Archive for August, 2010

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Rent vs. Buy

August 25, 2010

 

 

It’s the age-old debate in real estate – what formulaic equation can you come up with to justify whether you should rent or buy in any given market. I’m here to tell you – formulas don’t work. 

For instance, Trulia reports that “Trulia.com, a real estate for-sale listings site that also recently began listing rentals, has launched its own rent vs. buy calculator. If you’re trying to decide on a city, it also created a Rent vs. Buy Index for 50 major cities. The index compares the costs of buying a two-bedroom condo with the costs of renting one.” 

But what Trulia and others don’t consider is that it’s more emotional than dollars and cents. There is still a certain joy in OWNING your home. There’s a wonderful feeling when you get a tax deduction on your residence but an even more wonderful feeling when you walk in and know it is YOUR home and you don’t answer to anyone else about paint, carpet, dogs, guests, etc. It’s your home. You can do anything you want to it. You don’t have to worry about any nicks or bruises and you can decorate and nail the heck out of your walls. It’s YOUR home. 

We’ve just come out of a cycle in real estate where everyone looked at their home as an investment. This obviously didn’t work out too well for many people. Now we are back to looking at our homes as a place to raise our families and to live our lives. If we make money – even better. 

Renting has its place and its merits. But I still, even now, don’t think it can ever beat owning a home. There is no amount of money that can beat the feeling and pride of ownership.

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Real Estate Mind Games

August 21, 2010

 

Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don’t quit.” Conrad Hilton

 

Real estate today is moving and changing in new directions. To be a winner in today’s real estate world, you have to put the past behind you and move toward the future. You have to be an agent that wants to win and then sets out to figure out what it will take to make transactions matter.

It’s all a mind game and you must have a winning mindset. If you don’t – you are doomed to fail.

I am constantly reminded how tough our economic climate is and how bad home prices have fallen. But I am also reminded that we are not the only generation to have financial challenges. Many of our grandparents and parents suffered greatly during the “great depression” and they think we are all being a wee bit dramatic. I know it is tough out there but I also know that opportunities exist to those who don’t give up and keep moving toward a goal.

Will real estate ever be the same? No. But how can we expect it to remain the same? It’s changed for good and I don’t think that is all bad news. It’s just our reality and it is time we deal with it. I heard today that nearly a quarter of Americans think their home is going to fall in value this year and yet I also heard that nearly a quarter of Americans are going to put their homes on the market the first sign of change.

Be the change – start thinking about winning in a hard market. What have we got to lose because our days are full of opportunities! Keep a positive mindset and be prepared to WIN. I believe it for you.

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OWNER Financing – a great idea!

August 2, 2010

 

SELLER FINANCING IS A GOOD THING! JUST DO IT!

With real estate, we are taught to always talk in positive terms and believe me…I am positive. I’m positive that things are TOUGH right now and values are stable but nowhere near historic highs. I am positive that INTEREST RATES are low but no one can get a loan. I’m positive that we have a long time to heal in this economy with Congress seemingly lethargic and running scared. In the words of an old song “we need a hero”.

One of the things that Sellers in today’s market should consider is OWNER FINANCING. It’s not just a great opportunity to make good money it’s a FANTASTIC opportunity. Why rent your home waiting for the market to turn when you can sell and earn interest on the loan? As a seller, you have a secured asset and you have a plethora of worthy borrowers but you can’t get a fair market value for your home. Owner financing may solve your problem.

Seller financing works when:

  • Property has been on the market a long time with no buyers.
  • Property may too high priced for loans (jumbo loans are still a tough get)
  • Price is too high for current appraised values
  • No move up buyers in this market
  • Home needs updating or work.

OWNER financing works with:

  • Buyers may have some glitches on their credit and can’t get bank financing.
  • Buyers may be self-employed and have trouble getting financing.
  • Buyers may desire for many other reasons not to use bank financing.

A savvy seller realizes that there are good buyers out there who have lost their homes but have steady employment and could afford mortgage payments. They are ideal for owner financing and worth the risk.

What’s in it for the Seller? A great return on their investment. The seller sets the price, the interest rate and the payment plan. The Seller returns to a power position and reaps a great yield on interest since most of the payment during the first ten years of any loan goes to interest and not to principal.

The downside remains that the borrower may default but you simply foreclosure and the property is returned to the Seller. It’s not easy or fun but it’s all legal.

To the Seller who can afford to hold financing – take 10% down and hold a balloon mortgage for seven years at 7% and watch your money grow in this economy. It’s so simple that I can’t believe more Sellers aren’t doing it. Take a leap of faith and reap the rewards.