How Donald Trump’s Policies Could Affect Phoenix Homeowners

Billionaire Donald Trump made much of his fortune as a real-estate developer.

But it’s not yet clear what his presidency will mean for the wealth of homeowners, though many of us are trying to figure it out.

President-elect Trump’s plans for Wall Street, immigration, a border wall and builder regulations could all impact the housing market, particularly in Arizona.

Let’s examine how some of his policies could affect homeowners here:

Interest rates

The most immediate impact on the housing market came right after the election when mortgage rates jumped. Homebuyers and homeowners trying to refinance across the country were jolted as the 30-year mortgage rate jumped above 4 percent early last week. Some buyers balked, and mortgage applications fell 9 percent.

A drop in home sales can turn into slower appreciation in values and a stalled recovery. But the current higher interest rates aren’t all on Trump.

Rates were rising before the election as investors jittery about the market poured more money into Treasury notes, pushing up their yields and mortgage rates.

Banks and lending

One thing we do know is Trump wants to quickly dismantle the Dodd-Frank law that went into effect six years ago in the middle of the crash. Dodd-Frank covers a lot including protecting consumers from predatory lending and regulating banks from getting too big to fail as well as investing in hedge funds. The goal of the package is to prevent a repeat of the crash.

donald-trump

“If the government decides to dismantle Dodd-Frank as proposed, allowing banks to grow even bigger, credit availability could loosen nationwide,” said Ali Wolf, manager of housing economics for the national real-estate firm Meyers Research.

“Proponents, including former Federal Reserve Chair Alan Greenspan, believe Dodd-Frank was a ‘disastrous mistake’ that kept credit markets too tight,” Wolf added.

Mark Stapp, real-estate expert and director of the Master of Real Estate Development program at Arizona State University, told me that any impact on the capital markets that make it easier to get a loan would be positive.

But there’s concern among other housing advocates that too loose of lending guidelines get us back to the bad loans that led to the boom and crash.

Immigration

What could affect the housing market the most in Arizona are the president-elect’s plans to deport undocumented workers and build a wall between the U.S. and Mexico.

Originally, Trump’s plan called for deporting 11 million immigrants living illegally in the U.S. More recently, he said he would focus on deporting a smaller number, particularly the criminals living illegally in the country.

Arizona housing analyst Mike Orr said the number of deportations are key.

“Will he deport 10,000, 2 million, 3 million or 12 million, and over what time period?” Orr said in an analysis for this column.

He said 10,000 will have no significant impact on metro Phoenix’s housing market. Two million “will create significantly lower demand for housing. And 12 million would devastate housing.”

Building a wall would impact Arizona’s population but also will likely mean more jobs while its being built in our border state, he said.

About 190,000 metro Phoenix residents aren’t in the U.S. legally, according to national research. That many people translates to about 100,000 Valley households.

“Overall, a smaller population means a smaller economy,” Orr said about both immigration and the proposed wall.

Proponents of Trump’s immigration plan, including Sen. John Kavanagh, R-Fountain Hills, have told me the Trump deportation plan can benefit metro Phoenix’s housing market..

“It’s a solution to getting more affordable housing,” he said. “The argument suggests that if people here illegally left, no one would take their place. I don’t think that’s true.”

Kavanagh believes the jobs and homes left vacant by Trump’s deportation plan would be filled by “millions of people who are waiting to come here legally.”

We all will be watching this closely.

Builder regulations

Homebuilding hasn’t recovered from the crash in metro Phoenix, though that part of the market is having its best year in nearly a decade.

In an August speech to the National Association of Home Builders, Trump said the homebuilding industry is overregulated

He estimated that 25 percent of the cost of a home comes from regulations and said the figure should be closer to 2 percent.

Arizona has much lower homebuilding regulation costs than California and the East Coast, so this move by the president-elect could have a smaller impact here.

Also, Stapp said, “claims of eliminating regulations to lower fees are suspect because most are local and not federal.”

He thinks a Trump policy that focuses more on helping increase demand from homebuyers instead of trying to “marginally” cut federal building costs will be better for the housing market.

Trump inherits an economy with a housing market nearly recovered from a catastrophic crash. President Barack Obama came into office eight years ago as the economy and real-estate markets were in free fall.

Now that the new president will be renting at the White House, it’s important for our incoming president to redirect his real-estate expertise from his own portfolio to the nation’s homeowners.

Common Legal Mistakes Real Estate Investors Make

You can’t expect to reduce your risk of getting sued to zero, but you can take steps to reduce your risk as much as possible. In any situation where your money is at risk, ask yourself, “Is there a better way?”

Know the legal and financial risks of the situations in which you place yourself, your business, your family, and your assets.

Without covering every issue involved, here are a few common mistakes that investors make, novice and experienced alike.

Poor Legal Forms

It’s amazing how short-sighted novice investors can be when it comes to shelling out money for good legal contracts. They often buy contracts at discount office supply stores, from Internet web sites, or borrow them from friends.

However, a real estate deal is only worth the paper it’s written on. Like the old expression, “every tax strategy works until you get audited,” it can also be said that “every contract works until you have a dispute.”

So invest in a good set of legal forms that apply to your practice and ask a local real estate attorney to review them. Also, make certain you fill in the forms correctly—a good real estate attorney will review contracts for just a few hundred dollars.

Too many people rely on real estate brokers to fill out contracts, which is fine for a “standard” deal. However, most brokers aren’t trained in legal matters and often create long contract addendums that are insufficient to protect your interests.

Illegal Discrimination

The Fair Housing Act of 1968, as amended, prohibits discrimination on the basis of race, color, religion, nationality, familial status, age, and gender. Many state and local laws also forbid discrimination on the basis of sexuality or source of income and the Americans with Disabilities Act makes it illegal to discriminate against disabled people.

If you harbor any such prejudices and would allow them to come into play when renting a housing unit, then you’re probably not cut out to be a landlord. However, many sincere real estate investors make honest mistakes that result in discrimination lawsuits. The best way to avoid these lawsuits is to be informed.

The Fair Housing Act may appear to be common sense and most people would never think of discriminating against people of different races or religions or on the basis of gender. However, it’s important to note that the Act extends beyond the screening process and into advertising as well, so watch the wording on your ads.

This is where many landlords and property managers make critical mistakes. Some people scour the classifieds looking for inappropriately worded ads so they can pounce on them and threaten a lawsuit. While someone must have standing to bring suit, these scoundrels often work in coalitions to ensure that all of their bases are covered.

For example, if you own a rental property in a predominantly Jewish community, its proximity to the local synagogue could be a major feature. But if your ad says “within walking distance of the synagogue,” you could be sending the message “gentiles need not apply”—even though this wasn’t your intent.

And keep in mind that you may not discriminate on the basis of whether a couple is married and whether children are to live in the unit. You may also not discriminate on the basis of age. Often, novice landlords aren’t aware of these areas of concern. And while it’s good that citizens are more aware of their rights today, it can create a bad situation for well-meaning landlords who are out of step with the law.

Be aware of your local laws and use good business sense. State law and local ordinances can extend similar protections granted under the Fair Housing Act to other groups. For example, California, Minnesota, and North Dakota prohibit discrimination based on source of income. In other words, landlords can’t discriminate against would-be tenants who rely on public assistance. Putting the political perspective of the landlord aside, such discrimination makes little business sense because people on welfare or social security are virtually assured of a fixed income.

The Americans with Disabilities Act (ADA) prohibits discrimination against the disabled and also requires landlords to make “reasonable accommodations” to disabled tenants. Who decides what’s reasonable? Typically, judges, if it comes to that. But while most landlords are aware of the ADA and would never stoop to discriminate against a person in a wheelchair, many are unaware that the ADA also protects mentally disabled tenants. A mental disability could also include recovering alcoholics and drug addicts. On the downside, these people can relapse; if they do, this can cause serious problems for you and other tenants. Everyone deserves a second chance and many recovering addicts become productive members of society. Those unable to recover typically have other problems and, thus, if you decide to reject their rental applications, it’s vitally important that you document additional reasons for rejecting their applications.

Improper Disclosures

Improper disclosures are a common mistake for investors. It’s critical to be aware of the federal and state requirements for disclosures. For example, federal law requires a lead-based paint disclosure on the sale or rental of properties that were built before 1978. State laws may have additional regulations.

It’s become common practice for real estate brokers to use a property disclosure form as a general-purpose sell disclosure for all aspects of the house. Even if you’re selling your house on your own, be sure to use one of these forms. Whenever in doubt, disclose what you know, especially something the buyer or tenant may not know about, such as dangerous conditions, water damage, electrical issues, or plumbing problems.

Illegal Solicitation of Money

Many novice investors try to solicit money for investing via public advertising or mailings. This is commonly referred to as syndication. You may inadvertently cross over a variety of federal and state securities regulations when trying to raise capital. Chatting with friends over the dinner table about a real estate deal is one thing, but advertising to the public in mass may be considered a public offering. Before soliciting money from strangers, review your marketing, paperwork, and solicitation strategies with a local attorney well versed in this area of law. You may be able to get away with a good set of written disclosures if you solicit money on a limited basis, but it’s better to be safe than sorry.

Independent Contractor Liability

The IRS and your state department of labor are on the lookout for employers who don’t collect and pay withholding taxes, unemployment, and workers’ compensation insurance. If you have employees that are “off the books,” you’re looking for trouble. If you get caught, you’ll have to pay withholding taxes and as much as a 25 percent penalty. Intentionally failing to file W-2 forms will subject you to a $100 fine per form. The fine for failing to complete the Immigration and Naturalization Service (INS) Form I-9 varies from $100 to $1,000 per form. Your corporation or LLC won’t shield you from liability in these cases, either. All officers, directors, and responsible parties are personally liable for the taxes.

If you hire people to do contract work for you on a per-diem basis, they may be considered employees by the IRS. If any workers fail to pay their estimated taxes, you may still be liable for withholding. If these workers are under your control and supervision and work only for you, the IRS may consider them employees, even if you don’t. If this happens, you may be liable for back taxes and penalties.

To protect yourself, you should:

Hire only contract workers who own their own corporation or get the business card and letterhead of any unincorporated contractors you may use so you can prove these workers aren’t your employees.
Require proof of insurance (liability, unemployment, and workers’ compensation) in writing.
Get written contracts or estimates on workers’ letterhead that states they’ll work their own hours and you don’t have direct supervision over the details of the work.
Have letters of reference from other people for whom the contractors worked to show that the contractors didn’t work solely for you. Keep these in your files.
File IRS Form 1099 for every worker to whom you pay more than $600 per year.

In addition to possible tax implications, an independent contractor can create liability for you if a court determines the contractor is your employee. For example, if your independent contractor is negligent and injures another person, the injured party can sue you directly. If facts show that you exercised enough control over your contractor, a court may rule that this contractor is your employee for liability purposes. As you may know, an employer is “vicariously liable” for the acts of his or her employees—the employer is liable as a matter of law without proof of fault on the part of the employer. Make certain you follow these guidelines when hiring contractors and pay particular attention to the issue of control.

Finally, under your state’s law be aware which duties are considered inherently dangerous, such as providing adequate security for tenants in a multiunit building. These duties can’t be delegated to an independent contractor without liability on your part, regardless of whether the person you hire is considered an independent contractor or an employee.

Position Realty

Office: 480-213-5251

SPEND A LITTLE, RAISE THE PRICE A LOT

Your real estate professional is probably advising you to declutter, stage your home, plant new flowers, and make numerous repairs and updates. You may be reluctant to get started because of the costs, but according to home valuation site HomeGain, improvements like these can actually make you more money when you sell your home.

Under HomeGain’s Tools for Sellers, you can find the Home Sale Maximizer tool, where HomeGain has identified the top 10 home improvements under $1,500.

These add the most to home sellers’ bottom line, and are recommended by over 600 real estate professionals across the nation.

The top 10 home improvements are listed by the greatest return on investment (ROI):

Cleaning and de-cluttering ($290 cost / $1,990 price increase / 586% ROI)

Lightening and brightening ($375 cost / $1,550 price increase / 313% ROI)

Home staging ($550 cost / $2,194 price increase / 299% ROI)

Landscaping ($540 cost / $1,932 price increase / 258% ROI)

Repairing electrical or plumbing ($535 cost / $1,505 price increase / 181% ROI)

Kitchen and bathroom ($1,265 cost/$3,435 price increase/172% ROI)

Replace or shampoo carpets ($647 cost/$1,730 price increase/169% ROI

Paint interior ($1,012 cost/$2,112 price increase/109% ROI)

Repair floors ($931 cost/$1,924 price increase/107% ROI)

Paint exterior ($1,467 cost/$2,222 price increase/51% ROI)

When you put in your zip code, your results may vary from the survey results, but what’s interesting is how consistently the surveyed listing agents recommended the same home improvements. Nearly 100% of listing agents recommend cleaning and de-cluttering, while 97% recommended lightening and brightening and 80% recommended staging. These top three categories cost just a little over $1,000, yet netted sellers $5,734 at closing.

One hundred percent of HomeGain real estate agents recommend painting the interior and cleaning the carpet and ninety-eight percent recommend decluttering., but you may be surprised to learn that the top three money-makers in terms of ROI aren’t necessarily what agents most often recommend.

Cleaning and decluttering: Remove personal items; wash and clean all areas inside and outside of house; freshen air; remove clutter from furniture, counters and all areas of the home; organize closets; polish woodwork and mirrors, etc.

Home staging: Add fresh flowers; remove personal items; reduce clutter; rearrange furniture; add new props or furniture to enhance rooms; play soft music; hang artwork in walls, and more.

Lightening and brightening: Open windows; clean windows and skylights inside and outside; replace old curtains; remove other obstacles from windows that block out light; repair lighting fixtures; make sure windows open easily, among other suggestions.

It’s all about first and favorable impressions. It takes money to make money, but it doesn’t have to take a lot. It’s the return on investment that’s important.

How To Retire Early Investing In Commercial Real Estate

We all work hard at our J.O.B., don’t we? We work hard each day and hope to retire when we’re 65, that’s the American dream, right? Many of us are looking for something better, maybe a scenario where we can retire earlier or perhaps enter a state of semi-retirement. The answer: investing in commercial real estate.

Imagine working really hard to find a good building at a fair price, putting the financing together, and hiring a property manager to run the whole thing. Was that a lot of work? Of course. But don’t you work hard anyway? Here’s the difference….

Commercial Ownership – What’s It Really Like?

Imagine the day you close on the building and your property manager takes over. Ask most commercial building owners, and they will say they spend anywhere between 2 and 5 hours per week on their building if it’s managed by a professional management company.

What have you done? You went from a job that took 40-50 hours of your time each week to one that takes a fraction of that. And you replaced part or all of the income of your job with that from the commercial building.

You’re working less while maintaining your income.

What would this mean to you? Maybe you could spend more time with your family. Maybe you want to travel more. Pursue a hobby. Give back. Or maybe do more deals.

How is something like this possible with commercial buildings? The answer is in how commercial buildings are valued.

How Do you Make Money On Commercial Investments?

The value of a commercial building is driven by its net operating income, the amount of income left after all expenses are paid. The more money the building spits out after all expenses, the more it’s worth.

In many parts of the country, a building is worth 10 times its net operating income. This “10 times multiplier” is referred to as the “capitalization” or “cap rate” for short. Don’t worry about this for now – it’s not important to the point I’m trying to make. Let’s just use a cap rate of 10 for our discussion.

Let’s say a building has a net operating income of $100,000, which would make it worth $1M. If you could somehow make the building generate $10,000 more each year, maybe by increasing rents or decreasing expenses, you would have generated $100,000 in value (a cap rate of 10 times the additional income of $10,000 is an additional $100,000 in value).

Let’s look at a more specific example, so that you can start visualizing how this “math” could work for you in real life.

Assume you bought a 10-unit building for $540,000, and you had to put 30% down. The building was bought at a “10-cap” based on our formula we’ve used so far. Which means its net operating income (or NOI) is $54,000 per year, times our cap rate of 10 is $540,000. The income per unit is $1,000, and the expenses are 55% of the income. The building is in great shape and has been managed by the owner himself.

So far there is nothing special about this deal.

However, suppose you found out that the average market rent in the area is actually a $200 higher per month. Suppose further that you meet a property manager who manages two similar buildings in the area, and he tells you that his expenses are only 45% of income.

Let’s say it takes us 3 years to get the building to where it should be, i.e. with each unit bringing in $1,200 per month and lowering our expenses to 45% of income. Here’s how this would impact our financials:

By making small improvements each year, we have added $25,000 to our Net Operating Income. What is our value now?

Our new NOI is $79,000, so our value now is about $790,000 ! That is an increase of $250,000 in three years! Isn’t that incredible?

But that’s not all.

You also had between $2,600 and $4,700 in monthly income from this building over those three years.

That’s still not all. You (emm, I mean your tenants), paid down $21,500 of your mortgage balance during that time, too.

Here’s what you get if you add everything together:

Your down payment was $160,000, and your total profit if you sold this building in 3 years is $284,000. This means you nearly doubled your investment!

In the meantime you enjoyed an average of $3,500 per month in cash flow.

Maybe you need more than that each month to quit your job. No problem. Buy a bigger building. Or get a second or third one. Three of these buildings will give you $10,000 per month in income and almost a $1M of profit in 3-5 years.

Retirement Possible In 5 years After Investing In Commercial Real Estate?

Would it be a lot of work? Absolutely. Do you work pretty hard right now? Probably.

Imagine working just as hard for the next 5 years and being able to retire. Imagine. 5 years.

And then you can do whatever you want. Keep working. Keep finding new deals (why stop?). Travel. Family. Give back. Whatever.

You don’t have all the answers, and you probably feel overwhelmed. That’s to be expected. The point I’m trying to make is, make sure that whatever you’re working hard at gets you to where you want to go.

Give the professionals at Position Realty a call to discuss your investment goals and objectives.

Position Realty
Office: 480-213-5251

Phoenix Real Estate Market Report January 2014

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. Currently the numbers of transactions are slowing down as a result there is an increase in inventory because the number of listings is not being purchased at a fast enough rate.

Since February 2013 (12 months ago), the average sold price has increased approximately +12.4% (up from last month), the average days on market have increased approximately +5.6% (up from last month) and the number of transaction has decreased approximately -27.8% (down from last month). The month of November showed signs the average sold price was starting to decrease and this trend has continued throughout the month of February. The current average sold price is approximately $248,000 which is down -2.7% from last month at $254,000. Also, the current number of transactions in month of January at 4,651 has never been this low since April 2008. If this trend continues throughout the year it could be very bad news for real estate price. Hopefully the average sold price, average days on market and the number of transaction will reverse with the spring / summer buying season.

The volume of REO purchases since February 2013 (12 months ago) has decreased approximately -49.3% and the volume of short sales have decreased approximately -69.3%. The volume of REO purchases are shrinking because the increase in real estate prices are causing consumer to stop letting their homes go into foreclosure and the existing supply of REO properties are getting purchased at a faster rate.

Since February 2013 (12 months ago), the number of homes for sale on the market have increased approximately +23.8%. This increase in the number of listings is caused by investors leaving the market and sellers that purchased during the real estate boom are putting their homes on the market to break-even or sell with a small amount of equity. Real estate prices have reached a point where sellers are listing their homes at a faster rate than buyers are purchasing. This may cause a decrease in real estate prices but hopefully buyers will resume their buying trend as we enter the spring / summer buying season.

As more and more sellers enter the market and as more of the supply of residential homes increase, real estate prices may start to decrease (more supply and weaker demand causes prices to decrease).Real estate prices are still at an all time low (near 2008 prices), mortgage rates are still at a historical low and the market is improving both in terms of prices and the overall economy. Time to sell is NOW!! Give us a call to discuss your best selling strategy, TODAY!!

Phoenix Residential Market Report ~ August 2013

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. Currently the numbers of transactions are slowing down due to the lack of inventory and real estate price have flat lined for the last three months.

Since September 2012 (12 months ago), the average sold price has increased approximately +18.9% (up from last month), the average days on market have decreased approximately -7.9% (down from last month) and the number of transaction has increased approximately +9.9% (up from last month). The current average sold price is $239,000 which is back to the average sold price experienced in 2008. Since January 2013, the number of transaction is up approximately +17.9% and the number of transactions are expected to increase as we enter the fall home buying season.

The volume of REO purchases since September 2012 has decreased approximately -22.5% and the volume of short sales have decreased approximately -59.5%. The volume of REO purchases are shrinking because the increase in real estate prices are causing consumer to holding onto their homes and the existing supply of REO properties are getting purchased at a faster rate.

Since September 2012 (12 months ago), the number of homes for sale on the market have been fairly stable with approximately a +1.0% increase in homes for sale. Since last month, the number of home for sale on the market have increased approximately +4.3%. As real estate prices increase, more and more sellers that purchased during the real estate boom are putting their homes on the market to break-even or sell with a small amount of equity. The inventory of active homes is consistently being replenished but prices have flat lined during the summer which is common because consumers were on vacation.

As more and more buyers enter the market and as more of the supply of residential homes are exhausted, real estate prices will continue to increase at a faster rate (lack of supply and strong demand causes prices to increase).Real estate prices are still at an all time low (near 2008 prices), mortgage rates are still at a historical low and the market is improving both in terms of prices and the overall economy. Time to buy is NOW!! Give us a call to discuss your best buying strategy, TODAY!!

Position Realty
Office: 480-213-5251

Phoenix Residential Market Report Summary ~ October

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. From March to June of this year the residential real estate market experienced another buying frenzy caused without government intervention or relaxed mortgage underwriting standards. Currently the number of transactions is slowing back down to number of transaction experienced around the same time a year ago due to the lack of inventory and we are currently in the holiday seasons.

Since January 2012 (10 months ago), the average sold price has increased approximately +23.5% (up from last month), the average days on market have decreased approximately -22.7% (up from last month) and the number of transaction has increased approximately +10.3% (up from last month). The largest average price increase over the last 12 months was experienced in March from $168,961 in February to $184,078 in March.

The volume of REO purchases since January 2012 has decreased approximately -50.7% and the volume of short sales have decreased approximately -0.5%. The volume of REO purchases are shrinking due to the increased volume of trustee sales, more banks are accepting short sale transaction and an existing supply of inventory is getting purchased at a faster rate.

The current supply of homes for sale on the market is 22,283 (up from last month) where the same time a year ago there were 46,197 homes on the market which is a decrease of -51.8%. Since the January 2012 (10 months ago), the number of homes for sale on the market has decreased approximately -6.5% (down from last month). As more and more buyers enter the market and as more of the supply of residential homes are exhausted, real estate prices will continue to increase at a faster rate (lack of supply causes prices to increase).

Trying to “time the market” for the perfect time to buy is nearly impossible but there is no better time than now to purchase. Real estate prices are at an all time low (not for long), mortgage rates are at a historical low and the market is improving both in terms of prices and the overall economy. Time to buy is NOW!! Give us a call to discuss your best buying strategy, TODAY!!

PositionRealty.com
Office: (480) 213-5251

Phoenix Residential Market Report Summary ~ September

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. From March to June of this year the residential real estate market experienced another buying frenzy caused without government intervention or relaxed mortgage underwriting standards. Currently the number of transaction is slowing back down to number of transaction experienced around the same time a year ago due to the lack of inventory, 19.5% from a year ago, we are in an election year and we are approaching the holiday seasons.

Since January 2012 (9 months ago), the average sold price has increased approximately +21.1% (up from last month), the average days on market have decreased approximately -28.4% (down from last month) and the number of transaction has increased approximately +0.5% (down from last month). The largest average price increase over the last 12 months was experienced in March from $168,961 in February to $184,078 in March.

The volume of REO purchases since January 2012 has decreased approximately -55.8% and the volume of short sales have decreased approximately -8.5%. The volume of REO purchases are shrinking due to the increased volume of trustee sales, more banks are accepting short sale transaction and an existing supply of inventory is getting purchased at a faster rate.

The current supply of homes for sale on the market is 21,182 where the same time a year ago there were 46,197 homes on the market which is a decrease of -54.1%. Since the January 2012 (9 months ago), the number of homes for sale on the market has decreased approximately -11.1% (up from last month). As more and more buyers enter the market and as more of the supply of residential homes are exhausted, real estate prices will continue to increase at a faster rate (as currently experiencing).

PositionRealty.com
Office: 480-213-5251

Why You Should Use A Buyer’s Agent

One of the biggest mistakes new and veteran real estate investors make is to purchase a listed property without the use of a buyers agent who is experienced in working with real estate investors. Now any agent can be a buyers agent but unless they understand how we buy and sell property they will not be able to guide you through the many pitfalls and will cause unnecessary paperwork and hassle.

Many investors incorrectly believe that if they don’t use a buyers’ agent they can get the seller to give “them” a 3% discount in-lieu of paying the full 6% to the listing agent. This is almost always wrong. A seller enters into a listing agreement with the listing broker for an agreed upon amount or percentage. Once the property is listed in MLS that fee is shared with the agent, if any, that sells the property. If the listing agent sells the property…they keep 100%. That means not only do you not get a discount equal to the shared fee, but you also are letting the seller have an advantage in the negotiations.

What Exactly is a Real Estate Investors Buyer Agent?

Buyers’ agents are agents who are experienced in and often times specialize in working on investment related transactions and retained by real estate investors to help them find the perfect house and are paid by the sellers / builders / listing agents.

Here’s an example. Lets say that you are in the market to buy a very specific car (i.e. a Black Chevrolet Suburban 4×4 with tan leather interior) and walk into a local Chevrolet dealership to find one. Guess who those “friendly” sales people work for? The dealer, of course. They’re all trying to get you to buy using every pressure tactic in the book. Do you feel comfortable? Of course not.

Now, what if you could hire an independent vehicle consultant to find you that exact vehicle from amongst all the regional Chevrolet dealerships. Someone to handle all of the negotiation, at your direction. Someone who knows the market and the costs associated with buying this vehicle as well as how long a dealer typically takes to sell this car. All of this info is vital to you getting the best deal To get all of this at no cost to you, you simply sign an agreement with that individual that outlines the following obligations:

* That the consultant is to look out for your best interest (The are legally bound to do so).

* You agree to allow your consultant to paid a pre determined finders fee from the dealer from whom you decide to buy.

* That the consultant will help you find the best deal. Performance based compensation. If they don’t find you what you want…they don’t get paid.

* You agree to work exclusively with that consultant. (This helps ensure that there is no pressure on you to buy because that consultant knows that he / she will eventually be rewarded for their effort to help you).

* You agree to only buy from dealerships that will pay your sales person a finders fee.

Now substitute the car for a house and the consultant person for a real estate investors buyer’s agent and you’ve accomplished the same thing, which in real estate is known as buyer agency.

Services That Buyers’ Agents Offer to Their Clients:

*Reliable advice and information is perhaps the key factor in making a “good decision”. As your buyer agent, they will provide you info such as, but not necessarily limited to the following:

* The original purchase price of the house.

* Evaluating improvements that the sellers may have made to the house.

* Comparative market analysis for similar houses in the neighborhood.

* The average closing help paid by sellers of other similar houses in the neighborhood.

* The average drop from list price to sold price.

* How many days the property has been on the market for sale.

* The co-relation between tax assessed value and market value.

* Computerized what if scenarios on spreadsheets to allow you to make sound financial decisions.

* Introduction to reliable mortgage lenders, home inspectors, settlement attorneys etc.

* You worry about finding the perfect house – they will help you take care of all the small details.

How Exactly Does a Real Estate Investors Buyer’s Agent Get Compensated?

Whenever a house is listed with a brokerage firm, the seller of that house (whether it is a new house or an existing resale house) agrees to pay the listing firm a set fee. The listing firm then enters that listing into the MLS database and agrees to pay a percentage of the final sales price to any other realtor from any other listing firm should they produce a buyer for that house. This way, brokerages get to share one another’s listings and can cross sell thus making it easier to sell the property. Only a very small portion of homes on the marketplace do not want to pay realtors. These include small or not so reputable builders who do not want realtors advising their buyer clients and for sale by owners (who’re typically priced too high). I can highly recommend the use of a real estate investors buyer’s agent for real estate investors of all experience levels. Be sure that you select one with experience in real estate investment transactions. There are many of these folks out there.

PositionRealty.com
Office: 480-213-5251

Sellers to Buyers: Stop With the Lowball Offers!

Phoenix Home buyers who are looking for big discounts on housing nowadays are finding that their lowball offers are no longer sticking with sellers, and that their offers are getting a flat-out “no” when they’re way below the asking price.

Right off the bat, buyers say, ‘I want a steal,’ and I tell them they have to wipe that word out of their vocabulary.People come in, and they think the market is 2008 or 2009, when sellers were desperate, They’re not desperate. Not at all.

What qualifies as a lowball offer? Sellers generally consider lowball offers to be less than 90 percent of their asking price.

Buyers, on the other hand, tend to say offers of 80 percent to 85 percent of the list price are reasonable.

The mistake some buyers make is going so low it’s not even reasonable, says Stephanie Chen, a seller, who refused to take an offer $40,000 less than her asking price. We just walked away from the table.

Another big mistakes home buyers are making in today’s changing housing market is that they are taking too long to make an offer, real estate professionals say, and because of that they are losing out on getting the house they want. The number of for-sale homes on the market nationwide has shrunk considerably in recent months, bringing out higher competition for properties, particularly for move-in ready homes.

The Phoenix real estate market is so hot that properties are receiving multiple offer within a few days. The days of the low ball offers are a thing of the past in Phoenix real estate. Real estate prices in Phoenix are estimated to rise considerably by the end of the year.

Position Realty
www.PositionRealty.com
Office: 480-213-5251

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