Posted by: nelyacalev | July 10, 2009

It takes the right type of buyer to buy an REO

Recently I have seen a large upsurge in the number of buyers approaching me about purchasing REO properties.  Until recently, I preferred to not work with buyers.  Most of my sales come from listing REO homes for banks and that keeps me quite busy.  However, I came to realize that with my specialized knowledge I could help buyers navigate this tricky market as well.

What many buyers do not realize though is that not every buyer is ideal for an REO property.  If you match any of the following criteria, REO properties are probably not for you.

1) You are not exactly sure of what you want.  Given a nice home, you are not sure whether it is your ideal home or not.  You want to see a great number of homes before making your decision.  You figure that when you find the right house, it will stay on the market for awhile so you can see a lot of other houses.  After seeing those houses, you may go back to this house to make an offer.

2) You are not financially and mentally prepared to buy now.

3) You are not prepared to do some work on the home – for instance install appliances that are missing.

4) You are afraid that the bank does not disclose any defects about the home (because it does not know about them) and therefore you may buy a home that has problems.

There are two types of REO properties – overpriced ones and well priced ones.  Most people tend to shy away from the overpriced ones.  Well priced REO properties, on the other hand, do not stick around for long.  They often receive many offers and buyers need to be prepared to move quickly on them.

If you are not prepared to jump when the right property comes up, then my recommendation is to clear your mind of getting a great deal of an REO property.  By the time you make your decision to purchase it, the property will already have closed.

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Posted by: nelyacalev | July 9, 2009

Buyers’ confidence in buyers’ confidence at an all time low

Recently I had a conversation with a buyer who contacted me about buying a house that went like this?

Buyer: What are you seeing in the market right now?

Me: I am seeing a lot more buyers in the market.  I see prices staying the same right now but there are a lot more buyers out there.  There seems to be a new found buyer confidence in the market and the realization that now is the right time to buy.

Buyer: My confidence is not up!

Me: Then why are you talking to me about buying a home?

This is a general trend I see right now.  Many buyers are very interested in what other buyers as a whole are doing right now.  While I do see health returning to the real estate market, I also see a lot of anxiety on behalf of buyers.

It reminds me somewhat of millions of tiny crabs on a beach waiting to see if the coast is clear at night.  “Hmmm… I hear other crabs moving, but how can I be sure?  Let me take a peak… Hmmm… I don’t see a crab there… Is that a crab over there?”

A lot of people are peaking out of their shells right now hoping that the coast is clear.  While I do see a lot of cautious crabs moving around on the beach right now, there are still a lot of pessimistic crabs slowly crawling onto the beach, worried that they have made the wrong call.

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Posted by: nelyacalev | July 8, 2009

Dear Microsoft. Please kill my IPhone.

I absolutely love the IPhone.  I surf the web on it, check my e-mails, talk with friends and clients, chat with relatives in other countries for pennies thanks to Skype, and take some of my favorite shots of my kids with it.  It is a great device, with one huge flaw.

The flaw is the AT&T network.  On some days every single call is dropped.  Some days I do not receive any calls at all until the evening when they all come as voice mails.  I have missed numerous important phone calls thanks to their network and it is embarrassing to have to call back other agents several times during the course of a conversation. 

The issue is not the phone – which Apple has already replaced.  I have spent hours with tech support – who advised me to continuously reset my network settings.  “Why didn’t I have to do this with Verizon”, I asked.  Their response – “because Verizon has a better network.”

My husband is prodding me to give up my IPhone and move to Verizon so that I can continue to communicate again.  The problem is I am addicted – I love my IPhone.  It is rather like an abusive relationship.  “I promise I won’t drop your calls again”, it seems to say over and over again.  I want to get rid of it, but I simply abhor the Blackberry Storm and other garbage phones Verizon is pushing at us.

That is why I need your help Microsoft.  It seems obvious that you have something up your sleeve.  T-Mobile has the Google phone and Sprint has the Palm-Pre.  Isn’t it rather suspicious that Verizon – who happens to be a big Microsoft partner – doesn’t have an IPhone competitor?  I have heard news that the Palm Pre will come to Verizon in January, but I also have a feeling that when Microsoft finally does announce their IPhone competitor – Verizon will be their carrier.

So Microsoft, please come out with this phone.  Please come out with something that competes with the IPhone enough that I can finally rid myself of the AT&T curse.  Please help me leave this abusive relationship.  I’m not looking for the perfect phone.  I just need something that looks halfway decent and doesn’t drop my calls.

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Posted by: nelyacalev | July 7, 2009

Flipped short sale listed by same agent – unethical?

Some time ago a house came on the market not far from my own house.  I drove by it almost every day as it continued to sit on the market through numerous price decreases.  One day I looked the property up on the MLS and noted that it had fallen so far in price that it became a short sale.

The listing stayed active for months, but eventually sold for around $410,000.  The original price of the home before price reductions was around $490,000.  From my estimates, the home was probably worth somewhere in the middle.  This wasn’t overly shocking, but what did startle me was what occurred next.

The first peculiar thing was that the sign never went down.  The agent works for a small brokerage with flashy signs and has a habit of not removing his signs after the property sold.  I didn’t think much of it until I noticed that the “sold” sign was removed.  Huh?  Did the property go back on the market?  I thought I remembered looking up the property and seeing that it had closed?

It turns out that the new owners did some minor remodeling and the house is back on the market with the same listing agent as before – but at $495,000!

This strikes me as a bit odd and suspicious.  Wouldn’t the original sellers – who had their credit histories severely damaged by the short sale – be rather upset at this?  Isn’t it a conflict of interest for the listing agent to know that the buyers intend to relist the property with him?

What do you think?

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Posted by: nelyacalev | July 6, 2009

Why short sales suck

Short sales suck.  Sometimes they’re cheap.  Sometimes they’re pretty.  But almost always they suck.  In today’s market, there seem to be two types of people – those who run away from short sales and those who run towards them.

Do you know why they suck?  They suck because any agent out of the blue can list them.  There are no requirements other than a real estate license.  It does not matter that the agent has never dealt with a bank before or even that the agent has any idea what a short sale truly is.  However, no matter how good the selling agent is, if the listing agent is incompetent the deal will not close.

Bank owned properties are usually much different.  They stand a far higher chance of closing and one of the many reasons is the agents who sell them are specialized.  Most banks require these agents to undergo special training and many of these agents only deal with REO properties.  Therefore, these agents know how the process works and how to get the deal closed.

The other huge reason is that generally banks actually want to sell a bank owned property.  When a home is listed for a specific amount for a bank owned property, the bank has agreed to (and often dictated) that price.

For a short sale, on the other hand, just because a home is listed at a given price, there is no guarantee that the bank will accept that price.  There is a growing scam where many real estate agents deliberately price short sales ridiculously low for the marketing aspect.  The home never sells, but the agent gets a lot of attention and leads.  The agent and seller do not need to consult the bank before pricing the home, and often the agent does not care that the bank will accept it.

There do exist short sales that actually close, but they are in the minority and you are more often than not better off by just running away in the first place.

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Posted by: nelyacalev | July 2, 2009

Remodeling. Yeah!

After a long eight years, I have finally convinced my husband to remodel the kitchen and the rest of the house.  We decided to go all out and I am very excited for how it will turn out.  Even though construction is not yet done, I thought I would share with you what I have learned so far.

The final price will always exceed the budget

Amazingly, we are only about 20% over our initial budget right now, thanks to a considerable amount of planning ahead of time.  Still, keep in mind that you will exceed whatever budget you initially come up with.  My in-laws exceeded their initial budget by 130%.

Do not underestimate the stress

Remodeling is stressful.  My husband and I actually agreed on the cabinets and granite.  We disagreed a bit on the appliances, where I still do not see the need for a monster 48″ fridge that e-mails you if the door is open.  I will leave the fridge open so he feels he is getting his money’s worth.  I at least managed to get rid of the convection microwave.  No Chernobyl cookies for me.

Remodels are like a disease.  They affect the rest of the house.

We did not intend to refinish our floors, but found out we had to in order to get them to match with the rest of the kitchen.  We also wound up remodeling areas of the house because the new kitchen suddenly makes them look like crap.

If you are doing it for yourself, it is OK to avoid reason.

If you are flipping the property or want to sell soon, you need to be very careful with your remodel.  You need to use quality components, but not make things too over the top unless it is a very high end house.  However, if you are doing this for yourselves, it is perfectly fine to go over the top if that is what you want.  We purchased a very high end granite.  We are spending a lot on this granite.  If someone came to our house, they would see granite.  Not ‘amazing’ granite – just granite.  However, we happen to like this granite.

Use the time to learn how to communicate better

When the computer had to come down for the remodeling effort, you would have thought the dog had died.  No one knew what to do with themselves.  Invariably you will be forced together during times of remodel.  Make the most of the time.

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Posted by: nelyacalev | July 1, 2009

The thing about discount brokers

As I have mentioned before, my husband participates on a large alias at his work where people ask questions about homes and real estate.  Over time, he has noticed that a huge number of them will not even consider a full service 3% agent.  They want discounts and many of them use Redfin or a discount (1% agent).

In the beginning, he attempted to dissuade them and explain what you get with a true full service agent.  To be honest, I doubt he really convinced anyone.  I also used to spend a lot of breath trying to explain this, but the truth is there are some people you will never convince.

My in-laws (who I hope are not reading this) have done their own taxes for years.  Every year they get walloped with a huge tax bill and every year the process takes them a significant amount of time because they own businesses.  I for one have never done my own taxes, but take them to a tax expert.  I pay around $200 each year and have always received a very nice refund.  Our tax professional is very knowledgeable about recent changes in tax laws and always does a good job.  I am sure I saved a lot of money doing this.

However, we will never be able to convince my in-laws to not do their own taxes.  This is just the type of people they are.  They do not trust others with their financial business and probably never will.

This is why there are some people I just will not be able to convince about discount agencies.  I can try explaining that it is almost impossible to buy a hot REO property with one of these agents, that most if the agent can’t even negotiate a 3% fee for themselves, how confident are you that they can negotiate for you?  I have tried to explain how full service agents go the extra mile, are more knowledgeable, and will almost always save you money in the long run.

There are people out there that simply want to do it themselves.  So if you want to do your own taxes and your own dry cleaning, discount agencies are the way to go.

In some respects, it’s not a bad thing that there are such people out there.  People like this allow me to win big concessions for my buyers/sellers when I am on the other side. :)

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Posted by: nelyacalev | June 30, 2009

Real estate agents are independent variables

Recently my husband showed me a thread from his work where the thread went similar to this.

Question: Could someone recommend a realtor that is an expert in Education Hill?

Reply: I recommend “so and so”.  He is a very good agent.

Reply: Do not use anyone in that office.  I had a very bad experience with an agent there.

Reply: Just because you had a bad experience with one agent, doesn’t mean they all are bad agents in that office.

The individual then started going off about how evil the agent was.  Listening to his story, I honestly felt for the agent.  Of course I do not know exactly what happened, but in his words when she refused to change the legal language in the contract as he wished, he fired her.  Of course, agents are not allowed to practice law.

He then went into probability theory stating that since he “randomly” came across two bad agents in a row at that office, probability theory would state that the chances of finding a bad agent in that office are very high.

Therefore, to all techies who have this warped frame of mind, I will explain it in words they understand (per my husband).

Real estate agents are each independent variables!

Just because one real estate agent didn’t do a good job, it means absolutely nothing about another agent.  It means nothing about an agent for the same company, for the same office, or for an agent that sits next to that agent.  All it means is you found a very bad agent.

Honestly, if you keep coming across bad agents, seriously look into how you are finding them.  Do you keep getting recommendations from friends (”hey, my brother in law can help you out!”, “my sister is dating a real estate agent!”)?  Do you interview agents?  Do you ask the right questions when interviewing an agent?

It is up to you to find the right agent for the task.  They do not fall out of the sky and random selection is not the way to go here.

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Posted by: nelyacalev | June 14, 2009

Median Prices by Bellevue High Schools June 2009

Keeping with the monthly tradition of examining housing prices in Bellevue based on the area defined on the different high schools, here are the results for June.  Data was obtained using this method and consists of the median house price sold.

By the way, you can see a map of the high school boundaries here.

High School

January 2009

May 2009

 June 2009

May-June Change
Interlake $467,000 $445,000 $435,000 -2.2%
Sammamish $496,000 $414,900 $415,000 0%
Bellevue $957,000 $850,000 $850,000 0%
Newport $585,000 $480,000 $505,000 +5.2%

 

Interlake, which was spared much of the drop the other areas have seen since May, is the only area that declined in the last month.  Newport, which may have been hit the worst, actually saw a slight increase.  Overall these numbers are positive as for the most part prices stayed stagnant.  It will be interesting to see what happens in future months but at least for the last month things have not become worse.

High School

Median Active Home Price May 2009

 June 2009

Number of Homes May 2009

 June 2009
Interlake $625,000 $645,000 52 26
Sammamish $550,000 $529,990 176 159
Bellevue $1,299,999 $1,395,000 338 340
Newport $815,000 $795,000 96 103

 

Clearly the market is still oversaturated with higher priced homes.  This is especially prevalent in the area of Bellevue High School where active home prices actually increased!  I suspect this is because lower priced homes have sold there recently, leaving more higher priced homes available.

Interlake also saw a slight increase in prices.  Perhaps this is because inventory remains relatively low there.  It still seems that this area has been spared the worst of the market.  Recent news that this high school ranked 18th in the nation and second in the state (behind only Bellevue’s International School) also may help.

For the other two areas, it is good to see that the average price of active homes is slowly approaching the average price for sold homes – which in a healthy market should be a bit closer.

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Posted by: nelyacalev | June 1, 2009

Funny foreign perception

This weekend I received an e-mail from one of my friends from school who currently lives in Russia.  He had read about the housing crisis in the United States and wanted to invest here.  His question:

“What can I get for $100,000 in the US?  I’m thinking about buying a large house on the beach.”

Contrary to reports, at least in this area you still can’t buy much of anything for $100,000.  For that amount, you’ll get a condo very far away.  Prices have fallen, but they’ll have to fall far more drastically to even approach that level.

Still, I thought it was rather funny.  He obviously has heard of the fire sales happening in Michigan and in other parts of the country where jobs are drying up.

My temptation was to reply that I am interested in visiting Russia.  Do I need a visa from the mafia to do so?

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