FINANCE - REAL ESTATE - 2

1. Top 7 Questions to Ask a Buyer Agent

Not all that long ago the concept of buyer agency (a real estate agent representing the buyer only in a transaction) was relatively uncommon to the real estate industry because, at the time, most agents represented the sellers of property or both parties.

Buyers of real property were in need of a real estate professional to represent their needs exclusively and buyer agency was born. Fast forward to today, there are tens of thousands of agents who represent buyers in real estate transactions so here are seven questions to help you find the right buyer agent for you.

How many homes have you sold in the past year? - The real estate industry is home to over one million practicing professionals and each agent can choose whether to work part-time or full time.

Sometimes you have an agent who may be licensed to help friends and family sell real estate and other times you have the full time professional who assists in the buying and selling of dozens of properties each year. Find out how many properties your buyer agent has participated in the sale of over the past 12 months to get a better idea of how much experience they have in today's real estate market.

How many times have you represented the buyer only in a home sale over the past year? - The representation ratio is as important to the agent's ability to help you as their overall sales experience. Ask your buyer agent how many times they have represented the buyer only in a real estate transaction because buyer representation and seller representation are two very different concepts.

What area do you sell the most homes? - When you begin looking for a home you will need to narrow down where your ideal living areas will be. Using an agent with extensive knowledge of the area you're most interested in will aid you in finding the right home much faster. There are many real estate agents who specialize in one county, city or even one town!

What's the most you have negotiated off a home's price in the past 12 months? - Part of being a buyer agent is negotiating the best price possible for your buyer client. When interviewing your buyer agent you should know what their most recent successes have been for other buyers because there's a very real chance you will see similar results.

There are agents who constantly push for the maximum possible price reduction before you purchase a home and there are also agents who will be happy if you buy a home at asking price without negotiating at all. It's your money and future so knowing their negotiating success is crucial to your investment.

What type of incentives are being offered by builders and homeowners right now? - During down markets you will find a lot of home builders and sometimes even homeowners who offer incentives to entice you to purchase their home. Incentives can range from the seller paying closing costs and HOA fees to car leases and free appliances.

Do you have a network of contacts that I can use to make my buying process easier? - Who your buyer agent knows really does matter. What happens if you need a new home inspector at the last minute? Having a solid network of contacts will help streamline your home buying process making it much less stressful for you.

How quickly can I expect a response from you? - A big concern for home buyers is what is going to happen once you do start the home buying process. Will your agent be available by phone, text or email? Will you have to wait three days for a response? These are important questions to ask before you choose your buyer agent.

Knowing more about your buyer agent will make you much more comfortable about working with the agent and give you a better relationship to candidly discuss aspects of home buying like sale price, contingencies and what to expect throughout the transaction.


2. 8 Ideas to Improve Your Property and Boost Value

To succeed at real estate investing, investors must create value in a property.

With successful real estate investing, negative first impressions don't discourage an investor's enthusiasm concerning a property, and investment decisions aren't made on whether the investor likes or dislikes the property. Instead, the successful real estate investor judges the property's potential profitability, and makes a determination, based on thorough market research, whether he or she can spend some amount of money to boost the value of the property perhaps by double or triple.

In this article, we'll look at eight improvements you can consider making to a rental income property that could easily boost the value of the property and maybe get you a great return.

1. Clean the Property

Clean units attract higher-quality tenants, and investors pay more for properties with better tenants because better tenants mean lower risk, less trouble, and surer rent collections.

Rental units that aren't meticulously maintained turn off top-quality renters. They go elsewhere, and instead, those tenants willing to accept units with dirt-encrusted windows and light fixtures, stained carpets, grease-layered stoves, and dust-laden window blinds flood in and likely treat your property as a pigpen.

When you display pride of ownership, you not only attract better-quality tenants, you show your tenants the degree of cleanliness you expect. Likewise, when you do plan to sell the property to another investor, a spotless unit will normally sell quicker and at a higher price.

2. Update Color Schemes, Patterns, and Fixtures

You can quickly add to the appeal of your units with modern color schemes, or special touches like chair moldings, mirrors, fancy plumbing, light fixtures, or patterned tile floors. Don't go overboard, the rule is to add just the right amount of sizzle to make your units stand out from the competition.

3. Create More Usable Space

If you can create more usable space at your property, you will increase its value. Keep asking yourself, "How can I use or create space to enhance sales appeal or generate more income from these units?" Maybe you can convert an attic, garage, or basement to additional living area, or perhaps enclose a porch or patio, add a second story, or build an accessory apartment.

Also, think about remodeling the living area within the units so every storage and living area within the apartment is sized proportionally to market tastes and preferences. You might be able to reduce the size of large rooms by adding walls or separate areas, for example, or perhaps you can combine small rooms to make larger areas. Tenants and investors are often reluctant to pay top rents or a top price when room or floor areas are perceived as "too large" or "too small".

4. Create a View

Whenever you can find properties that fail to capture a potential view of a lake, ocean, mountain range, park, or woods, you have discovered a great way to add value to a property.

5. Capitalize on Creative Possibilities

Improvements that add value begins with creative imagination. Rather than rushing into slapping on a fresh coat of white paint and laying new beige wall-to-wall carpeting, think outside the box and try to imagine some creative possibilities. You might be surprised with the result of reaching beyond commonplace ideas.

6. Eliminate a Negative View

It should go without saying; some buildings devalue because they look out directly onto an alley, another building, or perhaps power lines. If you can eliminate the negative view and convert it into something attractive, perhaps by changing the location of a window, some creative landscaping, or by adding decorative fencing, you will add value to your property.

7. Amplify Natural Light

Tenants and investors prefer properties with lots of natural light. Consider adding or enlarging windows, swapping solid doors with glass-inlaid doors, or installing skylights. Likewise, you can make the units appear more spacious with lighter colors,carpets,and window coverings, or by tearing out that low, false ceiling.

8. Reduce Noise

Tenants pay a premium for quiet. Consider insulation, caulking, trees, shrubs, and soundproof windows to enhance quiet. The more you can muffle or eliminate outside (or adjoining apartment) noise, the better. In fact, before you buy a multi-unit building, test the soundproofing between units. If you can hear a television, people walking or talking, or toilets flushing, beware. Unless you can figure out a solution to the noise problem, you will hear multiple complaints and contend with high tenant turnover.


3. Future House Prices are Dependent upon Future Loan Terms

Every homebuyer operating in the deflation of the housing bubble needs to consider what loan terms will be available in the future. At some point, most buyers become sellers. The future buyer will likely need to borrow most of the money necessary to complete a real estate transaction. The availability of credit and the loan terms this future buyer will face is the primary determinant of the price this buyer will pay for real estate.

During the rally of the housing bubble, buyers did not concerned themselves with the day they were going to become sellers. Why would they? There was an endless demand for properties, and buyers were paying whatever was asked. If they wanted a price above current market values to pay off a loan, all they had to do was wait. Once the bubble burst and home prices started to decline, the conditions people were accustomed to during the rally dramatically changed.

Anyone considering buying a home in the aftermath of a crash should think about the buyer who is going to buy their home from them at some point in the future, and more specifically, what debt-to-income ratio and loan terms this future buyer will utilize. This is important, because the amount of money this take-out buyer will pay for the home is completely dependent upon these variables. At most, a house is only worth what a buyer can pay for it. In a declining market with few qualified buyers, many of those qualified buyers will only make offers if the deal is exceptional or simply wait for further price declines.

In a market environment where prices are detached from fundamental valuations, bubble buyers face a daunting challenge just to break even on their purchase when the time comes to sell it. A future buyer must have favorable borrowing terms allowing for a high degree of leverage or they may not be able to borrow the prodigious sums borrowers during the bubble rally were able to obtain.

If a future buyer is not able to borrow as much with their income as bubble buyers, then wages must increase over time to permit future borrowers to borrow the same sum and allow a bubble buyer to avoid a loss. Unfortunately, it will take many years for wages to catch up to bubble prices. Even when this occurs, and a seller can recover their purchase price, inflation will have diminished the value of those dollars. If the prices are adjusted for inflation, many bubble buyers will never see an inflation adjusted breakeven price.

For all our wisdom and collective experience, none of us knows what the markets will do next. Like an ocean current or a raging river, a financial market charts its own course. It is fickle and feckless and flows without regard to our hopes and dreams. The ebbs and flows of financial markets are meaningful to us, but in reality they are just movements in price; nothing more. Price rallies make homeowners blissful and renters bitter, while price declines make homeowners gloomy and renters gleeful. These feelings and emotions are independent of movements in price. The market just moves, that is all it does. It is benign, yet dangerous; it is indifferent, yet demonstrative; the market is a paradox which we must simply accept.

Despite the difficulty in market forecasting, many who have examined the residential real estate market point to continued declines through 2009 and beyond.