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.
Wednesday, January 18, 2012
Monday, July 18, 2011
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.
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.
Monday, July 11, 2011
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.
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.
Monday, November 17, 2008
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.
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.
Property Values - Commercial
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 commercial/income producing property.
I deal mostly with commercial transactions. Commercial property, unlike residential property, is simply a math problem. The value of commercial property is always some function of the profitability. The most common reflection of one of these functions is known as the Cap Rate. That is short for Capitalization Rate and is calculated by dividing the Net Operating Income of a property by its Fair Market Value. For example, if a property has an NOI of $60,000 and a FMV of $750,0o0, then its Cap Rate is 8% ( 60,000 divided by 750,000 is 0.08 or 8%). In short, the Cap Rate is the amount of return on investment that a property investor would expect to get from his investment in a piece of property.
Each market segment has different factors affecting the cap rate. Cap Rates move up and down with the market and are reflective of the risk/reward of the investment. Assuming all other factors are equal, lower risk investments will have a lower cap rate and thus a higher value. Likewise, higher risk investments will have higher cap rates and lower values.
To determine the actual value of a piece of property, you have to get into some research. As is the case with any valuation, you must find comparable properties (don't compare a gas station with an Applebees or vice versa) that are being offered for sale or, better yet, have already sold. Examine the basic numbers and determine what the cap rate for the properties is. If your research is anything like mine, you will find that properties of specific market segments tend to run along the same cap rates with a few exceptions thrown in (there will always be one way higher and then again some way lower). You can throw out the odd properties, but take time to evaluate why they might be different. When you get down to a obvious range, then you can start dissecting why one property has a higher or lower rate within the range. From that determination, you can then apply the findings to your property and come up with a highly educated assessment of the value.
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.
I deal mostly with commercial transactions. Commercial property, unlike residential property, is simply a math problem. The value of commercial property is always some function of the profitability. The most common reflection of one of these functions is known as the Cap Rate. That is short for Capitalization Rate and is calculated by dividing the Net Operating Income of a property by its Fair Market Value. For example, if a property has an NOI of $60,000 and a FMV of $750,0o0, then its Cap Rate is 8% ( 60,000 divided by 750,000 is 0.08 or 8%). In short, the Cap Rate is the amount of return on investment that a property investor would expect to get from his investment in a piece of property.
Each market segment has different factors affecting the cap rate. Cap Rates move up and down with the market and are reflective of the risk/reward of the investment. Assuming all other factors are equal, lower risk investments will have a lower cap rate and thus a higher value. Likewise, higher risk investments will have higher cap rates and lower values.
To determine the actual value of a piece of property, you have to get into some research. As is the case with any valuation, you must find comparable properties (don't compare a gas station with an Applebees or vice versa) that are being offered for sale or, better yet, have already sold. Examine the basic numbers and determine what the cap rate for the properties is. If your research is anything like mine, you will find that properties of specific market segments tend to run along the same cap rates with a few exceptions thrown in (there will always be one way higher and then again some way lower). You can throw out the odd properties, but take time to evaluate why they might be different. When you get down to a obvious range, then you can start dissecting why one property has a higher or lower rate within the range. From that determination, you can then apply the findings to your property and come up with a highly educated assessment of the value.
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.
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