DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

What do you really want from your real estate purchase? It is a question many people fail to ask themselves.  There may be times when an opportunity presents itself out of the blue, but in most cases it is wise to know what you are looking for ahead of time. Home buying can be especially tricky. Ask yourself some basic questions to pave the way to a better home buying experience.

1. Is the home for your own personal use?

Know whether you are buying to live in, to rent or to sell the home. You will be a better judge of all the features if you know your target market – even if it is simply you.

2. How many bedrooms do you need?

If the home is for you, you already have a good idea of the number of bedrooms that is right for you. If you are buying to rent, you have consider how many bedrooms renters in your area generally need and will pay for. If you are buying to flip and sell, find the hottest market in the area. Three bedroom homes are usually very popular, but in some neighborhoods, the ideal size might be different.

3. Home many square feet do you need?

The obvious answer is: as many square feet as you can get for your money. However, there may be limits on either end of the scale that are not acceptable. For instance, you might find a home with too much space is costly at tax time. You have to decide how important that is to you. On the other hand, a home that is a great buy except for being too small is not really such a great buy after all.

4. How is the home decorated?

Many people are swayed by the styles of the ceiling fans, bathroom tiles or kitchen appliances. Sometimes, they are not even aware that these features have influenced their decision. Keep your head about you and do not make a decision on the basis of something that can be easily changed.

5. What is the parking situation?

In most parts of the country, people drive cars. They need places to park them, and it is usually not satisfactory to have to park far from home and walk in. The number of cars that will fit in the garage should make sense for the number of cars that will probably be owned in a household. Another parking factor is whether you have to park straight in and then back up into heavy traffic to get out. That would be a pain for you, and it will scare away many renters or buyers.

These are but a few of the questions to ask yourself when shopping for a home. If you are going to buy a home, or any real estate for that matter, take a day to brainstorm about all the factors that are important to you in your purchase. You should think about the day-to-day life in the home, whether it is for you or someone else. Consider the types of costs that will be involved in running the home. When you have finished, you will have a checklist to bring on your real estate shopping trip.

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With the real estate market the lowest it’s been in years and the market being flooded daily with foreclosed properties, now may be the perfect time to pick up a home at a large discount.  Although, many foreclosed homes come with their own set of issues, there are some diamonds in the rough that can be found for a fraction of what they are really worth.

Foreclosed homes sell significantly lower than their actual value.  This is due to the fact that the properties are now owned by the bank.  Because banks tend not to have a need for vacant homes that are costing them money to insure and keep in decent shape, they are looking to get rid of them as fast as they can.  What this means for you, is that you may be able to find a home that needs minimal work to make it look like new again. 

There are two ways in which you can purchase a foreclosed home from the bank.  One is dealing directly with the bank and submitting your offer to them, the other is to purchase homes at a bank held auction where bidders determine the selling cost.  If you choose to deal directly with the bank, you may be able to negotiate a better deal than if you were to involve a third party.  The benefit of purchasing a home at auction is that you may be the only person interested in the property and be able to purchase for a lower price than the bank was initially asking.

There are some challenges with purchasing a foreclosed property as well as benefits.  Once all the paperwork has been signed and you are in possession of the property you may discover problems that you weren’t aware of before the purchase was finalized.  To avoid finding yourself in this situation, you may want to have an inspection done on the property so that you are aware of any problems before you close on the property.  An inspection is relatively inexpensive compared to what you may have to pay in order to make the property livable.

You may have heard horror stories about the problems that come from buying foreclosed properties, while some are in dire need of repair there are some out there that are in nearly perfect shape.  One of the most important things you need to do before purchasing a foreclosed property is to do a bit of homework.  By doing some research into any problems the neighbors may have had with plumbing or flooding issues, you will get more information from a friendly neighbor than the bank might offer.  Research is the key to finding a foreclosed property that will need minimal work to become your dream home.

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Have you considered investing in real estate? If so, how do you know you would make a good real estate investor? The fact of the matter is that most people jump into this type of investing without having any clue whether or not they will be good at it. They just think that it is an easy way to make an investment, and that they will learn as they go. This is the largest mistake made by new real estate investors. Here are three ways you can know you are going to be good at real estate investing.

1.      You have good credit and a strong financial well being. This is the most important thing for investing in real estate. You will have to be able to get a mortgage on the property you are investing in, and you will have to have the money necessary to keep up on the mortgage while you are waiting to flip the property or get tenants moved in. If you don’t have good credit or you don’t have any breathing room in your budget, then real estate investments are not for you.

2.      You are a good judge of character and have a sense of urgency when it comes to money. You should be able to judge your potential tenants fairly but accurately in order to make a wise decision on who to rent to. In addition, you need to have a sense of urgency when it comes to money. This means that when a tenant is behind on their rent one month you take action, not wait several months for the problem to correct itself. You have to be proactive and protect your investment. After all, if you are not getting rent anyway it profits you nothing to have tenants. And, if you get rid of non paying tenants, you are making room for ones that might pay on time.

If you are going to be investing in property to flip it, you still need to be a good judge of character in order to get a decent deal on repairs and home improvements that need to be made before you sell the property. In addition, you will need to have that same sense of urgency about money. The sooner you flip a property, the better off you will be financially.

3.      You have knowledge and resources for making repairs or upgrades on properties. Whether you are going to be flipping properties for a profit or renting out properties, you will save a ton of money if you know how to make repairs yourself. Alternatively, you could have resources at your fingertips for these repairs and home improvements, such as friends or family in the business of construction or HVAC. Having these resources and knowledge will go a long way toward saving you money and keeping your profits from a real estate investment high.

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When the real estate market is down, finding foreclosed properties is simple. You can just drive around various communities and look for signs hanging from doors.When the real estate market is bad, foreclosed properties are advertised in the paper, on street signs and sometimes the news about foreclosed properties is even spread by word of mouth. However, what happens when the real estate market turns around? Where do you look to find foreclosures then?  The rest of this article explores ways to find foreclosed properties in any market. Weak Markets Usually weak markets have more foreclosures than strong markets. In a weak market, many homes once offered as short sales end up on the foreclosure listings and eventually deeded to the banks. Sometimes it is a good idea to wait until a property has hit foreclosure status. One reason is that your initial outlay of money could be lower with a foreclosed property. Yes, there is quite a difference in the amount of money you will spend on a home that is still being short sold versus one that has already been repossessed by the bank and is now up for sale. Finding foreclosures is as easy as looking through the classifieds. Most of the time, real estate agents specialize in one type of housing.  Another way to find foreclosures in a weak market is to drive around. Many banks or real estate agents will advertise a home that is in foreclosure openly. These signs along with droves of cars are good signs that a property is in foreclosure. Strong Markets Strong markets are different animals. When there are few foreclosures, it can be a little more difficult to seek them out, but it is not impossible. The trick with strong markets is to get an upper hand on other foreclosure investors. This can be done by calling a listed foreclosure agent and asking about other foreclosures that are not listed yet in the MLS (Multiple Listing Service) database. Many real estate agents will wait a couple of weeks before officially listing a foreclosure. This is so they can verify with the bank, the exact listing price they want on the property. By asking ahead of time, your agent can point out other foreclosed homes in your price range. Bank websites are another place to look in a strong market. Many of the national banks, such as Countrywide, Bank of America, and Chase list all of their current foreclosures on their website. While these are hit or miss, because they are on a national scale, it is a good place to start. 

No matter what market you are in at the present, finding foreclosures is not as difficult as you might think. With a little deductive reasoning and a bit of super sleuth work, you will be able to find the perfect house or project for your budget. Use those detective skills you practice while watching Law & Order to help you find foreclosure properties during a strong market. Just pay attention and you’ll find foreclosures in droves in a weak one.

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When the difference between the fair market value and the seller’s desired asking price is too great, the agent has some tough decisions to make.  The agent knows that the analytical data is accurate.  The seller knows what price will make the family happy.  The seller may also know what similar homes in the area have garnered.  The agent hesitates to tell the seller that the property does not measure up to some of the surrounding sales.

There are several ways to handle this delicate crossroad.  However, they all begin with the agent having command of substantive facts and having the experience to connect the dots.  In some cases, the agent has no answers.  In those cases, the agent should retreat, explaining that it might be best to bring in outside assistance in the form of an office manager, broker of other sales experts.  While not an ideal solution, it burns no bridges and puts the possibility of meaningful dialogue on the table.

In most cases, this will not occur.  The seller wants to see how the agent responds to pressure and how the agent explains why there is a difference between their asking price and the perfect listing price.  In fact, that is an explanation the agent should be comfortable with and prepared for prior to walking through the door.

The agent has assembled comparable sales data.  To increase the effectiveness of this data and to establish a comfort level with the market value, the agent should examine various statistics.

·                     Comparable active listings

·                     Comparable closed sales

·                     Comparable pending sales

·                     Days on market of comparable pending transactions

·                     History of comparable withdrawn listings

·                     History of expired listings

·                     Square footage comparables

Sometimes agents develop such a feel for the marketplace that they are familiar with every one of these listings.  Familiarity with the marketplace impresses sellers and if presented properly is hard to dispute.  Responsible agents see as many listings as possible and stay in command of facts and market conditions.  Now, is your chance to put that experience to good use.

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As every real estate agent knows, the most difficult part of getting that new listing is establishing the right listing price.  If there was not a human side to every listing price, arriving at the fair market value is relatively simple.

Well, there is a human side to the listing price.  And, that component needs to be addressed.  Once in a rare while, the listing agent meets a seller who wants professional advice and truly acknowledges the fair market value.  However, those sellers are few and far between.

More often, the seller is aware of certain homes that have sold in he neighborhood and can build a street-savvy, hearsay case for their own selling price.  Rarely, is the seller’s idea of a listing price on the mark. 

The agent must now walk a delicate balance taking into account the fair market value and the personal feelings of their client, friend and seller.  That is the tricky part, isn’t it? 

At the same time, the agent must be professional, courteous, filled with integrity and accurate.  We all know that, historically, we have been surprised.  Sometimes, listings have sold for more than our data suggested.  Far more often, and especially in the current marketplace, listings have sold for less than was merited and below market value.

While there is no question that this is a buyer’s market, houses are selling.  And, properly priced homes sell for market value.  Brokers and their agents know that it is a buyer’s market and, don’t kid yourself, so do your sellers.

Even though a property’s fair market value may be less than your seller hopes, the agent’s responsibility is to provide an accurate fair market value analysis and a well-designed marketing plan that will accomplish that goal.  These two components go hand-in-hand and experienced agents know that one without the other does not work.

Yes, agents do take certain listings at above market value prices, but they have upheld their integrity and the integrity of their firm by advising the seller of the true market value.  If the seller chooses to disregard the recommended asking price and fair market value, the agent then has to make a decision. 

Many times, the agent will take the listing above market value with the agreement that a reduction will occur within a certain time frame.  We dislike admitting it, but we all know that happens.  This can actually be a strategy certain brokers and agents employ.  Yet, even that strategy will only work if the true market value has been discussed and substantiated.

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No matter what niche of the real estate market you find yourself in, there is nothing more important than understanding your local market.  First and foremost, you must understand the real estate trends in your local community.  This is crucial for several reasons.  Neighborhoods within a community vary greatly in respect to value.  If you do not keep up with which areas are appreciating in value and which ones are depreciating, you can easily find yourself making risky investments.  Regardless of the national headlines and the poor economic outlook, there are always isolated communities that do not follow the trends.  Your job is to find them.

Secondly, the value of properties is constantly changing, especially in today’s market.  Keeping abreast of the local property values in your market is the key to turning a good profit.  Home values fluctuate by the thousands, even tens of thousands of dollars in a given month and if you are trying to sell a property, timing the sale during the “up” times is imperative.

Creating positive cash flow is the bottom line in real estate investing.  Let’s say you want to rent one of your properties for $800 per month with a $200 positive cash flow.  Now, let’s say that you haven’t done your research and do not know with any certainty that you can rent it for $800.  When all is said and done, your local market will only bear $600 per month.  Now you are flat even with no positive cash flow and potentially could be in the whole if your expenses ever increase, and eventually they will.  This is not the situation you want to be in.  If you want to be a real estate millionaire and profit from real estate right now, you will have to educate yourself so that you can think like one.

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