Category Archives for "Selling"

Muskoka Real Estate Investment – One Simple Formula

By Andrew John Cocks | Buying , Huntsville Real Estate , Muskoka Real Estate , Selling

Muskoka Real Estate

Muskoka Real EstateI saw ads in muskoka’s small-town newspapers for years before I realized exactly what was going on. They were always the same: A Muskoka cottage for sale with 5% down and payments of 1% of the purchase price. It might be a three bedroom home for $190,000, for example, with $9,500 down and $1900 per month payments.

A friend started doing the same thing and explained the process to me. It was a way to get a great return on capital. It was the opposite of buying with no money down. You bought for cash.

A Muskoka Real Estate Investment Formula

It is simple, really. When you buy for cash, you often get a much better price. A house that needs a little work might be worth $75,000, for example. By offering $65,000 cash, you negotiate your way to a $68,000 purchase price. If not, you walk away – there are always others.

Then you put few thousand into high-return repairs and improvements. Paint, carpet, and maybe asphalt for the dirt driveway. For our example, we’ll say you put $5,000 into it.

Now it’s worth $85,000 perhaps, but you target those buyers who can’t get financing easily, and you finance it yourself. By making it easy for the buyer, you can get $90,000 for the home. Whatever the sales price, you let the buyer put 5% down, and make monthly payments of 1% of the purchase price. Of course, you get higher than market interest too.

The buyer is thrilled that they can buy instead of renting, and you get a capital gain of perhaps $14,000 after expenses, plus good interest. Your total rate of return is somewhere over 25%!

The first to do this consistently in our town were a father and son. They were both lawyers, and saved money by doing their own foreclosures when necessary. After forclosing, they just raised the price and sold it all over again, of course. By the way, if you can get an average return of 18% on your money, you’ll turn $75,000 into more than one million dollars in about fifteen years.

Muskoka Real Estate

It’s So Easy, Being Green

By Andrew John Cocks | Buying , Selling

With oil and natural gas prices, stoking terror of long, cold and and expensive winters, a renewed interest in keeping heating costs under control has has been sparked. Homeowner’s have an ignited passion in understanding energy saving methods. If you’re in this boat, stuck in cold waters, here are some tips for energy saving tricks of the trade.

If you’re living in a home with a furnace that’s more than 20 years old, you may have already attempted the “buy a sweater” method of keeping warm. This is certainly one approach, but these days upgrading your home’s heating system is a much better option, and will bode well for you in the here and now, and in the long term, should you decide sell your home. More and more, homebuyers are looking for homes with energy efficient systems already in place. So, think of these upgrades as a long term investment in the resale value of your home, as well a cost efficient and green alternative to your current conditioning system.

Now, with that old choker of a furnace huffin’ and puffin’ away, guaranteed it’s not as efficient as it could be, no matter what fuel type it uses. The newer gas furnaces are mid-efficiency (78-82%) or high efficiency (89-96%). Although the higher efficiency products can cost up to $1000 more than the mid-efficiency products, extra costs will be re-couped in a couple years, as they will burn less fuel. And, you’ll be the greenest frog on the block, sending less harmful emissions out into the atmosphere. “It’s so easy being green”, murmured Kermit, once he upgraded his furnace.

With oil furnaces, there are again, much more efficient products on the market as of late. But, a oil furnace does need to partner with a good chimney, and so this may be an additional cost to keep in mind

Take note, it’s still the case that electric heat is more expensive than oil and gas, although a smart combination of central woodstove heat, supplemented by electric heat can be cost efficient.

Let it Flow: Change Your Filters!

Whether disposable or washable, all forced-air heating/cooling systems use filters. And, these filters need to be maintained and changed. Some filters require monthly changes while other last up to three months, and much depends on the conditions within your home. A dirty filter will restrict air flow and with clogged filters you’re blocking heat that would otherwise be keeping you toasty warm. Do yourself a favor and keep on top of the regular changing of your heat filters. This is a pretty easy way to boost your energy efficiency and cut costs.

Pump it up: Install a Heat Pump

Air source heat pumps are the most common and they are generally used with a back-up heating system. In terms of function a heat pump works by extracting heat from the outside and bringing it in, (in heat mode), and by removing heat from the inside of the house and releasing it outside. ( in cooling mode).

The king of heat pumps, though, are ground and watersource, or geothermal. And while the initial investment may be great, the saving will be substantial in the long run. These pumps will use 25-50% less energy than conventional conditioning systems.

At the end of the day, another simple method to help with soaring heat bills, is to keep an eye on the set temperature levels in your house, What is normally described as room temperature is around 20 degrees celsius (68 Fahrenheit ). Of course, only you can decide where to set the dial. But, if you’d rather avoid the ” put on a sweater” method of winter energy conservation, you might consider investing in an improved system that’ll bring you warmth today, and will be a smart investment in the re-sale value of your home.

Evaluating the Offer for Your Home

By Andrew John Cocks | Selling

You have read every book under the sun. You have read more internet articles than you can imagine. You have cleaned up your home, made repairs and put out your marketing. At this point, you feel like you are an expert in the process. Suddenly, you get an offer on the property. Now what?

The first thing to do is relax. Do not make the mistake of rushing to evaluate it. An offer is just that – an offer. It has contingencies and all kinds of little quarks in it. Although you have lived in the home for a lengthy period of time, you need to realize you are now in a business transaction. Once you have caught your breath, it is time to consider the offer.

The first issue is always the offered purchase price. The price will generally never be what you are asking for in the listing. It may be below the number, perhaps shockingly lower. At this point, you may feel the urge to pick up the phone and give the buyer a piece of your mind. Don’t! This is a business transaction. The buyer is merely throwing out a bit of bait to see if you are going to bite. If you do, they get a great deal. If you do not, they will evaluate any counter offer you make. If you do not counter, they can always submit a higher offer. Remember, this is a business transaction, not an affront to your pride!

A second issue concerns items in the home the buyer may want included in the sell. I have seen brawls break out over a lamp that would make a biker blush. Maybe that lamp is an heirloom that you can’t part with, but it probably is not. Only you can decide how valuable it is and whether it is worth losing the sale, but try to be objective and coherent when making the decision. Yes, it has been a loyal lamp, but really now…

After this, you need to evaluate any additional costs associated with the offer. The buyer may want allowances for painting and so on. It is usually fairly easy to bypass your emotions on this one, but you need to make some basic financial calculations. Take the offered price and subtract all costs for the transactions. One you have the net revenue figure, compare it to the bottom line number you decided on when you first decided to sell. This will tell you if it is an offer you should accept.

Homeowners often get so focused on the selling process, that they are caught off guard when an offer actually rolls in. Stick to your guns on your bottom line and you should be fine.

“Don’t Sell Your Property Without It”

By Andrew John Cocks | Selling

For most people, the prospect of selling their home can be positively daunting. First of all, there are usually plenty of things to do just to get it ready for the market. Besides the traditional clean-up, paint-up, fix-up chores that invariably wind up costing more than you planned, there are always the overriding concerns about how much the market will bear and how much you will eventually wind up selling it for.

Will you get your asking price, or will you have to drop your price to make the deal? After all, your home is a major investment, no doubt a rather large one, so when it comes to selling it you want to get your highest possible return. Yet in spite of everyone’s desire to get the top dollar for their property, most people are extremely unsure as to how to go about getting it. However, some savvy sellers have long known a little financial technique that has helped them to get top dollar for their property. In fact, on some rare occasions, they have even sold their properties for more than they were worth using this powerful financing tool. Although that might be the exception rather than the rule, you can certainly use this technique to get the most money possible when selling your property.

Seller carry-back, or take-back financing, has proven to be a surefire technique for closing deals. Even though most people do not think about when it comes to selling a property, they really should consider using it. According to sources, there are currently over 100 Billion dollars of seller carry-back (seller take-back) loans in existence. By any standard, that is a lot of money. But most importantly, it is also a very clear indication that more people are starting to use seller take-back financing techniques because it offers many financial benefits to both sellers and buyers. Basically, seller take-back financing is a relatively simple concept. A seller-take back loan is created when a property is sold and the seller performs like a lender by assisting in financing all or part of the total transaction. In effect, the seller is actually lending the buyer a certain amount of money toward the purchase price, while a traditional mortgage company usually funds the balance of the purchase price. A seller take-back loan is secured with the property. The loan then becomes the primary mortgage and is fully secured by the property. In most seller take-back financing transactions, the buyer repays the seller with interest in accordance to mutually agreed terms over a period of time. Usually, the terms call for the buyer to send the payments, consisting of principal and interest, on a monthly basis. This is advantageous because it creates a steady monthly cash flow for the note holder. And if the note holder decides to cash out, he or she can always sell the note for a lump sum cash payment.

Regardless of market conditions, seller take-back financing makes sound financial sense; whereas, it provides both buyer and seller with flexible financing options, makes the property easier to sell at higher price and shortens the sales cycle. It also has the added advantage of being an excellent investment that generates a steady cash flow and high return. If you ever need immediate cash, you can always sell the note through our office. If you are planning to sell a property, then consider the many benefits of seller take-back financing.

Does Your House Pass the “Smell Test?”

By Andrew John Cocks | Selling

When potential buyers come to look at your house, they’re not only LOOKING, but they’re also SNIFFING, either consciously or unconsciously. When we live in a house, we tend to get used to the way it smells and don’t always notice when something is a little…stinky. But any obnoxious odors will be immediately apparent to a first-time visitor. So before you show your house, take a sniff or two, and then take these steps to de-odorize.

1. Pets. Dirty litter boxes and old “accident” stains are the obvious culprits here. Keep Kitty’s litter box scrupulously clean at all times, and consider having your carpet professionally cleaned by someone who is experienced with pet stains. Don’t forget that many people are allergic to cats, so make sure your furniture and carpet are vacuumed frequently. If possible, think about keeping your cat or other pets confined to a certain area of the house while your house is listed. If you’re thinking of getting a cat or other pet, wait until AFTER you’ve moved.

2. Cooking. We’ve all been told that we should eat more fish, but until your house sells, eat that fish at a restaurant. Strong odors from cooking fish hang around and permeate the house. Cabbage, onions and garlic are notorious offenders, too. Throwing a few lemon slices in some boiling water or running lemon peel through the garbage disposal can help clear the air. And remember to take out your kitchen garbage as often as possible.

3. Cigarettes. Smoking easily drops the value of a house by 15-30% — possibly even more. Smoke gets into the drywall, carpets, furniture, and drapes, and it is very difficult to remove. If you or a family member smokes, stop smoking inside the house as soon as you decide to sell. Paint the interior, and either shampoo the rugs or replace them. If weather permits, keep the windows open to help air out the house.

Follow the above steps, and your home will not only LOOK good, it will SMELL good. A fresh-smelling, odor-free house is much more appealing than a stinky one, and much more likely to sell at the price you want.

Real Estate Flipping Basics

By Andrew John Cocks | Buying , Selling

You see a lot of articles and books about how to make money “real estate flipping.” Perhaps you’re heard radio or television news reports about the illegalities of flipping real estate. Maybe you’ve seen the late-night infomercials promising you easy overnight fortunes.

What’s the truth about making money flipping real estate?

First, real estate flipping isn’t illegal. Because some dishonest real estate investors conspired with deceitful mortgage brokers and property appraisers, their stories made “good news” for newscasters who love to grab attention with “Investors Scam Banks and Bilk Buyers out of Millions!” sound bites. True, some investors defraud mortgage lenders and/or desperate home buyers. Cheating investors hyped up property values, helped home buyers tell untruths on mortgage applications, and conned banks and buyers.

On the other hand, ethical real estate investors make a lot of money real estate flipping. There are many ways to make money flipping real estate:

1. You can help home sellers in foreclosure save their credit by arranging a sale of the property and never even take title. In other words, buy the property and double-escrow the property to a home buyer who wants to live in the home.

2. Find a seller under stress with a bargain property, secure a sales contract, and sell your contract for roughly $500 to $5,000 to a seasoned real estate investor without financing or taking title.

3. Buy a fixer for a bargain price, fix up the property, and sell for full market price.

You can make money flipping real estate without being dishonest or unethical. But first, you need to:

1. Get your credit in order to finance quickly. ( or have access to private money investors)

2. Study your location so you know what properties sell for.

3. Learn how to negotiate with sellers under stress.

4. Find a good closing agent.

5. Learn how to fix houses or find good professional help.

6. Learn how to sell your property or find a great selling agent.

Before you jump into flipping real estate, do your homework. Copy other successful real estate investors who make money flipping the honest way.

Should You FSBO or Use A Realtor?

By Andrew John Cocks | Selling

When it comes time to sell your home, should you try to sell it on your own, or should you list it with a licensed Realtor? Consider the following factors to help you decide:

EXPOSURE

Realtors, or real estate agents, are part of an office of agents, and each of them knows of buyers that are currently in the market for a home. Their buyers are pre-qualified, that is, they have already seen a lender and have qualified for a loan so the buyer knows exactly how much they can afford, and the Realtor does too. In many areas, a realtor won’t even show homes to a buyer until they pre-qualify. The process saves a lot of wasted time on everybody’s part.

Contrast this with the prospect of you putting up a “For Sale” sign in your front yard, and having to deal with people that will be calling you to talk about your house and want to walk through it, even though they don’t have the resources to actually buy it. In the end, they are just wasting your time.

Realtors also have contact with many people from out of town who are relocating to your area. Each realtor in town gets contacted frequently through their website, by people that are looking for a home by long-distance. They may be coming to town soon to look at available homes for a few days. The Realtor lines up a number of homes for them to tour that fit their criteria. One of them could be yours.

But, if you FSBO, that potential buyer won’t know your house is on the market until they get to town, if then.

EXPERIENCE

A real estate agent will be able to assist in setting the right price to list your home, according to the current market conditions.

A real estate agent is a trained professional who will spend the necessary amount of time it may take to get your home SOLD.

The agent understands and will take care of all the necessary paperwork to complete the buying process. The agent will also act as a liaison between you and the inspectors, thebuyer’s agent, and between attorneys, if they are involved.

Most buyers prefer to deal with a real estate agent because the agent will give them the unbiased professional opinion on a house, and how it stacks up against other houses on the market.

Agents understand all the different types of loans and financing options. They can provide information to buyers about local lending institutions to fit their needs.

ADVERTISING

Realtors have many ways to advertise your home, not just a newspaper ad and a “For Sale” sign in the yard. They also utilize the following ways to advertise a home:

The Multiple Listing Service

Open Houses

Web sites like Realtor.com and Yahoo Real Estate

Direct mail

Newspaper inserts

Regional Real Estate Magazines

Cable TV

Realtor “Caravans” where 30 or more Realtors will tour your home and then match it to their prospective buyers.
How much of this marketing muscle can you flex if you FSBO?

SHOWING YOUR HOME

Agents have expertise to help you get your home in top shape before your prospective buyers arrive. They can help you “stage” your home to look more like a model home that would appeal to a larger group of buyers. They know how to emphasize and focus on your homes good points.

If you FSBO you will be learning the process as you go, a costly education when you are trying to sell your own home.

SUMMARY

With all the time, knowledge, effort, and paperwork it takes to sell a home, you should take some of the work, frustration and fear out of the process, and hire a professional!

Making Money With Real Estate

By Andrew John Cocks | Buying , Selling

The many ways of making money with real estate include not only the various types of property. Of course you can make money with land, apartment buildings, homes, commercial buildings and more. But with whatever type of real estate, there are different ways you’ll make your profits. Some of those ways, and how to maximize them, are listed below.

1. Pay-down on the loan. Equity builds with every payment you make. If you get the lowest interest rate you can, more of each payment will go towards the principal.

2. Cash flow. Buy income property the right way, and you not only have your tenants paying all the costs and paying down the mortgage loan, but you also have positive cash flow. As a rule, don’t buy investment properties without cash flow.

3.  Value appreciation. Sometimes making money with real estate can be as simple as holding on and waiting. For the most appreciation in value, however, you should buy in an area where demand is growing faster than the supply.

4. Tax depreciation. After all the tax law changes, you still get to declare a loss for depreciation that doesn’t really exist. Saving at tax time, means more after-tax profit. To maximize this, buy property that has its value primarily in the buildings,  because you can’t depreciate the value of land.

5. Get instant equity by buying low. Buy below market and you get instant equity that will be converted into a profit when you sell. Offer a reason for the seller to sell low: fast closing, cash, assume some debts or liabilities, etc. Alternately, just make a low offer. A seller may have his own reasons to sell it cheap.

6. Selling high. If you clean it up nice, make it easy to buy, and find the right buyer, you’ll get top dollar. The following four on the list cover ways to create value, so you’ll get more when you sell.

7. Finance the sale. You’ll often get substantially more for a property if you offer financing. This is especially true if you let someone buy it with little money down. You can also get good interest on the loan.

8. Changing the use. Find a higher use for the property, and you can convert it to make it worth more to the next owner. This could mean making condos into apartments, or apartments into condos. Perhaps converting a home into office space will get the biggest return.

9. Improve and repair. Repairing anything that needs it is obvious, but you need to look creatively and carefully to find improvements to make. Concentrate only on those that will raise the value several times more than what they cost you.

10. Sell it in parts. Sometimes in real estate, the parts are worth more than the whole. For example, splitting off an extra lot to sell for $30,000 will rarely decrease the value of a home by that much, so you’ll make more money in the end.

Look at the sources of profit listed here, and think of how you can use a few of them on your next real estate investment. You can get wonderfully creative making money with real estate.

Checklist for Preparing Your Home to Be Listed

By Andrew John Cocks | Selling

Once you decide to sell your property, you need to realize it evolves from your residence into a product. Before listing it, here are some tips on sprucing up your product.

Property Checklist for Preparing Your Home to Be Listed

Most sellers make the mistake of assuming the way they live in a home is a good atmosphere in which to conduct a sale. It is not. Homebuyers are not looking for a property in which you, the seller, seem comfortable. They are looking for a property in which THEY will feel comfortable and can envision themselves settling down in. This may sound like a minor distinction, but it is actually very large. If you can wrap your mind around this fact, you will have a much better selling experience.

First and foremost, you must understand that people have different tastes. The particular chandelier or aspect of your home, which is unique, may seem appealing to you, but not to buyers. Emotionally, you must be prepared for buyers to make rude comments regarding aspects you might cherish. Remember, it is a product to be sold and nothing else. If they don’t have taste, that is their problem. On the other hand, they could be the buyers of the property you are trying to sell, which is your problem. Remember that when you are about to make a snide remark.

Before listing your property, it makes sense to address a few issues to avoid any problems.

1. Clean up closets – sellers look.

2. Clean up garages – sellers consider it a sign of how you took care of the home.

3. Clean the refrigerator – make it spotless. We are talking surgical room spotless.

4. Same goes for the oven.

5. If you have an attic, clean and organize it. Buyers will look everywhere.

6. Make sure all light bulbs work.

7. Fertilize the yard a few weeks before listing the home.

8. Repair leaky faucets.

9. Consider replacing worn or old fixtures.

10. Clean the windows.

Again, the goal is not to show a home you enjoy living in. The goal is to show a home they buyer could be comfortable living in. You are shooting, as much as possible, for that new home look.

How Much Is My House Worth?

By Andrew John Cocks | Selling

Are you wondering “how much is my house worth?” I have two answers for you. First, if you don’t really need to move, it is worth whatever you say it is. If you think, “I wouldn’t sell this house for less than $300,000,” then it is worth that much to you. If you need to sell it, though, what it is worth to you is irrelevant.

Market value is the only relevant value once you are ready to sell. This is the value according to all the home buyers out there. They don’t care what you spent renovating the house, or what you originally paid. Spend $50,000 adding a pool, and they may only pay $20,000 more for the home. Real estate is worth what the market says it is worth.

How Much Is My House Worth – Part One

To estimate the market value of your home, use “comparables.” This is how appraisers do it. Find at least three similar homes nearby that have sold within the last six or maybe twelve months (these are your comparables). This information is in county records (sometimes online now), or ask a real estate agent with access to the multiple listing service. Get the sales prices, terms of sale, description of the property, and other information.

Take your first comparable, write down the selling price, and review the description item by item. Add to the sales price of the comparable for each thing it doesn’t have that your subject home has, and subtract for each thing it has that your subject home does have. This sounds confusing, but it will make sense once you try it a couple times.

For example, if your home has a second bathroom, and the comparable doesn’t, add the value of the bathroom to the sales price of the comparable. If the comparable home has a blacktop driveway, and your’s doesn’t, take the value away. You’ll have to estimate what these things are worth, or ask for professional help.

You are rectifying differences, to see what the comparable home WOULD have sold for if it was just like yours. If a comparable sold for $242,000, with one less bathroom than your home, and a bathroom is worth $15,000 in your area (ask a real estate agent for help with these figures), then you ADD $15,000 for the bathroom it doesn’t have. Subtract, say $5,000, for the paved driveway it does have, that your home doesn’t have. $242,000 plus $15,000, minus $5,000 gives you a comparable sales price of $252,000.

Do this with  each comparable, then average the three comparable prices. If, for example, the three comparables now have adjusted sales prices of $252,000, $262,000, and $249,000, add the three figures and divide by three. The indicated value of your home is $254,300. This is about what it should sell for.

How Much Is My House Worth – Part Two

Appraisal is an inexact science. If you can only find houses sold over a year ago, you should probably estimate appreciation in the area, and add that. If one sold with seller financing, you have to adjust for how this affected the price. These complications make it tough to appraise your own home, so what if you need help?

There are other ways to find out what your house is worth. You can pay for a professional appraisal. This way you will also have something to show to prospective buyers who doubt the value. Be sure to tell the appraiser about anything she might miss, like a newer roof, or specially imported tiles.

What about online services that tell you what your house is worth? They don’t have enough access to sold prices of homes around the country to have a program figure the value of your house. Instead, they usually just take your basic information, e-mail address, and phone number, and sell this “lead” to a real estate agent that will contact you.

It is better to find a real estate agent on your own, and ask “How much is my house worth?” Find one who has sold homes in your area, and ask if she can do a “market analysis” of your house value. Normally this is free, with the agent hoping to impress you and get your business. Often, if the agent has experience and has worked in your neighborhood, they’ll do a better job than an appraiser, and the price is right.