Closing Letter – The little things make a big difference

In an industry where the Realtor is often the scapegoat for any problems related to the deal that go sideways, it’s such a pleasure to get a thank you letter from a client, where hard work and professionalism is acknowledge.

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Keith,

Just a short note to thank you for your extraordinary service in the recent sale of my property on [street address]. How lucky that I ended up working with you when my tenant decided to move!

In these days of poor customer service, it is heart-warming and reassuring to meet people like you. Not only did you help me navigate the difficult waters of fixing the place up for sale: you advised me well on which repairs would add value, and which would not. Your expert assistance in selecting just the right contractor for the job and seeing the job through far exceeded my expectations.

Thank you for responding promptly to my queries, and for a job well done.

I will certainly be happy to serve as a reference for anyone considering your services.

Sincerely,
[client's name]

Flipping Houses – Investors’ Mistakes

I get frequent calls from investors and referrals consistently of those who are fliplooking to invest in and/or flip properties.  The latest was a semi-retired contractor who has enough cash to buy and improve a home, and would like to do several of these a year.  The potential problem:  He’s never done this before.  So I did a little hand-holding, went over spread sheets and took him through a real potential property to flip.   This was an off-market deal – not offered to the general public – derived from a relationship I have with another investor.  At the end of the day the seller asked for $5000 more than they originally said they wanted – still a good deal.  The buyer (being new) got really offended by this and said that he felt jerked around.  I agree, no one likes to pay $5000 more after expectations get set at the lower price.  Instead of trying to negotiate or come up with a solution, the buyer just emails me, “You’ve found some real winners to work with!  Have fun!”  I emailed him back (since he stopped returning phone calls), erring on the side of miscommunication I replied, “I’m not sure how to take this last email… clearly you are frustrated.  Are you calling it quits?  Is that the way I should read it, or are you just frustrated with this deal?”    I’ve yet to get a response, taking that to mean he threw in the towel, with no acknowledgement that I took the time to educate him, coach him, and served him up a sweet deal – just that I somehow was part of “jerking him around.”  He’ll probably never know how good it was, even at the higher price.  Some of you may wonder how sweet at deal it actually was, or if it was a good deal or not?  The proof is in the rest of the story.

The very same day I return a call to one of those investors who calls saying, “Looking for a good deal… want to flip a property [yada yada yada].”  I almost didn’t call him back after that last incident.  After asking the caller a few qualifying questions (realizing that this guys if for real), I told him about the same deal at the higher price.  He got so excited that he ran out to the property the same day, met his contractor, and we wrote an offer the following day!  He thanked me profusely.  The deal closed in two weeks without a hitch.  Again, he could not stop thanking me and was so glad for the deal.  In fact, they will be done with the project in a few weeks (1 month turn around) and they asked me to list the property.  A home run for everyone!

This is what a seasoned investor/flipper realizes:

1) It’s all about inventory – at least right now in the Sacramento CA area.  Without the project/property, nothing else matters.  If you cannot land the deal, everything else is a waste.

2) It doesn’t matter what the previous owner paid for it, nor what they will make from the sale, nor what the agent will make.  What matters is if the deal is good for them per the numbers.   Don’t miss the obvious and focus on your situation answering the questions, “Is this a good deal for me?”  This is the only magic there may be – figuring out the real disposition cost and an true exit strategy.

3) They don’t take it personally.  Clearly the first, unseasoned guy let his emotions get in the way and let them cloud his judgement.  I think that if he could have got past the feeling of being jerked around and realize that it’s part of the “game,” he could have executed a great turn-around.  The next guy swooped in and is going to make a chunk of change, and we’ll probably do a bunch more deals in the future.

4) Relationships are of the utmost importance.  I always appreciate the trust from those sending referrals and putting in a good word.  And it takes time and energy to develop relationships that create a win-win on both sides of the deal.

I guess the comments by the “rookie” that were meant to hurt me, were the truth after all.  I picked some real winners to work with [not him] and I AM having fun.  I took it as a learning lesson and reminder to qualify the would-be investor/flipper more carefully.  I am thankful for the experience and hopefully I can have more discernment on the future –  it never feels good to pour into a would- be-investor, only to get kicked in the stomach on the way out.  Thanks for playing!

What’s your recent “war” story, whether as an agent or investor?

Cheers,

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Keith Klassen, Broker

Appraisal Challenges and a Rebuttal with the VA

brick front doorThere is a lot of nervousness these days getting past the appraisal contingency, which is one of several things that a real estate contract usually hinges on when a purchaser requires a loan.  The contracts typically most susceptible are those from FHA and VA buyers, as these buyers many times can, and do offer more than the listing price, and the appraiser tends to scrutinize the property much more.  These loans require the least amount of down payment, with the VA requiring zero down.  A higher priced offer, over the list price, excites a seller as they see dollar signs, while a savvy agent knows that it must first get through the appraisal hurdle, or else the deal falls apart, or the seller has to lower the purchase price to the appraised value.   Many times an agent will meet the appraiser at the property in an attempt to educate, enlighten,  or justify the contract price using comparative listings and sold properties, as well as showing and detailing improvements, etc.  Some times this is helpful when done with tact, while other times it just annoys and ticks the appraiser off.  I typically just want to make sure that the appraiser is local and familiar with the area.  Homes that border neighborhoods and dividing lines can be tricky if the appraiser  is unaware of these boundaries, which a map does not show.

I am currently listing a home and in contract with a VA purchaser.  I felt that we priced the home fairly, in the sweet spot of the market.  We ended up getting two offers within a few weeks and settled in on one that was about $3000 under asking price.  All the inspections went well with no issues.  The appraiser called to let me know that the value would be coming in below the contract price, but wanted to give me an opportunity (known as “The Tide Water Process” only for VA loans) to submit my own findings and comparative sales.  I thought this was courteous, however, in our conversation he made it clear that he takes his job very seriously, and that he’s hardly ever wrong.  I interpreted that as, “go ahead and knock yourself out, but I’m not changing the value.”  I proceeded to send him the comps and a write-up as to the value of the home, including upgrades and details he may have missed.  Also I asked the question, “What other house can the buyer purchase in this area for the same price that is similar, where they can keep their kids in the same school” (which I knew was one of the buyer’s objectives).

End result:  The appraisal came in at the list price, $3000 over the contract price.  Go figure.  Seller is getting his money’s worth by hiring me.

Lesson learned:  Never give up.  Decent writing can go a long way.

Anyone else have experiences, good or bad with appraisers and appraisals?

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Keith Klassen, Broker

916.669.9030

Curtis Park Villiage (Sacramento) is Becoming a Reality

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After years of debate, soil treatment, neighborhood meetings, planning and develop the Curtis Park Village is now in full swing.  Twenty fourth Street is now  open to drive through, and unbuilt/pre-release homes have hit the market.  These stylish “cottage” homes (as they are referred to on the listings) have 3 bedrooms, 2.5 baths and range from 1790 to  2163 sq. ft., with options of a den, 4th bedroom, and one car or tandem garage.  They are listed from $564,990 to $609,990.

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One of my first thoughts was, “I wonder at what rate will that sell?  Are they going to go like hot cakes, or sit there with  price adjustments, etc.  Currently one has already gone pending, which is a good sign that they are a hot commodity.  It clear that first-comers will get choices of location, different options and amenities, and maybe will get in on the lowest price?  If the sell fast, those prices could go up!

Leave a comment or give me a call if interested and I can forward you the listings, or set up an appointment with the sellers for  more in depth information about the properties.

Truly,

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Keith Klassen, Broker

916.669.9030

Sacramento Housing Inventory (Spring/Summer 2013) – Like Trying to Find a Needle in a Haystack

However cliché this title sounds, buyers and some realtors alike are completely discouraged by the lack of homes to choomonoploy housesse from.  I just read the statistic that the median days on the market for a home in April 2013 was 12 days.  In addition,  the inventory has shrunk a bit further since then.  Buyers use to say or think, “If I don’t get this particular property, I will just wait for the next one.”  Now they are saying, “The next one might cost more than we want to pay (or can afford), or we may have to wait 4 months to find it!”

Some home buyers have told me that they are just going to wait until the next dip in the market.  This could be extremely wise, or they could be waiting a while?  Time will tell.  Ultimately, like my dad use to say, “You’ve just got to get on the merry-go-round, or stand on the sidelines and wait.”

Is the Bubble Going to Burst in Sacramento Housing Market?

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My kids (and adults alike) love these huge bubble makers – they are awesome!  It seems like the public feels the same way about the real estate market.  One investor, friend of mine, who has been in business since the early 70’s – yes, 1970’s) is very skeptical.  He says, “Maybe it’s just the old guy in me talking [kind of sounds like my dad], but I’m sure if this appreciation in the market is real or manufactured?”  He went on to say that with the government backing so many loans at 3.5% down, so many home buyers are instantly upside down in their home after they buy it, as it takes about 8-10% to sell it.”  I’ve never really looked at it like that before. My response was, “but hardly any other buyers are able to even get an offer accepted, let alone close on a home, due to all the investors gobbling up the inventory with cash!”  My seasoned friend mused on, “Even with unemployment going down, I wonder how many of these new jobs are substantial… solid jobs – ones where people are making a good living and able to buy or invest with confidence.”   I left that conversation thinking:  1) The market will keep going up as long as there is demand, and I know with my list of buyers, there is HUGE demand.  And, it will keep going up as long as there is a perception of health in our economy – that seems what everyone wants to feel, even if it’s just a perceived reality.  How long will it last?  Or, at what price are these home unattractive to both investors and buyers?  2) Especially for investing… proceed with caution.  Another friend at the table said that he will only invest if he knows that he can get out safely within 6 months.  It’s interesting to hear seasoned investors say they are unsure and don’t know, especially when the wisdom of the day is to make certain proclamations like, “We got 2 years of appreciation!” or “Once the unemployment rate falls to ____, then interest rates will go up.”  Some of these statements have truth embedded, but beware of those who “knows for sure.”

Another respected voice, Jed Kolko (Cheif Economist) says in a recent article, “that the next housing bubble is probably just a matter of time. But, as Trulia’s Bubble Watch shows, that time is not now.”  See this interesting article HERE.

Curtis Park Village Developement, Sacramento CA

As a Curtis Park resident, I’ve been following the most recent news on the Curtis Park Village development – here’s a recent piece that goes a little beyond our Viewpoint news.

http://www.sacbee.com/2013/05/05/5393743/petrovich-to-break-ground-on-long.html#mi_rss=Business