It Boils Down To Perceived Value of Motivation

Texas is a non-disclosure state. By that, it means that real estate sales price are not public records. That means buyers and sellers have a more challenging time to figure value. Often times, real estate consumers rely on their realtors for this knowledge. Many homes are sold through the MLS system, thus sold record data may be held there.

Realtors perform comparative market analyses to figure out the value of houses. Again, value is only in a form of an opinion. What the actual house will sell for depends on the given buyer and seller under their own motivation and circumstances.

I have come to the conclusion that no matter how much market data, stats and comps you see (as a home buyer or seller), in the end, realtors may provide you with a suggested price range of which a house should sell for, it is ultimately a willing buyer and willing seller that determines the price. In this equation, one thing called the perceived value of a buyer's and a seller's motivation is often times difficult to evaluate, or in short, put a dollar value to it. How much it is worth to you, your realtor cannot tell you.

For example, if you are seller that needed your house sold 1 month ago has more motivation to sell when compared to a seller who wants to see if he can get what he wants. If you are Seller #1, and assuming you had the exact same house as Seller #2, most likely, your price would be lower than Seller #2.

When dealing with a buyer who just absolutely disregard a suggested price range of the market value and is a bargain hunter, there is nothing much to say other than testing how low a seller would go. A value is based on today's value yet so many buyers make offers based on the fact that this is a declining market. Is it really? You would have to prove it based on alot more market statistics and data to come up with the answer - if it is indeed a true declining market. Not just what newspapers and TV say.

Often times, sellers have their reasons to sell. Some have relocated, some want to move closer to family in a different place while others just want to upsize or downsize. Some have to sell for financial reasons while others seize the opportunity to cash out their equity. All these are reasons and in actual fact, has a dollar value denomination to a seller. What this number is depends on the individual.

As real estate professionals and the market area experts, we could only provide a somewhat systematic approach to our opinion. But the rest do obviously lie in the decisions of the buyers and sellers. Motivation truly has a value. Really.

In All Seriousness Of An Offer

Written by Loreena Yeo

3:16 team REALTY

Copyright 2008

Most parts of the country, including my Frisco TX real estate market is undergoing a Buyer's market - generally speaking. (Some spots - whether it is the price range or location of the market are not suffering at all) By that I mean that Buyers have many houses to select from and being a Seller at this point in time is definitely not fun. You are right, it down-right awful. However, despite the current real estate market conditions, if you are a purchaser in this marketplace, there are some facts you ought to know.

Even you have the upper hand in this Buyer's market, do understand that your offers have to be somewhat "reasonable". For example, If the Listing Price is $350,000 and the comparables support a $342,000 number, your verbal offer of $220,000 most likely would not buy you that house. In all seriousness, the contract that you and your realtor put together could perhaps be just a waste of time. (Again, perhaps).

Not only your number should be somewhat "justifi-able", it should also be endorsed with a written formal offer. Then, your experienced real estate agent could perhaps include a copy of your pre-approval or bank approval letter, copies of your earnest money and option fee checks (account numbers blacked out).

Again, market comparables are only used to indicate what the "typical" or "average" house would sell for in the neighborhood you picked. However, we know that ultimately, it is a Buyer and Seller for that specific home that determines the final price.

What Does This Mean If You Were a Buyer In A Real Estate Transaction?

You can make any and all the offers you want. It is ultimately yours and the Seller's decision to determine the final price. No doubt that this is a time where you can take an advantage, the odds are great for you. However, Sellers still do need see if they could accept the price you offer. Again, a verbal offer in a real estate transaction bears no weight and credibility. I understand that you are very conscious about the price, however, all terms come into play besides just the price. In short, there is just more than price that determines the transaction is successful. Your experienced realtor will be able to assist and navigate this path with you.

What Does This Mean If You Were a Seller In A Real Estate Transaction?

First of all, please do not get upset or offended by the Buyer who has just given you a "low" offer. Again, the word "low" here is relative. Many times, Buyers consider many factors before placing that number on the contract. Most of the time, it is simply because he/she is taking the chance that this real estate market has NOT bottom out yet. However, the positive side to this is that you at least have an offer to chew on. Some buyers are just down right trying their luck. Most of them who care enough to give you a formal written offer ultimately are interested in purchasing the house. If you do have a contract, you at least have something to negotiate rather than being on the other side of the extreme, that your house will probably sit on the market for much longer. Give it a good work out (negotiation rounds). See if there is a number that truly would make you and your Buyers feel at ease.

What Does This Mean If You Were an agent?

You must get your buyers to show some good faith that there is some seriousness in the offer. However, all I can say is that do not take the written offer "personally". It may or may not be a reflection of you. (Some are jokes!). Ultimately, we are hired to work in our clients' interests. After seriously discussing the effects of an offer (reasonable or unreasonable), just let it be and see how the situation pans out.

Ask Not What I Charge But What I Can Do For You

Written by Loreena Yeo
3:16 team REALTY
Realtor/ Broker
Copyright 2008

So many times, potential sellers will call me on the phone and ask the fee I charge to sell their homes. The conversations may occur in some variations of this example:

Seller: I am thinking about selling my home and I would like to know how much you charge?

Me: Thank you for giving me this opportunity. However, I do not disclose this information over the phone. I much rather we talk face-to-face after I have seen your home.

Seller: Oh really? You can't tell me that - just over the phone?

Me: Not really. Do remember that I need to understand your clear objectives of the reason for your sale. If you want, we should set an appointment at our earliest convenience so that we can discuss this further.


The Sellers go on and on and try to get me to disclose my fee and again and again, I need to explain to them that I do not do that.



So many times, when potential Sellers call me on the phone, one of their very first question is, "What are your fees like?" Point Blank and cut to the chase. I respect that because they do not want to waste their time and neither do I mine. However, Sellers should consider the perspective/ their reason to sell: ie. to move on to the next phase of their lives. Do not get hung up about the fees. Even if I charge $10 as an example (all broker's fees in Texas are negotiable), and Sellers focus themselves on the FEE rather than what I can do to sell the house, when the house does not sell, it still does NOT meet the Sellers' main goal: SELL the house.


I have learnt in my experience not to work with clients whose sole focus is the fee. They often fail to see the value a good realtor can bring to the success of their sale. Besides just the fees, there are more important issues to consider:


Correct pre-listing action items such as staging and prepping the house for sale.

A good realtor knows what you must do to the house in order to sell it. They understand what Buyers are looking for and often provide solutions and suggestion to make the property more attractive.

Correct pricing of property.

This is the key to success. A good realtor will not let the Sellers determine what the house should lists for. A good realtor is very realistic on what is expected of the market. If it is too far away from a realistic number, it does no one in the transaction any benefit. When a realtor accepted an overpriced property, he or she is only giving false hopes and expectations to the client in hopes that one particular buyer would see through the overpricing and purchase that property.


Correct marketing for the property.

Understanding how to effectively market the property for maximum exposure and thus, bringing the most buyers for viewing and a contract is really what a Seller wants. Not necessarily how much he or she charges.


Correct closing of the property.

A good realtor knows the correct steps and procedures prior to accepting the offer from the Buyers. Then, a good realtor interviews the Buyer's lender is also a key success in closing on the property. An organized realtor has processes and procedures to ensure that closing will happen.


Thus, after disclosing what key steps are important to a successful real estate transaction, should the commission and fees be the sole determining factor in selecting your realtor? Think again. Evaluate this: 0.01% of nothing is nothing but would it fit your goal? Is your goal to sell your house or harp on fees?

Collin and Dallas counties Newly Available Properties at first glance

Based on the busy-ness of this Collin and Dallas County realtor's schedule, it is imperative that I make this BOLD statement. Most houses in these areas are typically overpriced to begin with. Some Sellers are more realistic than others often take their first price "adjustment" within 2 weeks while some do it around the 30-day mark. Some Sellers who may find it more difficult to accept this ugly fact choose to do it much, much later - and very often too late that it would not make much difference in its traffic except for new Buyers that come on the market at their price point.

With the amount of previews that I do for myself (as market knowledge) and my clients as well as my showings to my Buyers, I often have to express my honest feedbacks about my visits. After all, that is what a listing agent would be concerned about: Is this house listed correctly based on the features and location?

While trying to assist my other realtor co-workers, some of them have a hard time accepting the fact that I mentioned that it is overpriced. I had a realtor who responded to my feedback with irrelevant market "comparables". I used the word, "irrelevant" because he tried to compare houses in the same neighborhood (that's a good start) with a swimming pool (the subject property does not have a pool) but according to him, the subject property backs up to a "greenbelt". In actual fact, it was more of a drainage ditch. Then, he also tried to show comparisons with properties sold for "much more" per square feet over the LAST FEW YEARS. Ha! The market today is not the same as 6 months ago, yet this realtor tries to make comparisons with properties (and data) in the last few years. Wow. The property has been on the market for about 80 days now and it finally had its first price drop. When I made the feedback, it was about 1 week on the market.

Again, my advice to Sellers is to price it correctly to begin with. The further away you are from your initial listing date, the further you are in getting what you want for the property. It is a fact that Buyers these days are very unforgiving. When it is overpriced to begin with, they usually NEVER return for a second showing. There are just too many inventories out here to look.

In The Midst of Multiple Offers

Yes, in this Buyer's market, there are still ample possibilities of having multiple offers on a property. The key is pricing it very attractively. This blog is not about how to receive multiple offers on a property, but it is more geared for buyers - specifically if you are one of the multiple offer entries.

In the midst of multiple offers, be cautious! Because you know that there are multiple offers, many times, we get very involved in wanting a bite on it too. Since everyone wants it, it must be a great deal! Yes, chances are that it could be a great deal. But......... evaluate the property - if it is a great deal for you (and your family).

Go back to the basics. If you didn't want a LARGE yard to mow, it would still costs you more per month on hiring the mower to do that for you. If you didn't care for the odd-shaped kitchen and it does not fit your family's lifestyle, think carefully if it is a great house for you.

Calm down and re-think your evaluation. Sometimes it is truly indeed a great deal - in terms of price per square feet. But it is not just numbers that you are evaluating. A house you call home will have to fit your lifestyle, your tastes and your likings. Just because everyone else is jumping on the deal does not necessarily mean it is the deal for you.

A Year in Review 2007 - Frisco TX real estate market

Frisco sold 3082 single-family homes in 2007. The statistics below do not include townhomes, duplexes and condominium units.

The average home consists of 4 bedrooms, 3 bathrooms and just over 3,000 square feet. The list price is at $304,000 with the selling price of $293,000 (96.5%) at 76 days on the market.

The median home consists of 4 bedrooms, 3 bathrooms and around 2,800 square feet. The list price is at $245,000 with the selling price of $238,500 (97.4%) at 55 days on the market.

The cheapest home in Frisco (2 bedrooms, 1 bathroom, 872 square feet) sold for $49,000 at 1 day on the market while

The most expensive home in Frisco (7 bedrooms, 8 bathrooms, over 8,000 square feet) sold for almost $2.1 million dollars at its full asking price in 763 days on the market.

Current Absorption Rate (based on February 2008 statistics) = 50.9 weeks.

What Does This Mean To You if you were a seller?

With the real estate market going at its present rate, it will take about 1 year to clear all the inventory on the market. If you have special circumstances to sell ie facing foreclosure soon, lose your job, relocating out of town, pricing and marketing your property becomes even more crucial in your success. Whatever your reason to sell is, I do believe that there must be a special marketing plan specifically designed for each property. Thus, working with an agent who possess that skill becomes more vital in today's challenging market.

What Does This Mean To You if you were a buyer?

No doubt that this is a Buyer's market. However, real estate is very local. But that I mean that one neighborhood may vary from another. One price range may sell "hotter" than another. So, are you looking in the right places? In order to find the good deal you are seeking, a good real estate agent may be able to assist you. Remember that it is not only the price that you would negotiate, there are lots of factors that can contribute to a winning successful contract.

Definitions:

Average is the sum of all numbers and divide the total number of houses.

Median is a type of average, found by arranging all the numbers from lowest to highest and selecting its middle number.

Absorption Rate is the rate in which it takes the homes to sell at its present rate.

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What Does This Mean To You?

All this could very mean that despite this "down" market as projected by the news media, you could still possibly move on in your life without putting your real estate plans on hold. Remember that real estate is local, but that it means that it is not just city or county specific, but it could depend as specific as your neighborhood. Believe it or not, some neighborhoods and small areas in the metroplex are appreciating in values! To find out how your neighborhood fares, contact us today.

Now Factor In the 3:16 Specials

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Here's how it works: When you call, we will schedule a time for an in-depth consultation to assess your specific situation. We will devise a plan specific for your situation. We believe each client has his/ her own specific needs, hence it is only fair that a plan to works in your situation best benefit you. Based on our two-way discussion, there may be threee outcomes. STEP One: You will not put your home for sale in the market. STEP Two: You might hold off your plans until further notice. STEP Three: You will list your home with 3:16 team REALTY while enjoying this home selling process. Let our company handle this transaction/ process for you. We understand the stress homeowners feel.

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Make your move.

If selling is the right decision for you (now or later), find out today. You would not know until you take the first step of finding out if it is for you. By contacting us today, you are allowing yourself that oppurtunity but most of all, giving us the opportunity to serve you and by that, we take it very seriously.

And we mean it.

How Is The Market Doing - really ???

A close friend asked me the Million Dollar question earlier this morning,

"How Is The Market Doing? Really?" With a spark in his eye, he added, "I know the news is talking about how bad the market is doing, but how is it, really?"

I smiled and answered,

"Really.... if you really wanted to know, this is what I will tell you ......

There's really two kinds of houses here in Frisco, or the Dallas metroplex for that matter. There are those who sell within 30-60days and then, there are those who will be in it for the long haul."

How Does This Relate To You If You Are Buying?
A great home priced correctly moves FAST. It also does not mean that you would have alot of negotiation power if it just came on the market a few days (this is merely a generalization statement. Each listing/ seller has its own reason to sell). Making a low-ball offer may not get you the house and perhaps other buyers would recognize the same potential and could offer the Seller a reasonable offer.

How Does This Relate To You If You Were Selling?
It really depends on which category you want to be in. There are some steps you need to take in order to ensure you are on the first category (not the latter):

1. Work with an agent who knows what he/she is doing - as far as pricing and marketing the home.

2. Per an experienced agent's recommendation, follow the advice he/she gives you in order to sell the home.

3. Trust the person you hire. (If you dont, it is difficult to build a successful relationship that will get you where you want to be: move on to your next plan).

More importantly, this is a question you need to ask yourself:

Do you really want to move? Or are you just testing the market to see what it would take?
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For no fluff real estate market advice, please contact Loreena Yeo - broker/ principal of 3:16 team REALTY. Proudly serving Frisco, Plano, Dallas, Richardson, Allen, McKinney, Celina, Prosper, Little Elm real estate markets.

Setting Showing Limitations: Setting Up For Failure

As a kind word of advice for Sellers in this Buyer's real estate market:

For buyers to view your home (with your hopes of a pending sale) can really be tainted if you set too many parameters for viewing your home. With the amount of properties on the market at the moment, should you have hindered your showing activities can impede the sale of your home.

Some of the common constraints:

• Appointment required only: Some agents and their clients might be viewing your neighbor's property. Then, they noticed your property was for sale too. (You had great curb appeal and they had to come in to take a look). But when the buyer's agent make the call to view the property, it says Appointment Required. So happened, you were in the movies and you didn't pick up that call. Guess what? The buyer's agent and buyers move on (not remembering about your home).
• xx hour notice: Some showings may require 1 hour notice. I have seen some that needs a 24 hour notice. If you set yourself such parameters for viewing, again, drive-by agents and their clients do not have time to wait for 1-hour before viewing your property. While we understand that you might need a few minutes to grab your child and stuff, as long as a courtesy call is made, your potential buyers should be able to walk into your house after given notice (again, in this market).
• No showings before xx a.m. or after xx p.m.: Buyer's agents would typically make appointments as early as 9:00 a.m. or ends their showings at 8:00 p.m. So, do not restraint them to come in during this time-frame. We can understand not to show the house at 7:00 a.m. or 10:00 p.m. I am not saying make your house a revolving door, but if you limit yourself, you might not catch those "early birds" or the "late night owls". In my personal experience, I have seen a showing instruction to not show the house after 6:00 p.m. That makes showings very difficult for the sale of your home. Guess what? Most buyers view houses after work, while you are trying to get home to prepare dinner. It will be inconvenient - and the home-selling process is never convenient. I take it that if you are bothered so often, those are good signs that your home has great showing activities. High showing activities lead to a contract eventually.
• No showings between 12:00 - 3:00 p.m. (seller's child takes naps): This is really a big question. Should you restrain showings like this? Could your child take naps at an alternative location when a showing is pending?

Think about your showing parameters. In a market such as this, you would only hope many, many showings are made for your property until you could barely stay in. That, will be a good sign for a sale is near. If you set too many showing parameters, you are only setting yourself up for failure.

When Foreclosure Hurts

Several years ago when the real estate investment hype was going strong, Collin County (Texas) realtors cashed in on selling real estate as investment properties. Some went to California, bought large billboard signs and phone calls/ "investors" came in by the hundreds, if not thousands. They conducted seminars about the real estate investment opportunities in this area. Many of them cashed in on their Californian home equities to purchase these properties. Business was hustling and bustling. Life was good.

Fast forward 2-3 years later, these properties continue to sit on the market VACANT. Ouch (not a pretty word for the investors).

Why????

You see, these California investors purchased properties by the dozens. Many of them bought existing homes and many more bought new properties. When you purchase 3-5 properties at one time, you betcha the Home Builders would cut you a pretty good deal on the houses. These are very large houses too (by that I mean 3,000-4,000 square foot homes). Corresponding to that, large homes tend to come with large rents. If you knew the Texas (or specifically Dallas) real estate market, you would know that generally, most renters do not rent huge McMansions and pay over $2500 - $3500 homes no matter how new they are. So, these homes become very difficult to lease and obviously sat on the market for over a year EMPTY. Ouch. So, these investors have to resort to selling them (at a very huge lost) or many of them have been foreclosed upon.

Just to quote a specific example: Panther Creek Estates in North Frisco has too many houses such as this. Back in 2004-2005, you could purchase a home for something close to $200,000 (and by that I mean, single-story starter homes). Fast forward 3 years later, you can now buy 4,000 square-feet homes for around $200,000. And these are available by the dozens. Quite a few for you to pick from.

Foreclosure hurts everyone. Not just these investors. It hurts the Sellers who are NOT in foreclosures, trying to sell their homes for whatever their reason. Granted, these non-foreclosure houses are alot better quality and have many finishing touches in them, these Sellers cannot justify a $50-$100K more in price no matter what you have in the house! Sellers who are not realistic with their expectations continue to sit on the market, awaiting this One-Special Buyer who thinks that their house is worth that much more.

This scenerio continues to grow all over the Dallas area real estate market. When investors are foreclosing by the hundreds, it hurts everyone. Buyers will seize the opportunity to purchase.

Lesson learnt?

Think twice when some salesperson sells you something. Do your due diligence in anything concerning money. And if you are interested in investing in real estate (which I still absolutely believe in), invest in your backyard to begin with. I personally do not advocate investing in unfamiliar territories and more so, some where you cannot get to easily.

For realtors, please take on a better job in discussing the pros and cons about investing in real estate. Do not just get these Investor buyers and leave them fending for themselves (I know several realtors in town that have done so). At the same time, I understand that it takes two to tango. So, investors, again do your due diligence.

Betting/ Gambling in real estate is NOT the way.

A Friday Real Estate Rambling

Written by Loreena Yeo Copyright 2007.

Sometimes after all you have done and you know you did your best, the people who loves and cares for you will tell you that That's All You Can Do. But it never fails to dampen my spirits about this listing I didnt get. Or should I say, I wished I was able to give my best to.

I am not sad because I didnt have the opportunity to list. I am truly disappointed to know that the Seller whom I went out to try to assist (in her horrible need-to-sell basis) while I was given orders from my doctor to stay on bed rest (a risk I took from my precious baby). I had to go out there to at least see if I could be of help. I took the risk and it didnt turn out the way I wanted - at least for the Seller.

Long story short, this Seller needs to sell Yesterday. She openly told me she's interviewing other agents (and I only think it's fair. I wouldnt want it otherwise). But I lost this listing to an agent who listed $60,000 more than I think it should sell for (given her situation). And with the condition that it is (it truly looks dated with wallpaper and throughout the house) with no pool while her entire neighborhood has a swimming pool. Even with a pool, she would have been $40K overpriced at the price this listing agent took.

I truly wish I could go out to shake this agent or at least share this with the Seller but since there is an agency relationship, I think it's best I keep quiet.

I am sad because I didnt push hard enough.

I followed up with her a few days later and she told me she decided to go with another agent despite telling me that she thought I was very thorough in my presentation and expectation of what she MUST do in order to sell her property.But am I (thorough enough)??? I still failed to make it crystal clear to her about how listing it at any higher price that I suggested will not help her sale any faster.

Agents and my family will tell me that she would eventually find out but I hate for her to realize this 3 months into the wrong listing price.

I politely asked her, "What she thought I didnt do to earn this listing?"

She answered, that "The other agent's marketing was more aggresive......"

In my heart I asked, "Aggressive such as ??????. " Instantly, I knew I had lost because the other agent had promised her a higher listing price while mine really, really sucked in reality. The truth: The reality of this market sucks and for me to give my best was to price it realistically. I never doubt that I wouldnt work as hard as any other agent -if I knew what I had to do. If I could deliver the Moon, I darn would.

Guess, this is just another one of my stories to tell in my book. I do place this guilt and failure on me: not my potential client. I feel I have failed not to be aggresive to convince her that the listing (for the assistance I think I could give her, not for the paycheck at the end) needed to be where it needs. But I cannot tell her that now.

Are You Landlord-Material?

Written and copyright © of Loreena Yeo 2007

(1) How much money have you set aside for your rental property(ies)?

See, the question is if you have any money ready to be set aside for this business (after all, landlording is a business). I did not quite mean if you have any money set aside. Unfortunately, if you have to dip into credit cards to make the mortgage payment when your tenant cannot pay you, or if you have a plumbing issue, this is a good red flag to say that it may not work out for you. If you can put at least 3 months worth of payments aside (better at 6 months), you at least have a sound financial plan.

(2) Can you cashflow? Or are you going to feed some money into the property each month?

Work out the math. Factor in vacancy rates and estimate repair costs. Not just mortgage payments with property taxes and insurance. There is a real math behind this. What if the numbers do not work? Does it mean this landlording business is out? Not necessarily. Again, it depends on your individual situation. If you need help in figuring this out, contact me. I'd be more than happy to share with you what I know. No pressure and obligation. I feel the more information you have in your hands, the better the decision you make for yourself.

(3) Oppps.......... let me back up. Do you work off a monthly budget and abide by it?

How is your financial situation at home? Are you living from paycheck to paycheck? (Red flag alert)... The truth is that I have heard many people saying that "They are doing okay" or "I got that covered....". What does that really mean? Please let me tell you what it should mean before you really think you have that covered.It means you are on-time with all your personal bills. You are sitting on at least 3-months of cash savings (living expenses) and now that you are getting into the rental business, you should have at least 3-months of additional mortgage payments plus property taxes and insurance. This is the least you must have in order to sit on a strong foundation to begin considering landlording.

Why so stringent you might ask? The more savings you have, the more you can pad away your problems. Then you wont operate in a crisis mode. Having that $500 plumbing problem then because just a mere inconveninece for you.

Should you seek credit cards to fund your emergencies? Absolutely not. The rental business is purely a numbers game. If you have to seek a credit card for help at 18-20% interest rate, dont you think your entire ROI (return on investment) go out the window? Well, how about those 0% credit cards? Well, think again. It already says you are not financially ready for landlording, in my humble opinion.

(4) Do you plan to manage it yourself or hire a property manager?

Either way, property management can be successful if you have the right personality and tools to do it.
The benefits of handling your own rentals is that you save money. Typically, property management fees start around 10%. That means you will also need to factor this fee as part of your cashflow equation. The property manager takes the tenant calls for you, however, you still will need to play a somewhat active role in keeping on top of your property manager. So, instead of dealing with tenants, you deal with your property manager. Late fees are collected for you and typically split between the property manager and you. But we never wish that to happen.

You do not need to listen about Why Rent cannot be paid on time this month. Some real tenant answers are, "I need to buy new clothes for my kids or school items before the kids go back to school" or "It's Christmas and I really dont want my kids to be without this season. After all, 'tis the season to love and give, right?"........ Going back to school in August and Christmas occuring every December suddenly catch them by surprise. Be prepared that people make decisions with their money and it is beyond your control. I am not here to judge if it is right or wrong. It happens. (I do not say that ALL tenants are this way. But you need to assume the worst to make your most conservative decision).

The advice I provided may sound difficult or somewhat harsh, but as a realtor and a trusted advisor in your new endevours, I'd rather be upfront with you than to get you scrambling when you are already in the situation. Call me if you have considerations in becoming a landlord - whether it is here in the area or anywhere else. I'd love to share with you.

PS: I am a landlord and I have some experience in this field. I am not here to say whether this is for you because ultimately you do what you think is best for you. But you should hear all the goods and bads before you get your feet wet. After that, you will still have your own lessons to learn.

Related Article:
Is Landlording A Better Alternative to Selling in this market?

Is Landlording A Better Alternative to Selling?

Written and copyright © of Loreena Yeo 2007


No doubt that the real estate market has recently suffered some downturns. Many Sellers who plan to move on with their lives cannot or do not want to wait for the market to turn around are looking at different alternatives to selling.

Landlording comes to mind.

Is Landlording A Better Alternative To Selling In This Market For You?

Well, it depends on your situation.

(1) First of all, not everyone can qualify for having 2 mortgages in their name. Well, someone else has just made the decision for you.
(2) Even if you can qualify for it, should you?

Here are some points to ponder:

(1) Are you landlord-material? Read more on this.
(2) After the landlord material consideration, are you just making an emotional or financially-sound decision?
(3) If the market was not in this condition, would you get into the landlording business in the first place?

When Sellers make this at-first-glance consideration, they assume that:
(1) You will always have a renter in the house (no vacancy ie someone is always there to pay this part of your mortgage)
(2) There will be no turn-over.
(3) There is no repair.
(4) Rent will always be on time.
(5) It is just a simple clean and vacuum, then the For Rent sign goes up again in the yard.

The questions that I have raised are truly significant. They are real and they can make or break you. As much as I believe in real estate, landlording is not for everyone. Landlording is a business and should not be used as an alternative until something turns around. So, make your EMOTIONAL as well as FINANCIAL considerations diligently.

Find out what it takes to become a landlord.

Is a little Home Improvement Project on your horizon?

Before you begin home improvement projects, get your favorite realtor involved...... Why?

Realtors have many resources that you can get some insights to. How about giving some good referrals of services they can share with you? A good and cheap tiling guy? How about some new hand-scraped hardwood floors? Or granite countertops? How about cheaper alternatives to Home Depot or Lowes? Do you know the best places to shop?

Some realtors are a central source of information. They know where to shop and whom to call.

More importantly, are the home improvement projects you plan to do worth the time, effort and money you put into? Use the knowledge and market insights to see what are buyers looking for these days... Some home improvement projects bring value while others do not, yet they bring marketability to your home when the time comes to sell.

If you are looking for a trusted local real estate expert, contact me. I will be delighted to share what I know about the home improvement projects that interests you.

Seller says, "Let's Negotiate"

One of the episodes from Buy Me on HGTV remains pretty crystal clear on my mind and I do not think I necessarily agree with both the agent and sellers.

Setting the Stage:
The house has been on the market for a while before the Sellers interview this real estate agent to list it for them. The house has foundation issues and it is VERY Visible from the exterior bricks and the first floor.
Knowing this, the agent presented two strategies to the Sellers.

(1) List it "higher" than the original price that the Sellers could not sell it at the FSBO price.
(2) List it "lower" to reflect that the house needs foundation work performed.

What did you think the Sellers chose? Hint, hint: They said, "Let's Negotiate".....

My Comments:

I do not think that was the right pricing strategy to begin with. Even without knowing the market, and the fact that most For Sale By Owners overprice their homes, listing it HIGHER to try to get the house SOLD is definitely not the way to waste the Seller's, the listing agent, the buyer's agents and their clients' time.
In this market where the HOMES are not in the PERFECT condition, most buyers just say, "NEXT!".....The Sellers' feel that with given enough Buyer's interests, they can always "NEGOTIATE". I am sorry but most of the time, it does not happen that way.

Based on my experience, buyers move on and do not want to deal with a (1) overpriced listing (2) a house with problem on top of that.

Towards the mid-part of the show, Summer turned into Fall and there were still no offers. Eventually, the listing agent suggest to lower the price 8% - a very difficult choice for the Sellers to make, yet they agree.

My Comments:
The Sellers in their minds have set that their house is worth XXX - original listing price with the agent. Now, having to reduce it 8% is more than they can handle. It feels like the agent is trying to take a piece of their soul. Well, in the first place, the Listing agent did not set reality in the Seller's mind.

Winter came and the Listing agent suggest to reduce it another 5%. By now, the Sellers are not in good terms with the agent. No one was happy. And the house continues to stay on the market. Show ends......

My Comments:
This is a harsh reality where an overpriced listing - to begin with hurts everyone. According to the show, the house was on the market for 2 months while the Sellers try to sell on their own. Then from June into the Winter months (February) was another 8 months the house sits with an overpriced listing and problem (Foundation). A good wake up call.

Extreme Circumstances Deserve Extreme Measures

Most of the places in the country are facing a Buyer's market*. There are just more houses than are buyers out there. As a result, the prices are typically lower. With the splashing news of subprime lenders going out of business, it makes buyers harder to qualify for loans. There are still 100% loans out there but the availability has significantly dropped. The adjustable rate mortgages were at one point "easier" to qualify because of the "lower" debt to income ratios are also adjusting "up". In short, the pool of available clients have definitely impacted Sellers of residential real estate.

Thus, it become even more crucial to work with a real estate expert who knows the market and knows how to move your property. Despite the current market conditions, there are still buyers out there.

Home Improvement shows such as Designed to Sell and Get It Sold are some examples of what a real estate expert may require you to do to sell in today's market. Some episodes require homeowners to go through extreme measures to update their properties. Moving walls, remodeling the entire kitchen and alot of elbow grease. These are some methods Sellers employ in order to achieve their goal: Move on. On the other hand, these shows did not portray the entire true picture of the real work that goes into the process. They get it done for very little money (some as low as $2000). Realistically, unless you have the time to find pennies on the dollar resources, it is very hard to achieve $2000 worth of work in the amount of "stuff" they do. But the concept holds true. Staging works.

Ask my real-life clients: The Milners. They worked tirelessly for two-full months to put their house on the market based on my recommendations. They are very capable homeonwers who could tile, paint and tear down arbor on their own. They definitely put their fair share of sweat equity. No doubt, the projects took them a little longer to complete than anticipated but in the end, they made their house the best in its price range and condition. I listed their house on Friday evening at 9pm and received an offer the very next day at 4:30pm (to the 1st family that viewed it).

Update: Guess where are the Milners now? Well, they are off to the next phase in their lives: help plant a church in a different state - with no house (or house payment) to sell in their minds.

In the Milners very own words:
"Loreena, you were so helpful in your advice on how to prepare and stage our home. We never dreamed it would sell the first weekend! You under-promised and over-delivered! You did your research, you made solid recommendations, you were thorough and well-prepared. You did what you said you would do and then went beyond - How can we thank you enough! You're wonderful!"

So, guess what? STAGING WORKS!!!!

A can a paint $22, Tiles in kitchen floor $500, Peace of Mind: Priceless.

Another proud story of extreme circumstances that deserve extreme measures.

What To Do In This Declining Market?

We are hearing the Chicken Little cry all over again. This time is it with real estate. "The sky is falling, the sky is falling".....

Media headlines are splashing with screaming reports, "Sales of new homes fell in June - largest amount in 5 months and WORST DOWNTURN in 16 years".... quoted MSNBC. Foreclosure rates are at its highest, it is more difficult to qualify for loans. The National Association of Realtors (NAR) reported recently that the sales of existing homes dropped to its slowest pace since November 2002 and the decline was twice worse than expected. Some economists say that the weakness in housing could linger well into 2008. The rise and fall of the US Stock Market is clearly not helping either. We recently hit the highest point at the Dow Jones at 14,000 points (July 19 2007) but it did not last long. Before we know it, we were riding the roller coaster downhill plunging over 500 points over 2-days by the following week (July 26 and 27). People at Wall Street is calling this a Meltdown.

So, as buyers and sellers in the current real estate market, what should you do in the mean time? Sellers: Should you retract your house on the market, make plans to continue stay where you are at? Is that possible for your plan(s)? Buyers: Is holding off your plans a possibility because interest rates are heading higher? Or would now be a great time because Sellers are more open to offers?

When purchasing a property to house your family, even though there are investment and appreciation factors to consider, what really goes on with the "market" should not be the MAIN deciding factor on whether you want to buy (for buyers) or sell (for sellers). No doubt that it can be much more challenging than ever for Sellers, hence partnering with a local market area expect is key in bringing you the success you are looking for. At the same time, when you purchase a house and plan to make it a home - haven for your family, chances are these relatively "short" term commotions should not affect your major purchase decision.

Be in the Buying or Selling market now to fit your schedule and circumstances now. And not how the market is doing. Since you are making this decision on as long-term decision for your family needs, the short term swings of the real estate and stock markets should not hinder your plans. If you try to make your long-term buying/ selling decision based on short term affects, what you are trying to do is to "time" the market.

Just like participating in buying and selling stocks (even though we know real estate is not as liquid as stocks), market timing known as the attempt to predict the future price of houses, can be a dangerous strategy. It becomes more of a gamble. Is the happiness of your family worth the risks? Hence, sticking to the safer path is like walking on solid grounds.

Purchase or sell a house when you are ready. It is the BEST time to do it. Not when other factors affect you. Worst still, factors beyond your control such as higher interest rates, rising and falling of the stock markets and whether your neighbor is in foreclosure or not.

If you are considering a real estate purchase or sale in the North Texas real estate market, I will be delighted to speak to you. I work in the Frisco, McKinney, Allen, Prosper, Celina, Little Elm, Richardson, Dallas, etc. (Denton, Collin and Dallas counties).