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Company’s Coming: What’s In Your Closet?

February 29th, 2008
A state closely resembling panic sets in when the real estate agent calls to say she is coming to show your house. You run around picking up the clutter, stuffing it here and there to make things look nice. So many things get piled in the hall closet that it is almost impossible to shut the door. The kids throw everything from the floor of the bedroom to the floor of the closet. One pushes it all in while the other one shuts the door. You take a look around and feel satisfied the place looks clean enough to show. Out the door you go without a thought about anything but an offer.
 
Enter the agent. This poor, unsuspecting soul has done her best to round up as many buyers as she can to help you sell your home. She is excited because this one seems like a great candidate. Your house is exactly what this buyer has been talking about for a week. They are about to take a private tour. The key word there is private.
 
These people who are going through your home are not going to just walk from room to room. They are going to open cupboard doors. They will peek inside the medicine chest. They will open every door and built in drawer there is in the house. After all, they will want to see what they are actually buying. They will want to know how much space is in the kitchen. They will want to know if their things will fit in the closets.
 
When you put your house on the market everything is an open book. People will be going through with a fine tooth comb to see what the house has to offer. This means looking in places a guest would not even go near. There are some things you should do to prepare your home for the people who will be coming in during the showings and open houses.
 
The first thing you should do is pack up anything in any of the closets which are not necessary. Put them in storage, whether it is in the garage, basement, or even a storage unit. You will want to get rid of anything you will not need. This will make the closets more roomy and appear larger.
 
You will also want to clear clutter from built in drawers. Again, box up what you do not need. There are some bedrooms which have the added convenience of built in drawers. Some people keep very personal items in these drawers. Anyone who is interested in buying your home will be looking in them. If you do not want things seen then move them to an appropriate place where they will not be discovered.
 
Many good real estate agents will tell you to prepare your home so that anyone walking in can visualize their possessions in the space. This means removing any personal items like family pictures. You will want to make the house appear as neutral as possible. This can allow the potential buyer to see the house and not the decorations. They can envision how the rooms will look when they are in the home.
 
By packing up what is not necessary will help you when it comes time to move. You will have many of the things in the closets and drawers already packed. This makes it so much easier to not leave anything behind. You can also avoid any embarrassment when people start looking behind closed doors.
 
 

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Choosing a Real Estate Agent

February 28th, 2008
The real estate market is constantly changing. There are so many variables when it comes to putting your house on the market it can become overwhelming. To make the job of selling your home easier you may want to enlist the aid of a real estate agent. Choosing the right one can be confusing.
 
A real estate agent is trained to know the market in which they work. It would only make sense to find an agent that is in your area. This way you know you are getting someone who can answer questions efficiently about the neighborhood, should a buyer ask. An agent who knows the schools and community can add a great deal more to the experience than one who does not.
 
You will also learn that there is a difference between a real estate agent and a realtor. They both went through the same schooling to obtain their license. This is a professional license issued by the state. However, the realtor is a member of a nation wide organization known as the National Association of Realtors (NAR). He or she swore to uphold an oath as a member of this organization which states:
 
I Pledge:
To protect the individual rights of real estate ownership and to widen the opportunity to enjoy it.
To be honorable and honest in all dealings.
To seek better to represent my clients by building my knowledge and competence.
To act fairly towards all in the spirit of the Golden Rule.
To serve my community, and through it my country.
To always conduct myself in conformity with the ideals and objectives as set forth in the REALTORS® Code of Ethics.
To contribute to the welfare of my Association by abiding by the bylaws, rules and regulations of (which ever local association of realtors they are a member of)
 
This is a very important oath to the realtor. By breaking any one of these guidelines can result in disciplinary actions from monetary fines to license suspension. A realtor has a code of ethics he or she lives by. 
 
The NAR offers an advantage to you as the seller. With so many different businesses relocating their employees, many times a local agent will work with an agent in the new city to find a home for the employee. This means that your home will not only be advertised locally, but nationally as well. This opens up a larger market for you as the seller.
 
The local realtor also works with other realtors within other brokerage firms to help clients buy and sell homes. In other words, when you list with a realtor you are actually listing your home with hundreds or even thousands of agents. This will help your home sell even faster than it could if you were to try to sell it on your own.
 
You should always ask how much experience the real estate agent has with homes of your value. You will also want to know how the home is going to be advertised and where. You will want to make sure the agent understands the financing aspect of selling your home. If you do not feel comfortable listing with one agent you can choose another one. It is always best to find an agent you have a rapport with. You want to be able to stay in constant communication with your agent to know what is happening with your home. Choosing a real estate agent is not so hard when you know they are trained, licensed professionals dedicated to getting the job done.

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Can I Negotiate My Real Estate Contract?

February 27th, 2008
Can I Negotiate My Real Estate Contract?
 
You can negotiate anything. The real estate contract is no different. When an offer comes in to buy your home it may not be what you were expecting. This is not a problem because you can negotiate your real estate contract.
 
You can counter the offer by asking for what you want. The real estate agent is required by law to submit to you any offers which may come into her office. She has to present them no matter what she thinks of them. You may not like some of the offers you see. This is fine. At least there are interested parties. The time to get scared is when there are no offers.
 
Let’s say you are offering your home for $145,000. The market analysis showed that this was a comparable price for your neighborhood. The buyer has presented an offer of $125,000 and has asked for certain things. They want you to pay the closing costs and three points. This is not really a great offer. It could be worse, but it is not one you should say yes to. It is also not one you should just rip up and storm away from either.
 
Stop and think about it for a moment. You know you have someone who is interested in your home. This is a good thing. They are $20,000 below asking price. Closing costs can be another $3,000 and when you add the points this brings it to a total of $6,750. You need to figure a way to save the deal and make everyone happy.
 
You already knew you would look at offers under the asking price. You also knew you would accept the first one which offered $139,000. You were willing to drop $6,000 from the asking price. So you can do that now. Counter the offer with your own negotiations. Offer to pay the closing costs and the points if the buyer will agree to the full price.
 
The buyer may walk away from the deal. He may also decide this is perfect and accept it. You can only see what the outcome is. The buyer may also decide to counter the offer again. This is how the negotiations work with a real estate deal.
 
You may also think you are bound by just the paperwork of the original contract. This is not true. You can add an addendum to make sure everything you and the buyer have agreed upon is in writing. By adding an addendum you know exactly what is stipulated between both parties. This means there is less confusion. Each party involved knows what is happening. No one can claim they did not understand the contract.
 
You must understand while the paperwork is under negotiations, it is an agreement. Once everything has been hammered out and agreed upon with signatures from all the parties involved, it becomes a contract. This contract is upheld by the courts. This is why negotiations are important. You want to make sure everything you want, need, or expect to be done is worded in the agreement so everyone understands. After the negotiations, you are bound by the contract.

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Be a Motivated Seller

February 26th, 2008
Be a Motivated Seller
 
Advertising a product can be a difficult thing to do for any company. Trying to find the right market, the potential consumers, the right age groups, and even the right income bracket is tricky. This does not stop the motivated business man. It should not stop the motivated seller, either.
 
You have a product you want to sell, your house. That is the easy part. Trying to find the right market can be the hard one. It is not as hard as you think. You just need to understand how to market the product and who to market it to. All of this is assuming you are already running an advertisement in the local paper and have put up a sign.
 
Take a good look at your home. Why did you buy it? Was it because of the number of bedrooms? Maybe it was the location. It could have been because of the yard. There are so many reasons people buy homes. You need to remember why you bought yours. This is what will tell you about your market. For instance, maybe you bought the home because it offered four bedrooms and was close to the school you wanted your children to attend. You have one potential market already. The large family. Now you need to be able to reach them.
 
Every school has a parent teacher organization. You could have an open house for the PTO members of your school. By sending out invitations to this group, you are reaching people who are already interested in the neighborhood. You know this because of their involvement in the school. Asking them to bring a guest will generate more interest. How many times have you been talking with someone who said they would like to live in the school district in which you live. Now is the time to offer that chance to them. The PTO members may know someone just like that. By having an open house for just the PTO members you can let them introduce someone into the neighborhood by showing them your home.
 
You can do this with every group and organization you are affiliated with or know about in the community. This is just one way you can advertise your home and be a motivated seller. There are plenty of other ways.
 
Determine what income bracket your home would attract. Locate organizations and clubs catering to these people. Put up flyers where these people may frequent. If you know certain individuals who may be interested or know someone else who may be, then invite them to a private showing. This always makes people feel special. They are more receptive to what you have to offer. People do not like competition. Although many times it makes them perform better, hence a higher offer, you may still end up with a bad deal in the end. Let each potential buyer think they are making all the decisions. Coax them into a deal instead of trying to bully them into it. You will have a better response.
 
Being a motivated seller does not mean being desperate. It means you are trying to market your product to the consumer. Real estate has become a business just like any other. You need to make good decisions, be marketing savvy, and be a motivated seller. This will bring the profits just like in the corporate world.

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Will You Cash Out Before the Market Crashes?

February 25th, 2008
Six — count ‘em, six – major financial firms now declare that the United States is in recession. That list includes heavyweights such as Goldman Sachs, Merrill Lynch, and Morgan Stanley.

Several other financial institutions, while not yet using the "r" word, are nonetheless pessimistic. The Wall Street Journal quoted a Wachovia report that said, "There is no question that the economic news has taken an unusual and disturbing turn for the worse."

Of course, the stock market has done nothing to contradict this outlook. The S&P 500 is already down nearly 8% year to date.

If the worst is yet to come, you’d be daft not to sell … right?

"An adverse feedback loop"
After all, every part of our economy seems to be spiraling downward together. Federal Reserve official Janet Yellen called this "an adverse feedback loop — that is, the slowing economy weakens financial markets, which induces greater caution by lenders, households, and firms, and which feeds back to even more weakness in economic activity and more caution."

Students of American history will remember that a similar feedback loop prolonged the Great Depression — and it took a world war to break the cycle.

So if the stock market does tank this year, we’re all going to look back and say we saw it coming. Why not sell and wait for safer times?

Not so fast
My Foolish colleague Paul Elliott called this way of thinking "the real threat facing investors today." But he advises you to stick it out — as do I. Two key points apply:

  1. Recessions do not last long. Since 1945, none of the 11 recessions on record lasted more than 16 months — and none longer than eight months since 1982.
  2. Stocks do not all go down during recession. In reality, you can make a lot of money by investing when economic confidence is weak.

Take our last recession (March 2001 to November 2001), for example. During that time period, the market had nearly the same number of gainers as decliners (2,000 or so on each side). While bellwethers such as ExxonMobil (NYSE: XOM), General Electric (NYSE: GE), and Cisco Systems (Nasdaq: CSCO) were down (8%, 16%, and 17%, respectively), Intel (Nasdaq: INTC), Genentech (NYSE: DNA), and UnitedHealth (NYSE: UNH) were all up (12%, 10%, and 21%, respectively).

The killer stat, though, is this: Since the 2001 recession began, 826 stocks have tripled. Eight months of contraction simply cannot stop innovative operators with wide market opportunities such as Apple and Amazon.com (Nasdaq: AMZN).

An aside to all of this optimism
It should be noted that stocks dropped substantially in 2000 leading up to the recession — just as they’ve dropped of late. Those examples, however, just go to show how the stock market does not move in lockstep with economic realties. Instead, it’s an imperfect prediction machine with millions of analysts, institutions, and individuals trying to incorporate the information they know into daily trading decisions.

All that dynamism makes the market impossible to time, and if you’re only starting to worry about recession as we may or may not be entering one, you are way late to the game. To get ahead of the curve, you should start thinking about buying and holding for the long term.

Don’t just take our word for it, though. There’s also brand-new research from IESE Business School professor Javier Estrada.

Javier who?
Mr. Estrada’s recent paper "Black Swans and Market Timing: How Not to Generate Alpha" is one of the most persuasive cases I’ve read for a disciplined buy-to-hold investment philosophy.

Estrada studied 15 major global stock markets for periods ranging from 31 to 79 years, with the full data encompassing more than 160,000 trading days. What he found is "less than 0.1% of the days considered" actually matter to long-term returns, which means that "the odds against successful market timing are staggering."

So … don’t try to time the bottom
Now, this is a dangerous article to go on record with. If the market does tank this year, I’m going to get plenty of profanity-laced emails telling me that I’m "the real fool now" (seriously, you’d think people would be over that joke by now).

But even if we lose money this year (yes, I’m staying invested myself), we’re all going to make a lot more money down the line not by trying in vain to time the market but by adding new money to great companies on a regular basis.

That way, rather than run from the lows, we’ll double-down on them … and supercharge our returns in the process.

Submitted By: Kim O’Connor

 

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Can Someone Really Sell in Seven Days?

February 25th, 2008
No matter where you happen to reside in the United States, there’s a real good chance you have seen advertisements for businesses who can supposedly sell your house in seven days time. The signs for this kind of service litter the nation’s highways and real estate classifieds sections. If you are like most other people you have probably wondered if such advertisements are genuine. Believe it or not, not all of these advertisements are scams and some of the better ones are actually genuine.
 
Many of the advertisements for guaranteed real estate sales are placed by investors who happen to have access to a great deal of capital. By virtue of their access to lots of capital, many of these investors can afford to close very quickly on a piece of property. If one of these investors decides to purchase your home they will also pay for any and all closing costs and arrange all of the paperwork. While the investor might be willing and able to close on your home in seven days time, it’s important to remember that they are investors seeking a return on their investment.
 
Investors willing to close on your property in seven days time will not be willing to pay full market value for your property. They want to buy your property quickly because they want to cash in on the home’s equity. How much the investor is willing to pay for your property depends on several factors including local market trends and the condition and location of your property. If your home is in good condition and is in average location, you can expect the investor to offer somewhere between 70% and 80% of the property’s market value.
 
At first glance it might seem like the investor is really ripping you a new one. But when you stop and consider the costs associated with selling your home the investors offer begins to look a little better. If you enlist the help of a realtor you can expect to pay about 10% of your home’s value to your realtor and for things like closing costs and a small discount to the buyer. The average home takes several months to sell and the longer your home takes to sell, the more money you lose. If your home takes seven or eight months to sell you can easily lose another 10% of your homes value. 
 
If you sell your home in the conventional manner you can expect to lose about 15% of your homes value to various costs associated with selling and holding the property. Selling your home to an investor can actually be a very good way to get cash out of your home quickly. If you are willing to part with some of your home’s equity, selling the property to an investor can be a very good decision.

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Tips for Investing in Bankruptcies

February 24th, 2008
The market is ripe for investing in bankruptcies. There is an estimated two million foreclosures coming on the market in 2007 alone. This means that many people have the potential of making some very good money by investing in these bankruptcies. Here are some things to remember when choosing the properties.
 
Determine which market you want to invest in when looking at the properties on the market. You may find certain areas where the wisest choice is a storefront or warehouse. It may be better to choose multi-family homes. To better understand the market, speak with a real estate agent who knows the area. This will allow you to know what is moving and what is stagnant. The last thing you want is to buy a property which will just sit on the market for six months. The real estate agent can let you know how long certain properties are for sale. The ones selling within the first month or two are the types you want to examine.
 
Find an area which is on the rise. New construction is a good indication of growth potential. A high rate of employment is also a tell tale sign of growth. Investing in bankruptcies in an area which is growing is a very wise decision. You can move the properties quickly when it does come time to sell.
 
You will also want to have a real estate agent who knows the area who is willing to work with you. This is a mutual business opportunity for both of you. The reason is because you can be informed of what the market is doing and the agent can benefit if you choose to list the property you are selling with him or her. Another person you should insist on having on your investment team is a licensed inspector or contractor. You will want someone to be able to tell you of the repairs needed for the properties you are researching. This way you can stay away from the ones which can cost more money than they are worth.
 
Always buy under market value. This is something you may feel does not need mentioned. In many cases the market can crash and what you thought was a good deal will turn into a burden. For instance, a property could be worth $150,000 but is on the market for $95,000. This may look like money in the bank. However if the market is showing comparable properties listed at the same price and remaining on the market for six to eight months, it is not a good choice. There are many properties, at present, whose market value is falling fast. This is a result of the real estate crisis hitting many parts of the country. The prices and values were inflated in the first place, meaning the properties were not worth the initial investment to begin with.
 
Never underestimate what a buyer wants. There are many times when someone thinks there is a demand for one type of home or property when it is not the case. When you are in the business of investing in bankruptcies the home buyer is the one who will dictate what the property is worth. Just because you think you should be able to get thousands of dollars out of a property does not mean it will happen. The schools may not be desirable. Shopping may be an inconvenience. There are many things a buyer looks at besides the property. A smart investor takes everything into consideration when investing in bankruptcies.

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Successful Marketing Strategies for Investing in Bankruptcies

February 23rd, 2008
There are many successful businesses in the world today. Each one started out with a vision. A dream to become the leader in their field. Many times these businesses ran into stumbling blocks. They went down paths which turned out to be failures. The thing that made them successful even with the many failures at different ventures was the marketing strategies they used. There are many tips you can learn from these businesses to become successful in your venture of investing in bankruptcies. Here are just a few.
 
1)      Study the Market. Learn what is available and how you can use it to make money. There are some areas where the best investments are warehouses. Other places are doing great with multi-family rental units. Sometimes you may find the best strategy is to buy and then sell the properties. When you see what is working for other investors you should do the same.
2)      Keep investments to a minimum. Never put more money into a property than you can make on it. When you pay full market value for a property then you are just asking for a loss. You are investing in bankruptcies to make money. You want to get the best deal you can on the properties you are purchasing.
3)      Determine sale time. You do not want to buy in an area where the properties have been for sale for six or eight months. You want a market that is moving. You want to determine how long you would have to hold onto a property before you can sell it for a profit. You can only learn this when you research the sales that have taken place in the community. This will also give you a good understanding of what you could sell your properties for when it comes time to market them.
4)      Supply and demand. Just because you see a property you know is great, does not make it a good investment. A one or two bedroom house is great for a neighborhood filled with senior citizens. Finding this same home where there are large families would just cost you money. You could probably sell it but not as fast as a three or four bedroom home. Find out what the people in the area are looking for before you decide on which investment to buy.
5)      Joint ventures are profitable. There are many companies which team up to make their products more accessible to the public. Sometimes companies use the knowledge of each business to make a successful venture. The same is true in real estate. The truth is if you do not know then ask. You may have only invested in houses. You have no experience in commercial properties. This is when you should find a real estate investor who knows about commercial properties to help you seal the deal. With your finances and their knowledge you can make a large profit. You may also find the deal was not as great as you thought it was. Learn from the experience of others who have invested in bankruptcies. 

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Setting Up Your Investment Team

February 22nd, 2008
Investing in real estate is not a one man show. There are many people who work behind the scenes to get a deal to go through. You can ensure a better track record and greater success by setting up your investment team. It does not take much to put one together.
 
The first person you should choose for your investment team is a licensed real estate agent. You will want someone who is familiar with the neighborhood as well as the types of properties in which you are investing. A good real estate agent can let you know how the market is moving. He or she will be able to tell you when a new property is on the market. This same person can also bring potential buyers to your open houses or introduce you to others who may want to view your properties. The professional real estate agent works for the seller. However, there are times when you can offer to pay commissions and have the agent work for you, the buyer. The choice is yours. Either way, to have a real estate agent as part of your investment team only makes sense.
 
Another member of your investment team should be a licensed contractor or inspector. This is the person who is going to be able to determine what repairs need to be done to the property to get it ready for sale. You can also have the properties inspected prior to buying by this team member. You do not always know what you are getting into when the property is vacant. The contractor or inspector has been trained, or has the experience to spot potential problems. They can tell you if there has been significant water damage. They can spot termite or other infestations. This team member can save you a great deal of money in the long run.
 
When setting up your investment team, you should always consider adding another investor to the group. This is someone who may be more familiar with certain properties than you are. He or she may know commercial properties when you have only been dealing with single family homes. This person may also be able to help back a potentially large investment when you have no other resources available. Joint ventures are made all the time in real estate. Having another investor on the team means you can take advantage of deals you may otherwise have to say no to.
 
The last person you should have on your investment team is a lender. The lender can offer you new ways to finance a property. He or she can also keep you informed of what the market is doing when it comes to interest rates. Many times the personal relationship you have with your lender can help get a loan approved which might otherwise not go through. You can also be privy to certain properties which have been foreclosed upon by the lender’s organization.
 
Never think of real estate as a one man show. There are too many other people who are working behind the scenes to put the deals together. These are the people you want to have on your side when setting up your investment team.

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Real Estate Investment Programs

February 21st, 2008
There are many ways to make money with real estate. You will find infomercials and books anywhere you look telling you how to amass a fortune by dealing in real estate bankruptcies. Many of these self proclaimed experts are making their money by selling a program. If the program worked as well as they say it does then why do they advertise so much about what you can afford to buy from the wealth you will make instead of telling you how to do it? Remember those that can’t, teach!
 
Just because someone says there is money to be made with no money down does not mean it is going to work with every real estate deal that comes along. You need to understand the rules of real estate. This is something which many of these guru’s forget to mention. It may work with somebody who is willing to carry a note on the properties. It will not work on a foreclosure or bankruptcy in which the seller needs the money to rescue themselves from total devastation. They want money and if you do not have a buyer for the house, the bank is not really going to let you walk out of the closing with the key without some money somewhere in their pocket.
 
The truth is that anyone can invest in bankruptcies and truly build an empire with the properties they buy. This is done over time, not over night. You need to understand the real world of investing before you spend a fortune on programs which are nothing more than scams used when people were so desperate to buy or sell they would try anything.
 
If you really want to know how to invest in bankruptcies find a real estate investor who has done it. Make sure your source is someone who has put several deals together. Do not take the word of someone who fell into a great deal because the neighbor’s great uncle’s wife had a brother who died and left the house to someone who could not afford it. Gain from experience, not whims.
 
People who have made money in real estate investing are not afraid to show you what they know. They are proud of being able to put good deals together. They know there are so many on the market now that no matter what, there is enough for every one to gain from them. Ask how they did it. Find out what these experts know. They will tell you. You may even be surprised to find they will help you with the first deal.
 
Many of the experts advertising on television are people who may have made a deal or two. Their real money has come from selling the program you are watching the ad campaign for. Any reputable real estate investor who is selling their information will usually be doing it in a seminar. In the seminar you will learn many secrets. No, not all of them will be revealed. This is saved for the books or tapes you can buy at the end of the session. Yet you will find many of the hints and tips being offered in the seminar will work. You may not get all the lists if you do not buy the book. These are the lists you can find on your own anyways.
 
To make sure the program you are deciding about gives references. Not paid actor claims which state they have made millions doing the exact program to invest in bankruptcies. Find people who have bought the program and have had success. A real program that works will have people who can tell you it does work and they have done it. They will let you know what is wrong with the material or what is outdated. The program writer will not be afraid to let you talk to these people. This is because he or she knows the system will work for you. You can make money with certain real estate programs on the market. You just need to do your homework and decide which one is right for you.

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