Real Estate Investing

An always fabulous agent I work with told me recently about one of her closings.  She found a home for her buyer that had first been on the market for $145,000.  Following the market downward, it was reduced after several months to $130,000 in order to remain competitive.

Her buyer wanted this home, so they wrote a contract.  In the contract, they asked for 3% ($3900) in down payment assistance and 3% ($3900) in closing costs.  They also asked for a home warranty, a $1000 repair limit, termite inspection (we’ll say $75, but could be up to $800 depending on whether termites were found), and for the seller to pay for title expenses (another $1200).

This once $145,000 home was being purchased for

… drumroll …

$119,925 after the seller paid all of the concessions on behalf of the buyer.

That was $25,075 less than the original list price.  BUT because the market sets the price - and in fairness - the number would be $10,075 off the list price.  So the buyer made a full price offer on paper, and yet it was not a full price offer.

It got back to my friend the agent that the buyer’s father fussed at everyone he met because the agent didn’t get her son a “good enough” deal in a buyers market.  I beg to differ.  That she saved his son over $10,000 dollars from the list price was a pretty fabulous deal.

Yet there are always people who argue that it wasn’t enough.

Another friend of mine wrote a comment to me about full price offers saying, “No one should ever pay full asking price for anything that lends itself for negotiation possibilities…..there is always someone willing to wiggle….keep looking.”  I respectfully disagreed with her given the scenario outlined above.

I believe people need to always remember that just because you see something on paper, it doesn’t tell the whole story.  A full price offer may appear to be full price, but when a seller walks away with over $10,000 less than expected, they are not receiving full price.

Of course, you can also ask yourself how badly you want a house.  Even in a strong buyers’ market, homes in your price range in safe neighborhoods may not be available, so you do what you have to do.

I urge buyers and agents to never let the naysayers convince you that you made a mistake because only you know and have the complete picture of what your needs are.

Photo by Kathy T. and her blackjackii phone. Special guest: the calculator.

A few days ago, I promised to tell you how to buy a home to pay for college on behalf of your children and grandchildren.  Before giving you these tips, however, please visit the website for the College Savings Plans Network of the National Association of State Treasurers.  A lifetime ago, I helped to establish this organization as the lead staff member so I’ll always be a proponent of planning ahead for college funding.  The states do offer wonderful savings options where the earnings are exempt from federal taxation. Why is it important?

College is an investment for a lifetime - the gift of a college education can open the door to a world of opportunity for your child or grandchild. Saving, even a little at a time, can make a big difference down the road. With the cost of a college education continuing to increase, the key is to start saving early and regularly.

In addition to the prepaid tuition and college savings programs, investing in real estate is another way to save ahead for a higher education on behalf of your children or grandchildren.  Here are 10 tips for creating a savings option for future education.

1. Buy residential properties - houses and condos. Stay away from land and commercial real estate unless you are an experienced investor or are buying as a business “user.”
2. Buy “mainstream” houses and condos. Buyer properties that are at or below the average sales price. Buy properties that appeal to most buyers. Avoid high priced or unusual properties. Buy houses with at least three bedrooms and condos with at least two. If possible, buy properties with a garage.
3. Don’t buy with partners, unless you have to. If you have to have partners, make sure they have the same goals and values, are of similar age, and have job, geographic, and marriage stability.
4. Believe in the long run.  Real estate markets are cyclical but the long term trend has been up. Hang in there for the long run. The great investor’s lament is “I should never have sold that property.” The other investor’s lament is, “I could have bought that property for $xxx!”
5. Take care of your property and it will take care of you.  It’s your “golden goose.”  If you don’t like property management or are too busy, either hire a professional property management firm or buy condos or townhouses. They take a lot less management. The homeowner’s association takes care of most of the property maintenance.
6. Get started early.  Put time on your side. Albert Einstein was once asked what he thought was the most powerful thing in the world.  His reply, “compound interest.”  Don’t wait to buy real estate.  Buy real estate and wait!
7. If you don’t have the money, make a plan and commitment to get it.  Consider borrowing your investment money out of the equity in your personal residence.
8. Know your “enough.”  How much investment money do you need?  Know when you are ready to stop accumulating property and start paying off what you have - and enjoying life!
9. Work with knowledgeable people. Pick Realtors, accountants, attorneys, and property managers who know what they are doing.
10. Have a goal and a plan. Contact your agent and begin to develop a customized plan to start creating investment wealth.

Even if your child or grandchild does not go to college, you have still created investment wealth for your retirement.

Source: Butch Roth, friend and fellow-Realtor.Prendere le storie di mano quando i giocatori di party casino online non mostrano il loro al fiume - il Grande trucco di party poker che sono sicuro che molte persone hanno scoperto.

I do not have a degree in macro-economics, trigonometry, accounting, investment, banking, financial prowess,  matrix algebra, or computational data analysis.  I am not an economist.  I am an outsider looking in at the massive amount of statistics that determine the national housing index. 

What I do know is that my cell phone has begun ringing again.  I’m getting calls from both people I know and those I’ve never met asking about buying property.  Several months ago, my calls were from sellers who were nervous and scared about the value of their homes going down the tubes.  Today my calls are from buyers who have figured out that yes, the percentage rates on loans are incredibly low and yes, home prices may have hit bottom.

This renewed interest in home buying seems to be playing out on the national real estate market, as well.  Real estate guru and senior editor of Realty Times Blanche Evans is reporting that the falling prices of homes are leveling according to the real-time housing index.

Days on market have gone down from 122 in February, to 119 in March to 111 in April, which is also a positive trend. Miami and Detroit experienced the longest days on market.  Austin, Texas, sold homes the fastest at 67 days on market.

That means it’s time to carefully watch inventory build-up. It’s spring so it’s natural for more homes to come on the market, but it’s begining to look like some markets may have bottomed in February.

When we see the market hit bottom, it has but one direction to go… back up.

The best part is that the buyers who are now calling are smarter.  They are talking to lenders before asking me to drive them around exploring neighborhoods and walking through houses.  Their agents are performing the neighborhood comparables to be sure the sales price is fair market - today’s market not last year’s.  This puts buyers in a really good position to negotiate for a great price and it’s a relief for homeowners to be finally able to sell and move forward with their lives.

Here’s an overview wherein some agents agree the market has hit bottom, while others are not so Mary Sunshine about real estate.

Naples Real Estate Blog: Market Hits Bottom!

(Wisconsin) Real Estate Market Hits Bottom: See the Numbers!

The Housing Crisis is Over? Not in Phoenix

The Gory Details of Real Estate: A Bell Will Not Ring When the Market Hits Bottom

It reminds us that all real estate is local.  Just because one area of the country may flourish, another may still be facing hardship (but it will get better!).