Judging books by their covers

I somewhat regularly post the best deals I come across in my Unreal Deals Blog.  My latest find looked great on paper and I was excited to feature it:

“My newest UnReal Deal is all about the acreage.

2 Bedrooms, 1 bath, 1232 square feet, plus a 58x 60 horse barn and 66.9 acres. That’s right SIXTY SIX acres. How much would you pay for all this? For a limited time, it’s yours for only $145,000.

Here are the listing details

Average price per acre for parcels 5 acres or larger is $3261, indicating a land value alone well in excess of $200,000. This proprety was just listed, by Tim Reid, RE/Max Bayshore properties, and while I haven’t toured it yet, it hit my radar and caught my attention.

Turns out on paper isn’t real life.  Yep, it’s got all those acres, and the house, and the barn, but the house is as bad as the agent let on in his comments, or worse.  The deck has…let’s call it debris… an inch thick on it.  The former owner sold all the top soil off of the land, and allowed contractors to dump old concrete and road construction debris out back.

Don’t take this to mean the agent was dishonest in describing the property.  By no means did he sugar coat it, but by getting caught up in the specifications of the property, I rushed to judgement.  This might still be an OK deal for the right buyer, but it’s not as UnReal as I had thought.

This is similar to the realization that many buyers face when looking at foreclosed properties- they compete on price alone.  Condition and history are unknown.  Nobody is loving them, keeping them feeling like a home.   The good news for buyers is that more and more sellers are taking competitive stances on pricing, bringing well cared for homes into the mix with foreclosures.

If you’re in the market, don’t limit yourself by telling your agent you’re only interested in foreclosures.  Just because the bank owns it, doesn’t mean it’s the best deal.

 

Cars vs. Cribs: How the tax credits stack up

The passing of the $4500 “Cash for Clunkers” tax credit out of the House got me thinking. First, let’s not fool ourselves into thinking that this is serious efficiency legislation- yes, it puts an incentive on deciding upon a fuel efficient vehicle, and that’s certainly more palatable than forcing higher efficiencies and limiting consumer choice. But this is about getting auto sales moving more than anything. And as an old car guy (I grew up around my father’s Chrysler dealership) I cringe when I hear that the “clunkers” traded in would be “recycled”- it’s a certainty that some very serviceable vehicles are going to be taken out of circulation. That means they won’t be available for resale to those who can’t afford a new car.

Let’s compare this incentive to the $8000 first time buyer tax credit, shall we?

Average new-car transaction price has dropped to $27,941, according to The Wall Street Journal. This means that the credit given is 16% of the average price- a pretty healthy incentive, and no restriction on who can buy, other than you have to move up in efficiency.

Compare this with the 2008 US Median Sale Price of $198,100 (per this NAR report) and the $8000 First Time Buyer Tax Credit, and we’re looking at an incentive of 4%. Still very nice, thank you, but think what a bump in the tax credit, to say $15,000 could do. Especially if it were paired with revisions making the credit applicable to all buyers of primary residences!

Danielle Hale, a research economist with the National Association of REALTORS(R) put together this analysis that shows each home sale at the median generating $63,101 in economic impact. That’s an enormous number, and one that drives activity in all sectors of the economy.

My opinion: The current home buyer tax credit is a good thing, but it would be a much more significant force in helping clear inventory and stabilize values with the changes noted above.

 

Weathering the Storm

The recent near blizzard conditions here in Northern Michigan brought to mind the topic of Weathering the Storm.  Like many areas in the country, Michigan’s real estate market has taken a beating.  Honestly, our entire state economy has been struggling.

 The thing about real estate markets, though, is that they’re local.  In our area, we’ve got one county showing a 15% drop in average sales price, while the neighboring county is down only minimally.  SE Michigan continues to struggle mightily, but when that market turns (and it eventually will) we’re going to benifit in the vacation/retirement mecca here in the north.

 So what to do in the meantime?  Work hard, get good listings, make sure they’re priced well, and tell the world about the deals available.  And there are deals!  I’ve got a list sitting in front of me that includes 286 bank owned properties in a 5 county area.  These banks don’t want to sit on these properties- they want them gone, and among these 286 listings are some great deals.  Aside from bank owned properties, there are private sellers who are ready to make someone a very happy owner. 

I’ve literally got one owner right now who is all but begging me to buy his property.  And I might just give in and do it, because it’s a GREAT deal.  But I can’t buy all the great deals, as much as I’d like to.  I need to keep finding buyers who are ready to move when these deals become available.  So that’s what I’ll be working on this week.  Calling contacts and pitching them a deal, one that I should probably take, but so far haven’t.

 I’m really optimistic about the upcoming year.  It’s the buyers turn in the drivers seat, and as prices adjust, buyers can afford more home.  That means more happy buyers, more dreams fulfilled, and more excitement.  And for me, those are the rewards that last, that fill you with hope when deals go bad, that make you smile when you head to the office, that make you feel like you make a real difference.  I’ve said often to friends and family that “I still want to save the world, to make it a better place.”  When dreams get fullfilled, I can see that I’m doing that, bit by bit.

If you want a copy of the list I referenced, or want to be on my “hit list,” send me an email, or post a response.  It’s a great time to be a buyer!

 

Deals are there for the taking

I wrote an offer today on a house that’s listed for $19,900.  While it is beat up, it still is a house, on 1.2 acres, for $19,900.  As my friend Jesse said…”that’s like buying a car!” and it got me thinking.  The last time I sold a house in this price range was about 6 years ago, and that was a single wide mobile on a tiny lot in Thompsonville.  Don’t take this to mean that we’re back to pre 2001 levels across the board, but there are some great deals out there.

 So good, in fact, that Tammy and I are talking about selling our house.  We know we won’t net out what we might have hoped not long ago, but it’s all relative.  There are deals available that I’m having trouble passing on, and so we can make it up on a purchase.

 Word is starting to get out, and the really good deals don’t last for long before they’re snapped up. 

 I read an interesting analysis comparing and contrasting the foreclosure issue in Michigan and Ohio to that in California and Florida.  Here’s that article.

 Enjoy