keeping Murphy in check!

We all know Murphy's law right?  If something can go wrong, there's a good chance it will.  Though like any risk, with preparation and due diligence that risk can be mitigated.  In real estate a big part of it is knowing your business, your business partners, and not freaking out when things don't go as planned.  And in today's real estate environment, things rarely go as planned.  Hurdles to reaching a successful conclusion of any real estate transaction are simply par for the course.  I found this online and thought it might be helpful to some of colleagues and consumers as well when it comes t keeping Murphy in check!  Remember: Concentrate of the ones where you CAN affect the outcome...as for the rest; as they say, "keep calm and carry on"

 

 

 

market diagnosis and pain mitigation

‘It’s never been harder to buy or sell a property.” This is a sentiment that’s shared by many of my colleagues that have been in the real estate business for many years and through many market cycles. Fact is that they’re right. And historically speaking, here’s one reason why: From 1900 to 2000 home prices appreciated roughly 3-5% year over year. Yet from 2000 to 2006 the cumulative appreciation was 89%! We reached such ridiculous heights, that the fall had to be painful. And that pain continues to manifest itself in the way of foreclosures, bankruptcies, and the havoc that those wreak on everyday Americans. Make no mistake about it, we’re right in the thick of a social and financial reality check in our country; a painful one at that.
However, even pain can be mitigated. And in the case of real estate, that mitigation comes in the form of information. As a home seller, it’s not nearly enough to know what homes sold for last month, last week, or even yesterday. Where the market was this morning is of no consequence to you. Where it will be tomorrow and how you position yourself within the context of that future will ultimately determine your success or failure. And if a real estate professional cannot demonstrate that he or she has their finger on the pulse of that future, than I suggest that you find yourself another doctor.
“But what if I’m buying”, you may ask. Truth is that the methodology is not much different. Learning about recent sales is an indicator of past market activity, where the market was, and subsequently of limited value. Yet to determine whether a property is a good buy, or whether to buy at all, you need to know where the market will be in the foreseeable future. And once again, if your real estate professional lacks the resources to do that, then you certainly need a second opinion…or maybe a specialist! LOL!

marketing in proper perspective

The real estate brokerage business is perhaps one of the most competitive service industries out there. And in our eternal quest to gain market share we real estate agents continually play a game of marketing one upsmanship. We say things like,”hire me and I’ll market your property in this magazine, that newspaper, and these internet sites”. And then the next agent will say, “I’ll do that as well, and on top of that I’ll add x, y, and z too!” And the icing on the cake is that all of this “stuff” that we’re giving you will sell your property “quickly and at the highest price”
Here’s a reality check that’s likely to put me at odds with many of my colleagues: No marketing, at any time in the history of real estate, has ever sold a single piece of property. I’d love to take credit for this eureka statement, yet my humble respect for Mr. Jay Schweppe prevents me from doing so (more on him in a future post maybe). Even yours truly, with a degree in marketing, has seen the light.
Here’s the logic: Marketing can sell products. Marketing can sell services. Is your house a product or a service? Or perhaps it’s something else. Truth be told, real estate is a commodity, and no amount of marketing, no matter how good, can sell it. When was the last time you saw an ad in The Wall Street Journal reading “great deal on wheat futures”? Yet wheat futures sell every single trading day. There are always buyers, regardless of what the market conditions are. And what ultimately determines how much sells, is whether there’s a perception of value for the commodity on that day.
Real estate is no different. The buyer pool remains relatively constant, yet it’s the perception of value that changes. Is the perception of value for real estate in 2011 different than it was in 2005? Of course! So what’s a would-be home seller to do? Make no mistake about it; the only tool that a home seller has at their disposal to create a perception of value for their property is the asking price. “So why all the fancy schmancy marketing?” one may ask. That’s a good question.
One must be able to reach as much of the Buyer pool as humanly possible. So it stands to reason that the Seller who employs the most prolific, extensive, interactive, targeted, cutting-edge, and technologically driven marketing platform, will ultimately reach the entirety of the buyer pool. Couple this with a well-positioned property that creates the necessary perception of value, and the net result will be a sold property. Happy selling!!!

pricing for the internet age

A not so big secret within the real estate industry is that the single most important factor that determines whether a property that's on the market sells or not is the asking price. This is not to discount the dstinct advantages of having a pro active agent and a comprehensive marketing strategy. Yet an effective pricing strategy needs to go beyond just having an attractive asking price. It must take into consideration the evolution of consumer's shopping behavior; namely the shift from print media to online sources. As a matter of fact, almost 90% of home buyers begin their search on the Internet, yet certain home sellers are still pricing their homes as if they were running a discount store. What savvy educated consumer is going to be persuaded by the fact that your property's priced at $199,000 as opposed to $200,000?



The typical real estate search engine allows buyers to search for homes using specific price brackets; usually in $25,000 or $50,000 increments. Taking the $199,000 home for example: If a buyer is calling up properties in the 150k to 200k range, this home will be found; whoopee! Yet, it will be the highest priced home in the search results. Conversely, if this same home is priced at $200,000 it will be found by the same buyer pool in the above example, and it will also be found by prospects looking at homes in the 200K to 250K price range. And here's the booby prize: This home will now be the lowest priced one in the search results! How's that for bumping up the perception of value for your property up a notch? Considerably more people will find the home at $200,000 then at$199,000. More online hits will lead to more inquiries, which will lead to more showings, which will eventually lead to a SOLD property.

So remember, position your property like it's 2011........not 1911.

A Tale of Two Houses

I‘ve been working with buyers who, for six months, have been patiently waiting for bank approval on a short sale contract. Finally last week, the approval came! The Seller’s lender gave a written OK for the transaction to go forward at “x” price and terms. Needless to say the buyers were both relieved and excited, as this was their dream home. We immediately proceeded to order the appraisal and home inspection. And what happened next was like a kick in the stomach…….Chinese Drywall :(

The presence of Chinese Drywall in a home is perhaps the most devastating news for a homeowner or buyer to hear. A roof can be replaced, bad plumbing can be fixed, and even a faulty foundation can be strengthened. But in many cases the presence of Chinese Drywall requires a complete gutting of the property down to the exterior walls and roof. Now granted I’m no expert, but I’ve just received a crash course; read on my friends...

Upon discovery of this bad news, I immediately set up an appointment for the buyer to see another property that I was almost ready to bring to market just a block away from the first one. Upon entering the home, and having learned about the Chinese Drywall just 20 minutes before, we proceeded to look in the air conditioning closet and could not believe what we were looking at…………evidence of Chinese Drywall!!!

Here are some tell-tale signs to look out for:
• Corrosion of a/c coils (black in color)
• Corrosion of electrical wiring
• Failing electronic equipment (computers, TV’s, washing machines, etc.)
• Rusting doorknobs and hinges
• Corrosion of plumbing

To learn more about Chinese Drywall, possible health issues, and remediation you can visit www.chinesedrywall.com

back to the future?

I’ve been having a text conversation with a potential home seller for about the possibility of bringing a prospective buyer to see their property. The conversation has progressed to the point that I now have a scheduled appointment to bring that buyer to tour the property in the near future. Just this morning I received a text from the owner that essentially said this, “Bring me an offer for ‘x’ amount, no low-ball offers!”

To which I replied, “ I can bring you an offer for that amount if you can supply the 1.21 gigowatts of power required to transport us all back in time to the year 2006”. Now, I’m not quite sure how that went over on the other end, but I still have an appointment for this Saturday. I’m confident that all will be fine…

Market timing, a luxury community, and the seven year itch...

Those rare times when the planets seem to be astrologically aligned to favor our major financial transactions, such as the buying of a home, are few and far between. Yet occasionally, I'm able to direct my clients to just such a "Haley's Comet"; in this case specifically, Silvercrest Lakes Estates in Miami Lakes.

Simply put, Silvercrest is one of the finest single-family luxury gated communities in South Florida. However, this is not the primary reason that you want to consider buying a home here in the near future. A convergence of seemingly non-related events has created a wonderful opportunity for would be Buyers in this community. For starters, this project was built in 2001-2002. Hence many of still original owners bought their homes before prices started appreciating at such an alarming rate. Subsequently, many prospective Sellers can price their homes competitively while still making a profit; a win-win scenario for Buyer and Seller!

Additionally, the foreclosure rate in the community is very low, which bodes well for the present and future property values. As a matter of fact, there's only one recorded foreclosure filing in 2010 to date.

What about the "seven year itch?" Well, statistically speaking, the average American family stays in a home for approximately seven years before relocating. So for some who bought homes here in Silvercrest in 2002, the time has now come to make move. And the net result of all of this is that a prospective Buyer here now has a varied selection of homes to choose from, generally well-priced, in a pristine secure community..........and let's not forget the ridiculously low mortgage rates; that's just a Bonus...LOL!

responding to a low-ball offer

I've worked with many a home seller who, when presented with an offer much lower than their asking price, react by saying, "I'm not even going to respond to that!" This response, or lack thereof, most often is a big mistake. The Buyer is obviously interested enough in your house to have made the offer in the first place. "So why the low-ball offer?" you may ask. My experience has shown me that Buyers often think that this is the way real estate deals are done, and subsequently make low ball offers because that's what they did the last time they bought a property 5, 10, or 15 years ago. Additionally, many buyers today are simply afraid to pay too much. Can you blame them?

Here are a few steps to take when responding to low ball offers:

• always counter-offer; you never know what the buyer's motivation was for making that "low-ball offer", and you'll never find out just how much they're really willing to pay unless you counter-offer their initial offer; furthermore it lets the Buyer know that you're willing to negotiate
• look at the entire offer. An offer is more then just a number, yet often Sellers focus on the number alone. What are the terms, and furthermore can Buyer and Seller agree on many or maybe all of those terms? If both sides agree on 7 different terms of the purchase, then it makes it easier for both parties to come together on the 8th term....the selling price.
• conduct an new competitive market analysis; chances are that our fast-paced market has changed your home was initially brought to market. I.E.-The Buyer's low-ball offer may not be so low after all.

In short, my experience has been that if you have sincere motivation on both sides, most disagreements between Buyer and Seller can be overcome. Yet both parties must do everything possible to take emotion out the equation. So remember Mr. Seller; the Buyer's low-ball offer isn't an insult, they're just playing ball. And you'd be wise to step back, take a breath, and play a little ball yourself...

The $64,000 question

How's the market? I'm asked this question at least 6 times a week, and I can honestly say that I've yet to give the same answer twice. "How can that be', one might say. Well, it stems from a fact that most people already know, yet readily forget. That is, that all real estate is ultimately local. So when one hears that sales are down, or maybe that prices are slipping, the "gut" reaction may be to decide that it's not a good time to sell a home. An easy decision, right? Yet it may not necessarily be the right one. Market conditions are dictated by what's currently happening in your subdivision, in your neighborhood, even what's happening on your block! The macroeconomic, well-intentioned headlines you may read or hear do not necessarily apply to your situation.

For example, I had a homeowner say to me last week that they would put off selling their home because of the "glut" of homes on the market, as reported by our local newspaper. Through an in-depth analysis of the supply and demand trends in the neighborhood I was able to unequivocally demonstrate not only that homes in their area were selling at 94% of their asking prices, but also that they were selling considerably faster then the rest of the market. Needless to say, we brought the home to market and have had multiple showings since!

In short, when you ask a real estate agent "The $64000 question", take note of how the they answer. It'll give you some insight as to how they work...

1971

In 1971...

• Intel introduced the first microprocessor
• Apollo 14 lands on the moon
• Walt Disney World opens in Orlando, Florida

And for the would-be home buyer.....rates were at 4.69%.

Coincidentally, they just hit 4.69% today: The lowest on record since 1971! So if you're sitting on the fence about buying a home, I suggest you call your lender and lock in your rate today!

Tax credits and first-time buyers

You can imagine the mad rush by first-time buyers on the last week of April trying to get a property under contract in order to cash in on the Government sponsored tax credit. Unfortunately, many of these folks, and their agents, ultimately wound up very disappointed because there were only so many properties available, and a gluttony of buyers bidding on them; a classic example of demand exceeding supply. Not to mention that many of these homes wound up selling more then 100% of their asking prices! That only happened in 2005...right?

So as we fast forward a few weeks. And, can we say that the tax credits helped the real estate market? Yes! Did they spur demand? Noticeably! Would extending them have continued their positive effects? Surely! And now that they're history, has the fierce competition amongst first-time buyers abated? No way!

I diligently continue making the case that if you're a first-time buyer, it is no longer truly a buyer's market. Even in a post tax credit world, entry level properties are still selling quickly, and at or near their asking prices, when they don't sell for more that is...

Mr. Seller, please leave!

There's a reason why I always insist that the home sellers leave the house when I'm showing it to a perspective buyer. More often then not the seller sticks their foot in their mouth, and low and behold, yesterday it happened................again. I was showing a beautifully-kept home that was flawless in every sense of the word. The prospective buyer was sold and was already talking about making an offer while we were still in the house. Then, as the buyer proceeded to comment on the lovely piano the seller says..................here it comes..........are you ready?........"Oh thank you! It belonged to my mother-in-law who passed away, and here's her room. We keep it just like if she were still here with us." This is not completely verbatim, but you get the idea.

Needless to say, the buyer will not be making any offer on this property; not to mention that the seller potentially gave away a bargaining chip by disclosing to the buyer that she already bought and just closed on another home. Now granted this example is on the far end of the foot-in-the-mouth meter, and most infractions are less severe. But what they all have in common is that they ultimately cost you money. So when your agent asks you to leave the house, please don't be offended. Do yourself a favor..........leave!

Why scapegoat the appraisal?

Appraisals are killing real estate deals. This should come of surprise to no one. As a matter of fact, the appraisal has come up short on my last four transactions. It's quite common for appraisals to come in at $25000 below contact prices, or even more. Just this week I had a property appraise at $140,000 below the contract price! Needless to say, all parties are in shell shock. Yes, the listing agent, the seller, the buyer, and myself expected that we would come up short, and would have to then re negotiate. However, this is more then 100% off from any of our wildest estimates. For now, we're in limbo. The buyer still wants it, the seller still wants to sell it, yet the buyer can only buy for the amount that their lender will lend. What to do? "Blast those appraisals!" you say ? I think our industry is barking up the wrong tree. The appraisals are merely a reflection of what properties are currently selling for, and the buyers by and large will pay the appraisal value. Unfortunately, we're just not adequately educating our home sellers. It's a bitter pill to swallow for a home owner, but a reality nonetheless. Lets start off on the right foot by having the home owner order an appraisal before bringing the property to market...

The evolution of the buyer

Buyers are evolving, and for the better. Up until the beginning of 2009, an abundance of inventory, coupled with a 'sky is falling" mentality lead many to believe that the real estate market was theirs for the taking. They were now in the driver's seat! And as a result they were submitting such ridiculously low ball offers that most often didn't stand a chance of being considered. They made these types of offers very often because "a friend of a friend of a friend" got such a phenomenal deal on a home , that it must be possible to do. And they tried it again, and again,........and again; only to ultimately be disgusted, disillusioned, and fed up with the idea of buying altogether.



Fast forward to today. Buyers are stepping up to the plate. They're actually making very competitive offers, yet procuring a property still for many is still challenging. The issue has now become the sellers. Unfortunately, many sellers have yet to undergo an evolution of their own, refusing to come to grips with what the market values of their properties really now are. I am, however, quite optimistic that home sellers will soon come to the table with more realistic expectations. And the end result will be a vibrant, healthier, and more balanced market .

The Velocity of Money

The velocity of money is a term used by economists to describe the speed at which money makes its way through our economy. During boom times money moves quickly through the system as it's spurred on by consumer spending and investment, and in recessionary times it's velocity is diminished.
Why should you care?
Well, if you've been thinking about buying a home, then the "velocity of money" should be of concern to you. The Federal Reserve uses interest rates to control the money supply flowing throughout the system; low rates=more money in the system, and higher rates=less money in the system. In order to encourage borrowing, one tool that the Fed has is to lower the discount rate(the rate at which banks borrow money from the Fed). The net result is more borrowing, subsequently contributing to an increase in the "velocity of money".
Historically speaking, this monetary strategy has been used to encourage the country out of a recessionary cycle. However, over playing this card can be have unintended negative consequences. In the 1970's the increased "velocity of money" netted a 13% increase in the money supply, and interest rates skyrocketed to as high as 20%! Fast forward to 2009. In the hopes of increasing the velocity of money the Federal Reserve has exponentially increased the supply of money compared to the net increase in the 70's; I've heard some estimates as high as a 100% increase in money supply over the past 14 months! Now I'm not an economist or financial guru; I'm simply taking a historical example, looking at what we're doing today, and extrapolating a possible end result.
In short, higher rates mean less buying power, higher mortgage payments, and more difficulty in securing financing. So as you ponder whether to take the plunge or not, remember that the 'velocity of money"can put a real damper on you future plans. :(

How to buy a bank owned home

Buying a foreclosure can be a really stressful undertaking for many people. After all, you're buying the property As/Is. Many times these properties are distressed and in dire need of repair. But before you even get that far, the lenders are usually very specific about how those offers to be submitted. And if your agent omits or modifies even a seemingly benign part of that process, then rest assured that your offer is not going to go very far. I came across this very satirical approach on buying these types of properties on Yutube; enjoy!

http://www.youtube.com/watch?v=SM7oWKgCVo4

luxury at a discount

As I examine the outstanding available inventory of homes in Miami Lakes, particularly in Royal Oaks, it occurs to me that there has not in recent memory been a better time to pick up a high end property. There is such an array of available property types to suit almost any taste. Most of these homes are either nearly new or completely remodeled. There are at least 5 homes on the market that have over 1 million dollars invested into construction costs that any serious buyer could likley pick up for a fraction of that amount!
If you'd like to learn about some of these great deals, shoot me an email:
carlos.lobato@floridamoves.com

A sellers market?

That's right folks. I'm going to go out on a limb here and declare that in some market sectors we indeed have ourselves a "seller's market".


At the peak of South Florida's so called "bubble" it was commonplace for a property to sell very quickly, with multiple offers, and at above askng price. This, of course, happened because demand was consistently exceeding the supply, subsequently contributing to the 'perception of value' for real estate.


Today, almost every offer that I've put in on behalf of buyers has been at above list price, and in 50% of those cases those buyers were out bid by someone else. What type of market would you call that?


Here are two examples:
West Hialeah-single family homes priced under 200K in barely acceptable condition are selling quickly and with multiple offers

Royal Oaks(Miami Lakes)-Here, the demand for properties remains strong, and often homes priced well in comparisn to the competition again sell quickly and with multiple offers.


One can extrapolate from these two simple examples that any seller can create a buyer's market for their property, because even when the forces of supply and demand don't seem be in the seller's favor, the seller can create the all important 'pereption of value' that will always get a property sold, regardless of market conditions. In short, the seller's ultimate weapon is the asking price!

Why isn't my house selling?

Here's a great post from one of my colleagues in Illinios:

http://activerain.com/blogsview/1201953/6-reasons-why-your-house-won-t-sell-

I must say that she's hit all of the bases...

Single family home market outlook

The market
As you may have noticed, prices are beginning to bottom out, and we are at the beginning of the end of this depreciating cycle. The next six months will specifically reveal exactly where that bottom actually was. As with any economic cycle, you never know the exact bottom until you've past it. The foreseeable future for the single family home market in Dade County is that we will soon return to a state of predictable equilibrium, where the forces of supply and demand create a balanced market with roughly six months of inventory; we now have twelve months of inventory. In other words, single family homes will once again return to a "normal" appreciation rate of 4-5% per year. This was the historical appreciation rate for real property in the U.S. from 1900 to 2000. From 2000 to 2006 political and economic influences, coupled with unregulated and unrestrained lending practices, led us to an unrealistic bubble.