I found this little article and video on McKinley Village interesting – Let’s go take a look!
Keith Klassen, Real Estate Broker
A good portion of my business has trended toward investors and investment properties, I get this question/scenario posed to me often. If the question is not asked directly, I’m usually bringing up the issues revolving around selling with a tenant in the property. There are a lot reasons why the answer could go either way on this topic, but let’s explore some of the main concepts that will help you make a good decision based on your situation. (Qualification: This discussion mainly has to do with single family income properties, rather than multi-family units).
Many agents just don’t want to deal with the hassle of selling with a tenant. There are scheduling conflicts, posting of notices, and high emotions when treading on someone’s living situation – all potentially emotionally charged and exasperating situations. While these can be good reasons to sell vacant, they may not be the best. A good agent knows how to handle and deal with tenants in a caring and professional manner. It does, however, make the process a bit more grueling and cumbersome.
I find the main issue boils down to is loss of income. Most owners balk at asking tenants to leave, because they don’t want to lose the monthly rents. In most cases I’ve found that the loss in rent is less than the higher amount a home will fetch when vacant. Why?
Call or write to discuss your situation in more depth.
Ketih Klassen, Real Estate Broker – 916.595.7900
Whether you are selling retail, wholesale, or analyzing a flip project, the costs can sometimes be tricky to figure out. It’s not just estimating the sales price and backing the loan amount out of the proceeds. There are many fees involved that can sting a seller if unaware. This is where experience and some simple tools come in handy.
For retail sales, your favorite title company can drum up an estimated cost sheet with your potential sales price. Or, you can usually get the title company to give you a net sheet spreadsheet or a link to their website, which many of them have a seller’s and buyer’s net sheet program. If you are an agent, doing it yourself can save time and help establish your expertise. Remember to remind the seller that this is an estimate, however, the better you get at filling in the net sheet (and comping properties) the closer you will be to the exact net number. I like to give a worst case scenario, then the client is happy when I negotiate a better deal. The following are included in a typical net sheet:
Here’s a sample net sheet:
|SELLER’S NET SHEET|
|Address:||SACRAMENTO, CA 95818||Est. Close Date:||6/28/2016|
|Prepared by:||Keith Klassen, Klassen & Associates, 916.595.7900||Annual Taxes:||$0.00|
|Estimated Sales Price:||$645000.00||1st Loan Balance:||$385000.00||Interest:||$|
|Approx. Gross Equity:||$260000.00||2nd Loan Balance:||$0||Interest:||$|
|CA Withholding (3 1/3% of sales price):||$|
|County Transfer Tax:||Paid by: Seller||$709.50|
|City Transfer Tax:||Paid by: Seller||$1773.75|
|Title Insurance Premium (Owner’s Policy):||Paid by: Seller||$1815.00|
|Escrow Fees:||Paid by: Both||$712.50|
|EWC Drawing Fee:||$0.00|
|Courier Fee (includes Federal Express):||$40.00|
|Total Commission:||6.00% + $0||$38700.00|
|Transaction Coordination Fee:||$350.00|
|First Loan Balance:||$385000.00|
|Interest on 1st Loan:||$|
|Second Loan Balance:||$0|
|Interest on 2nd Loan:||$|
|Natural Hazard Disclosure Report:||$99.00|
|Pest Control Report:||$125.00|
|Work Required for Pest Clearance:||$|
|Tax Proration (if not paid to date of recording):||$|
|Total Estimated Costs to Seller:||$429999.75|
|CREDITS TO SELLER|
|Total Estimated Credits to Seller:||$0|
|CASH TO SELLER|
|Estimated Sales Price:||$645000.00|
|Plus Estimated Credits:||$0|
|Less Estimated Costs:||$429999.75|
|Estimated Sale Proceeds to Seller:||$215000.25|
Contact me if you’d like a complimentary value assessment done on your property, or to discuss the costs of selling in detail.
Keith Klassen – Real Estate Broker
There 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?
Keith Klassen, Broker