Calculating costs of selling a home is one of the biggest struggles I see homeowners having.  One of the first consultative elements we have in our process is to help a potential home seller determine their net proceeds, and educate them on the costs of selling a home.  Most people hear “costs of selling a home” and think…. commissions.

That’s only part of it.

Regardless of whether a seller uses a Real Estate agent or not, those of us in Spokane County we have a 1.78% excise tax.  For all intents and purposes that’s pretty dang close to 2%.   There’s now way around excise.  Sellers also must pay for one-half of the Closing Agent fee (calculated based on the dollar amount of the transaction), and title insurance for the new buyer.  You must also consider recording fees and possible utility holdbacks.  All of this is before agent costs.

Knowing what you will net is highly important, and as Stephen Covey says “Begin with the end in mind.” in his book The Seven Habits of Highly Effective People, knowing this is crucial to negotiating on your home.

Do you know what your net proceeds will be?  If you’d like us to help you calculate please contact us or call (509) 990-7653.

By Jolene Barrington, Buyer’s Broker

It is no wonder why today’s home buyers are more reluctant than ever to purchase a home. With the “collapse” of the real estate bubble and the current “state of the economy” there is plenty to be concerned by. However, a recent survey published by the real estate giant, Trulia, shows that 70% of Americans still consider home ownership an integral part of the “American Dream”.* Owning your own home still represents a certain pride that cannot be duplicated by renting or leasing. Regardless of the depressed market, our society still maintains the important affects owning a home has in a family environment. Home ownership provides a safe haven to raise families. For most, home ownership equals stability; something that is becoming more and more difficult to obtain.

Yes, home ownership is still viewed as most to be an invaluable part of the American Dream, but the American Dream is evolving as the economy changes. Home buyers are becoming more practical. Gone are the desires for expansive floor plans, a plethora of square footage and acres and acres of land. Today’s home buyers are more aware of their use of space, efficient designs, smaller footprints on the environment and close commute to town, work and schools.

With interest rates plummeting to history lows and good “deals” on nearly every residential block, it is still a good time to be a part of the American Dream.

*Trulia Resource

Photo Credit: Aroid.

http://www.youtube.com/watch?v=Q5PHz6EOuko

Believe it or not, one of the most common questions we get is “How do I buy a home?” In this video Aaron highlights some of the advantages to working with a buyer’s agent and how a new buyer can get started buying a home.

We get a lot of questions from investors looking at Bank Owned Properties.  There is a lot of confusion around the owner occupancy rules surrounding many FNMA and FHLMC owner occupancy requirements.

It’s not uncommon for the bank to restrict offers to owner-occupied buyers in the first one to two weeks of the initial listing.  Undoubtedly this is because they usually net more money from an owner occupied buyer than they do an investor.  On many properties, they’ve made considerable investments in carpet, paint and sometimes appliances to make the property more appealing to owner occupied buyers.

“Can’t I just SAY I’m going to be an owner occupied buyer, and then not occupy?”

Well, the answer is, yes… you can say and do whatever you want, but there are some things you need to know.

1. You have to sign an addendum stating that you are going to occupy the property within 60 days and reside there as your primary residence for at least one calendar year, OR pay a penalty of $10,000 (or something very similar, see example contract.)
2. They will check.  We’ve been hearing more and more about banks doing occupancy checks after closing.  With $10,000 on the line, it could be a great way for them to recoup lost revenues.
3. Your agent has to sign.  Your agent signs certifying that they don’t know anything about the occupancy being false or misleading that they are encouraged to notify FNMA.

At the end of the day we strongly encourage you to abide by the owner occupancy requirements on the transaction, there are serious consequences.

What do you think?

Comment below and let us know what you think about Fannie and Freddie’s owner occupancy requirements.

Photo Credit: Iluvcocacola

Buying a home can be scary…  Even for those who do it all the time.  

We have identified the key aspects to buying a home, the factors where most home buyers “trip-up” and have created a FREE Dinner Class we call:

“Avoid Common Pitfalls When Buying A Home”

Instructed by Cassie Miller a Real Estate Broker and home buyer specialist with years of experience behind her.

The free course will outline many key elements including:

• Low to no-down financing (yes it still does exist in some scenarios)
• The home buying process (isn’t it easier to do something when you know the steps?)
• Evaluating how much home you can afford
• How owning a home can make you financially independent

A free light dinner will be provided to all participants who RSVP and time will be left at the end for Question and Answer with actual Real Estate Agents and Local Area Lenders.  

August 11th From 6:00 – 7:30 PM PST

 Interested?  Sign up here!

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

We get this question a lot! I just wrote an offer on a house – when do I get my keys? Great question and most commonly the answer is at closing. The problem is many people define closing as many different things.

Some buyers believe they get their keys when they sign all the paperwork, which in most cases is incorrect. That paperwork has to make an incredible journey before the home transfers possession.

1) Bank generates loan documents & sends to closer
2) Closer receives and prepares documents per banks instructions
3) Appointment set for parties to sign
4) Once all parties have signed Bank receives docs back for review, if NO conditions bank clears to fund and sends money to closer
5) Closer sends documents to courthouse to be legally recorded
6) After legal recordation, funds are dispersed to seller
7) You are THEN legal owner of the home and entitled to keys (unless otherwise specified in the contract).

This process can vary some, but GENERALLY speaking this is the case, have questions? Contact us!

http://www.youtube.com/watch?v=hS1ZucEtxzk

A lot of people are under the impression that the first offer submitted wins.  This is incorrect.  It’s not a race.  It’s a negotiation.

Depending on the market conditions, we see multiple offer situations on homes that are priced in the market.  They are homes where the price is so dead on that multiple buyers compete to buy the home.  In these cases offers are submitted and the offer the SELLER selects is the offer that wins.

A lot of times the seller will bounce back with a “Hey, I’ve got more than one offer, give us your best offer by tomorrow” letter.  We know how to handle these, and have been in a multiple offer situation more than once!

Check out the video and let us know your thoughts in the comments.

http://www.youtube.com/watch?v=68Ho7FjeDao

So you want to buy a house?  GREAT.  We get this question all the time, “I’m a first time home buyer, I don’t know where to start.”  Well, if you’re calling us or reading this blog, you’ve done the right thing.  In 2010 81% of home buyers bought through a REALTOR, it’s important to have great representation when you buy a house.  Best of all, the SELLER pays for our services.

A first few steps you want to take:

1) Talk to a lender – We cannot stress this ENOUGH.  You need to know if you can qualify to buy a home prior to offering, this will allow you to make necessary preparations in your budget etc., and know all the costs associated with buying.

2) Talk to a REALTOR (or a team, like us) who specializes in First Time Home Buyers.

3) Do your homework – get utility bills, tax information etc., on the houses you are interested in.

Have more questions, call us! (509) 990-7653

Talk soon!

By: Ellen Sanford, Guest Writer

Editor’s Note: Obviously, the below described agent is NOT one of our team members.   We are using Ellen’s experiences and lessons learned as a learning experience for our potential customers/clients.

Many Realtors will tell you they work with Investors and they really do, but when it comes down to the business of investing and turning a profit sometimes the only person making money on a deal is the Realtor who sells the property in the first place.  If you have been an investor a while, chances are you have a good Realtor that you have an established relationship with.  But if you are new to investing or new to an area, or worse, like me, new to both, sorting out which Realtor really knows what properties and what price will work in the investing world and what won’t are two different stories.   It always pays to do your homework and use caution when you are about to puchase an investment property regardless of how much or how convincing a Realtor can be.  A good realtor can jumpstart your business just like  a bad one could help kill it.   Due diligence even when establishing relationships is key!

Recently I signed a Purchase and sales agreement on a REO and the offer was accepted.  Like any investor I’ve made dozens of offers and a lot of times I don’t even go see the properties until they are accpeted because I would do a whole lot of running around for properties that the banks would never accpet my offer on.  But in this case the bank did accept my offer on this property and it probably was because it wasn’t much lower than the asking price. This offer price and this property were heavily influenced by a realtor that told me how savvy he was and how great this house and this area were.   So,  I was the proud owner of a new property and according to this Realtor, who, by the way, worked almost exclusively with Investors as buyers, this was a property  that I was going to make a ton of money on…..or so he told me.  This Realtor, he was so excited, he tells me how I am going to easily make 20k, and if I walk with less than 10k I have done something wrong.  Tells me I can sell this baby within 90 days and in 90 days I’m going to kiss him I’ll be so happy cashing my check.  Perfect, I say, a paycheck in 90 days sounds good, that’s exactly what I’m looking for.  He says you are going to see how great it is to work with me, I’ve got you hooked up with a money guy, a title guy and now I’m getting YOU this Steal of a Deal!  “Oh my!”, I think, “I am one lucky girl.”

So, with much excitement and trepidation I went out to this glorious property that my Realtor told me I would kick myself if I did not buy —- to find a house that is almost a DUMP.  Ok, ok, I’m in the business of buying dumps and making them pretty and reselling them, right?  That is what I am doing as a real estate investor, right?  Heck yeah!

Here’s the thing.  I told this Realtor I need properties right now that I can Turn and Burn.  90 days, done.  So, with this one he was telling me all the pros and cons, the fix up and the potential resale value.  He sent me comps, the comps he sends back what he was saying and then some!  How exciting, man do I ever need a paycheck!!!!  But…  and, of coarse, there is a but, I start my due diligence, and lo and behold, the house 2 houses down is for sale, has been for 120 days for 183k.  It’s not moving.  Explanation from the Realtor: that house is way dated.  Ok, maybe, but that area still wasn’t boasting house prices of over 185k  and to make money I would need to sell for at least that amount.

Ok, take it in stride, let’s look at the place.  The neighborhood is great!!  Houses are pretty, the house 2 doors down–great!  Whoa, wait a second, this nice looking house, 2 doors down, with the price dropped down to 169k is pretty, prettier than the house I just bought.  I tell myself, well ok, let’s take a look in my house and see what we can do…   OK, WOW!  This house is going to need an overhaul!!  This house needs a kitchen update, a new vanity for a double sinks in the bathroom, new tub, new windows, new doors, trim throughout, a new stove, a new master bath update, new exterior paint, some siding replaced, the basement is a wreck with all these itty bitty (8×8) creepy rooms down there, (eww), what else, there is even more–the cost of this rehab is adding up in my head.  Not to mention all the stuff, the dumping fees are going to be huge!!!   The carpet needs replaced and it just has a real creepy feel to me.  Ok, I tell myself,  well even with this, let’s look at the house 2 doors down to see why I will be able to sell my house at a higher price and then we’ll take a look at the rehab and figure out what we can do with and do without.

So, two doors down, it is clean, newly painted, has new kitchen cabinets, new floor in the kitchen, wood floors polished, it looks nice.  Only issue I see upstairs is some fuddy-duddy wallpaper on one wall and a green counter top in the bathroom.  But that’s it, the house has a nice feel to it and is move in ready.  So, the basement, on the other hand, has old, ugly carpet and needs paint.  So, how does this compare with my prospective house.  Well, my Realtor says that this house does not compare because it is so dated, it looks like some blue haired lady lived here with 80 light fixtures and pink flower wall paper.  In my house, he tells me that I should take up the carpet and polish the wood floors, don’t replace the cabinets in the kitchen—see about painting them, buy a new stove, paint the exterior, paint the pink bathtub, new floor in the kitchen, paint interior, clean it up and call it good.  So, tell me how am I going to sell this for more than 169k like the house 2 doors down?  I’m doing almost exactly the same thing but wait —I won’t have new kitchen cabinets and my house has these itty-bitty creepy rooms in the basement.  So, what should I do–Realtor says he is willing to take risks, that is what you do in this business, so buy it, and then wait, oh yeah, hold it for 6 months and if it doesn’t work make it a rental.  I don’t have 6 months to wait….

The bottom line is, this realtor wanted to sell me this house.  The offer that I was told was such a killer deal, wasn’t.  With hard money costs, closing and selling costs, the only way I could make money is if I could sell around 185k, but that wasn’t going to be possible when 2 doors down was not selling at 169k.  This Realtor told me I was missing out on a good deal, but I disagree.  The deal I got was – learning to not do business with this guy, he’d sell me ocean view property in Arizona if I’d buy it.  Realtors are the most important part of a good investment team and a bad Realtor, like this one, could put a quick end to your business as an investor.   Getting to know your Realtor, finding out what kind of experience they have with investors, and checking things out before you go all the way through with a deal are critical.  Once you have an established relationship with a good realtor you’re business will grow and it is worth sorting through the crowd to get just one good Realtor that really knows how to work with investors!

Photo Courtesy of dklimke.

We get this question quite often on our short sale listings when we explain the property has an offer in at the bank: “Can’t we make a better offer and beat the offer that is in at the bank?”

The answer is: It depends.

Here’s why.

In Washington, we have a form 22SS, this form allows us to negotiate specific terms of the short sale.  The three main terms are:

1. How long the buyer/seller intend to wait (measured in days)
2. Whether the buyer may walk away at any time prior to bank acceptance
3. Whether the seller may accept additional offers and submit them to the bank

Item three is the trigger for this question.  Ninety percent of the time buyers request that their offer  be selected as the only offer submitted to the bank, and most of the time, sellers accept this term.   This locks in the offer for the first offerer requiring subsequent offers to be placed into backup position.  In the event the primary offerer backs out of the transaction, or the transaction falls apart, the backup offers will move into first place sequentially.

However, if it is negotiated that the seller may continue to accept offers, more than one offer can be submitted to the bank and the potential exists for a higher offer to be accepted, however the bank need not accept the highest offer.  The bank can accept any offer they wish.