Cash Flow Spreadsheet

Here's a Google Docs version of my cash flow spreadsheet - useful for estimating costs and tax benefits.

Cash Flow Spread Sheet Google Docs Version

Quick Reverse and Regular Closing Cost Calculators

Here's a basic spreadsheet we use for closing costs - using the reverse calculator, you can see what price is needed to end up with a desired net amount.

Closing Cost Sheet Excel Version

Here's another link to a Google Docs version in case you don't have Excel

Closing Cost Sheet Google Docs Version

I'll add my cash flow spreadsheet too soon!

-John

Are Short Sales Still for Suckers?

I may have to change my view on short sales, now that one is about to produce income for the VanderMyde family...

... still, watching how hard Heather is working to make this sale happen makes me long for the days of just buying a house from the seller.  Now, you are buying the house from the bank essentially, without the bank really wanting to sell.  Oh sure, they know they'll most likely foreclose on it and have to sell it down the road, most likely in worse shape for less money... but they've done that before.  Short sales are new, different... and no one at the bank wants to stick his or her neck out by doing ANYTHING that might make it easier for the Buyer or Seller... or Agent.

However, Heather was able to get through to the vice president of short sales yesterday at Bank of America...

... which means their IS a vice president for short sales, implying a short sales division... so this means they actually have realized the need to sell off some of these homes in lieu of foreclosure.  Heather was able to get a two day extension after the deal had all but fallen apart due to the bank making arbitrary and infeasible demands on the buyers.

So, I'm guessing that most short sales will still be difficult, drawn out processes that strain buyer and agent... but in the end, the bank does need to get rid of the house, the Buyer can get something at what is likely a below market price; the Seller may be in a better credit situation than with a foreclosure; and the Agent who has held it all together with patience and experience earns enough on this transaction to want to tackle another one with hopes of helping more Buyers or Sellers accomplish their individual goals.

It's not a process for the inexperienced or timid though - tax and legal questions must be answered for the Seller, the Buyer must have the fortitude to wait through the process, and the Agent must be aggressive enough to keep pushing even when it looks like all hope is lost.

Integrated Marketing

I'm in a seminar on integrated marketing, which is stressing all the ways marketing has to adapt to our wired world.  There have been several good ideas presented; the first one that stood out to me was how Realtors advertise listings in magazines - is everyone familiar with tiny type under tiny pictures, with 50 listings to a page?

In the pre internet world, those tiny ads kind of made sense.  Now, they are just a waste of advertising dollars - people would much rather see a larger picture with only the price, location, and size - no flowery language describing how great the house is please!

The next question is, should properties be advertised in magazines at all?  The vast majority of home buyers use the internet to look for properties - instant information, compared to a magazine that is a month behind the market at best.  Would you rather your agent spend their time and money on keeping their website up to date, or placing ads in magazines and newspapers?

Well, chances are, if you are reading this, then you want your agent to be following the latest marketing trends, which stress the instant availablitiy of information, and then integration of all advertising to get that information to prospects and clients.

In moving forward through the Outer Banks real estate market recovery, we will be looking for more ways to leverage all our efforts .

It ain't over till the Home Inspection

I need to write something up to give to every one of our buyers & sellers about how to handle the home inspection negotiation and the emotions that hit both the buyer and seller when they first see the report.

For now though, a blog post will have to do as a start.

We are currently selling one of our investment homes, a summer rental in Salvo where we have another couple as partners.  It's an older home, and with all older homes exposed to the beach environment, it is inevitable that there will be water intrusion around windows, HVAC equipment on it's last legs, and a laundry list of minor items  that you just don't think about until a skilled inspector labels each one on a report in red ink.

For the buyer, it's a shock to realize that a home that looks so nice has one thing after another that will need repair.  It's enough to knock away all the warm fuzzies they had when they made an offer, and seriously reconsider whether they want to buy a home that's less than perfect.

For the seller, after negotiating away a good portion of the equity you thought you had, it's a shock to see another big chunk of it disappear for repair allowances.  Also, it's easy to think the buyers are being nitpicky when you've lived with the bi-fold door that falls off the track occasionally, a frosted window pane or two, and the termite damage that was there when you bought the place, the bugs themselves poisoned long ago.

To the buyers though, every little item in red is a huge red flag... and phrases like "maybe it wasn't meant to be" start making their way into the conversation.

I think a lot of this can be avoided if we stress over and over to the buyers to expect a long list of items, and how fortunate we are to have outstanding professional home inspectors who find all these hidden problems before closing, when they can be addressed as part of the sales negotiation.

Which leads me to my point - negotiations are not over until the home inspection report is done and repairs decided upon.  Too often both parties breath a sigh of relief after the initial price negotiation is done, and are blindsided when a much tougher negotiation starts over the repair request.  The contract price should be viewed as a starting point, but the real negotiation is after the home inspection.  It is at this point that both parties are fully informed about the property, and can make rational decisions based on that information.

So, my advice to sellers is to keep some good will and money in reserve during the price negotiations to get through the repair requests, and to buyers, don't be scared by the items in red, but expect problems to be uncovered, and be happy that you are fully informed about the property before closing, in time to negotiate a fair settlement with the seller.

More on Strategic Default

A friend just emailed me this article, which is basically more reading on the basic theme of foreclosure vs. short sale or loan modification.  It includes some good quotes from Wall Street figures, who disparage the idea of a homeowner walking away from an underwater property, while those same Wall Street boys had a field day betting against the loans they were making to us. 

Hypocrisy from Wall Street is nothing new, but the fact that as a nation we are spending billions of dollars trying to prop up a market that should be allowed to adjust naturally is something to concern us all.  These billions of dollars are not going to homeowners, but back to the banks... and only to keep people in homes paying far more on a mortgage than the same home would cost to rent.

It's an easy sell to the public to help a homeowner avoid the stigma of foreclosure... but wouldn't it be a lot cheaper for the public to just not stigmatize those who were caught by the bubble?  Let those overvalued homes go... to be bought by an aspiring homeowner at a far lower price after forclosure.   We should thank those with the courage to walk away from bad debt - debt the banks that never should have issued in the first place. 

Tire Kickers?

One of the most important skills an agent must have is the ability to discern who will eventually buy, and who never will.

When I first started selling, we always used the term "tire kickers" to describe someone who loves to look at property with no intention of buying.  Well, perhaps that is a bit unfair - they may intend to buy, but do not have the financial resources to do so.  Why then, do they look at property?

Buyers love to look. If they can find an agent that will show them around unqualified, then they will look, look, and look.  Getting their money in order and qualifying for a loan may mean finding out that they don't actually have the resources to buy - poof, fun time over.  So, they'll avoid reality to enjoy a free tour on an agents time. No reason to bemoan it, it's just natural behavior for the buying animal.

Good agents have a duty to find out who is able to buy, and who is just looking, not only for the agent's own benefit, but also to benefit the qualified buyers working with that agent.

How do all these probing financial questions benefit you as a buyer you say?  Well, agents come with reputations, and an agent who has a good reputation of only working with qualified buyers will put you at an advantage in any negotiation - sellers and selling agents do not want to waste time with unqualified buyers, and if you are perceived as being a sure bet to follow through on a sales contract, then you start off in a much stronger negotiating position than someone who has not been qualified.

So, make sure your agent qualifies you before you head out to tour homes... unless you don't really want to buy.