In my View Blog

Buying Houston bank foreclosure homes

I know you want to get started with the process already, but I would like to start with a question, if I may: Why do you want to purchase a foreclosure? 

It's okay to say it: You want a real deal! A foreclosure that has everything you are looking for in a home plus some good built in equity so when and if you decide to sell later, you would make a profit.

Now that we're on the same page, we can get to the good stuff. (Foreclosures are my neck of the woods, so I'm quite excited about writing this post.)

All Foreclosures are Bargains

Possibly, the biggest myth about foreclosure properties is that every bank foreclosure home on a market is a bargain. Just to give you an idea how wrong that common perception is, just consider the fact that 95% of foreclosure homes in the Houston real estate market are a far cry from being bargains. They are either being sold at market value or discounted just enough to account for the repairs that they need to be brought to move-in condition. But then, there is that 5%! Those diamonds in the rough, deeply discounted 20, 25 or even 30 percent lower than their true market value, are what makes our day. And if you are looking for that deal... this is what you need to focus on.

Is it any different?

The questions I get most often from our clients revolve around whether purchasing a bank foreclosure is any different than buying a regular (non foreclosure) home. The short answer to those questions is: Not Really. First, bank foreclosures come with the same assurances that regular homes offer in terms of an insured clear title. In other words, when you purchase a bank foreclosure, you an be sure that the title to the property is clear of any liens, back taxes or any other issues of that nature. Second, when you enter into a contract to purchase a foreclosure, you are purchasing the home "as is" but are alloted a certain period of time to perform inspections on the property. Depending on the bank this period can vary from 5-10 days. If serious issues are discovered during inspections, you would be able to get out of your contract. Third, most bank homes can be financed through regular mortgage loans under the same exact terms (i.e. interest rate, down payment, closing costs) as a regular home.

Any handyman skills?

Equity is the ultimate goal, but it is not the only factor you should consider before making a move. Foreclosures come in all conditions ranging from "dump" to "has anyone ever lived here", and your decision should be dependent on:

1. Your handy(wo)man skills

or in their absence

1. Cash on hand to pay appropriate contractors

If you don't possess neither, don't worry. This just means that your foreclosure search will be limited to properties in good condition and the good news is that there are plenty of those in the Houston market today.

Open Mind Required

If you are looking for homes in showing condition that smell good and their AC set at a comfortable 70 degrees, let me save you a trip. Most foreclosures will be littered with trash, will smell like something that's been vacant for quite some time and won't have power, (therefore no AC). But if you are hunting for a deal, let me tell you that trash is your best friend, so try to keep an open mind. If the biggest issue with your foreclosure prospect is that it is not clean, you may have a gem on your hands. Instead, if you are looking for a home packaged in a tidy little "bow", the retail section of the store is in a whole another building!

Don't go at it alone

If you want to see what it takes to consistently discover those great foreclosure properties ... those in that 5% category with great equity... pass by our office around 9 AM and you will see the amount of time and effort it takes for trained pros to do it. The biggest piece of advice that I can offer you today, is to not go at it alone. A real estate agent that specializes in foreclosures would be able to provide you will good prospect properties so you don't have to go through the laborious process of finding them. That way your time would be spent sifting through good deals versus wasted over figuring out if in fact you are getting a deal. Note: When you buy a foreclosure, all fees to all agents involved are paid by the bank, so if effect you get a specialist on your corner for free.

Keep these tips in mind when you are out in the hunt for that special foreclosure deal. And most importantly: Enjoy it!

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: Check out our Houston Foreclosures

 

Do Open Houses work?

When this question is posed, arguments begin.

One one end, some homeowners view the lack of Open Houses as a sign of outright laziness from their agent. Their home has been on the market for a long time and maybe it would already be sold if only their agent had put some efforts into some weekend Open Houses.

"Open Houses just don't work" - claims their agent. "They are a complete waste of time. I sit and sit in an empty room waiting for prospective buyers to show up and they never do".

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They might both be right.

The short answer to our Open House question is: It Depends!

Location

Where your home is located in relation to major thoroughfares is probably the single most important factor that will determine the success of an open house (or lack thereof). After all, open houses rely on traffic redirection by means of road signs. From our experience in selling Houston real estate, open houses in homes tucked deep into subdivisions tend to be real snoring contests, while those near major streets are generally more successful. As a rule of thumb, if it takes more than 5 "Open House" signs to direct traffic from the road to your home, you're probably in too deep.

Define: Successful Open House

We must be clear about setting some realistic standards for productive open houses. Sometimes sellers have this idea that open houses in real life are the same as those in HGTV  life. This couldn't be further from the truth. If two semi serious prospects come to a two hour weekend open house, you've got yourself a winner. Now notice that I said "prospects", not tire kicking neighbors trying to kill 20 minutes snooping into your home.

RSVP=Success

Usually, ancillary marketing campaigns can help make an Open House successful by getting prospects to RSVP for it. We advertise our Open Houses through email campaigns directed at other real estate agents that work in the area. In addition, we try to attract other buyers through Craigslist advertising as well as notification of the Open House on SignatureHouston.com.

Agent should be selling YOUR house

In a cruel twist of the argument, some homeowners complain that agents are (ab)using their home's open houses to get more buyer business for themselves without ever trying to actually promote and sell their house. While the agent has every right to pursue a prospect that might genuinely not like that particular house, they cannot bypass their duty to their clients to represent them during the sale of their home. In my view, agents engaging in this practice are very much the exception and not the rule.

No Open Houses are OK

Marketing and selling homes is about having numerous tools and strategies to accomplish the ultimate goal. Every property is different and it may require a different combination of such strategies in order to sell. And that combination may not include Open Houses. Try talking to your Houston Realtor about what their overall strategy is for selling your home. Get involved in the process and then hold them accountable for it. But give them the appropriate professional freedom to do their job.

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Photo Credit: Flickr

A yard sign is not even close to enough

I'm sorry to tell you that the "Home for Sale" yard sign purchased from Lowe's will not get your home sold. Neither will your Infotube brochures.

Sure, if an interested buyer happens to drive around the neighborhood and sees your phone number in the sign, they will probably call it. They might even reach over and grab a flier to show their spouse what the home looks like.

But don't mistake the bare minimum with an actual marketing campaign.

Selling real estate is a matter of exposure. You want to get as many qualified, probable buyers (ready, willing and able) to look at your property. And once you've got them looking, you better have what they seek.

Information.

Lots of it. Photos, descriptions, maps, measurements, calculators, schools, virtual tour...

When we sell Houston Real Estate, we create an individual property website for every single home. Think of it as a virtual information booth dishing out a healthy dose of useful information to everyone looking for it. A prospective buyer landing on one of our property websites would be able to get in depth descriptions of the property, look at well lit photographs emphasizing positive aspects of the home, map out its location, calculate their eventual mortgage payments as well as go on a virtual tour through the home. They could even look at what kind of shopping and entertainment is around and get detailed school district information. 

Once the property website has been created, we then direct all "prospective eyeballs" to it by advertising it in our fliers, online classified ads as well as (believe it or not) MLS. When we bring prospective buyers to our clients' individual property website, they are looking at plenty of information about the property we care to sell the most, as opposed to them looking at little information from plenty of different homes a la har.com.

Property websites are just another tool in our technologically advanced toolshed that enables us to achieve the single most important goal : Get homes sold fast!

And they sure beat Infotube ...

Selling your home? Know its marketing schedule

Photo Credit: Joe Lanman

During a brainstorming session about three years ago, an idea was born within our company that is completely vital to the overall marketing strategy we employ when selling Houston homes. We were trying to find a solution to the following question:

What tool could we provide to home sellers to allow them to track the progress of our marketing campaign for their home?

By the way, we found it ironic that in a field (real estate) where everything has to be written in order to matter (i.e. hold up in court), agents were verbally describing (in general terms) their marketing to their prospective clients. If you think about it, you would not hire a contractor that didn't give you a written bid, would you? The purpose of a written estimate is to provide both parties with clear benchmarks of what constitutes a properly finished job.

Our Solution

An updated marketing calendar that outlines our strategy to sell your home for every 30 days with clearly defined events. For instance:

April 3 --  Take well lit photos of the property
April 4 --  Post the property on the Multiple Listing Service
April 4 --  Put the real estate sign complete with color fliers
April 5 --  Create Virtual Tour (Email Link to Client)
April 6 --  Create Single Property Website using Postlets
April 10 -- Public Open House 12-2 PM
... (get my drift?)

What's the Use?

This tool allows the home owner to become part of the process by following along as you complete such events which in effect constitute expectations. And make no mistake about it: When our clients receive a calendar, they can expect everything to happen on the date specified.  So if you are selling your home, be sure that whatever real estate professional you hire (which should preferably be a Signature agent) provides you with a written plan they intend to execute to get your home sold.

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Also Read

Keep your Realtor on their toes

Houston Real Estate Sales Slide in March

Selling in the current Houston real estate market

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Looking to sell your home? Give us an opportunity and experience the difference: Houston Real Estate

 

Keep your Houston Realtor® on their toes

Last month we were contacted by a homeowner whose Houston home had been on the market for over six months without selling. Their listing contract with the previous Realtor® had expired without producing a sale and now they were looking for a different agent to help them with the process. From the start of our appointment, the homeowners were very (understandably) hesitant and skeptical and in order to get to the root of the issue I asked them about their experience with the previous agent. After a long sigh, they told me that after a fantastic listing presentation and subsequent signing of listing paperwork, the agent had "stuck her sign in the yard" and they never heard from her again until it was time to either lower the price or renew the listing. No feedback, no strategy, no effort. Their attempts to rescind the listing agreement were met with repeated rejection from the agent. They felt "locked into a dead end".

Photo From Here

This is a recurring story...

First, let me be clear. I believe that having a listing agreement in place is absolutely necessary for the protection of both parties. Clients need to have a written contract that outlines their Realtor's® obligations to them. Agents on the other hand need a listing agreement to ensure that their hard work is protected and that it will result in agreed upon compensation. For every story of irresponsible agents behaving (in my opinion) unprofessionally towards their clients, there is a story of certain clients refusing to honor their contractual obligations. These stories are the exception not the rule. The wide majority of real estate agents that I know are outstanding professionals that go out of their way to help their client's interest.  The wide majority of clients are happy to rightfully compensate their agents for their efforts.

With that being said, I believe that listing contracts need a "firing provision" to make them more customer service oriented. Here's the provision we put in our listing contracts:

"Every thirty (30) days of the duration of this listing agreement, there will be an evaluation meeting during which the Client shall have the right to cancel this listing agreement if the performance of the Agent is deemed unsatisfactory"

Why is this so crucial for the homeowner? It keeps their Realtor® on their toes, always working hard to provide the best service for the Client. Without such provision it is easy for an incompetent agent to get complacent and hide behind the fact that their Client has no cancellation option. In these times of a buyer's market, make sure that you hire a professional agent that is willing to back up their promise of customer service with a firing provision. It is the real estate equivalent of  "putting your money where your mouth is".

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Looking to sell your home? Give us an opportunity and experience the difference: Houston Real Estate

Houston Real Estate Sales Slide in March

Source: Houston Association of Realtors

According to a press release by the Houston Association of Realtors on Tuesday, home sales in the Houston Real Estate market continued their year-on-year slide for the seventh month in a row.

First, the raw data:

The total number of sales and (as a result) the total dollar volume went down by approximately 17% compared to last year. The number of active listings on the market and the months of inventory went up 9% and 14.5% respectively. The number of pending sales went down by 19%. On the other hand the average sales price went up by 2% while the median sales price stayed unchanged at $151,000.

I happen to believe that the numbers never lie. Sometimes there are stories that may run undercurrent and that might not be immediately obvious, but they are there. The total March home sales in Houston are lower than what they were last year, but the average sales price increased slightly.  This is a completely reversed picture from the latest national numbers: Total sales went up, but average sales price went down. So what's the story here?

In my view, the Houston Real Estate market is currently being affected by restricted lending guidelines that are causing the "pool" of available buyers to shrink. This factor combined with the seller's unwillingness to budge off their asking price (see average sales price and median sales price) is keeping deals from happening. This is demonstrated by the lower number of pending sales while active listings on the market are up. As a seller, what are the lessons in these numbers?

• Price your home to sell (aggressively) -- Tactics of putting the home on the market for a higher price to see what happens can ensure that your property stays on the market for a long time. Make sure that you give the available buyers a good value by pricing your home attractively.
• Contribute to closing costs -- Buyers are leaning closer and closer towards FHA loans so to help your home sell you have to be open to contribute to the buyer's closing costs. Typically, 3% is the norm but closing costs can run as high as 6% especially if the buyer does not have money for a down payment. Keep your eyes on the prize and focus on the figure that you stand to net (Price - Closing Costs Contribution)
• Maintain your home in top shape -- With fewer available buyers, come fewer available showings so you have to make every one of them count. Keep your home in showing condition and give it a selling chance.
• Listen to the market -- The market has a very curious way of telling you when your home is overpriced: There are no showings! If the home is being properly marketed and it is not showing, chances are it is overpriced. (No your Realtor is not trying to talk you into giving it away.)
• Put numbers into perspective -- If you think these numbers are bad, look at the ones from California and Arizona and you will feel much better. We are feeling the downturn here but at a much lower scale than elsewhere where average months of inventory can be double our figure.
• Demand feedback -- Feedback is the conversation between the buyer and seller so don't cover your ears when you hear something you don't like. If it is something you can help, by any means, do it. That may be the turning point for the next buyer.
• Hire a fighter -- This is no time for "stick-the-sign-in-the-yard" real estate agents. Make sure you hire a Houston agent that will fight to get your home sold through an aggressive marketing campaign.

Discovery Green Park opens in Downtown Houston

Discovery Green Park opened up for "business" this past weekend to large crowds who had come to see what the hype was about from local TV news and newspapers. This 13 acre, $122 million project by the City of Houston certainly did not let them down.

Complete with waterworks, playgrounds and even a dogpark this was reminiscent of New York's Central Park, although much smaller in size. It is located accross the street from George R Brown convention center, in close proximity to Minute Maid Park, Hilton and Four Seasons hotels.

Being as obsessed as I am with Houston Real Estate, I had to look for possible real estate plays related to the park and discovered that they were being made already. A luxury leasing development by The Finger Companies, dubbed One Park Place, was already under way and being marketed as "Downtown Luxury Living, Featuring a 13-acre front yard". Very coincidental!

Anyhoo.. For all the photos catch my entire Flickr stream.   

Selling in the current Houston Real Estate market

Considering the extensive news coverage of housing market woes, it might be easy for homeowners to wonder exactly where their neighborhood stands. This confusion can have serious consequences as homeowners base their "housing" decisions (i.e. when to put your home on the market and at what price) on their perception of the local real estate market. And if perceptions can get distorted from media coverage hungry for drastic news, it is possible that the decisions made on them might not be in the Seller's best interest. The National Association of Realtors has made a cliche out of the "real estate is local" conundrum. But be that as it may, the fact remains that what affects the sale of your home are local conditions down to the neighborhood level. (If you think about it, what does it matter to a Houston seller that home prices in California are plummeting when homes in his inner loop neighborhood are selling like hotcakes). In this buyer's market, overpricing your property is the biggest mistake a seller can make. There is no marketing strategy that can make up for an overpriced home in this market. But don't misunderstand my objection to home overpricing with the idea that the seller has to dramatically cut their price to "give away" levels. In my opinion the winning combination is properly priced homes combined with aggressive marketing campaigns.

But how does one go about properly pricing a home?

Photo Credit: -bast-

In my view, there are a few factors to consider. First, your real estate agent has to provide you with a conservative comparative market analysis (CMA). Look at comparable sales in the last 3 months (at most 6 months). In better markets, agents will go as far as one year in researching comparable sales, but as we very well know by now, the market was significantly different last year. Recent sales are the most accurate indication of proper value and your best antidote for overpricing. Once a value is determined, make sure that it is checked against the current inventory for sale (active listings) to see how it would fare. You don't want to be the most expensive listing on the market or the least expensive. The best place to be is somewhere in the middle. Second, you have to take into consideration the foreclosure inventory in your neighborhood as excessive foreclosure listings may attract away buyers fascinated with getting a bargain. If foreclosure listings make up a substantial percentage of homes for sale in the area you must take that into consideration and make an appropriate adjustment (downward). Third, home sellers and their agents have to pay close attention to overall trends in their neighborhood. If it appears like the neighborhood is a fast selling, desirable place to be Sellers can demand a  (careful) premium for their home (or vice versa). This ties into how we started this article:

"...the fact remains that what affects the sale of your home are local conditions down to the neighborhood level."

But how does one know what the neighborhood trends are? Consulting a knowledgeable Realtor is definitely the way to start. Helping buyers and sellers in a particular neighborhood puts Realtors in a unique perspective to see overall trends and gives them the ability to assess the local (neighborhood) market. In addition, the Houston Chronicle has a great tool in their Homefront section that allows visitors to see neighborhood price ranges, price trends and year on year changes. They also have a zipcode map for how the area fared in 2007.

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Looking to sell your home? Give us an opportunity and experience the difference: Houston Real Estate

A view is a terrible thing to waste

Last week, I was showing some foreclosure properties to a client in the trendy Midtown district. For those unfamiliar with Houston, Midtown is an ever developing, young, vibrant part of town buzzing with nightlife, urban lifestyle and contemporary town homes.

Something was different about this particular property, though. Unlike the many, cut-up, fit-as-many-"boxes"-in-one-lot town homes we had been seeing, this one actually had a floor plan that flowed well and most importantly a did-you-see-THAT view. I have been in Houston real estate for quite some time now and I have never seen a view like this in a town home. Usually, you are either staring at your neighbor's siding or at best, you're looking at Downtown from a binocular distance. Looking outside the window, I felt like I was staring at a miniature Central Park.

OK, I might be exaggerating just a little. But this view was breathtaking! Nice five panel panoramic window, gorgeous natural light flowing into the bamboo hardwood floors. And it didn't stop there. The same window and view were part of the master suite upstairs! Seemed like everything anyone could ask for in a trendy property.

Until we started paying attention.

Flooring in the living room and the adjecant kitchen were not level with the slate tile sticking about one whole inch ABOVE. In the exterior, the two year old stucco was already looking a decade old. The door to the master bath could have made Keira Nightley feel claustrophobic going through it. It was obvious that this was an amateur developer with an utter lack of planning and extremely cheap materials.

It was no wonder that the whole complex was foreclosed. What a waste!

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On the next post, I will give my view on the contribution of developers to the foreclosure wave. Stay tuned!

Ashby Highrise going forward with original plan

A little over a month ago, I went over a feud between developers of a proposed highrise condominium [ASHBY] project in Southampton and opposed surrounding homeowners. At the time, the developers had agreed to delay permit requests to find a possible compromise that would make everyone happy. In such a spirit, they had submitted a proposal that would allow for a smaller building with a smaller footprint that they felt should alleviate any fears that homeowners had about increased traffic levels.

Well it turns out that the developers are going forward with their controversial 23 story plan after the city had failed (according to them) to give them any feedback on the reduced proposal. Of course, they failed to mention that part of their "attempt to reconcile" was a payment in excess of 2 million dollars that the city would have to make to make up for the foregone profits.

That's like saying: Sure, we'll reduce the size... when it snows in Houston in July!