Category Archives: Kansas City Real Estate

October 26, 2009 · 8:44 am

Honest To God, Fannie Mae Doesn’t Get It

I have ranted and railed against Fannie Mae and Freddie Mac here on this blog before. Not only do they put up barriers to a true real estate recovery by keeping real estate investors, actually qualified real estate investors, on the sideline but in addition they staff themselves with asset managers that just don’t seem to understand real estate. Seriously.

Read the link above to see previous self-defeating decisions they have made. But now I have a new story.

I represent a buyer who contracted a Fannie Mae owned duplex in the Kansas City area for $140,000. Based on comps we felt this was a bit high but that taking this position would ensure my buyer got the property for a good price wherein he could do the necessary repairs and still have room for cash flow.

Bank of America did an appraisal that came back at $120,000, because of a very recent fire sale that Fannie Mae had held a short distance from the property in question. So we submitted an amendment to the contract changing the sales price to $120,000. Fannie Mae would not sign, not that they ever got around to signing the original contract, but after about 5 days of communications decided to order their own appraisal.

How did their appraisal come back? $130,000. So they will sell the duplex for $130,000, right? No. Their answer is to ignore and reject my ready, willing and able buyers and to discuss a price reduction in the “future.” We are welcome to watch the Kansas City MLS and submit a new offer when that does, or doesn’t, happen.

How does Fannie Mae get away with just suspending the realities of our current real estate market which they helped to create? How does hanging on to another asset for a few additional months and then inevitably dropping the price to $130,000 help? People, your tax dollars are at work here. The machine is clogged up with “decision makers” located in NW Washington, DC and Dallas (I believe that’s the location of the asset manager) making decisions about whichever local market you live in. I would seriously doubt if this asset manager has any actual real estate sales or appraisal experience. But I’m quite certain the AM has a minimum of 2 weeks paid vacation, health care benefits, and leaves promptly at 4:59 pm each afternoon.

It’s bad enough that we are in this current real estate situation. It frustrates me to no end to know that it’s difficult to get out of it when I see the decisions being made by people who are supposed to know what is going on.

12 Comments

Filed under Kansas City Real Estate, Real Estate Investing, Social Issues, Uncategorized

October 19, 2009 · 9:21 pm

Olathe, Kansas Real Estate facebook Page

I’d love to have you go on over to my new facebook page promoting real estate in and around Olathe, Kansas. As regular readers know, Olathe is a fast growing suburb of Kansas City, Missouri. The name of the site is Olathe Real Estate Keller Williams Realty.

Now, it’s a new page so there aren’t very many bells and whistles…yet. But I’d love to have you join if you are a facebook member and a regular reader of Kansas City Real Estate & Investing. What I discuss here and what I discuss there could be, will be, two different things.

Fan me!

http://www.facebook.com/home.php?#/pages/Olathe-KS/Olathe-Real-Estate-Keller-Williams-Realty/166719317560

1 Comment

Filed under Kansas City Real Estate, Olathe

October 19, 2009 · 12:24 am

Sign Up For My Newsletter

I’m putting together a newsletter regarding Kansas City real estate. Many of you have sent me your contact information before and I’ve kept it. But if you are a newer reader and you would like to sign up for periodic mailings and/or emails I send out regarding Kansas City real estate…including some real good deals…you should just drop me an email today.

listwithchris at kw.com

First Time Home Buyer Tax Credit

As I am helping a young couple to buy their first home in Olathe and take advantage of the First Time Home Buyer Tax Credit I wanted to bring you this little discussed caveat: It’s up to 10% of the home’s purchase price to a maximum of $8,000.

Now most people won’t have any difficulty with that because they will buy a house priced over $80,000. But this young, soon-to-be-married couple are looking at homes priced between $70,000 and $100,000. So they could potentially be under the $80,000 purchase price. Just something to be aware of.

By the way, these first time home buyers are smart. Between the two they could qualify for a home up around $175,000 to $180,000. But they’d rather stay out of debt and being newly married they want their own house but not the massive debt that can come with it. Ah, if I had the chance to do it all over again…

Schizo-phrenic Real Estate

Dictionary.com describes schizo-phrenic as;

2. a state characterized by the coexistence of contradictory or incompatible elements.

Frankly, I think our current real estate market here in the greater Kansas City area fits that definition about perfectly. Nearly every day people call or email me to ask me what I think of our current real estate market. On some days I think “Hey! It’s not too bad.” On other I think “Is this ever going to end?”

Proof of Recovery
My office, Keller Williams Realty, Diamond Partners, Inc of Olathe, Kansas has had two record months very recently. I believe I was told that June and August were the best June and August months we’ve ever had. (Keeping in mind our office got started in 2003.) Personally, my June kicked hiney and July wasn’t too shabby. Olathe housing inventories have been down a little and DOM seems to be holding steady after having dropped a bit.

Proof of Lingering Slump
It’s all around. While many agents are keeping up or dipping only slightly from previous highs most have seen at least a 10% – 15% dip in sales volume from 2007. A great many of the agents that are still in the profession will quietly whisper that they are down 20% – 25% from 2006. I don’t know about you, but if your income took a prolonged 20% hit when would your spending habits and lifestyle have to change? Over 3,000 agents have fallen off the MLS rolls and more are expected to fall off this renewal season. I’ve heard the local builder’s association rolls have been devastated.

Forget housing starts, equity statistics and talking heads. Look at the incomes and sales volumes of your local real estate agents. If the amount of agents is going up and their incomes are even or going up you have a good housing market. And the opposite is true if all that is dropping. We can bend statistics (politicians, CNN and Fox are masters of this) all we want. But if people are or are not earning a living in real estate then there is your answer.

A Last Word About This Administration’s First Time Home Buyer Credit
While the first time home buyer’s credit has been an excellent resource for a great many people…and I have helped five different home buyers take advantage of the credit…I still don’t like it.

First, four of those people would have bought a home anyway. So there is money that didn’t have to be given away. Second, I believe it provided a false bounce to the market by accelerating the purchasing time frame of a great many people so as to not miss the arbitrary deadline of November 30, 2009. Now they want to extend it. But realtors I know here in Olathe aren’t finding very many takers. I believe you have taken current and future home buyers out of the market for at least the next six months. Extending the credit will not magically provide us with new home buyers that are credit worthy.

What to Expect?
Listen, the sky has shaken but it hasn’t fallen. I still believe 100% in the long term value of real estate. But the dips hurt, no doubt. For me, an average guy with an average income in an average city in the middle of the country, to sit here and give you answers would be folly. I suspect, however, more of the same. First we heard this would end in the latter part of 2008. Then the Summer of 2009. Now I’m hearing recovery is just around the corner in 2010…but maybe the last quarter.

I wouldn’t necessarily count on it. This could linger. Our houses are no longer just easily accessible piggy banks. You have to use good sense. Move when you need to. And most of all, look at your local market independently of even your city or state. As always, real estate is very local.

5 Comments

Filed under Kansas City Real Estate

September 16, 2009 · 10:39 am

Kansas City Set To Rebound?

Driving in this morning I heard on the radio that Kansas City is one of the first cities expected to rebound in 2011 from our current recession. Dallas, Houston and some other midwestern cities were on the list as well. But not Milwaukee or St. Louis. They are still expected to struggle. I cannot remember the name of the study they were quoting. I just heard it.

Then I get here and hop on to the Kansas City Star webpage and see that Warren Buffett says we’ve hit the bottom and leveled out. He’s not expecting a double-dip recession.

It would be nice if his economy would begin a slow to moderate climb up. I suspect, however, that we’re where we are gonna be for a while. Japan in the ’90s? I don’t know. I’m not an economist. I’m just like everyone else. Trying to hang on. Trying to build a future for my wife and family.

2 Comments

Filed under Kansas City, Kansas City Real Estate

August 21, 2009 · 12:13 pm

Bad Advice Leads To Real Estate Investing Disaster

I remember years ago when a good acquaintance of mine used a better-buddy realtor friend to buy three fourplexes up in Kansas City, Kansas. He followed a few simple mathematical formulas that he had learned (his Realtor buddy leading him all the way) and decided that not only would these properties pay for themselves but they would also kick-off cash flow. After all, they were priced about $15,000-$20,000 under the available comps in the area.

Now, I have never, nor will I ever, advise a client of mine to buy investment property in this area of Kansas City, Kansas. The value of the investment property there was not realistic for KC rental property. Way over-valued. Crime is/was abundant. Quality tenant? No. Housing voucher bums that float from apartment to apartment after dismantling the one they are in were plentiful. (No. Not everyone that uses a housing voucher is a bum. Just most of them in this area.) And they weren’t in that great of repair, anyway.

Have I ever been in his units? No. I don’t need to. I’ve seen others in the neighborhood. He bought at $140,000. Rents were about $525/mo. Slam dunk, right? NOOOOOOOOOOOOO!

He called me earlier this week. He had comped the area (with the same agent he used before!) and said that the values were down to about $40,000 each in today’s market. That’s $100,000 less than what he paid for each of the three four years ago. Vacancy? He’s currently half full.

He’s going to attempt a short sale and was seeking buyers. What’s worse is his notes are held by Bank of America. Now, Bank of America can get you loans. They can even service them to a certain extent. But when it comes to work-outs and short sales I cannot imagine a more incompetent bunch of case managers. I mean, without a single exception, none of them understands what is going on and how long buyers will/will not wait around.

And there could be more trouble brewing. What if he does get them short saled? When does the statute of limitations end for BOA to come back in and try to recover their losses from the personal assets of this individual? He has a nice income, an even nicer personal residence and other assets. I like this guy. I really do. But it’s frustrating when I hear people choose to let the banks take the loss or share in the loss and hope to have no more responsibility. If he had made $100,000 per unit would he have allowed anyone, BOA for instance, to share in the responsibility of the profits?

You simply must get professional advice before investing in real estate. QUIT USING REALTORS THAT DON’T KNOW WHICH WAY IS NORTH ON A MAP REGARDING INVESTMENT PROPERTY!!!!!!!!! (Phrase borrowed from Jeff Brown. – I had another phrase in mind.) Or it could cost you just about everything you’ve worked for.

I pray for this guy and others like him.

20 Comments

Filed under Investment Property, Kansas City Real Estate, Legal Issues