Real Estate Terms Your Clients Don’t Understand

October 28, 2014

When a transaction tanks, there is usually one common culprit to blame: miscommunication. Too often clients and customers trade in lingo they don’t actually understand. While you may be telling them the truth, it’s going over their heads and pointing you towards transaction disaster.

In hopes of helping you avoid the derailed deal during this year’s “make it or break it” market season, here are five terms to go over early to avoid a negative review or, even worse, a deal gone down the drain.

Good faith Estimate

In a dream world, there are no surprises on the way to closing. Here on planet earth, anything can change at any time. A frequent stress point where clients get caught in the cross-hairs of the sometimes inevitable is the Good Faith Estimate.

Most clients see and save towards this magic number that tells them what they’ll need ti close. However, make sure your buyers pay attention to the last word in Good Faith Estimate. These “estimates” can vary drastically when it comes to closing time, and they should probably save with padding in mind to make sure their deal doesn’t fall apart at the end of the road.

Preapproval

Too often clients think that their preapproval is as good as money in hand. Yes, it foes give them permission to shop, but they need to be aware that changes in their habits or the market can affect their ability to close. Most people know not to buy a car while shopping for a home, but they may not be thinking about closing rhe deal fast to avoid getting caught on the downside of lending standard or market value changes. They need you to make it clear that they don’t have the loan until they’ve closed, and that means both being conservative with their credit and time.

The “Comp”

On the seller’s side, the most common catchphrase that trips your clients up is the almighty “comp.” A “comp” is one comparable property; and yes, they are helpful when it comes to pricing.

You clients, however, need to understand the difference between the comp and a comparative market analysis (CMA). Your CMA take into account a number of factors, and if you don’t take the time to explain them properly, you client will lean on sites like Trulia or Google as an authority for pricing advice.

When you recommend a pricing strategy, show clients what road you traveled to get there. They’re much less likely to challenge your recommended price.

MLS

In the mind of many seller clients, the MLS is a magic place where properties go to get sold. You know that a ton more goes into marketing.  To make sure clients don’t misunderstand what a multiple listing service is, show them your entire property marketing plan. This has two major benefits. One, you keep them from sounding like a dunce. Second, you prove your value by showing them all of the resources and tools you use to move their home.

Agent

The fact is that most people hire an gent without having a clue as to what agents actually do. If you let your clients get this wrong, you risk both the deal and your reputation.

There’s a lot of conversation around whether or not agents earn their commissions. Showing off things like your marketing plan, positive recommendations and reviews, and other resources that break down what you do in your listing or buyer presentations can go a long way.


Dealing With Unpleasant Negotiators

October 8, 2014

Selling your house yourself can be intimidating if you’re doing it for the first time. Here’s how to deal with unpleasant neighbors.

Sometimes you encounter someone who is not going to be happy unless he maneuvers you into accepting less than your home is worth or doing things for his benefit that are unreasonable. Then what? Well, first let’s discuss the most common forms these type of people take and what to do with them.

One frequent form the unpleasant negotiator takes is the person who tried to intimidate you and disparage your property. Red flags should go up if someone works hard at trying to get you on the defensive. I’m not talking about an occasional negative remark. What I’m talking about is a whole string of them and the attitude that goes with it. Even if it’s cloaked in the appearance of classic good manners and charm.

The second form an unpleasant negotiator can take is called the “nibbler.” You think negotiations are over and the two of you have come to a mutually acceptable agreement. Then at various points as you progress toward completion of the sales process, the other person starts to “nibble.” They usually pretend they had no idea that the carpet needed attention, or the roof needs replacing, etc, and use that as an excuse to change things. this process can and does continue tight up the point the deal falls apart, whichever comes first.

There is a civilized way to cope with these people. Don’t hop into doing it until you really feel it is a nibble or you could become a nasty negotiator yourself. However, a nibble can be dealt with by inquiring blandly, “If I do that for you, will you do “fill-in-the-blank” for me?” Your goal is to convey to the nibbler that each successful nibble will cost him something. Make it something significantly relative to the nibble request.

If you think fast on your feet, you can always say, “I’ll get back to you on that.” Do not allow yourself to be rushed if you think best when you mull things over. Stay calm and thoughtful. No one can force you to make a sale or purchase that’s not in your best interest. Keep evaluating the situation, and stay open to the possibility that you may need tot walk away until the sale is complete. That way you won’t force yourself to do what’s not in your best interest either. It’s not easy, but it’s very simple. Stay in control of yourself.

The Walk-Away Secret 

Be willing to walk away if the if the personal is being unreasonable and you’re unwilling to meet their demands in order to make the sale. There is power in being willing to walk away from negotiators and is one of the strongest negotiating skills. It doesn’t require being mean and nasty. However, what it does require is that you not consider your home sold (or bought, for that matter) until all negotiations are really over.

Think about it. You put yourself in a “losing posture” with a nasty negotiator the moment you emotionally consider you house sold. So long as you’r willing to walk away, you have the power that is as strong as the buyer’s wish to buy. If such a “deal: blows up, so be it. You weren’t going to get what you wanted from it anyway.


Checklist for Buying a Home

September 29, 2014

Even if you do get a home inspector, look for these things yourself before buying a home. Some home inspectors don’t look for these items. Some never even go into the house. Here is a checklist you should always look over before buying a home.

Mold Test 

The number one problem faced by new homeowners is mold. You read about it in the news. Every week I get a call from an attorney gathering info for a lawsuit against a home seller and their real estate agent. the topic is always mold. You can get inexpensive mold test kits online or in home improvement stores.

Gutters

The number one cause of mold in a home is improperly installed or damaged gutters. They allow water to pour into the walls. Water causes damaging mold to develop inside the walls. Make sure the gutters are level and not bent.

Mud on Walls

This also goes back to gutters. If the gutters are undersized, excess water pours over the edges of the gutters and onto the ground. This splashed mud against the outside walls and the excess water also seeps into the foundation of the house.

Foundation Vents

These vents are designed to let air flow through crawlspaces. This house may not have a crawlspace, but if it does, check the vents. Do they open and close? Some builders slop concrete on them and they are permanently opened or closed. Potential mold and wood rot problems can result.

Sump Pump

A sump pump is there to remove water from your basement. They are critical. If there is a sump pump it needs some water in it anyway. This standing water can lead to mold and termites. Always make sure the sump pump is up to date and working properly.

Do the attic vents work?

Is the attic hot? Just because the attic has vents this doesn’t mean they work. This is often very over-looked and causes headaches when the motors rust or burn a fuse.

Basement Walls

If you see build-up on the blocks in the basement it means there is probably long-term water problems. That build-up is minerals deposited over time by drying moisture. Not a good sign!

Water-spots on ceilings

These always hold mold. You only have 48 hours after a leak before mold begins to grow. After that drying won’t help. A LOT of people will paint over water spots, but if you look closely they are easy to spot. Be aware!

By all means, hire a home inspector, but make sure the inspector goes inside the house. This may sound silly, but you’d be surprised how many don’t. Always use precautions when buying a home. Better safe than sorry!


Biggest Real Estate Investing Mistakes

September 17, 2014

It is impossible to call yourself a real estate investor if you have not made a mistake or two along the way. Sadly, most people don’t even realize the mistakes they made until after several years. If you bought a home and kept it as your primary residence for 30 years, you might not care about mistakes.If not, you will come to know about your investing mistakes sooner or later. The role of research and due diligence is of utmost importance in any real estate transaction. It is important to know your mistakes early and avoid those mistakes in the future.

Impulse Purchases

It might sound a bit odd to new investors, but impulse investing is indeed a common mistake. Once you’ve made your decision on what kind of property you’re looking for as well as the areas you’re most interested in, budget enough time to not only do your research, but to do it two or three times. Finding a deal which requires immediate action isn’t a rare situation for investors, but when you fail to achieve the required research it can turn into an investor’s nightmare. No matter how good the deal, take your time and think it through. Deals that are too good to be true often have hidden problems than can ruin your margins.

Treating Optimism and Potential as Reality 

Long gone are the days of what we might “investing on easy street.” As the market continues to change and force investors to adapt, there are still many who confuse their positive mindset with a factual reality and the mistake can turn into big trouble for them. Keep your momentum and positive mindset, but always examine investments cautiously with the worse case scenario first in your mind. Very few would be upset with earning a bigger ROI because they were conservative with their numbers; but virtually everyone would be disappointed to earn a lower ROI because they were too optimistic.

Buying Real Estate Without an Exit Plan

Investors know the importance of understanding the current real estate market, knowing the direction of the current trends, yet a very common and costly mistake is not knowing your exit plan from an investment. For many investors, buying properties in need of rehab relies on the ability to sell the property afterwards. This would be an exit plan, nut what happens if the property doesn’t sell, or problems prevent the sale from happening in a timely manner? Having your capital tied in a single investment could not only potentially kill your profit, but prevent you from being able to purchase other properties that might be available.

Location of Your Real Estate

It’s not only real estate investors that should understand the important of location. It’s what drives the real estate market and failing to research and understand the neighborhood and location of your investments can often be the death touch on some investments. Learning how to not only assess the property but also the location is what can keep investors further in the green instead of going into the red.

Potential for Converting Your Real Estate into a Rental Property 

If your spouse does not work or your job is a temporary one, make sure that there is a demand for rentals in your location. In case of an emergency, you can convert your property into a rental instead of going through a foreclosure. You can either act as a landlord, or you can fire a property management company. Many homeowners have saved their distressed homes from foreclosures by becoming accidental landlords.

The Renovation Trap

If you decide to invest in a property that either needs improvement or would benefit from some updates or upgrades, know how to estimate properly. This is especially true for beginners who have not yet gained the experience of rehabbing an older property. As the real estate market continues to improve across the country, finding great properties for flipping is increasingly harder. When and if you do choose to do so, know the metrics and ensure your estimates are conservative, so you don’t leave the deal with a loss instead of a profit.

Most people don’t learn from other people’s mistake, they often have to learn it personally, but hopefully these are some mistakes you can save yourself from making.


Learn Great Ideas For Selling Real Estate

September 3, 2014

Selling your home can be a daunting task. There is so much to do and so much to think about. If you are feeling overwhelmed by the process, or by just the thought of it, this articles has some advice for you. Here are some great tips and ideas for ways to make the whole process easier. 

Decorating the inside of your residence with seasonal items can make selling your house easier. Choose a few inexpensive products, such as window treatments that display the colors of the season, and complete a mini-makeover on your home. This will make your residence look fresh and well taken care of, giving the buyer a more favorable impression of the property. 

You should hire your own real estate agent to represent you. An agent that works for both the buyer and the seller can possibly have conflict of interest. Ask friends to recommend an agent to you. Interview several agents and make sure you are comfortable with the person you choose. A knowledgeable agent is an invaluable resource. 

Staging your house can be one of the most effective tools for selling in a different market. Keep your house as neutral as possible, removing personal pictures and painting walls an ivory, light brown, or off white. This allows a potential buyer to picture themselves as the homeowner, rather than you.

When your real estate agent calls to schedule a showing of your home, make sure to the home is always neat and tidy and smells good. Warm up the atmosphere in your home to convey a welcoming environment to all potential buyers, to help them visualize the house as theirs. 

To persuade a serious, qualified buyer who is on the verge of accepting your offer to take the plunge, let them literally sleep on it and get the dotted line signed! 

To negotiate a real estate purchase, you should research the area around the house before making an offer. Finding out what other recent sales in the neighborhood have actually sold for gives you better information in deciding what a reasonable price is for the house and gives you more strength with the seller.

To help you buy or sell real sate, you have to find an agent that knows the market very well. If not, they may suggest that you sell at a lower price than you should.

Instead of defining market value as what buyers are paying for similar homes in your ZIP code, think of it as what buyers are able and willing to pay. When determining selling price, be sure to make allowances for the availability of short sale and foreclosed homes. A house may be worth it, but only if prospective buyers are willing to pay the price. 

Selling your home doesn’t have to be the nightmare that some people experience. That’s why this article has given you such great advice. There are ways that you can increase your profit, decrease the time it takes to sell and keep your sanity in the process. Hopefully this article has shown you that. 

 


How To Transition Into Real Estate

July 21, 2014

Whether you have always had a passion for sales or if you simply want to get into the real estate market for your own future,  transitioning to real estate can be done in less than a year with enough studying, dedication, and preparation.

Consider Your Area of Interest

If you have an interest in working in commercial real estate or if you are drawn more towards residential properties, it’s important to consider your own preferences before you decide to pursue a career in real estate. Knowing whether you prefer representing commercial buildings or if you want to help families buy and sell homes can guide you in the right direction to get started with  accomplishing any goals you have set.

Read Books and Research

Begin the transition into real estate by investing time in researching and reading books by real estate moguls who represent properties you are most interested in. Not only will you gain wealth of knowledge from various bestsellers written by professionals real estate agents who are well-known in the industry, but you will also gain the ability to better connect with potential clients you want to work with professionally.

Get Certified

Taking a real estate agent course and getting certified in you local city or state is often required for you to legitimately begin listing homes, showing them and assisting others with their own hunt for any type of real estate. Research various certification courses and requirements you need to complete in your state before you begin forming your own agency or applying to work as a professional real estate agent at a company near you.

Build a Name For Yourself

Building a name for yourself once you enter real estate is essential, regardless of whether you have chosen to specialize in commercial or residential properties. Building a name for yourself can be done with an official website, local listings as well as by developing an online presence with the use of social media accounts. Having Facebook, Twitter, and other social media sites to represent yourself professionally is a great way to showcase and feature properties you are currently representing or that you have represented in the past.

The more you update and get involved with locals who are interested in real estate themselves, the quicker you can build your portfolio and being making a name for yourself.  Regardless of whether you want to help others invest in chain commercial buildings, warehouses or even the homes of their dreams, making a connection with any potential client is a must if you want to be successful within the real estate industry. If you don’t have clients, you don’t have anything.

Having an idea oh how to go about transitioning into real estate as professional is a way for you to feel more confident and comfortable even when you are working in a highly-competitive market/environment. The more you know about real estate prior to working as one yourself, the less likely you are to encounter hangups when seeking out new clients and building a professional reputation for yourself.


Myths About Real Estate

July 16, 2014

There are countless things that everyone “knows” about real estate.Considering that a house is usually the biggest big-ticket item the average person will ever buy or sell, it would be wise to spend some time searching the truth and the myths.

Compared to buying, renting is always a financial loss:

This is the most popular real estate myth. Buying only produces results when you own the home for several years. Every real estate market has it’s ups and downs that can’t be predicted. Transaction and maintenance costs of a home can require seven or more years of ownership to even break-even.

A house is a good investment:

If you were buying or selling a home during the big market crash of ’08, you know this to be untrue. Breaking even was about the best case scenario you could look for because houses weren’t increasing in value in a downward market. The growth of home prices derives almost solely from inflation. A house does not produce anything; the price can rise only with the purchasing power of buyers. If there’s no buyers, there’s no money coming in.

The best mortgage deal is a the fixed 30-year:

This is true. If you actually stay in the house for close to 30 years.

Paying one-third of income towards the mortgage is affordable:

Each situation is different. If you can pay more, pay more, and vice versa. Track your current income and expense to determine how much you can actually pay each month.

The down-payment should be 20%:

An ideal down-payment ratio would be 20%, however, few buyers can actually afford that. There are alternatives. Some government programs offer qualifying borrowers very low down-payments. Many borrowers chose to pay private mortgage insurance so they can make a minimal, upfront down-payment; it is then removed once the borrower has accrued sufficient home equity. A high-rate secondary mortgage is also available if you have good credit. With this option it is possible to borrow a portion of the down-payment.

Borrowers must also always consider the transactions fees in addition to the simple loan rate. Mortgage lenders are not faceless and interchangeable; each is different. If you are buying in a competitive market, chose a lender with a reliable reputation which may affect the seller’s decision. A lender well-liked by realtors will go a long way.

 

 

 

 


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