The other day my wife and I were having dinner with a group of friends and I overheard someone with the group at the next table say, “We’re ready to buy a house, but we’re waiting until spring so we can get the best deal.” Really? The best deals are only available in the springtime?
It’s funny how an urban legend gets started.
Statistics at the Oklahoma Association of Realtors website (www.oklahomarealtors.com/mlsstatistics) support that more homes are sold each year during the second and third quarters than are sold during the first and fourth quarters. This has been true at least since 2002. I know this because that’s as far back as the OAR website displays the data. One quote from that website speaks volumes.
For the second quarter of 2009:”The average cost of a home in Oklahoma has decreased by 3.4 percent compared to Second Quarter 2008. In Second Quarter 2009 the average cost of a home sold was $145,413 compared to $150,559 in 2008. Statewide, 12,130 homes were sold in Second Quarter 2009. This is 11 percent less than the number of homes sold in Second Quarter 2008 in which 13,626 homes were sold. The average Days on Market was 115, and the average Median Price was $106,901.”
If you wait until spring and summer to purchase a home, are you certain you’ll be getting the best deal? Or is it possible that just the just as many good deals and even great bargains could be available during the fourth and first quarters of the year?. Let’s briefly examine the conditions that could make this October to next April one of the best times to buy a home.
High Home Inventory: More homes are available for purchase now than at any time in recent history. Across the state the average days is on the market 115 days before being sold. That’s almost four months. That means that if a home was put on the market in June (one of the peak months for home sales) that same home could very well still be on the market today. And with 11% fewer homes being sold (April through June, 2009) you can expect to find more homes on any MLS database search that meet your criteria.
Time on Market Affects Price: When a home is first listed on the MLS, it receives a great deal of notice from Realtors. But the longer that home remains on the market the less notice that home usually receives. This is why many Realtors suggest dropping the asking price. This kind of change brings the home to the top of the search criteria when Realtors check the MLS.
Don’t Forget Foreclosures: The news is filled with numbers of new foreclosures throughout the country. Oklahoma has its share of these numbers and many of these homes are in good shape and can be picked up for a great price. If you elect to go down this path, make certain your Realtor has experience negotiating a short sale. This is a transaction where the holder of the lien agrees to accept a price that is less than the note they currently hold against the property.
$8,000 tax credit goes away December 1, 2009: There’s still time for first time home buyers to close on a home and claim this tax credit. However, time is running out. Check with your Realtor and your mortgage provider for all the details.
Hungry Realtors: One of the things I love about America is the structure of our economy. Hard work and industry are rewarded by greater income. When fewer homes are being sold, skillful Realtors survive by going the extra mile for their buyers and sellers. Skillful Realtors feed their families all year long by working hard to get you the best deal.
Hungry Mortgage Brokers: The same truth that applied to Realtors applies to Mortgage Brokers. The number of refinances has dropped right along with the number of applications for home mortgages. This motivates the skillful and hardworking Mortgage Brokers to do whatever it takes to get your business and that can include reducing the amount they make on your loan.
Friday, September 18, 2009
Friday, September 11, 2009
6 Vital Home Rehab To-Do's
A good friend of mine called me yesterday to continue a discussion we started about an abandoned home in his rural neighbourhood. Most of his neighbourhood lots are 1+ acres. The abandoned home sat on 5 acres and had a 20’ x 40’ shop next to the house. The 2,100 square foot home, the shop and the 5 acres just sold for $199,000!
There are plenty of good deals out there just like this one. If you’re interested in finding them, there are plenty of creative ways to go about that task. Just be careful because there seem to be more horror stories than fairy tails when it comes to successful home rehabs.
Well, here are 6 must do’s for anyone in the market for a home to rehab and sell, or for anyone with immediate plans to rehab a home they already have.
Limit your potential exposure: If you’re looking for a home to purchase and rehab, keep in mind that should you need financing, current lending guidelines limit financing to 70% to 80% for investment properties. This means that in addition to the money required for any updates and repairs, you’ll need a 20% to 25% cash down payment. Don’t forget to include 6 months of total payments (principal, interest, taxes and insurance) as verifiable reserves. Most likely the underwriter will require that much for each investment property you own. It’s probably best that you settle for properties with a maximum sales price of about 70% of the current appraised value. The property my friend and I were discussing was sold for about 72% of its value. But the necessary repairs would be minimal, so it was a great deal for the person who bought it.
Be conservative about what the home will be worth after affecting repairs: The correct industry lingo is After Repair Value (ARV). Our local real estate market is relatively steady, even still, changes regularly take place. It’s unwise to trust sales comparisons from over 6 months ago. Use sales within the past three months to establish the ARV. Also limit your search to one-half mile or less and only use home that are very close in size and share many of the same amenities. The local MLS will show the active listings and pending sales, but these are less effective comparisons and should be used discriminatively. There are plenty of REO (bank owned) sales and these should be included in your comparison to establish what the home will be worth after the repairs have been made.
Get multiple bids for the necessary repairs: Do yourself a favor and get at least three bids for the necessary repairs. If you don’t have a ready list of reliable and quality construction professional, contact several realtors you know and trust and ask them for referrals.
You’re the coach; build team consensus: America still has a capitalist economy and the contractors and real estate agents you hire want what you want. Maximum return on a minimum investment. Contractors want to do the least amount of work and make the greatest possible profit. Agents want to do as little marketing as possible and earn as much commission as possible. So why not commit to contractor bonuses if work is finished on time and under budget? Why not pay the agent their full commission and bonus them $1,000 if they sell the home by a specific (realistic) date? You’re the coach, so lead the team.
Plan for multiple exit strategies: In any building/remodelling project, there are always surprises, delays, added expenditures and the potential for disasters. Make sure you visit with your property insurance carrier and that you have correct coverage for your project. It’s also a good idea to have additional cash reserves to cover any cost overruns. What do you do if the property doesn’t sell? Make certain that the property cash flows well so you can rent it and hold onto the property.
Begin marketing the home for sale immediately: It’s never too early to begin letting everyone you know that you’ll soon have a home for sale. Tell your friends at the coffee shop, let your realtor friends know. Tell your friends at work. Attach a flyer to your email messages. Use Twitter, Facebook and LinkedIn. Take advantage of every available avenue to advertise your project. Market early, market daily, market often and market continuously!
There are plenty of good deals out there just like this one. If you’re interested in finding them, there are plenty of creative ways to go about that task. Just be careful because there seem to be more horror stories than fairy tails when it comes to successful home rehabs.
Well, here are 6 must do’s for anyone in the market for a home to rehab and sell, or for anyone with immediate plans to rehab a home they already have.
Limit your potential exposure: If you’re looking for a home to purchase and rehab, keep in mind that should you need financing, current lending guidelines limit financing to 70% to 80% for investment properties. This means that in addition to the money required for any updates and repairs, you’ll need a 20% to 25% cash down payment. Don’t forget to include 6 months of total payments (principal, interest, taxes and insurance) as verifiable reserves. Most likely the underwriter will require that much for each investment property you own. It’s probably best that you settle for properties with a maximum sales price of about 70% of the current appraised value. The property my friend and I were discussing was sold for about 72% of its value. But the necessary repairs would be minimal, so it was a great deal for the person who bought it.
Be conservative about what the home will be worth after affecting repairs: The correct industry lingo is After Repair Value (ARV). Our local real estate market is relatively steady, even still, changes regularly take place. It’s unwise to trust sales comparisons from over 6 months ago. Use sales within the past three months to establish the ARV. Also limit your search to one-half mile or less and only use home that are very close in size and share many of the same amenities. The local MLS will show the active listings and pending sales, but these are less effective comparisons and should be used discriminatively. There are plenty of REO (bank owned) sales and these should be included in your comparison to establish what the home will be worth after the repairs have been made.
Get multiple bids for the necessary repairs: Do yourself a favor and get at least three bids for the necessary repairs. If you don’t have a ready list of reliable and quality construction professional, contact several realtors you know and trust and ask them for referrals.
You’re the coach; build team consensus: America still has a capitalist economy and the contractors and real estate agents you hire want what you want. Maximum return on a minimum investment. Contractors want to do the least amount of work and make the greatest possible profit. Agents want to do as little marketing as possible and earn as much commission as possible. So why not commit to contractor bonuses if work is finished on time and under budget? Why not pay the agent their full commission and bonus them $1,000 if they sell the home by a specific (realistic) date? You’re the coach, so lead the team.
Plan for multiple exit strategies: In any building/remodelling project, there are always surprises, delays, added expenditures and the potential for disasters. Make sure you visit with your property insurance carrier and that you have correct coverage for your project. It’s also a good idea to have additional cash reserves to cover any cost overruns. What do you do if the property doesn’t sell? Make certain that the property cash flows well so you can rent it and hold onto the property.
Begin marketing the home for sale immediately: It’s never too early to begin letting everyone you know that you’ll soon have a home for sale. Tell your friends at the coffee shop, let your realtor friends know. Tell your friends at work. Attach a flyer to your email messages. Use Twitter, Facebook and LinkedIn. Take advantage of every available avenue to advertise your project. Market early, market daily, market often and market continuously!
Friday, September 4, 2009
Made in the Shade
Okay, I’m ready to laugh about it now, but only just now. And the time between now and the last wound suffered has been only a few days. So I may ramble on a bit, just to give you fair warning.
I’m smiling only because I’m amazed at how such a simple straightforward project as purchasing suitable coverings for two small windows, can turn into a screenplay for a new Pink Panther movie. Perhaps I’m overstating the case, but I swear that the comedy of errors surrounding this home improvement task would make Tim the Tool Man’s Top Ten List.
Our home faces the west, and well, since the sun sets in the west, we had to do something about the windows. We installed wood shades over the square windows and that worked well. But over the study window and over the front door were two “eyebrow” windows that would require specialized treatment.
My wife steadied the stepladder as I climbed, tape measure in hand to garner semi-precise dimensions for “close-enough-for-government-work” pricing estimates. These openings weren’t oversized, but every evening from late spring through early fall the brightness from the sun made it nearly impossible to navigate the kitchen; and the heat it generated made it unbearable in the study.
We took these measurements to several stores where blinds and shades are sold and one sales associate after another showed us our choices and tallied up the cost. I think it should be required for builders and sellers to disclose just how much it costs to properly treat an eyebrow window. At the prices we were quoted the word “treat” was inappropriate. I consulted my Thesaurus and found more appropriate terms such as, extravagance, indulgence, delicacy and luxury. This search led me to other words like doctor, nurse, cure and heal.
Our original thoughts were to have matching wood blinds custom cut. I’ve shopped for used cars that cost less. Seriously, are there people out there who actually pay thousands of dollars for something to hang in the window collecting dust? I guess so.
After several days browsing through decorating magazines, we settled on the idea of a shade. A window covering made of a durable material formed into cells that fan out from the bottom center of the window similar to a Chinese hand fan.
The look of this window treatment was pleasurable, but not extravagant, delightful but not luxuriant (yes, more Thesaurus words). And the price was more “general practitioner” than “specialist”. So we set the appointment for the installation expert to come and take exact measurements of our two windows.
Three days later I met the installer who not only took exact measurements, he also taped thick brown butcher paper over the openings and cut templates for the manufacturer to use when making the custom cuts. He left and the next day we returned to the store to place the order.
The sales associate called out the price and I actually smiled as I handed her my credit card. After consulting the computer she said, “Your shades should arrive in two weeks.” Okay, I thought, two more weeks of the heat and the sun spotlighting our dinner preparations. And we left the store.
Three weeks later (yes, that’s 3) the store called to let us know that our shades had arrived and that we needed to schedule installation. Four days later (yes, that’s 4) I met the installer who admitted, “I’ve never put these kind of shades in before. But hey, how hard can it be?”
Four hours later (yes, that’s another 4) the installer was leaving and I was on the phone with the store complaining that the shades for which we had waited an extra week were cut at least two inches short in all directions. How could that be? I mean the installer had cut an exact template of each window. I watched him do it myself.
We were assured that the re-order of our purchase would be made immediately and that we could expect delivery in three weeks.
Four weeks later (yes…) our new shades arrived. The installer came out five days later and we now have shades to cover the two eyebrow windows. The whole process required just over three months, numerous phone calls four installer visits and I now know why they call it window treatment. In the end, the windows get treated better than the customer.
I’m smiling only because I’m amazed at how such a simple straightforward project as purchasing suitable coverings for two small windows, can turn into a screenplay for a new Pink Panther movie. Perhaps I’m overstating the case, but I swear that the comedy of errors surrounding this home improvement task would make Tim the Tool Man’s Top Ten List.
Our home faces the west, and well, since the sun sets in the west, we had to do something about the windows. We installed wood shades over the square windows and that worked well. But over the study window and over the front door were two “eyebrow” windows that would require specialized treatment.
My wife steadied the stepladder as I climbed, tape measure in hand to garner semi-precise dimensions for “close-enough-for-government-work” pricing estimates. These openings weren’t oversized, but every evening from late spring through early fall the brightness from the sun made it nearly impossible to navigate the kitchen; and the heat it generated made it unbearable in the study.
We took these measurements to several stores where blinds and shades are sold and one sales associate after another showed us our choices and tallied up the cost. I think it should be required for builders and sellers to disclose just how much it costs to properly treat an eyebrow window. At the prices we were quoted the word “treat” was inappropriate. I consulted my Thesaurus and found more appropriate terms such as, extravagance, indulgence, delicacy and luxury. This search led me to other words like doctor, nurse, cure and heal.
Our original thoughts were to have matching wood blinds custom cut. I’ve shopped for used cars that cost less. Seriously, are there people out there who actually pay thousands of dollars for something to hang in the window collecting dust? I guess so.
After several days browsing through decorating magazines, we settled on the idea of a shade. A window covering made of a durable material formed into cells that fan out from the bottom center of the window similar to a Chinese hand fan.
The look of this window treatment was pleasurable, but not extravagant, delightful but not luxuriant (yes, more Thesaurus words). And the price was more “general practitioner” than “specialist”. So we set the appointment for the installation expert to come and take exact measurements of our two windows.
Three days later I met the installer who not only took exact measurements, he also taped thick brown butcher paper over the openings and cut templates for the manufacturer to use when making the custom cuts. He left and the next day we returned to the store to place the order.
The sales associate called out the price and I actually smiled as I handed her my credit card. After consulting the computer she said, “Your shades should arrive in two weeks.” Okay, I thought, two more weeks of the heat and the sun spotlighting our dinner preparations. And we left the store.
Three weeks later (yes, that’s 3) the store called to let us know that our shades had arrived and that we needed to schedule installation. Four days later (yes, that’s 4) I met the installer who admitted, “I’ve never put these kind of shades in before. But hey, how hard can it be?”
Four hours later (yes, that’s another 4) the installer was leaving and I was on the phone with the store complaining that the shades for which we had waited an extra week were cut at least two inches short in all directions. How could that be? I mean the installer had cut an exact template of each window. I watched him do it myself.
We were assured that the re-order of our purchase would be made immediately and that we could expect delivery in three weeks.
Four weeks later (yes…) our new shades arrived. The installer came out five days later and we now have shades to cover the two eyebrow windows. The whole process required just over three months, numerous phone calls four installer visits and I now know why they call it window treatment. In the end, the windows get treated better than the customer.
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