To FSBO or NOT

Many people decide when its time to sell their property to do it themselves. In Real Estate we call these people "FSBOS"  short for "For Sale By Owner." Most Fsbo's feel they can save big money on commissions when they sell the property themselves. They are also in complete control and have to answer to no one. These are some great benefits but naturally their are some disadvantages. Here are some points for you to consider when you take the FSBO route:

1. Buyers work with agents. 99% look at properties on the internet. Sell it yourself, and they won't see or hear about your home. How do you find that "right" buyer or get top dollar when you're invisible to most of the market? There are internet services that will put you on the local MLS but they charge between $500-$1000 for 6 months. By the time you pay that you are already close to a Real Estate agents commision.

 2. Your For Sale By Owner will probably get lower offers. The buyer thinks you'll take less because you're saving the commission. Save  $5,000 commission, get $10,000 less.

 3. Advertising is expensive. The costs the real estate office and agent normally pay are yours if you sell it yourself. My advertising costs me around $500-$700 per listing. Sometimes more depending on the property.

  4. Agents have the resources and you don't. Agents have a database of sold properties and contrivances to determine the best price for your home. You can be giving your property away based on a neighbors sale and not relize that they sold for less for reason that doesn't have anything to do with your property.

 5. Good agents know the market. What's the target market for your house? Young couples, retirees, second home owners? What features do they want? 

 6. Real Estate agents are educated in the laws (we are not lawyers and can not give legal advice.) We have to take continuing education every year, we are notified and updated when new legislation affects our business. Not disclosing something in a sale (like an underground tank on your property) can lead you to a lawsuit.

 7. Are you a good salesperson? Can you develop rapport and properly answer objections? Can you look at your property objectively or could your defensiveness scare off a buyer who criticizes your place? Think back on your own purchases, and you'll realize that a good salesperson makes a difference.

 8. Paperwork. Will you help the buyer properly fill out an offer to purchase or contract of sale? Do you know how to protect yourself from a buyer? What do you do when things go wrong? Did you protect yourself in the agreement? You could hire a lawyer but again the cost will be on you.

 9. Agents negotiate for you. When did you last learn a new negotiating technique? Can you counter-offer without scaring off a buyer? Would you "waffle" at the first offer?

 10. You may not save anything. The documents, newspaper advertising, signs for the yard, and most importantly your time - it's all your expense when you sell it yourself. After your hard work, you may get low offers and negotiate poorly. Sellers often net less money from the sale when they try to save the commission. 

11. Good agents have a vast network. Investors, buyers, other agents, and potentials. My internet resources has given me a large list of buyers. Everyday I look for them, I even look at For Sale By Owners and see if they are willing to work something out.. 

If you have had your eye on a FSBO but felt it was overpriced or the owner was hard to deal with give it time. Most "FSBO" sellers eventually turn to a real estate agent for help. The constant low ball offers, tire kickers, late phone calls, unqualified buyers with owner financing and lease to own requests usually wear them out. Something like 97% of FSBOS eventually list with a Realtor. The other 3% either sell their property, give up, or re-finance. After reading this article you will notice that most FSBO signs turn into Realtor signs within 4-6 months.

Thanks for reading!

If there is a Real Estate related topic that you would like me to research and write about or if you have any Real Estate questions feel free to email me at chrisp@wrcoastal.com.

Air and Opportunity

This blog entry has been in my head for over a month. My friend use to have a joke about Air and Opportunity. It went something like this; "There are 2 things standing in your way, air and opportunity." My friend would then take a deep breath and say there went the air.

I am an avid reader of the Cape May County Herald and of course the spout offs. I read over and over again how bad people think our beloved Cape May County is. There is have been many Spout Offs about how North Carolina, West Virginia or insert some cheap place to live are soooo much better than here. A common complaint is that there are No jobs or opportunities in Cape May County. I believe the opposite and offer you some proof.

I recently sold a property to a a US citizen that was transplanted here from Eastern Europe. He came to this country eight years ago with nothing but the desire to live the AMERICAN DREAM and succeed. He worked hard and continues to do so 7 days a week, 12 hours a day. Just like me except I work 18 hours a day:) He saved and saved. When he was ready for his first Real Estate purchase in America he chose an income producing property that he could live in also.The deal that I found for him worked out so the rents on the other units pays the mortgage and he lives for free.

Here's my point: 8 years in this country and with hard work in our county my client has achieved above expectations. He found a Cash flow positive deal. Cape May County is a place full of opportunity you just have to find it and work for it.

Air and opportunity..........there just went the air. Stop spouting and start succeeding! 

Baseball and Real estate

First, I would like to thank everyone that attended our BIG Open House Event this President's Day Weekend. Everyone had a great time and the Sam's Pizza was a home run! Our next big event is our Home Seller's Workshop at the Bolero Hotel Conference center, 3310 Atlantic Ave, Wildwood this Saturday 2/25/12 1-4 PM. All home sellers are welcome and it looks like a great turn-out so far.

Buying Low and Selling High or Flipping

Short term investing in real estate is defined by buying a property with intentions on selling it in the next 2 years. Buying a property cheap and selling it for more may seem like a "can of corn" (easy to do in baseball lingo) but there can be some problems. Planning your real estate investment as short term can easily be a strikeout.

-Strike One: Buying Low. Simple as it may seem buying low is not that easy, most properties sell for market value. I have seen, been part of and currently part of several deals that are currently below market value. If you think that you are going to stumble upon these deals searching the Realtor websites its probably not going to happen. Most are gone within 3 days (attorney review) or they never even get seen. Now understand in this market that there is nothing wrong with market price. Buyers have a great position right now with low prices and low rates but you can't flip a property that you buy at market value and expect to have a profit. So the first task is buying low. Any property can be a deal at the right price. The problem is most people aren't going to sell their property under market value unless there is a circumstance to cause this. The main reason for properties priced under market is financial distress. Those are the short sales and foreclosures that you read and hear about. There are plenty on the market but again you have to find the right fit and price.

-Strike Two: Selling High. Again not as easy as it seems. The first concern is the timing of the situation. This is true with any investment. There is no guarantee that you will be able to sell your property for a greater amount than what you bought it for creating a profit. A lot of things can change and there are some things that you should be aware of. First with short sales the bank doesn't want to give you a fantastic deal and have you flip it the next week. They often stipulate that you will keep possession of the property for at least 30-90 days. Secondly, conditions are ever changing, although many feel that we have hit rock bottom in prices that may not be true. If interests rates decide to climb back up to 8% your buyer pool becomes limited and supply will become greater than demand. Unless you are an experienced market guru there is a lot of risk in short term investing.

-Strike Three: More Football than baseball, Holding. You decide to keep the property despite your original plan of selling in the next two years because market conditions are not perfect for you. Guess what? They probably never will be. Like the song,

"You got to know when to hold 'em,

know when to fold 'em, Know when to walk away, know when to run.

You never count your money when you're sittin' at the table,

There'll be time enough for countin' when the dealin's done."

Rental Properties

Numerous rental properties on the market. When you work out the numbers they look like an easy Home Run. Income minus expenses and your cash flow positive! This again can look like another "can of corn," a simple way to invest but there are always two factors that most people overlook: time and sticking with the baseball theme; "that one came out of left field" TOCOOLF. A rental property will require your time. Marketing the rental, problem solving and being on call will be involved. The TOCOOLF principle has unexpected problems that an in-experienced landlord may not foresee. I am going to give you a basic example, a condo that you plan on renting and using on the off weeks. Here's an example:

There are plenty of 3 bed 2 bath new condos on the market in the Wildwoods priced under 200k. Some of these units gross 20k in rentals. So if we throw together some ball park figures:

Purchase price: 170k

Down payment: 34k

Financing: 136k

Mortgage 4.25% 30 year: 670/ month

Taxes: 4000 yr

Expenses, insurance: 3000 yr.

Income 20000- expenses @15000 (easy math)= 5000 profit. So you own a condo that you rent 12-15 weeks a year and walk away with 5000 thousand. You may even produce more income if you can find a winter rental. Looks like an easy win right? Let's throw our 2 curve balls in.

Curve Ball #1: Time: How much time did it require for you to make that $5000? Did you spend countless hours marketing the rental and responding to leads/inquiries to create that income? Did you have a nightmare renter who called you 3 times everyday to complain about something? Did your second property become a full time job? With any business you can not expect to make money or even break even if your not willing to put in the time. Be prepared.

Curve Ball #2: TOCOOLF (That one came out of left field): Lots of unexpected things can go wrong. Are you prepared for damages? Did you secure a non refundable deposit or was it your friends cousin and didn't think he would break the flat screen TV? How many weeks can you afford without rentals? Remember last year the hurricane scare made everyone lose a week. What if you had 3 cancelations on top of that? I can go on and on. How long can you survive the TOCOOLF?

So how does the smart investor cover his bases? Not make a bunch of rookie mistakes? This one is easy: Have a business plan. A successful business plan will clearly define your goals, your expectations (projections), a "TOCOOLF" contingency plan, back up reserves, and most importantly, research! Do not just depend on a Realtor to give you all the answers. Your due diligence is required for your success.

I probably just drove everybody nuts with all of the baseball clichés. So here is another reason for writing this article about baseball and real estate. I recently sold a property to an up and coming baseball star (or at least I hope be because he gave me his autographed rookie card.) He was just signed with a Major League baseball team and was looking to invest his bonus money. His father was also a baseball player and wisely invested his bonus years ago and has been enjoying the success of the returns. Their investment strategy was a combination of buying low and buying a rental property. They had a clear business plan that worked with other similar investments. Part of it was the parents taking their overflow of renters in their property and putting them into the son's property. They were a great family and I very much enjoyed working with them and know that they will have continued success.

As for you future Real Estate star I wish you the best in your endeavors.

The Open House Event

 With the spring home buying season approaching,Weichert Coastal is showcasing its impressive inventory of properties for sale and celebrating the second year of The Open Hous Event Presidents Day Weekend. Open Houses will be from 11-2PM Throughout the Wildwood's and each Open House will feature Sam's Pizza!!!!!!!!! (while supplies last:)

Home Sellers Workshop February 25th, 1-4 PM Bolero Conference Room

 It's that time of year in our beloved county when our season is getting ready to kick in. Just a few short months away it's getting to be that time to start preparing, if you haven't already.

2011 Cape May County Sales

 First, let me welcome everyone that has stumbled upon this blog. I am very excited about this opportunity to share my thoughts and ramblings. As an extra bonus I have other associates who have promised contributions to the series.