Who Is Dean Graziosi? What You Learn May Surprise You….

January 27, 2015

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Could Your Home Sell to an Investor?

January 23, 2015

If you’ve been thinking of selling your home, or if you need to sell, there aren’t many markets out there crawling with buyers. The first time homebuyer market is still in the cellar. The Millennial Generation are still at home with parents for the most part. They’re not buying for multiple reasons, from sketchy graduate employment prospects to high student debt.

Existing home sale prices are improving. The FHFA (Federal Housing Finance Agency) report of home prices for November 2014 shows an increase nationally of 0.8% on a seasonally adjusted basis. However, sellers as a general rule across all markets are not enjoying high demand. The NAR (National Association of Realtors) report of existing home sales for the same period provides these data points:

• November’s sales declined by 6.1% from October, only slightly higher by 2.1% from the previous November.
• All regions tracked showed a decrease in the number of sales, though prices were up slightly.
• It takes approximately 65 days on average for a home to go from listing to contract, slower than the 56 days from the year before.

That’s kind of a mixed bag, and as far as DOM (Days on Market) an average number includes all of those “hot” markets with buyers competing and writing contracts in hours to a few days. There are a whole lot of sellers out there sitting on listed homes far longer than the average. Some markets are always slower, with DOM figures approaching six months or longer. So, if you need to sell your home, or want to and aren’t getting the job done, is it a candidate for a rental property investor?

No Discount — No Purchase

Don’t even think about it unless you can sell at a price at least 10% or more below its true market value. If you owe too much on it to do that, or you just don’t want to settle that low, then keep working the retail market. Savvy investors want to lock in some profit at the closing table.

The good news is that if you can do this, you could be selling very quickly. Investors are constantly monitoring their markets and looking for deals. Many of them pay others to deliver good deals. If the numbers work, they can often offer cash and a closing within 30 days. But, the numbers have to work.

The Numbers

Let’s do an overview of the things rental investors want in a property:
Rental demand — First and most important, the home should be one in an area renters want to live. It must also have some or all of the features they want, and they want pretty much the same thing as home buyers. So, if your home has a non-functional floor plan or antiquated appliances and other features, it’s a tough sell.
Cash flow — Most rental property investors use leverage. They will be using a mortgage, and they must be able to rent the home out for a positive profitable cash flow over their mortgage and expenses. Here is where you need to do some research. Check out the rentals in your market with similar features. Call like a renter, get real rent numbers. Then use a mortgage calculator at current rates and the discounted price at which you’ll sell to see if, taxes and insurance included (20% down), the home can rent out for at least a double-digit positive cash flow to cover other expenses with a profit.
Appreciation potential — Like any other homebuyer, a rental investor wants the asset to grow in value over time. Of course, you can’t predict the future, but you can see how your neighborhood has performed over time. If the area at least keeps up with the national average appreciation or exceeds it, you need to verify that with data.

None of these three research items require much time or effort. You can get data for recent property sales from a real estate agent to determine if you can sell at a discount to value. If your home meets the criteria, you could be a target for an investor. But, they need to know you’re out there. First, pull together your research so you can present it. No sales pitch is necessary, just reliable data they can verify.

Go to Market

This can be as simple as going on Craigslist and placing a free for sale ad targeting investor buyers. It’s different than a regular for sale ad. You want to put your research into a concise ad that will attract their attention with keywords like ‘rental home for sale, great cash flow property, discounted rental property, cash flow home at a discount,” etc.

Then just summarize your data, something like: “Great cash flow rental home for sale in high demand neighborhood with great value appreciation history. Buy at double-digit discount to value, with rental income potential that will generate approx. 20% return.”

The 20% number came from an example home that would rent out for a monthly payment around 24% higher than the mortgage, taxes and insurance, allowing for other expenses. If the numbers work, look for a call within hours to days, as investors or their birddogs are out there looking.
Dean Graziosi

Weekly Video Blog #95 – Betcha Didn’t Know Dean Was a Magician!

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Weekly Video Blog #95 - Betcha Didn't Know Dean Was a Magician!

Visit http://www.internetlifestyle.com/blog/fun/lessons-and-adventures-from-necker-island-with-sir-richard-branson/ Welcome to Dean’s Weekly Video Blog as we…

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Weekly Video Blog #124 – Fortune Magazine Says Now Is The Time

January 19, 2015
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Weekly Video Blog #124 - Fortune Magazine Says Now Is The Time

Visit http://www.automatedforeclosurefinder.com/ Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… Th…

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Weekly Video Blog #141 – Why the Heck Does Dean Go and Have to Sell Things?!

January 16, 2015
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Weekly Video Blog #141 - Why the Heck Does Dean Go and Have to Sell Things?!

Visit https://www.facebook.com/deangraziosipage Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… Bet…

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Top 5 Things Home Sellers Need to Know About Price

January 15, 2015
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The vast majority of homes sold in the U.S. are sold through local real estate MLS (Multiple Listing Service) systems. The member real estate brokers and agents list their properties and cooperate with other members in the sales through commission sharing. The typical seller will shop for a real estate company and agent, maybe interviewing several.

Every seller has their own priorities for that choice, but the most important common concern should be listing the home at the right price. Here are what I consider the top five things to understand about pricing your home to sell and not sit on the market.

#5 Value is Relative but there’s a Limit

You’re going to have your own ideas about what your home should sell for, but emotion only clouds the picture. It doesn’t matter how much you love your home, or how much money and sweat you’ve invested in it. There isn’t an absolute hard number though, as there are nuances in every market. Every potential buyer will have their own unique situation and a top price they’ll pay for your home. It’s a mistake to assume you’ll stumble into the perfect prospect who will fall in love with the home and pay over market.

There are fast, slow and balanced markets. Sellers can be more aggressive if buyers are competing in a low inventory situation. Your home may also have certain features that are in demand, such as a large open gourmet kitchen. But, if every home in the neighborhood does as well, then you lose the competitive advantage. The point is to work with the listing agent to thoroughly evaluate your home based on more than just what others have sold for recently.

#4 DOM Can Burn You

That’s Days-On-Market. Testing the market with a price higher than a careful valuation tells you it’s worth is risky. Sure, if it’s a healthy market you may get that just-right buyer the first week or so. But, if you don’t, buyers are checking out the number of days your home has been for sale and maybe adjusting their offers downward. Don’t assume that DOM doesn’t matter.

#3 Leave Room for Negotiations

Sure, we all know that it’s unlikely that we’ll get a full price offer right out of the gate. We expect some back-and-forth, and the listing price should have some room built into it for this bargaining process. But, too many sellers forget that there is another bargaining process after inspections. The perfect home doesn’t exist, and home inspections turn up condition issues and repair recommendations.

Minor stuff usually doesn’t result in a new round of negotiating, but buyers can be very demanding, especially if they paid near asking price. If you’ve been aggressive and held the line for a full price or near full price contract, expect some pushback if there are condition problems.

#2 Know How Your Agent Chose the Comparables

Real estate agents do a CMA, Comparative (Competitive) Market Analysis. They choose a number of homes similar to yours that have sold recently and use their selling prices to value your home in the current market. They adjust those sold prices to compensate for differences in the properties, such as number of bedrooms, etc.

Three very important things they consider in choosing those comparables (comps) are similarity to your home, when they sold and location. They should be using very recent sales, try to stay in the same neighborhood, and use homes as close to the same in features and size as yours. Ask your agent the reasons for choosing the comps they did, and how many possible choices there were. It may not be intentional, but in competing for a listing, an agent wants to give you a good list price estimate to get the listing. They can lean toward the comps with the highest sold prices, even if there were more qualified recent sales.

#1 Do it all Again

If your home doesn’t go under contract very quickly, how long is that original list price the right one for the market? It depends on the market, but in all of them homes are being added and sold almost daily. Supply and demand is the driver of prices, and supply can rise or fall quickly. Have a clear understanding with your agent that you want a report of market activity every couple of weeks. If home inventories change a lot, you’ll want to do another CMA.

Another thing that can make a big difference very quickly involves the type of homes and features. Inventory levels can stay pretty steady, but if three bedroom homes flood the market suddenly, yours may need a price adjustment.

Now you’re well-informed about price influences and the process. Keep these in mind for a better relationship with your agent and a smoother sale process.
Dean Graziosi

Weekly Wisdom #166 – How to Get Rid of the Villain Within

January 12, 2015
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Weekly Wisdom #166 - How to Get Rid of the Villain Within

Visit http://deansacademy.com/ Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… This week, Dean goes…

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In 2015, Will It Be More Renters or a Buyer Binge?

January 9, 2015
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There is never a shortage of opinion or predictions about the housing market at the beginning of the year. 2015 is no exception, and I’ve been doing some reading to try and get a feel for market activity this year. Over the past two or three years the picture has been pretty muddy as to how home prices will move. In some areas they’re climbing nicely, but in most they are rising on average at a pretty slow pace.

Three areas of interest all influence home prices and investor activity, and the current consensus for each doesn’t really clarify anything about near term home buying activity. For investors, particularly rental property investors, draw your own conclusion from these three current market influencers.

Mortgage Rates Plunge

Mortgage rates have dropped a lot and quickly. The 30-year fixed mortgage interest rate is reported to be about 3.73%, down from 4.51% a year ago. The 15-year rate is down from 3.56% a year ago to 3.05%.

Economists over at Realtor.com tell us that mortgage rates haven’t really been a major influence pulling buyers back into the market. They’re more concerned about down payments and qualifying for a mortgage. The slow income gains over the past few years are dampening enthusiasm. Median household incomes are lower than 2007 levels after inflation, and the millennial generation is putting off buying homes.

If you’re a glass half full person, these really low rates may lead you to believe some predictions that first time buyers will return to the market in droves this year. If you’re on the other side, until the economy improves, more jobs are created, and incomes rise, there probably won’t be much in the way of exciting home buying and appreciation news this year.

FHA to Lower Mortgage Insurance Premiums

The FHA has announced that the premium charged for mortgage insurance is to be lowered from 1.35% of a home’s value to around 0.85%. That’s a major reduction the agency justifies with rising reserves, predicted to rise from $ 7 billion to $ 10 billion annually. The FHA states they won’t be needing another bailout due to improving finances.

This premium reduction is predicted to lower the annual premium for homeowners by around $ 900, and will hopefully enable a quarter million new buyers to purchase a home. The lower premium helps the buyer to qualify for the mortgage with lower income.

Adding this news to the lower mortgage rates could make the difference, luring the millennial generation back into the market for their first homes. However, not everyone can qualify for the FHA loan, though the low down payment requirements help a lot.

Rents Just Keep Rising

If you don’t anticipate a buying binge, investing in rental property or wholesaling to those investors who do may continue to be profitable strategies in the coming year. Rental reports from Zillow.com are showing that Americans paid out more than $ 20 billion dollars in higher rent in 2014 over the previous year.

Nationally, the total number of renters is estimated to have grown 1.96% in 2014, with the median rent paid rising by 2.9%. Another interesting number is that rents have grown at twice the pace of income over the past 14 years. Demand is strong and supply isn’t keeping up. Zillow chief economist Stan Humphries is quoted as saying “Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn’t out of the question. In fact, it’s probable.”

What’s Your Call?

There are already plenty of analysts and economists predicting home prices and the health of the housing market, so I’ll stay out of the fray. One thing I will predict is another great year for rental property owners; strong rents and cash flows should hold well.
Dean Graziosi

Weekly Video Blog #105 – Reflections On Thanksgiving?

January 8, 2015

Visit https://twitter.com/deangraziosi Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… This week ma…

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Weekly Video Blog #115 – Time To Crown a New Champion!!!

January 5, 2015
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Weekly Video Blog #115 - Time To Crown a New Champion!!!

Visit http://www.forbes.com/sites/helaineolen/2012/07/25/cnbc-to-promote-house-flipping/ Welcome to Dean’s Weekly Video Blog as we talk about how to make pro…

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