Saturday, April 25, 2009

A Lesson About Market Value

If you ask "How much is my house worth?" I have two answers for you. First, if you don't really need to sell it, it is worth whatever you say it is. If you can honestly say, "I wouldn't sell this house for less than $300,000," then it is worth that much to you. Of course, if you need to sell it, what it is worth to you is entirely irrelevant.

Market value is the only relevant value once you are ready to sell. This is the value according to all the home buyers out there. They don't care what you spent renovating the house, or what you originally paid. Spend $50,000 adding a pool, and they may only pay $20,000 more for the home. Real estate is worth what the market says it is worth.

A True Story About Market Value

As a real estate agent, I once did what was then called a "comparative market analysis" for a young couple who were getting ready to sell their home. This is sometimes just called a "market analysis," a "selling price analysis," or something similar. It essentially consists of comparing the home to others that have recently sold in the area, to see what it should sell for.

I spoke to the couple, looked over the home and took my notes. I promised to return the next day. I carefully dug through the "sold" books (this was before everything was computerized) and found nearby homes that had sold within the last six months or so. I did my adjustments and all the other work that I had to do, and came up with a market value of $115,000.

"$115,000!" They blurted out in unison. I was sitting with them at their kitchen table, and I had all the papers with me. I showed them the "comps," or the listing information on homes that had sold. I felt that I did my homework well.

"But we paid $90,000 for the house two years ago and last year we put $40,000 into remodeling the kitchen!" Having perhaps a bit less tact than I have now, I politely explained that I took the kitchen into account. The kitchen was lovely, I assured them, and their $40,000 investment had probably raised the value of the home by $10,000. Neither a market analysis nor a formal appraisal can take into account the desires, feelings or expenditures of sellers.

They chose not to list with me. Normally in a case like this, the sellers then find a real estate agent with lots of patience or little business. That agent agrees to list the home for too much, hoping that one day the sellers will get desperate to sell, finally face reality, lower the price and take their lumps. The sellers often get frustrated waiting, and end up selling for even less than they would have gotten if they had priced it right to begin with.

Market Value

What is market value? It isn't what you have into your house. It isn't what you feel it is worth. It is what the market will pay. How do you figure out what the market will pay? For single family homes, the most effective method is a comparative market analysis, whether done by a real estate agent or as part of a formal real estate appraisal. You can even learn to do this by yourself, but that is a topic for another article.

Real Estate Negotiation - The Art Of The Compromise

Real estate negotiation is a book-length subject, and one of those reasons why it can sometimes be a mistake to sell your property on your own. A good real estate agent, after all, should have some good negotiating skills learned from experience. However, there are some things you can learn a piece at a time, and this is one of them.

Of all the techniques of real estate negotiation, and of negotiation in general, the compromise is one of the most common. In fact, it is so much a normal part of negotiation, that people often forget that it is a "technique." Both sides expect to have to compromise on many points, and it is the easiest way to settle a difference. How you arrive at that compromise, though, is crucial.

Negotiating A Compromise

It is common for someone to say something like, "Look, we're only $6000 apart now. You want to $204,000, and I want $210,000. Why not split the difference and make it $207,000?" This idea of "splitting the difference" has become a cultural norm. Even if it isn't agreed to, it seems reasonable and non-offensive to suggest it.

The question however, for the smart negotiator, is how this "difference" is arrived at. Where did negotiations begin, and how did they proceed? Did you start at $230,000, and the other side $200,000? Did you give a little or a lot at each step? What about the other side?

Using the example above, suppose you had only dropped your price to $216,000, instead of $210,000. The difference between that and the $204,000 on the other side would be $12,000.  In this case, "splitting the difference," would mean a price of $210,000. You can see that it's important what you do before the compromise.

Obviously, extreme initial positions can help here - if you don't just chase the other side away. Buyers use this technique all the time, and it works. An investor doesn't expect to get a property for 20% less than the asking price, but offering that plants a seed of doubt in the sellers mind as to the value, and it lowers his expectations. He might be happy with a compromise that gets him 10% less than the asking price - even if he would have rejected it out of hand as a first offer.

Moving in smaller increments helps you win a better compromise. For example, as a seller, you can let the buyer come up $2,000 at a time from his first offer, while you drop your price by only $500 with each counter offer. At some point a compromise will be suggested, and it will be at a higher level thanks to your strategic moves.

Being too obvious in using a real estate negotiation technique like this can scare the other side away, though. To make it more subtle, you may want to also negotiate for other points that are of little concern to you. This gives you something to "throw back in the pot" when it's time for a compromise.

For example, if a buyer expressed some interest in having the washer and dryer stay with a house you are selling, you can dismiss the idea - even if you have no use for them. This gives you something for later. When the buyer hesitates over a proposed compromise, you can say, "Look, why don't you take the washer and dryer too, and we can sign this right now."

Certainly you should learn at least several real estate negotiation techniques if you are investing in real estate or selling your own home. Learning the art of the compromise is a good start.

Sell your home easily..

What do buyers need when they plan to buy a home? In fact, there are so many aspects one needs to consider. In the seller's point of view, you should follow some home selling advice. Here are some advices for your success of selling home:

Here is the first step to sell your home. Make a best first impression to your buyers so that they are attracted to buy your home. Get rid of dirt and rubbish, remove all clutter, repairs all flaws of your home, get rid of unused furniture to make it looks spacious.

Don't forget to decide whether you pay an agent to sell your house or you just do it by yourself. Pay a realty agent gives you a little effort for you to sell your house. An agent will carry out all of business in correlation of your home selling checklist. You just hire an agent and pay him. But it will spend costs of course. So, it’s up to you to pay a little effort or bigger one.

Now if you don't really know how much your house is work, be smart, contact today a real estate appraisal software so when people approach to you to purchase a house, you know how much you should get for your property. 

As a last advice: Get familiar with financing terms, such as mortgage financing (fixed, adjustable, seller financing, assumable loans), pre-qualified, pre-approved, commitment.

Also keep in mind selling home by yourself is not as easy as it seems but it is worthy to do because you can save about 2-6% of your selling price. Selling home privately is sure going to take much time and efforts for you to sell it.

If you find too difficult to sell, or do not want to sell money in spending take a real estate course. It will surely help you in the process of selling a home.

Your Home Buying Checklist

A good home buying checklist, like any good checklist, can make things go more smoothly. You will have to put your own list together according to what your own needs, but here are some items that will be common to most home buying lists.

___ Prepare. Consider not only what monthly payment you can afford, but how much you want to afford, given your other goals. Check your credit report and take actions to improve your credit score. Make a list of what you want or need in a home, and prioritize it in case you can't get everything.

___ Choose an area in which to focus your search. What do you need in a town or neighborhood? Use online resources to investigate towns. Check crime rates online. Investigate schools. Look at local newspapers online to get a "feel" for a town.

___ Get pre-approved. Gather pay stubs for the last few months. Find recent bank statements, tax returns, w-2 forms, proof of other income. Ask questions about loan options (take notes). Make copies of pre-approval letter to submit with offers.

___ Start home shopping. Browse online listings. Look in newspapers, and real estate guides. Find a real estate agent that is active in the area you are interested in, and with the types of houses you are looking for. Consider a buyer's agent. Explain clearly what you are looking for. If the agent shows you homes that clearly don't fit your criteria, fire him. Take notes on homes you see.

___ Look at the homes. Does the home meet your requirements? How does it feel when you walk through it? Look at the neighborhood. Ask the agent about any problems the home may have. Take a photo, or write a description, so you'll remember the home after looking at others. Ask a lot of questions. Use a home inspection checklist, taking notes to pass on to a professional home inspector.

___ Make a decision. Does the home work for you? Find out the appraised value if possible. Find out why the seller is selling. How does the home compare to others you have seen? What is the home worth to you, based on what you know of values at this point? Ask the agent if there have been other offers, and what happened with them.

___ Make an offer. Have the agent help, but don't reveal your thoughts on possible negotiations. Write your earnest money check to an agency, or the real estate broker if they have an escrow account. Be clear in the offer as to what stays with the home. Specify who will pay for each closing cost. Include contingencies for any necessary inspections.

___ Complete the purchase. Arrange inspections as soon as the offer is accepted. Satisfy any other contingencies in the offer. Get a loan commitment from a lender. Get a firm closing date. Buy home owners insurance. Get a closing statement. Obtain the cashiers check for the closing.

___ Prepare for the move. Once closing is certain, arrange for transfer of utilities to your name. Mail change of address forms to post office. Start packing. Hire a mover. Transfer prescriptions. Get kids registered in new schools.

As a final item on your home buying checklist, check out everything thoroughly when you arrive at your new home. It should be in the same (or better) condition as when you made the offer.

Home Investing -The Proper Way to Start

Always begin with cheap home insurance. Have you begun Property Investing? If you have, congratulations to you; you see, it is one of the most profitable businesses that you can be involved in. Once you know how it all works, you can already reap huge money in the coming months and years. 

If you have a weak heart, this is not the business endeavor for you. True enough, Real Estate Development can give you huge profits but then if you don't know how it works, you can also lose huge money. In fact, many investors leave the business due to bankruptcy. If you know where you're going, you will not get lost. Educate yourself about the many areas, foundations, and basics of Real Estate Investing to ensure that you will not lose more money.

What do you need in order to be a successful investor? First, you need to learn from experienced investors. Ask them out politely and they will gladly give you advice and helpful tips. 

There are many online Real Estate courses that you can sign up but just make sure that you don't end up overloaded with information. Just learn the things that you need to know and you're all set. One course is enough and as you pursue your career, you can take only certain parts of the courses you don't know. By following the steps involved in starting the Property business, you can enjoy successful Investment. If you're overloaded with information, you will find it difficult to start.

By learning only the essentials, you can start immediately and just continue learning as you work your way through various deals and transactions. Choose the Property Investment course carefully. Check if the instructors are investors themselves. To be able to teach other people about Property Development, they should also be in the business. 

Don't believe in the so called 'gurus' online. There may be expert gurus that teach about Real Estate Development but not all of them can be trusted. If you can find a free Real Estate Development course online, you can take advantage of that. Do some careful research and choose among several good online courses. 

You can even purchase eBooks about Home but you should choose them well. It's much easier to learn and acquire new knowledge these days, thanks to the internet. You can also access forums to get helpful tips and suggestions from fellow investors.

Once you've devised a strategy or game plan, you can already access the industry. Well of course, by now, you've already generated enough capital to cover your investments. It's already expected that you will spend huge money at first but if you focus in the right area and you're knowledgeable enough, there is plenty of room for success.  

So where are you going to concentrate? Some say that purchasing properties and renting them out afterwards is a good choice because you can expect monthly income from the rent. However, you also need to become a landlord. The value of the properties will continue to appreciate and its up to you whether you will resell the property or not.   

So, are you going to enter the Home industry? Property Investment may be the thing for you but you need to be prepared. Get adequate knowledge first before you start Investment.

For other money saving tips have a look at free house insurance quote or Whole Life Insurance Coverage.

A Real Estate Strategy

Here's a proven real estate strategy: Buy a property, change the use, and sell it for a profit.

Big profits are possible if you find its most profitable use. The disadvantages of this strategy? There is a lot of homework required, and many possible dealings with zoning authorities and others.

Years ago there was a row of old homes on a main street in the Northern Michigan town where I used to live. Many of them were rentals. None of them were very well taken care of. Then one day they were gone.

What had happened? That part of the street had been zoned commercial for many years, but there wasn't a reason to tear down perfectly good homes to put up stores. That is, there wasn't a reason until the land could be sold for commercial purposes at a price that exceeded the value of the homes plus the cost of removing them.

As the town grew, at some point an investor realized that he could buy those rental homes, tear them down, and sell the land for a nice profit. This is not uncommon. A particular piece of real estate is not always used for its "highest purpose." When this is the case, it may sell for much less money than it otherwise should. It is just waiting for someone to recognize what its highest purpose is, and then buy it and convert it.

Sometimes an office that had once been a home is converted back into a home, because the property is worth more as a home. Homes sometimes become professional offices for attorneys and doctors. The more common examples of a change of use is when farmland is developed for homes, or when apartment buildings are made into condominiums.

The bottom line is that if there is a higher use for a property, there may be a profit opportunity. How can you tell? First you have to identify the highest use, meaning the use that makes the property most valuable. One way to do this is to simply look around and see what is happening with other properties around the one you are looking at.

Once you determine what the property should or could be used for, you have to determine how much it will sell for when it is ready. Then you determine how much it will cost to get it ready, plus the holding costs until it sells, and the costs associated with buying it and selling it. Subtract all of these costs from the projected sale's price.

Then subtract the profit you want for your work from that figure. This gives you the maximum price you can pay to make the deal work. Offer less, of course. That helps with this and any other real estate investing strategy.

Persistent Myths in House Investments

Typically, these myths are the standpoint why there are those who fail in Real Estate investing. These myths are often heard from those who never really made it to first base. This is not meant to offend those who are to be offended but an eye-opener. 

Myth 1 : No cash, no venture
Truth: Some might say that you would need money in order to make one. But in the case of investing in Real Estate, that's not wholly true. Once you have found a Home deal posing a good offer, the money will eventually find you. If you ask an investor who has reached the peak of investing, he or she will inform you that lack of money is not the real issue; it is the lack of the best deals that's the problem. Think, if you have found a house offering a good price, you'll soon find a lot of partners willing to bring the money at your doorstep.

Myth 2: It won't work
Truth: If it just doesn't work for you, then the problem would probably be on your part. Being pessimistic doesn't bring anyone anyplace. You can forever convince yourself that stuff won't work and be just like that for the rest of your life. Unless you try on something and give it your best shot, it will always be a mystery to you. Yes, there are risks in investing on House but that doesn't necessarily mean that the risks could outrun the benefits. Risks can be remote and sometimes realistic. If you will keep on basing your decision regarding House a total mess, something that can only happen for those who are "gifted" in the investment scene, then it'll forever be like that. 

Myth 3: Realtors don't want to cooperate
Truth: Property agents are your best friends and are the ones who can pull you up once you have established yourself a good deal. There are agents who call up to you when a good deal has come up. Some agents will give you deals that are unimaginable and you can bet your bottom dollar on it. One of the reasons why you can't seem to get along well with your agent is because you both misunderstood the likes of one another. It is best that you inform your agent about the deals that you want. 

Myth 4: This stuff is risky
Truth: In reality, even if you ask the prominent investors, Property is the safest investment that anyone can venture in. This is because you can't control the stock market. But the thing is, you have to take a step and must be willing to take a risk in order to make money. Without calculating the risks, you won't be able to appreciate how things would eventually come out. 

You must have sufficient knowledge about the entire Property so that you won't get lost with how the system works, thus, decreasing the risk. However, knowing everything is not a requirement before verging into the deal.

Myth 5: Competition's getting the best of me
Truth: Supplies will cover the people needing it. There are a lot of deals that can make anyone who enters in House investing deal rich. This will only happen if you go out into the world and find someone who will accept your deal.

For insurance options have a look at: or free homeowner insurance quotes. For auto insurance have a look at:

Real Estate Development for Beginners

Make sure you have looked at free home insurance quote first.Property Investing for beginners was never an easy task. There are numerous companies that sell properties for those who are just starting but the big question will depend on how trustworthy these companies are to help you sort out your goods. Can you entrust these companies with your money and pray that they won't leave you bankrupt? If you are a beginner, here are five important tips you can follow. These tips will help you figuring out what to do and what to look for when considering the purchase of a specific property from individuals or companies.

Tip 1 - Background check

One of the most important things to look out for in a company is to check if they have a good background record.  Many of these companies sprung up just years ago therefore it is quite difficult to determine their status. However, not because certain companies are new in the industry doesn't mean that it will hinder your attempt. Research on their status, search for testimonials, talk to those who have successfully made business with the company and ask of their performance. Above all, you have to check if the company's financially sound and stable. You can asses for general information of the company through the web and other resources.

Tip 2 - Expect for Positive Cash Flow

There are companies involved in selling that are good in selling something that is already there. You have to keep an eye on companies like these. You have to know if the property being sold to you will bring profit each month or will it be just another headache. You have to demand concrete proof from the company. Don't easily agree and sign on that contract just because of the promises of sales talk. Do your own research of the company and not ask for the person's opinion about it. It is of utmost importance that your decision will depend on the diligence that you invest.

Tip 3 - Asses the area

Before agreeing on the deal, make sure that the area you are about to purchase is a good property. As a beginner, you have to stick to the areas that have good reputation. Areas that have the best reputations are those that don't financially stack up and rents don't cover the mortgage. Therefore you have to go with the properties having a very convenient site and figures just don't stack up. You have to be very careful with individuals and companies wanting to sell properties in specific locations that aren't fit for 'safe' living. Some of these areas have histories of crime, death, drugs, etc. These properties are fine but for beginners, these pose risks. At the meantime, you have to say a big 'NO' with these kinds of offers until you have fully developed yourself in estimating your experiences.

Tip 4 - Property affordability

Don't just say yes because you loved the property, it's unwise. You have to consider first if it's affordable. There are companies who specialize in making people want to buy their offer, especially for the beginners. Some companies or individuals will deceive you into thinking that what you are purchasing has no strings attached but then again you will finally realize that you have paid for a nice piece of property that you cannot afford.

Companies and some individuals have their way of luring beginners into a false bargain. Be particular with your decisions. Sometimes, these wonderful Real Estate Investing offers can turn out into worst case scenarios.

For more ways to save money look at house insurance quote online or for your car Illinois auto insurance rate information.

Tuesday, April 14, 2009

*All Articles pertaining to Financial Matters are Offered by a third party unrelated to my services. Please ensure you seek-out the advice of your own financial expert. The rule of thumb is to get the advice and rates of three separate companies or professionals*