Monthly Archives: January 2009

January 13, 2009 · 2:35 pm

Interest Rates And Should You Buy Now?

interest-rates-headline

The single biggest reason you should be thinking about buying a home now is interest rates. Seriously. Have you checked them lately? Give your mortgage person a call. You’ll be stunned if you haven’t been paying attention.

Then, a home buyer client of mine sends me an email telling me about this interest rate opinion and I was both happy and a little worried. What if we start to get deflation? That would be a tragedy I would not want to see come to light. My base instinct says we won’t get there. Or anywhere close to there. At least not with the amount of capital the feds keep pumping in to the economy.

Right now really is a great time to buy a home in Kansas City. If you have a down payment, a good job or business with verifiable income and a good credit past you can do quite well. Better than your parents had ever hoped of doing. At least as far as buying a home is concerned.

Location. Location. Location. Where Are All The Bargains?

I have lived by these two simple real estate axioms;

Location. Location. Location.
It’s the price, stupid.

I’ve been practicing real estate for seven years now. That’s not a lifetime. But it’s not a short time, either. Happily, I can mix in my experience with living and working in other cities as well. Those cities were Washington, DC and Tulsa, OK. Throw in Kansas City and I think I have a fairly decent base on which to form opinions.

flood-gates I lived in DC when living inside the Beltway became of paramount importance. The closer to the city’s center you were the higher the price. This isn’t unique to DC. But here in the Great Plains cities like KC and Tulsa living close to the city center is less magnified because there is always more, inexpensive land close by.

But you know what? Location still matters even here in KC. In a previous post I told you that I’ve been working with several “regular” home buyers. And it’s been great fun…and an eye opening experience.

I can safely say that on the Kansas side of the state line the closer you are to downtown Kansas City and the Missouri state line the less choice you will have when choosing a home. All those bargains you hear about every night on the news channels? Where are they to be found? Certainly not in the $175,000 – $240,000 home price range.

Yet, when you scoot away a bit to the more distant suburbs of Kansas you still find a healthy market compared to the rest of the nation but you do find more choice and more houses priced under current market. So, even here in the Kansas City real estate market, location does matter very much.

As far as axiom #2? Well, you know it’s true. You just have to remember that when pricing your own home.

Real estate investing tip: Re-read the burgundy sentences above. After proofreading my work I noticed I had just dropped a jewel on you when I wasn’t even discussing real estate investing.

Bank Stupidity And Why We Should Have Let Them Fail!

Okay, so your tax dollars have gone to help out financial institutions who made bad loans an art. So how are they using federal funds to loosen the credit market and make housing easier to obtain? pullhair

Wachovia’s Stupid Stip
I had a buyer that wanted to buy a house, bank owned house that is, from Wachovia. Priced at $219,900 the actual value is probably around $245,000. My buyers anxious to make an offer came to a sudden stop when I read to them a stip in the corporate addenda that I’d never seen before. Seems Wachovia has decided that the buyers must put down a 5% earnest money deposit that is totally and completely nonrefundable. Inspection out? No. Financing fall through because you lose your job before closing? Too bad. They want the buyers to take an approximately $11,000 gamble to buy the house. It’s a pretty good bet they could/would close. But seriously… That was five weeks ago. Guess what. The house is still on the market.

HomEq Loan Servicing Corp’s Stupid Stip
Yesterday I inquired about a short sale home that is in the redemption period in Kansas. Needs about $45,000 worth of repairs but perfect for these young, energetic first time home buyers. After they buy the house and make the repairs they’ll be up some serious equity. But wait. Before HomEq will even look at an offer they require a certified appraisal paid for by the buyers! Oh, and there are no guarantees they will negotiate with you, meet your offer or even accept the certified appraisal!

Countrywide Home Loans’ Stupid Actions
I have had a short sale seller for the past few months. Countrywide sent me a letter stating what they would take. I’ve sent them three (that’s 3!) offers within a very reasonable pricing window and all three offers have been completely ignored. No response. Repeated phone calls, emails and letters unanswered. Calls to supervisor? Hah! I finally pulled my sign and told the very upset seller I’ve had it and sorry they had to deal with Countrywide because I was done wasting my time.

Can somebody please tell me why we should save these banks? Is this how capitalism rewards the slothful and inept? I thought capitalism was supposed to let these people fail and someone that can operate a business would pick up the pieces for pennies on the dollar and be rewarded. Jeff Brown, you are being called out here. You like to tell me there is a greater good. Where is it? 😉

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Filed under Financing Options

January 1, 2009 · 11:51 am

Kansas City Real Estate: A Glimpse At The Current Market

I’m going to break for this post from talking about Kansas City real estate investment property and talk about a specific part of the Kansas City real estate market and that is Johnson County, Kansas. You see, a real estate investor client of mine who has purchased a few homes from me has asked me to help his son and fiance to buy their first home. They are looking for something that will give them the warm and fuzzies but also be a solid buy and a good investment. first-time-home-buyers

What they want is a home in the Overland Park/Leawood area of town priced between $175,000 and $200,000 with at least 3 bedrooms, 2 baths, 2 garages…you know the drill. Most of their money will be spent on the down payment, closing costs and move-in expenses so they don’t want or need a fixer. So what can we find them “under-valued?”

Let’s break for a moment and talk about mindset. With all the bad news thrown our way day after day after day (by the way, go back and read my posts from a couple years back…you’ll see I never bought in to the whole “boom” thing for KC, either) you’d think you could pick up houses on the cheap all day every day. So what exactly does “under value” mean?

In my humble opinion Johnson County, Kansas is, has been and will continue to be the economic engine of Kansas City. Oh, I know KC has more population and business headquarters and all that. But the money and exec types have always ventured over to the Kansas side. (Calm down Missouri. I didn’t say all the money and execs and I didn’t say we were better than you.) 😉 Although our football team beat your football team…

Real estate values in the Kansas suburbs simply have not dropped the way people have seen real estate values drop as little as a few miles away on the Missouri side of the line. There are only 45 homes available that meet the criteria of these new buyers and really only 9 of them look all that appealing. Days on market? Looks like about 122 is the average…throwing out one on the market for about 2 years.

A closer look reveals some more interesting thoughts about our current real estate market in Johnson County, KS…or at least this part of JoCo. In the last 6 months (that’s what appraisers are looking at, right?) the average days on market for homes in that price range has been 73 for the solds. Average asking price has been $187,421 with average sales price right at $181,738. That’s still 97% of asking price!

Does that sound like a depressed real estate market to you? No. Houses are not selling in a week or two any more. No. You can’t just ask whatever you want price wise, either. But ask yourself this the next time you are hearing all the bad real estate news: What does this have to do with me and my current situation? Maybe everything. Maybe nothing. That’s why you need professional help when trying to decide.

One last note. And this will concern Kansas City real estate investing. I’ve been accused of being a snob when it comes to helping people buy residential investment property. But if you’ll look at the rental properties I’ve sold to my buyers over the last few years I’d put their current values next to any current values in the country. Some have actually appreciated even as we stand today. Others are even and a few are actually a little depressed. But in all cases rent covers the costs as we initially calculated. So even the depressed houses have the wherewithal to ride this storm out.