Thursday, January 27, 2011

Finding the Magic Number: Pricing strategies can help you market your listings and generate offers that turn into closed deals.

Finding the Magic Number: Pricing strategies can help you market your listings and generate offers that turn into closed deals.

by Katherine Tarbox is a senior editor of REALTOR® Magazine

"Once you get a real estate license, you can start telling consumers what their homes are worth," says Melanie McLane, ABR, CRB, owner of the Melanie Group in Jersey Shore, Pa. She’s a certified appraiser with more than 30 years’ experience in real estate. "But I find many people aren’t prepared or haven’t done their homework to know what the market will support before giving price estimates."
And just doing your homework isn’t the end of setting a price; it’s also important to have a pricing strategy that works for your market and your clients. Here are four techniques:

Employ shock and awe. Remember Economics 101—the simple law of supply and demand? Adam Smith, the grandfather of modern economics, said when an asset is undervalued, the "invisible hand of the market" corrects the pricing to fair market value. It’s a principle that Amanda DiVito Parle, ABR, CRS, broker associate with RE/MAX Alliance of Arvada, Colo., has used to her sellers’ advantage. By drastically lowering the price on some of her luxury listings—a process she calls "shocking and awing the market"—she creates instant demand. "I listed a $1 million–plus property for $599,000, and a sales professional called and asked if it was correct," she says.

Often, properties can end up selling for more what you’d have originally listed them at. "You need to the drop the price so dramatically that buyers think it’s outrageous," she says. "They’ll determine the price. They’ll be eager to see the property and create a competitive bidding war."

Set a market-leading price. "Do your homework on the local market and price the home to lead the market, not chase the market," says Rick Lawrence, e-PRO, SFR, a sales associate with RE/MAX Professionals Select in Naperville, Ill. He recommends showing sellers virtual tours of comparables to get them on the same page about setting a price that will lead the market.

Pick an exact number. Ben Kinney, founder of the Home4Investment real estate team in Bellingham, Wash., assesses a listing’s value, setting a price to the dollar: $137,368 or $213,348, for example. "Consumers assume that even prices aren’t carefully calculated and probably just a home price thrown out for the sake of it." At least with Kinney, that notion is correct. He considers all the features of the home to reach a precise number.

Don’t get counted out. It’s not uncommon to price a house slightly under an even price point, say at $199,000 instead of $200,000, to give the home a competitive edge. The trouble is, buyers who search for homes online (and virtually all do) are typically searching a range of prices, Kinney says. So a buyer looking for a $200,000–$250,000 house wouldn’t even see your $199,000 listing. By knowing the range buyers usually use for a neighborhood, you can price your listing for maximum exposure, Kinney says.

When the offers do start rolling in, take them seriously, McLane says. Sellers sometimes make the mistake of refusing reasonable offers early in the listing period. Help your clients understand that the longer their house sits, the less desirable it may become to active house hunters.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Thursday, January 20, 2011

Buying REO / Foreclosure Homes in the Boise Idaho Real Estate Market

The safest ways to buy foreclosures
By Bankrate

With interest rates at record lows and the stock market looking too perilous for small investors, many people are putting money in an asset they understand -- real estate.

One of the best places to invest is in foreclosures and bargain residential real estate.

The current market conditions make it a perfect time for a small investor to purchase one or more foreclosure properties for their private residence, rental or resale. During economic downturns, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime-ridden areas is inaccurate. Beachfront and homes in affluent areas are part of the mix of foreclosed properties available.

But anyone considering buying a foreclosed home should forget about paying pennies on the dollar.
"You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market," said John T. Reed, editor of Real Estate Investor's Monthly, a newsletter based in Alamo, Calif.

Yet the savings may be twofold if the property is purchased from the lender who holds the mortgage that's in default. That lender may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment.

Investment of time

A novice must learn to navigate the foreclosure process. But Todd Beitler, owner of the Real Estate Library in Boca Raton, Fla., says the time and effort can translate to savings. "If somebody spends 10 hours a week for five weeks to do research, it's worth it."

For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.

The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.

This may include everything from missing light bulbs to roof leaks. Tree limbs in front yards, broken appliances and windows, and dirty carpets, floors and walls are found in even very-affluent area foreclosures.

This can be a boon -- or boondoggle -- for a buyer. Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. The first rule of real estate, "location, location, location," applies in these situations. If there is trash in every room of the house, but the foreclosure is in a good area with high property resale values, hold your nose, walk through the entire house and consider making a low offer.

Reading assignments

When a lender decides to foreclose on a property, a notice of default or a lis pendens (Latin for "lawsuit pending") is filed, depending on the state. This document is a public record, and for buyers, it's the first step in locating a property in foreclosure. A buyer looking for foreclosures also can buy magazines and newsletters that list properties in default.

Once a home has been located, search public records. Look for liens on the property, since they can drive up the purchase price. Liens typically are placed on a house for unpaid property taxes. Also check assessed values and sale prices of neighboring properties.

Research local state foreclosure laws, since they differ. Some states -- such as Florida, New York, Ohio and Pennsylvania -- require the lender to sue the borrower and get a court order for the sale of the property, a process known as judicial foreclosure. Other states -- including California and Texas -- follow the non-judicial foreclosure process, which doesn't require a lawsuit.

For novice investors, buying from the lender is the safest way to buy. Most foreclosures are taken back by the bank during auction, Beitler says. While well-located homes in good shape generally don't sell for deep discounts, rundown properties can be sold more cheaply.

Often, the banks hire a real estate agent and sell foreclosed homes in the traditional manner, Reed says. But sometimes buyers can succeed by pestering bank loan officers with low offers.

Buyers might try low-balling the lender's REO (for "real estate owned") officer shortly before the nonperforming assets have to be reported to supervisors, Beitler says.

The safest deals

Bank-owned properties offer the safest deal for inexperienced foreclosure buyers, Beitler says: "There's no risk. There are no taxes, no liens, no tenants to evict."

A lender that's eager to sell might be willing to offer attractive terms, says George Tribble, broker of record at Jetstream Mortgage in Oakland, Calif., and past president of the California Association of Mortgage Brokers.

The lender might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Because the bank already has done an appraisal, the buyer might not have to pay an appraisal fee, Tribble says. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.

Hidden foreclosures

Not all foreclosures are previously owned homes. Some foreclosed homes are new. These homes are not as easy to identify and rarely appear on national lists. In some areas, the slow economy has left many builders of new midscale and upscale homes at the end of their construction-loan periods without finding buyers for their homes.

In these cases, the banks that issued the construction loans take possession of the homes and attempt to sell them, using real-estate agents to handle the deals.

These, too, are foreclosures. They are "hidden" foreclosures because no one associated with the sale of these properties will refer to them as foreclosed homes.

More daring investors can find other points in the process to buy homes, like just before foreclosure. The buyer finds a homeowner about to go into default. The homeowner doesn't want to lose all of the equity in the property, so accepts a portion of the difference between the equity and the home's market value.

Pre-foreclosure buys offer bargains but demand persistence. That's because creditors are often hounding owners at this stage. "Trying to get through to the homeowner is virtually impossible," Beitler says.

If the homeowner is contacted, the buyer could be in for a surprise, Reed adds. Homeowners in default might not have phones or electricity, and they might have a variety of personal and legal problems. What's more, they probably need somewhere to live before they can move out of the property the buyer wants.

This is a high-risk, high-reward proposition, and it's not for first-time foreclosure buyers, Beitler says.

The auctioneer

Most auctions take place at the county courthouse steps, and they pose disadvantages: Buyers might not be able to inspect the property, and they'll have to put up the entire purchase price the same day.
The U.S. Department of Housing and Urban Development also runs auctions to unload homes it has acquired through defaults on federally backed mortgages. There aren't a lot of steals in this process, according to a study by Tim Allen, a real estate professor at Florida Atlantic University.

Allen tracked sales at a HUD auction in Florida in 1998; he found that buyers paid prices very close to assessed value. Beitler agrees that there's a "frenzy" at HUD auctions that can push prices to unreasonable levels.

The cost of getting started

With good credit, many banks will loan the full price of the foreclosure or more. If the home is to be used as a rental, many banks will require only a 10% down payment.

Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.

Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.

Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. With many stock portfolios down, foreclosure real estate investing may be the alternative many people are seeking.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Tuesday, January 18, 2011

ACAR's 2010 Review: Yes Virginia...there is a Santa Claus...and other reasons to give thanks.

ACAR's 2010 Review:  Yes Virginia...there is a Santa Claus...and other reasons to give thanks.

December sales in Ada County were 518. That’s an increase from December ’09 of 19%. This is the first year over year increase since June; and is the highest number of unit sales since the same month! Year-To-Date ’10 is now 5,891; an increase of 7.7% over 2009. I told you we could do it!

Just in case you forgot the impact of real estate sales on our economy…through the end of December we are nearly $1.1 billion in total sales. That’s $23 million more than we sold in all of 2009; with a 8% decrease in median sales price.

Historically, sales volume in December is less than November…not this time. December was up compared to November ’10 by almost 20%! (In case you’re counting, that’s three exclamation points in two paragraphs.)

Of our total sales in November…61% were distressed….up 9% from last month. (Short sales 21% and REO’s 39%). This is as high as it was last spring…clearly the highest levels of distress we’ve seen this year.

Pending sales dropped 17% to 575 from the 690 we had at the end of November.

The percentage of pending sales in distress rose 2% from November to 54% overall.

The number of houses available at the end of December fell to its lowest levels since early 2006. As of the end of the year there were 2,641 homes available. At the end of the year we had 25% fewer homes available than in January. At the same time, the percentage of active inventory that is distressed, increased 2% from November to 45%.

In Ada County we have 5.6 months of inventory on hand…down one full month from the end of November. The price categories in shortest supply are equally distributed between $100K-$250.

Median home price ended the year at $155,000. Compared to year-end 2009 we are down 8%. We are essentially back to late spring home values.

New Homes median price ended the year at $177,875. This is an increase from the 2009 year-end median of $169,990. Mark my words…2011 will be a good year to be selling new homes.

So now we enter year two of our “official” recovery. I know that you are ready. I an promise you that ACAR is ready to assist you in every professional way, to make 2011 a year that we look back on fondly. Heck…it beats the stuffing out of the last couple.

Looking back at 2010 here’s what we’ve got…

Home sales volume is picking up – lagging the national average, but still on the rise
Inventory continues to fall
Median prices are trying to stabilize
Distressed properties (sold, pending and percentage of inventory) as as igh as they have ever been

What does this tell us?

Contrary to most of the rest of the country, we’ve already “burned through” the “glut” of inventory. With inventory this low, and not likely to grow that quickly, prices should stabilize.

But, median home price (for existing homes) continues to bounce along the bottom. Its likely the victim of the unusually high levels of distressed properties.

Our state legislature went into session this week. The Governor said in his state of the state address yesterday that we have to look at thing differently (as far as expecting services from government) from here on out.

The same is true for housing. We seem to be at the beginning of a transition in consumer expectations in home purchase. The desirability and availability of new homes (that don’t carry the baggage of short sales and REOs) may eclipse the historical consumer preference for existing (used) homes.

This shift in preference could also provide a secondary benefit…more jobs.

Construction increases. Construction jobs start to come back. And…well you know the story goes after that.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Friday, January 14, 2011

Selling Your Home in the Boise Idaho Real Estate Market - Now's The Time

Activity is picking up in the real estate market in Boise Idaho and surrounding areas such as Eagle, Meridian, Nampa and Caldwell. Our marketplace is seasonal and most real estate buying activity takes place from late winter to late spring and early summer with activity peaking in the April/May time frame. For example, here's the statistics for homes sold in Ada County for 2010. You will notice that the activity peaks in April, May and June.

If you are looking to sell your home in today's market, you must be competitively priced and start the marketing no later than mid to late February. You want to sell into strength as the activity climbs rather than sell into weakness when the majority of buyers have already found homes and are in contract.

Yes, the equity seller will continue to compete with REO's and short sales. However, we are noticing that buyers are pulling out of short sale contracts and looking at REO's and equity sales. They are tired of waiting and not knowing whether or not they will close on the property. Therefore, for the equity seller, there may be a "non-distressed" premium in some cases.

Please call or email us if you have any questions about selling your home.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Tuesday, January 11, 2011

Foreclosure Process: How State Laws Vary

Foreclosure Process: How State Laws Vary

By: Barbara Eisner Bayer
Published: August 2, 2010

Foreclosure is a complicated, multi-step process—and each states handles it differently.

Foreclosure is not a universal, single situation. Each state has its own complex rules and timelines for how foreclosures are handled, and even within each state there may be more than one type of foreclosure. You need to know the steps of foreclosure, whether your state has judicial or non-judicial foreclosures, your state’s quirks, and any possible loopholes.

Know the steps of foreclosure

Although there are variations, your foreclosure will go through five stages, which gives you some time to adjust to the idea that you need to leave your house and take steps to ensure as smooth a transition as possible:

1. Payment default. Your agreement with your lender will stipulate how many missed payments put you in default.
2. Notice of default. Your lender sends this after a fixed amount of time, depending on your mortgage agreement. According to Wayne Greenwald, a New York-based attorney, this is when you must aggressively pursue ways to fend off the worst outcome. In New York, for example, you have the right to contest the foreclosure. Start by demanding to see the paperwork. Since so many mortgages are repeatedly sold, every so often the actual paperwork gets lost in the shuffle, and you’ll reap the benefits: your foreclosure will be delayed until it’s found.
3. Property put up for auction. Property that has been foreclosed is placed for public auction. In some states, you may have rights for redemption or reinstatement, which basically give you some final opportunities to reach an agreement with the lender.
4. Property sold at auction. If the auction fails to find a buyer, the bank will take ownership and attempt to sell property, often with a real estate agent’s assistance.
5. Eviction. You’ll receive eviction notice, advising you to vacate premises immediately.
Understand judicial vs. non-judicial foreclosures

When you bought your house, you were handed piles of pages in fine print you almost certainly didn’t read. Foreclosure is where these pages come into play! You need to understand some terms before you can understand your foreclosure:

A mortgage is actually not the loan you received, but a document that was issued at closing. It is an agreement between you and the bank that is lending you the money.

A deed of trust serves the same purpose as a mortgage, but it involves three parties: you, the bank, and a trustee that holds the title until you’ve paid off the loan. This trustee is typically a title company, but in some places it can also be an attorney.

You probably don’t remember choosing one over the other—because you didn’t. Your state’s law determined which instrument would be used. And in fact, for the average homeowner, there’s virtually no difference between the two. However, these instruments affect the kind of foreclosure you will likely face:

Judicial foreclosure. Typical in mortgage states, it requires the lender to go to court to proceed with foreclosure.

Non-judicial foreclosure. Typical in deed of trust states, the trustee can usually proceed with foreclosure without involving the courts.

Many states allow both judicial and non-judicial foreclosures, depending on specific terms in the loan documents. Non-judicial foreclosures are usually—but by no means always—quicker than judicial foreclosures.

Learn your state’s quirks

Each state has its own specific ways of handling foreclosures—you can’t even assume that all judicial or non-judicial states will be the same.

If you live in Georgia, for example, you will probably go through a non-judicial foreclosure. The lender will attempt to notify you that foreclosure is imminent, and then place a “notice of foreclosure” in the local legal newspaper for four consecutive weeks. After that, the lender’s attorney can sell your home to the highest cash bidder. Lenders on Georgia homes can often complete the repossession process in as little as six weeks.

On the other hand, if you live in Connecticut, you will definitely proceed through a judicial foreclosure. The judge presiding over the case has the option to grant either a “strict foreclosure,” where the deed is forfeited immediately, or a “foreclosure by sale.” Your lender must send you a letter at least 60 days before the foreclosure action, after which time the foreclosure can begin, typically taking up to four months.

Compare that state to New York: It’s also a judicial-only state—but the process typically takes more than a year.

Review the loopholes

Although nothing replaces professional help, researching your state’s rules is a good place to start. Even beyond the usual regulations, some states have recently created special rules to ease borrowers through the foreclosure process. Qualified local help can help you with such programs as:
Maine’s borrower-friendly foreclosure diversion program. It creates stays of proceedings and requires lenders to participate in good-faith foreclosure discussions. Lenders who don’t participate can find their lawsuits dismissed.

New York’s new rules that add loans secured by borrowers’ homes in its mandatory settlement conference law, essentially requiring lenders to meet with borrowers to discuss settlement.
The more you understand your state’s laws, the more likely you will be able to move through your foreclosure process with a minimum of bumps—or even avoid it altogether.

Barbara Eisner Bayer has written about mortgages and personal finance for the past 16 years for the Motley Fool, the Daily Plan-It, and, and has been the Managing Editor for, and She’s grateful that she now knows where to turn if she ever struggles to meet her mortgage payment.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Thursday, January 06, 2011

New Listing in Meridian - Home on One Acre with In Laws Quarters

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

Tuesday, January 04, 2011

6 Questions Foreclosure Buyers Should Ask

6 Questions Foreclosure Buyers Should Ask

There are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

Source: James J. Saccacio, CEO, RealtyTrac

Is now a good time to buy a foreclosure?

This is a very common question from both real estate professionals and prospective buyers. Obviously, because local market conditions vary, the answer is different from market to market. But there are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

What’s the first step buyers need to take?

Require buyers you work with to be preapproved for a loan before you help them shop for a foreclosure. If they’re thinking of buying a foreclosure as an investment or second home, they need to understand that financing the home will be more difficult and more expensive than financing a primary residence. Lenders typically charge higher interest rates and require a larger down payment for investment or second homes.

How can you tell a bad foreclosure from a good one?

Certainly there are great deals in many markets for both investors and buyers looking for a primary residence. But making a sound deal can be tricky. Buyers need to be wary of unpaid liens, including mortgage debt, taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. Any or all of these financial obligations could become your clients’ responsibility when they purchase a property in foreclosure. Unless the property goes through a foreclosure auction and becomes a bank-owned REO, the outstanding foreclosure liens and fees could be simply transferred to the new owner—your clients. Don’t let them fall into the same financial trap as the previous owner.

If I’m a qualifying borrower, can I appeal to banks for better loan terms?

Lenders are drowning in defaults—particularly in hard-hit real estate markets such as Arizona, California, Florida, Michigan, Nevada, and Ohio—so they may be motivated to cut a deal. If your clients have a good credit score, many banks will offer them a below-market-rate loan on a bank-owned home. Unlike paying down with points, this doesn’t cost anything in fees, and it gives them the ability to spend more for the home.

What are the costs of buying a foreclosure?

It takes money to make money. The best opportunities are for buyers with cash. If your clients are planning to rent out the property or even resell it for a quick profit, make sure they consider the carrying costs, including sales commissions, marketing costs, vacancies, taxes, insurance, and maintenance costs. Once you’ve calculated all the expenses, add on another 10 percent to 15 percent. If they don’t build in a "surprise fund," your clients might be the next foreclosure statistic.

How does choice of neighborhood affect foreclosure investments?

Clients looking for a good investment should generally avoid neighborhoods overrun with foreclosures, particularly newer subdivisions in overbuilt exurban areas. Investors will be tempted to buy foreclosures in these areas because they offer the steepest discounts—but they also carry the most risk of further depreciation. Look in well established neighborhoods with good schools and transportation. If you’re in a market where prices are still falling, encourage your clients to factor falling prices into any offer they submit on a foreclosed property.

Regards,IERT logo
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro

Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422

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