Buy, Fix and Hold. An investment strategy in 2012 Sacramento Real Estate

Doug Reynolds, a Sacramento Area Realtor, discuss an investor strategy that will be prevalent in the 2012 Sacramento Real Estate Market.  It's called: Buy, Fix and Hold.  Now that the market has bottomed out in the area, investors who have been sitting on large amounts of cash are now picking up real estate investments.  They are purchasing homes that are in poor or fair condition, fixing them up to be in average to good condition and then renting them out to be held for 5 to 15 years.  This is one of the reasons for very high buyer demand in the Sacramento area for 2012 and why the market is now a sellers market with very little inventory.

clear skies,
Doug Reynolds
 

Where Are All the Home Sellers?

As we’ve been discussing in our Sacramento area: low inventory, high demand and a flattening sales price.  It’s happening in other parts of the country as well.  Check out this article from the Wall Street Journal.

By Nick Timiraos of the Wall Street Journal

Inventories of homes listed for sale in January dropped by 6.6% from December to 1.77 million, the eighth straight month that listings have declined. For-sale listings are 23.2% below year-earlier levels and at the lowest point since the housing bust accelerated five years ago, according to data from Realtor.com.

All but one of the 146 markets tracked by Realtor.com had fewer homes listed than one year earlier, with Springfield, Ill., as the outlier.

Compared with one year earlier, listings were down by a whopping 55% in Fort Lauderdale, Fla., and by nearly half in Miami, Phoenix, and Bakersfield, Calif. Markets with the smallest declines included New York (-1.7%) and Philadelphia (-3%).

Housing inventories typically rise heading into the spring selling season, but only four markets saw inventories increase from December, all of them in Florida. San Francisco and Boston, reported some of the largest monthly inventory declines, of 16% and 10%, respectively.

The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.

The National Association of Realtors estimated on Wednesday that there were nearly 2.31 million homes for sale at the end of January, a 21% decline from one year earlier. The NAR estimates that at the current pace of sales, it would take 6.1 months to clear that inventory, the lowest level since April 2006, before home prices began falling.

Low inventories are a prerequisite for any housing recovery because a glut of unsold homes has been one factor pulling down prices.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

How Long Before You Can Buy After A Shortsale, Foreclosure, Or Bankruptcy

Unfortunately, in our economy man people have got through a short sale, foreclosure or bankruptcy.  The good news is you can establish your credit and in a fairly short people of time, be able to purchase a home again with the currently historical low interest rates and very low prices.  Take a look at the video to see when you'll be able to start looking again as long as you have got your FICO back up.  Call or email if you have any questions.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

What Your Remodeling Contract Should Say

By: Oliver Marks

Review your remodeling contract carefully and adjust it to make sure it protects you in terms of payments, work schedules, and project specifications.

The essential job of a construction contract is to spell out the project’s “scope of work.” This is the document you and your contractor will consult throughout the job, so make sure it’s as detailed as possible.

Some states require the contractor to write his license number on the document and to include a clause that allows you to rescind within a certain time period after signing. Check your state laws to learn what your construction contract should contain.  

A thorough contract is filled with numbers and stipulations that will take several hours to review, so leave enough time to review it before signing. The contract should state:

·         Contractor will secure all necessary permits and approvals

·         Where and which walls will be moved

·         Payment schedule

·         Work hours

The contract needn’t contain product specs on its pages: It may refer to the contractor’s attached, itemized bid.

Set a payment schedule

The contract is your summary of how much and when you should pay for completed work. Payments should be linked to work milestones, such as when the foundation, rough plumbing, and electricity are completed. Here are some general guidelines:

·         First payment should be no more than 10% of the total job.

·         Final payment should be enough money--at least a few thousand dollars--to make sure the contractor returns to correct niggling details.

·         Keep back enough money to hire someone else to finish the work if things go south with your contractor.

Schedule start and end dates

A boilerplate contract rarely says when the job will begin and end, so make sure you add those details to the document. 

Look at these dates as a timeframe, not a minute-by-minute promise: Delays happen and an eight-week job wraps up in nine. But if the project drags on for months, written start and end dates will help make--or defend--your case in court.

Address change orders

Make sure the contract states that any changes that will affect the cost of the job must be priced in writing and countersigned by both the contractor and home owner before that work commences. This line ensures that offhand discussions don’t result in unforeseen additional costs. 

Written change orders also help you update your budget and resist the frequent urge to expand the job.

Research your arbitration options

Many remodel contracts contain a clause that stipulates that an arbitrator, rather than a judge, will resolve disputes. This clause can save you time and money because a court fight is expensive, even if you win.

Problems arise, however, when the contractor names a specific arbitrator.

“There are some big, national, well-respected arbitrators, like the American Arbitration Association,” says Tampa, Fla., attorney George Meyer, chairman of the American Bar Association’s Forum on the Construction Industry. “And there are other questionable arbitrators that always side with the contractor.”

Before you sign the contract, research the arbitrator named. If you don’t like what you find out, insist on another.

Turn down contractor’s warranty

Agreeing to a warranty may limit your contractor’s liability and cost you money in the end.

Warranties often are loaded with exclusions and time limits that favor the contractor, not you. Frequently, state statues provide better protection, which you forfeit if you accept less from the contractor. Unless a lawyer reviews the contract, strike the warranty clause

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

What should I do before the appraiser goes out to the house?

Doug Reynolds, a Sacramento Area Realtor, discusses the topic with a local appraiser.  Ryan Lundquist, Ludquist Appraisal Company, provides tips for both buyers and sellers as to what things can be done to make the appraisal process smooth, seamless and provide the best outcome for the valuation inspection.  Give Ryan a call or email if you have any questions about the appraisal process (http://sacramentoappraisalblog.com/) .

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

 

'Buyer's market' expectation leaves homebuyers disappointed

By Jim Buchta, Star Tribune

MINNEAPOLIS -- Jessica Harrison thought she knew what to expect when she decided to look for a house: a buyer's market.

And why not? Prices in Minneapolis, as in much of the country, are down sharply since 2009. And with so many foreclosed properties for sale, Harrison was certain she would find a good deal fast.

Instead, the Minneapolis teacher waded through countless homes during what became a two-year search. Most needed too much work. When she found a move-in-ready house, she lost out to bids she couldn't match. Harrison tried to buy a home through a short sale, too, but the deal fell through after six months.

She finally reached a deal on a tidy house in south Minneapolis and expects to close at the end of this month.

"There were multiple properties available, but I wanted to get a house that I could move into," Harrison said. "A lot of the houses needed a lot of work, and I didn't have the money or resources to do that."

Homebuyers no longer can assume that it's easy to buy a cheap house in a good location. Make no mistake: There are still more sellers than buyers. But the decline in listings and the quality of the options are slowing the search for those on the hunt, as would-be sellers hold on to their homes until the market improves. U.S. home listings in September fell to a four-year low, according to Realtor.com.

"(Buyers) have to be patient until the right home comes along," said Ryan Haagenson, a sales agent with Re/Max Results in Minneapolis. "And ready to pull the trigger when it does."

Homebuyers can run into complications during their search in other ways. Often, they may come across houses that appear available but already have an offer. When an offer is made on a house that is foreclosed or going through a short sale, a third-party approval is required, usually a bank.

In those cases, the agent isn't required to change the status of the listing from active to pending.

During a recent house hunt for a client, Sarah Fischer Johnson, a sales agent with Edina Realty, found 28 three-bedroom townhouses in Shakopee, Minn. They were priced from $250,000 to $350,000, but nine already had offers awaiting lender approval.

"The data would lead any buyer to believe that it's a buyer's market," she said. "No, and that's the sad part."

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

Arden Park and Arden Oaks - Sales Data for October 2011

There were 5 homes sold in Arden Park and Arden Oaks in October2011.  That is a vast decrease from the 13 sold in the month of September.  Here are the addresses and specific information:

There are currently: 18 active listings, 9 active short sale listings, 7 contingent short sale listings, and 4 pending sales.
If you would like more information (pictures, listing history, what type of sales they were, etc.) feel free to call or email and I’d be happy to provide that for you.  Call or email me if you are looking to buy or sell in the Arden Park or Arden Oaks area.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

Pricing Your Home Right: Art or Science?

When you and your REALTOR® sit down to analyze comparable homes and recent sales, you may find that prices of homes similar to yours can be thousands of dollars apart. 

It’s tempting to pick the highest price and say, “Let’s list it here.”

 That’s a strategy that usually works in an accelerating market, but what if your neighborhood is flat or declining? Would you pick the lowest price and list it there? Probably not.

 That’s why pricing your home is as much an art as a science.

The science of home price analysis

 As a home seller, the science is choosing the right price at which your home will sell. How do you do that? By analyzing your local real estate market conditions.

 You want the highest price, while the buyer wants to pay the lowest price. The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value.

 To best determine market value, you have three important tools: CMAs, appraisals, and your REALTOR’s® knowledge of the market.

 The comparative market analysis

 A comparative market analysis (CMA) is a side-by-side comparison of similar homes for sale and recently sold homes in your neighborhood. CMAs are composed of data compiled for comparison purposes by your REALTOR’S® multiple listing service (MLS.)

 REALTORS® use CMAs to illustrate the range of homes in the marketplace and the features that make them unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc. As a seller, you should be able to see where your home fits – in the top or lower price range of similar homes.

 Buyers get CMAs from their practitioners to help them understand the selection in the market, and to prepare them to make an offer on a listing.

 CMAs are typically used by buyers and sellers before an offer is made.

 The appraisal

 An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including MLS data and conforming loan formulas.

 Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a home buyer. Appraisals come after an offer is made when the buyer applies for a loan.  Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.

 Buyers have one advantage over sellers when it comes to appraisals – their bank has the last word. If the appraisal doesn't meet the contract price, the bank refuses to make the loan, unless the seller agrees to a new contract price. 

 You can hire an appraiser to help you determine at what price a bank will loan a buyer money to buy your home.

 The art of the deal

 It’s your REALTOR’S® knowledge and experience in the local market that can take the numbers and put them with other market conditions. She or he will help you read the market, and help you choose the right price, based on current trends analysis and news.

 Her experience with current customers tells her how buyers are behaving today. Are they paying top dollar, or saying they’re waiting for prices or interest rates to drop?  

 His network of contacts provide valuable intel into whether other sellers have run into problems. He helps you avoid the same issues. For example, did another seller lose a deal due to an inadequate disclosure or bank appraisal?

 Your REALTOR® knows your motivation, what you need to get out of the home financially, and your terms. While it’s her job to help you meet your goals, it’s also her job to help you face the realities of the current marketplace, whatever they are.

 His job is to help you price your home high enough that it sells quickly, without sitting on the market longer than you can afford. By the same token, his job is to make sure that you don’t list so low that the market questions the condition of your home.  

 And that’s where the art of the deal comes in – putting all the moving parts of the market together.  

It’s an art and a science

Ultimately, you are the one who will choose your listing price, based on your understanding of all the data. And the results will tell the tale.

 You can’t list and sell your home for any more than a buyer is willing to pay.

 And that makes pricing it right both an art and a science.

clear skies,
Doug Reynolds
 
www.BHGshortsales.com

How credit influences your home financing options

Whenever a new buyer client calls,  I ask if they have been pre-approved for a loan yet.  Most reply “no.”  From there I explain that before you begin looking at potential homes, you need to get pre-approved.  For most buyers, it’s a fairly easy process of speaking with a loan officer on the phone for 10 – 20 minutes.  Some buyer might need to provide the loan officer with some simple documentation and then within a few hours to a day or so, the loan officer should have a pre-approval for the buyer.  At that point, the buyer will know their max purchase price, what their monthly payments would be, what the current interest rate is, what costs they will have in getting the loan and what type of financing would be best for them.  Also, most buyers don’t have a loan officer already and need help getting pointed in the right direction.  That’s when I recommend 2 or 3 excellent loan officers for them to contact.
clear skies,Doug Reynolds
 www.BHGshortsales.com

Here’s some info for you to glance over before starting the pre-approval process.

How credit influences your home financing options

One of the most important steps in buying a house is financing the purchase. Your credit is one of the first things that lenders examine when considering you for a loan. Making payments on time is the most important way to establish good credit. A pattern or history of frequent late payments can lead to a poor credit score that could negatively affect your ability to be approved for future loans, or result in home financing at a higher interest rate. Conversely, having a good credit score will let you secure a home loan at a lower interest rate.

Your credit report

When you are being considered for a home loan, mortgage lenders will review your credit report, which displays your credit history and credit score. Your credit score, also called credit rating, is based on a summary of your overall credit history. It is shown as a number that provides lenders with a fast and objective way to predict how likely you are to repay a loan.

Lenders use your credit report to decide on the following:

·         Whether or not to approve you for a loan

·         The type of loan for which you qualify 

·         The interest rate to charge you

The importance of good credit

Your credit history will follow you throughout your life. Therefore, making good credit decisions along the way will help a great deal when you're ready to realize the dream of home ownership.

How to Come Up With a Game Plan for Buying a Home in the Sacramento Area

Doug Reynolds, a Sacramento Area Realtor, sits down with Erick Perpich to discuss the best way to start thinking about buying a home in the Sacramento Area. Erick Perpich is a local loan officer with Republic Mortgage, a direct lender in Folsom. Erick explains that even if your credit is bad or you don't have enough money for a down payment, it is in your best interest to talk with a loan officer to see where you are at today and come up with a game plan for moving forward and getting you into the position to buy. The game plan might only take a month or a year but there are strategies available to speed up the process. Along with that, there are some down payment assistance programs that can help certain buyers with the down payment and closing costs. Give Erick a call today to discuss your personal game plan for buying a home in the Sacramento Area.
Erick Perpich
Republic Mortgage
916-549-3577
eperpich@repmtg.com

clear skies,
Doug Reynolds
 
www.BHGshortsales.com