Real Estate Investing

In a class this morning, Mimi from our auction team was asked by another agent about how to conduct an eBay auction for a house.  Mimi’s answer was very eye opening, “You don’t.”

Her colleague Dale further explained that unless you’re the actual owner of a house, real estate agents can not auction homes on eBay unless they are licensed by the state as auctioneers.  Real estate broker Tom from St. Louis, Missouri says on the Homes & Agents site that you only have to be a licensed real estate agent to sell homes through online auctions, so this points to rules varying from state to state.

I suspect you could auction a mobile home - without the land - because it’s considered personal property rather than real property.  For example, if a seller calls me who lives in a mobile home park to list their trailer, I could not because Realtors sell LAND and any house or building on it is considered an improvement that adds value to the land.

Overall, regular real estate auctions are picking up.  Douglas Heddings of True Gotham Real Estate Blog says,

They key once again to creating the perception of value is to aggressively price the property to appeal to a larger pool of buyers.  A tricky task in today’s less heated market. 

In today’s less heated market, everything is a tricky task - from finding the right marketing strategy to pricing to figuring out how to compel a buyer to offer a fair market price when they’re under the perception that sellers are giving their homes away in a buyers’ market!

Meanwhile, I visited the real estate auctions on eBay.  In one hour, 47 minutes, the bidding will be over for a home in Flint, Michigan.  Current bid: $5300.  Two bedrooms, one bath.  “Great investment property.”

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.

When I first heard the word “short sale” at the beginning of my real estate career, I mistakenly thought it meant the sale was going to be fast.  Actually a short sale means the lender will accept *less* for the home than what is owed in the current mortgage, so they’ll be short the loan payoff.

I listed one house as a short-sale and it was approved in advance of the home going on the market.  The seller had a heart transplant and his wife was a secretary.  He was unable to work, but stayed home to care for his two young daughters who in fact helped care for him a lot during his recovery.  When a low income family has to decide between feeding their children and paying for a serious medical condition or making a house payment, making a mortgage payment becomes the third choice.

In this case, when the contract was received we had to write a counter that stated the offer was accepted by the seller but the lender had to review and accept as well.  I had to submit a net sheet to the lender that outlined how much repairs would cost, termite inspection and treatment costs, seller closing fees, broker commissions, and any other expenses.  The net sheet, contract, and other supporting documentation was reviewed by the bank’s facilitator and then passed to the board for final decision.  Thankfully, the mortgage company was very cooperative during the process, which still took two months to play out. 

I was one of the lucky ones in my office who basically had a smooth short sale transaction.  Another agent submitted a contract for a short sale.  The bank has not taken action on the offer for THREE months.  The last I heard from the agent, who has since left my company to open her own office as a broker, her buyer was giving up and finding another property.

Given the glut of foreclosed homes on the market, I would expect banks to jump when they receive a fair offer on a home.  When they drag their collective feet, it has a negative impact on our local real estate markets.  The house is likely sitting empty - an open invitation for vandalism and abuse - which will bring the value down.

Another agent writing at Active Rain told about how he finally began calling the lender every hour asking for a decision.

Unfortunately, like many prior, the lender “misplaced” the faxes and emails I was sending. We also didn’t get to chat with the “negotiator” (I use negotiator loosely with this lender because of their inability to communicate very well,) until the end of April. The last time, prior to yesterday, I talked to the lender was May 2nd! I was supposed to get the approval that day or within a couple of days from then.

And John Occhi of Hemet, California wrote a wonderful piece after he attended a class on short sales.  He has a lot of class notes packed in his post (including a disclaimer that his notes could be written wrong, etc.).  Here’s one note I thought was interesting - especially the bold headline,

BANKS DO NOT INITIATE SHORT SALES. SELLERS & AGENTS DO:
The above Beneficiaries (aka “Bennies”) are always negotiated with by the seller, or assisted by the agent. Lien holders rarely agree to 6% listings. Commissions can range from 1-5%, depending a number of factors.

Meanwhile, if you think you might be interested in buying a short sale property, be aware that it may take a long long time.

Photo from here.