Friday, March 15, 2019

FSBO - Good idea or bad?


By Kevin Ronan


What is a FSBO? No, it is not a strain of the flu or an invasive plant growing in our lakes. FSBO stands for For Sale By Owner. A seller has decided to market and sell their own property without the assistance of a local Realtor®. The most common reason for selling your own property is the desire to not pay a realtor's® commission and saving thousands of dollars in commissions is very attractive. However, many FSBOs also suggest their desire for  greater control  of scheduled buyer showings and open houses, listing activity, price negotiations, security and closing activities.

Are you considering going FSBO? With so much information online, how easy could it be to snap some pictures, write a property description and post online? The most common methods of marketing the old fashion way include yard signs, word of mouth with friends and family, open houses and advertising in local community publications.

In 2017 The National Association of Realtors® reported that FSBO sales accounted for only 7% of all residential sales. Why is it so low ? 

Experts agree, the number one reason is because the FSBO properties were priced too high for the market. By preparing a Comparative Market Analysis (CMA) with the assistance of a local Realtor®, they can help you understand the local market conditions and recommend a suggested list price. It is also reported that sellers do not have the time or the resources to market the property themselves. 

Incredible to believe that just under 50% of all FSBO sellers reportedly did nothing to market their property. A combination of poor listing visibility and lack of multimedia marketing resulted in low buyer traffic.

In closing while FSBO does work seamlessly for some sellers, that route is not for everyone. Carefully weigh your options and consider if you have the time, resources and emotional strength to go this route alone.  In the end, if you don't have the time and resources, then consider seeking a local Realtor®, who can help you with the market rate and marketing so that your property can be sold quickly and with expertise.

I hope this article sheds some light on the challenges you face when you follow the FSBO path.  Please contact me or your local realtor if you have any questions. 

This article was brought to you by Kevin Ronan, Associate Broker® affiliated with Alliance Realty, 290 Bridgeton Road, Westbrook .For more information, contact Ronan by email at Kronan388@gmail.com or by phone at 207-838-4855



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Friday, March 8, 2019

How to buy a house when you have one to sell

By Nicole Foster

If you thought that the processes of being a first-time home buyer was complicated then just wait until you join the ranks of repeat buyers! The majority of people will need to sell their current home in order to qualify for financing to purchase another property. Paying two mortgages each month is not something that everyone is in the position to attempt or sustain for very long.  I am often asked how this process works and I know that there are even more people who are curious but are not asking me, because the very thought is so overwhelming with helping people buying and selling at the same time.

Using one Realtor® to assist you with both the sale of your current property and the purchase of your next one can help to streamline communication and expedite the overall process. Even the most experienced and top-notch agents will have only so much control over the many variables which will need to be synchronized and move in concert, but together it can be accomplished!

Buying
Your Realtor® will help you to identify the range of market value for your current home, which combined with other factors will determine how much you will be able to afford. Explore what your financial position will allow you to consider doing with a trusted lender and weigh the pro’s and con’s of each option. There are inherent pressures that will inevitably come with each decision, so you will need to prepare yourself for how the byproduct of your decisions will impact your judgement, ability to negotiate and your motivation. If you are carrying two mortgages, will you feel inclined to settle for less on the sale of your current property? How will you be competitive when buying if you find something you really want? Selling your current property then moving into a temporary rental will make your offering power much stronger as a buyer, but it may not be the most cost-effective option because moving incurs expenses and you will be doing it twice. For many it is not only the expense but also impractical to store their personal property often elsewhere and provide the necessary resources for two moves.

http://locationsinmaine.com/One of the instruments available to us is to make an offer which is contingent on the sale of your current property. This will allow you to look for and make offers on properties of interest while staying in your current home.  Some people do not feel comfortable having their current property listed until they have found suitable housing, out of concern for being temporarily displaced and not wanting to move twice. If you have decided to wait until you find a suitable property before listing, the seller will most likely want to know the details surrounding the upcoming sale of your current property including: Where is your property located and which agency will you be listing with? What will the list price be, and do you have a clear marketing plan in place to get a quick contract? If the seller is willing to work with you during the sale of your current home then you will need to be prepared to get your home on the market typically within 5 calendar days of the agreement, so working with your Realtor® to develop a strategy in advance is essential.  In some circumstances an agreement can be negotiated with the buyer of your current property to allow you to rent back or remain in the home for 60 or 90 days while you continue to search, which can help to relieve a bit of pressure.
 
Selling

How will being under contract as a buyer impact my negotiating ability as a seller?  What happens if I get a contract on my house before I find something? Will I feel rushed into purchasing a home that I otherwise would not choose? Having a very clear Plan B or worst-case scenario plan will help to give you a bit of space and relieve some of the pressures when making tough decisions. If you are purchasing a newly built home or build package you may want to have an idea of what you are going to do should inclement weather or labor shortages cause the process to fall behind resulting in being temporarily displaced. You might be able to negotiate a certain amount of time to secure suitable housing, but you are then requesting a concession so it may cost you in other areas depending on the buyers’ necessary timeframe to close and move in. Your Realtor® can help to reviews the pro’s and con’s of disclosing this strategy when listing or waiting until negotiations with buyers. If you are under contract on the purchase of your next property you will need to be prepared to price your home more aggressively. Often you will be provided 30 days to get a contract on your current property and an additional 30-45 days to close depending on the financing of all parties, but these are terms and conditions which will need to be negotiated.

One of the most challenging maneuvers in this intricate dance following sucessful negotiations is to keep the timeframes moving along for both Property #1 and Property #2 concurrent and parallel on things like building inspections for both homes, negotiations for repairs and appraisal inspections for both homes. Scheduling the necessary professionals, how much they will cost you and understanding what their turnaround time for reporting will be is absolutely critical. Your Realtor® will assist with all of these details or handle them on your behalf. With grace, a certain amount of skill and an insane amount of luck; more often than not, we are able to hold back-to-back closings at the same table on the same day for both properties, but it is always a good idea to discuss what you may need to do in the event of a delay on either side.

Nicole Foster became licensed in 2005 and is a Broker with Locations Real Estate Group in Falmouth and resides in beautiful Windham with her family. Call, text or email with any real estate related questions.


Friday, March 1, 2019

The whys and hows of investing in multi-units


By Katie Kinney

Purchasing a multi family property can be an important first purchase in your real estate portfolio. By doing this you will produce more income and build your net worth faster. As an investor you may be interested in adding to your real estate portfolio and creating larger yearly rental profits. Keep in mind buying a multi-unit will require increased responsibility, liability and usually more capital reserves. Below are some tips to help with your due diligence and decision-making.

Choose the right professional to help guide you through the process. Buying a multi unit can be overwhelming and having a broker who is qualified and experienced in investment property transactions will make your purchase seem a lot less stressful. An experienced broker should have knowledge of local rental markets, physical aspects of buildings, be able to understand the financials and explain cash flow analysis.

https://www.raveis.com/Consider starting out as an owner-occupied investor. If you purchase a building with two to four units you will qualify for owner-occupied financing, requiring a smaller down payment. If the property is the right investment, the other units should help cover the expenses, allowing you to save money and keep your debt to income ratio lower for your next real estate investment.

Make sure to ask for all relevant documentation, current rent amounts, lease terms, utility expenses and any building maintenance costs. You should also become familiar with the vacancy tendencies in the location of the property. You don’t want to purchase a building and have lengthy periods in which your units are vacant. As a landlord you will need your leases to be sound and protective of you and your investment. It is a good idea to have an attorney look over your lease to make sure you are legally protected if any tenant related issues arise.

A multifamily property is not valued the same as a single-family property. A multifamily property is valued by its income and return on investment generated. You will need to consider the income and expense of the building and what is left over, this is called the net operating income. To determine your cap rate, you divide your net operating income by the purchase price. Generally speaking, four percent to 10 percent per year is a good investment.

You should keep adequate cash reserves. Unexpected events occur all the time when being a property owner. These events can be very expensive, especially if you own a larger rental property. The general rule of thumb is that you should have enough cash set aside to cover 2-3 months of mortgage payments. Many investors also hire property management companies. This may be appealing if you do not live in close proximity to your property. The fees for a property management company range from three percent to 10 percent of the rental income.

I have successfully helped many clients buy and sell investment properties during my career as a real estate broker as well as owning personal investment properties. Whether you are a first-time homebuyer interested in owner occupied properties or a seasoned investor, I have the skills and knowledge to facilitate your transaction. Feel free to contact me anytime to learn more about investment properties.

Katie Kinney, Broker Landing Real Estate 
Cell ~ 603 205 2276