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Category: Real Estate (page 208 of 266)

March 1, 2007

Five Mortgage Tips that Can Save You Thousands

by

Real Estate Investor

Author website

I thought I would take a brief moment to share a few interesting tips and tricks I recommend when considering real estate. I have compiled these in my limited years of investment and my brief time in school.

Tip #1: Use your mortgage like a bank account. One interesting phenomena in real estate (residential especially) that is surprisingly irrational is the treatment of mortgage. If you have a residential mortgage at 6.5% and your bank account nets a 2.5% saving rate, there is really no reason to put any money in your savings account (you lose 4% on every dollar you deposit!). Outside of cash needed to operate day to day, all of your savings should go to paying off your highest interest debt. A lot of people either don’t think about this or just do not know the true implications of this. Luckily, our newest writer, James Hsu has saved me some time by providing a quick analysis on the value of paying off mortgages early. Not only do you save yourself a tremendous amount of interest by paying off your mortgage early at no additional cost, but you also free yourself of future debt. My recommendation is to set a maximum emergency cash flow you need to live and funnel everything else to your loan.

Tip #2: Pay your mortgage more often. Interest is calculated monthly on most loans (based on principal balance at that time); therefore, paying bi-weekly essentially allows you to pay slightly less interest. While it may only save you several hundred dollars of interest payments a year, this money adds up. If you get paid bi-weekly, send in half your mortgage payment early. This can shave several years off your mortgage.

Tip #3: Consider a second loan to avoid paying PMI. This can be tricky because you want to make sure the second loan cost you less than the mortgage insurance (obvious, but it has to be said). Optimally this will be a second loan that you can repay early, avoiding most of the interest payments. Check with your mortgage broker or banker to see if this Read more

March 1, 2007

How Much is My Agent Charging Me?

by

Mega-Producing Realtor

Author website

Lin Savage wrote:

I am evaluating a proposal from a realtor to sell my current home and cash-pile-notes
represent me in buying a new home (all in Texas). I would like some assistance in clearly understanding the commission structure as I consider her proposal.In the “right to sell” doc that she gave me, it says that I will pay her 6% of the sales price, and then says that she will offer 3% to the buyer’s broker.Later in the doc, it says she will charge a 4% commission if she represents me on the purchase of my new home (which I intend to do) assuming she is paid a 3% commission from the new home seller. She also says that if one of her subagents represents the buyer of my current home, that she will reduce the commission by .5%.

I read your comments about the buyer always paying … I’m trying to follow the money trail to see if this arrangement makes sense for me, and find myself going in circles. Can you explain this to me? Thank you!

Lin,

It looks to me like the total maximum amount you would be paying as a seller is 6% of the sales price of your current home. The 3% she would offer to the other agent is not in addition to the 6% but is money your agent would pay to someone else, who was representing the buyer. If I am correctly understanding what you have written, the 4% would become the maximum (instead of the 6%) if you also purchase your new home through that same agent. And if your agent (or one of her staff of agents) can successfully sell the house themselves (without having to pay a 3% co-broke fee to an outside agent) she will reduce the commission by a half a percent.

If I’m doing the math correctly – and if I were you, I would clarify each of these points directly with that agent prior to signing anything – if her team sells your home and you buy a house through them, the most you would pay is 3.5% and if Read more

March 1, 2007

Lucky number 13: James Hsu, a math god for our pantheon

by

Suburban Phoenix Real Estate Broker

Author website

Today we are adding contributor number 13, James Hsu:

James Hsu is a Realtor and Real Estate Investor working in suburban Seattle. From math to computer science to medicine to web development, James may be the whole Realtor 2.0 package personified.

These capsule biographies are cruel in their brevity, so here is what James said in his own behalf:

I’m a Realtor in the greater Seattle area (Mill Creek to be specific). Trained in the art of math and computer science (and a few years in pre-med), I spent a number of years in web development and then jumped into the telecom world doing product development for a major carrier. When I realized my life had become the script out of Office Space, I turned what I had been doing as a hobby (real estate investing) into my new career path. Outside of real estate, my wife and I have a two-year old son and I’m learning about commercial properties. I’ve found that the numbers game that I love is much more complicated and fun in the commercial world. However, it’s the people in residential sales that makes me smile at the end of a 12-hr work day. When I have time, my other interests are playing sports and video games.

James has his own weblog, Northwest Real Estate Update, which is how we discovered him. James puts everything through a rigorous analysis, but his writing is always thoughtful, readable and fun. We’re honored to have him on board.

As a house-keeping matter, on the subject of feed-guarding, we have added a copyright notice to our about page:

Blanket assertion of copyright: Weblog entries, images, audio or audio-visual content and comments on BloodhoundBlog are the exclusive intellectual property of their authors and are used and archived here by permission. In addition, the form and substance, look and feel, images and user interfaces of BloodhoundBlog, its syndication feeds and any derivative variations thereof are the exclusive intellectual property of BloodhoundRealty.com, LLC, an Arizona corporation. ALL RIGHTS ARE RESERVED. Republication or resyndication of content originating on BloodhoundBlog in any form without expressed, written permission from BloodhoundRealty.com, LLC, is prohibited. Read more

March 1, 2007

An Email From Jim Gatos

by

Mega-Producing Realtor

Author website

In response to this post Jim Gatos wrote:

Russell,I wholeheartedly agree.. I also found (by accident, actually, this

http://www.shaftingrealtors.com/roger_butcher_false_statements.htm

First, a little background info on me.. I have been in real estate since 1985 full time. In all those years, depending on the year, my energy level, and plans, I have closed a high or over 50 sales (with a full time assistant and a buyer agent) and a low of around 12 sales (I was verrrryyy slow and busy with personal issues). Presently I don’t have an assistant. I can say, I learned a lot from Mr. Butcher, in the 1990’s, however, I think his methods are now outmoded and very expensive. I also took Floyd Wickman, Mike Ferry, and Brian Buffini.
Of all those, I would say Floyd & Brian were probably the two I can attribute numerous sales to, and with Roger, I can too say I made money in using his systems.

The problem is they advocate working expireds and fsbo’s. And that’s fine, it was a lot easier before the do not call list. Except Buffini, who is completely into personal referrals. They all have something to say, and I think I find them all invaluable. Hoewever, I honestly think YOU have more to teach us.

The sad part is, a lot of people won’t take up your generous offering because it’s free. Some people have to pay for something to find value.

Having been in the business for over 20 years, I will listen to everything you say. You’re the king, and I think your style is also very straight shooting.

It did concern me a bit to see L. Ron Hubbard quotes when you recommend tipsforsuccess.org, however, honestly speaking, I found the website extremely useful and informative. I signed up for the weekly newsletter, and I even did the goal setting exercises. Honestly, they were the BEST goal setting exercises I have ever ever seen. Some folks are very very apprehensive about Scientology, and even afraid. It seems there are two very strong sides to that issue.

You keep ’em coming. I’ll keep listening!

Thanks

Jim

First, thank you for your response, Jim. I understand, appreciate Read more

February 28, 2007

Understanding Why Depreciation Isn’t Just An Add-on — Cost Segregation

by

Real Estate Investments Broker

Author website

What is cost segregation? In a nutshell it’s the process by which an investor can increase the amount of total depreciation taken on each investment property. It will deal almost exclusively with the personal property which is part of the real estate. These personal property assets include a building’s non-structural elements, exterior land improvements and indirect construction costs. This is usually the point at which investors begin to glaze over.

Not so fast write-off breath.

Once you fully understand the results of successful cost segregation, you’ll be a fan for life. The difference between what the average investor claims for depreciation and what’s actually available is staggering to most when they see it for the first time. If you want to try it out on your own, go here. I strongly recommend though, that you hire a firm specializing in this process, as the IRS much prefers that approach.

What’s the average? In my experience and in talking with various CPA’s over the years, the average taxpayer claims the normal building depreciation using the schedules requiring a 27.5 or 39 year life. Many will then add a few personal assets to the mix, but not nearly what is available to them.

Take a $500K purchase of residential income property.

Let’s say it was built a couple years ago, and you can support a land value of $100K. This results in the building being depreciated at $14,500 a year. Investors then will add a few items of personal property, depreciated over five years. Let’s say the average runs around $5.5K. They now have $20K in depreciation. At the blended tax rate of 33% state/fed, this results in a tax savings of just under $6,700.

However, if this investor takes advantage of cost segregation, his depreciation could increase dramatically. Typically, the engineers will literally look at every single part of your property. This includes but isn’t limited to driveways, landscaping, exterior stairs, HVAC systems, and on and on. It’s common for them to find roughly 6-20% of the purchase price, including land, in new depreciation. (They often find much more than that.) Using this example that would mean give Read more

February 28, 2007

RE.tube? RE.cast? Envisioneering a YouTube-like distribution system for RE.net podcasts . . .

by

Suburban Phoenix Real Estate Broker

Author website

The folks at Zillow Blog and Mike’s Corner have been working on a great new idea:

How about a YouTube-like system for distributing RE.net podcasts? Content originators would submit their podcasts to a server run by Mike Price’s MLPodcast, and then that content would be available from any RE.net weblog running a widget to be built by MLPodcast.

The benefit to individual RE.net weblogs? The demands on your file server and its bandwidth are off-loaded to specialized multi-media content servers. Plus which, your podcasts get a much wider distribution.

Is there a downside? People may find your content at other sites, which may be an issue for ad-supported weblogs.

There are big questions to be settled, so now is the time to speak up if you are interested:

1. What kind of content should be accepted, and what should be omitted? Feelings are running strongly against spammy or self-promotional podcasts — for instance, video virtual tours of listed homes.

2. How local is too local? Obviously I am strongly biased in favor of general-interest, nationally-focused and industry-oriented podcasts. Should locally-focused podcasts be accepted, and, if so, should any limits obtain on what kind of local content should be accepted?

3. What’s a good length? I personally prefer podcasts that run from 45-75 minutes, the length of a good workout. The Sales Success podcasts we’re putting together will run from 10-30 minutes. What do you think is a good length?

4. Finally, do you have plans either to create or to subscribe to real estate podcasts, and, if so, would a system like this appeal to you?

Other RE.net weblogs will be entertaining these ideas as well, so speak up if you want to be heard…

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February 28, 2007

Delighting customers and clients: Doing the thing that no one thought to ask for

by

Realtor, Staging Consultant

Author website

As real estate professionals, our clients’/customers’ satisfaction with our service and the outcome of their transactions is unquestionably key to business success. In fact, I’d bet this has been true in every career you have ever had. It sure has been for me… beginning with my first jobs as babysitter, then as counter help at The Red Barn, and then throughout my various corporate positions in management, finance and information technology. Whether my customer has been internal, external, faceless or my very best friend, I’ve always done very well by doing very well for him and her.

And so it’s always been maddening for me to see someone or some organization fail to recognize that the “customer is always right,” or if the customer isn’t right to help the customer become right… at least to try to help. We all know the adage that a happy customer will tell someone else about his satisfactory experience, but an unhappy customer will tell the unhappy story ten times more often. Well, I want to tell you about great customer service that I was just the happy recipient of.

But first some background… It begins with Greg and me wanting to attract more clients than we were getting from reputation alone. Around the end of the amazing sellers’ market of 2004/2005, around the first anniversary of BloodhoundRealty.com, we hoped to jump-start our business by giving someone who didn’t know us personally (or through referral) a reason to believe that we put our clients’ interests above our own. We wanted to offer something more tangible than a motto or a sincere-looking pose. We were doing well when we took listings, but we were turning down more listings than we were accepting, because home owners, who didn’t yet know us, didn’t yet believe us that the buyers were no longer willing to pay top dollar. So we figured we would try to attract buyers by offering to let them keep their money in their pockets — money they would be paying the seller to pay to us. We thought that once we got this word out, we would Read more

February 27, 2007

What’s Wrong with zipRealty?

by

Mega-Producing Realtor

Author website

Some readers here may be a bit concerned that some of the writers here on BloodhoundBlog don’t find and report enough negative comments about various discount real estate companies. Relax. There is more.

I received the following email today from Dave Marron. As you will see, he is a former executive for Zip Realty.

__

Hi Russell:

I saw that you posted on bloodhound about zipRealty awhile back. Did you see their earnings release the other day? I’m an ex-zip exec (and ex-KW broker) and I put my thoughts down on paper about the state of their company (see attached). Do you have any use for this? If not, it’s OK. I just thought I’d shoot it over to you in case you thought it was bloggable.

Thanks,

Dave

What’s Wrong with zipRealty?

Last week zipRealty released their “preliminary” fourth quarter results. I’ve been interested in this company since 1999 when I went to ZipRealtylogowork for them. I
spent over four years at zip performing numerous jobs including VP of Sales. A couple of things popped out at me during their “preliminary” earning release conference call that just don’t make sense. Here are my observations.

One of the initiatives zip’s leaders gave for how they are going to improve in 2007 was an increased effort on training. Stock analyst Wendy Snow asked the team what they intend to do differently in the training arena that will make a difference in 2007. To this, Management answered that their “ideal candidate” would have the qualities of a strong trainer and strong real estate skills. They’ll also consider someone with strong training skills who could be “pick up the real estate craft quickly”. Are they kidding? They would hire a trainer who can “pick up the real estate craft quickly”. Would Pilsbuy, Madison and Sutro hire a legal trainer who could pick up the law craft quickly?

After leaving zipRealty I sold real estate for several years and I’m now an owner in a real estate technology company. The way that I learned the “real estate” craft was by going out and selling lots of homes. It’s not something that you can teach someone to Read more

February 27, 2007

Does Redfin.com have tougher agents or tougher clients? A challenge in Bloodhound red . . .

by

Suburban Phoenix Real Estate Broker

Author website

I represented the buyer in the sale of a home worth $450,000. Luxury home on the first tee of an exclusive golf course, right next to a million-dollar custom-home lot.

How much did we pay? $310,000.

Now the truth is, I had an ideally-situated buyer and we were working with an ideally-dys-situated seller. Fortune favors the well-prepared, but, in the end, we simply got lucky.

But if I wanted to, I could present that story in such a way that, by the time I finished warming your ears, you’d want to rename Wednesday after me. (Take that, Odin!)

And welcome to Redfinland. They’re determined to take a victory lap, and let ’em. As Kevin Boer said to me in email:

In all fairness to Redfin, if the numbers had come out the opposite, the re.net would have been all over it, showing it as “proof” that they suck.

Indeed. And as much as CEO Glenn Kelman resists the characterization of Redfin.com as a discount real estate brokerage, it remains that their marketing appeal is based on saving clients’ money. It’s hard to doubt that discount-seekers would be discount-finders.

But, as I discussed last night, Redfin’s results are not a slam-dunk validation of its agents skills, zeal, rigor, vigor or charm. The much more likely explanation for the results it reports is that its clients — unlike swimmingly-besotted house-lovers — are congenitally low-balling INTJs and INTPs who do not focus on anything that can’t be expressed numerically.

Tougher agents or tougher clients? There is a way to find out for sure. Last night I made this proposal to Kelman:

I’ll make you a deal. Send me PDF scans of the 170 files. I’ll make a server available for FTP, and y’all can redact for personal details. I can reconstruct a transaction from the file, so I can vet the quality of the work in full, not just as regards price. For example, I can see how complicated the deals are, and how much Redfin’s buyer’s agents are bringing to the transaction. I’ll report my findings in detail, and you can get your incredible PR machine to promote them far and wide. Read more

February 26, 2007

Thinking skeptically to rain on Redfin.com’s parade . . .

by

Suburban Phoenix Real Estate Broker

Author website

I’m not a Jesuit, but I play one on BloodhoundBlog. The real truth is, I’m a roll-your-own Jesuit, more auto-didact than anything. I didn’t have Brian Brady’s inestimable advantage of having had the gift of reason literally pounded into me. Instead, I had to stuff it between my own ears by hand. But one way or another, lay student or Brother, if you walk in the path of Ignatius Loyola, you learn to think skeptically. Any affirmative claim is far more likely to be false than true.

This morning, Redfin.com posted a claim that MLS results “prove” that Redfin agents are better negotiators than other agents in the Seattle area. If CEO Glenn Kelman had made a claim like this in Brother Paul’s class, he’d be up late tonight writing a paper, striving either to prove or disprove it.

The problem is not that the claim is necessarily false. The problem is that that there are so many ways that it might be false that, to call it true without eliminating each one of these canards and false paths is an inherently tendentious statement — suasion, not persuasion.

Before I begin work on my much shorter paper on why the claim is dubious, I want to raise three meta-issues. First, I do not have access to the underlying data. If I did, I might write a much longer and much more conclusive paper. Second, I would have much greater faith in the mainstream media if more reporters were tuned to a Jesuitical tenor of skepticism. And third, the tabbed browser window is an excellent tool for organizing the resources to be used in an exercise like this.

First, Redfin claims that its results rebut the claim that a salaried (and possibly inexperienced) agent will not negotiate as aggressively as a traditional real estate agent working on a straight commission compensation plan:

After a year in the market, we decided to put our theory to the test, by querying the Northwest Multiple Listing Service for data on every home or condominium sold via a brokerage from February 6, 2006 (the date of Redfin Direct’s launch) through February Read more

February 26, 2007

The Carnival of Real Estate . . .

by

Suburban Phoenix Real Estate Broker

Author website

…is up at The Real Estate Zebra. Host Daniel Rothamel is one of our favorite real estate webloggers, so it’s a double honor to have our own Kris Berg win yet again for The ABC’s of Agent Hiring – Oops, They Did it Again. This is Kris’ second win and the fourth for BloodhoundBlog.

This week’s Carnival of Real Estate Investing is at TheMillionairesBlog. We entered Michael Cook‘s Negotiation 201: Don’t Just Think about the Best Price, but it didn’t take first place, alas.

There is much good reading at both weblogs. Go take a look…

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Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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