Monthly Archives: July 2007

Last week I had a gentleman that belongs to the Kansas City Breakfast Club ask me if I could go to an auction in his place to see if he could purchase this home down the street from his business at a reasonable price.

The potential buyer had to be out of town for some family business and wanted to pick up the home pictured left. The home was being auctioned by Jeff Cates of Cates Auction.

Now in my mind, the home needed;

• New windows.
• Vinyl siding repairs.
• Exterior drainage issues resolved.
• New garage doors.
• All flooring replaced.
• A complete kitchen redo.
• Two complete bathroom redos.
• All new interior paint.
• Probably termite treatments.
• Exterior trim paint and wood rot repairs.

And there was a host of other small issues. When I arrived at the auction 20 minutes early I found it to be professionally staged. And the auction team was working the crowd trying to generate a good opening bid and discover the bid strategies of those attending. Hey, that’s their job and to their credit they were doing a great job.

I didn’t talk too much to the other potential bidders. I just moseyed around with my cell phone to my ear and listened to private conversations. The two bidders I could hear both had about the same strategy as what I had recommended. Buy this house in the mid-sixtys, MAX. The ARV was capped at about $105-$110,000 in a good market. This neighborhood is a bit static, however, so I figured a $100,000 ARV.

Oh the excitement builds as the auction draws near. And as the auctioneer begins his bidding song that we’ve all heard he starts at $100,000. “Who will give me $90,000? Start me at $90,000 for this fine home. Look at the comps people. Who will give me eighty, do I hear eighty? Eighty, eighty, eighty. Seventy-five, who will give me seventy-five?” (note: not verbatim…I did not record.)

“Thank you, sir. Seventy five do I hear eighty?”

What??? With that I noticed no fewer than about 4 bidders just turn and walk away. I should have, but I just had to know if anyone else would drive the price higher. Five minutes later, it was all over. The auctioneer congratulated the savvy real estate investor who had bid such a high price that no one else even bothered.

You know, this house was going to be a fix and rent for my client. I guess he could have gone to $70,000 and still had it be worth his troubles to do the work. But $75,000 plus a 10% buyer premium? No, thank you.

Did the gentleman not know his numbers? Or was he planning on fixing it all by himself? (He was 88 years old! So I doubt it.) Or did he get caught up in the excitement of an auction? I don’t know. I didn’t ask. All I know is I wouldn’t let my clients buy at that price.

The auctioneers did their job. They sold the house quickly and for more than I would have recommended. Could I have put it on the market at $85,000 and gotten it sold? Maybe. There’s always someone who doesn’t do their numbers.

Don’t let that somebody be you.

My wife has Graves Disease. That’s Hypothyroidism. Basically, her thyroid will kill her if not monitored. It’s changed her personality and given her a whole host of symptoms to deal with.

What does this have to do with your choice of REALTOR when you are involved in real estate investing? It really doesn’t. But it does provide another great teaching point.

***

A couple month’s back my wife was really out of sorts and out of character. Her doctor didn’t know what was going on and so I sent her to mine. To my doctor’s credit she picked up right away that this was probably Graves Disease. She prescribed the right medicine and recommended a specialist.

We saw that specialist today. He really made us feel comfortable. And as I sat there listening to him speak I was prepared for everything. Marie and I had spent hours on the internet learning about Graves Disease. The good, the bad and the ugly.

What he said was NO SURPRISE to me at all. I had already read about it. Heck, I even knew before he said it what medicines he was going to prescribe and what the treatment plan would look like.

Then he said it. My doctor had prescribed the right medicine, but he was upping the dose 600%. I said six hundred percent!

Now, let’s understand each other. I’m not mad at my doctor. She is a general practitioner who immediately recognized that what the problem was and immediately ran tests. As soon as her suspicions were confirmed she sent us to a specialist. That’s her job. And she did it well.

Again, Chris, what does this have to do with real estate investing? Everything.

I’m not against you thinking you know as much as a real estate professional when it comes to buying or selling a home. I realize you’ve done it once or twice or six times. (Sometimes I have six closings in a month.) And I know you’ve read four books on owning and managing income property.

I’m also fully aware that you belong to two real estate investing clubs, have an uncle that owns two rental homes and attended a short sales seminar that was put on for only $395.

But damn it, when my wife’s health and well being is at stake I’m going to the specialist. He did not say one thing I didn’t research on the internet. Well, check that. If I had read on the internet and then prescribed my wife medicine I probably wouldn’t have gotten the dosage right. And maybe I would have missed a symptom or two and had the wrong disease altogether.

What does he charge? Who cares? Can I find someone to do it cheaper? Who cares? Am I going to argue with him about everything?

Now, about your finances. Do you want to wing it from something you researched on the internet? Or do you think in the long run, at the very least, that you would be better off working with someone who specializes in the real estate field with a double major concerning real estate investments?

If you are outside of Kansas City just count this as the rantings of an evil REALTOR only bent on making a commission. But I beg you, if you are in Kansas City and interested in real estate investing, please seek my help. Don’t gamble your future. I will cost you some money. Money well spent.

Yesterday I wrote a post titled Understanding Your REALTOR’s Role When Buying & Selling Real Estate. And for that post I concentrated mostly on the duties of your REALTOR when you are a regular house buyer/seller.