MiamiRealEstateKing

HOW TO SELECT A PROPERTY AND WIN…

In real estate on November 15, 2010 at 8:15 pm

With so many properties to choose from, it is often overwhelming for buyers to choose, causing them to do nothing. This is a shame because, in several key markets, prices have already bottomed and, even though there will continue to be plenty of foreclosures, the bottom price will begin to slowly rise over time.

By the time they decide that it is time to make a choice, the bottom would likely have passed.

As a matter of fact, experts agree that the recession as defined, was over in June of 2009 – that’s 18 months ago (from this writing)! This means that, buyers would likely find out months after the fact, that they also missed the bottom.

When evaluating what property to choose, you may need to consider (among other factors):

  • Is the main use for the property to rent or a primary residence?
  • If you want an investment/rental property, even if you found yourself living in the property temporarily, would the property have to fit your long-term needs or the basic comforts of a tenant?
  • Do you prefer it to be rental-ready or move-in ready or are repairs needed, OK? (a higher purchase price on a rent or move-in ready property may be better than a lower purchase price on a property needing work you can’t do – considering that the work to be done, may also take twice as long or more, as first estimated)
  • Lower maintenance fees for higher net or lower monthly costs (rental nets of $2-400/mo are easier to find than $7-800/mo – what is your rock-bottom net required? What is your maximum payment if additional expenses caused your payments to go up unexpectedly?)
  • If a condo, what is the building’s overall condition and re-certification status (open permits or violations can affect your investment for months or years to come)
  • If a house, similar consideration for all the major systems are required (roof, electrical, plumbing, pool, etc).
  • Tenant in place vs. vacant. Obviously, an existing tenant gets you collecting rent immediately. However, if you plan to use the property as your residence, it can interfere with your move-in date if the tenant is on a lease you must honor.
  • Facilities such as laundry on premises, balcony, pool, gym, pets and/or parking, view and proximity to bus, beaches and other factors that may improve desirability (and rentability)

So, how to choose?  Borrowing from a sports analogy…here’s a good trick:

1.      Make a list of all your wants and would-love-to-have in a row and without pre-conceptions.

2.      Then, create a matrix (like a sports team elimination matrix), to help you discern between your must-haves from your would-love-to-have. Simply, begin to prioritize.

3.      Choose your top 3 must-haves and your top 3 would-love-to-have.

Recognize that, units offering it all, including every would-love-to-have feature, will be more difficult to find at a lower price range.

4.      As you choose, consider: what’s more important…rent-ready or price? Price or net? Then, keep comparing all your choices against each other, until you find your absolute 3, must-haves and your top-3, would-love-to-have.

5.      Consider those units offering your top 3 must-haves plus the most would-love-to-have, first.

Units having all 3 must haves and your top 3 would-love-to-have, will become your top-picks and offers should be written on those. You may end up with 2 or 3 of these.

Your professional Realtor© (remember, only real estate agents who are members of the National Association of Realtors© and who adhere to their strict Code of Ethics can be called Realtor©), can then look at your top-three choices further to find similar sales in the building or immediate area and  help you consider other details that will help you make your final decision and offer price for each. You should then make an offer to your top choice, first.

Remember that:

1.      Short sales (pre-foreclosures for sale by distressed sellers), may take several weeks or even several months to reply and know if your offer is even accepted. The lender may flat-out reject the offer or counter. You can then adjust and present another counter accordingly or withdraw. Lenders behind short sales may allow up to 60 days to close (depending on a number of factors), and you can close sooner if ready.

2.      REO (foreclosed, Real Estate Owned), properties typically reply within a few days. Fannie Mae and Freddie Mac REO’s require that the first 15 days be reserved for owner-occupied offers only. After the 15th day, you can participate and submit yours. REO properties may elicit multiple offers stifling our chances that way, while Short Sales may allow to only submit our offer while others would remain as backups. REO sellers may typically allow up to 45 days to close, although we can, close when ready.

3.      Non-distressed, motivated owners (not a short sale or REO), occasionally surface with a good opportunity to avoid the above, allowing us to make a clean offer and once accepted by the seller, immediately proceed to the closing process (inspections, etc), and close fairly quickly (often within 15-20 days).

If you find one of these that meet your criteria, you improve your chances of closing before year-end and qualify for my year-end promotional offer (close a transaction with me on or before 12/31/2010 and I will credit you 20% of my commission at closing), and win!   🙂

Hope this helps your decision process further and you are as always, welcomed to ask any questions, at any time.

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