People, how do?
The title is a little harsh. Appraisers are in a bad situation. Their pay has been cut by the banks. They can not use their old contacts to get them jobs due to new Federal regulations. Instead, they are all pooled together like cattle in a sardine can until the lucky appraiser is picked (Yippee, I get to work for less money). Then they are so scared of over appraising a home that they naturally are over conservative. Very understandable. Some might even be glad that they are over conservative. Part of the reason we're in this economic mess is due to over inflated property values that went up like a high fly and then came screaming down on the kid without a mitt (That kid now has no teeth). Appraisers have it bad.
But, come on. They ruin more dreams than Freddy Kruger (Couldn't think of another bad dream persona. Sorry). 2 examples:
1. Nice lemon grove listing that I had listed for $350,000 and got an offer at $338,000 (It was a little over priced, so we liked the offer). The appraiser (An appraiser from Temecula) came up with a value of $315,000. For the math-can't-do-its that comes to a $23,000 discrepancy. My clients were counting on the extra loot to buy something worth $22,500. We ended up at a price of $330,000 and the buyer had to come up with another $15,000 cash to make the deal go. Why would the buyer do that? Because it was a great deal. The seller gets screwed out of some money and the seller doesn't get to finance the amount they should have.
2. Nice condo in Eastlake. I'm representing the buyer now and we're in escrow at $224,000. Mr Appraiser-Man gave us a slap in the face value of $200,000 (Again, lives in Riverside County). There is no way to bridge that amount on that low end of a deal. We are trying to work it out, but I have no faith that 10%+ of the purchase price can be settled (So pessimistic). My client will get his deposit back but not the $500 he spent on appraisal and not the $250 he spent on the property inspection. Ouch!!!
Both of these properties were under valued by someone who did not know the area.
So, I do feel bad for the appraisers and what they have been drug through, but not enough to not be really angry with them.
God Bless.
Thursday, April 1, 2010
Tuesday, March 30, 2010
#s Don't Lie
Hola, People.
The Wall Street Journal just reported on an organization (The Center for Economic and Policy Research in Washington DC, or CFEAPRIWDC. Not the catchiest acronym) that came out with a crazy formula that can determine if you should buy a home or rent. It's called the "price-to-rent-ratio" (Again, not too catchy).
"Take two houses of similar size and quality—one for sale and one for rent—in the same neighborhood, or comparable neighborhoods. Take the price of the home for sale and divide it by the total cost of renting the other house for a year. If the resulting number is higher than 20, it's likely the price of the home for sale could fall further. Thus, renting might be a better option, says Mr. Baker. However, the price is most likely near its low if the figure is 15 or below; 15 is the general average price-to-rent ratio over time, Mr. Baker says, and the number at which rental and ownership costs are close to even". That's what he says. I like that he put a formula to it, I just do not understand his reasoning. The strange thing is, I agree with the out come.
Here's where he said San Diego is:
"Median home price: $387,816 (Closer to $350,000)
Average monthly home payment: $2,525 (Could be, with taxes & ins)
Average rent: $1,249 (Is he kidding? probably closer to $1800)
Price of appliance repair: $46.79 (23% below average) (I have no idea).
The article further states:
"San Diego presents an attractive buying opportunity. Prices have stabilized and in many cases are going up, says Mr. Yun.
Services are also below the national average, which puts another check in the buy column."
So, I do not know how he came up with his #s or his formula, but I do agree with this Nutty Professor's hypothesis for San Diego. I have no idea what the rest of the country think of his findings.
Click on the title for the rest of the article.
God Bless.
The Wall Street Journal just reported on an organization (The Center for Economic and Policy Research in Washington DC, or CFEAPRIWDC. Not the catchiest acronym) that came out with a crazy formula that can determine if you should buy a home or rent. It's called the "price-to-rent-ratio" (Again, not too catchy).
"Take two houses of similar size and quality—one for sale and one for rent—in the same neighborhood, or comparable neighborhoods. Take the price of the home for sale and divide it by the total cost of renting the other house for a year. If the resulting number is higher than 20, it's likely the price of the home for sale could fall further. Thus, renting might be a better option, says Mr. Baker. However, the price is most likely near its low if the figure is 15 or below; 15 is the general average price-to-rent ratio over time, Mr. Baker says, and the number at which rental and ownership costs are close to even". That's what he says. I like that he put a formula to it, I just do not understand his reasoning. The strange thing is, I agree with the out come.
Here's where he said San Diego is:
"Median home price: $387,816 (Closer to $350,000)
Average monthly home payment: $2,525 (Could be, with taxes & ins)
Average rent: $1,249 (Is he kidding? probably closer to $1800)
Price of appliance repair: $46.79 (23% below average) (I have no idea).
The article further states:
"San Diego presents an attractive buying opportunity. Prices have stabilized and in many cases are going up, says Mr. Yun.
Services are also below the national average, which puts another check in the buy column."
So, I do not know how he came up with his #s or his formula, but I do agree with this Nutty Professor's hypothesis for San Diego. I have no idea what the rest of the country think of his findings.
Click on the title for the rest of the article.
God Bless.
Sunday, March 28, 2010
Real Estate Investments & The Flip Is Dead
Hey, People.
If you've watched all of the reality shows on how to invest & fix up properties to "flip" we have some re-educating to do. The "flip" is dead (At least in San Diego) unless you buy the property at an auction for all cash (Someone will find that one in a million example to prove me wrong. That house that was bought for $100K, had it's light bulbs replaced and was flipped for $200K. On a whole, flips are dead).
Properties on the market are priced correctly (Again, somebody will find that lotto house that only needed the drive way swept before he flipped it for a quick $20K).. Do not think you can buy something, slap on some paint, throw in a Ficus tree and think you can sell it for a profit. The seller knows (At least his listing agent knows) how much to deduct for paint and other cosmetic fixes. Plus you have closing costs (On the buy and the sell), mortgage payments to make while you own it & realtor commissions (96+% of all houses sold are done through a Realtor. You don't have to use one but it will usually take you longer). It ain't 2004.
The good news? Since it's not '04 and since prices have come down mucho faster than rents, it's a great time to invest in rentals. I have a client who's in escrow on a duplex that she's paying $315,000 for. The rents come to $2550 a month, gross profit. Her mortgage payment, taxes & insurance will come to under $1750 a month. A potential of $800 a month in her pocket. That's just potential. To be safe, you should multiply your gross rent ($2550) by .8. That comes to $2040 net before mortgage, $300 a month of approx net.
That's about a 7.5% capitalization rate (Take the net rents, before mortgage, and divide it by the sales price. The higher the rate the better). Back before '06 you'd be lucky to get a 4 or 5% cap rate.
These are pretty conservative #s, you should do better on your investment.
Check out the old article I found by clicking on the title.
Call me with any questions on investments, 619-507-7449 or email me at jack@rowellrealestate.com
God Bless.
If you've watched all of the reality shows on how to invest & fix up properties to "flip" we have some re-educating to do. The "flip" is dead (At least in San Diego) unless you buy the property at an auction for all cash (Someone will find that one in a million example to prove me wrong. That house that was bought for $100K, had it's light bulbs replaced and was flipped for $200K. On a whole, flips are dead).
Properties on the market are priced correctly (Again, somebody will find that lotto house that only needed the drive way swept before he flipped it for a quick $20K).. Do not think you can buy something, slap on some paint, throw in a Ficus tree and think you can sell it for a profit. The seller knows (At least his listing agent knows) how much to deduct for paint and other cosmetic fixes. Plus you have closing costs (On the buy and the sell), mortgage payments to make while you own it & realtor commissions (96+% of all houses sold are done through a Realtor. You don't have to use one but it will usually take you longer). It ain't 2004.
The good news? Since it's not '04 and since prices have come down mucho faster than rents, it's a great time to invest in rentals. I have a client who's in escrow on a duplex that she's paying $315,000 for. The rents come to $2550 a month, gross profit. Her mortgage payment, taxes & insurance will come to under $1750 a month. A potential of $800 a month in her pocket. That's just potential. To be safe, you should multiply your gross rent ($2550) by .8. That comes to $2040 net before mortgage, $300 a month of approx net.
That's about a 7.5% capitalization rate (Take the net rents, before mortgage, and divide it by the sales price. The higher the rate the better). Back before '06 you'd be lucky to get a 4 or 5% cap rate.
These are pretty conservative #s, you should do better on your investment.
Check out the old article I found by clicking on the title.
Call me with any questions on investments, 619-507-7449 or email me at jack@rowellrealestate.com
God Bless.
Tuesday, March 23, 2010
KRAZEE
People.
If you own, rent, buy, sell, invest, look at, build on, tear down, or do something else revolving around real estate then you are a target for coo-coo people. Case in point.
I was putting a lockbox on a listing of mine in P.B. when someone asks me "can I help you?". Anytime I'm asked that I feel like just saying "no" and going on about my business. But, I decided not be rude and I introduced myself and told the guy I was the listing agent for this particular dwelling. I shook the guy's dead fish hand and listened to his story of how he was interested in renting the place from my seller (My seller had moved out of state) but he couldn't get a hold of her. He mentioned that my seller did not call him back a couple of times before he asked me for her phone #. "I'm sorry. I can't give it to you. If you want I can relay a message for you" was my uncomfortable reply. I gave him my card and prayed that he would not call.
Within an hour he called me. He started telling me of this great plan he had when I interrupted him and asked him to call me back in 20 minutes. I then tried to get a hold of my seller to ask her if this is a friend of hers so I would know how short with this guy I could be. He called me approx 10 times inside of an hour (Hell no I didn't answer) leaving me one message telling me that I really should answer the phone.
The next day I finally got in touch with my seller and told her of the evil plot going on and that I was against it. She told me that the guy gives her the creeps too (Thank goodness) and that she did NOT want to rent to him. Now I was armed.
I was just about to call my stalker when he called me. I let him state his case. He wanted to rent her place for $2000 a month and give me a $1000 (For que?). He told me "If you're smart (No one ever accused me of that), you'll take this deal. Places sell much faster and for more money when people are living there". I explained to him that wasn't true (In fact, the opposite is true) and that I told my client that it wouldn't help her to rent the place out while she was selling it. He told me I was wrong. I said I wasn't. "You are". "I'm not". This went back and forth until I gained my senses and told him "I understand your opinion but we are not going to rent to you. That is final".
There was an odd silence before he said "Well, you are wrong and I work for a news paper and I am going to write an article and tell the world what you are doing". I started laughing. "This article will shine an unfavorable light on you". I was laughing very loud now. I told him (Through my laughter) that we really couldn't rent to him now, due to his character issues. "Character issues? Would you like a letter from a Congressman to vouch for my character?". I could barley get it out when I said "I'll need a letter from a Congressman, a Priest, a Rabbi & a pharmacist". A full minute of me laughing went by before he said "I think you're wrong". I finally hung up, sat down and laughed my butt off.
I called my seller to tell her about the comedy I was just in. She said the guy told her he was with the FBI.
So, watch out. There are loonies out there that will entertain you.
Tell me your funny story in the comment or call me 619-507-7449.
God Bless.
If you own, rent, buy, sell, invest, look at, build on, tear down, or do something else revolving around real estate then you are a target for coo-coo people. Case in point.
I was putting a lockbox on a listing of mine in P.B. when someone asks me "can I help you?". Anytime I'm asked that I feel like just saying "no" and going on about my business. But, I decided not be rude and I introduced myself and told the guy I was the listing agent for this particular dwelling. I shook the guy's dead fish hand and listened to his story of how he was interested in renting the place from my seller (My seller had moved out of state) but he couldn't get a hold of her. He mentioned that my seller did not call him back a couple of times before he asked me for her phone #. "I'm sorry. I can't give it to you. If you want I can relay a message for you" was my uncomfortable reply. I gave him my card and prayed that he would not call.
Within an hour he called me. He started telling me of this great plan he had when I interrupted him and asked him to call me back in 20 minutes. I then tried to get a hold of my seller to ask her if this is a friend of hers so I would know how short with this guy I could be. He called me approx 10 times inside of an hour (Hell no I didn't answer) leaving me one message telling me that I really should answer the phone.
The next day I finally got in touch with my seller and told her of the evil plot going on and that I was against it. She told me that the guy gives her the creeps too (Thank goodness) and that she did NOT want to rent to him. Now I was armed.
I was just about to call my stalker when he called me. I let him state his case. He wanted to rent her place for $2000 a month and give me a $1000 (For que?). He told me "If you're smart (No one ever accused me of that), you'll take this deal. Places sell much faster and for more money when people are living there". I explained to him that wasn't true (In fact, the opposite is true) and that I told my client that it wouldn't help her to rent the place out while she was selling it. He told me I was wrong. I said I wasn't. "You are". "I'm not". This went back and forth until I gained my senses and told him "I understand your opinion but we are not going to rent to you. That is final".
There was an odd silence before he said "Well, you are wrong and I work for a news paper and I am going to write an article and tell the world what you are doing". I started laughing. "This article will shine an unfavorable light on you". I was laughing very loud now. I told him (Through my laughter) that we really couldn't rent to him now, due to his character issues. "Character issues? Would you like a letter from a Congressman to vouch for my character?". I could barley get it out when I said "I'll need a letter from a Congressman, a Priest, a Rabbi & a pharmacist". A full minute of me laughing went by before he said "I think you're wrong". I finally hung up, sat down and laughed my butt off.
I called my seller to tell her about the comedy I was just in. She said the guy told her he was with the FBI.
So, watch out. There are loonies out there that will entertain you.
Tell me your funny story in the comment or call me 619-507-7449.
God Bless.
Sunday, March 21, 2010
I Are Angry
Hello People.
Ever thought "Boy, if I had $400,000 (More or less) I would find a good house priced around......Oh... $430,000, and I would offer them $400,000 and watch their mouths water"? Sounds like a good plan, right? The seller would be nuts to not take your offer. No, appraisal. No loan hassle (There are tons of them). No brainer.
That's what my client and I thought too. After making that offer we we're countered at $425,000. We were also told if we did not close in 14 days (That was the amount of time we offered) the price would jump to $427,000. We countered their counter at $405,000, still feeling like the cash was good. They emailed back (Very coldly I might add) saying they had another offer that they were going to deal with.
I talked to my client and she wanted that home. I emailed the agent back and asked him if $415,000 would work. "That will not work" is what Mr. Sunshine emailed back. We sent him a counter that countered our counter that countered the seller's counter saying $420,000, all cash and any other terms and time lines the seller would like. They took the other offer.
I was (Am) so pissed. My client is heart broken. I am thinking bad thoughts towards the seller and listing agent. The moral of the story is real estate is nuts. No science involved, just people and very often those people are bananas.
Let me know what pisses you off.
God Bless.
Ever thought "Boy, if I had $400,000 (More or less) I would find a good house priced around......Oh... $430,000, and I would offer them $400,000 and watch their mouths water"? Sounds like a good plan, right? The seller would be nuts to not take your offer. No, appraisal. No loan hassle (There are tons of them). No brainer.
That's what my client and I thought too. After making that offer we we're countered at $425,000. We were also told if we did not close in 14 days (That was the amount of time we offered) the price would jump to $427,000. We countered their counter at $405,000, still feeling like the cash was good. They emailed back (Very coldly I might add) saying they had another offer that they were going to deal with.
I talked to my client and she wanted that home. I emailed the agent back and asked him if $415,000 would work. "That will not work" is what Mr. Sunshine emailed back. We sent him a counter that countered our counter that countered the seller's counter saying $420,000, all cash and any other terms and time lines the seller would like. They took the other offer.
I was (Am) so pissed. My client is heart broken. I am thinking bad thoughts towards the seller and listing agent. The moral of the story is real estate is nuts. No science involved, just people and very often those people are bananas.
Let me know what pisses you off.
God Bless.
Friday, March 19, 2010
They Hate Us
People. Hi.
CNN Money just came out with a list of the top 25 cities in the U.S. to have the best home price forecasts. San Diego did not (They hate us for being beautiful) make the list. Matter of fact, they said we were going to Depreciate. They said we were going to loose .3% (That's .oo3. I know you know math, just clarifying) and places like Kennewick & Yakima, Wa, Modesto, Ca (Have you been to Modesto?) and Anchorage, Ak are going to appreciate. The top 25 are projected to appreciate from 6% to 1.6% in 2010.
It breaks down like this: Washington had a whopping 8 cities in the top 25. State growth seems to be the reason (Or some sort of witch craft). Oregon and California came in 2nd with 4 cities. Let's just say California was 2 & Oregon was 3. Alaska, Wyoming & Montana all had 2. Colorado, New York & South Carolina all had a a big 1.
So, us San Diegans are projected to lose .3% of home value in 2010. On a $300,000 home that is $900. Probably not going down much more. If you're waiting on the bottom, you should be pretty darn close.
Click on the title to see the article that shows all of the cities that crushed us.
God Bless.
CNN Money just came out with a list of the top 25 cities in the U.S. to have the best home price forecasts. San Diego did not (They hate us for being beautiful) make the list. Matter of fact, they said we were going to Depreciate. They said we were going to loose .3% (That's .oo3. I know you know math, just clarifying) and places like Kennewick & Yakima, Wa, Modesto, Ca (Have you been to Modesto?) and Anchorage, Ak are going to appreciate. The top 25 are projected to appreciate from 6% to 1.6% in 2010.
It breaks down like this: Washington had a whopping 8 cities in the top 25. State growth seems to be the reason (Or some sort of witch craft). Oregon and California came in 2nd with 4 cities. Let's just say California was 2 & Oregon was 3. Alaska, Wyoming & Montana all had 2. Colorado, New York & South Carolina all had a a big 1.
So, us San Diegans are projected to lose .3% of home value in 2010. On a $300,000 home that is $900. Probably not going down much more. If you're waiting on the bottom, you should be pretty darn close.
Click on the title to see the article that shows all of the cities that crushed us.
God Bless.
Subscribe to:
Posts (Atom)