Who’s Buying the Homes in Brentwood?

Recently there has been a notable increase in homebuyers in Brentwood and other local areas. Who is looking for homes and why?

With the recent rate decrease and odds that there will be more, people are now looking for real estate as there is an opportunity for them.

For the investors (and I mean real investors, not flippers) there are positive cash flow opportunities in Brentwood. With sufficient down payment and selection of the propert loan program, an investor can make some pretty good returns (positive cash flow, really) purchasing some of the offerings here in town.

First time homebuyers, who have been discouraged by the media, friends, and even some realtors, are looking at nice homes, with attractive prices. Since the primary offerings on market are bank owned properties, they are able to get their closing costs paid for, buy down their interest rate, and other incentives, since the banks want to get rid of these properties. The problem they may have is the number of offerings there are. So many choices can cause confusion.

Move up Buyers are also beginning to look at the real estate market as well. The availability of the perfect home at low prices is becoming a temptation that is hard to resist. While we are not yet out of our foreclosure cycle, the properties we are seeing are many times nicer the new homes. Upgrades, landscaping and other amenities are already installed, and at no charge.

The environment of low priced, low interest rate, and large selection is continuing and looks to do so for remainder of the year,

If you are interested in participating in this opportunity, we can help you, no matter your situation, investor, first time home buyer, or wanting to move to your dream home 

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Hold on to Your Hat!

With the recent cuts in the interest rates by the Federal Reserve, low real estate prices, and loads of choices, we expect the number of real estate transactions to dramatically increase from the previous 2 years.

Prior to the rate increase, increased buyer activity has already evidenced itself and has since October of last year. Agents are seeing multiple offers on properties again. These properties, of course, are viewed as bargains by the buyers, who see real value in the real estate purchase.

Not only homebuyers are purchasing homes. Investors in real estate are back as well. Many properties are being purchased for the express reason to rent them to tenant who cannot or do not intend to purchase real estate. Most of the investors I speak with are those who see the bottom of the market either being very close or already occurred.

As a purchaser of real estate, you need to assess the reason for your purchase. If you are buying for your primary residence, whether the bottom of the market is near or not,  is not important. What are important are these two facts:

1)      You like the home

2)      You can afford it.

The investment aspect will only become evident after you have lived in the home for some time. Out general rule of thumb is, if you intend to live in the home for 5 years or more, purchasing makes sense. If not, renting may be a better solution. The reason for this is simple. The transaction costs of purchasing a home are not insignificant. To recover those costs, only time will help. Renting will cost less over the short term, as a rule. If you plan to live in the home for a long time, then buying is the way to go. The savings you will get from mortgage interest deduction, along with the potential for appreciation of the property’s value over time give the homeowner a real investment opportunity, but more importantly gives them a home to live in.

Investing in real estate requires good analysis of the costs and the potential income, modified by interest rates, inflation, and price appreciation potential of the property you wish to acquire. Successful investors look at the numbers, rather than look at the property. Working with a real estate broker or agent that understands these concepts is a requirement as well.

The ’smart’ money are people who see value when others do not. We believe that the smart money is in the market today, buying real estate at bargain values. You can be part of the smart money as well, but do not hesitate. The longer one waits, smart money becomes semi-intelligent money. When values go up, there is no smart money, only smart sellers.

Buyer will be coming back to the real estate market in large numbers in 2008. The earlier the smarter.

Call us at (925) 308-7045 for more information.

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Buy or Sell Real Estate at Auction? Things You Need to Know

You have probably seen a few, if not many, signs around town announcing that a property is to be auctioned on a particular date.

This has gotten our interest and we have done a little research to help everyone understand how property auctions are working here in
Northern California.

The popularity of the property auction was sparked by a show that plays on BBC America called ‘Homes Under the Hammer’ which is no longer being shown in the
U.S. In this show, people were at property auctions that gave them great bargains and the show then followed up on how the people made out with restoration. They brought in ‘Estate Agents’ (the same as real estate agents here) to give their market assessment on how the people did compared to buying property on the open market.

The majority of people who brought these properties had done very little compared to what they had expected to do over 3 months of followup. Often, the estate agents results were only as good or worse than what could have been achieved by purchasing a home in open market. Given the time and effort, most of the Buyers were worse off.

Here are some items that you should consider if you are thinking of entering the Real Estate Auction business space.

AS A SELLER

The property that you want to auction must be vacant and have clear title. In today’s market in the
US, only foreclosed homes have been put up to auction, as a rule. There are examples of successful auctions being completed on EBay. There is a cost for doing the auction. EBay will charge almost $6,000 to sell a home (for a $350,000 property as an example) on their site and the fee will have to be paid within 30 days of the close of the auction. Most properties in escrow take at least that long, so you will probably have to come up with the fee out of pocket.

You can hire a firm to auction your property. The company will have you sign a contract with them to do the promotion, advertising, setup and operation of the auction. You will have to pay the auctioneer, whether the property sells or not. You will be able to place a reserve price on the property (a reserve price is one where the minimum selling price is set and the sale does not occur if the reserve is not met) but more than likely, the selling price is reviewed by you, including the terms of the sale (any commissions asked, repairs, loan terms, etc.). You can then decide as to whether you accept the deal or not. In either case, you will be required to pay the auctioneer.

If you decide to use an auctioneer, you should interview several to determine whether they have the resources to conduct an auction that will attract the largest number of bidders. New real estate auction firms are popping up all of the time, many of which have no real estate auction experience (as in the U.S., we have not done a lot of this in the past). Be wary of the statements made. Auctioneers are salespeople just like Real Estate agents.

AS A BUYER

Looking at the auction ads you will see some very low prices advertised. These prices are the starting bids for the properties and this advertising is used to entice you to attend the auction. If you are attracted by this, you are not the only one who is. The prices do attract a large number of potential buyers.

The preview weekend (sometimes weekdays) is important as this will be the only time that you have a ‘Get out of Contract Free” card. If you are the successful bidder on any of these properties, you are obligated to purchase them, regardless of condition. Bring your pest specialist, home inspector, or any other trades person to look over these properties. While some may be in good condition, many are not. You need this information in order to make a sensible bid. For example, if the property is worth $300,000 but has $20,000 worth of pest damage, it is worth less, at least $20,000 less.

Get your loan in order prior to going to the auction. You will have to know if you can get a loan unless you are prepared to pay all cash for your new acquisition. There may be a lender at the auction site, but not always. Remember, you will be entering into a contract to purchase. If you win a property, you will more than likely be required to place a 5% deposit on the property prior to leaving. For a $500,000 home, this means a $25,000 check. Most firms will take a personal check for this, but many do not.

Most of the time, the auction sales contract will specify that you must close escrow within 30 days. If you do not, there will be per diem penalties that will increase the cost of your purchase.

Here is the most important part of purchasing real estate. If you change your mind about purchasing the property, you will more than likely lose your deposit. This is the major difference between the regular sale and the auction sale. Be very, very aware of this.

The property, once you win the auction, may note be yours. The Seller will have a few days to review the result and determine whether or not to accept it. We get listings frequently from asset managers who have placed the property on auction and not received the amount they expected. Don’t think the bargain that you get at the auction is necessarily a done deal. The asset manager will determine if your bid is sufficient. It is different than a regular auction of collectibles, kitchen equipment or estates.

You will probably find at auction that choice properties will attract more Buyers thus driving up the price. That $150,000 starting bid goes fast more the $500,000 property and is bid to the level that this small market will take it. Be prepared to raise your paddle quickly and to take it down even more quickly once your price is hit.

CONCLUSION

There are people who have experience, time, and money that will help in making money from auctioned real estate. You will be competing with them. Be aware when entering into this arena. It is always a good idea to take an experience real estate professional with you when trying this. Good one will not charge you for this service as they will be compensated from the seller. Good luck!

If you have any questions about this, give use a call at (925) 308-7045

John and Diana Case

Broker Associate/Realtor, CRS, GRI, SRES

Intero Real Estate Services – Delta Communities

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