NOTE: these tips are based solely on my experience with my buyers and Bank owned homes in the Temecula Valley area. Procedures may differ from state-to-state and county-to-county… so please read this with a grain of salt.
1. I call the agent and find out if there are multiple offers on the property before I show it to my clients and I ask if they are still accepting offers and if so, what is the cutoff time. This saves my clients the frustration of viewing a home they like and then finding out they are no longer accepting offers.
2. I advise my clients they need to come in with their BEST & FINAL purchase price right from the start (with multiple offer properties). There is no room for haggling back and forth with the bank on price if there are a lot of offers on the home. It is important to realize this and make the offer your best offer – if you want a chance at competing with the other offers.
3. I make sure we have all required documentation before submitting the offer:
-----Required pre-approval depending on which bank holds the title to the property.
-----Proof of Funds for down-payment amount or all cash offers.
-----FICO scores are helpful (either have the lender put it in the pre-approval letter or obtain a copy of your score from the credit reporting agencies).
-----Copy of your “good faith” deposit showing you have intent to deposit the check into escrow as soon as the offer is accepted (this amount varies from about 1% of purchase price to 3% of purchase price—the listing agent will generally make a note if the required amount is 3% in the agent comments of the MLS).
4. I make sure that I am friendly, upfront and very nice to the listing agent and/or their team. Good communication and honesty can go a long way! Staying ethical and professional says a lot about a person’s ability to successfully represent their clients.
5. I try to make sure that when I submit an offer to the listing agent that it is “complete”. If something is missing it can hold-up the offer being submitted to the bank for approval. I also, follow-up to make sure the offer was received and to verify they have everything they need to submit the offer to the bank.
It usually takes a few days to get a response on the offer, but I try to keep in contact with the listing agent during this time. Sometimes the agents are very helpful and responsive and sometimes I don’t hear a word from them until the offer is accepted or rejected.
Note for other buyer’s agents who are working with bank owned listing agents: Just remember there are some really great listing agents who work for the banks out there and they truly are a pleasure to work with. However, with any business, you have some people who are not good at what they do. Don’t let this stop you from moving forward; you can try to find ways around their shortcomings to get your clients what they want.
Friday, December 12, 2008
Monday, December 8, 2008
Statistics 101 and Real Estate Values
Balmy day in Temecula! Many years ago when I taught statistics classes at the college level, I would consider the weather before presenting my lecture. This may seem a little silly, but with people already having a high-level of anxiety about statistics it seemed appropriate to incorporate how the weather might affect my students moods—thereby changing the way that I would present my lecture for the day.
I think a similar statement could be said about purchasing a home and having high-levels of anxiety. I don’t know if there is a significant correlation between the two but it seems fitting. Today’s Balmy day made me reminisce on the days when I would share my love of statistics with those students who were only in my class because it was a requirement for them to graduate… LOL.
Why am I bringing this up?
I am bringing this up because I think it is important to talk about how the numbers are derived in all of those reports we read on current market values. I think anxiety of statistics can stop people from talking about how we get the numbers we rely so heavily on to help make decision about a purchase as big as a home. I hope that I can add a little information to your day or at least a recap of something you probably learned years ago.
I always send my clients statistics on current comparable properties, as I imagine most Realtors do. Statistics are a way to answer a question – the formulas always stay the same and only the numbers change. Answers are what my clients want! They want to know they are getting the best deal for their money and the best way to get those types of answers are through statistics.
Most of the statistics used in these reports are called Measures of Central Tendency. Measures of central tendency are scores that represent the center of a distribution or a normal curve: The three most common measures of central tendency are the mean, median, and mode. In Real Estate we do not use the mode as an accurate measure of value (the mode is simply the most frequent number in a set of data and does not provide us with an accurate value for home prices).
Here is a look at some real data I just ran for a client:
You tell me if they are making a good choice with this house—that is, will they get the best deal for their money?
Property in question: 5 bedroom, 3 bath, 3708 square feet built in 2004 List Price is $356,900. All of the homes in the example below are comparable to subject property.
Closed Date....Sold Price...Sqft....DOM....SP/Sqft 10/31/2008.......$365,000.......3,708.....12.............$98.44
11/18/2008.......$375,000........3,708......5............$101.13 12/01/2008..........$395,000.......4,076.....14..............$96.91 10/16/2008..........$400,000.......3,755.....45............$106.52
Average...........$383,750......3,812...19........$100.75
Median............$385,000......3,731....13.........$99.79
When you see “Median” home price in a report this number was derived by taking the middle house price from a distribution of house prices. All home prices being considered are ranked in numerical order and the middle price is the “median”. So half of the prices are below the median price and half are above. Note: If there were two numbers in the middle of the distribution you would take the middle of those two numbers (add them together and divide by 2) for example; to get the median price per square foot you would take 98.44 + 101.13 and divide by 2 which gives you a median price per square foot of $99.79. One of the limitations of using the median price is that it does not account for outliers. Outliers are those homes that sold for way above the average price or way below. An example of this would be if a home in this neighborhood sold for $250,000 and was comparable to the subject property the median would not account for this price, whereas the “mean” or “average” would factor this price into the equation.
When you see “Average” home price people are generally talking about the mean also know as the arithmetic average. The average is the sum of all prices divided by the number of homes. So, in the example above all 4 home prices were added together = 1,535,000 and then divided by the number of homes = 4 which gives you an average sale price for this neighborhood of $383,750. To get the average price per square foot you first have to get the price per square foot for each property you take the sale price $365,000 divide by square foot 3,708 this gives you $98.44. Do this for all homes and then sum those numbers = 403 and divide by 4 which gives you an average price per square foot of $100.75.
Well that is enough of that!
I think a similar statement could be said about purchasing a home and having high-levels of anxiety. I don’t know if there is a significant correlation between the two but it seems fitting. Today’s Balmy day made me reminisce on the days when I would share my love of statistics with those students who were only in my class because it was a requirement for them to graduate… LOL.
Why am I bringing this up?
I am bringing this up because I think it is important to talk about how the numbers are derived in all of those reports we read on current market values. I think anxiety of statistics can stop people from talking about how we get the numbers we rely so heavily on to help make decision about a purchase as big as a home. I hope that I can add a little information to your day or at least a recap of something you probably learned years ago.
I always send my clients statistics on current comparable properties, as I imagine most Realtors do. Statistics are a way to answer a question – the formulas always stay the same and only the numbers change. Answers are what my clients want! They want to know they are getting the best deal for their money and the best way to get those types of answers are through statistics.
Most of the statistics used in these reports are called Measures of Central Tendency. Measures of central tendency are scores that represent the center of a distribution or a normal curve: The three most common measures of central tendency are the mean, median, and mode. In Real Estate we do not use the mode as an accurate measure of value (the mode is simply the most frequent number in a set of data and does not provide us with an accurate value for home prices).
Here is a look at some real data I just ran for a client:
You tell me if they are making a good choice with this house—that is, will they get the best deal for their money?
Property in question: 5 bedroom, 3 bath, 3708 square feet built in 2004 List Price is $356,900. All of the homes in the example below are comparable to subject property.
Closed Date....Sold Price...Sqft....DOM....SP/Sqft 10/31/2008.......$365,000.......3,708.....12.............$98.44
11/18/2008.......$375,000........3,708......5............$101.13 12/01/2008..........$395,000.......4,076.....14..............$96.91 10/16/2008..........$400,000.......3,755.....45............$106.52
Average...........$383,750......3,812...19........$100.75
Median............$385,000......3,731....13.........$99.79
When you see “Median” home price in a report this number was derived by taking the middle house price from a distribution of house prices. All home prices being considered are ranked in numerical order and the middle price is the “median”. So half of the prices are below the median price and half are above. Note: If there were two numbers in the middle of the distribution you would take the middle of those two numbers (add them together and divide by 2) for example; to get the median price per square foot you would take 98.44 + 101.13 and divide by 2 which gives you a median price per square foot of $99.79. One of the limitations of using the median price is that it does not account for outliers. Outliers are those homes that sold for way above the average price or way below. An example of this would be if a home in this neighborhood sold for $250,000 and was comparable to the subject property the median would not account for this price, whereas the “mean” or “average” would factor this price into the equation.
When you see “Average” home price people are generally talking about the mean also know as the arithmetic average. The average is the sum of all prices divided by the number of homes. So, in the example above all 4 home prices were added together = 1,535,000 and then divided by the number of homes = 4 which gives you an average sale price for this neighborhood of $383,750. To get the average price per square foot you first have to get the price per square foot for each property you take the sale price $365,000 divide by square foot 3,708 this gives you $98.44. Do this for all homes and then sum those numbers = 403 and divide by 4 which gives you an average price per square foot of $100.75.
Well that is enough of that!
Sunday, December 7, 2008
Thoughts, Feelings, and a Prediction of Temecula Real Estate
The current real estate market in Temecula CA is saturated with bank owned homes. A lot of buyers and investors are cashing in on finding homes at rock-bottom prices. This is great news for buyers but, very devastating to sellers - not just sellers but everyone who purchased property before the crash of the real estate market in Temecula.
As a real estate professional it is very easy to become excited about all of the homes I am selling but as a person with feelings my heart is breaking for those who have lost their dreams.
I know there are always three-sides to one story (this persons, that persons and the truth somewhere in the middle). Some people are under the impression that those who have lost their homes were at fault. Others believe that the industries of banking/lending/agents are at fault. Some are even blaming all the investors that scooped up homes during 2005/2006.
What do I think? I think I have no right to judge!!!
What is next? My prediction for next year’s real estate market in and around the Temecula Valley is this; we will have another on-slaught of Foreclosed homes also known as Real Estate Owned (REO) hit the market late January and continue into February. I think we will see home prices start increasing and continue upwards until September and at that point even out. I don’t think house prices will regain the unjustified prices they were in 2005/2006, but I do think we will see our market start to stabilize in the Temecula Valley. I don’t think home prices can go down much if any lower than they are right now. However, with that said, I would like to add a caveat -- I didn’t think they could reach the prices they are right now either… what does this say about my prediction… who knows, that is why it is a prediction!!!
As a real estate professional it is very easy to become excited about all of the homes I am selling but as a person with feelings my heart is breaking for those who have lost their dreams.
I know there are always three-sides to one story (this persons, that persons and the truth somewhere in the middle). Some people are under the impression that those who have lost their homes were at fault. Others believe that the industries of banking/lending/agents are at fault. Some are even blaming all the investors that scooped up homes during 2005/2006.
What do I think? I think I have no right to judge!!!
What is next? My prediction for next year’s real estate market in and around the Temecula Valley is this; we will have another on-slaught of Foreclosed homes also known as Real Estate Owned (REO) hit the market late January and continue into February. I think we will see home prices start increasing and continue upwards until September and at that point even out. I don’t think house prices will regain the unjustified prices they were in 2005/2006, but I do think we will see our market start to stabilize in the Temecula Valley. I don’t think home prices can go down much if any lower than they are right now. However, with that said, I would like to add a caveat -- I didn’t think they could reach the prices they are right now either… what does this say about my prediction… who knows, that is why it is a prediction!!!
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