When we look back ten years from now to today.  Millions will be saying....why oh why didn't I buy that home when I had a chance.

THIS IS THAT TIME!

RECIPE to be A Milionaire.

Buy ten houses, (with 15 year notes),  worth 1 million dollars and have the tenants pay for it.

In fifteen years you are a millionaire.

It is a simple and tried and true recipe that I myself have followed!

An interesting thing happened on the way to helping a client in a very high price range.

I recently showed a home to a client of mine.  Fairly quickly, we ruled it out for many reasons. The first impression was not good compared to others we had seen.

Note: this was one of those situations were my client wanted to see a home that was not on my list to show. It was OUTSIDE of my CLIENTS specific price requirements.  Nevertheless, I showed the home to her.

SPECIFIC HOME ISSUES!

1. Priced $40 per square foot,  above the competition.

2. Small family room.

3. Narrow driveway.

4. Sub average street appeal.

5. Too close to a major highway.

Several weeks later my client/buyer was driving through the neighborhoods I was showing her, and saw the same house open and decided to look again.  This time the owner was there and he carefully explained to my client WHY his house was the best house to buy.

Well, sure enough, my buyer believed the SELLLER's explanation and decided that...by gosh...the home was worth buying no matter what the price. So we made an offer at what a market analysis showed the house was worth. The offer was rejected, but negotiations continued.  Finally my buyer gave in, despite my counsel, and decided to buy the home at significantly above market value. We had negotiated $20,000 off of the seller's $150,000 premium price.

The negotiated sales price was now only $130,000 over priced.

I advised my buyer that the house may not appraise and that the lenders may be strict in the current economy. I remended her that a home she liked more early on inher search AND on the same street had closed for significantly less money.

Well, after everything was accepted in writing. This seller decides he wants a fresh contract and not the one with the price crossed out and initialled.   The seller then decides he wants to change some other terms.  What! Your kidding? Why? Stall tactic? Unneccessary delay?  This, after 5 days of constant negotiation!

Suddenly, the light went on in my buyer's head! My buyer agreed that this was just too much. That she had given in to every seller demand and that this home just was not a win for her!

I was thrilled and I promised her we would find a much better house at a much better price.

The very next week we found a MUCH better home, in a much better area, with more rooms, better upgrades, and at a BELOW MARKET PRICE! My buyer had instant equity!

It was a super, fantastic home and a super fantastic win for my clients!  They are so thrilled and they cannot believe that they were almost duped by the seller into buying a vastly inferior home!

There was LOTS of drama, but in the end, my buyer got the right house at the right price!

 I have seen Fannie Mae and Freddie Mac dumping their investment properties lately.  This is incredible since Austin Texas Rents are at an all time high!  Rents are higher than they have ever been yet, Fannie Mae and Freddie Mac are dumping properties at 70 cents, 60 cents and even as low as 50 cents on the dollar.

This makes no sense....but I suggest you grab them while the grabbing is good.  Duplexes and Fourplexes are valued by investors by their rents.  So if a fourplex has rents of $2,800 a month the value of that property in good condition is about $280,000 or 100 times the monthly rent.  We found two fourplexes for sale for $105,000.

Our clients are taking advantage of this and so should you!

Short Sale experience = 10 years. For me Short Sales are quite enjoyable, although I can't always say that my staff enjoys them. Short Sales give you the opportunity to truly help someone in their time of need. It, also, does require some serious training and experience. However, lately we have been seeing some new trends in the Short Sales process that have caught us a bit off guard so I thought it would be helpful if I shared these thoughts with you.

These are three recent short sale scenarios!!

SUCCESSFUL SCENARIO #1 : Seller has had house on the market for 2 years.

Seller loses job.

Seller decides to move over seas to enjoy a lower cost of living in the far east. Seller has no income and has savings less than $10,000.

There are two liens on the property totaling $220,000

first lien $170,000

second lien $40,000 TOTAL LIENS = $210,000

The home sells for $200,000 which is determined to be market value by appraisal and BPO.

Cost to close = $20,000 (commissions, late fees, attorney fees, title etc, closing costs)

NET to lien holders = $180,000 First Lien holder's lien is 100% satisfied = $170,000 Second Lien Holder gets approx. $10,000 of their $40,000 note.

SHORT SALE ACCEPTED!!

However, this was a DIFFICULT negotiation because the seller had a 401K valued at $100,000 . The second lien holder wanted the seller to pay $10,000 at closing, but we were able to negotiate that to zero.

SCENARIO # 2: (Lien Holder requires promissory note) Seller's decide to get divorced. Mother is stay at home Mom, husband loses job but obtains contract work at significantly reduced pay.

FIRST LIEN= $200,000 Home Sells for $160,000 after 2 years on the market.

PROPERTY has Mortgage Insurance!!!!

Short Sale is approved but Seller is required to accept a $9,500 promissory note. Seller refuses to accept $9,500 promissory note! In this scenario the sellers had $14,000 in their savings. Also the mortgage insurance on the property may have been an issue since the lien holder is insured for $160,000.

The mortgage insurer will have to pay a full claim on this property at foreclosure! If the mortgage insurer agrees to the short sale they will have to pay the full claim NOW rather than later. A promissory note was probably the only way the first lien holder could get the mortgage insurer to sign off on the short sale. Additionally, the sellers assets exceeded $10,000.

SCENARIO #3: (Lien Holder requires a promissory note) In this scenario the seller is an investor who was in a car accident . The accident was severe and created a significant hardship for the investor. The resulting difficulties caused the investors wife to file for divorce.

First lien =$165,000 Home Sells for $155,000 after 6 months on the market.

The seller has significant assets and equity (over $50,000) and owns 10 other rental properties in various states. The seller has savings less that $10,000 and no employment.

Short Sale is approved but the lien holder requires the seller to accept a $12,500 promissory note at closing.

Seller refuses to agree to a promissory note so the transaction does not close.

CONCLUSIONS: There are lots of lessons to learn from the above three scenarios.

1. MORTGAGE INSURANCE: if a mortgage company is involved and has to pay a claim, it rather pay it later than sooner. Mortgage Insurance companies may not approve a short sale without a promissory note. Why would a MI company pay a claim right now when it may take 6 -12 more months to complete a foreclosure. MI companies rather pay the claim when the loss is truly a loss and the claim is truly a claim.

2. INVESTOR: if the seller is an investor, even one with a true and proven disability or hardship the lien holders will often ask for a promissory note at the closing of the short sale.

3. ASSETS: if the seller has assets over $10,000 you can expect a the lien holder to ask the seller for a promissory note at closing. ADVISORY: as a short sale REALTOR it is important that you prepare your short sale clients that they may have to bring money to closing or accept a zero interest promissory note. the trend is for banks to ask for promissory notes regardless of true hardship.

    www.bobguest.com

I can't help it. I just like dogs and children. The best part about Real Estate to me is getting to meet everyones children and their dogs.  Whenever, I am tired or not wanting to go on another appointment I just think of the next child or dog I am going to meet and it lifts my spirits and gives me instant energy.

    Now for the lesson: I love children and dogs for the energy and joy they give me alone.  However, you can certainly learn alot about people from their children and their pets.  Their is no question that children and pets are a reflection of their parents and owners.  So many valuable insights can be garnerd by taking the time to meet and greet every member of the family and every pet.  Additionally, the relationship can be built much easier when you put your clients family first!

     For me, taking the time to meet the family and the pets is my happy time.  It's my way of enjoying the act of Real Estate. My relationships with the decision makers is better after I have taken the time to meet everyone and every pet who does not make a decision.  Afterall, this is a relationship business and in business relationships trump everything! 

     It's smart and essential to market and advertise and prospect....but nothing, nothing, nothing can ever beat a great relationship! Especially in todays market!

Closing gifts: when I close it is my policy not to give gifts to my clients because it is a professinal relationship.  However, I do not have the same rules with their children and their pets.  So if I give a gift it is always geared toward the non-decision makers in the family!

 In "The Millionaire Next Door" by Thomas Stanley and William Danko that one thing that hampers the youth is what they called "Economic out patient care of children".  In other words, if a parent gives a young adult money to solve a problem... the young adult has a hard time learning the lessons of money.  The parents monetary gift can negate the young adults ability to learn the hard lessons of money management.  Apparently the damage is so severe that children of the wealthy often cannot create wealth themselves, perhaps because of their parents good intentions. In fact the children of millionaires rarely acheive the same finacial success of their parents. This is despite the fact that the children of millionaires were more advantaged, had better educations and had a good mentor/role modelme. Obviously the lessons of LOTTO winners proves the same thing. Consistently, winners of lotteries eventuall lose their gains...because they never learned the lessons of money!  The same is true of athletes or musicians who don't understand money! Their wealth evaporates almost as fast as their skills aquire it...unless the learn the lessons of money!

DOES THIS SOUND FAMILIAR!  Our governments GOOD INTENTIONS may not help our economy...just the opposite. Free money is not SMART MONEY! Much of the money will be wasted, it will fall into corrupted hands...as all experts on money can accurately predict.

To me the well intention Government Economic Outpatient Care is akin to a REALTOR spending thousands on Billboards or Advertising without testing the results!  You can spend $40,000 on a billboard and not get a single sale! It sounds like a great idea! Your heart is in the right place...but that money is gone forever!  Only smart money rules the day!

wwwBobGuest.com

www.BobGuest.com

The Right Things Wrong Can Save You Thousands! 
The Right Things Wrong Can Make You Wealthy!

Uninformed and uneducated buyers buy with emotion and often make irrational, emotional and petty decisions! This is the reason it is so important to have a fiduciary representing you!

What is good and what is bad?  What is right and what is wrong?  What represents a good value and what represents a good financial decision?   You should purchase a home so long as it represents a good value and has the potential for a great investment.  In many cases a few small things wrong (the right things wrong) can make a big difference in what we can negotiate for our buyers!

These right things wrong are what to look for when buying to save thousands and thousands of dollars!

THE RIGHT THINGS WRONG ARE:

1. Paint !  This is obvious but...painting is the easiest and most cost effective way to increase the value of a home.  Paint issues are the most obvious RIGHT THING WRONG because it is so easily corrected at a very low cost!  Untrained and uneducated Buyers will turn down a property because of paint color or damaged paint. Don't be one of them!

Commonly, a home painted at a cost of $3,000-5,000 can have a striking visual improvement, so appealling that it increases the value by $10,000. That is a HUGE return on investment! This is the reason so many smart people have learned to flip houses! Sometimes just a little paint and a little landscaping make all the diffference! Knowing this will help you to make a better buying decision! Do not make the mistake of turning down a messy, dirty or unpainted home! Instead see through the firt and reap the rewards!

2. Landscaping!  Buyers will reject a house because of a poorly landscaped yard! 

Amazingly, I watch buyers turn down properties because of weeds, cedar trees, brown patches on grass, dead grass and over-grown bushes. Fixing these items are remarkable inexpensive. You can fix these items in our spare time for FREE...this is what we call SWEAT EQUITY! We frequently see $500 in landscaping increase a homes value by $3,000 or more!

3. Pet Odor! Buyers will turn tail on a house because of a pet odor.

Pet odors, to a buyers agent, are a great and wonderful gift. If I smell pet odors, I get excited because I know it is money in my buyers pocket! Most of the time pet odors are easily and completely removable so long as the urine has not seeped behind the base boards and into the walls themselves. But usually, the odor is from a wet dog or a pet accident that was not properly cleaned.Do not reject a home because of pet odors! Use wisdom and fight past the smell to the value it puts into your pocket! Often just one good cleaning solves the problem!

4. Termites  ! Buyers will reject a home because a house had a termite treatment! Even though all the affected wood has been repaired and/or replaced and the termites have been eradicated!  Now that is just silly! 

TERMITES! Investors LOVE termites because everyone is afraid of them... but most of the time the reapirs are small and inexpensive. You can save thousands and tens of thousands on a house with active termites! TO PROVE MY POINT! We had multiple offers on a completely rehabbed home in perfect condition. The seller disclosed that they had discovered some termites in the outside siding adjacent to the ground. The entire home was immediately treated for termites, all damaged areas were replaced and the home was put into a monitoring program to prevent recurrence. The buyer backed out of their agreement with us because they just did not want a house where termites had visited. These buyers turned down a propery that was later sold for thousands more and has appreciated at a fantastic rate ever since. Those buyers are still renting a home a few houses down, fearful of owning a home! Be smart and understand the value!
 

5. Drywall Cracks ! Drywall cracks on vaulted ceilings are very common due to the temperature differentials caused by this type of construction.  What you have is R-30 insulation on top and insulation as low as R-16 on the vault it causes expansion and contraction at the joints.

6. Gas Leaks !  I once had buyers who wanted to terminate because an inspector said the gas log lighter leaked through the holes on top. (They are designed with holes in them to let out the gas to light the logs!)  I had a utility company a certified plumber and a fireplace company tell them is was acceptable in writing before the buyers calmed down and went through with the purchase!

7. Roof Leaks and Hail Damage!

1. I can't tell you how many times an inspector has seen a stain on the ceiling and called it a roof leak. TRUE STORY: On one house I hired two roofers and two general contractors to explain to the buyer that the roof was not leaking. It was merely poor craftsmanship in the sheet rock that caused a strange shadow. Til this day the agent and the inspector still claim it was a legitimate leak! RIDICULOUS! See next story below.2. I recently talked to a buyer (NOT MINE) who DID NOT buy the house of their dreams because the inspector said the METAL ROOF was defective, leaking and needed to be replaced. (COST ESTIMATE of $25,000) The buyer backed out and found out later that the metal roof needed $400 of new grommets to fix the problem. Turns out the inspector was unfamiliar with the reapir methods of metal rrofs.

8. Water Heater Leaks !

We had a house which had recently had a water heater replaced and the water stains were still there from the previous water heater leak. The inspector said the stains indicated a current leak. Even after three plumbers and a contractor inspected the nearly new water heater and told the buyer that the stains were from the past...the buyer would not go ahead until the perfectly good water heater was replaced. Even the inspector told the buyer he wanted a licensed plumber to check to see if it was leaking. Once the buyer got it in his mind that there was a leak nothing could move him. True Story.

9.  Inspector Over-Calls !

 You must understand inspectors! They have to protect you because they have a fiduciary responsibility to do that. However, they must also protect themselves from unscrupulous buyers too! 1. Light Fixture Inoperative - this means a light bulb is probably not working. 2. <Roof at end of normal life span - this means the roof is not leaking and is functioning as intended, but the inspector can tell it is probably older than 10 years. 3. Faucet Leaking Slightly - Most faucets have seals and moving parts.

Wrong Things Wrong! 

Steep Driveway

Back Yard Faces West (HOT SUN IN TEXAS!)

Overhead Electrical Wires

Single Pane Windows (HOT SUN IN TEXAS SUMMERS, COLD DRAFTS IN WINTER!)

One Air Conditioner or lack of Dual Thermostat  Baffle Controls for a for a 2 story home! (HOT SUN IN TEXAS!)

Nonfunctional Plan ? Lack of flow and traffic patterns, poor lines of sight, no windows or doors to backyard.

Lack of ability to layout furniture.

Lack of Water Flow off the property

Very Small Yard

Backs to a road

Backs to commercial

Non-conforming area

Overlooked  by other homes in backyard

Major repair items (Appliances, Roof, HVAC)

8´ ceilings

Right Things Wrong !

Filth

Poor Colors

Minor Disrepair

Minor insect/rodent intrusion

Bad Odors (wet dog, cat urine, cigarette smoke)

Under certain conditions these are the right thing wrong as well!

Termites (usually can be treated and repaired at low cost)

Bad slab (although it will permanently be part of the sellers disclosure it may allow a very good sales price)

Right Things Right!

Trees, Trees, Trees !  Trees sell!

Lots of windows ! Light sells!
Level yard and driveway

Seclusion!

Location!

Seller who put in lots of upgrades (Blinds, Counters, decks, sprinkler, gutters, jetted tub, extra windows, extra doors, drapes, landscaping, covered patio) 


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For many, many years REALTORS have given the standard answer to their customers that inground pools add little value to real estate in Austin Texas.  I have even heard agents reason with their clients that many families do not want pools due to safety issues with small children. They reason that a large number of buyers do not want pools, therefore the value of a home with a pool is not increased. This is interesting logic, but false! In recent years my clients have been getting huge returns of up to and even more than 100% of the pools cost. Unfortunately most REALTORS do not know the value of an in-ground pool and are still relying on old data and false perceptions!  This error is perpetuated because houses with pools are statistically rare.   

Here is what the National Association of REALTORs says: 

They (in ground pools) do tend to add value to a home - about 7.7%, according to National Association of Realtors statistics. Regionally, in-ground pools will add about 5% to the value of a home in the Northeast part of the country, about 6% in the Midwest and 7.5% in the Southeast and West. In the Southwest, a swimming pool will add nearly 11% to the home's value!

Some instructors still believe that having an inground pool is a detriment to real estate sales today! This is absolutely FALSE! 
 WARNING: If you have an inground pool and you sell your house you could lose as much as $40,000 - $50,000 due to an inaccurate evaluation in todays market (Spring - Summer of 2007)!  Pools in Austin, Round Rock, Pflugerville and Cedar Park Texas add a considerable amount to the value of the home. This is true because of the improved technology, reduced maintenance, improved safety features and increased competition among inground pool makers. Additionally, modern pools tend to have better designs, modern features and they have a HUGE PERCEPTION of VALUE!. 

I have had clients literally laugh at me when I told them I could get $30,000 - $60,000 more than the highest quote given to them by other sales agents.  I recently sold a home with a pool that had been purchased the previous year. The owners thought they had no equity becauseThey were very happy when I delivered on my promise! The value you get for your inground pool is also enhanced by the landscaping and the design. A hot tub also adds value.

In the examples below the return on money spent on the pool was close to or exceeded 100%.

This Pool In Round Rock (Stone Canyon) Raised the value of this home by approximately $60,000 the pool cost was around $50,000! (actual house sale sold for $60,000 above the exact same floor plan which has sold repeatedly in this neighborhood for $60,000 less)

This Pool In Round Rock Texas (Stone Canyon) Raised the value of this home by approximately $50,000 the pool cost was approximately $50,000. (this plan is very common in this neighborhood and routinely sells for $50,000 less)

This pool in Round Rock Texas (Stone Canyon) Raised the value of this home by approximately $40,000. (Note: this is a very plain pool with no hot tub and only basic landscaping)
 
This pool in the Oaklands in Round Rock Texas raised the value of this home by approximately $50,000! The pool cost was approximately $50,000 (Note- stone coping and nice landcaping adds value too!)

This pool in Cedar Park Texas raised the value of this home by $25,000 (note: this is a very plain rectangular pool with no hot tub and no landscaping)

This pool raised the value of this home in Tonkowa Springs Round Rock Texas by approximately $35,000. (Note, very simple pool with no hot tub and basic landscaping)
This Information is the Property of the Bob Guest Team and all the rights are protected!

Another basic pool and a green-belt lot increased the value of this home by $40,000 over nearly identical comparables in the neighborhood. The neighborhood experts were shocked and awed by the sale. They were so bold as to tell me the home was dramatically over-priced. Fortunately the experts were WRONG!


This basic pool easily aided the sale and added at least $25,000 to the sellers pocket book!


Because of the high value of a pool I decided to add a pool to my own back yard. Above is the picture in November of 2006! We decided to do a midnight blue Pebble Tek surface and use stone coping and a raised bond beam with two scuppers (Water Features add value too!) This pool should raise the value of my home at least $55,000.