Seattle Real Estate, Fixer, Real Estate Seattle

The simple, cheapest, and greatest return you can do with your property is clean it. We’ve been cleaning properties for forty years. The second thing is giving a property a high quality paint job. We have provided painting services for forty years.

Keeping your yard up may be something you think is for your neighbors, but it also adds to the value of your property. Every neighborhood has a stand out yard where some long time resident has trimmed the trees, bushes, and mowed every two weeks.

Simple things that are cost effective, that you can do yourself add a lot of value. You can take the most run down piece of poop, and clean it until it looks like something. You can also replace rot, as needed, that adds thousands of dollars in value. Replacing supports, or boards on a deck can help you keep that amenity from falling apart.

Sure there are things that need to be done, things that need to be replaced, or remodeling maybe will give you a return, but simple things, common sense things, are what pay the most.

In the past twelve years from 1998 to 2010 properties sold without much help. The remodeling was done with a quick sale in mind. Paint jobs glossed over some of the defects a property might have , and new carpets were as cheap as new construction. Even the big remodels today are being done with a short life span.

There are very few high quality restorations going on. What I see every day are properties that need fixing, little things that need repair, handy man kind of stuff, on a larger scale.

What I think is that home, properties, should get on a maintenance schedule like what we do for house cleaning. Take small projects done over the course of time, months, or years, and set up an affordable way to get those done.

Painting is especially getting to be a sore spot for me. Many properties have production paint jobs sprayed out quick with low quality paint that looks faded. Mildew is especially bad this year, with the amount of water we have crawl spaces, and basements have been repeatedly flooded. Those projects that could have, or have been waiting, all these years, should get on a program to be resolved.

In my opinion the days of doing it all at once, or having those big plans of how to fix your property are winding down. It’s possible we should all look at maintaining what we have.

Three hundred nine thousand dollars will buy you a tear down in my neighborhood. That’s $309,000. It’s a tear down, there is no hope for the structure. The Real Estate agent was rattling off the improvements the current owners did, but the house was never built to last. Some old guy, it’s always an old guy, built it during some very lean years, maybe out of what he could find.

The back yard is spectacular. The current owner certainly made an oasis of the large back yard with Southern exposure. That part is worth keeping. The rest of it has to go. It may have a foundation to work with. There is no basement, just a tall crawl space.

Using the rule of three the house built on the lot would need to be at least a milion dollars. The neighborhood can support that so maybe there is a chance for a sale. I was just shocked by the price.

One of the first things to consider is that no one likes to carry a low offer to a property owner. In todays market it will become more normal. The real estate blogs are filled with advice on how you should proceed. Sales data, even historical data will be of little use.

What people forget is that in real estate there have always been formula buyers. Some buyers will buy anything that fits the formula they have. Number one is the ability to pay off a property quickly. If you have a business plan in commercial real estate you follow that. Residential purchases can work the same way.

A young couple that I worked with ten years ago made an offer on a house that was as much as they could afford. They were tired of looking at properties, and just took the chance. It turned out the seller was making an aggressive price reduction if the property didn’t sell over that week end, they had to be in Boston in a month.

You never know what the circumstances are for the seller of a property. Low offers will become normal this year. What you should do is have a plan, to go along with the offer. You’re also going to need an agent who can present the offer well. You need some one to go to bat for you.

An investor who made an offer on one of our properties was making twenty offers a week. His agent was simply faxing in the offer with no follow up. I, as a comparison want to present my own low ball offers, at least to the agent, or the agents broker.

In my opinion no one should be offended by getting an offer from a qualified buyer. Getting a pre approval for over the loan limit on a specific property helps a lot in having the offer considered. Your ability to close a loan will be a huge factor this year. All your negotiations should be up front, get an inspection done as soon as possible, and be willing to walk away.

Never nickle and dime a deal once you have it. Just assume that the house need at least $5K worth of work. You’re going to want it your way, anyway, so just figure you’ll be doing repairs. Become a serious buyer who is there to close the deal.

Real Estate is an investment. Think like a professional.

Most people look for information about Real Estate online from Real Estate sales sites. Big Real Estate companies put home searches on line so you can “shop.” Those sites also provide a forum for people to discuss the Real Estate market.

The internet is filled with opinions, this blog has my opinion. Another site that had an opinion was called Housing Panic which closed a couple of years ago after the housing market crash. The writer predicted the crash and followed the demise. He has a new blog called Soot and Ashes.

In an interesting twist last month the author return to the site, that now sits idle, with a prediction. He says now is the time to buy Real Estate http://housingpanic.blogspot.com/

He doesn’t really present a compelling reason, he’s simply saying to buy. In my opinion he is presenting a view point I had when I set up this blog. The Real Estate market declined sharply so that there is a panic about owning property.

I just thought it was interesting that his opinion would come out at the end of last year, and will follow what he has to say. My conclusions may be different, but the idea is still the same. You can buy now, buy well, if you make a solid financial decision.

I just finished cleaning out a place today that is just a disaster. It sold for twice the price it is worth just three years ago. There is no way it will be standing by the time the 30 year loan is paid without at least $70K worth of work. There is a massive crack in the basement that has a crude patch; over in the other corner is a sump pump.

The exterior was covered in stucco. That had to have been done in the 1950s to early 1960s because it is well done. Most of the windows are also new vinyl so my guess is you could see the slippage by the windows being crooked. There are some other fixes that should have told the new owners something was wrong.

We can fix the property by stripping the stucco, then jacking up the house about two feet. We could repour the basement floor or jack hammer it out. I’m in favor of the jack hammer, and adding an interior drain field.

The foundation itself is a little rickety. It could be repaired, I suppose, but as long as we’re excavating we might as well do the exterior as well. We’d add some footings, then pour a substantial foundation wall, or supports as needed so we could expand the attic into a master suite.

So we can fix it, or call it what it is.

A lot has been written about the reluctant land lord, or people who paid way too much for a property that are now trying to rent out the property to wait out the Real Estate market. The Real Estate market is declining and will continue to decline until we hit an equilibrium between rents, and mortgage payments.

Owning property is expensive if you don’t know what you are doing. Some property managers don’t know what they are doing. Some deliberately have an eye on owning the property they manage. Either way it seems to me that a lot of rental properties are in very bad shape. Some of the properties are tear downs that have a negative cash flow.

My opinion is that most of the properties being managed as rentals are a part of the shadow inventory of properties for sale. There was a time when Real Estate agents would solicit out of area property owners for listings. Now it would make more sense for individuals to make offers directly to property owners.

My brother in law is in a perfect position. He has rented a place for about four years from a gentleman who has owned the property for decades. Even though the owner has a rental income from the property he also has to maintain the property. It would be better for him to pick a price based on today’s over inflated property prices, and sell on a 30 year contract.

In a lot of discussion that I’ve had in the past couple of years people have told me that banks are overwhelmed with foreclosures. My contention is that banks know exactly what they are doing.

The last short sale I did a couple of years ago was with a bank I had dealt with before. There was a group in the Loss Mitigation department that I had worked with in the past, so I called them to ask what was going on with my deal. The person I knew told me that the bank had cut staff, and stacked files. He had 130 on his desk which was about twice the normal amount.

Our conversation was very clear that banks weren’t going to let anything slip by them. There was no panic on the banks end. We discussed the Brokers Price Opinion which was done by an assistant to a local agent. She brought a higher value than I expected. I was told that the BPOs were only to check the condition of the property, which I kind of guessed.

On this short sale the focus was on the seller’s ability to pay the mortgage. There were three people on the Note, so no amount of hardship was going to get the short sale approved. All three people had jobs so we would see what recourse the bank will take.

The impression that I came away with was that the bank knew exactly what they were doing. Our conversations about the property were well rounded. There were no surprises that I could present that weren’t countered with a reason.

This article lays the ground work for the next, which is why this foreclosure process is working to the banks advantage, in my opinion.

The people who frequent Foreclosure Auctions are professionals. They make money by buying, and selling foreclosed properties. There is a new batch of “investors” in today’s mix. About two years ago I wrote about a couple of groups who guide investors, or investor pools. Dean Street at John L Scott is the grand master.

Investing in Foreclosures is a combination of skills. You have to know your product as well as the numbers. It used to be, for a few years, that anything you bought you could sell. Usually there were problems with the properties you were buying, but some one, for the right price, would buy it.

Today’s auctions have a lot to choose from. A wide variety of properties come up for sale. There are also more people who are shopping, and willing to pay a little more for a property to keep or pass on to a secondary group of buyers. In that way some good quality properties come up for auction, and get a fair price.

If you are an investor that can be a challenge. It would cut your margins, or the profit you might get. At the same time properties that require more effort, that are more in need of fixing, get passed over by the crowd.

It’s good to have product knowledge. There are contractors out there who are looking for something to do, and some have taken to the auctions. This is also a good place for all cash transactions if you are looking for rental income.

This could take a while because there is a lot that goes on at the Foreclosure Auctions. You need a lot of information. There are groups that sell that information. Some individuals keep track of the information for themselves, and investment groups. As public records become more accessible on line some people think that the information has gotten to be easier to get. In fact in many cases all that has done is complicate matters.

The other thing is that information means absolutely nothing if you don’t know how to read it. There is a lot of experience in those people who attend the auctions on the court house steps. Many fortunes have been lost over the years. Probably more has been lost than has been made, because that is the nature of the auction, some one loses a property so some one else can buy it.

I’m going to have to do a series of these articles because there is a lot to know.

Just for the basics, the foreclosure auction is on the court house steps, it is a legal process, and it is all cash paid on the spot. All of those people standing around carry up to and including $500K in cashiers checks. Most carry about $200K, but you never really know what will come up that day. A list is posted, but many are pulled back because of some last minute wrangling by the bank, the previous owner, the IRS, or some creditor.

It’s a lot of drama in a day. The next post will be about the foreclosure process, in general terms. There are a lot of foreclosures these years.