Landing the Plane

     While a great deal of the emphasis placed on the practice of selling real estate is on the marketing and obtaining of a buyer, that is only a small portion of what a real estate agent does. And, I would interject, that it is not necessarily the most important part of the process.

     Anyone who has ever flown an airplane will tell you that taking off and cruising, while challenging in their own right, are relatively simple. That relative simplicity comes in comparison to landing the plane. The same goes for real estate sales. Marketing and contract writing are fairly push-button operations with only a few "disastrous" outcomes. However, bringing the sale to a safe and profitable conclusion is fraught with peril.

     Let's take a page out of my book from today: As I am writing this at 1:30pm, I have a closing scheduled for 3pm. The buyer's agent is out of town on a cruise and has left an associate in charge of the closing. So far today, the package from the title company that was supposed to arrive before 10:30 had an anticipated delivery time of 5:00pm. After a call to UPS, the title company, and a prayer offered up to God, my friendly UPS man walked in the door at 11:52 with the package. Next, after opening the package, I found that all of the documents necessary for the closing were not in the package and there was no indication if there would be a representative from the lender at the closing to clear this all up. A quick call to the stand-in buyer's agent yielded my least favorite response, "I don't know." After she made a few phone calls on her end, she found that "Bob" (no other information than a phone number was available) was the loan officer in charge and she would give him a call. That call helped to lay a lot of worry to rest as Bob said he would be there. Now, I sit in my office waiting for the next obstacle to arise with the anxiety of knowing that a deal can always fall apart even at the last minute.

     As you can see from the details of just the last 4 hours and the anticipation of the next 2 hours, the front end of a deal is not the treacherous end. It is the end of the deal. It is the time when it all wraps up and comes to a conclusion that the gremlins come out to wreak havoc on your plans. My clients are currently unaware of the anxiety that I have faced today. They will arrive at the closing none-the-wiser, and leave with a check in hand to go on to their next adventure. This is what I get paid for. I take on the task of representing people in transactions so that they don't have to worry. And, while it is glamorous to be a high flying marketing guru, the only pilot that gets paid is the one who can land the plane.

Placing A Value On Your Property

There is a common question among all home sellers: "How much should we ask for our home when we put it on the market?" As a real estate professional, I will tell you without a doubt if any agent tells you that they have a foolproof method, they are lying.  There are many factors that go into finding a price that will generate interest in your property while at the same time maximizing the return on your investment. Here are the big 3:

1. Comparable Properties. The first place I look when deciding who to advise clients is comparable properties. These are properties that have similar characteristics to the subject property. I look for similar bedroom and bathroom numbers, region, construction style, etc. Unless you are in a subdivision with very similar homes, this can sometimes be very difficult to do and requires a great deal of research.
2. Market Trends. Each market has trends that can vary from city-to-city or even from region-to-region within a city or county. Are prices trending up? Down? Flat? These are all factors that need to be examined when determining value.
3. Property-Specific Features. Not all property is the same. Just because it is comparable, does not mean it is identical.  Does your home have an in-ground swimming pool? How about a sauna? Theater room? Features such as these can add value over comparable properties and need to be evaluated individually. Remember, that not all features are positive, and negative features need to be taken into consideration as well. Think about your septic and water systems. Being off-grid may be a benefit to you, but a typical, American buyer may not share the same mindset.

Our tendency when pricing is to look at what it cost us to buy or build. We also place emotional value on property that is based solely on our feelings about the property. If you ascribe value strictly based on any of these factors, you can expect to experience frustration and a lack of success. It is always best to have a disinterested third party help you to honestly assess the value. Real estate professionals have the tools and expertise to help make these decisions quickly and accurately, and will often readily offer to help without obligating you to use their services. Contact us today for a free evaluation of your property.

Multifamily Investing

Now is a great time to invest in Multifamily Properties.  Contact us today to get started finding your next great investment.

Here is a great article for potential multifamily investors.

Tired of Dealing With Rental Property?

Everyone has heard of the nightmares that come along with owning rental properties.  It is difficult enough to own your own property without the hassles of dealing with property in the hands of someone who doesn't actually own it.  Add to that the difficulty of dealing with the people.  Oh, the people.  Criminals, liars, dead-beats, drama queens. etc.  And it doesn't matter whether you are dealing with a $300/month studio apartment or a $1,000/month house, there are all types of less-than-savory renters at all socio-economic levels.  It is probably not politically correct to say that, but I am afraid that it is true.

If you have rental property and you have experienced these issues, we feel your pain.  One of the many services we offer is property management and our roster currently includes over 200 residential units and several commercial units.  We know property, we know tenants, we have seen the problems and we have created the solutions.  So, if you are tired of the headache, give us a call or drop us an email.  When it comes to real estate headaches, Ashcraft Real Estate Services is better than an aspirin.

What is a buyer's broker?

In the typical real estate transaction, a home owner who wishes to sell will contact and employ the services of a real estate professional.  This person becomes the agent of the seller and markets the property for sale.  When you, the home buyer, call this agent and seek to purchase one of their listings, you have to remember that the agent isn't working for you.

This is where buyer's brokers come into the picture.  A  buyer's broker acts as the agent for the buyer.  It is this person's job to negotiate and work on behalf of the buyer to find the property that the buyer wants and at the lowest price possible.  The seller's agent is trying to negotiate to keep the price as high as possible for the seller.  The buyer's agent will be trying to negotiate the price down or seek other consideration to make the deal more attractive to the buyer.

So, how does using a buyer's agent help you? First, and most importantly, the services of the buyer's agent are not typically paid for by the buyer.  When the sale takes place, there is a commission check cut at the closing that comes from the seller's funds, NOT THE BUYER'S.  This commission is split between the seller's agent and the buyer's agent.  So, if you are the buyer, the seller has just paid for someone to work and negotiate on your behalf.  There aren't too many places where this dynamic occurs.  In fact, I can't think of any at this point.  If you are going to buy property, always seek representation.  If at all possible, seek an individual who provides buyer representation as a specialty. 

Feel free to contact me at 502-682-6767 or at john@ashcraftrealty.com.  I provide buyer's representation on residential property.

Where do we go from here?

Just when it seemed that the market was headed back up, the talks and signs of a "double-dip" recession started to rear their ugly heads.  So, what does that mean for the real estate market?  Well, in our local area (Owen County), you most likely won't see much of a change.  Things have been tough for sellers for quite some time and even when things were starting to look up, things still weren't looking to good.

With that said, you would probably expect the next thing for me to say to be "it is a buyer's market". Typically I would be saying this and to some extent it is true.  However, new lending requirements and the current state of our economy have made it increasingly difficult for buyers to find financing.  Couple that with the decline in property values and that reflection on appraisals, and it is increasingly difficult for buyers to become buyers.

Now, there is more than gloom and doom to my message.  If you are a seller, it is a perfect time to refinance to make things easier on yourself in the way of payments.  It is also time to evaluate your property and decide whether or not you really want to sell or if you want to make improvements and wait for the market to rebound.  To the potential buyers, it is time to save some money and do it the right way.  The lure of 100% financing was just too much for some people and is in part what caused the collapse that we saw.  Save for your down payment (no less than 15%) and buy your home with some equity and save some money on mortgage payments.  Not only will this help you in the long-run, but it will also make buying a home easier when sellers see how serious that you are.  If there aren't a whole lot of hoops to jump through to get low down payment financing, sellers may be willing to take a little bit lower price given the assurance that you are going to be ready to close.

In closing, always seek the input of a real estate professional before buying or selling property. It is a complex process with many pitfalls. For sellers, the expense of the commission only comes if there is a closing and your real estate agent will be worth every penny.  For buyers, the seller pays the commission, not you. Your real estate agent gets paid by the seller at no cost to you.  That is like suing someone in court and having that person pay for your lawyer and you just can't beat that.

Property Values - Residential

One of the first questions buyers pose to real estate professional is "what is my property worth". That can be a tricky question to answer. For starters, the agent or broker does not want to give a value that is too high for fear of creating unreasonable expectations which will lead to ultimate failure. On the other side of the coin, they don't want to value the property too low and either insult their potential client or, even worse, adversely affect their commission. In this blog entry, I will deal with the value of residential property.

I would like to say that placing a value on a home is as simple as comparing it to the houses nearby with similar features that have sold recently. In reality, that calculation plays the biggest part in determining the bank's appraisal of the home, but it does not encompass all that goes into placing the asking price or the offering price on a home. Unfortunately for someone like me who likes his assessments to be objective and based on concrete items (incomes, expenses, etc.), there are far more subjective factors influencing homes. Among these factors are perceived affluence of the neighborhood, proximity to schools and the ratings of those schools, crime rates, neighbors, and the list goes on and on.

To start the valuation, you want to use the concrete factors. If it is a new home (e.g. you are a builder), start with the overall cost of construction and add your profit margin. If it is an existing home that the new has worn off of, you need to examine comparable properties and make adjustments based on what your home has or does not have in comparison to those comparable homes. If you are doing this on your own, use the internet to your advantage, but make sure you are getting comparables. A 1500 square foot Cape Cod in Owenton, KY does not equal an identical 1500 square foot Cape Cod in Savannah, GA. You can also use your local PVA's office to your advantage to find out what features comparable homes possess and what type of value the PVA has placed on those homes.

Once you have your concrete numbers in place, you can then start to apply the subjective factors. Look at it through the eyes of a buyer and decide how much each factor either adds to the property or takes away from it. For example: You are 1/2 mile to the best school in the district so you might decide to add $2000; however, your crime rate is double that of any other neighborhood in the same area so you deduct $5000. You can see where I am going with this valuation. You have to decide what each one of the factors brings to the table and how much it affects demand for your property.

The art of valuing homes is not an exact science. It takes a great deal of research and thought. As with all property transactions, I highly suggest employing the services of a real estate professional. Many buyers overlook the benefits of retaining a real estate agent/broker to assist them in finding and purchasing properties. If you are looking to buy, the services of the agent/broker will usually be at no cost to the buyer. If you are the seller, the value of the the experience and insight that your agent/broker brings to the table will, in many cases, far outweigh any costs associated with those services.