18.5% plan to pay in cash

By Inman News
Inman News™

Real estate investors are likely to be three times more active than other types of homebuyers in their local markets within the next two years, according to a nationwide survey from Realtor.com operator Move Inc.

Market research firm GfK Custom Research North America conducted the survey on behalf of Move from April 11-15, 2011. The survey included telephone interviews of 1,200 U.S. adults, of which about 200 were identified as real estate investors. Data was weighted by age, sex, education, race and geographic region.

A third of real estate investors are planning to buy in the next 24 months, compared to 8.6 percent of typical homebuyers — those planning to purchase a primary residence, vacation home or retirement property. Another 9.1 percent of typical homebuyers, and 28 percent of investors, plan to purchase between two and five years from now.

Among the investors, half plan to hold their properties for five or more years while 11 percent expect to sell within a year of purchase, according to the survey.

Some 56.5 percent of investors said the repair and maintenance of their property has not been difficult, and 42 percent plan to spend their own time and energy for that upkeep going forward.

Among the rest, 29.5 percent said they would hire a contractor for repairs and 28 percent said they would purchase move-in-ready properties. About 65.7 percent don’t expect repair costs to surpass 20 percent of the property’s purchase price, the survey said.

“This data suggests today’s climate is hot for investing and is attracting a lot of new people that don’t fit the stereotypical deal-driven flippers who buy and sell properties quickly,” said Steve Berkowitz, Move CEO, in a statement.

“They’re mostly entrepreneurial individuals who will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities.”

More than half of investors, 53.5 percent, expect home prices to remain the same in the next six to 12 months. Of the rest, 23 percent expect prices to fall. About 69 percent expect it would be easier to find properties in the next six months, though 43.5 percent expect it would be harder to find bargains.

Some 41.5 percent of investors expect it would be easier to sell their properties in the next six months, the survey said.

Only 18.5 percent of investors said they will engage in an all-cash purchase, while 75.5 percent plan to combine cash and credit to purchase a property. More than half (59.5 percent) plan to put down cash but finance more than half of the purchase.

Sixteen percent plan to put down more than 50 percent in cash and finance the rest. Of the cash-only buyers, eight out of 10 expect discounts from sellers.

About 65.5 percent of investor respondents expect the financing difficulties first-time buyers are having will make it easier for them to compete for properties, according to the survey.

“The fact that most real estate investors plan on combing cash and credit for their purchases goes against the conventional wisdom that investor transactions today are mostly cash-only sales,” Berkowitz said.

“This suggests they’re seeing tremendous or once-in-a-lifetime opportunities and may be tapping into credit or taking out second trusts on existing properties. The data also shows they’re expecting high returns to match the level of investment they’re making in an arena that is new to many investors.”

Most, 59 percent, of investors said they were new to investing; only 36.5 percent had experience with more than one property transaction. Nearly half (48 percent) said they expected a profit of 20 percent or more from their property investments, equal to a 4 percent annual rate of return over five years, the survey said. Another 40 percent expected a profit of 10 percent.

Contact Inman News:
Email	Letter to the Editor

* The municipal pool at Coolidge is planned to be open this summer. Stay tuned for details!
* The school year is coming to a close and graduation season is here. Congratulations to all the graduates and I look forward to seeing many of you at the celebrations!
* In addition to attending many graduation ceremonies, I will be speaking at the Lowell Refugee conference and the League of Women’s Voters over the next few days.
* The Massachusetts State Senate has released their budget. They will debate and file the budget over the next few weeks. In addition the Senate is maintaining a proposal to reform municipal control over health care, which will save cities and towns money. A summary is attached.
* On June 8th I will be testifying before the Joint Committee on Telecommunications, Utilities and Energy on Wednesday June 8th at 10am in Room A1 of the State House at a hearing on the Municipal Light legislation filed by Rep. Jay Kaufman (H869) which would allow for the establishment of municipal light plants. I have already testified against Unitil’s rate increase.

Daily Real Estate News.

The Economic Market Watch Report combines local real estate data with economic forecasts to help identify current and future trends.

It is broken down at the county and zip code level and shows statistical calculations, forecasts, analysis and commentary.
This informational report is updated approximately one month after the end of each quarter and is a collaboration between MLS PIN and the National Association of REALTORS®.

This information is provided for informational purposes and is not for distribution or re-transmission and may not be reproduced without the expressed written permission of the authors. The information contained is not prepared by Bill Foss and no responsibility is taken for the content of the report.

Question No. 1: I made an offer for a house that was a short sale. After my offer was accepted and the contract had been sent to escrow, I noticed the house still listed as “active” on the multiple listing service. The listing agent claimed that he kept receiving inquiries on the property, and used that to push me to remove inspection and loan contingencies. He said he would only mark the home “pending” once I had removed contingencies.

Is it possible for the seller to accept a second buyer’s offer after accepting mine (even if the later offer comes with a higher price? Don’t they need me to sign a release before they do that?

If they do accept another offer and go with the second offer, do I have any legal right for compensation? (I believe this would be a “breach of contract” case, but can you confirm it?) –Mike

Question No. 2: The broker on a short-sale house has not acknowledged my offer and will not sign the papers. He says he wants to wait and see if the first offer goes through first. Isn’t this an unlawful way of doing things? I do not know if I am a backup buyer or just left out in the cold. Is there anyone I can contact regarding this unethical way of doing things? –Charles

A: Talk about two sides of the same coin! One of you is in contract on a short sale and concerned about whether a second, higher offer could usurp their position. The other is trying to usurp a first-position contract on a short sale. A little education about this area of the short-sale realm will answer both your questions.

Short sales differ from “regular” sales in that a short-seller is selling a home at a net price (after the seller’s closing costs) below what the seller owes on the home. As a result, all mortgage lenders and holders of liens on the property must approve the sale before it can take place.

Procedurally, what happens is a buyer makes an offer on the property and the seller accepts that offer and generally requires that the buyer agree to a short-sale addendum, which significantly alters the normal flow of the contract, as well as the legal rights and obligations of both parties — mostly in order to work in the fact that there’s at least one extra party to the contract besides the signatories who must sign off before the deal can be done.

In some cases, the buyer must sign the standard short-sale addendum used by the agents in the area and an addendum required to be signed by the bank(s) involved on the seller’s side, who will not consider the short-sale application without the document being signed.

Ultimately, the short-sale addenda prevents the contract from being finalized so as to prohibit the seller from considering or accepting other offers until after the bank(s) and other lien holder(s), if any, agree to the terms of the transaction.

That is, when you are a short-sale buyer, you are notified upfront that the seller does not have the power to create a binding contract — not unless and until the bank(s) and lien holder(s) sign off on the price and other terms of your offer, including your qualifications.

The short-sale addenda — both the boilerplate forms brokers and agents use and the bank versions — add in the banks’ and lien holders’ approval as a required condition of the contract. Mike, normally, the buyer’s contingency periods for inspection and loan don’t even begin running until after the bank(s) involved have approved the sale.

While it is strange that the listing agent would pressure you to remove contingencies so soon in a short-sale situation, it is also highly possible that he was waiting to collect additional offers or waiting to make sure that you were actually able to do the transaction as early as possible in the sale.

It sounds like you are without your own broker or agent in the transaction — if you were, the chances you would have been pressured into prematurely paying for inspections and appraisals, etc., would have been far, far reduced.

In a “regular” non-short sale, the seller cannot kick a buyer out of place in preference of a later, higher offer once the property is in contract, though in a short sale the bank may actually require that the seller submit any and all offers to purchase the property that are received prior to the bank green-lighting the transaction, so that the bank can take the highest offer and minimize its losses.

Mike, the bottom line for you is that, strictly because your transaction is a short sale, it is highly possible that the seller may retain the legal right to boot your offer out of first place for a higher offer up until the point that the bank approves your offer.

However, Charles, unless their mortgage lender requires them to, it is not the case that the seller is obligated to do anything with your backup/second-in-time offer — neither is the listing agent’s behavior unethical, in your situation, as the agent is being upfront and honest with you about the seller already being in contract.

For both of you, I’ll advise you as I advise any and every buyer in a short-sale situation: Do not count your chickens until the bank approves your contract! That is, until the bank has approved your offer, do not spend money on an appraisal, do not spend money on inspections, and do not stop looking for a home.

If you do, you do so at your own risk — the risk of losing the cash you’ve spent if the bank does not approve your offer for any reason.

The seller — to answer your second question, Mike — does not owe you any compensation for breach of contract, unless you were already notified that the bank had already approved your offer.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Source: MARealtor.com;  http://www.marealtor.com/content/NewsTicker.htm?view=38&news_id=1592&news=31

Articles and commentary are provided by Ken Levesque, New England District Manager for Franklin American Mortgage Company and are for general information only and should not be relied on as legal or financial advice.
Opinions expressed herein do not necessarily reflect the opinions of Ken Levesque, New England District Manager for Franklin American Mortgage Company or of Bill Foss, EXIT New Options Real Estate.

By David Fletcher
Inman News™

March 16, 2011

There is a lot of talk about real estate agents being in customer service. Certainly those talking don’t mean this to be news. We get paid to provide very important and very difficult services.

I am a commission salesperson and have been for 35 years. Should I apologize for this?

I think of transaction management companies and title companies being in customer service, because they build their business on relationships with third-party referrals (from real estate agents, for example).

Real estate sellers and buyers need a solution, not a towel. We don’t provide real estate services for tips based on guests’ whims.

I will believe I am in the customer service business when I get paid a fee or hourly rate for services rendered to a real estate homebuyer or seller.

We are dealing with large purchases on behalf of families and individuals who need our help. My guess: This is one reason they don’t Google “customer service” when they want to buy or sell real estate.

Prospects expect me to find, qualify, show, and reassure them that they are making the right decision on homes that meet their needs both financially and emotionally.

Sellers expect me to know how to show their homes in their best light, to negotiate on their behalf, and to do so with as little inconvenience to them as possible. In my mind, knowing how to list homes at the right price is a service, but knowing how to negotiate and resolve sales-related issues is sales.

Allow me present a couple of scenarios, because positioning is so important to any business. What you don’t want to do, of course, is confuse the market — or even worse, yourself — in today’s real estate market as to whether you are in real estate sales or customer service.

Which of these sample ads would best fit your services?

1. “Looking for a service-oriented real estate agent to help you purchase your next home? Look no further. I am a REALTOR® I will answer all of your questions by phone, text or e-mail seven days a week. Think of me as your concierge/chauffeur. If you don’t like my services because I was of no real help (you don’t buy), don’t pay me.”

2. “Home shopping can be fun when you give me the great honor of providing more than 100 services to you at no charge. We laugh. We have lunch. We look at as many homes as you wish. You will absolutely love my service, and as always, I work for nothing and pay my own expenses.

“Gas prices got you concerned? Not to worry. My car is my office. Let me show you the home of your dreams. I am a no-pressure customer service professional. I am not a door-to-door salesman, but I do provide door-to-door service.”

Seriously, try writing an ad describing the services you provide and how you work. You will be flabbergasted.

In 2005, I wrote what I call “The Real Estate Agent’s Creed” for our team and have shared it in training sessions. Call real estate sales professionals what you wish. The fact is, we are service-driven commission sales agents.

Here is the creed:

I am a real estate agent

“I am a real estate agent. I sell homes and help buyers purchase them for a living. I understand that most of my buyers and sellers will meet me with a high level of sales resistance. It is my job to help them lower that resistance to zero before I can expect them to move from resistance to acceptance.

“When meeting prospective buyers I have four — and only four — critical services I must complete successfully in proper sequence. I must remember that until sales resistance is eliminated, the prospect will not give me permission to sell him/her.

“My first task is to establish trust. To build trust I must first establish rapport, find common ground, speak and dress with propriety, be competent and professional.

“I dress conservatively. I don’t flirt, tell off-color jokes, or say things that can be misconstrued.

“For until I establish trust, I cannot expect the prospect to be open at a level deep enough to successfully complete my second task: establish needs.

“I must learn to ask relative questions and listen. I must learn to learn to listen between the lines and establish agreement that I completely understand the prospect’s needs and wants. When I reach this point, I will confirm my understanding that I completely understand his or her needs. Then and only then will I rightly assume a prospect is giving me permission to sell to him or her.

“If I do not do this, it follows that I will not be able to meet objective No. 3: Make a professional presentation in terms of the prospect’s needs. I will always remember that unless I am talking in terms of the prospect’s interests and needs, I will be talking in terms of my own, and this will always increase resistance.

“I must always show only those homes that meet the buyer’s requirements because I understand that the buyer will not want to see homes a second time that the buyer did not, during the initial visit, picture himself or herself living in.

“Both the prospect and I have the right to expect me to meet my fourth objective: establish urgency, which enables the prospect to purchase one of the homes I show them within the time previously agreed upon.

“Therefore, it is up to me and only me to develop the prospecting, questioning, showing and selling skills I need to become successful working with buyers.

“I can do this.

“I will become proficient at establishing trust.

“I will learn to ask good questions and probe to make sure I understand them

“I will show only those homes that I know will meet the needs of my buyers.

“I will become an expert at anticipating and resolving concerns that might defer a buying decision, unless it is in the buyer’s best interest not to purchase.

“I help families make big, important decisions about where they live. It is both a privilege and responsibility.

“I sell homes for a living. I am proud of my profession. I am a real estate agent.”

In closing, let me say that I understand completely about service, because I have taught for years that referrals do not come from satisfied customers — they come from enthusiastic ones.

We are in the service business, for sure. But we have known that for years.

What we have not known, perhaps, is how to sell ourselves on how important our professional services are to many who use them.

David Fletcher has been a Florida real estate condominium and new-home broker for more than 30 years. He has been the broker of record for 70 new-home and condominium communities. He offers podcast coaching services for general agents, broker-owners, homebuilders and developers through his website at www.newhomesniche.com. You may contact him at davidf@newhomesniche.com.
Contact David Fletcher:

By Al Heavens Print Article Print Article

RISMEDIA, March 9, 2011—(MCT)—Now that virtually all the winter’s snow has melted (in some areas of the country) and it’s easier to navigate the streets, let’s consider something calculated to get people slamming on the brakes: curb appeal, that special something that makes prospective buyers stop for a better look at a house for sale.

In normal market times, the National Association of REALTORS®, 49% of buying decisions are based on curb appeal. While we begin to understand and work through the “new normal,” curb appeal is still of major importance, especially with so many homes for sale.

In effect, curb appeal is “outdoor staging,” said Center City REALTOR® Joanne Davidow, of Prudential Fox & Roach. Even if the interior decor is Buckingham Palace-quality, no one will ever know if the place isn’t appealing from the street—because no one will ever ring the doorbell to see it. “You need to pay attention to the outside as well as the indoors,” she said.

Still, Marilou Buffum of Eichler & Moffly, Realtors in Philadelphia’s Chestnut Hill neighborhood, who concentrates on Northwest Philadelphia properties, cautioned that curb appeal “depends upon what a buyer is looking for.”

“If you have an urban-oriented buyer, a house with a lovely lawn isn’t high on the list,” Buffum said. “Clean windows, paint that isn’t peeling, an attractive front door, nice plantings, leaves raked and the freshly mowed lawn set the tone of what the buyer thinks the house should be.”

Late fall to early spring—right now, in other words—is the toughest time to make the view more pleasing. All the flowers, except perhaps pansies, are dead; all but the evergreen trees are leafless, and the grass is brown and sparse.

With short days and the sun at such a low point in the sky, the light that provides accent and focus to the appearance of a yard and house in spring and summer is temporarily unavailable.

There are challenges to curb appeal everywhere, no matter where you live. “The city is the best place to live, and I wouldn’t live anywhere else,” said Prudential Fox & Roach agent Jeff Block, who focuses on the Center City real estate market. “But city properties do deal with unique curb-appeal issues.

“One is simply windblown bags, wrappers and leaves,” he said. “You can sweep your sidewalk every day, but if the wind blows right before an appointment, the buyer doesn’t know that.”

Also affecting curb appeal may be the condition of neighboring houses. “We deal mostly with townhouses and twins,” Block said, “so sellers can point their brick, paint their door and trim and the house can look perfect. But it does not help if the attached house is beaten up.”

Said Buffum: “You have to look at your neighbor’s house when considering curb appeal. If there are issues, and you get along well with your neighbor, you might ask if they wouldn’t mind trimming hedges or cleaning their yards.” In some cases, sellers have even paid to have the house next door painted, she said. “Remember, you are selling your neighborhood, not just your house.”

Among the easier-to-fix curb-appeal issues are the weeds that pop up between pavers on sidewalks and patios, said Weichert Realtors agent Carolyn L. Sabatelli. Most plants and shrubs are still several weeks shy of bloom, “so color is at a premium” in late winter, said Sabatelli, who works out of Weichert’s Media office. “Bushes should be trimmed neatly, and plant beds should be trimmed out,” she said. “If driveways are asphalt, they should be nice and clean, and, if needed, another coat of blacktop applied.”

Think mulch, agents say. Fresh dark mulch adorning even barren landscapes gives them a warmer look.

Except for when a property cries out for professional help, boosting curb appeal does not have to be expensive, Buffum said. “A fresh coat of paint or windows washed and fixed don’t add up to much of an expense,” she said.

“Will you get the money back on your investment? Not necessarily, but you are making your house more appealing to buyers,” said Buffum. “It gives buyers the impression that you care.”

Some agents recommend having photos available that show how your house looks in other, more colorful seasons. In fact, Buffum and other agents make booklets of such pictures and leave them inside the house for prospective buyers to see.

But “I don’t think you should put those photographs in the MLS (Multiple Listing Service), because buyers will see right through it,” she said. “Not only that, but if it is winter and the photo of the house was taken in the spring, people will think the house has been lingering on the market for that long.”

(c) 2011, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.