FSBO IS A NO-GO

FSBO IS A NO-GO

It's hard to resist commenting on the story which recently appeared in the Wall Street Journal regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and lifelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do.
After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sambrotto has been espousing for over a decade. Let’s look at two of those myths:

Myth #1 – You Will Pocket More Money Selling on Your Own
Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale?

From the WSJ article:
“The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.
By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”

Myth #2 – The Internet Alone Can Sell Your Home
Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet?

From the WSJ article:
“Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling success’ and switched to a broker because many buyers were so reliant on brokers.”

Bottom Line:
There is a reason the real estate industry has been around for centuries: it performs a valuable service.

Atypical Abodes

ATYPICAL ABODES

Flickr and Yahoo have comprised photo galleries to showcase the top Atypical Abodes of 2011 (Flickr) and the strangest homes you can currently buy (Yahoo).  Whether you're just curious or seriously interested, these homes range from fantastical to incredible to mind-boggling.




Mushroom House, Rochester, NY
Photo: Rich Testa of RE/MAX Advance



"Eye of the Storm" home in Sullivans Island, S.C.



No information has been provided about this exquisitely strange residence!



Pagoda House, Wapiti, Wyoming.  This home was unfinished at the time the photo was shot.



Conch Shell House, Isla Mujeres, Mexico



Photo: Jesper Voetmann Mikkelsen, Denmark

See the complete Flickr gallery.

See the complete Yahoo article.

Chicagoans. Good news. Carpe Diem. Great time to buy!

Case-Shiller Index Posts Second Straight Increase

 

For the second month since recording an official double-dip in home prices, the S&P/Case-Shiller index has posted an uptick.

Data released Tuesday by Standard & Poor’s shows that 16 of the 20 metros included in the study and both composites reported positive monthly increases.
The 10- and 20-city composites were up 1.1 percent and 1.0 percent, respectively, in May over April.
Detroit, Las Vegas, and Tampa were down over the month and Phoenix was unchanged.
On an annual basis, Washington D.C. was the only metro with a positive rate of change, up 1.3 percent.
The remaining 19 metros were down in May 2011 versus the same month last year. Minneapolis fared the worst posting a double-digit decline of 11.7 percent.
The 10-city and 20-city composites recorded annual declines of 3.6 percent and 4.5 percent, respectively, when compared to May 2010. (Last year’s spring season had the benefit of federal homebuyer tax credits which served to boost activity.)
Still, David Blitzer, chairman of the index committee for S&P, says he’s seeing some seasonal improvements in May’s data.

Feng Shui your home with Plant Energy!

B Uplifted with Plant Energy

Plants have an uplifting affect, raising the energy in stagnant spots and corners.  The best plants to use are upward-growing with rounded leaves.  Cacti and plants with spiky stiff leaves are less positive.  Dead plants, dried flowers, and potpourri have dead energy and should be thrown away.
To increase Energy flow, place plants in the following areas:

• On your desk or next to your computer
• In a bathroom to increase healthy energy
• Staggering plants down a hallway can slow down energy
• Soften corners with floor plants

Here are some examples of house plants that require low light:
Peace Lily, Camille Dieffenbachia, Ficus, and Rubber tree


 
These plants require medium light: Jade, Croton, Fiddle leaf fig, Philodendron

High light plants: Weeping Fig, Zebra plant, Orchids
  

Choosing the Best Offer

 

 

 

Choosing the Best Offer

You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.
1. Understand the process
All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines
Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a prequalified or cash buyer.

3. Create an offer review process
If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally
Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term
Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures—such as appliances, furniture, or window treatments—to be included in the sale that you plan to take with you?
Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.
Have the buyers attached a prequalification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can’t get a mortgage, and they’ll take their earnest money back, too. Are you comfortable with that uncertainty?
Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?
With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative
If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.
G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Getting Started with Apartment Building Investments: Lesson Seven: How To Retire Rich

Getting Started with Apartment Building Investments: Lesson Seven: How To Retire Rich

by K-Diddy Rocio

This is not meant to scare you, but according to The Wall Street Journal, the average 35 year old person in the United States will need to have saved a nest egg of at least 3 million dollars by the time they retire at age 65.  That may seem like an astounding number and it basically leaves investors a few choices to build a nest egg of that magnitude.

The first choice would be to play the lottery and hope.  Unfortunately, right now this is the plan that many millions of Americans are undertaking right now.   You might be one of them.

The other, and more common route, is to contribute to your 401k and maximize on your employers matching contributions.  This has worked for some people in the past but as good, high paying, professional careers become more scarce in the United States this route doesn't appear to be a wise choice for most people.  Most people's 401ks are mostly invested in a basket of stocks, mutual funds and bonds.  The problem with putting your nest egg into a 401k is the fact that you are basically counting on the fact that the stock market will be in a bull market when you are ready to retire.  If not, you will end up like many people who in 2008, when the stock market nose dived, were forced postpone their retirement by another decade because the value of their retirement nest egg had dropped so dramatically.

So what is the answer to securing your retirement future?  It just might be a strategic apartment building investment.  Here's why:

1) Other People's Money. As opposed to investments in stocks apartment buildings offer the opportunity to invest with other people's money.  In fact, investing in apartment buildings allows you to purchase the building with up to 100% other people's money by using a combination of partnerships and traditional bank financing.  In addition, the balance of the mortgage is paid off over the life of the loan using other people's money in the form of rent payments made by your tenants. 

2) Scarcity and Demand.  A record low number of multifamily units will be completed this year. The increase in rental housing demand is being met by a sharp reduction in the supply of new apartments. Just to put this into perspective, over the 10-year period from 1998 through 2008, there's an average of about 240,000 new rental completions per year. Last year, there were 160,000. And this year, completions are expected to be below 80,000 units, which would make it a 50-year low. This level of new completions is actually less than the estimated annual loss due to obsolescence, meaning that we're seeing essentially a net zero increase in the stock at a time of strong demand. New starts are not expected to approach historical levels until late next year, 2012, which means it would likely not be until late '13 and into '14 that we'll see completions return to historical levels. And obviously it's the completions that are what's important in affecting the supply demand fundamentals.

3) Demographics.  Roughly 3 million young adults had been living with family during the past five years, according to data from the Census and real-estate investment brokerage firm Marcus & Millichap, and housing experts estimate that they now generate about one-third of rental demand.

4)  Instant Returns.  Factoring in maintenance costs and other variables, an investment property should produce at least a 6% return on the initial cash investment in the first year after it is purchased. For example, an investor who puts down $250,000 in cash on a $750,000 property would need to clear at least $15,000 in the first year.

What does all of this mean to you as an investor?  It means that the time to begin buying apartment buildings is right now.  I am not promising that you will be the next Donald Trump but I certainly believe that apartment building investing now offers one of the safest and securest ways to secure the comfortable retirement that you deserve.

The next step is to get started.  But don't go out today and begin buying apartment buildings unless you are properly prepared.  You need to arm yourself with all of the tools, information and market knowledge to ensure that you are investing in the right property that will not only continue to pay for itself over the years but also offer you a hefty monthly cash flow that will put money in your pocket.

5 STRATEGIES FOR NAVIGATING THE SUMMER CLEARANCE SALE - ON REAL ESTATE!

5 STRATEGIES FOR NAVIGATING THE SUMMER CLEARANCE SALE - ON REAL ESTATE!

 

 

Home prices are low, interest rates are low - real estate is basically having a summer clearance sale! But unlike buying a clearance-priced car or computer, making the wrong move in this real estate 'sale' can have disastrous effects, from losing your dream home due to a bad bid to ending up with a money pit of a property.
Here are a few money-saving, pitfall-avoiding tips and tricks for buyers who want to do some smart home shopping this summer.
1.  Have a vision in place, before you start your house hunt. Actually, have several visions in place.  Have a financial vision, complete with a clear picture of what your total income and expenses look like, in the  “after homebuying”  view, including what you pay out for your home and related expenses, like HOA dues and homeowners’ insurance.  Have a vision of your life in your new home, including what you want to do, with whom and where you want and need to go - in the work, family and recreation areas of your life.
If you kick off your conversations with your mortgage broker and real estate agent with a clear understanding of the lifestyle you are looking to create, you’ll be much less likely to get derailed. With a clear vision in place and, ideally, on paper, you can clearly communicate your wants, needs, goals and financial boundaries to your professionals, telling them what you can afford, rather than trying to shoehorn your financial plans into one-size-fits-all mortgage guidelines. With a vision, the temptation of an uber-low-priced, but completely inappropriate, home will not lure you into buying the wrong place for your needs. (Nor will an amazing home that is simply out of your personal price range - no matter how great a value it is for the money!)
2.  Don’t let affordability get between you and reality. High affordability doesn’t necessarily mean you can get every single thing you want - and name your price. The fact is, even people who are spending millions for their homes don’t get everything they want!  I’ve seen buyers insist that they need X number of bedrooms and Y number of bathrooms in move-in condition for a price that is just not going to happen, even in this clearance sale climate, and end up looking and looking, ad infinitum.
If your agent has shown you home after home that is what you want, but has sold for more than you want to spend, and you’re confident that you can find or cut a better deal because the market is down and you just so happen to be a brilliant negotiator (!), you might be at risk of falling into this trap.  There are deals to be had, but if you don’t stay grounded in reality, you’ll end up chasing your tail and missing out on the tax and lifestyle advantages of homeownership.
If you’ve been house hunting for months and months on end, your agent keeps trying to tell you that you should search in a lower price bracket, you have repeatedly gotten overbid or you just can’t seem to find the precise home you seek in the location and price range you seek, at least consider the possibility that you might have an outsized wish list for your budget. Take a step back, revisit your vision, and remind yourself what’s really important.  It’s okay to save some “must-haves” and “deal-breakers” for your next home purchase!
3.   Get a local expert to brief you on the local market, then screen out the noise.  Now more than ever, it’s essential to have laser beam focus on the information and strategies that will get you what you want - whether it’s an amazing deal on the home you’ve always wanted or simply success at becoming the owner of your first home at a price you never thought would ever be possible. Otherwise, you’ll end up all over the place, spending your time, money and sanity attending auctions, getting worked up over distressed properties that aren’t yet for sale, trying to negotiate deals with sellers who are in no position to cut them and having your lowball offers on bank-owned properties rejected time after time.
Don’t let a news story about a guy in Minnesota who got a home for $3.27 be the basis for your entire home buying strategy. Instead, ask around and get referrals to a local broker or agent who has a track record of helping the people you know.  Read their answers on Trulia Voices and ask them your own questions to get a sense for whether they might be a good fit for you - if they are, and you trust them, then consult with them on the dynamics of your local market.  The market is down everywhere, relative to 2006.  But some markets - and some neighborhoods within markets - are still seeing multiple offers and home prices which are relatively recession-proof, compared to what you’d expect from the national news. 
Once you have a strategy in place, work it - don’t let your acupuncturist or shoe repair guy convince you that your strategy is wrong, that you could get the place for cheaper or that the bank should absolutely do every single repair, or you should walk away from the deal.  Many would-be buyers lose out on great homes because they take negotiating advice from their holistic veterinarian over that being offered by their broker or agent.
4.  Read everything. Good faith estimates. Contracts. Disclosures. Inspection reports.  There is a long, long list of multi-page documents that are very easy to “just sign” when you’re in the heat of the hunt and think you’re on the scent of an amazing deal. I’m not suggesting you ask for a week-long pause button to read every document, either - rather, read them when you get them, ask questions, and keep asking until you understand the documents.
Many buyers this summer will make offers on more than one home before they get into contract on “the one,” and many of those properties will be short sales or foreclosures.  With distressed properties, every contract is different, so it behooves you not to go on autopilot, just skimming the papers as you might otherwise. Also, inspection reports might reveal red flags and condition issues that you’d normally expect to see in the seller’s disclosures.  It’s especially critical, in these situations, to fully understand as much as you can about the property, your loan, and your obligations and due dates under the contracts.
5.  Stop your mental accounting and do the actual math - on paper.  In the field of behavioral economics, mental accounting refers to the tendency we humans have of doing math in our heads, separating things like easy money (e.g., the so-called “instant equity” from buying a home for less than it’s supposedly worth) from hard-earned wages and salary, and making spending decisions differently from these different mental accounts.
On the scent of a good deal, and in the heat of the hunt, even the most meticulous homebuyer can go up a few thousand in offer price to beat out other buyers.  No problem, right?  Well, but then when the inspector uncovers a few needed repairs, they make a mental guess as to what they’ll cost, and add that in - again, mentally. Then, when the lender requires a few extra thousand bucks than expected to close, that goes on top, but again, only mentally.  And mental money tends to stretch a bit longer than real money does! 
So, you can see how it’s possible to break the bank when you thought you were in great shape because you scored such a great purchase price for the property itself. 
Even if you hate budgets with every iota of your being, buck up on this one project, pull out the calculator or open up a spreadsheet and keep track of every line item. Get actual repair bids during your inspection period, to the extent possible, and get your math mojo on. It’s fine to buy and incur these overages here and there, but keeping track of them is key.  You know what I like to say - surprises are for birthday parties, not for real estate transactions, and not for your bank account, either! 
Keeping a strict tab on the expenses you incur during the transaction - or will need to incur afterwards -- will save you so much drama later.