Just Drew It!

All The Home's A Stage

2008-03-24T11:10:00.000-07:00

Here is a great article from the Raleigh News & Observer. There are many good points in this article that I wanted to share it. I now make this article REQUIRED reading for all my new listing clients.

If you get NOTHING else from the article - just remember - "Potential homebuyers typically will take just 15 seconds to decide if they want to buy your home... so lose the distractions!"

++++++++++++
By Samantha Thompson Smith, Staff Writer

Potential homebuyers typically will take just 15 seconds to decide if they want to buy your home.
So if they're looking at your wedding pictures on the wall instead of the cherry built-in bookcases, you might have already lost them.

Worse still, perhaps they're distracted -- even turned off -- by the ultramodern décor, the lingering scent of smoke or the antlers hanging in the den. In 15 seconds, they're too busy judging you, the homeowner, to notice the stone fireplace, the screened porch or the gourmet kitchen.

In today's highly competitive real estate market, homeowners can't afford to make those kinds of mistakes. That's why more real estate agents and some homeowners lately are turning to professional home stagers to set a home apart.

"When it's a buyer's market, your house must be perfect," said Karen Reynolds, owner of the home staging company Champagne Staging in Wake Forest.

"Buyers have so many choices. You want your house to stand out. And a staged home will stand out."

According to a study by Stagedhomes.com, a group that promotes and teaches home staging techniques, 93 percent of homes staged last year by an accredited home stager sold in less than one month. And nonstaged homes stay on the market five times as long as staged homes, the group's Web site says.

Reynolds, who started staging several years ago for her own investment properties, said that for the 25 homes she staged and sold last year, the average time the homes were on the market was 18 days. And that includes a few that were listed for 120 days or more without a nibble before she staged them.

"What staging does is highlight the positives of the house and help detract from the negatives," Reynolds said. "It gives an implied lifestyle so the buyer can see how they can live in the house."
Julie Keelan, a real estate agent in the Wake Forest-Rolesville office of Allen Tate Realtors, recently sold three homes staged by Reynolds. Keelan is so sold on the concept that she offers a two-hour staging consultation to homeowners who list with her as part of the listing package.
"After I saw what she did, I became a believer," Keelan said. "A lot of sellers have a personal attachment to their property. When they're in selling mode, they have to detach."

C. Reneé Hill, owner of the Raleigh interior designer firm Interiors by Reneé, said her business is now about 30 percent home staging, with demand from real estate agents driving the surge.
"The sad part is that some people don't want to pay the money for the staging," Hill said. "They need to invest now and get the price they want as opposed to having your house sit on the market."

The biggest mistake people make is that they wait until the last minute or until their home has been on the market for more than six months before they look into home staging, she said. Hill said it is best to at least talk to a stager before putting a home on the market to get a list of what needs to be done on the inside and outside of the home.

In the long run, it is a low-cost investment, especially considering the alternative might be letting the home sit on the market for months or reducing the asking price to get the home sold.
Home staging prices vary, of course, depending on the size of the house.

Consultations start about $125. Reynolds said that in two hours, for about $250, she can get a lot done in a 4,000-square-foot house, especially if the homeowner is willing to help out and bring a few friends to get the job done more quickly.

But often, the price isn't what is painful for the homeowner. It is hearing what among their beloved possessions needs to stay and what needs to go.

Reynolds admitted that when she walks through a house, she is ruthless.

"I look at it like a buyer," she said. "I find everything that a buyer would pick apart. Every flaw the house has gives the buyer one more reason not to buy the house or [to] give a low-ball offer."
In the end, most homeowners end up seeing the value of the staging. Some even enjoy seeing the transformation.

Lose the distractions ...
Amy and Danny Houston, who own a 3,200-square-foot-home in Heritage in Wake Forest, were open to hearing Reynolds' advice after their home fronting the golf course was on the market a few months.

After taking about an hour to walk through each room, all the way up to the attic, Reynolds pointed out a long list of what needed to go. Most things were decorative pieces and family mementos, but in some cases, a bed or a table had to be pulled out.

The Houstons took about week to move out family photos, rugs, a treadmill, paintings, a computer and printer -- all per Reynolds' instructions. Then Reynolds added a few decorative touches, just enough to give the house some warmth.

The result was staggering.

Instead of seeing the furniture in the living room, you could see the baby blue walls, the expensive plantation shutters and the tall built-in bookshelves. The room looked bigger and brighter, and you were no longer so distracted by what was inside that you couldn't see the 16th hole of Heritage Golf Course outside.

... But keep the warmth

Reynolds said her job is to make the home as neutral but as warm as possible, highlighting its positive elements. The goal is to keep the buyer focused on the house instead the family living there.

Often that starts with taking the owners' personality out of the home. Family photos? Gone. Diplomas on the wall? Gone. Kindergarten artwork on the fridge? Gone.

Next comes decluttering, a step that trips up plenty of homeowners who don't see their decorations as distractions. The key is knowing what needs to go and what can stay, Reynolds said.

Her rule of thumb: If it's smaller than a bowling ball, it has to go.

Reynolds leaves just enough décor so that it won't distract.

Stagers said sellers should pack up the rest of the stuff and store it. Just leave plenty of space for people to walk around.

Show off walls and floors

Furniture is also critical in home staging -- not just the quantity, but the size and placement as well.

Reynolds suggested taking out enough furniture so you can see 70 percent to 80 percent of the floor space (the same rule applies to wall space).

Take out most of the area rugs as well, so potential buyers can see the beauty of your hardwood floors.

"Less is definitely more, but not to the point where it doesn't have any personality whatsoever," Reynolds said. "It's important to be able to create that feeling of warmth."

Most stagers say sellers should only keep enough furniture so homebuyers will be able to envision their own furniture in the space.

The furniture you do keep in the house can't be oversize or overstuffed, said Karen Jensen and Ann Jagger, owners of Homes in Motion, a Raleigh company that specializes in updating and enhancing homes and work spaces.

"Big furniture can make a room look small," Jensen said. "It can even make the house look smaller."

Another rule: Don't try to sell an empty house. If you've already moved out, rent furniture. Some staging companies have furniture, greenery and decorative items that homeowners can use until the house sells.

Buyer Incentives When Listing Your Home

2008-03-10T09:38:00.000-07:00

** I highlighted a few of my favorite points in the following article from Realtor Magazine

This article was published on: 03/01/2008 by Realtor Magazine
Selling: Examining enticements The Risks of Oversweetening

Buy this house, and you also get the $40,000 luxury car in the garage. Sounds like an enticing offer that just might clinch the sale, right? “It didn’t have any impact,” says Phil Wood, CEO of John R. Wood, REALTORS®, in Naples, Fla., of the incentive one of his company’s sellers tried in 2006. “Buyers looked at the home and said, ‘I guess this house is $40,000 overpriced.’ ”

Because of that and similar lessons, Wood says his team now tells sellers to skip incentives to buyers. “On our advice, just about all of our sellers have stopped doing incentives,” he says. “We advise them to price perfectly, and then no incentives are necessary.”The logic behind offering an incentive to a buyer to purchase or a salesperson to sell a property is simple: By buying or selling this house, you get something extra for free.

A handful of states ban incentives to entice someone to buy a particular property, says Mike Thiel, associate counsel for the NATIONAL ASSOCIATION OF REALTORS®. Because state statutes can be confusing on this point, Thiel recommends that you check with your state association before you offer any incentive to buyers.

Even in the vast majority of states that allow buyer incentives, those inducements may not be effective. Many practitioners say that while they sometimes suggest that sellers consider offering an incentive, what really makes a property sell is its price.“You can offer incentives all day long, but usually buyers see through that,” says Ben Coleman, broker-owner of Century 21 Hartford Properties, a 40- person brokerage in San Francisco. “The single thing that’ll drive buyers and salespeople to a property is that it must be priced at today’s market value. If that happens, you’ll get buyers at the property, and you’ll get practitioners there, too, because they believe buyers will buy.”

Richard Quigley, a salesperson at @properties in Chicago, generally agrees. “Probably the greatest incentive in the world is a price reduction,” he says. Quigley and his fellow @properties practitioners don’t often advocate that sellers offer incentives. In rare cases, however, Quigley has recommended that sellers sweeten the deal for buyers. “If the property has needed help, I’ve suggested that a seller offer something,” he says. “Say the property doesn’t show well, and the seller isn’t particularly cooperative, so the purple bedroom remains the purple bedroom. I’ll say, ‘Why don’t we offer a decorating allowance? Maybe that’ll catch somebody’s eye.’ ”Quigley says he’s recently seen a range of incentives in the Chicago market. They’ve included covering a condo unit’s assessments for a specified time, offering a free deeded parking space, paying the buyer’s closing costs or local transfer stamp fees, covering the mortgage for a set time, offering to pay for new appliances, and throwing in gift cards.

Coleman isn’t entirely opposed to incentives either. His team sometimes offers vacations to buyers or to the cooperating salesperson. His brokerage has also begun to offer five-year home warranties rather than the more common one-year plans. In Naples, builders who offered cruise vacations 12 to 18 months ago have switched to offering “more value-added things,” says Wood. “Builders used to charge extra for a pool, but today they’ll say that, for one month, they’ll throw in the pool for free.”Although such perks may increase traffic to a property, if the property sells, practitioners say it’s not because of the incentives. “They’re just fringe benefits,” says Coleman. Quigley agrees. “The buyer has to already like the property, and the incentive facilitates moving forward,” he says. “No buyers will purchase something they don’t want just because they’re getting a new refrigerator.”

Catching the EyeWhen you’re trying to get salespeople to show and sell a property, money still talks. “The most motivating factor usually is the commission,” says Coleman. “People are driven by dollars, whether it’s making or saving dollars. That’ll drive practitioners to the property.”For instance, rather than halving a commission with a cooperating broker, Coleman’s seeing brokers offer a 55 percent to 60 percent split to the cooperating broker. “We’re also seeing builders offering referral fees to practitioners when they bring a buyer and then offering a commission on top of that.”In the Chicago market, Elizabeth Ballis, a broker-associate at Coldwell Banker Residential Brokerage, says incentives to buyers are more common than perks offered to sales associates. “I’ve seen them,” she says, “but they’re not rampant.”

Salesperson incentives are “a slippery slope,” says Ballis, “You have to make sure they’re legal, and they’re not perceived in a good light by buyers. That’s why my recommendation to sellers is to make sure incentives are targeted to the buyer’s benefit, not the salesperson’s.”Thiel says offering increased compensation to a buyer’s representative is fundamentally legal through out the country, but related legal and ethical issues could still arise. “Are there requirements that buyers receive a disclosure that the salesperson is getting an increased commission? No,” he says. “But if there’s something that materially influences the buyer’s agent to do something that affects the best interests of the client, that could raise ethical concerns, and it raises the possibility of the buyer’s agent getting sued.” The bottom line: Again, check with your broker or state association before adding commission incentives.

Official Visitor's Guide

2008-02-04T10:26:00.000-08:00

Are you looking for more information on Raleigh, Cary, Apex, Wake County? There used to be a time when you had to pick up the phone, call someone. They would mail information to you, etc. Then, everything came online. BUT, you still had to search for things, get used to different formatting of web pages, etc. Now, all those print items that you used to get in the mail, are now available online in a very familiar format.

I thought this was REALLY cool! Click for an interactive Visitor's Guide: http://www.raleighvisitorguide.com/

The Mortgage Forgiveness Debt Relief Act of 2007

2008-01-28T08:53:00.000-08:00

The Mortgage Foregiveness Debt Relief Act of 2007 may help homeowners who sell their property on a 'short sale'. For more information on short sales, please visit my website at http://drewludlow.com/default.asp_Q_f_E_cpg_A_pg_E_ShortSales.

According to President Bush, "When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes. So I'm working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on cancelled mortgage debt." http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

I am not a CPA, so I can not give tax advice. For more information, please consult with your tax professional. Having said that, it used to be that when you short sale your home and the debt is forgiven by the lender, you would be 1099'd at the end of the year for the forgiven debt. Danmed if you do, damned if you don't!

Now, it seems as if you have some protection from paying taxes on money you never really received.

Although this quite significant, many lenders are not forgiving debt when allowing short sales to proceed. They simply release the lien on the property to allow the sale to go through, but are still retaining the right to the promissory note and all subsequent debt by the borrower. Still, regardless of whether or not your debt is forgiven, a short sales is always better than a foreclosure!

Wake County Recession?

2008-01-21T13:04:00.001-08:00

You hear so much in the news and press today about recession this, subprime market that, housing slub etc, etc, etc.

I may not know alot about the rest of the world, but I do know a little something about Wake County NC. Are WE in a recession? Are we in a housing slump? A little, but not THAT much.

Did I tell you that Forbes rated Apex, NC the number one place to live in NC? #14 in the US too. That didn't hurt us. All the other accolades that are given to the Triangle area (see my website at www.drewludlow.com) certainly don't hurt us either.

Sure, during the month of December, my business slipped a little. But that was because of the Holidays. Market activity ALWAYS slips towards the end of the year, and is always slow to react at the beginning of the year. So, you take a look at the larger picture.

I am fortunate to have access to a wonderful storehouse of statistical data courtesy of the the Triangle MLS and Stacey Anfindsen. Every month, they publish a statistical market update. The following is a Reader's Digest of how are market is currently doing, compared to last year:

Total inventory (homes for sale) is up 23% compared to 2006 - I think a large part of this has to do with the fact that MORE people are selling rather than a judgement on Buyer confidence. Just see the next stat.
But total showings are only down 5% compared to 2006
Total closed sales are down 6%. Not bad considering all the negative press
Current supply is 5 months compared to 4 months in December of last year.

Of course, there are plenty more stats to go around. If you would like some more, just email me. But suffice it to say, we are not doing THAT bad compared to last year at this time. Given that the rest of the country is in a panic about real estate, I still continue to list homes and help buyers buy homes. I have seen a little drop in activity, but I am not as sure that is completely due to the mortgage mess and real estate slump. Perhaps there are other factors contributing to the stats we just saw. You do know that in 2005 and 2006, there was a real estate frenzy and investors were buying, buying buying. Perhaps the numbers simply show a drop off in THAT activity. One way you could look at it is that our market has corrected back to the days before the real estate 'bubble'.

Parks and Greenways

2008-01-14T07:54:00.000-08:00

One of the reasons people love moving to the Triangle area of NC (remember, this includes the cities of Raleigh, Cary, Morrisville, Apex, Holly Springs, Fuquay Varina, Knightdale, Wendell Zebulon, Wake Forest, Durham, Chapel Hill & other cities that I am sure I missed), is not only because of our robust Real Estate market and growing economy, but because of all our parks and greenways.
If you are a nature lover, we have alot to offer you. You can always use Google to check out different links, but I thought I would post a few to get you started on way down to the South.

Cary greenway system http://www.trianglegreenways.org/cary.htm
VisitNC.com http://www.visitnc.com/
North Carolina State Parks http://www.ncparks.gov/Visit/main.php
City of Raleigh Parks & Recreation http://www.raleighnc.gov/portal/server.pt/gateway/PTARGS_0_0_306_209_0_43/http;/pt03/DIG_Web_Content/category/Leisure/Parks_and_Facilities/Cat-Index.html
City of Raleigh Parks and Greenways http://www.raleighnc.gov/portal/server.pt/gateway/PTARGS_0_0_306_209_0_43/http;/pt03/DIG_Web_Content/category/Leisure/Park_and_Greenway_Planning/Cat-Index.html
NC Division of Travel & Tourism NC Outer Banks (Kitty Hawk, Nags Head & Hatteras, NC)
Ski Beech (Banner Elk, NC)
Sugar Mountain Ski Resort (Banner Elk, NC)
Wilmington (Carolina Beach & Wrightsville, NC)

There are many more where that came from. Just Google us!

When You Need More Information

2008-01-07T05:07:00.000-08:00

When you need more information on a town, city or other area, typically, the information is only a few clicks away.
Of course, your local Realtor is going to be one of the best places to start - that is, as long as they are familiar with the area in which you are researching. I know alot abou the Triangle Region of North Carolina which encompasses Apex, Cary, Morrisville, Wake Forest, Durahm, Chapel Hill, Carrboro, Raleigh, Knightdale, Wendell, Zebulon, Garner, Holly Springs, Fuquay Varina and a few others. I would not be a good resource for information on Sanford or Greensboro which are outside my area of expertise.
But when poeople come to me for questions, I try to answer the best I can, and then I refer them out. My favorite places to refer people are to their town (or City) websites.
For example, I have my finger on the pulse of Apex, NC development. One reason is because I continually study the Apex Development map at http://www.apexnc.org/. There, you can find an interactive map that shows everything the city has on the table. You may find information that other local Realtors don't know about yet like future developments, neighborhoods, roadways, stores, shopping centers, etc.
When you have a question about a certain city, just Google the town: "Town of Apex, NC" or "City of Raleigh, NC". Planning departments, zoning departments and engineering departments are always a great place to look for information. And don't be afraid to call them either. Many city offices are happy to answer questions - and if you have to leave a message - do so. I have been proptly called back many times by city officials.
Of course for schools, you can always check out the county website, or go to http://www.wcpss.net/.
I have many more links on my website at www.drewludlow.com. Click here: http://drewludlow.com/default.asp_Q_f_E_links_view_A_id_E_65. I also posted another blog entry with many more cool Wake County school links: http://cpgrealty.blogspot.com/2007/10/wake-county-nc-schools.html
When you do purchase a home, you have to turn on the utlities, right? Don't open the yellow pages. Google your favorite town's website - or better yet, click here: http://drewludlow.com/default.asp_Q_f_E_cpg_A_pg_E_LocalUtilities

Apex Ranked 14th Best Place to Live in USA & #1 in North Carolina

2007-12-31T12:21:00.000-08:00

Apex Ranked 14th Best Place to Live in USA& #1 in North Carolina
For Immediate Release July 16, 2007

CNNMoney.com - Best Places to Live: Top 100
WRAL.com - 2 Triangle Towns Among Money's 'Best Places to Live' List

CNNMoney.com reported today that the editors of Money Magazine had ranked the Town of Apex as the 14th best in their annual list, 2007 Edition, of the 100 Best Places in America to Live. This year’s list had focused on smaller communities under 50,000 in population that offered the best combination of economic opportunity, good schools, safe streets, things to do, and a real sense of community. The web article highlighted the Town’s “impressively intact” “turn-of-the-century” Historic Downtown District. This designation gives Apex the distinction of being the best in North Carolina as only two other, but lower-ranked, North Carolina municipalities were on the national list.
Mayor Keith H. Weatherly expressed his appreciation for this recognition as he said, “We are all so pleased and proud that our Town has attracted this kind of positive national attention. Our Town Council and town employees have really worked together with our citizens, our businesses, our schools and churches to make this community one of the best places in all of America to have a home, to raise a family, to go school, to start a business, and to enjoy a safe and happy lifestyle.”
As news of the national ranking of Apex spread, calls and inquiries poured into Town offices and the local Chamber of Commerce. “We’ve had a deluge this morning of people from everywhere wanting to know more about Apex,” said Apex Town Manager Bruce Radford. “We are always glad to share all we can about opportunities in Apex. This is a very welcoming community,” added Radford.
Mayor Weatherly continued by saying, “We have tried to maintain a delicate balance of managing our growth, holding development to high standards, keeping taxes low, creating attractive and affordable neighborhoods, supporting local schools with high academic achievement, offering diverse recreation programs, and keeping crime out of our Town with a strong public safety program. Our water towers all feature the slogan APEX -- THE PEAK OF GOOD LIVING. Today that’s not just a goal, it’s the truth."

The 5 Best Places To Sell A Home

2007-12-30T10:47:00.000-08:00

The 5 best places to sell a home

Home sales are in a slump, but not everywhere. These five cities, because of lack of room to overbuild or a population influx, are still seller's markets.

By Matt Woolsey, Forbes.com

If you've got property for sale, chances are you're in a bind: Nationwide, prices for existing homes keep falling, and new homes started a few years ago continue to come on the market, increasing inventory.
On top of that, the fallout from subprime lending, the subsequent tightening of credit and lending standards and the recent rise in long-term Treasury yields have shrunk the pool of eligible buyers.
Yet, not every market follows national trends, and despite the industry's overall problems, there are still cities where sellers have the upper hand. The best way to judge a buyer's versus a seller's market is a simple supply-demand analysis of housing stock: At the current rate of sales, how long would it take to sell off the inventory of single-family homes or condos? If that measure comes back high, houses sit on the market longer. If it is low, the market is tightening, which is good news for the seller.
To measure inventory glut, we used Moody's Economy.com and National Association of Realtors data that tracked a market's current sales rate by projecting the amount of time it would take to sell off the excess housing stock at the current rate of sales. We also looked at the change in sales rate over the past year to measure the relative tightening or loosening of the market. Finally, a measure of price stability was applied so as to prevent the list from being a rundown of upstart markets.
The measurements left out a few cities that lacked comprehensive data. Seattle, for example, has incredibly strong market fundamentals -- the lowest vacancy rate of major metros at 0.9% and a small geographic area not conducive to overproduction. It is a good seller's market, but for tracking what we were after, Seattle data were incomplete for our analysis.
Moody's Economy.com chief economist Mark Zandi points out that the best-performing markets are those that had barriers to overproduction during the housing boom.
In the case of San Francisco, which ranked second on our list, it's an issue of geography: There is little space for growth or new development, and the local government doesn't do much to encourage new construction.
Strong in-migration stemming from local economic strength is another factor keeping demand high. New houses being built isn't a problem if new people are moving to town.

This scenario is playing out in Raleigh, N.C., the No. 1 city on our list. Moderate growth and disciplined building over the past five years prevented the market from developing a significant glut. Additionally, a strong local economy has helped contribute to the city's healthy 1.6% vacancy rate.
What's more, the rate of home sales against home inventory was healthy in Raleigh; in this category, it ranked fifth best of big cities, according to Moody's metrics. Even though the market has low vacancy to begin with and displayed strong construction restraint during the housing boom, Raleigh still has the eighth-best rate of tightening.

Similarly, strong in-migration and local economic pop make Austin, Texas, a seller's market. It finished fourth overall in sales rate to inventory size and has the fifth-best home-price appreciation figures of the large markets Moody's measured. Its mediocre 14th-best market-tightening ranking can be attributed, in large part, to its small inventory excess. Austin's vacancy rate is 1.5%, which is also where the national average stood during the most recent housing boom. In other words, that low a vacancy rate indicates a housing market at close to full capacity.
While the market isn't going gangbusters for investment, sellers in these markets are faring much better than their counterparts across the country.

Top cities for home sellers:
Raleigh, N.C.
San Francisco
Austin, Texas
San Antonio
St. Louis

I Don't Know How You Do It...

2007-12-17T05:26:00.001-08:00

Buyers, I really don't know how you do it. I mean, 'buy', that is. How do you guys buy homes? Seriously, my wife and I started looking for homes in Apex, NC this past weekend. Yes, I am a Realtor, and yes, I should know all the ins and the outs of the business. While that is true, I know all the ins and the outs, perhaps I know too much. Nonetheless, that does not mean that I have the innate ability to find whatever I like, let alone have the financial prowess to purchase whatever I want.

Maybe I have seen too much, maybe I know too much. But heck... we can't seem to find anything that we both like. Or rather, we can't find anything that we both want.

'We need room. Lots of room.' I have heard that before.
'We want a good area'. I have heard that before.
'We want good schools'. Tell me about it!
'We want a nice lot with a backyard'. Who doesn't?
'We want large upstairs rooms and a large master'. Go on...
'We want a deal'. Of course we do.

Oh, brother! I have heard all that before and then some! So, I swore to myself that I would not be another one of those people. Always telling me what they want, and then not being able to find it... and then stopping the search, staying put, and never buying anything. Yep... that seems to be me! I AM one of those.

So... Buyers... I now empathize with you. I understand the complicated thought processes that you go through. I understand how hard it is to make a choice - to find the right house - and to find it in a price range that is acceptable. A neighborhood you can feel proud of, with lots of trees, good neighbors, a pool and playground. Yep, I want that too.

Let me know when you find it!

Cost Vs Value Report

2007-12-10T13:12:00.000-08:00

Thinking of remodeling? Many people ask me how much they think they will get back after they add 'this' or remodel 'that'. Really, I have no idea - it depends upon the market. Check out this link to a nationwide study of cost vs value: http://www.costvsvalue.com/index.html

In sum, projects with highest national percentage of costs recouped:

88%Upscale siding replacement
85%Wood deck addition
81%Wood window replacement
83%Minor kitchen remodel

Of course, it also depends upon the quality of workmanship too. Just because you replaced your siding from materials purchased at Home Depot or Lowes, does not mean you will get 88% back.

Housing Slump Article

2007-12-03T18:36:00.001-08:00

Here is a link to an article I read on the housing slump:
http://www.msnbc.msn.com/id/22065972/

Read it and then come back here.

The last paragraph reads: "Keep in mind that in any housing market there is always a buyer — if the price is right. One reason houses aren’t selling well in some areas is that some buyers who are waiting for prices to recover are unwilling to acknowledge that they may have to settle for a little less. If asking prices remain stubbornly higher than recent sale prices, it will take longer for the level of home sales to pick up again. "

I assume that the writer meant to say that "One reason houses aren't selling well in some areas is that some SELLERS who are waiting for prices to recover are unwilling to acknowledge that they may have to settle for a little less."

This is the truth. Until Sellers get the hint that the real estate boom is over, prices will remain high. Buyers think it is a buyer's market and sellers still think their homes are worth more than they are. Until the two meet at the same mindset, we will remain at an impass, and you will continue to see inventory rise.

Where Are The Deals?

2007-11-28T06:05:00.000-08:00

Where are the deals? How do you buy a home at a great price? I work with many buyers who say they want a deal when we negotiate the price of a home. They want the best home at the lowest possible price. Awesome! Let's do it!

But what people fail to do is put themselves in the mindset of the Seller. Why would a Seller give away their home? Here is one answer - motivation.

In order to get a great deal on a home - or any other product, consumable or not, there has to be motivation on the seller's side. That motivation is what pushes them to accept less than what they really wanted.

It just pains me to see Buyers waste their time (and mine) trying to get a price reduction on a home that just came on the market. One that has a flat, fenced backyard. One that has an optimal floorplan, in a great neighborhood, with a pool. Why oh why would a Seller agree to a price $15,000 less than what they are asking for without waiting just a couple of days to see what the open market brings? Buyers continually tell me that they want this, that and the other - they want the best house I can find them - oh... and they want to buy it at below market value. After all, they read in the paper that it is a Buyers' market. So why shouldn't Buyers get the price they want?

Home Inspection Attitudes

2007-11-19T05:36:00.000-08:00

Whew! Home inspections can be tough. I know I wrote about this before, but it warrants another call. Most Buyers and Sellers rejoice after putting a home under contract. Everyone feels like the long wait is over. The Sellers finally got rid of their home and the Buyers have now found the home of their dreams.

But wait! There's more! The process is not over. In fact, the trouble has just begun. In my opinion, the home inspection process is the most difficult process in the entire home transaction.

From the Buyers' point of view, they are purchasing a home with 'all these problems and defects'. They have every right to want everything fixed. Why should they inherit someone else's problems and baggage. After all, they are paying a good price for the home, so everything should be fixed.

From the Sellers' point of view, these 'were not problems when we moved in to the house'. Their inspector never said anything about the damp crawlspace and the creaky floors. The air conditioning works just fine too, so why should they fix it? The door will close fine, all you have to do is put some weight against it. Oh, and they never used the hot tub, so they are not going to fix that either. After all, the Buyers got a great price on the house, so they can simply fix all the problems.

As you can see, this might take a while to sort out. The point here is that neither side can have it their way. This takes negotiation, patience and a lot of compromise. Buyers and Sellers should go into the inspections with a heart of good faith. Buyers should not 'beat up' the Sellers over minor repair items like creaky doors, or uneven fence posts. And Sellers should not become angry and personally offended when a Buyer asks for items fixed.

It is my job as the Realtor/Agent to make sense out of all this mess. But I can't do it without everyone's objectivity.

Just realize that the home inspection process is a difficult one. Treat others the way you would like to be treated int he same situation. We all have to buy and sell at some time, so remember the other side when you are battling the battle. Stay objective, be fair and most of all, compromise. Otherwise, everything may end up with a home that is 'back on the market'.

Market Update for the Triangle Area, NC

2007-11-10T07:18:00.000-08:00

Triangle residential real estate; third quarter summary
Published without permission from:
Stacey P. Anfindsen, Birch Appraisal Group of Cary, Editor
and
Triangle MLS, Inc., Publisher

LISTINGS

There are currently 13,410 active listings within our four main counties. This is an increase of 23% compared to October, 2006 inventory levels.
There are currently 4,996 new home listings, an increase of 21% compared to 2006 new home inventory levels.
There are currently 8,414 re-sale listings, an increase of 25% compared to 2006 re-sale inventory levels.
There were 24 (compared to 23 in 7/07) price points/geographic areas that had lower inventory . There were 74 (compared to 45 in 7/07) price points/geographic areas that had higher inventory.

PENDING SALES

There were 2,351 listings that were taken off the market in September with a status changed to pending or closed.
1,942 of these listings were located in the four main counties. This is a 14% decrease compared to pending sales in September of 2006 and the lowest amount within the past four years.

CLOSED SALES

There were 23,247 closed sales in the four county market during the first nine months. This is a decrease of 3% compared to the 23,983 closed sales during the first nine months of 2006.
There were 2,583 closed sales during the month of September, a decrease of 3% compared to 9/06 closings.
There were 16,696 closed re-sales in the four county market during the first nine months. This is a decrease of 2% compared to the 17,043 closed sales during the first nine months of 2006.
The average sales price during the month was $248,500, an increase of 4% compared to the 9/06 average.
The average price of a re-sale was $219,400, an increase of 1% compared to the 9/06 average.
Wakefield Plantation closed the most amount of homes during the first nine months with 208 closings. They were followed by Hedingham with 203 closings and Heritage Wake Forest with 199 closings.

DAYS ON MARKET

The average days on market for closed sales during the first nine months has been 73 days.
The average at the end of 9/06 was 72 days and the average at the end of 9/05 was 85 days.
The average for a re-sale home was 59 days (versus 61 in ’06) and the average for a new home was 107 days (versus 100 in ‘06).

CURRENT SUPPLY

The current supply of all housing within the four main counties is 5 months. The current supply at the end of September, 2006 was 4 months.
There are 14 (compared to 25 in 9/06) price points/geographic areas with a current supply of 2 months or less. There are 11 (compared to 4 in 9/06) price points/geographic areas with a current supply of 10 months or more.

2007-11-05T10:30:00.000-08:00

I THOUGHT THE FOLLOWING ARTICLE WAS VERY INTERESTING. IT CERTAINLY HELPS DISPELL SOME MYTHS ABOUT US REALTORS.
(Reproduced and added here without permission from RealEstateABC.com newsletter.)
++++++++++++++++++++++++++++++

How Much Do Real Estate Agents Earn?

Many people think real estate agents make huge amounts of money. Some do. Most don't. But lots of consumers want to know "how much"?
Because agents are so easy to poke fun at, the media often try to present the figure in a way that indicates real estate agents are overpaid.
Maybe we'll bust a myth about that. Maybe not. During the writing of this article, we'll calculate how much agents earn in commissions. Right now, as we write the article, we don't know what the answer will be except that commissions are down from last year. We intend to calculate the figure as we go.
So let's start.
The median average sales price in America right now is $211,000 and we're currently on a pace to sell 5 million homes. Simple multiplication provides a dollar number on which the total real estate commissions will be based.
Over 1 trillion dollars worth of homes sold.
That's a lot.
Most of those sales will pay a real estate commission. Folks think that the typical commission is 6%, but it varies and is negotiable. Some "full service" agents charge seven percent. There are "discount brokers," too - and sellers will make different kinds of deals with companies offering different levels of services.
Combining all that together, the average commission charged per deal is between 5% and 5.5% depending on the region. Although the national average is probably around 5.14%, we'll go with a figure of 5.25%, just to play on the safe side.
That comes out to a total of $55 billion. The number is probably high because the estimate for 2006 was a total of $61 billion. Sales are much slower this year and prices are down. But we'll go with $55 billion.
According to estimates, >>>>
between 22% and 27% of the total goes to the company. That leaves between 78% to 73% for the agents. Sure, some experienced agents have higher splits. Some have lower splits. Some even get paid a flat fee or a salary. To make it easy, let's assume that the higher end applies - 78%.
That leaves $43 billion for the agents.
How many agents are there?
Though it is hard to put a number on it, states like California estimate they have one licensed agent for every 52 citizens. The Wall Street Journal estimates there is one real estate agent for every 75 people in America. That would be over 4 million agents! Though that many might be licensed in their individual states, most of those aren't actively selling homes. We won't use that number.
The National Association of Realtors claims 1.3 million Realtor members. Most of those are agents, but not all are actively involved in the business. At the same time, not everyone selling real estate is a member of the National Association of Realtors, either. They are still real estate agents, just not Realtors. Even lenders and appraisers are selling real estate nowadays.
So how many folks are actively working to sell real estate? Approximately 1.25 million says the Journal.
That sounds about right.
The average agent, then, would earn about $34,400 based on current values at the current sales pace. Some more. Most less.
Less an average 14% in expenses. Total? $29,584.
How do we check the figures? According to independent sources, the average commission charged per house in the USA in 2007 is $11,000. With 5 million sales, that would be...(we promise we didn't check this in advance...)
Total commissions of $55 billion

Be Wary of Flips

2007-10-29T05:57:00.000-07:00

A few years ago, this may not have been a problem. But now, as time matures, and the once real estate boom is behind us, we are seeing lot of those "flips" hit the market again. This time, however, they are all repaired, rehabbed and staged... just like you would expect to see on HGTV or TLC.

The problem is that those late night TV shows and infomercials didn't teach everything there was to know about how to fix a flip. Yea... we know what kind of spanish tile to install, and we know how to get a good deal on marble floors or granite counters. We also know how to maximize the space we have so the entire home flows.

But what we do not know is the most important thing: And that is... how in the heck do you fix up a house. I don't mean cosmetically! I mean structurally and functionally. It's like going into battle with an instruction manual and no real combat training (huh??)

I am on my high horse right now because I have seen several supposed flips lately that look beautiful on the outside, but on the inside... it is a different story. I just closed on a home in North Raleigh with a wonderful couple from out of town. When we looked at the home, it was beautiful! Granite counters, hardwood floors, antique fixtures, stainless steel appliances and the whole nine yards. But when we got around to inspections, the home showed a lot of flaws. The Sellers was very agreeable in fixing things, but during the month we had the property under contract, they didn't fix a thing. That should have been our red flag. Instead, we settled for a couple grand as a seller concession and my Buyers closed on the home. Since then, they have had nothing but issues. Leaking faucets, plumbing mains leaking everywhere, improperly installed flooring, counters and appliances... you name it! You just never know what is underneath all those band aids.

Another couple that I worked with recently put a home under contract. Same thing... beautiful on the outside, but on the inside??? The inspection once again showed a lot of deficiencies and structural defects that were simply not completed correctly. How about mold?? Don't play around with mold.

Many of these nine-to-fivers who buy run-down homes at low prices with every wonderful intention of fixing up a home simply fail to succeed. They start with all the gusto in the world. But when the process takes months longer than they had expected, certain items tend to get lost and corners are cut. In addition, budgets are always under valuated, so as the prices go up and the cost to fix increases, more corners are cut. Of course, this is not the case with every contractor, rehabber and flipper - like I said, I am on my high horse right now after seeing some of my buyers very distraught.

It is so easy to look at water stains on a wall and just figure you can paint over them. If something doesn't leak right now, there will never be leaks, right? Do many flippers know how to correctly install a dishwasher using the high loop method? Do many flippers really know how to install a GFCI breaker? How about properly istalling the discharge valve on a hot water heater?

My point is that it can be so easy to put a cosmetic band-aid on a flip. The band-aid makes the house look, feel and smell wonderful to potential Buyers. But what lies underneath those bandaids? Part of the problem is lack of funds. Part of the problem is lack of knowledge. Part of the problem is a flipper's ability to simply overlook what isn't a problem now, but will be a problem doen the road. Some of those red flags simply go unattended.

If you are contemplating purchasing a home that is 'flipped', consider the following:

1) Have the home professionally inspected
2) If there are red flags, investigate further. Do not take for granted that the home inspector is the final word on whether a home is a good purchase
3) Try to get pictures from the sellers with images of what the home looked like when they purchased it.
4) Try to get the home inspection from the sellers when they purchased it.
5) Try to meet with the sellers to find out exactly what repairs they made. It doesn't take a rocket scientist to figure out if they did mostly cosmetic repairs or if they actually fixed the nuts, bolts and bones of the home.
6) Was the work done by sub contractors, or was it done by the actual sellers?
7) How long did the work take and what was the budget? This will be difficult to get, but any information might be useful. If their budget was $10,000 and the house is more than 20 years old, you might start to think that some corners were cut.

These are just a few of the items to look out for. If you have any others, feel free to leave a comment or send me an email. Remember, purchasing a home that has been 'flipped' can be a great purchase. But it can turn out to be a big ol' headache too!

Press Release - Waterproof Notepad

2007-10-29T05:56:00.000-07:00

Here is a little something I am involved with in my spare time:

New Waterproof Notepad Premieres in Stores Across the Country

What To Expect When Selling

2007-10-21T15:16:00.001-07:00

Here is something that I give to all my Sellers when they list with me...

What To Expect When Selling Your Home
There are many ‘gotchas’ along the way from contract to closing. Many times, Sellers are so thankful that they received an offer on their home that they conveniently forget that accepting an offer is only one step in the myriad of obstacles along the escrow process. It is your Realtor’s job to minimize the stress, negotiate the terms and bring everything to a successful ending. However, please keep in mind that there are many situations that are out of your Realtor’s control. Please understand and keep the following points in mind when selling your home.
• Your home will be advertised to hundreds of thousands of people nationwide and thousands of agents locally. There is a 95% chance that another agent will show and sell your home. Your Realtor will work with this agent to bring the sale to a complete and successful close. Please remember that the majority of showings on your home will be performed by other cooperating agents. Just because your Realtor is not personally showing your home does not mean that he/she is not working for you!
• Once a potential buyer shows interest in your home, there will be several to many rounds of negotiations. This is all part of the process. Please do not get discouraged if you spend several hours on the phone with your Realtor discussing various offers and counteroffers.
• Once you accept an offer on your home, there are still many hurdles left. You are not home free until you sign the deed at the attorney’s office many weeks later. There will be inspections, appraisals, re-negotiations, repairs, qualification and underwriting issues and final closing stipulations.
• After you and the Buyer finally agree on price and terms, your home will be professionally inspected by the Buyer. No matter how well you keep your home, the inspector will find issues of concern. The Buyer may ask you to repair some or all of the items on the home inspection report. This is the beginning of the second round of negotiations. At this point, the Buyer may also ask for further financial concessions relative to the extent of concern on the home inspection report. You are not obligated to fix everything the Buyer requests. However, if you refuse, you will leave the Buyer free to terminate the contract and receive a refund of his earnest money if he so chooses. PLEASE PREPARE FOR THE ROLLERCOASTER RIDE WE KNOW AS THE HOME INSPECTION PROCESS.
• Once you complete repairs on your home, the Buyer will ask for a final walkthrough. Be advised that if the repairs are not done in a workmanlike manor, or if they are simply not complete, you will not close, and you will most likely enter into yet another round of negotiations.
• No matter how much you feel your home is worth, and no matter for how much your Realtor has valuated your home, there is a chance the appraiser and underwriter may feel differently. If your home does not appraise at or equal to the purchase price, your Buyer is free to terminate the contract or ask for another price reduction.
• Although a pre-qualification letter is required from your Buyer before you will accept an offer, there is a chance that your Buyer may not properly manage his finances after that acceptance. All Buyer information is verified before closing, and if the status of his credit has changed, this may or may not affect the ability for the Buyer to obtain financing.
• Although a date may be set to ‘close’ on your home, there are many things that may delay the closing process. Holidays, over-extended workload, lazy underwriters, miscommunications, uncooperative attorneys… and the list goes on. Your original closing date may be extended anywhere from one day to two weeks. Please keep this in mind when making final moving arrangements.
• You, as Seller, will have to pay some closing costs which may or may not include transfer taxes, property taxes, HOA dues, attorney fees, courier and copy fees, commissions and of course your current mortgage payoff. Also keep in mind that the current balance on your mortgage statement is NOT your payoff amount. Please contact your lender to obtain the payoff amount as of the estimated date of close.

The State of Our Market

2007-10-17T05:34:00.000-07:00

While searching for ideas on this week's blog, I came across a post by Jim Cronin who quoted his client's view on the current state of the market. "We're basically in a Mexican Standoff," he said. "Sellers are having visions of 2004 and buyers want to wait until the prices come down even further."

To me, that says it all! Mind you, that client is reporting on the market in Naples, Fl. In the Triangle region of NC, we are not necesarily experiencing the same woes as they, but we are experiencing a slowdown nonetheless.

Typically, I try to manage no more than 10 listings at a time. This is so that I can give all my clients most of my undivided attention when needs arise. Rather than sporting a team of 5 to 10 assistants and maintaining 50 listings, I try to keep it manageable. I never really do get up to 10 at a time because my listings usually sell within a reasonable time frame (30 days).

No so true anymore. Gone are the days that you get 20 showings the weekend a listing premieres. Gone are the days of multiple offers. Gone are the days of bidding wars. And gone are the days of pushing the pricing envelope.

We here in the Triangle region of NC are definitely experiencing some pain. Although most of our market is still appreciating unlike most of the troubled markets nationwide, homes are simply not moving as quickly as they used to move. I don't have to tell you that. You can read it in the press and hear about it on TV.

"Why", my sellers ask "is my house not selling?" Here are some of my responses:

1) There has been a mortgage fallout. The buyers who once were able to afford this home can no longer qualify. Some can still purchase a home, albeit a smaller, less expensive home. Yet others can't even buy a stick of gum.
2) Buyers can't sell their homes in the regions from which they are moving. Buyers used to have more confidence, and thus they would make a contingent offer on a home (contingent upon their home selling). But now, they are afraid of making such offers and possibly losing their earnest money. Further, Sellers are much less likely to accept contingent offers. Buyers feel this and are reluctant to make offers altogether. Another vicious cycle.
3) There is way too much inventory. Competition, competition, competition.
4) New home builders are slashing prices and offering incentives that we resellers can not compete with.
5) There are fewer buyers in the market place because more are 'staying put' longer. Consumer confidence is low, many buyers have been forced out of the market, and thus many are making the decision NOT to buy.
6) Just like the inspiration for this blog, many Sellers are still remembering the days of old... the days when they could get a premium for their home - unrealistic pricing. And as a result, Buyers are waiting for prices to come down.
7) My best answer is that THIS is the way the market really is. The past few years have been a boon. And those years were the unrealistic and unusual years. Yet, no one questions the market when it is riding high. Only when there is a let-down do people question. The truth is, the market is correcting itself, and THIS is how things really happen.

Your interpretation of my answer number 7 will intrigue me. Let me know what you think.

Just be thankful that most of the Triangle region of NC is still experiencing growth. Most our home values are not declining. We are just taking a much needed recess.

Wake County, NC Schools

2007-10-08T09:22:00.000-07:00

The number of people relocating to the Wake County area who ask about our schools is astonishingly large. Every day, it seems, I get asked questions: "How are the schools?", "Which are the better schools?", "Are they building more schools?" and so on.

I attempt to answer each question individually, but the requests have become so large, that I decided to put together a list of links to help you learn more about our schools in Wake County. Remember, Wake County includes popular cities like Apex, Cary, Holly Springs, Fuquay Varina, Raleigh, Wake Forest, Knightdale, Wendell and Zebulon.

First, start at the Wake County Public Schools System main website: http://www.wcpss.net/
If you want to know which schools you will be assigned to, based upon your address: http://wwwgis2.wcpss.net/cgi-bin/Production/MainScript.pl?MainOption=StreetMain
Wake Co School Report Cards (2005-2006) great stats!: http://www.ncreportcards.org/src/search.jsp?pYear=2005-2006&pList=1&pListVal=920%3AWake+County+Schools&GO2=GO
Newcomer Resource Center: http://www.wcpss.net/newcomer/getting-started/
For information on year-round schools in Wake Co: http://www.wcpss.net/year-round/
Wake County public schools system demographics: http://www.wcpss.net/demographics/
For a list of Wake Co schools and their ratings: http://www.greatschools.net/schools.page?district=171&state=NC
Wake County Charter Schools: http://www.wakegov.com/schools/charterschools.htm
Another Wake Co public school directory: http://www.wcpss.net/school-directory/
Wake County private schools: http://www.privateschoolreview.com/county_private_schools/stateid/NC/county/37183
Wake County magnet schools: http://www.wcpss.net/magnet/
Meredith College: http://www.meredith.edu/
NC State University: http://www.ncsu.edu/
Peace College: http://www.peace.edu/index-flash.htm
Shaw University: http://www.shawuniversity.edu/
St Augustine's College: http://www.st-aug.edu/
Wake Tech Community College: http://www.waketech.edu/
NC Character Education Partnership: http://www.ncpublicschools.org/nccep/wake_county/index.html

Of course, there is much more information available out there. If you have any questions on the state of NC schools, feel free to contact me.

Short Sales - Part II

2007-10-05T06:48:00.000-07:00

For current, up-to-date and relevent information on Short Sales and Foreclosures... please visit my website:

http://drewludlow.com/default.asp_Q_f_E_cpg_A_pg_E_ShortSales

The information I posted below is out-of-date.

Thank you!
-Drew Ludlow

==========================================================

For The Buyer of a Short Sale
By purchasing a property for less than what is owed you may get that deal you were always looking for. Many homes that are within the pre-foreclosure process are nice homes in nice conditions. Other times, these homes may need a little TLC to make it habitable. Regardless of the condition of the property, to you as a Buyer, the end-result of the short sale is that you own a home, free and clear of all encumbrances of record. It will be no different than if you purchased a home at fair market value from Tom and Susie Homeseller, without the pre-foreclosure stigma. The only difference is that the process may take a little longer to complete.

For the reasons stated above, make sure that if you are considering purchasing a home in which the seller is attempting to short the payoff amount, you give yourself plenty of time and maintain a contingency plan in case the process takes a turn to the left.

Be aware that the short sale process is not an exact science. If you see a home that is 'listed' as a short sale, the list price you see may or may not be the price at which you can purchase the home. I know this may sound strange... why can't you purchase a home for the asking price? Many times, the Realtor does not know at what value the lender will accept by the time the home is initially listed. Remember, the whole reason to short a mortgage is to sell it for less than what is owed. The only number the Realtor may know at listing time is what is owed. If the full balance owed is more than the home is worth, (which is the real reason for this entire process) then the seller may never obtain an offer. Therefore, in many instances, the Realtor lists the home at their best 'guestimate' of what the lender may accept. Once an offer is received, whether it is more or less than the list price, the Realtor will submit it to the lender for approval or counter-offer.

Remember, before bidding on a short sale listing, you need to inquire with the listing agent as to how they arrived at the listed price. Is it the fair market value of the home? Is it a shorted payoff amount that the lender will accept, or is it an estimate of what the borrower and Realtor hope the lender will accept?

Why Do Short Sales Take So Long?
We get this question all the time! Sellers want to sell their home quickly so that they don't do any further damage to their credit report. Buyers want to know, simply, if they can buy the home or if they have to look elsewhere. Buyer agents (Realtors representing their buyers) need to understand where in the process they are so that they can counsel their buyer.

Remember, when dealing with lenders, there is red tape, red tape, red tape. A Buyer and their Realtor are dealing with a person sitting behind a desk in some far-away land who has no real interest in the home that is being sold. All they know is that they are to submit specific information to their boss. Furthermore, they are being paid an hourly wage to do so. They simply don't care for expediency. Especially since our economy and housing sector has taken a turn for the worse, the amount of paperwork that is sitting on these desks are mounting and mounting and mounting. Many times, the initial paperwork that is submitted gets lost in a pile, never to be uncovered again. So, after weeks of waiting, the process begins again.

In addition, lenders will not do ANYTHING until the complete short sale package (along with all offers and addenda) are received. Then, they perform their due dilligence to make sure a short sale is warranted.

Please be patient! We have seen short sales completed within a couple weeks, and we have seen them take as long as 120 days before the lender calls to accept, counter or reject the offer.
For more information on our short sales, please click:

3521 Wood Duck, Wake Forest
8701 Attingham Dr, Raleigh

For more information on the short sale process, or if you are considering a short sale purchse, please contact us. We can review the situation and assist you in selling or buying a home.
Call 919-303-6722 or email drew@drewludlow.com

Short Sales - Part I

2007-10-05T06:43:00.000-07:00

For The Seller
The short sale process is a very long and lengthy one. It could take anywhere from 30-120 days to complete. If you are a seller in default of your mortgage and you are considering a short sale, the time to speak with a Real Estate professional is on day one. Too often, people wait until the last minute, hoping for a miracle to happen. It never does.
One reason that the process takes so long is that there is a plethora of materials and documentation to gather, before and during the short sale process. Some of these items include:
* A signed copy of the listing agreement with your Realtor.
* A signed copy of a sales contract with all addenda and attachments.
* A commitment letter from your Buyer.
* A written hardship letter stating the circumstances for your missed payments and default.
* Your last two bank statements (checking and savings)
* Your last two paycheck stubs
* A HUD-1 settlement statement (net sheet) indicating the allocation of all sale proceeds.
* Your two most recent state and federal tax returns
* Your most recent summary satements for any 401k, retirement or investment accounts

Once all these items are assembled, your Realtor or agent will then submit them to the lender for review. It is at this point that the waiting begins. The lender must then perform their own due dilligence, some of which may include:
* Re-assembling the materials you just submitted.
* Sending them down the line to the department head for further review.
* Sending them once more to yet another department head.
* Submitting them to their board.
* More red tape.
* Performing a BPO (Broker Price Opinion) to determine the fair market value of the home.
* Losing all the documents your Realtor submitted.
* Reassembling them again.
* More red tape.
* Counter-offer.

If everything goes well, the lender may approve your short sale and you will be free to complete the sale of your home to a Buyer at a lesser amount than what is owed.

(Don't Miss Short Sales - Part II) Coming Next!

Appreciation - Part II

2007-10-05T06:37:00.001-07:00

As we can see, factoring appreciation into an investment gameplan is not without its downfalls. It takes time and requires risk. Risk is inherent in almost everything, and real estate investing is certainly not without risk. But for investors with little capital, it is extremely difficult to compete with more established investors. Buying with negative or marginal cash flow requires cash reserves until they can tap into the equity created from appreciation. In a hot market, some investors may purchase property at the top range of its value, knowing that in time, their property will appreciate. This can be a risky play and may not work in many areas. Furthermore, keep in mind that just like the stock market, the real estate market can and does occasionally crash. The real estate market may skyrocket, thus forcing the market value sky high and those that buy at the top of the curve may be wiped out extremely quickly. Over time, market supply and demand will pull everything back into place, but investors that were wiped out may never recover from the loss.

This does not necessarily mean that investors without sufficient capital to buy long term properties for appreciation gains cannot use appreciation to their advantage. It simply requires time, patience and perhaps a different mindset. Perhaps they need to think outside of the box. Some markets that are not currently benefiting from record high appreciation values may still offer isolated opportunities to benefit from appreciation gains.

Take for example, a depressed area that is just beginning to show signs of recovery. I am not speaking of the ‘war-zones’ we have all been warned to stay away from. Rather, I’m referring to an area with potential and perhaps abutting a busy city, or an outlying community with downtrodden properties but with easy access to major travel arteries. With the help of more experienced investors and homeowners themselves, average investors can team up and revitalize an entire community or area within a city. Of course, this will take time, resources and will-power. Nonetheless, once enough properties are rehabbed, a chain reaction might occur. More investors will begin flocking to the area, current homeowners take more pride in ownership, and the dilapidated dwellings that serve to foster drug activity are eliminated, thus displacing some of the crime that often keeps these areas depressed. The city often gets involved, and before you know it, the area has returned to its pre-depressed state. Guess what happens to the market value of properties in the area? Appreciation, and often lots of it!

Another example of this type of ‘forced’ appreciation can occur in an area that experiences infrastructure changes. It could be simple for investors to pick up on these changes before appreciation begins working its magic. For instance, a neighboring city to the one in which I reside, is likely to experience significant growth in the decade to come. Some investors have already picked up on the signs. Knightdale used to be a small, outlying community to the capital of North Carolina. Inhabited primarily by the working class, Knightdale will soon prosper from the construction of a major highway bypass that will encompass the city, thus making travel from outlying areas to the major cities much smoother and quicker. Guess what will likely happen to property values after the construction of this bypass? Appreciation!

For investors, appreciation can be a valuable tool in creating long-term wealth. It does require time and planning and is certainly not without risk. By all means, do not abandon the other investment profit centers of cash flow, tax deferral and equity from loan reduction. Building your cash reserves is also paramount in creating working capital and a rock-solid investment business plan. Understand and learn to focus on building long term wealth through appreciation!

With the right mindset, education, teamwork and most of all, patience, you can watch your investments increase in value over and over again,and before you know it you will be wealthy indeed!.

Appreciation - Part I

2007-10-05T06:35:00.000-07:00

It all started many years ago, after I purchased my first home. It wasn’t an investment property, but rather the one in which I was to live. I knew nothing about real estate and even less about investment strategies. I simply wanted a place to live, hang my hat and call my own. The house was new construction, in an up-and-coming neighborhood, and I was excited about finally becoming a homeowner. After 9 months of watching the construction process, my wife and I finally closed the transaction. A good while later, I decided to establish an equity line in order to access my down payment in the case of an emergency. To my surprise, the bank’s appraisal determined the property was worth $20,000 more than when we had purchased it. Somehow, over the course of time, I had minted money. Somehow, my original investment was now worth more than it was originally.

What I had discovered during my first foray into the real estate world was due in part to the power of appreciation! This phenomenon enabled me to create money out of thin air! Since I wanted to repeat my efforts and purchase more property, I had to figure out how to use this wonderful tool to my advantage.

Shortly thereafter, I discovered other ways to make money in real estate investments. In fact, investors can make money in four unique real estate profit centers: 1) profits from positive cash flow 2) equity growth from loan balance reduction 3) tax savings and of course, 4) equity from appreciation. With a rock-solid game plan and a fundamental understanding of each of these profit centers, investors can create a monthly income from their cash flow, receive tax savings by writing off expenses and depreciation, and can mint money through tenants retiring their debt and through appreciation. Since appreciation is based on the full value of the asset and not the amount of money you invest therein, it can often yield the greatest gain of any of these profit centers.

Unfortunately, appreciation is not usually a short-term money-maker. Appreciation may take effort to harvest, and since significant appreciation occurs over time, it usually requires tenacity and perseverance on the part of the investor to hold a property for years in order to ‘mint’ money. Keeping this in mind, we also know that there are two approaches to real estate investing: short-term and long-term. Most beginners are anxious and feel they must create an income right away. These investors are sometimes referred to as ‘wholesalers’ or ‘flippers’. They purchase property below market value and resell it almost immediately at a higher value, thus realizing a short-term profit. To me, this is simply a glorified salary, a job. They rarely realize the benefits of appreciation. Then, there are your buy and hold strategists. These investors have longer range goals in mind. Rather than concentrating on purchasing property and immediately turning it to another investor for a small profit, they are more interested in keeping the property long-term in order to realize the long term benefits of property ownership, especially gains from appreciation.

Many investors are hesitant to buy and hold for long-term wealth creation. “What if I can’t rent out the house? Will property values really rise in this area? I need cash now! I don’t want to be a landlord!” Of course, the list of excuses continues. The truth is that in order to create long-term wealth, investors MUST factor appreciation into their game plan. In other words, they must be willing to buy and hold. Certainly, I am not advocating that you use appreciation as the cornerstone of your investment strategy. Use several strategies, working in tandem with one another to produce a successful game plan and profitable investing business. Some investors use appreciation and tax deferral from depreciation as their ‘gravy’ money. These investors make sure than an investment is sound on a cash flow or short-term profit basis before they proceed with their purchase. However, others are willing to put their plan in a negative cash flow position if they feel that the end justifies the means. In other words, they may feel they can make $30,000 if they can simply hold onto a property for 5 or more years. Yet, in order to get from here to there, they must accept less in rent than they are paying in monthly debt service and expense outflows.

Once again, I reiterate that appreciation is a long-term wealth creation strategy. If investors are willing to wait, they just may find themselves minting money through appreciation.

(Don't miss, Appreciation - Part II) Coming soon!