May Buyer's Tip-Everybody Marches Out of Step but Jimmy

I don't remember which TV show it was, but there was a sit com back in the *harumph*ties where somebody read a letter from an elderly relative talking about how proud they were of a young man who was doing so well in the army. "I was at the parade when his unit came past," says the letter, "And everybody was marching out of step but Jimmy..."



I think about that scene whenever I start to think about market trends and forces, whether Doom & Gloom Analyst A or Perky & Optimistic Talking Head B is right about what's going to happen in real estate over the coming months. Should we all step out with our left foot, or lead with our right?



Then another memory pops up. I was at an investor conference and the speaker asked the room how many people thought the market would go up over the next 6 months, about half the audience raised their hands. He then asked what how many thought the market would fall, and the OTHER half of the room raised their hands. He smiled at us and then said, "Half of you are wrong. But nobody knows which half."



And so, since May is here and spring is definitely arrived in our City by the Bay, I thought it couldn't hurt to remind people of some basics of buying a home. Like last week's column, this is targeted at your Average Rebel, who is looking to buy a home for their family.

• Just because everybody is doing something, doesn't mean you should do it, too. If all your friends are finally buying houses because they're afraid the market is going to to soar and they want the lowest price possible, fine. It doesn't mean YOU should do it. Plenty of people did NOT follow their friends' actions during the run up to the recession, and also DID NOT follow their friends into foreclosure. Buy only if the deal works for YOU.


• Don't try to time the market. I'm a real estate investor and finance professional, and even I don't try to time the market when I'm looking at a property. I know what risk-levels work for my investment portfolio, and what represents a good deal today.


• Don't wait for a perfect deal. I have said this so often I think it's become a meditation mantra. If you are looking at a home that you like, and it fits most of your criteria, and you know you can afford the payment over time, and that you wouldn't mind living there...what's stopping you??


• Don't rush into things. This is the flip side of the "Don't wait" rule. If you're not sure you can keep up the payment (fer instance), or your real estate Agent is prodding you into making an offer just because "Well, the market's turning and you won't see these prices again," take a deep breath and re-run the numbers, or ask to see another property more within your budget.

Enough said!

And I'm pretty sure Jimmy was a Rebel...

Best,

Larry

May Resource Post-ARGH, I'M HIJACKING MY OWN BLOG!

Ok, this week, I’m going to rebel against myself.

Normally, I’d be putting together a resource post for you Rebellious Readers out there, choc-full of useful links, sites, and tools to help you navigate the short sale real estate world and beyond.

But I’ve been going over and over in my head a recent issue that has come to my attention, and I thought I’d spend a little time talking about it…

You’ve all heard me rail against the craziness that seems to be inherent in the real estate industry when it comes to understanding short sales.

Now, there seems to be a whole ‘nother layer being created, this time coming from the Department of Real Estate in California (CA DRE). Now, they seem to say, only licensed real estate agents are allowed to talk to people about short sales on their properties, or to banks to negotiate a short sale price. I keep hearing this from both RE brokers and agents, so I started doing some digging myself. And, of course, I found that it ain’t necessarily so. IF YOU READ REBELLIOUSLY, and most people don’t, here’s what you find…

The core of the issue seems to come from the question of who is allowed to talk to a lender to negotiate a short sale on a property, as a recent article from the DRE muddies, er, I mean “attempts to clarify”, the issue. A short excerpt follows:


A real estate broker license (or a real estate salesperson license where that person is working under the supervision of his or her broker) is required under section 10131 (d) of the California Business and Professions Code (B&P Code) where a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders …in connection with loans secured directly or collaterally by liens on real property…" for or in expectation of compensation, "regardless of the form or time of payment".

In addition, under section 10131 (a) of the B&P Code, a real estate broker license (or salesperson license with appropriate supervision by the broker of record) is required of any person who, as a representative of another, "Sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property…" (http://www.dre.ca.gov/pdf_docs/Article_ShortSales03_2010.pdf accessed May 10, 2010)

I’d like to bring your rebellious attention in particular to this sentence from the above excerpt: “a person, in a representative capacity on behalf of another, "negotiates loans…or performs services for borrowers or lenders”

And that, my friends, is the rub. When I take a look at an investment property, I look at buying it FOR MYSELF, and, sometime later, SELLING IT. Nobody is “representing” me in the sense of the law, and while I may have employees engaged in some of the tasks involved in the process along with me, it’s my money and my company purchasing the property. YES, later on I will sell it, for more money than I bought it for. That’s kinda the point of being an investor.

So tell me, what is to stop me from talking to the banks to negotiate a short-sale on a property?

As I read it, as long as I’m the buyer, then nothing at all. Again, it comes down to that line that reads “…as a representative of another”. If I want to negotiate a price on something I’m spending my own money on, nothing in the code prohibits me from doing so.

I’ve got more to say about this letter in coming weeks, but I’m doing a bit more digging first. So stay tuned!

Rebelling everywhere,
Larry

May Seller's Tip-Distilled Wisdom for yer Average Joe

Hola, Amigos, and Happy Cinqo de Mayo! I think I'll celebrate the victory of the Mexican Army over the better equipped French force at the Battle of Peubla in 1862 by taking a look at how an Average Joe looking to sell their home can come out ahead in these tough real estate times. I'm bringing you a few tips to navigate today's market as an average, non-short sale, non-foreclosure seller. Oh, and of course, I'll head out for some cervezas too...

What if, instead of fighting of French soldiers, that Average Joe (AJ) is stuck in the mire that is today's real estate market and is trying to sell his house? Supposing AJ is being moved out of town by his company and just needs to sell his Bay Area home and move to another state, but is worried about getting the best price when so many homes are on the block for below market rates? Or if AJ (Average Jane, in this case), just watched her last kid graduate from college and head for the big city to start a career and she is starting to think that it might be time to relocate herself?

Here are the top three things that I'm seeing recommended for a "normal" home seller in today's market. Now, remember, I spend most of my time focusing on the Bay Area short sale market, but I do keep my eyes and ears open to all aspects of Real Estate in San Francisco and beyond.

• Get a REFERRAL to a good Real Estate agent. As much as I get frustrated with brokers and agents in the Short Sale environment, a good agent is your best bet for getting the top price for your home in a regular sale. If there's any good coming out of the housing crash, it's that a lot of half-baked agents are getting out the industry, leaving a smaller pool of dedicated professionals. BUT ASK AROUND, check with friends and colleagues who have USED the person's service. "Cousin Bob is a real estate agent" doesn't cut it. "The agent who helped me sell my house in a week at a great price six months ago" is closer to what you're looking for.
• Make absolutely sure there's not much of work that will need to go into your home. The days when a seller could knock down the price a little during negotiations because the potential buyer spotted a ragged corner of carpet are gone. Fixer-uppers are everywhere, especially in areas where the previous owners walked away from a mortgage payment but took the faucets with them.
• BE REALISTIC. As I've mentioned before in these pages, this is not the market in which to try and recoup all your stock market losses at one fell swoop. Although there seems to be some light in the tunnel, it's still a tunnel and we're not sure if that's a train or not, so if an offer comes in that looks good but isn't exactly what you want, think hard before you turn it down.

That's it, Rebels, if you read through all the blogs and articles, it still comes down to being smart, flexible, and realistic.

And drinking Cerveza. Which I'm heading off to do...

Rebelliously,
Larry

PS-Coming next week, The Government is dictating who can negotiate on your behalf with a bank?? What the..?