Do you WANT a “full service” real estate agent?
Many will say “NO, I don’t want my agent 2nd guessing ME!” Then don’t pay the price for one. Don’t hire one in the first place. Instead, find a lower cost “service provider” who would not presume “to tell YOU, the customer, that you are wrong”. Hire “less for less”.
But if you want someone 2nd guessing you, every step of the way from start to finish, so that you do not make even a tiny mis-step, without knowing it, when buying or selling something that costs hundreds of thousands of dollars…then you may not want to save those dollars by choosing “less for less”.
The reason we need many and varied “models” in real estate, more than are currently available, is because not everyone wants or needs a “full service” agent. If you need “less”, then “less” is full to you! Let’s explore the “full service” model so that you know when “full” is paying too much for what you may need.
The key is knowing which model suits YOUR needs best.
The FULL service agent is represented by the blue person in the middle
who is managing and 2nd guessing ALL of the people
who will be involved on your behalf.
ONE of those people is YOU!
A “full service agent” is not a service provider who is giving you what you ask for and doing what you tell them to do. A “full service agent” is helping you get the right answers to the RIGHT questions…not merely those you happen to ask.
A “full service agent” also does not fully delegate the other services like lender and escrow and home inspector and does not keep their nose out of those valued roles in the transaction.
A “full service agent” does not merely help you buy a house that is for sale. A “full service agent” tells you when all of the best houses have just been sold off, and you are picking from an inadequate selection, and should wait for the next better home to come on market.
If you go to the market an hour before the next bread shipment comes in, and the only bread on the shelf is day old bread, do you buy that bread? No! You ask when the next shipment of bread is coming, and if they say in 20 minutes..you do the rest of your shopping and come back to the bread aisle when the fresh bread is available. When you choose from only those that happen to be “for sale” at the time you are looking, you are not doing “it” right. You may be buying “the day old bread” at a GREAT price!
You should not be looking at homes with your agent to pick one to buy.
You should be looking at homes with your agent to determine what it is,
that may not be for sale today,
that you should buy.
IF you are looking for a hot commodity…one that the majority of home buyers want…then the one you are standing in with your agent is NOT likely “it”.
The odds are not in favor of it being for sale…and OMG! no one else found it in 72 days.
Let’s get the wrong “it” for less, because it is stale on market, is NOT how you buy a home for your family
to live in for 10 years or more.
Homes value on a relative basis. YES you can pick a lesser location or lower valued home style and pretty much anything you want. BUT a full service agent will make you think VERY HARD about your choices, and how they will impact you on resale…some day…in the future. A full service agent will tell you what price that “what you want” SHOULD BE…not what price you can get it for based on negotiations with the seller.
If the Seller is asking $700,000 and the “fair” price for that is $550,000, you need to know that. That is not a ludicrous example…I just ran into that the other day with a client. Do you want an agent who tells you that you can get it for $650,000 if it is only worth $550,000? Will you feel great that you saved $50,000…but paid $100,000 too much?
Most importantly…will you resent the fact that the agent pointed out it is only worth $550,000?
Will you hate the agent who is giving you a headache by forcing you to see all of the important things you need to consider before spending hundreds of thousands of dollars?
The NUMBER ONE feature of a lower cost service
that says they are FULL service…
is they do not 2nd guess YOU…the client.
Examples:
1) Seller wants to price his house at $700,000. There is no way a buyer should pay more than $550,000 for it. $500,000 would be a screaming deal for a buyer. Anything OVER $550,000 would be great for the seller.
A FULL service agent will help the seller do what it will take to get $575,000 or $585,000 before it is listed for sale, and price it at $599,950.
A “service provider” will list it at whatever the seller wants to list it for and stick a sign out front and a lockbox on the door…and charge LESS for that and CALL IT FULL SERVICE for less. What it IS is “less for less”.
2) Future home buyer wants what 65% of all home buyers want. A new(er) home (or older one that needs NO repairs or upgrades) in the BEST schools in a quiet location that is near parks, playgrounds, stores and work…AND he wants it for $100,000 LESS than what it costs to get one of those. (Pretty standard scenario, BTW.)
A FULL service agent will show the buyer where they can shave off that $100,000 by compromising on the “correctable” deficiencies vs the NOT correctable deficiencies. OR, at mininum, HIGHLIGHT the deficiencies that come with that $100,000 “less” price. Often the buyer will put their head in the sand as to the weaknesses that cause the price to be $100,000 less than it should be. Some buyers want the agent to not mention those deficiencies. They want to pretend they don’t exist. A FULL service agent will make sure they are buying with “informed consent” regarding those deficiencies.
A “service provider” will help them buy the home they want and say “who am I do say “that” is a “deficiency”. If the buyer likes it…and is willing to pay for it…a “service privider” is there to help them get what they want. If they are happier not knowing…then it is the “service provider’s job” to make them happy and not point out the negatives. If the husband knows about the deficiency, but says “don’t let the wife know about that”…then that is the “instruction” a “service provider” will follow. That is “LESS for less.”
When is “less for less” FULL to you?
1) IF you don’t want your “agent” to 2nd guess YOU…less is FULL.
2) If you don’t want your agent treating both spouses as equal clients. If you want to keep things from “The Mrs.” because she over-reacts to negatives…less is FULL.
3) If you don’t want an Agent telling you that you are asking TOO MUCH for your home, or telling you what you need to DO to the house to maybe make it worth THAT much by creating a lot of “extra” work…less is FULL.
4) If you want your Agent to do what you say…
never tell you that you are wrong…
even when you are wrong…
less is FULL.
Do YOU want a “full service” real estate agent?
There is no ONE “right” answer to that question.
On the assumption that my practice falls within the “service provider” model since I charge less…
So if I know my client is making a mistake, you think I stay silent? Wrong. 100% completely inaccurate.
You think I keep things from my other client, the spouse? Totally wrong. That would be illegal and unethcial (in a “professional ethics” sense) and you bet your bottom dollar I don’t do it. I make sure all clients get the information they want. If a husband specifically told me to NOT keep my other client, the spouse, informed, I would probably withdraw as their attorney. I certainly would not honor the request!
Over all, a grossly over-simplified treatment of “full service” vs. “service providers.”
No Craig…I am not “calling you out”.
Your client comes to you to buy X house. Do you ask all of the right questions before they make an offer to be sure they know everything they should know about maybe NOT buying “that” house? Do you ever tell them why they should not be buying that house?
I don’t know…I’m not in the room with you. Only you know that.
So here’s the point…husband says we want to see house x, x and x. The one the wife would want more is not on the list of x, x and x. It’s not even in the same City. How would you know that if the basis for “the tour” is as selected by husband?
I don’t look at your site often Craig. But since you asked me if this applies to your “service”, I looked.
“Real Estate Buyers: How It Works to Work with Us.
3) Shop for homes online. It’s easy to narrow down by neighborhood, size, price and more.
4) Go on home tours. We’ll join you and help you find your dream home. Try to use us and not the listing agent or some other agent – the flat fee includes 20 hours of tours! If you use another agent for the home tour, there may be a reduction in your commission rebate.
5)Make an offer. We’ll research comparable reports, give advice on pricing and draft your offer.”
I don’t know, Craig. It would seem that your service involves the buyer finding homes from those that are available for sale and as shown “online”. If they come to you to buy one…do you ever say no…wait for a better one? I don’t know. Only you know that. Your site does not suggest that you do that…but maybe you do. On what basis do you say the choices available online are “inadequate” vs merely over priced by doing a CMA? At what point do you advise your client that they are looking in the wrong place entirely?
It seems to stop at if they want to buy it and it is priced right…everything’s a “go”.
P.S. The house listed for $700,000 that is “worth $550,000” will likely appraise and also show as worth $700,000 if you do a CMA. The one I’m referencing in this post anyway.
Where does that fall in your “We’ll research comparable reports, give advice on pricing and draft your offer.
Well, I think your point is made nicely if we compile a few quotes from your three comments above.
Yep, you sure don’t.
You feeling OK, Craig? You seem to be more sensitive than usual these days.
You said: “On the assumption that my practice falls within the “service provider
C&A- An interesting dialogue
to watch from the sidelines. J-
Yes, It seems.
Yes, Ardell you are way off base AGAIN with your assumptions on 500 Realty as well. I would like to know the company you are referring to as well. Red Fin most likely for Buyers and MLS Owners 4 sellers.
The fact is this. If the client is fortunate enough to work with a 500 Realty Agent they will simply get the best there is in the business. We put our OWN money on the line each and every month for investments and our opinions are that of VERY educated Buyers and Sellers.
There is no BIG PAY DAY for any of us and I would say (as of late) 70% of our Buyers have just decided to wait it out while continuing to look for GEMS. They know (as we do) the market is going no where quick and at best we can hope for is a flat line. Sellers need to sell far more then most Buyers need to Buy.
Highest and Best requests and back-up offers are rarely offered by our Brokerage. We just ask our Buyers to be patient and ALWAYS be ready to strike. We know when the REAL DEAL is on the table.
Even our 500 selling plans gets the seller everything you provide EXCEPT Open Houses.
The 6% model is SHEER Insanity but the alternative models, including Craigs, are looking far more attractive to the New Age of Buyers/Sellers coming down the pike.
🙂 No need to be argumentative. Many lower cost models do not purport to be “full service”. It’s not a “challenge” post. In fact that is why the mls has a “limited service” disclosure for some models. Limited Service is clearly out there, available, and for some but not all, they are PROUD to offer “limited service” at a lower cost as their model.
Ran into one the other day that said “If you have any questions about this home, call the seller direct, NOT the Listing Agent”.
Being fully transparent as to “full” is difficult. The point of this post is that ONLY the consumer can decide what “full” is…not you or I. For some people “less” IS “full” because it represents what they need. Less can be Full to Joe and not to Mary…
You can have a full small glass or a half empty big glass and still have the same amount in each at the end of the day.
I think, for the consumer sake, you should make a GIANT chart of whats included with your Buyer service. Let 500 Realty and Wa Law fill in your chart as well. Then the consumers can have a well-informed choice instead of assuming what we or they offer our clients.
You will be quite surprised to find that there is VERY little (if any) difference in service AT ALL.
What you will find is VAST sums of money go back to Buyer in the alternative models.
But how would I chart the “vast sums of money” that go back to the Buyer in the “full service” model?
Would you assume that as NONE in “the chart”? Would you want me to erroneously show that as “none”?
Absolutely not! You can have a category as to the PRESUMED amount that you saved your client as well as the PRESUMED amount we saved the client.
I think you, and Craig, are missing the point here.
Ray says: “You will be quite surprised to find that there is VERY little (if any) difference in service AT ALL.”
Not sure how you can say that when if you ask ANY home buyer or seller, there is vast difference in service from one agent to the next, let alone one company or model to the next.
My point here is if the consumer does NOT want “full service”, then they shouldn’t pay for “full service”. How they get full service if they do want it…is not the point of this post.
I think you and Craig are missing something here, and taking offense as a result.
The point of this post is PAY LESS if you don’t want “full service”. That doesn’t equate to what the cost of “full service” is…as that varies from one agent to the next. If the consumer wants someone who will merely do as they say in “customer is always right” fashion…they should not hire a “full service” agent and pay a “full service” price.
That statement…and this entire post…does not necessarily work “in reverse” for people who DO want full service. You are assuming an incorrect reverse meaning, as is Craig.
Yeah, I’d like to see what it is you provide other than a sign in front and input into the NWMLS. Do you provide key boxes or are your sellers opening the doors?
Are you asking that of Ray, Craig or Me or all three of us?
yep..Key boxes and our Agents open ALL doors and attend ALL inspections!
We even arrive at closing to attend signings. Most FULL SERVICE agents do NOT even do that!
You’re kidding, right?
How about Open Houses, Broker’s Opens, and door knocking. Is everything up to speed on that?
Now, you have been talking about GEMS!!!! for three years, even though we know there have been no GEMS!!!! to buy for three years. So what are you educating buyers about, other than not to buy?
Oh yeah, you found a couple of suckers to pay you way too much in rent, had some lease purchases that need to be unwound of litigated against, and some one actually paid way too much for one of your agent’s foreclosure purchases.
You know I like you, but when we put that all together it sounds more like a problem to me than a solution.
LOL…David…are you talking to me? I’m sure not. Put put the first name of the person you are talking to at the beginning so we can keep this straight.
You guys turn everything into a fight. 🙂
Actually we have found 11 “suckers” to pay us Fair Market Rent.
Lease Options do NOT have to be unwound so not sure what you are talking about there unless I’m entered the mind of David again for which we all know has no exit.
We actually have sold 7 Trustee Sale purchases in the last 12 months in 3 States. As for the buyers paying way too much that was up to their Lender to decide. We are all slaves to the Banks and their appraisals anyway.
Far more activity going on for us in Calif and Nevada.
Ray,
Doesn’t seem to make much sense to compare you to “a brokerage” or an “agent” since you are an “investor group” with a license to bypass the agent process.
We’re not really in the same business, you and I.
No sane person would enter into a lease option in today’s market place. That would be number one.
The second thing is why any one would buy a foreclosed home from an investor????
Fair Market Rent??? You mean some one actually gifts you money every month? What for? At the GEM!!!! prices, those renters can own. Why would they pay you rent?
You’re not making much sense here.
Here you go:
There are many reasons for a Lease Option for a Buyer and I will let Ardell tell you why people choose this way of buying and how it helps many people get into a home.
People buy homes from investors because they cannot buy the home the way it stood prior to the investor purchasing it. VA/FHA loans have many restrictions but I cannot educate you on that so I will defer to Rhonda for the sake of my time.
Lease option Buyers ARE the owners of the property and do NOT gift us anything. They just make the payments to us. We are the bank.
I truly thought you were in the business a long time and knew all this.
I do know that the option works in an appreciating market place. It locks in the price.
When the price continues to decline there is no reason why any one wouldn’t just save the down payment as an asset.
I have been around a really long time, and seen that now is absolutely the wrong time for people to get involved with these types of schemes.
Give your land lord nothing. Sue the heck out of your land lord and wait for the sheriff!
David,
An example of one of my clients who wants to do a Lease Purchase:
1) I have a client who fully qualifies to buy right now per the lender. She has to wait 8 months for another reason, per her attorney. I can’t give all the details, as those are personal to her, but let’s assume her attorney is correct.
Her lease is up and she doesn’t want to stay where she is. She doesn’t want to move for 8 months and then move again. She wants to Lease Purchase the place she will buy with an 8 month lease period to close at the end of the 8th month. I might write that up as a 12 month lease purchase to close as soon as the buyer is ready to close. The lease agreement to terminate at closing, whenever that may be within a 12 month period. This way she can close in 6 months or 10 months or 12 months, depending on the lawyers advice. At this point it looks firmly at 8 months, but I’d like to give it a little flexibility rather than a projected drop dead date of 8 months in case the attorney needs an extra 30 to 60 days at the end of 8 months…or finishes earlier than expected.
Where the price will be in 8 months is not a concern for my client, as they would buy it now at this price if they could close escrow now. They are not hoping to use the 8 months in the interim to 2nd guess today’s price. They don’t want to leave it open as a rental, as they don’t want to have to move twice. It could be a Lease with an Option to buy in her case. Won’t know for sure until we identify the property.
In this market it could take 8 months to find the right house and we’ll skip straight to buy. 🙂 But the point is that person has good reason why they want to do a Lease Purchase.
Anything that exists in the market place has a use…perhaps a limited use…but to suggest no one ever did a legitimate Lease Purchase in a flat to down market, would not be correct.
The first thing I do if someone wants to do a lease purchase is explain that they may be locking in a higher price than what prices may be at the end of the lease period. If they want to proceed on that basis, usually because they would buy today if they could buy today, then they are free to choose that method of purchase.
I don’t do them…only because finding a seller who is willing to do a Lease Purchase is MUCH harder than finding a buyer who wants to do one. In that regard, Ray and his group are providing a product and process that is in demand, with little or no supply. It is a needed commodity, and he is providing it.
The only potential problem I see, as I understand it, is Ray is the owner and seller of these properties in whole or in part. Not the Agent for the Buyer of the property. At best he is a Dual Agent or a Buyer’s Agent with an ownership interest in the property. Not sure how he handles the buyer’s representation when he is part of the group that buys and sells them.
Who is representing the buyer in the Lease Purchase is my only question. If Ray is both the Listing Agent and a part owner…I don’t think he can also be the Agent for the Buyer. Even if another agent in the company represents the buyer, the fact that the owner of the company has a partial ownership interest would need to be disclosed in the contract to Lease Purchase. But I have a feeling the buyers know that. Ray’s pretty straight forward about things.
Jerry,
In a lot of ways you are at an advantage in the discussion, as you likely have run across full service agents in your time a lot more than newer models that offer less than full service.
Not only that. The agents on Mercer Island tend to be a cut above as to their market. Not sure why that is, but rarely do you find agents on Mercer Island that are an embarrassment to their industry. That’s either a testament to the brokerages there, or to the owners of the homes who insist on competency.
Maybe a little of both.
Ardell-
Perhaps my long tenure on Mercer Island is the reason,
I have had many good RE professionals as friends and
cohorts over the years.
Self contained markets tend to be fairly efficient. In an industry where many agents answer the question “Where do you work?” with “Anywhere!!!”, Mercer Island still has a very strong component of agents who work…”Mercer Island”. Practice makes perfect, and there are many agents who specialize IN Mercer Island FROM Mercer Island. It’s one of the reasons I don’t work there. There is no void of talent there…no need for “outsiders”, except to hire “service providers” for cost effectiveness vs better skillset.
If someone can’t find a good agent on Mercer Island…they aren’t trying hard enough. The ratio of good vs not good there is much higher than in the industry generally.
What you say above pretty well applies to architects too as perhaps it should.
Agree. Reminds me of an awesome house by an awesome Architect…built in the wrong place. Often an Architect’s design is better suited to the place where he works most. Someone comes along…likes it…and builds “it” in the wrong place, destroying the future value of it in the process.
Great for “here” does not necessarily equate to “great anywhere”. That is true of agents…and houses too.
Ardell-
Here’s “an awesome house by an awesome Architect
His genius is apparent there…but I would prefer it as a retreat than a “home” for every day living.
Ardell- I especially liked your “Great for “here
Very true. In fact the home I mentioned was “Frank Lloyd Wright” style designed for “in the valley” and canyons. Someone saw it and asked for it to be built right near the ocean. The amount of exterior wood did not weather as well near salt water air as it did in “the valley”.
I’ve seen the reverse as well though. I sold a house where the owner brought a great plan over to a different area, and it sold for well over appraised value as a result. The comps were not really comparable, and it was a standout great house, and better than the others near it.
Most recently I helped a buyer of new construction slightly alter the given plan. Another option. I think in the long run that change will make it more competitive at time of resale, as that minor change made it better than all the other homes around it. There was zero cost for that particular change out.
Another example of “full service agent” is helping clients make those kinds of changes and decisions. Some are great changes…others not so much… 🙂
A Full Service Agent has to know a lot about houses…that’s why leaving everything up to “the customer” regarding property selection is rarely, if ever, “full service”.
Ardell- Your “A Full Service Agent has to know a lot about houses”
is so very true. And also when to call in an architect consultant- if
the need for same becomes apparent. Over these many years, I’ve
done this many times.
I have only seen your earlier works, Jerry. Do you have any examples of modifications done in the last 3 to 5 years?
Ardell-
I’m so glad you asked this question-
here’s a link to one of my “updating”
that I’ve been working on the last 2
yrs. We still have a way to go. Jerry
http://knol.google.com/k/jerry-gropp-architect-aia/updating-your-mcm-bargain/246qxuxd260sm/168#view
Thanks Jerry. Maybe you can send us pictures as the project proceeds. I didn’t quite “get” how you are implementing the “hardie panels” with the oversized windows. Are you expanding the size from what existed…or putting them in the additional/added space?
Ardell- As to: “Thanks Jerry. Maybe you can send us pictures as the project proceeds”-
I may well do yet another Google “Knol” on this project. As you see, I’ve done a lot of
these. You’d be especially good at these. Jerry
I have enough “side ventures”, Jerry. 🙂 I did a Google Knol when they were new…but I prefer places where people are. Kind of like that Frank Lloyd Wright house – great place – but a little “too remote” for my every day needs. 🙂 Google Knols are a bit off “the beaten path”.
Ardell-
As to your “Google Knols are a bit off “the beaten path
He made a point of Lease Option. You are talking about a Lease Purchase. He’s referring to the fact we went all over the difference a few weeks ago.
Oh alrighty as long as you posted such a long Lease Purchase comment, the price most assuredly does matter to your client 8 months from now. If the in the 8 months your client finds Ray paid fair market value at auction then raised the price, only to see fair market value decline in 8 months your client may want to pay less for the property.
They now have a monetary consideration that they gifted to Ray. They occupy the property. maybe the property will only appraise at the auction price Ray paid, after all that is the fair market value, it really shouldn’t appraise for a dime higher than that.
Your client is then presented with the possibility of a low appraisal, they would be out the money they gifted to the land lord, and the land lord is given legal control.
What a mess.
In today’s market place any economic down turn can be lethal in any options to purchase. We saw it in the 1970s, and 1980s.
Generally speaking, not as to Ray specifically, a Lease Purchase will sell at a price higher than fair market value, the same as a home sale contingency contract. Coming from the seller’s side of the equation, why would a seller accept a Lease Purchase or a Contingent contract? Because the price is usually over fair market value. The seller chooses to accept the contingency or lease purchase in lieu of dropping the price to where it will sell if it were an outright purchase within 30 to 45 days, “fair market value”. So by definition contingent and lease purchase should be in excess of fair market value to some degree.
I saw a question on Trulia awhile back asking if he could drop the price now that his property has sold on a contingent contract. He promised to pay a premium if the seller would wait for him…and when the wait was over, he wanted to drop the contingent sale premium out of the price. Doesn’t seem fair. But if the market price differential was greater than the forfeit differential…one would have to at least consider the option of losing the forfeiture amount vs closing at the higher price.
Same with a Lease Purchase. You have to factor in some potential for the market to move at the time you agree to the lease purchase.
At the end of the day you have to weigh the difference between what you will lose if you cancel and what you can pay for a similar house today, plus the cost of moving there. IF…the buyer can’t lose more than 5% under WA statute, then the risk is limited at 5%. Almost every purchase and sale has the potential for at least a 5% variance on any given day.
As to what “matters” to my clients…I don’t think there is one absolute right answer to what matters to all people. I have three daughters…what matters to each on any given day is never the same. 🙂
The problem is that we know prices won’t move, and have a greater chance of going down than going up. There is no reason to purchase, let alone a lease purchase.
From a purely investment stand point, and there is no other, it’s better to make the best long term lease you can, then save the money in an account.
This is now, in 2011. We aren’t in the 1970s, or 1980s, or even the 1990s, where we couldn’t predict the future.
We know now that the housing market is completely trashed, and even if it gets up again, it can be trashed again. So there is absolutely no reason to get involved in a Option for Real Estate scheme, right now. It makes no sense, and is a very sure bet to lose money.
As David says- “We know now that the housing market is completely trashed”- how true. Jerry
David you do NOT know so I will enlighten you. Buyers are protected from loss in Value on the Lease Option in that if the Appraisal comes in LOW at the end of the term the Seller MUST accept the appraisal on its face. The Lender is Agreed upon prior to entering the option by Both parties. A seller and Buyer cannot determine a time frame for the option without the input from the agreed upon Lender to clear up credit issues and show proper work history to secure the loan. If the Lender states it will take 2 years the Option is usually made for 3 (just in case) with no prepayment penalty involved. The one at RISK is the Seller who could face a lower sales price at the end of the term if prices continue to deteriorate.
You simply do not know but you continue to pretend that you do. Very Sad.
I ran across this article and it reminded me of David’s discussion with Ray:
http://www.biggerpockets.com/renewsblog/2011/09/16/value-contributions-real-estate-investors-community/
Adds some perspective to Ray, and the areas where he works with these lease purchase arrangements, which may be quite different from where David and I may work on a regular basis. As I understand it, the properties Ray picks up to this purpose are ones he may pick up for $50,000 or so.
I think David may be right…if the properties were in Queen Anne or Capitol Hill and areas David is most familiar with, but Ray is right for the areas where he is actually doing this type of work, which involves 3 states including Vegas last I heard.
When someone is Lease Purchasing a house for $75,000, the last thing on their mind may be whether or not it is really worth $73,000.
Sometimes two agents disagreeing is more about the differences of that method used in their differing markets, than the pure logic of the discussion.
You’re not tracking Ray’s business model.
Ray is neither a Real Estate agent or Broker, though he has a license to do both. Ray is the managing partner of an investment group.
It is actually one of the oldest Real Estate business models.
In the past it was a good, and viable way of making a living. Today the market place is much different. No one should get involved in these schemes.
You can’t have a guy like Ray saying in every other thread that people should walk away from properties, then turn around, and say some one should buy one of his groups foreclosures.
It makes no sense unless the business model is to collect as much as you can before you default, or default, and collect as much as you can.
The property, no matter what the price, no matter what the term, no matter what, is still locked at today’s non appreciatting market price.
Today, as opposed to ten, or twenty years ago a person entering an option is making a suckers bet.
It’s a scheme that died in 2008.
Yes the seller is at risk. So how does that benefit your investment group?
David…they are buying now…closing later. They are no worse off than anyone who is buying now. Your comment re NO ONE should buy a house now is a little off the charts. What if they are getting a short sale price vs a today market price in an area with few short sales? Is there NO one who should buy ANY house today? That’s a bit extreme, don’t you think?
What if they are downsizing and currently own…isn’t the loss on the lower priced house less than the one in the one they are currently living in?
Not everyone wants to rent, David. I know you know that. So what is this EVERYONE should rent stuff about? That’s like saying everyone should live where houses only cost $70,000…or everyone should live in a mobile home. Hey…maybe everyone should live in their car and save ALL their money. 🙂
You’re not paying attention to Ray. You are talking about your buyer.
Ray made the distiction of Rent with an Option to buy. “There are many reasons for a Lease Option for a Buyer.”
You are talking about a Lease Purchase.
Ray is talking about making a profit from the rent, and sale of the property, while you are putting a deal together for your buyer.
Ray is, by inference, claiming to be a Brokerage, but he is in fact looking for lead generation to involve more people in his type of “investing.” He’s a part of an Investment Group.
I have the Investment Property discussion twice a month, and my caution is that no one should be buying “investment” properties today. People should be very cautious when listening to a person who tells people to walk away from properties, and is also trying to get people to buy properties.
Does that make sense to you?
I never put 2 and 2 together on that, David. Yes, that makes sense. I don’t think he sees it that way though…but I see your point.
I will make a response even though my time is FAR better spent cutting my toe nails.
I’m the managing Broker of 500 Realty. We represent Buyers and Sellers here in Washington. We are VERY picky on who we engage with and as of late have been turning many clients toward RedFin, Findwell, and Wa Law. We must have a CURRENT Pre Approval and will not defer from that. We advise everyone if they BUY to at least choose a rebating Brokerage.
Whenever anybody BUYS any property they are making an investment. To say nobody should buy any property is absurd. As it says here from Day 1:
http://www.500realty.net/aboutus.php
Because we are investors and not just Real Estate Agents or Real Estate Attorneys we believe we know FAR BETTER then anyone on the TRUE VALUE of the property in question. We see what the properties are being unloaded for on many different avenues and with CASH lines we are able to facilitate many quick sales to our partners from many distressed avenues.
I do NOT expect anyone to understand what we do or how we do it but I will ALWAYS tell the truth unlike so many RE Professionals. When sellers are horribly upside down and need guidance we always offer it but will NOT sugar-coat it. We know the rights of the homeowners and the limitations of the Banks. As I have said many times the Loan Modifications in 2008- late 2010 should be called kick-da-can-down-da-roadifications. However, through current Mediations
I see hope. Through current Mediations 2011- forward we are seeing principle forgiveness across the Board but it takes tremendous DD and preparation by the homeowner.
BAC, WFC, and Chase are ramping up their foreclosures these next 5 years and homeowners in default need support now more then ever. The next decade will be HUGE at The Auctions and deleveraging will hit a fever pitch across America.
Life may take me in a different path from real estate by 2020 because so many other exciting opportunities exist but one thing for sure is I will always tell the truth along the way and buyers/sellers will always get what they expect from me when asking my opinion.
Ray,
It does seem to appear that more houses at the auction is a self interest wish for you, and encouraging people to stay in their homes and let them foreclose, vs selling short, is to your advantage. I have to agree with David on that one.
I do think you also believe that is what is best for the owner in the home and their families. But it does also serve your objective of buying them at foreclosure. Why don’t you buy them as short sales instead? Then the seller can stay AND avoid foreclosure, if you buy them the week before the auction. Why do you want to buy them “at auction” vs as short sales?
Maybe you don’t…maybe you do buy some as short sales. OR…better answer is seller may be more protected if it goes to foreclosure (and likely is) than if they sell short. As long as they get that recommendation from an attorney who reviews their personal details…and the lawyer says foreclosure is better than short sale, I see no problem with your wanting only “at auction”. In fact all of the “short sellers” I have referred to attorneys, have been told to stay and let it go to foreclosure. So that may be the obvious best answer for most people who are owner occupants.
The more houses at auction have nothing to do with us. In fact, we have been unable to buy hardly ANY home at Auction here in Washington due to increased competition, over bidding, limited selection, and postponements. We just attend for the occassional morsel to scoop up. Its still too early in the Trustee Sale parade and we need to see more blood-letting at the sales.
Deals (Gems) are everywhere. Timing is critical.
We never BUY short sales because we do not need to. There is far too much inventory coming and time is limited because we all have lives. We believe the short sales leave the Buyers/Sellers slaves to the banks and THEY get to call the shots. We believe the MONEY should direct the action and not the seller (chained to their banks) trying to unload their toxic asset.
You can’t have it both ways. You can’t point out all the reasons why Real Estate will continue to decline in price, then say it’s a good time to invest.
We are in a time of lateral trades at best.
Buyers, and sellers will be much better served by agents who know the market place.
Buyers and sellers are better served by agents who not only know the market place, but who are honest and avoid inflating listing prices in this market. Being upfront with your seller from the get-go makes the process so much smoother for all involved– from the appraiser perspective as well as potential buyers.
I just got an email from an appraiser asking about concessions, vs a phone call. I think that is the first time in 21 years an appraiser approached me in that manner. Was great! I was on my way back from an appointment when the email came in on my phone, and it gave me a chance to double check all the facts before I responded. Usually I remember as the sale was within 3 to 6 months, but for some reason the appraiser was asking about a closed transaction from January. I think he was including all sales from the neighborhood, even those over 6 months old, in addition to the usual comps.
He was very thorough, and while I wish that info was publicly available for all home buyers…I’m glad appraisers makes sure they track down concessions before considering the “sold price” of a comp. Many don’t realize how accurate appraisers try to be…and the extra mile they go to be certain.
Of all of the fields that touch a transaction…appraisers are often the best at what they do.
Ardell- As to yours above-
“Of all of the fields that touch a transaction…
appraisers are often the best at what they do”-
I certainly do agree with you. I’ve known many
of them- all very concientious- and methodical.
Jerry
I’ve never met an appraiser I didn’t like. But then…I haven’t met a lot of them. I try to stay out of their way as much as possible. I don’t believe agents should be “meeting the appraiser” and have rarely, if ever, done that. Most of my encounters with appraisers are when they are calling me about a home I sold that they are using to evaluate a nearby property. They are always very appreciative of my providing them with needed info. In fact so much so, it sounds like all agents are not as free with their time when it is not their transaction the appraiser is calling about.
A- As you know, It never hurts to do anyone a favor.
I’ve had my name put forward many times by those
who’ve been pleased by polite responses on my part-
as my father taught me- and we’ve taught our kids. J-
I figure they can only be accurate…if we give them that kind of info, which is not available publicly. I do wish concessions were a required disclosure on all sales. Some mls systems have that requirement…but I’ve only heard of 1 or 2 in the Country that do.
I have never met an appraiser and I think I want to meet one. I guess appraiser is the best person to ask to get the accurate information you are looking for. Thanks for the informative post, I love reading your articles A.