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Can YOU Find and Buy a Home in 9 Days?
9 days.
That’s how long you have, as of this writing, to get your first home under contract and still qualify for the $8K federal tax credit. Can you do it?
Can you, starting from zero, with not one second invested in the home-shopping, money-borrowing, able-to-choose, able-to-close process of buying a home to call your own, can YOU get it done in that time frame?
The truth: You could do it in even less time.
You’re thinking: This is a Realtor writing this blog post. He’s going to say ANYTHING is possible when it comes to buying real estate.
To that I say: Wrong!
The fact of the matter is, over these next nine days, if you called me to help you seek out and buy a home before the end of the tax credit, I’d have no choice but to refer you to an appropriately matched colleague of mine. I’m sorry, but I’m too busy to help you right now, and to provide the level of service you need to have and I need to give.
So the Realtor optimism… that’s not the issue. The issue is: Is 9 days enough time to get pre-approved, look at some houses enough to know what you’re looking at, pick one, tie it up and be headed for closing?
Again: Yes. It is enough time. What price range are you in? Maybe you don’t know yet. If you haven’t talked to a lender, then you don’t know. You need to take the first step.
First step: Talk to a lender. Call the Bank of the Pacific, tell whoever answers the phone that you’re a first time buyer and you need the best person for the job. Then do whatever they tell you to do, bring them what they tell you to bring them. Get applied and see what you’re buying power is. You should know in 24 hours or less.
When you have your price range and the area of Whatcom County you want to be in, call me. Depending on where it is, I’ll put you in the hands of THE most qualified agent to help you out.
By the afternoon of the 2nd day, you’ll have seen more houses than most people will live in in their lifetime.
On day 3, you pick one or two finalists, then go back for a 2nd look. Pick one. Then tie it up. Get it under contract, and guess what: You’ve just qualified for the $8K tax credit.
Am I over-simplifying it? That’s something only you can answer. I work with buyers who move this fast or faster all the time. If you’re the type who needs to meditate for 4 years before buying something, you’re probably LONG past your self-imposed deadline.
But if you’re a decisive person, and if you’re sold on the power of owning a home, then call me. There’s still time. And $8K is nothing to sneeze at.
Comments: Please leave a comment.Sweet, Sweet Words
Some of the sweetest words a Realtor ever gets to speak are to first-time home buyers, who’ve been shopping HARD for NINE MONTHS, and who have just found their dream house, under-priced and in a hot neighborhood, and therefore INUNDATED with multiple offers, and with only 2 weeks left ’til the expiration of the tax credit…
But those first-time home buyers go into that multiple offer situation 110% un-daunted. Committed. Ready to pull out EVERY ninja strategy for strengthening their offer to the hilt and going for broke.
And then that call comes in from the listing agent, after he’s met with the seller and gone over all the offers, and he says, “Brandon, your clients are in first position.”
And then I get to call those buyers, and deliver those 3 words that are sweeter than the sweetest fruit you’ve ever tasted:
“You got it!”
I had that joyous experience this week, and it made the entire week. Congratulations to those buyers, and congratulations to that seller, for picking some truly WORLD-CLASS people to take over stewardship of your home. You have chosen well.
Comments: Please leave a comment.Can You Flip a Bellingham Home for Profit?
Remember back to 2005 and 2006 when it seemed like the whole world was flipping real estate and making ridiculous piles of cash? Half the people you bumped into at a dinner party, when asked what they did for work, said, “Oh, I’m a professional real estate investor.”
And you thought to yourself, “But… you’re only 15 years old!”
Well, it was that easy back then. We know now that it was all the fragile skin of a giant bubble, and a lot of those professional investors will be in recovery-mode for many, many years to come.
But there were also a lot of them who made a ton of cash, weathered the downturn (or even thrived from it) and are still working it today. Some of them are making ridiculous piles of cash, even now.
The topic of today’s post is CAN YOU NOW buy a house in Bellingham, fix it up, turn around and sell it, and make a profit? Let’s go one step further and qualify the concept of “profit” by saying it’s got to be worth the effort. That’s a subjective measure, I understand, but let’s set a net profit limit of 10% of gross sale price. So if your gross sale price is $300K, you gotta turn (pre-tax) $30K after all expenses.
For a 10% profit, and considering that it costs about 10% to sell a property* (see note below) you’re going to need to buy the property, hold it, and fix it to sell again for no more than a total of 80% of final market value. For truly professional investors, that margin would be considered EXTREMELY risky. 60% is more common for hardcore, sophisticated investors.
*NOTE: By the time you pay agent fees, excise tax, title and escrow and other closing costs, kick in some $$$ for odds-n-ends repairs after the buyer’s home inspection, and taking a little hit on the list price, 10% cost to sell is a safe number for a really decent property in this current market.
So let’s say you tie up a property at a price that, with all repairs and holding costs, you’re into it for a MAX of 80% of market value. Next question: How liquid is the home’s neighborhood market? Is it Columbia or Alabama Hill? Sunnyland or Sudden Valley? That’s pretty important. A few months of extra holding costs and one price drop and with that thin margin, it’s bye bye profit.
Back to the hypothetical: Let’s say you find the property, and all it needs is a paint and carpet remodel, landscape clean-up and new roof. All easy, fast stuff to get done. Next question: Can you get a loan on it? Let’s assume you’ve got 700+ credit, lots of work history with W2’s to back it up, 25% down — a good start. How many other properties do you own? Some banks draw the line at 4, so be prepared for that rejection if your portfolio is rich.
Hard money? Yeah, it’s still out there, though it’s gotten a lot harder to find. If your financials are good and the property is a slam dunk, you can get a private loan for 3 points up front and 10% interest, 30-year amortization, 1-3 year balloon. Loan to value depends on the property. If you’ve tied it up for closer to that 60% range, you can get 100% loan to value. The private money lenders know the business, and they’re going to want to REALLY know you or know the property. If you botch it up, they want to take ownership of it with room for them to fix your mess and make their money.
To be continued…
Comments: 1 Comment »This is Your Story
Just this morning I was reading Chris Brogan’s world-renowned blog and found that he’s writing about the importance of story in your life.
Perfect timing: a couple weeks ago we asked of home buyers “Does your story matter?” That is, do your goals and wants and strategies and who and what you are MATTER in the eyes of the seller, when you’re trying to buy their home? The answer was half wake-up call and half “Ninja Strategies Revealed.” And because it surprised a few people, it may be worth another look.
But back to Brogan’s blog: The post is a quick video review of Donald Miller’s latest book A Million Miles in a Thousand Years. Miller’s the one who authored Blue Like Jazz which sold a million-plus copies and led to other books. But the didn’t sell as well, and Miller fell into a creativity-sapping, follow-up funk.
Then one day he got an offer to make a movie about his life and the Blue Like Jazz story. As the producers drilled down on his REAL life story, however, they found it “needed doctoring lest it be too directionless for the screen.”
What follows is Miller’s awakening to a new perspective on life as a story that can in fact be “edited” on the fly. He’s inspired to get off his butt and chase the girl, find his father, get fit, follow the passions he’s read about and thought about but not engaged. He takes responsibility for the law of nature that says while all our lives are indeed individual stories, we’re not just characters. We’re the authors.
No question, this concept has tremendous value in the context of real estate, athletics, family, carreer, anything. What if a biographer or movie producer approached you today and said “We’re going to be following you, from your deepest thoughts to your outward actions, and we’re going to cover your story!”
Are you happy with it? What would you change right now, before the cameras started rolling? Why not dose up your story with some struggle-to-overcome, some intrigue, some failure for the sake of learning what can’t otherwise be learned. Would you rather your story creates a total insomniac of the reader because they can’t put it down, or a tranquilizer-alternative only slightly more read-able than the tax code?
It’s your life story. It’s your choice. Write on!!!
Comments: Please leave a comment.The Dance, Part II
In the recent post, The Dance, Part I, we looked at the laundry list of logistics that go into closing a real estate sale and getting moved in or out of the home.
And yes, it does come off more often than not without a hitch.
But when a step is missed… or worse, when one of the dance partners just crumples to the floor in a heap… well, let’’s just say we really get to see what everybody’s made of.
Here are a few missed dance steps or dance-floor stumbles I’ve experienced in the past couple years, and the respective outcomes:
Tale #1: Three home sales – all tied to one another in domino fashion – looked like they would fund and record on Friday, and everybody would be moving in over the weekend. But the IT gods were not smiling that day. The Whatcom County Recorder’s Office computer system was down, and they had no way of hand-recording the documents. Nobody got to move in that weekend. End result: The sales all finally recorded the following Tuesday.
Tale #2: A sale in Sudden Valley required for the buyer’s Alaskan home to close first. The Alaskan buyer’s lender made excuse after excuse, and the extensions were stacking up month after month. Then the news broke: the lender and her husband had committed double suicide, allegedly having extorted tens of thousands of “application fees” from their clients. End result: the Alaskan buyer switched lenders, and our sale finally closed after 5 months of extensions.
Tale #3: First, the buyer fought off multiple offers to get the deal. The appraiser then called for multiple work orders before they’d fund, so in came an army of contractors. When the work was complete, the seller THEN decided they required multiple bids to ensure the work was fairly priced. Meanwhile, the buyer’s (big box) lender handed the file down, down, down through multiple hands, with no one person claiming responsiblity. Extensions mounted. Then, escrow — a private law firm required by the seller — announced ONE HOUR before buyer’s signing that they wouldn’t generate deeds or tax affidavits. (Note: that’s like an auto mechanic taking your money to fix your car, then announcing they don’t have any tools). End Result: Sale closed after only 2 extensions, and the lender having to pay out on their proudly-marketed “Closing Guarantee” program.
Comments: Please leave a comment.The Dance, Part I
Hayden & Ashby, on the dance floor!
Closing is a dance.
Only it’s not like trying to dance with just one other partner who you’ve danced with before. It’s more like trying to do a salsa, in perfect step, to a song you’ve never heard, with 6 other partners — all at once.
Miraculously, it comes off almost perfectly time after time.
But when it doesn’t come off, it can be very un-pretty. Let’s review some of the “dance steps.”
We’ve got a closing date of, say, today, Friday, March 26th. So the buyers and sellers have both:
- packed up their entire household,
- closed out their lease on their apartment,
- quit their jobs (because they’re re-locating to Bellingham from Okeefenogee),
- hired a moving company, who’s semi truck is out front loaded to the gills with an entire household,
- moved all the new home’s utilites into their name,
- gathered a gaggle of friends to come help with the move-in,
- wire-transferred the down payment and closing cost funds to escrow,
- submitted all their change of address notices to about 14,000 different sources,
- checked the weather (can’t get those antiques wet on the way to the front door),
- arranged for an electrician, carpenter, plumber, tile-setter and painter to remodel that upstairs bathroom,
- scheduled a lock-smith to come by and change out the locks,
- scheduled a cleaner to white-glove the place,
- arranged for new appliance delivery,
- oh, and scheduled a priest to come by and bless their new home.
A salsa, remember? The music’s pumping, the crowd is cheering, you are ALIVE with high energy!
And again, somewhat miraculously, more often than not, this whole tango goes off more smoothly than not. But as you can imagine, when one of the dancers gets out of step, things can get, well, un-pretty. In Part II, we’ll look at some of the un-pretty circumstances and few ninja tricks for avoiding the missed step!
Comments: Please leave a comment.How to turn your wife — or a seller — against you!
Everything that happens in the course of buying, selling, or just owning real estate has a simple analogy to everyday life.
For example, the art of the inspection response is similar to having your wife — or husband — fix you something to eat when you’re hungry. Let me explain…
You’ve been out in the yard raking leaves, sweeping the driveway, and washing the cars. Definitely appreciated chores that, when your wife looks out the window and sees you pitching in, she feels deep admiration and respect toward you and your actions.
It’s very much like a seller appreciating a buyer who’s “pitching in” by wanting to buy the house, and thereby helping the seller reach their goals, too. You, the yard-worker/buyer, have scored some points with the wife/the seller. You’re ahead, for now.
Then, the next step in the general flow of events is that after you’ve finished the chores, you need something. You’re hungry, so you walk into the house and casually mention to your wife, “Hey Sweetie… could I bother you for a quick sandwich?”
The real estate version is this, “Hi Seller… we’ve just had the home inspection, and we wonder if we could bother you to address a few reasonable things?”
A quick, casual request in both stories… and not at all a marriage destroyer and/or deal killer. But let’s ramp it up a bit. Let’s say our hungry husband is feeling like he really deserves more food than just a sandwich.
“Sweetie… could you whip me up a mushroom-and-salmon omelette, with a side of fresh bread, some hand-squeezed orange juice, and an organic mango, sliced like I like it?”
Your wife’s brow furls, and the points you earned with your morning chores have, at this point, been neutralized. She knows you worked hard, for sure, but now you’re coming back and saying “Even though you work too, and have your own needs, and I really just need to satisfy my hunger, I want more. Afterall, it’s a husband’s market!”
With solid negotiation skills, and a bit of compromise here and there, you can keep the “deal” together and still end up with the food — and the marriage. But let’s ramp it up some more.
“Sweetheart… I just washed the cars, swept up, and raked some leaves. Make me a salmon quiche with goat cheese and free range egg whites , an organic strawberry and papaya smoothie with soy milk, a T-bone steak, a rack of ribs, a spinach salad with pine nuts and hand-made Italian dressing, and, oh yes, some of that Merlot we had two summers ago in Napa, a chocolate mousse with a hint of mocha, and just a spot of mint sorbet. Oh, and make it snappy.”
Guess what, dude. Your points just went into the red. You’re going to end up with some day-old toast, and a few nights on the couch.
Sellers often feel the same way. Remember, sellers are like springs — you can only compress them so far. Are there situations where the gourmet feast you’re requesting is justified? Absolutely… but it’s situational. At your wedding, when someone else is doing the cooking and it’s all about celebration and indulgence, expect the feast!
If you discover above-and-beyond damage in a house that the seller didn’t know about, and they’ve left a trail of clues that they’re fully committed to closing the sale and moving on… then you have more negotiation power.
But don’t expect by default that a seller is going to make a house brand new for you again. Read into it. Keep your own goals in mind (remember, in the beginning you were just hungry for a sandwich.) And be reasonable. The surest way to your goals, and your long-term happiness, is to keep “win/win” in mind.
Comments: Please leave a comment.Sorry, but you’re not the customer!
Yesterday, I sat down for a meeting with one of my buyer clients who has fallen in love with a short sale home. She submitted an offer on it, and as the 1st Time Home Buyer Tax Credit countdown keeps ticking toward the deadline, she’s begun the anxious wait, with fingers crossed, to get “Lender Consent” for the deal to close.
After I explained the ensuing wait, she had the same general line of questions that all short sale buyers have, and rightfully so:
1) WHY does it take so long to get approval?
2) WHY wouldn’t the bank want to get this liability off its books quickly?
3) WHY don’t they have an efficient system for approving these sales in a reasonable time-frame?
And so on…
And what do all these questions have in common? They make the assumption that the buyer — my client — or even the home’s seller, are the customer(s). In a short sale, they’re really not.
What the heck am I talking about?
The seller’s lender who must approve the short sale, they brokered the seller’s loan. They “sold” their product to the home-owner, so it would stand to reason that the home-owner, and the buyer ready to “save them from foreclosure” is the customer.
But then that lender sold that loan to an investor. It was probably bundled with a bunch of other loans, and they “sold” that product to that investor as a different kind of customer — one they’ve worked with many times over and for a lot more money than that simple, single homeowner.
Ask the lender who their customer is, and if they’re truthful they’ll tell you that the investor is their customer, not the homeowner. And that investor has been taking it in the shorts for a year and a half now, with no real end in sight just yet. The bank wants to protect and heal those investor relationships a lot more than they care about you or how quickly they can close on what is already a money-losing deal.
Banks: Tell me I’m wrong!
Comments: Please leave a comment.Duel on Main St.: Short Sales versus the Tax Credit
“It’d be nice to get the eight-thousand dollar tax credit, but what we really want is a house!!!”
This delightful quote was spoken by some buyer clients of mine as they signed an offer to TRY buying a Bellingham short sale home. As the April 30th deadline-to-be-under-contract approaches, some real strategizing and decision-making on the part of buyers — especially would-be short sale buyers — is beoming increasingly necesssary.
To qualify for the contract, the first-time home buyers have to be under contract on a home by April 30th, 2010. The sale must then close by June 30th, 2010.
Here’s why that gets sticky with a short sale:
Let’s say you get the seller to sign off on the offer and submit it to the seller’s lender for approval. Then you wait for lender approval. And, usually, you wait. And wait. And wait.
(Right now we’ve got one sale that’s been pending for 10 months!!!!!!!!!!!!!!!!! And still no answer. On another, we had a full approval in 4 days!)
And before an answer arrives, you suddenly realize it’s April 20th…or the 25th…. or the 28th. And let’s say the buyer elects to take the risk and let the deadline pass… and then sometime after April 30th the seller’s lender comes back and says:
- Sorry, no sale. We’ll just go to foreclosure. Or…
- OK… we’ll short sell it to your buyer, but at $XXXX more than they’re offering. Or…
- OK, but only if the seller agrees to this $XX thousands of deficiency judgement. Or…
- OK, we’ll sell it to you for your offer price, with no deficiency judgement against the seller. And it works out fine.
The question is, what level of risk are you willing to take on any of those being the outcome. And they all happen with regularity.
Yesterday, some clients of mine entered into contract on a short sale. And as we talked about the tax credit, they said, “You know, the $8K would be a nice bonus, but if we don’t get it and we still get that house, we’ll be fine with that.”
It was refreshing to hear. Then, as their agent, I had to lay out the possible scenario above, and the possibility of maybe not getting the house, AND missing the tax credit deadline. And their faces lost a little spark as they thought it through.
If you’re a buyer, start thinking it through now. Decide what level of risk you’re OK with. And meanwhile, best of luck finding The One!!!
Comments: 3 Comments »You’ve Only Got 44!!!
If you haven’t noticed, on the left column of this website is a count-down timer. It ticks off the second remaining before the expiration of the 1st Time Home Buyer’s $8000.00 Tax Credit… and the “Experienced” Buyer’s $6500 Tax Credit, available to buyers who sell their home they’ve lived in for 5 years to buy – in any price bracket — a different home.
The clock has found its way down to 44 days! Now, don’t flip out with panic: What that time indicates is when you must be under contract on a home. Then you’ve got through June 30 to actually close the sale. (Read all the other details here.)
So if you’ve been planning on taking advantage of either of these tax credits, and for your own reasons you’ve been waiting, procrastinating, putting it off, biding your time… or just refining your wish-list for a home… well my brothers and sisters, IT IS TIME!!!
Remember, actually FINDING a home to buy is (usually) a process! MOST people need to see SOME homes (4, 6, 
so they’re ready to commit to The One when it presents itself. That process takes, on average, 2-6 weeks. So the timing is perfect sto start today!
Buyer clients of mine who locked their loan at the end of last week, got a 30-year-fixed with no points at 4.875%. Tax credit or no… that’s reason enough to shop the market. That’s just crazy low.
The inventory is increasing by the hour, too. Sellers who’ve been waiting for warmer spring weather and flowers to bloom… they’re calling their agents and listing their homes EVERY DAY right now. And the good ones do NOT last.
What’s the next step you need to take? Call your agent, and when they answer just say, “My name is _______, and I’m ready!”
Comments: Please leave a comment.
