a niche that I honestly have never heard before by targeting newlywed couples. Go visit his newlywed website and compare it to his regular website.
There is a world of difference don't you agree?
According to his post on the Agents Online Forum, Mike is an avid fan of niche marketing and I applaud him for his creativity. His marketing plan isn't too bad either as he plans to focus his marketing efforts and dollars on the wedding industry. Here are his immediate plans:
As I've mentioned before, niche marketing is the most effective way to get your voice heard above the crowd. Good job Mike and much success.
Happy selling.
There is a world of difference don't you agree?
According to his post on the Agents Online Forum, Mike is an avid fan of niche marketing and I applaud him for his creativity. His marketing plan isn't too bad either as he plans to focus his marketing efforts and dollars on the wedding industry. Here are his immediate plans:
I have some ideas of getting brides/grooms to visit it but I'm always
looking for more. So far the ideas are:
- Advertise in a local wedding planner.
- Send postcards to the leads I get from the planner (300-400/month).
- Place some sort of flyer or brochure in local wedding shops.
As I've mentioned before, niche marketing is the most effective way to get your voice heard above the crowd. Good job Mike and much success.
Happy selling.
Five Steps to Make a Real Estate Investor Your Best Client
- GIVE THEM ONLY GOOD LEADS-Investors are extremely busy and do not have a lot of time. So don't just sign them up to your e-mail newsletter and expect them to sift through every singe listing.
- KNOW THEIR INVESTMENT CRITERIA-It's all about numbers for investors. Don't give them something that will not meet their profit margin.
- KNOW THEIR SPECIALIZATION-Some investors like rehabbing homes, while others prefer to buy multi-family residences.
- KNOW THEIR COMFORT ZONES-Most investors do not have the same comfort level. While some may feel comfortable "gutting" a property, while others may not want to do more than update the kitchen, replace the carpet and give the old place a quick paint job both inside and out.
- INTRODUCE YOUR INVESTOR CLIENTS TO EACH OTHER-Sometimes an investor will not have enough knowledge in a type of investment to move forward, while others may not have enough capital, but have the knowledge. Why not introduce them to each other and get the deal done?
Happy selling.
Big Shocks Await Many Adustable Rate Mortgage Holders
Chris Smith over at EquityScout.com has a posted an interesting article about the ARM loans. In his opinion, their is more trouble brewing.
Concerns about flatting property prices tend to get the most press time,along with the ongoing sub-prime lending soap opera. And we’re all keeping an eye on interest rates and hang on Bernanke’s every word. But in my opinion the real story will be how all these factors impact all those risky loans out there, and this is a die that has yet to be cast.
He quotes a study done by First American Corelogic that states that of the ARM loans that originated in 2006, most will have 30% to 50% increases when their rates adjust in 2008.
Wow.
Build your investor clientele list now folks, because the worst is yet to come.
Sunday, April 1, 2007
See How Easily the Mortgage Industry Can Trick Your Client
Here are a few tips from Mortgage Minister.com about some nasty tricks that lenders may try to play on your investor clients.
REMEMBER-The more your investor client or any client for that matter trusts you, the more he will list with you.
Happy selling.
Read more...
REMEMBER-The more your investor client or any client for that matter trusts you, the more he will list with you.
Happy selling.
Read more...
Realtors Have Much To Teach New Investors About Real Estate
Editor's note- Here is a 3-year old article from the guys over at Realty Times that is still relevant.
Hammered by a volatile stock market, a growing breed of home buyers want to put their investment capital into real estate. While some are true investors (long term holders of real estate) and others are flippers (into quick turnover of properties), many have no idea what they are doing, giving savvy Realtors the opportunity to build a good clientele by teaching these stock market refugees a thing or two about real estate.
Read more...
Hammered by a volatile stock market, a growing breed of home buyers want to put their investment capital into real estate. While some are true investors (long term holders of real estate) and others are flippers (into quick turnover of properties), many have no idea what they are doing, giving savvy Realtors the opportunity to build a good clientele by teaching these stock market refugees a thing or two about real estate.
Read more...
A Realtor® After My Own Heart
I just finished reading Broker Bryant's Real Estate Ramblings Blog and I came away feeling a bit jealous of the investors he works with.
His "Has Your Flip, Flopped?" post is a must-read for all real estate professionals going after the real estate investor market. Broker Bryant understands that real estate investing is a serious venture and uses his knowledge in his market to give realistic options to his clients.
In his post, he mentions a client who has deposited $30K and needs $50K to close on the home. I don't know the total sales price of the home, but putting down $80K better bring in a hefty return on investment.
His client's options are limited because there are 100 active listings and only 7 sales in the last 6 months. A dire situation to say the least.
Broker Bryant does not go into much detail about the advice he gave his client, but I would have told him to go back to the builder and try to negotiate down the amount the builder will keep. With any luck, the builder will give him some of it back.
Losing SOME of the $30K is better than losing ALL of the $30K don't you think?
Happy selling.
His "Has Your Flip, Flopped?" post is a must-read for all real estate professionals going after the real estate investor market. Broker Bryant understands that real estate investing is a serious venture and uses his knowledge in his market to give realistic options to his clients.
In his post, he mentions a client who has deposited $30K and needs $50K to close on the home. I don't know the total sales price of the home, but putting down $80K better bring in a hefty return on investment.
His client's options are limited because there are 100 active listings and only 7 sales in the last 6 months. A dire situation to say the least.
Broker Bryant does not go into much detail about the advice he gave his client, but I would have told him to go back to the builder and try to negotiate down the amount the builder will keep. With any luck, the builder will give him some of it back.
Losing SOME of the $30K is better than losing ALL of the $30K don't you think?
Happy selling.
Do You Recognize the 3 Warning Signs of An Inexperienced Real Estate Investor?
Working with real estate investors can be extremely lucrative, but a real estate agent must recognize warning signs that a client is inexperienced and headed for trouble. I know it's easy to dismiss this advice. As a real estate agent you just want to make the sale, get your commission and move on to the next listing.
That's not the smart thing to do.
A real estate investor can earn you multiple commissions regardless of the market, but the only way that can happen is that the real estate investor makes the right type of purchases.
Let me tell you a real case story.
Casey Serin is a 24-year old real estate investor who bought multiple properties in several states. He became over-leveraged by using no-money down loans and eventually maxed out his credit cards and ran into trouble.
His story is not unique at all.
The country is full of newbie real estate investors.
That's not the smart thing to do.
A real estate investor can earn you multiple commissions regardless of the market, but the only way that can happen is that the real estate investor makes the right type of purchases.
Let me tell you a real case story.
Casey Serin is a 24-year old real estate investor who bought multiple properties in several states. He became over-leveraged by using no-money down loans and eventually maxed out his credit cards and ran into trouble.
His story is not unique at all.
The country is full of newbie real estate investors.
- Some get blinded by the potential quick profit.
- Some believe the advice of the real estate guru that heard on a late night infomercial.
- Some think they know it all because they hang out with people in the industry.
But they all have something in common.
They don't know what they are doing.
As a real estate professional, you have to recognize early warning signs that your client is going in the wrong direction and guide them to the right path.
Early Warning Sign # 1-Misunderstanding the No-Money Down Technique
Whether your client actually puts no-money down or gets the money from another source, make sure your client can afford to make the payments on the new home for at least 6 months. If your client does not have a buyer or renter lined up, money is going to come out of his pocket.
Early Warning Sign # 2-Gets Emotionally Involved In The Property
An experienced investor is only interested in the numbers period. If the deal does not meet his investing criteria, he needs to walk away and not think twice about it. If you notice that your client is going back and calculating different numbers to try to force the deal to work, he is just speculating at this point and he will get in trouble.
Early Warning Sign # 3- Does Not Have a Net Sheet
A net sheet will help your client calculate to the dollar how much money is going to come out of his pocket and what is the maximum dollar the property can be purchased for. Make sure your client is not being speculative when he completes this form. Help him project conservatively on all parts of this form, especially the projected sales price.
By guiding your client through the buying process from an investor's point of view, you will be able to cultivate clients who will come back to you again and again and again.
Happy selling.
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