Gregg's Blog

What's that house worth?

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 01 Nov 2009 11:32:45 -0600

I have heard some version of this question over and over again, from different people, at different times, and all the questioners expected a definitive answer. I shall attempt to discuss worth and value and will try to simplify the discussion and give you some food for thought. First let's get to the most practical reasons people ask this question in my business. They either want to know:

How much can you sell my house for? ,or

How much do I have to pay for this house?

These questions actually go to price, and the short answer always has a dollar figure.

BPO's

In our office we are doing at least a dozen BPO (Broker Price Opinions) a week. A BPO provides the answer to this question: "based on the sales of similar homes in close proximity to this one over the past three months, what will the subject home sell of within 30 (or 90) days?" (for a blank BPO form click here).

The BPO form will also list three homes that are on the market, but in truth the ask price that some has on a home has little bearing in today's market valuation. A BPO price is generally brutally honest and generally is referred to for a quick cash sale. The BPO's in our office are performed on homes we list that have been foreclosed on by the bank and the bank is asking us to sell the home.

Alternatives

In general real estate sales, we are more likely asked: What can you sell my house for? We may start with a BPO. But we have to ask more questions: "How soon do you want to sell? Will you hold the mortgage? What is included?" In previous uptick markets sellers would "lead the market". They would price a bit higher and wait for the market to catch up. In today's market this might be a bit like trying to catch a falling knife. Most agents will look at what alternatives a potential buyer has to buy a similar house - not what one has sold for. If a buyer wants to live on the river in Lee County,for example, the agent will look at all the alternatives on the river and then price the subject home to be competitive with what is on the market.

Are you going to sell and then buy?

Some sellers today are thinking of downsizing. They want to put their home on the market and buy a smaller one. The wise seller will set his price to sell quickly, foregoing a higher price because they know bargains exist on the buying side. Unfortunately there are many who want to "sell retail and buy wholesale. They realize it's a down market but rather think that the down market does not apply to their home! In their wait for the perfect price for the home they are selling they may miss the bargain on the buy side.

What is in a price?

I have often said that there are three forms of capital: Time, Money and Thought, and I have a limited amount of all three. The money issue is the most up front and center. Let's look what is involved in the dollar cost of a home. The following is a list, in no particular order, of factors that affect the dollar cost of a home:

Purchase price
Insurance Cost
Taxes
Maintenance
Home Owners/Condo Dues
Useful Life expressed in years (Depreciation)
Cost of Borrowing
Utility costs

If a buyer or seller just looks at the first one, price, and ignores the rest, they are not examining the true costs.

Less obvious than the dollar costs are the time and brain power costs. You may think of these as the same thing. I do not.

One deals with the clock - how much actual time it takes to accomplish the search for a home, the maintenance of a home, and what are the alternatives for that time; the other deals with stress and cognitive power. If I am stressed with the burden of my home ownership, this will steal cognitive power I have for accomplishing other things - like my livelihood and my enjoyment of my family.

And what of Intrinsic value?

I am not talking of present value as in an investment, but more the philosophic intinsic value of a home and its contribution to happiness. The expression "You deserve this" comes to mind. The home is a reward - but only as it is related to happiness - not the number of square feet and bedrooms. What is the price for happiness? What is the cost? For this answer you must examine your bigger goals in life. I, like many others, have re-examined these questions and find that worth has more to do with the intrinsic values that the dollar values.

Gregg GFous@MarketAmericaRealty.com

Trends to watch for and profit from:

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 11 Oct 2009 11:06:23 -0500

Pets. This is a market that the recession has missed.. Yes we see anecdotal stories about abandoned pets as folks abandon their homes, but look to the steady growth of the pet industry to continue for years to come.
The Kitchen. Nothing says comfort more than a home cooked meal. Grocery prices are rising and restaurants are responding to the lack of customers. But look to home cooking and products related to dining in to increase in popularity.
Small is the new Big. At the economy shrinks, so will home sizes, cars, and furniture. Look for pride in small ownership and capitalize on it.. Small multi use furniture, easy to store playthings, and of course small electronics, small apartments and small cars.
Out Sourcing. This is corporate speak for do not hire an employee, but contract out for the service - from everything from your phone service to your software. Need a marketing department? Outsource it.. Need a call in service center? Outsource it. Here at Market America Realty and Investment Group we have outsourced our phone services, our IT department (Redline Managed Services), and our email system. We, in fact, out source our offices.
Software as a Service. Related to the outsourcing trend. Instead of buying the software buy the service. Need accounting, CRM, or inventory systems? Get it on the web.
Aging and Dying. We don't need to say much here, the baby boomer theme has been beaten to death - and that's where they will end up - think Bucket List and the package of products and services this aging population will demand. from medicine to vacations, parties to funerals.
Water - blue is the new green. Technology and marketing opportunities will increase as our demand for this precious commodity does not decrease but the supply dwindles. Thin water treatment and conservation.
Urban living. The Aging population will no longer want to live an hour's drive from essential services. Small efficient apartments in urban locations near libraries, hospitals and shopping - not to mention transportation. This trend runs perhaps contrary to the extended household trend -multi generational households. But the sprawling suburbs are expensive and impractical to support. Urban living gives us other markets to explore - smaller furniture designs, urban gardening, indoor pet potties, multi use appliances and compact EVERYTHING.
Home businesses. As the population loses corporate jobs look for more cottage industries and the products to support them.
Communications. Think social networking, computers in pocket (iphones) connect anywhere technology and the demise of the newspaper and printed media.
Virtual everything. Tour a home or a country, take a hike or fly a plane.
Shopping. Look for personalized manufacturing - order a car and they will make you a car. Order a pair of jeans, and then it will be made for you: Low inventory, the resurgence of catalogue stores - tied to the internet. A place to touch the product before you go on line to order it, not a place for inventory.
Medicine. The coming socialized medicine trends will boost the concierge medical industry, holistic medicine, and preventative care.
Aging infrastructure. The crumbling bridges, sewer lines and utility networks will favor the urbanization trend and the infrastructure per capital is lower in the cities.
Alternate fuels. Think annually renewable fuel sources water, sun, wind. Think growing polymers in plants.
Do it Yourself resurgence or everything - from home improvements and cooking to wills and clothes making. The population will produce more and consume less.

Five Things You Need to Know about a Condo Before you Buy

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 27 Sep 2009 09:25:30 -0500

Who IS the developer? Florida has a very strict successive developer law. The developer that is responsible for warranties and liable for other major issues just may be a bank or some other investor and not the large developer that built the project. Investigate this thoroughly and get a good agent working on your behalf that can intelligently get these answers and advise you of the ramifications.
Who is carrying the warranties and what is the policy on warranties for things like appliances, punch out items for the condo and major structural items such as concrete and doors? Many of the subcontractors for things like the pool, the concrete work, and the tile may now be out of business. If the condo you are buying is three years old yet has never been lived in, is there still a warranty? Who do you call if when you move in you find that the hot and cold water lines were mistakenly crossed or your doors don't work?
How many condos in the community are paying their assessments? If you buy a condo for $179,000 and the condo fees are $900 per month it is a safe bet that only a small portion of the condos are actually paying the condo fees. How does this affect you? What will the fees be in two years? In five?
Who built the condominium? This is different from who developed it. Are they still in business? What is THEIR policy on latent defects? Do they have the money and resources to back up their warranties? A good agent will contact the builder for you and get these answers.
Who is managing the condo association and has the project been turned over to the owners from the developer? The condo association is likely very busy with issues like un collected fees, estoppel letters for foreclosed properties, and other problems associated with today's recession; so to get answers from them you may have to make a personal visit. I would do so or insist that your agent do so on your behalf. You can learn a great deal about issues like insurance, warranties, the percentage of owner occupieds and other problems or challenges the community will face in the future. Most associations are run by a management company that is paid so much money per month, per door. They hire the common area maintenance contractors and deal with all items not associated with the individual homes.

The Longer the Drop the Higher the Bounce?

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 27 Sep 2009 09:23:07 -0500

The Longer the drop, the Higher the bounce?

Two weeks ago I received and email from one of my readers telling me that he was glad I was a salesman and not an economist. My writings and indeed my attitude were much too optimistic for me to be an economist. I wrote him and thanked him for his email and comment. I agreed with him, I would rather be thought of as an optimist than anything else.

I was reading an article in the Wall Street Journal last week and read something to the effect that all of the United States recessions have been followed by much happier times, and the deeper the valley the higher the following hill. I cut out the article, carried it around with me for a while so I could refer to it when I write on Sunday morning. But I lost it. I probably scribbled a phone number on it in the car, carried it to the office, and lost it before I called the number back.

No matter. I really don't need the validation of the Wall Street Journal to confirm what I am seeing with my own eyes. But I suspect there may be a bit of a perspective issue with the higher the bounce from the longer the drop theory.

My father used to tell me the story about Herbert, the philosopher. He came upon Herbert one day in his garden. Herbert was beating his head against the stone wall beneath the oak tree in the corner.

"Herbert!" exclaimed my father, "Why are you beating your head against that wall?"

Herbert stopped, looked up at my father and said, "Because it feels so good when I stop."

Today, belts have been tightened, literally, and spending is at an all time low, we have all cut back, economized, and retrenched. The clouds of excessive consumption have cleared and our minds have adjusted more clearly so that we can perhaps more wisely choose between needs and wants. I know my priorities have been altered, and I believe permanently, by this recession.

We all seem better able to gauge others by our own experience and I am certainly no exception. My experiences lately tell me that spending is on the increase. In my business we are expanding. I now have 14 agents and two staff locally and twenty or so more agents nationally. I am interviewing for an outside contractor for marketing. I bought additional capital equipment. I am spending money on my website and some money on advertising. Yes, just a trickle, but it is a start. But I am spending the money differently.

We added affiliates and now have Market America Realty and Investment Group - with offices in Punta Gorda, Sarasota, Michigan, and New York and soon in Germany.

But instead of adding employees I am in many cases outsourcing. Instead of long term commitments I am more conservative in my approach, cautiously optimistic, if you will. My PR person will be an independent contractor; so too my content manager on the web.

My affiliate program is another example of a fiscally conservative approach. I have identified technologies that make my business run smoothly, but for growth in my business I am taking an approach my brother I used "expanding" our boats.

Bill and I used to buy a boat with partners. Every time we need to spend money on the boat it would cost each of us just one fraction of what it would cost us if we owned the boat by ourselves, with three partners in the boat, that new prop was, in essence, 2/3 off.

The approach I am taking for Market America Realty and Investment Group is similar. It is a marketing Co-op, so to speak, I am adding offices, but not expense. I am adding technology, and the expense of that technology will be shared among affiliates. Now each office can afford the best support, advertising, and back office systems at a fraction of the cost for a single office. (The beautiful thing about today's technology is the low cost of scaling it for large growth. If you have a real estate office and want to talk about being an affiliate, call me).

The point here is that we are spending money again, but in a fashion that has been adjusted by our experiences in the recession. I think there will be a bounce, but it will only seem higher because of our adjusted expectations and our new found appreciation for any upside at all.

Folks, I am amazed at the prices, not just a Riva, but all over. We are now at that time that is just at the end of the long off season for sales and the beginning of the new selling season down here - and prices are remarkable. In some cases as low as 40% of that they once were. Riva is in an unusually location - only unusual because they uniquely own the high rise market in South Fort Myers. Views are spectacular both day and night, the amenities are high class.

The individual condos do not have the layout and finish that Parkside does (Parkside is all granite and wood trim) nor the marina, of course, but the amenities are done well.

Five things I wish other Real Estate Agents would do but most don't

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 27 Sep 2009 09:20:20 -0500

Five things I wish other real estate agents would do, but most don't

Identify themselves as agents when they call.
Put their contact info on all their contracts so if I need to call them I can.
Have a pre programmed signature for all their emails so if I have to respond quickly by phone, I can.
Learn how to scan a document to when you send it is not upside down.
Read and fill out attached addendums to contracts

Just my comments, on the side.

How to Buy a Foreclosed Property

Gregg Fous (Market America Realty and Investments, Inc.) — Tue, 15 Sep 2009 01:01:53 -0500

I'm sitting here this morning looking at, what in today's computer dominated world, is a blank sheet of paper: a white screen with a blinking curser standing at the ready, waiting for the words to come out slowly and with deliberation, originating from a brain that is anything but slow and deliberate; a brain that is sending signals faster than my poor typing skills can keep up. It seems that it would be so much easier if my brain had a USB port I could plug into and it would transport my ideas into some user interface with Microsoft Word. Before you tell me about speech recognition: I know, I know - I tried it. It simply does not work well enough. By the way, thanks for still reading my column. I try to keep the typos to a minimum - please accept my apologies for last weeks typo right in the subject line.

I have three topics I want to cover: How to buy an REO - a bank owned property that has gone through the foreclosure process and as now marketed by an asset management company though a local real estate agent; How to do a Short Sale - in effect sell your property for less than you owe the bank; and thirdly, I want to talk about One of my Greggisms that my kids have heard all their life.

First to the Greggism. This morning while I was reading the morning paper I had the TV on. The Fountainhead, by Ayn Rand was playing on Turner Classic Movies. The antagonist to Howard Rourk, Ellsworth Touhy, meets Rourk by chance at a construction site. For most of the book Touhy has been out to destroy Rourk, the protagonist of the novel and the representation of Rand's philosophy. Touhy is anxious to hear what Rourk has to say:

"So tell me Rourk. Tell me what you think of me." Asks Touhy.

"But I don't think of you." Rourk offers as he walks away.

Whenever I hear one of my kids or friends say: "I hate such and such, I always respond with, "Don't hate, just refuse to like, it takes much less energy."

I had never made the connection with my sentiment to Ayn Rand until this morning.

Not sure what this has to do with Real estate, but I needed to get it out my brain and onto paper so the rest of this stuff can come out. Enjoy.

How to Buy an REO

The topic is not how to find an REO to buy, nor is it how to determine what REO to buy. If you need help with these topics call me and let's sit down. What I want to talk about is how to get the one you have identified.

Buying REO's is not like buying a home from an individual. You are buying from an institution. There are no grey colors; only back and white. It also is not a race. First does not count. Highest and best counts.

Let's talk about highest first. You need to be working with an experienced and thorough agent that can make you just as knowledgeable as the asset manager for the bank that is handling the decisions. The asset manager had at least two real estate agents prepare a BPO (Broker Price Opinion) for the subject property. You need to do the same. Do not hesitate to pay for these BPO's . You should be able to get them for $50 to $100 each. If you are a loyal client and willing to sign a buyers rep agreement with your agent, I am sure they will do one for you free of charge.

Let me take a moment and talk about buyer rep agreements. You might be hesitant to sign one; and you should be. I can understand how you feel, and I felt the same way when before I was an agent and I was using agents to do work for me as a buyer. But then over time I realized that good agents work hard and diligently and have many demands on their time. But I need his full attention and I need to let the agent know that his efforts will ultimately be rewarded. Do not hesitate to sign a buyers rep agreement - ESPECIALLY when dealing with REO purchases or looking for bargains in a very competitive market like today's.

Back to the BPO. The BPO will give you a good idea what the home is worth and what the bank will accept. Just like in any negotiation it is helpful to know the other sides' motivation. The bank's motivation is simple - Highest price quickly. They want simplicity and no contingences. They want to move onto the next property. Which is where we come to BEST:

Once you see the BPO for the property you want, ask for all associated documentation. A good REO agent will have things like condo docs, tax records, sales history of the property, and perhaps old surveys or inspections. Go talk to neighbors. Visit the areas a few different times of the day. Go on the weekend. Get to know more about this property than anyone else. Look at the short sales in the area.

Whenever possible make your inspection prior to the offer. Do not make the offer contingent on ANYTHING. Your competition may be a higher priced offer but may come with a seven day right to inspect. You may win the bid at a lower price if you have already done your inspection.

Many years ago I bought a house in Cincinnati from a bank. I looked at the property and decided what it was worth. I then found out that there were three bids higher than mine. I wound up not making the bid. Ninety days later, almost to the day, my agent came back to me and told me the bank called her and asked if I was still interested. It seems that all three of the other contacts fell though during the due diligence period. I told her I was interested but I needed to go through the house one more time. I took a clip board and assumed everything that might need to be fixed HAD to be fixed. I submitted my bid based on cost estimates for it all, but with NO contingencies for inspection or financing. The bank called me directly a few days later and said they would like to save some time and counter my offer over the phone. I replied that I could save them a whole lot of time as they already had my final bid in their hands. I got the deal. (By the way the only thing I did not have to replace that I thought I would have to, was the slate roof. It cost only $135.00 to repair.)

Ask your agent if there are any addendums that the bank needs signed and you can get ahead of time. Normally banks ask for proof of funds or your ability to borrow. Give them that information and make it easy for them to verify balances by including your banker's phones number and name.

Ok, you have your nice tight package that is now in the hands of the bank. Don't stop there. Follow up. Talk to the banker's agent. Are their other offers? What are they? How many? The seller's agent has a job to do - and that is to get the highest and best offer that he can get for his client. If it is in the banks interest to tell you that you are two thousand below the next offer, he may tell you that - hoping to get you up a few thousand. Many banks set a deadline for offers, after the deadline they come back again and ask for "highest and best" again. You may be able to pre-empt that process by having such a solid first offer that they take the path of least effort and accept your offer.

Do not be discouraged. The process is not as much art as it is science; but there are still personalities involved. Good agents know how to get to the personalities and make the deals happen, but excellent agents go beyond that and make certain that there are no other reasons for the contact to be thrown out by the bank. They will help you make a tight offer that is highest AND best. Good luck and good buying.

What's the next Superlative? In Real Estate I think it's Intelligent design.

Gregg Fous (Market America Realty and Investments, Inc.) — Tue, 15 Sep 2009 00:58:52 -0500

I'm sure it started out way before I noticed it as a kid. I'm talking about the battle of the better-thans. There was a Dairy Queen in Emerson New Jersey when I was a kid. As a treat my parents used to take us there for ice cream. When ever we came off of the Garden State Parkway from long trips and got onto Kinderkamack Road; there were two mansions up the hill to the left. When I saw those mansions I knew the Dairy Queen was not too much further ahead on the right. This was my signal to start my pleading for my Dad to stop the car. Little did I know he always wanted a DQ as well and his resistance was just a show for Mom.

One year we took the Country Squire station wagon, a pop up tent trailer, and headed all the way to Disneyland in California. But after four weeks and thousands of miles, I still spied those landmarks on Kinderkamack road as we got close to home.

Of course we stopped and Dad sent me in to get small four cones.

When I came back to the car I soberly announced that they didn't have small cones anymore. In fact the smallest was a large.

"Huh?"

"Yup: large, extra large and jumbo."

This morning I was sitting reading the paper over looking JayCee Park in Cape Coral from our new Parkside Condo. It was (and still is) a gorgeous morning. It rained pretty much all night and a cool soothing breeze was coming off the river through a cloudless sky. As I made my way through the news sections of the paper there were joggers, dog walkers, and some sort of workout club distracting me, in a pleasant way, from the news. When I got to the real estate section I scanned the ads. The first half page ad as is for Concordia Brand New Luxury Condos. This is a project that is near and dear to my heart. Before we developed the Island Pines project we looked at this design, which is a modification of the "BigHouse" concept but went instead with a more traditional design from Mike Sheeley Architects. These homes being offered by Concordia are at a price that is at least half of their replacement cost and very much a bargain. In fact at as low as $77,000 it would be a mistake not to take a look at them if you are thinking of buying a condo in Florida.

For Concordia, luxury is defined by granite counter tops and stainless steel appliances and screened lanais. Certainly a step up from laminated counter tops - but who builds laminated countertops anymore anyway? My point is not to disparage Concordia, for I think it is a fantastic project, but to point out that our benchmark, our starting block, if you will, is luxury. We go up from there.

To those who have been coming up from luxury; luxury is a bathroom with a cocktail bar, or a kitchen with under counter refrigerators and beer on tap, built in wine coolers and six burner gas stoves; inlayed marble mosaic floors, gold plated faucets, and walk in closets with windows.

Opulent, sumptuous, lavish; but where do we go from here?

I say to intelligent design. Not bigger, but better; not more luxurious, but smarter.

The trend will be to the small, understated luxury, No extra rooms, but those that are built are built with use and design in the forefront. Large closets yes, third bedroom suites no. I expect not to lose high ceilings and large windows but I expect higher quality storm and sound proof windows; practical use of the space with things like built in safes, smart storage design, efficient kitchen and bath design, and little or no wasted floor space, multi use rooms with built ins: Energy efficient and "Green". Proper ventilation for the baths and kitchens, "smart" electrical design with remote controls, sleep modes and temperature stable homes.

In any case that's what I want. And I want to develop this too. But first we have to sell all the luxury homes that are on the market at bargain prices. We need to finish this "clearance sale". Which raises another interesting point: today the "few steps up" from luxury in now available at affordable home prices. Money available at 5% and incentives from sellers and banks alike.

I am expecting a very busy season in real estate in South West Florida. Come on down for yourself.

www.ma-realty.com

What's Your Value Add?

Gregg Fous (Market America Realty and Investments, Inc.) — Tue, 01 Sep 2009 00:39:10 -0500

Figure out what the real estate wholesaler's "Value Add" is and you too can make money in Real Estate.

I'm not sure where I first heard the expression "Value Add" - I think it was when I was a consultant for the Corporate New Ventures Team at Proctor and Gamble. We were big on buzz words back then like; "ideation", " key take-aways"; "peel back the onion" and "30,000 foot view";- all sorts of insider expressions that let others know we really knew what we were talking about and we were, well, consultants. I have to admit I still use these expressions in planning meetings today, although my planning meetings are much more informal these days and are more likely than not to be held with a few small confidants like my wife and close business friends. But I still love to use a white board and dry erase markers. When I can write ideas down they become more concrete - and approachable.

The concept of "value- add" requires us to define not just our right to succeed in a project, but just what we are bringing to the table to justify a margin contribution. At P and G, I was taught that the conglomerates vast size and marketing muscle was not a right to succeed, nor was being first to market a right to succeed. A "value add" had to be present and sustainable, scalable and offer a benefit to each customer - not just to the market or to the companies bottom line. The soap, for example, had to actually clean better or last longer. This over riding concept has served the company well.

A few months ago I was approached by an old friend in the real estate business. He was suddenly gung-ho on a multilevel market concept. He invited me to a presentation at a local hotel. I went because of our past friendship. At the meeting he talked about leveraging people, not money, and selling to friends various products that they were already buying anyway: like satellite TV service, cell phone service, and vitamins.

I asked him simple questions; "What's your value ad?"

"What are you contributing to this process?"

He did not quite understand that not having a value add would ensure that his business was not sustainable. He stressed I did not really have to DO anything. Sales people down my stream would sell. I did not need a value add.

But I understand that in order for my customers to use me, the must need me for the added value I bring to the proposition.

Ok. Let's talk real estate,

Market America Realty and Investments Inc. is selling homes to wholesalers, end users, and landlords. The expression wholesalers is perhaps not the proper term, but if you wish you can call these folks flippers, dealers, or money men. The foreclosure deals we now handle bring in multiple offers in wide price ranges. (To the lower left there are links to our newest offerings - some before they are listed on the MLS - because we do not have final pricing). I can usually tell when the buyer will be an occupant by where the price of the offer is in relationship to other offers- but not always. The investors that are going to resell the property know they need to add value to the property, and they know well where their margins and therefore offering prices, need to be.

The "value add" the wholesalers offer is this:

Inventory. Just like you would rather go to one store to buy clothes than a few dozen manufacturers, so you would rather go one seller for homes. They know how to buy the home that consumers will occupy.
Renovation. Many of the homes they buy require sprucing up - some just paint and cleaning, some more extensive renovation.
Repackaging. This is a big one. The wholesaler buys for cash and will sell to someone who needs to borrow money. He "repackages" the home to better sell it.
Patience. When the wholesaler buys he has to move very quickly. He inspects in mere days and closes in as little as a week. When he sells his home to the end user, he adds patience - he will wait for the buyer to inspect, insure, probe, and finance.
Knowledge. Just like the store that only buys items for his shelves that he knows his customers want, so goes the real estate wholesaler. He buys the homes that are in demand, he has studied the market and knows what to buy, where the quality is and how to identify these homes. He also knows what his customers needs are regarding financing, closing, insurance, and warranties.

The reputable wholesalers use their knowledge of the market, and strong agencies like Market America Realty and Investments, Inc. to help them find their properties. They pay for this service by making sure the agencies get paid commissions or fees for their work. Smart buyers these days are offering their buyers fees to their agents to locate the best homes over and above commissions paid by the sellers.

Here are some techniques we use to locate homes for our investor buyers:

Statistical analysis. We divide our market into ZIP codes + four. In each plus four zone we review closings over the last three months. We do this on a trailing basis daily then compare this average price per square foot with daily new offerings that we get either on the MLS or from the banks lists we receive in that plus four zone. By 10 AM every morning this gives us the homes we need to look at personally. For example if the average sold price per square foot for that zone over the past three months is $60, and the new home on the market that day is $44 - we need to look closely at that offering.
Up Close and Personal. Once we have our prospective homes we need to figure out if the statistics are swayed by pools, age, or other factors not readily apparent. One of our agents familiar with that territory visits the home. Where ever possible we do an initial inspection for things like Chinese drywall, presence of appliances, and other salient factors like vandalism or mold.
Short Sales. We know the short sale process, do in-house loan modifications and deal directly with the banks to affect the sales and closing process. We make offers for our clients and work the bank, the property, and the seller during the long process. Our client's money is patient; the investor does not need quick answers. When we approach the bank with a short sale offer, we have compiled every document and the answer to every question the bank will have. In the package presented to the bank is a BPO, complete financial statements, a hardship letter, listing agreement and marketing history, and a solid cash offer with no contingencies along with proof of funds. We like the short sale part of the business very much, because often these are homes that have struggled for months to be sold. We can make the sale happen.
BFB. We prepare a one page summary of what the investor is looking to buy. What his exit strategy is, what locations he wants, perhaps what ages, size, or style of houses he is most interested in. This BFB (Basis for a Buy) document becomes our template in our search. But it is also a living document that can be changed as market conditions change. I can't tell you how many people call me up and tell me to just find them a "good deal"; " You know", they will say, "One I can make a lot of money on" This is not good enough for me or anyone on our team. We need to come to a meeting of the minds before a search is conducted and properties offered.
Kiss a lot of Frogs. Early in the process we may have to present many properties and indeed many offers to zero in on the targets. Often is it through "kissing a lot of Frogs' that we are able to make the most accurate BFB sheet.
Know the whole journey. You have heard it before and I will tell you again: You make your money when you buy not when you sell. Smart investors know their exit strategy and every step along the way to the exit. They know their costs of holding, of improving, of taxes, insurance, etc. They give us a margin they are targeting and we will ADVISE them of our opinion of the exit sales prices. Our customers set these parameters, we do not.
Network. One of my clients used the expression, "Target Rich Environment" to describe the real estate opportunities out there. What he meant is that there are many many properties to look at. In order to weed out the gems from the fools gold, we need to use all the tools at our disposal. I have mentioned some of them above. The most important tool in my arsenal, however, is the network of sellers, brokers, agents, and investors that my team and I have developed mutual trust and respect with over the years. For me its about relationships and enjoying the trust that has taken years to develop.

Ok, so you are just one person looking to buy one house at today's bargain prices.. What do you do? Number one; hook up with an experienced broker like us. (Call me and I will suggest one or two!)

Number two, sit down with your advisor and work on the BFB - build on your objectives and your exit strategy.

Then be prepared to compete with the big guys. Short inspection periods, strong offers, completed paperwork, and patience. Examine your worst case scenarios. If you can still sleep with the worst case - your probably are on the right track. Get a handle on and define your expectations and be sure to share those expectations with your advisors.

Making money is real estate was never easy - although it may at one time have seemed that way. Remember, people don't make money without adding value.

What's your value add?

"There is a Sucker Born Every Minute"; Ten new plowing fields.

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 02 Aug 2009 07:52:29 -0500

The quote "There is a sucker born every minute" is often attributed to that great showman P.T. Barnum; but the famous line was in fact uttered by one of his competitors. (Story here) Fact is; there is probably a suck born more often than every minute. We are all suckers at least once in our life.

The con man understands the human mind and our desire to believe. He understands it so well - he is able to capitalize our inherent gullibility.

Four years ago I was working on my Cyperlin project - an 80,000sf office building I was planning on the corner of Summerlin and Cypress Lake Drive. During our pre-sell period I received a call from a local real estate agent.

"Would you be interested in selling the entire project?" she asked.

Now keep in mind this was a $24 million dollar project and the success of Cyperlin depended in great part on my ability to pre-sell individual floors to end users so I could get financing. I had letters of intent for three of the floors, but as of yet no deposits or contracts.

"Indeed I would" was my simple reply.

Over the course of the next two weeks two conference calls were set up with her buyer. He wanted to move his oil trading company to Fort Myers, in fact he was thinking of buying Al Hoffman's waterfront mansion in Gulf Harbour (This is how the agent was first approached by the buyer). He wanted the entire building. He asked all the right questions. He was very interested in qualifying me and the project.

"Could I meet him at his Palm Beach house next week to discuss the deal?"

He would fly his private plane to pick me up. He called the day before the meeting and postponed it to the following week. Then he never called.

Never.

But I wanted to believe him. I kept giving him the benefit of the doubt; kept calling him long after it should have been obvious this was some kind of fraud.

Sucker.

Cyperlin, by the way, never did come out of the ground, the market turned before we reached our pre-sell goal and I never closed on the land. My gorgeous window walled, eight story building I still hope to build some day - but Northern Trust wound up buying the property and putting another cooker cutter Mediterranean style building on the corner. I get a wave of disappointment every time I drive by.

There is a sucker born every minute and just as there are suckers, there are the perpetrators of the fraud, the suckee to the suckor. The unscrupulous capitalize on the current market. where ever there is a frenzy in the market or a new trend on the horizon, you can bet there will be those that will capitalize on it.

Late night TV "infomercials" seem to be a good barometer, and lately, with TV advertising getting so cheap - we can see these ads on prime time.

Here, without qualification, are some of the areas that just MAY be ripe for the gullible.

Foreclosure Help
Chinese Drywall litigation or testing or repair
Short Sales Courses
Making Money in Foreclosures
Loan Modification consulting
REO sales courses
Buy bank lists (or foreclosure lists or pre-fore-closure lists)
How to profit in the down market books and classes
Improve your credit - NOW
Erase credit card debt

Ok, I know I probably missed some good ones, and some of the above areas have very legitimate providers and opportunities. But be careful, for when you want to believe something is true, it is very easy to be lulled into tuning fantasy into fact - with conviction.

If you need help with your pending foreclosure, you need advice negotiating with your bank, effecting a short sale, or an appraisal on your home; seek a reputable advisor - and a good place to start is by asking your friends an neighbors, or give me a call or drop me an email. Is there profit to make in this down market?

Of course.

Is it easy, quick and risk free?

Of course not.

As always, if it sounds too good to be true, it probably isn't.

But take heart, membership in the "I've been suckered" club is not very exclusive.

Chinese Drywall - Behind the Scenes

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 26 Jul 2009 09:04:47 -0500

Chinese Drywall - Behind the scenes

I was at a family gathering many years ago and my sister Julie's mother-in-law, Ruth, was trying to use a new instamatic camera and was being "advised" on how to use it by Julie's father-in-law Ed. Ed was an interesting guy, he retired as a professional photographer. Ed spent his entire career taking pictures for Sear's catalogues but could never seem to take a decent home photo with actual people in it. I'm certain he knew his way around sophisticated studio cameras and pictures of crock pots, but the instamatic camera might as well have been a microwave oven as Ruth tried to "point and click".

As the argument escalated between Ruth and Ed on how to utilize the simple features of this new camera, my father chimed in; "Let me help, I don't know what I am doing either."

"I don't know what I am doing either" might as well be the mantra lately for all the "experts" that are chiming in on the defective Chinese drywall issue. The problem with these well meaning "experts" is that they are applying knowledge gained from unrelated experiences to how to fix a problem that has yet to be totally quantified. We all love an easy solution. There isn't one.

The first solution was to fix the first symptom - failing air-conditioner coils. The coils were just replaced. This proved to be a costly solution to the symptom and did nothing for the problem. The coils went bad again. Other attempts were made ranging from repainting the houses inside to gassing the house as if for mold, de-humidifying the house, and finally replacing all the drywall.

The interesting thing is that in some of these homes each of these "fixes" worked. In many they did not. The final solution that many contractors were trying to avoid was gutting the home of all the drywall and starting from bare studs. I have indeed solicited bids from contractors for some houses I was thinking of buying. (Bids range from $10/sf to $20 to replace all drywall and re-install cabinets and fixtures- depending on the house and intricacies of the finishes)

Then the unthinkable happened. A house was gutted AND the copper replaced. The drywall free house was tested for the off-gassing and corrosive air that was turning copper black- and the "problem" still existed without any dry wall present!

Some experts say the problem can be fixed.

Other Experts say the problem can't be fixed.

They can't both be right.

I am reminded of a classic scene from the Broadway musical; Fiddler on the Roof:

Avram: (gestures at Perchik and Mordcha) He's right, and he's right? They can't both be right.

Tevye: You know... you are also right.

This contradiction is easier to understand and perhaps agree on if we could better understand what the "problem" is and what the "fix" is.

Some of the problems have been claimed are:

Sulfur like smell
Copper turning black
Copper Air-conditioning coils clogging and failing
Chromed fixtures pitting and/or turning green
Mirrors delaminating

Do these symptoms have contributing causes like

Humidity
Temperature
Air tightness of the home
Presence of copper
Type of paint

The ultimate fix would be when all the above symptoms no longer happens in the home. Ever again.

There are degrees of the problem. Some homes don't have the smell, but the copper is turning black. Some copper turns dark, not black. Some air-conditioning units have not failed, but the odor is present. Some homes have Chinese drywall (as evidenced by the label) but exhibit none of the symptoms. Some have no Chinese Drywall (Again - the label ) but have all the symptoms. Some homes have no visible copper in the home - all plastic pipe - so if we do not smell it and we see no black copper - do we have a problem?

Some easy fixes may work on homes with a minor problem but not on other homes.

I sell foreclosed homes for Chase and Washington Mutual. One of the homes they asked me to sell we later identified as having the symptoms of having defective Chinese drywall. (Odor and blackened ground wire in the electric switch boxes). They asked me to get a bid to "fix the problem". I got a bid to tear out all the drywall and replace it. Will this be a fix? I don't know. No one does.

What if the solution fixes it for a year and then comes back because the toxin was in the concrete floor and grew back? What then? Is this problem akin to taking out a cancerous tumor after the caner has spread systemically throughout the body?

Some houses just have SOME defective drywall and not in all rooms. Does the toxin then infiltrate the good drywall?

Those of you with experience in statistical sampling know that we cannot determine of all the drywall if infected with out destroying the entire home.. We have to take samples.. How many do we need to take? Some say a hole cut every 48 inches will suffice. Some say if the symptoms are present we have to assume all the drywall is bad.

Let's assume that with thorough testing we have determined that removing drywall from houses with metal studs, replacing all insulation and sealing the concrete permanently fixes the problem. If this homeowner was ever to sell the home again he would have to disclose that it once had defective drywall? Is this house worth the same as one that never had the problem?

Let's further assume that the testing and some hefty insurance premiums to an underwriter convinced an insurance carrier to guarantee that this home was toxin free. Is that the ultimate "fix"? ( I would say YES to this question)

I would compare the problem of disclosure and guarantee to a water intrusion problem that a homeowner has and then fixed. If, for example, the intrusion was caused by the grading around the foundation and the fix required digging around the entire house and putting in a drainage system and then the problem disappeared for five years and the home owner then sold the house - would he be required to disclose this fact to a potential buyer? What if the drainage tiles failed in the sixth year, one year after he sold the home?

Gary Aubuchon of Aubuchon homes has been a reputable builder in Lee County for years. He build excellent homes and has an excellent reputation. There was an article in the Fort Myers News Press today (Article Here) about one of the homes he built having the problem - apparently in a major way. The home owner is quite justified in demanding a fix from Aubuchon, but the builder is hesitant to do anything that would fall short of a total cure - and so far one has not been embraced enough for insurance companies to get behind.

The home owner is right, the builder is right.

They both can't be right.

That's right too!

By the way - we are watching this "fix" very closely (Click Here) Gross Point developers and BBL both have excellent reputations and have teamed up to tackle this issue.

Ten Tools Every Realtor Should Want

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 12 Jul 2009 08:09:33 -0500

Email system
Personal WebSite
Contact Management Software
Integrated and manageable phone system
MLS CRM integration
Calendar Planner
Mapping Software
Drip Campaigner
Training/mentoring
Lean Capture System
Robust Corporate Website
Forms Library
Transaction Tracker
Global exposure

Six months ago I started working with my team on a list of all the tools that it would be nice to offer an agent that joined our company. What is listed above is some of the results. Yes there are more than ten (thanks for counting) and the list above is not all - inclusive.

I am about to launch Market America Realty and Investment Group and I am recruiting professionals that like me know what it is to produce, want the tools to make production efficient, and want compensation to reflect their efforts.

If you are interested in learning more about how to accomplish this, please give me a call or drop me an email with your contact info.

Gregg 239-851-5464 or GFous@marketamericarealty.com

Now its THINGS that are dependable, and People that Need Some Work

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 12 Jul 2009 08:07:35 -0500

Now its THINGS that are dependable, and People that Need Some Work

Am I kidding myself or are things more reliable than people these days?

When I grew up in New Jersey we had a pretty cool basement that was divided into three general areas; the bar/tv room, the summer kitchen/laundry room, and the work/storage room. Back in the work/storage room was the furnace and hot water heater, the fireplace cleanout chute for ashes, and most importantly, my father's work bench. It was a high counter made out of an old wooden teller counter probably discarded by the bank my father worked for years ago. The top of the counter was strewn with all sorts of things and stuff. Door knob parts, fishing reel spokes, hinges, axe heads or tool handles; these I classified as THINGS. Then there were pieces or metal and wood, and cut bolts and unrecognizable parts that at one time belonged to forgotten THINGS. These I classified as STUFF.

Of course there were also TOOLS. The obligatory vise, an electric bench grinder (I loved sharpening things just to see the parks fly) and wrenches hanging on the wall behind the bench.

It was important to Dad that we never threw out any of his stuff and certainly none of his things. Generally the tool bench looked a mess. There were coffee cans full of various bolts, mason jars with nails, brads, and screws that might be needed for some future projects, and paint brushes in various stages of use - from stiff "oops I never cleaned that one" to brished still in the paper package (no not plastic - that was yet to come)

Once in a while Dad would go down there with no specific project in mind. He just sorted nail sizes, organized his tools and things and threw out some "stuff". He would get ambitious and organize his wrenches by size, put all screw drivers in one drawer and pliers in another. Normally part of the way through this task he would start fixing some old thing and the workbench never got totally organized.

The bench itself was at the back of the basement, on the narrow side, past the furnace and

the stairwell, There were no wall light switches. To get to the bench you sort of walked in the dark swinging your arm back and forth feeling for the pull sting from a bare light bulb hanging from the rafter. This was Dad's world and little kids were not encouraged to explore this sanctum by themselves. If he asked me to go get him a hammer or some other needed instrument of construction, I would go down there and sort of hold my breath unit the light would prove to me that it was unoccupied and safe. But Dad put an old bar stool there for me to sit on when he putzed.

In my mind a house needs a work bench just as house needs a kitchen. A house without a workbench was rather strange to me; Except for Paul Nelsons house. His dad was the local pediatrician. No work bench: he had a tool box. I remember it pretty well, it was red and it even had a padlock. One time Paul and I spied it with out the lock. It was full of seemingly new tools. A shiny hammer, matching screwdrivers, a pencil; obviously Doc Nelson could afford to buy new things. He didn't need to fix stuff and turn it into things.

The only tool box my father had was a wooden one he made to carry tools to the point of a project somewhere other than the work bench. It was a long narrow affair with an old yellow broomstick as a handle. It was more commonly used to bring tools BACK to the workbench. Tools that he needed for a project he had one of us kids run down to get one at a time, carefully walking in the dark side of the basement cautiously swinging our arms to turn on the light.

Here in Florida we have no basements and our workbenches, if we have them, are relegated to a tiny corner of the garage. But things don't break as much these days as they did when we were kids, and if they do break, we certainly can't fix them at our workbench. In fact, we hardly fix things at all.

When I was in my early 20's I bought an old Buick with a V-6 engine. I remember my father in law coming out to listen to the engine making banging noises like she was ready to explode.

"Your pushrods are shot and you probably need to have new rings"

With in two days we had the entire engine apart, sent the block out to be re-bored, and I bought all new "things" for that engine. (Rods, or lifters, and valves, - I can't remember anymore). The point is, we never had to buy a tool. They were all there somewhere on his workbench. The other point is, the engine could be worked on. I could SEE the alternator, the carburetor, the fuel filter, and the radiator hoses. If I buy a new car today, I don't even know why I bother to look under the hood before I buy it: Perhaps some ingrained manly thing we think we are supposed to do. I barely recognize an engine much less a carburetor; and fix anything? Forget it.

I also remember in my twenties the push for zero defects in manufacturing. I knew a little about this as I was a manufacturer's rep selling raw materials. One of my neighbors actually made a living as a quality control consultant. He had an entire company that taught other companies how to make stuff that didn't break down. I think his company and those like it helped hasten the demise of the fixit workbench.

There was another major engineering field that also was designed to prevent tinkerers from fixin' stuff. I don't know what it was called, but it had something to do with making the outside case that held the thing into an integral part of the thing. The plastic case around the can opener, for example, all of a sudden was not to just keep it clean and neat looking, but it was in fact part of the can opener. Once you took it apart it was impossible to put back together again. In cars they called it uni-body construction. In can openers, it's well, cheaper to build it that way. So cheap, in fact, we just toss the old one when it gets too dirty and buy a new one.

Keep in mind this didn't stop Mr. Fixit's from TRYIN to fix something, it just meant that we took the whole thing apart before we threw it out and bought a new one.

Things we buy today are pretty reliable, very reliable in fact. Cars don't break down, electronics are solid state (pretty cool all-encompassing term, isn't it? SOLD STATE - kind'a tells you right there it's gonna last forever).

Things that wear out are disposable, and things that need adjusting are easy to adjust, and things that we need for along time, last a long time.

In short I think we have this engineering, production and quality control thing down pat. The problem today, is people.

Most people forget that they have to have to add value to what they do or risk becoming obsolete. I'm not sure how this trend has come about, but I will tell you this: in the current economy folks are learning pretty quickly that unless they can add value to a proposition that will be become redundant and not needed.

I talked a little about this last week. We have to produce ourselves out of the economic mess we find ourselves in. If we do not produce, we are not needed.

I see examples of "no production" people all around me:

I'm trying to sell a bank building to client of mine. I call the agent listing a building so I can tour it. I don't get a call back for FIVE days.
A member of a government board sets up a meeting for a land deal and wants a piece of the deal for being at the meeting - not for a contribution, but for his presence.
A Realtor sends me a client name and address and wants a 20% referral fee - but doesn't contribute anything input to the deal or the relationship - not even a personal introduction (because he doesn't know the potential client). BTW - I do not take these kinds of referrals.
Agents that LIST a property but don't actively try to sell it.
I am told by an acquaintance, "I lost my job" But when I ask what they did for the organization, they are hard pressed to explain their function to me or how they contributed to the bottom line.

In the boom boom times employees could get by with good effort and no results. I relate the story often about the sales person who makes the calls every week, satisfied that he puts in the effort - he does not get the sale mind you, but has put in the effort - and then is surprised when he loses his job for lack of production.

Farmers understand pay for production; managers and support people often do not. Your lawn maintenance guy understands pay for production, the salaried sales clerk often does not. You would think that the commissioned sales people understand production, but many do not.

Want some good news? The current economic climate is going to groom a very reliable crop of producers - because those that can't or won't produce will fall away to the producers. The market itself will create it's own version of "zero defect" producers, because these will be the ones that survive.

There is no work bench for fixing unreliable people. This corrective work is done in the field.

For me, I still want a house with a work bench, when I'm not producing; I need a place to putz.

Where's My Money - A Lesson....

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:53:54 -0500

Hey! Where's my Money?

Every morning about four minutes before the class bell rang signaling the start of class, young Anthony would quietly place a bright red apple on the edge of Miss Topp's desk. He has been doing that with a shy smile ever since the first day of school in Early September. On that first fall day of school Miss Topp was pleased but not that surprised. Many first day children brought her a little gift on first day. The second day, Anthony was the only child that brought her a gift - another red apple. This continued day after day until Miss Topp began to look forward to little Anthony walking past her desk, eyes staring down at his shoes and quietly setting down the fruit, always on the same spot. In fact Miss Topp's desk always looked the same. Blotter in the center, a ceramic cup to the left jammed with large black pencils, a pencil sharpener attached to the front left corner for students to use, and of course Anthony's apple on the front right corner. That is until after the afternoon break when the apple would disappear. Miss Topp got into the habit of eating the apple during the daily break when the children were at recess. This apple treat became Miss Topp's daily routine. She no longer brought a snack from home. She didn't have to. Anthony's apple was as reliable as that afternoon break. It always happened.

Anthony bringing an apple was as routine to Miss Topp as Hank always being the last kid in the class to quiet down, or Maria Arnaboldi always getting the top score in any test, or Stephen raising his hand first for any question she threw at the class. She grew to expect it, she habitualized it and it became her norm.

One windy March morning as Miss Tipp sat at her desk a few minutes before the bell, she looked up at saw Anthony sitting at his desk. Something was wrong. She wasn't quite sure what. The she looked around - and no apple!

"Hey, what's going on here?" she thought, "Where's my apple?" Miss Topp asked Anthony.

"I didn't bring one," was Anthony's only reply.

"But I count on that apple every day. You have been bringing me an apple in for months now. I will have no snack today, will I?

"I know Miss Topp.

I know you were expecting perhaps a joke or at least a well defined lesson in real estate. But the moral of the story is you can't count on external events that you do not control and do not participate in and do not even understand. It is human nature to behave like Miss Topp. It's not bad, or unethical. It's natural.

I was watching a special on Bernie Madhoff last night. All these people were getting these great returns on money that they entrusted to Madhoff. They didn't ask any questions as to why, or how, or how long. But when it stopped coming they screamed: "Where's my money?

I know we are told that Bernie was a crook and he lied and misrepresented the facts and he certainly wasn't a little Anthony. But most of the investors getting 20% returns were not asking a lot questions, were they?

The real estate market was booming years ago and prices were rocketing to the stratosphere and most of us were happy with this. When it stopped we asked "What happened to our money?" We forgot to ask, "Why is it skyrocketing, how long will it skyrocket, and what can I do about it?"

The money we access with our credit cards is so easy to use. I pull up to the gas station, run my card through the machine, and pump and go. But what if all of a sudden the card is not accepted because the bank backing it has no cash and shuts down my credit? I'm gonna say "Hey! Where's my money?"

I had a very large unsecured credit line with the bank. Two years ago I called to make sure it was still there. It was. Two weeks later I wrote a check on the line to cover payroll. It bounced. "Hey! Where's my money?"

In today's economic environment we can take nothing for granted. For example, I have been selling a least one house every week lately and I am gaining more and more clients looking for bargain houses to buy. Many of these new clients are late. I got a call from a good friend yesterday. He said, "Gregg, my cousin wants to buy a home in South Fort Myers, three bedroom, two bath, with a pool for under $250,000. I read in the paper where house prices are at a new median low of under $100,000 ($88,000 actually)"

I let Andy know that homes like this where he wanted to buy are around $400,000 now. "Hey - he said what happened?" I told him about Sallie looking for a house in SW Cape for under $75,000. The lowest one I found this week was $79,000.. "Hey what happened?"

While many folks are sitting on the side line houses are selling. They are selling at a rate that is more rapid than in any time in Lee County's history. Yes prices are lower, but they are without a doubt on the upswing. Not everywhere, not every house, not every price point. The median price is down because cheaper houses are selling now, more expensive, larger houses are not - so the median price is down.

The messages I am trying to get to my clients are these:

•1. This is no long term norm.

•2. Dig deep into the trends; ask how, how long, and why.

•3. Yesterday is well, yesterday's news. Figure out where we are gong tomorrow.

•4. You and you alone are responsible for your own success.

•5. Find out where the apple is coming from.

By the way, Anthony got five years after being convicted for apple laundering. Miss Topp now brings her own afternoon snack.

What I look for in an Investment Home

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:51:36 -0500

When I am looking at investment opportunities in fixer upper homes I look at the following:

Good Bones. The house has to have a solid base, something to work with; I call it good bones, as in: " This house is old, but it has good bones." The home has a good layout and was built with quality.
Fixable Problems. I love fixable problems like a bad smell or broken windows or no air-conditioning. I can fix those things. I can't fix a bad location or a small lot.
Location. You might think this is easy, but sometimes it is not as obvious as just a good neighborhood. It should be close to schools, transportation and medical services. Look into transportation and shopping, city services and infrastructure and roads.
Height of the tie beams. Some older homes have low ceilings and in particular low tie beams. I look for homes that if they do not have the high ceilings, at least have tie beams that are high enough for me to raise the roof and put in taller sliders.
Support. The neighborhood must support my plans for renovation, not just price, but appearance. I want to make sure I conform to the area.
Everyman's house. I am not out to make a design or fashion statement. I want a house that will appeal to the broadest market. I have heard time and time again about a house that does not sell, "But there is a special someone that will appreciate the uniqueness of this home". Let them say that about someone else's home, not one that I am tying to fix up and sell or rent.
My Sweet Spot. I like to go with what I know, where I know it.. A home might be a fantastic deal, but if I am not personally familiar with the area and it is not close to what I call my "sweet spot", I will not buy it.
Know how to get out before you get in. You have heard it many times: You make money when you buy, not when you sell. It is true that you decide what you are going to pay, someone else decides what they will pay you. Don't wait until you own the property before you figure how you are going to make money on it. Figure that out FIRST.

There are enough homes on the market to day that you should not have to compromise on any of your criteria. Wait until you find the opportunity that meets them all. If you need help setting up your criteria and your objectives, call me, I would be happy to sit down with you and help you. Gregg 800-439-1580 extension 52 GFOUS@MARKETAMERICAREALTY.COM

Ten Things I say often and hardly anyone listens to:

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:49:54 -0500

Focus On the task at hand, the ball, the next step. Narrow your territory, your efforts, your to do list.
It's only called work if you would rather be doing something else. If you spend too much time working, change what you do.
Answer the question you want to answer, not the one that is asked. Don't let others drive your discussion, stay on track and make your presentation.
It's about the relationship. It's not about price or product its about the relationship.
If you see it, get it now, from where you are. Don't wait for a better position, time or place.
You can't skip the basics. There are short cuts to the goal but he fall is just as short. Refine your basics and they will become a second nature to you. habitualize them
Write a list. Let your ideas gel on paper. Work your list every day.
Most people die in bed. Get out of bed. It's a very unsafe place. No great philosophy here, you gotta get outta bed to make things happen.
Don't hate. Just refuse to like. Hate takes energy away from good things. Indifference takes no effort.
What a great country! Bailouts, taxes, etc., It is still the best place in the world.

What do you think of me?

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:48:15 -0500

This morning while I was reading the morning paper I had the TV on. The Fountainhead, by Ayn Rand was playing on Turner Classic Movies. The antagonist to Howard Rourk, Ellsworth Touhy, meets Rourk by chance at a construction site. For most of the book Touhy has been out to destroy Rourk, the protagonist of the novel and the representation of Rand's philosophy. Touhy is anxious to hear what Rourk has to say:

"So tell me Rourk. Tell me what you think of me." Asks Touhy.
"But I don't think of you." Rourk offers as he walks away.

Whenever I hear one of my kids or friends say: "I hate such and such, I always respond with, "Don't hate, just refuse to like, it takes much less energy."
I had never made the connection with my sentiment to Ayn Rand until this morning.

Not sure what this has to do with Real estate, but I needed to get it out my brain and onto paper so the rest of this stuff can come out. Enjoy.

How to Buy an REO

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:46:10 -0500

How to Buy an REO

The topic is not how to find an REO to buy, nor is it how to determine what REO to buy. If you need help with these topics call me and let's sit down. What I want to talk about is how to buy the one you have identified.

Buying REO's is not like buying a home from an individual. You are buying from an institution. There are no grey colors; only back and white. It also is not a race. First does not count. Highest and best counts.

Let's talk about highest first. You need to be working with an experienced and thorough agent that can make you just as knowledgeable as the asset manager for the bank that is handling the decisions. The asset manager had at least two real estate agents prepare a BPO (Broker Price Opinion) for the subject property. You need to do the same. Do not hesitate to pay for these BPO's . You should be able to get them for $50 to $100 each. If you are a loyal client and willing to sign a buyers rep agreement with your agent, I am sure they will do one for you free of charge.

Let me take a moment and talk about buyer rep agreements. You might be hesitant to sign one; and you should be. I can understand how you feel, and I felt the same way when before I was an agent and I was using agents to do work for me as a buyer. But then over time I realized that good agents work hard and diligently and have many demands on their time. But I need his full attention and I need to let the agent know that his efforts will ultimately be rewarded.

Do not hesitate to sign a buyers rep agreement - ESPECIALLY when dealing with REO purchases or looking for bargains in a very competitive market like today's.

Back to the BPO. The BPO will give you a good idea what the home is worth and what the bank will accept. Just like in any negotiation it is helpful to know the other sides' motivation. The bank's motivation is simple - Highest price quickly. They want simplicity and no contingences. They want to move onto the next property. Which is where we come to BEST:

Once you see the BPO for the property you want, ask for all associated documentation. A good REO agent will have things like condo docs, tax records, sales history of the property, and perhaps old surveys or inspections. Go talk to neighbors. Visit the area a few different times of the day. Go on the weekend. Get to know more about this property than anyone else. Look at the short sales in the area.

Whenever possible make your inspection prior to the offer. Do not make the offer contingent on ANYTHING. Your competition may be a higher priced offer but may come with a seven day right to inspect. You may win the bid at a lower price if you have already done your inspection.

Many years ago I bought a house in Cincinnati from a bank. I looked at the property and decided what it was worth. I then found out that there were three bids higher than mine. I wound up not making the bid. Ninety days later, almost to the day, my agent came back to me and told me the bank called her and asked if I was still interested. It seems that all three of the other contacts fell though during the due diligence period. I told her I was interested but I needed to go through the house one more time. I took a clip board and assumed everything that might need to be fixed HAD to be fixed. I wrote all these cost estimates down. I submitted my bid based on cost estimates for it all, but with NO contingencies for inspection or financing.   The bank called me directly a few days later and said they would like to save some time and counter my offer over the phone. I replied that I could save them a whole lot of time as they already had my final bid in their hands.

I got the deal.   (By the way the only thing I did not have to replace that I thought I would have to, was the slate roof. It cost only $135.00 to repair.)

Ask your agent if there are any addendums that the bank needs signed and you can get ahead of time.   Normally banks ask for proof of funds or your ability to borrow. Even iof they do not ask, give them that information and make it easy for them to verify balances by including your banker's phone number and name and email address.

Ok, you have your nice tight package that is now in the hands of the bank. Don't stop there. Follow up. Talk to the banker's agent. Are their other offers? What are they? How many? The seller's agent has a job to do - and that is to get the highest and best offer that he can get for his client. If it is in the banks best interest to tell you that you are two thousand below the next offer, he may tell you that - hoping to get you up a few thousand. Many banks set a deadline for offers; after the deadline they come back again and ask for "highest and best" again. You may be able to pre-empt that process by having such a solid first offer that they take the path of least effort and accept your offer.

Do not be discouraged. The process is not as much art as it is science; but there are still personalities involved. Good agents know how to get to the personalities and make the deals happen, but excellent agents go beyond that and make certain that there are no other reasons for the contract to be thrown out by the bank. They will help you make a tight offer that is highest AND best. Good luck and good buying.

I would be happy to sit down with you and help you. Gregg 800-439-1580 extension 52 GFOUS@MARKETAMERICAREALTY.COM

Pre-Qualified or Pre Approved?

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:44:11 -0500

Pre-Qualified or Pre Approved?

If you are thinking of asking us to help you find an REO home to buy ( A home already foreclosed on by the bank.) Please let us help you get pre approved for the money you need to borrow. The difference between a pre-qualification letter and a pre-approval is almost a great as the difference between cash and a loan.
A pre-qualification letter can be obtained very easily and normally only requires a phone interview. Because of this, sellers have begun to ignore pre-qualification letters and insist on pre-approval letters.
A pre-approval letter is only obtained after at thorough examination of your finances - just as would happen if you were actually applying for a loan, which in this case, indeed you are. You will need all your financial records, tax returns, bank statements, social security cards, and financial history and credit scores. - Probably in duplicate!
We can help you get pre approval - talk to us.

Foreclosed Home Sale Process for the Bank

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:42:18 -0500

Here are Market America Realty and Investments, Inc. in addition to our traditional sales division, we are dealing with foreclosed homes. We take over the property for the bank, secure the property, do a BPO ( A formal Broker Price Opinion), order repairs, and supervise putting the home on the market. ( Here is our Asset Managment Page)

The process is interesting really. At 5PM one day I may get an order to start working on 123 Main Street, for example. I receive documents that indicate the bank as taken over owner ship of the house by email. I pull all the information I can about the house off the County tax site and see if there were any old MLS listings for the house. ( This gives me inside pictures and listing history. Then I go to the house that evening and determine if it is vacant. If it is, I gain access to the home, survey the home for damage and existence of appliances etc,. I take pictures, change the locks and walk around the neighborhood to learn what I can about he area and the surrounding houses. The next day I put the utilities in my name. I then spend about two hours doing the BPO - comparing this home to three homes that sold and three that are on the market that compete with it. I suggest a lisint and sales price to the bank. All this information is sent to the bank within 24 hours of my getting the order - 48 hours at the latest.

Once they get my information, the bank orders a BPO from someone else to get another opinion on the value of the home. In the meantime if there is work that needs to be done on the home I order bids from contractors to do things like, replace windows, fix the well, replace the air compressor, or other major repairs.

In my report I suggest a listing price to the bank. The banks wants a sale within 30 days, so the price will generally be pretty attractive. I will give them two prices. One for "AS IS" one for the home repaired. Without exception I have been able to sell all my REO homes "AS IS" - this is quicker for the bank and generally a better deal for the buyer.

I keep a short list of emails of people looking for certain homes and they are put on alert when I know I have one coming up. I have, for example, one coming up in Lehigh that I think will hit the MLS at about $50,000. I may have three offers by the time I get price approval from the bank. The contact will be executed normally with in three days of listing.

By the way...the only foreclosed homes you can tour are the ones that have already sold or are priced high enough to stay on the market long enough for a tour. Think about it. Gregg

Because it Was Made That Way

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:40:14 -0500

Foreclosures, Chinese Drywall, Commercial Real Estate

"Because it was made that way"

I grew up in a suburb of New York City, in a town where we knew all the kids in school and especially knew the when a "new kid" moved in. But it is was suburbia, not a farming town, so when one of our neighbors decided to house a pony in a small fenced area in their back yard, they caused quite a stir. Harrington Park's shady streets and wide variety of stately homes and blue collar asbestos tiled modest houses were more a place for black labs and poodles than for ponies. But this era was unburdened by a bunch of town ordinances while there was no exact law against ponies, there was a law against farm animals. Brooklyn raised Seymour Russo and his concentration camp survivor wife Carmen were just as determined to keep "Sandy" as they were determined to love their cherished young son Alan and Carmen's aging mother who survived the camps with her daughter Carmen.

Carmen didn't make it out of the horrors of a death camp to be told what pet she was allowed to have, and Seymour, well, Seymour was a horse lover and he loved his Carmen. I became a frequent visitor to the Russo home, first drawn by the pony, then more to sit down with Carmen and Seymour and their stories and unique outlook on life. Carmen was always feeding me; not just with the steady onslaught of leftovers and freshly prepared cakes and snacks, but with her philosophies molded by her experiences. Experiences to me that was exciting as they were frightening. Seymour was city raised in Brooklyn, worked shoeing horses and his rough and tumble outlook and lack of schooling were just as foreign to me as Carmen's Jewishness and Nazi experiences were. As a young kid their differences from each other where not obvious to me; it was how different they were from me that made them the same.

Carmen worked in Manhattan, spoke German, and sold dental equipment. Seymour spoke Brooklyn-ese, never went to high school and was a blacksmith. Carmen quoted philosophers, Seymour knew how to make things. Carmen cooked, Seymour ate. Carmen planned, Seymour reacted.

Carmen taught me many lessons, but her overriding obsession with her own rights were the most prominent. Perhaps born from the fact that the Nazi's took all of her rights, she was determined not to let the town of Harrington Park infringe on her right to let her son have a pet pony. She and Seymour eventually prevailed, by the way, and Sandy lived a long life in Harrington Park, becoming a star attraction for many kids growing up in the area.

It was from Carmen's influence that I built my strong stance on individual rights and indeed private property rights, and it was from Seymour that I took a few kernels of street born wisdom that stick with me today. I remember Seymour teaching me how to make a bridle with a rope. (Seymour was to later help me buy my first and only horse when I was 14 - without my parents' knowledge or permission I might add, but I will leave that for a chapter in the book).

I was looking at the rope, made of three twisted braids of intertwined strands. I took the three strands apart at the end of the rope and was left with curly cue coils of hemp in my hand. If I wound them back together they stayed together. It was like they wanted to be wound together as rope.

"Why does this hemp stay curled like this?" perhaps forgetting I was talking to Seymour and not Carmen.

Seymour, intent on some other task at hand, quickly responded, "Because it was made that way. Hand me that brass buckle."

I was to learn years later when I was a manufacturer's rep that there is indeed a principle if not in engineering, certainly in manufacturing, that "things" actually "remember" how they were made. It was explained to me by a scientist at one of my suppliers that molecules actually can be oriented and "remember" that orientation, and properly motivated by heat or some other influence will return to that state. Seymour didn't need to learn this, he already knew it.

So next time one of your kids or grandkids asks a question that can be answered with "Because that's the way it was made", don't feel guilty about not taking the time for a long explanation. You might be giving him a basis for his future outlook on life!

Foreclosures

Talk to any real estate agent here in Lee County and they will tell you that they are swamped with buyers of foreclosed properties. We handle two to three a week here at Market America Realty and Investments, Inc. (If you want to get on my notification list and bid on the bank owned homes before they hit the MLS, email me at GFous@MarketAmericaRealty.com).

But how long will this continue? The low interest rates lately have been forestalling a train wreck that some believe is inevitable. That train wreck is the maturing of the famed "Option ARMS". The last adjustment did not cause much a problem seeing the interest rates are still low (MBA FORECAST HERE), but most of the Option ARMS were made in the markets with the greatest decrease in housing values, the sub-prime Option ARMS adjusted in two years - and this adjustment greatly contributed to the current foreclosure in lower priced homes. But the prime ARMS were mostly five year adjustments. This means that beginning as early as late this year we will see another surge in foreclosures - peaking in perhaps late 2010. (A good article about this HERE)

Chinese Drywall

In my years a manufactures rep I tried to get plastic film produced for me in China. I spent one month traveling to manufacturing towns in China looking for sources for plastic film for the Christmas tree industry. I learned a thing of two about manufacturing specifications, and product liability. I'll give you my conclusion first - the Chinese manufacturer is not to blame and I believe the attorneys will have a very tough time finding a "deep pocket" to recover money from. Sure there will be a lot of people to file claims against, but expect this one to be tied up in courts for the next few decades. Meanwhile home owners and builders scramble repair the problem.

To understand this situation you have to understand how manufacturing is brought to China. I know, because I did it.

Manufacturers probably began to look for lower cost production over seas. They went to China, sold some older rebuilt equipment or in some cases a new turn key factory to a communist village and helped that village build a plant. Some other entrepreneurs (or the same ones) gave that plant a specification to which they should make the product they would buy. The specification listed all the parameters that the product needed to meet - color, hardness, particle size, tensile strength, shear, maybe even printability. They may have even listed potential suppliers of raw material (along with the comment - or equivalent). In many cases the buyers of the finished product needed to send in quality control equipment or the very least testing standards against which these standards were measured.

For example; "white" is not a specification. How do you measure white? Is there a range? How broad is it? How much product will you accept outside that range? Can you afford zero tolerance for defect? Even simple things like length of a drywall board is subject to interpretation.

Eight feet long: measured how? Is eight feet plus or minus ¼ inch okay? At what humidity level to we measure the board? (Boards grow with moisture content) If we measure at 50% relative humidity and we ship to Florida with 100% relative humidity will the board grow?

I'm betting that no where in the specification was there a sulfur content or odor spec for drywall boards. It simply never turned up before. I am also guessing that the plant that manufactured the board was full of employees that had never seen or used a gypsum drywall board. If there was an odor in the manufacturing plant these employees would have no idea if this was normal or not. (It has also been reported that the odor does not show up until the boards get into high humidity areas like Florida)

If a purchaser was to return boards and want a credit for them because the boards were out of specification, the first thing that the manufacturer would do is QC the product and determine if the product met the specification signed off on by the purchaser.

On the off chance there was a violation of specification we are presented with another problem: the manufacturer's responsibility is limited to the replacing the out of spec material. This is why there is an incoming Quality Control department testing "to spec" of incoming materials. Because once the manufacturer adds value to the item, it is HIS responsibility.

I have seen homes built with drywall that is somehow contaminating the air, turning the copper air-conditioning coils black, harming the chrome on the faucets, and making an unsavory odor in the home.

To rebuild these homes - tear the drywall out and replace it - will cost about $35/square foot. For perspective on this cost, there are 1500 square foot homes in Lehigh and Cape Coral that cost less than $100/square foot to build new. There is a theory that is being tested now that the sulfur out-gasing is caused by bacteria, and that by killing the bacteria it will permanently stop the problem. This will cost about $14/square foot and require emptying the house for 30 days. I expect to hear about the results of these tests by the end of July. The $14/square foot, by the way, includes an underwriting fee by a national insurance agency guaranteeing the fix to be permanent.

I believe the Chinese drywall problem is fixable, for a price, and I have put together a team buying these homes, mostly already owned by banks that are ill equipped to deal with them and need to unload them.

What's a home owner to do that has a home with the effected drywall? Work with the builder to fix the problem. The large reputable builders that have reputations to uphold are standing by their work - they figure that they will sort the economics out later. The folks that are in trouble are the ones who can't find the builder of their home or he is too small to be able to back up his work.

(For background on the Chinese drywall problem click here)

Commercial Real Estate

The commercial real estate market is just beginning to see banks take back properties promised in mortgages. This lag in commercial foreclosures is the lull before the storm. Commercial borrowers are often required to have interest reserves to carry them through the project construction and subsequent lease out time. In some cases interest payments are made years in advance.

These periods are now over and banks, as reluctant as they are to own property are have become unwilling owners of vacant commercial buildings with carrying costs for taxes, utilities, and insurance.

Here folks are the opportunities. But it takes what I call patient money. Buildings are not leasing - either retail or office. The strategy however, is to be the low cost landlord when the tenants do return. There is also the opportunity to take these tenants from higher cost buildings that need to charge higher rents and put hem in your buildings at a great savings to them.

If we can buy commercial buildings low enough, we can rent them out at lower rents and fill them first.

I am also seeing commercial land available at prices that are only 20 to 40% what they were three years ago. For example, I just listed a prime corner across from Walmart on Route 41 at $8.00 per square foot. This was $20/sf just a few years ago

Home Prices are Rising and Falling. The Market is not Stable. They Call it Fishing, Not Catching.

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 16:31:54 -0500

Gail and I are spending the weekend in Boca Grande. Boca Grande is the only part of Lee County, Florida that can only be accessed by driving through another county -unless you arrive by boat.
We drove.
If you visit Florida, Boca Grande must be on your "must see list". It is as different from the rest of Florida as Key West is, but in all the good ways. The Florida we have come to know as over built with cookie cutter concrete block on slab homes does not exist in Boca Grande, and it never will. Once you pay the four dollar toll to the private bridge owner for the privilege of visiting the island you will feel your blood pressure sink as your anticipations rise.

The north side of the Island is a shelling Mecca while the south end is the Tarpon Fishing capital of the world.

Boca Grande wasn't always just for the rich and famous. The railroad once bisected this island and just as the spine of Boca Grande's famous Tarpon ran down the center of his body from head to toe, the railroad went from entry bridge on the north end all the way to the lighthouse on the south, The south side of the island is where you will find the picturesque lighthouse and was home of the phosphate docks and current site of the "World's Richest Tarpon Tournament".

Historically this town was about shipping phosphate and fishing. The railroad is now paved over and is now a golf cart highway of sorts as the local residents and tourist alike abandoned their cars for the more quiet and ubiquitous golf cart - most of which have never seen a set of clubs. The mansions are best viewed by boat; after all it's about the water.

Gail loves it when we come here because my cell phone only works sporadically and internet connection is iffy. I can actually relax. Her brother Jake and I left around 6 AM for a half day of fishing; First an hour to cast for bait on the flats off Bokeelia then to Turtle Bay for snook, snapper, and trout. We came home at around noon with one keeper trout. (We accomplished a great deal of fishing and very little catching).
Jake and Janice have a condo at the Silver King, actually it's the condo that inspired Gail and I to buy at Harbour Isle years ago in Fort Myers. The condo has a balcony on the first floor that looks out over the boat slips. You can actually have a conversation from condo to boat without raising your voice. Jake and Janice's home is right down the street from the Famous Gasparilla Inn and its exclusive golf course. (The Bushes vacation here and when they come, they stay at the Gasparilla Inn and G. W. goes Tarpon fishing.)
Whenever we approach the condo by boat we idle past Boca Grande Isle houses on the right and the golf course on the left. Gail and I have been coming here for 12 years and have never taken the time to look at the homes in Boca Grande Isles from the land.

We took the golf cart and did so yesterday afternoon. The gate house was empty and we were able to enter without incident. The homes were almost as impressive from the road as they are from the water. It seems that front yards groomed like a putting green are the standard in Boca Grande Isles, as are manicured lush landscaping and luxury cars.

We saw perhaps a half dozen homes for sale (There are a total of about 60 homes, perhaps more). Remarkably we saw five homes being built or rebuilt. This is something that we do not see very often on the main land in today's market. There was no open house for us to snoop around in, but it was a pleasant tour.

Later that evening we had the chance to talk with a local Realtor about the Boca Grande real estate market. Prices are substantially down (Houses in Boca Grande Isles are down to almost $3,000,000 ) but since most homeowners here count Boca Grande as a second or indeed a third home, many are choosing simply to not sell in this down market. There are some relative bargains, but not to the extent of what we see on the main land.

In Lee County, prices on the highest end are still falling. But let me talk about this a bit. To put this in perspective, let's talk about the low end where prices are rising. Our office sold four houses this week. Every one of them went to contract at a price higher than the ask price we had post5ed on teh MLS (I have a alink below for two more houses re recived orders on this week). The ask price on these homes was established by using the closed sale prices of similar homes and setting the price based on this.

The report that the pricing is based on takes us about two hours to compile. We generate a very detailed price analysis that take's into consideration many factors like total square footage, age, number of rooms, yard size, condition, appliances, etc. We also look at how long each of these homes was on the market. The analysis is very scientific and has little room for fudging. If you would like to see a sample report, please call me and I will get you one. (You can see a blank one HERE) These reports are done for an institution as the customer (the bank).

The conclusion of the report, in effect, says this: Based on previous sales over the last three months this house will sell for X Dollars. The report also will give three examples of other homes that are ON THE MARKET. These prices are not entered into the calculation but are presented as a way to gauge competition. No where in this report is there a place to write down the emotional side of a sale or an expression similar to, "This is what I paid for the house so this is what I need to get".
Houses priced in this manner, if the data is gathered and analyzed correctly, will, in today's market, sell for higher that asking price. This means prices are rising: The sales price is HIGHER than previous sales or similar homes. I expect this to continue.

On the other hand, houses that are priced not on the market but more on emotion, are selling for less than asking price. Pretty simple. I have been saying for years that what one pays for something has absolutely no bearing on what it should be sold for. Very often I hear, after we do this lengthy report on value, "Yes but...."

We all think these reports apply to other people's house, not ours. I am asked, "Have you seen the new kitchen drapes?"; "Have you seen our yard, we have a view of the preserve, those houses do not?" "What about the imported tile in the bathroom?"

Ok fine. Even true, but these factors will make your house perhaps sell a bit quicker, but not raise the price.

Sales prices are rising at the low end and are lower than ask on the higher end.

In between? It's a little bit of both. Most agents feel we have hit bottom. For sure the inventory of the choicest homes is being depleted. If you are selling a 3/2 with a pool in a good location, your selling price is up from three or even two months ago. What should you do? If you are looking to buy - you need to be looking to buy now, because your selection is ether dwindling, or your prices will be going up. If you want to buy at the high end, make your deals now while you still can.

Commercial Opportunities.
The commercial market is changing. There are many reasons for this and most of those reasons have to do with the residential market. But the residentail efect took some time. There was a lag.

What makes the commercial different is that when developers borrow money for a project, they also borrow interest reserves. These reserves normally are scheduled to run out coincident with the original business plans forecast for when the project would be leased up or sold out. The forecasts were, of course, inaccurate, and now that the reserves are gone - the projects are in trouble. The banks are also turning their attention to the current market values of these projects, based on the depressed rental rates, and rather that increase the lending reserves to make up for the lending requirements on these assets that have decreased in value, they are trying to clear their books of these assets.

All this means there are wonderful deals on commercial property.

I was lamenting with a friend of mine that owns a number of self storage facilities and has done quite well. Joe Newman, like so many savy investors, sees opportunities when vacancies are down. "Everyone wanted to buy when the storage units were full. Now that they are at 60% occupancy (This is the average for Lee County right now) no one wants to buy. Ridiculous. This is THE time to buy - when prices are down, rents are down and vacancies are up - listen to Joe!.

This phenomenon is similar to stock market "investors" buying when a stock in hot, buying on good news instead of bad. When the local real estate market was hot, commercial corners were swelling for $20/sf. I can now sell them to you at under $8.00 (See my point NINE on the top ten mistakes investors make - on the side bar.)

The trick is to find financing. Banks like 100% occupancy, not 60%.

I have a few self storage deals and commercial properties with seller financing. If you are interested in these, please give me a call. We are getting good deals financed and putting together seller financed deals with the right buyers.

Call me.

As always, call me with questions or comments: 800-439-1580 ext 52 or email me at GFous@marketamericarealty.com

Gregg

Shrink Grow or Die

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 15:56:08 -0500

Shrink, Grow or Die

I have used this expression for years. I kind of assumed I heard it someplace, but I just did a Google search on the expression and did not turn up any sage advisors quote. No matter. Maybe someone will quote me some day.

In today's market we have to react, to adapt, and to survive. Implicit in my shrink, grow, or die saying is that if you stay the same you will perish.

I have owned and run executive suites for years. I now am in The Dean Executive Center downtown on Dean Street in Fort Myers. In executive suites we see many transitional companies: those that are growing or shrinking. In executive suites turnover is high for just that reason. But the suites are an exciting place to be; surrounded by entrepreneurs and producers.

It is not rare for me to show up at the office at some ungodly hour and find two other midnight candle burners. Some of these people could work at home, but then they would not get the benefit of the energy that exists by being around other like minded entrepreneurs.

Remember a single fireplace log soon burns out.

If you need a boost in your business and want to join us. Give me a call.

Gregg

REO STRESS

Gregg Fous (Market America Realty and Investments, Inc.) — Mon, 06 Jul 2009 15:54:15 -0500

REO STRESS

Friday was already busy. For me I always run out of week before I run out of things I need to accomplish. I get to the office every morning at around 7:30, Friday I cleared my emails and got ready for a conference call at 9 with buyers coming in to look for bulk purchases of stressed real estate. At 8:45 I get a call from a bank asset manager in Atlanta with some leads on commercial real estate opportunities. I had put out some probes earlier in the week trying to find out who to talk to at a number of banks about commercial REO deals. I have buyers and no deals to show them. I was excited about the asset manager's call and up-set that I had to cut off our conversation to take my 9AM conference.

I was chuckling to myself about the expression "stressed real estate". Who was stressed now? As soon as I hung up the phone from the conference call I received a call from one from one of my friends asking me to sit in on a meeting with another bulk buyer here from California. In my office I make outgoing calls on a land line and most of my incoming calls come on my cell. I felt like a scene from Groucho Marx movie, "Hello New York? Sell! Pittsburg? Buy!"; a phone in each ear.

Don't get me wrong. I am not complaining. I love my business and I love the pace.

In our market over 70% of the real estate deals involve cash purchases and bank owned property. This means if you are not dealing with bank owned property or buyers of bank owned property, you probably are not productive. In the past four weeks there have been more properties bought and sold than IN ANY OTHER FOUR WEEK PERIOD since we have been keeping records here in Lee County Florida. Prices, of course, area also at record lows.

Bank to the expression "stressed real estate". As I was leaving my last meeting at around 4pm on Friday I received four emails that needed immediate attention. Two more bank owned homes to handle and formal price approval and another two. Since I my last meeting left me closer to home than the office, I headed there to get the paperwork printed. I had time by 6:30 to go to one of the homes that evening while there was still daylight.

I loaded my paperwork, my toolbox, camera, and a new lock set into the car and plugged the address into the GPS. The home I was headed to was not too far away and near a KB homes project that I am familiar with off Bayshore Road.

My mission was to determine if the house is vacant. If it is, I have to "gain access", take a bunch of pictures, begin the BPO process, and change the locks. I also post no trespassing notices, my contact information, and a "For Sale" sign.

As I got close to the house, there was no need to heed the sexy satellite directed tour guide. I could see the overgrown yard up ahead.

The term "stressed asset" normally refers to financial stress, the kind that comes from upside down mortgages, low vacancies in commercial property, or economic extinction of a property. This home on Coon Road had another kind of stress: the stress of a neglect and life after humans.

There is a new TV show on Discovery channel called Life after People. An abandoned house does not take long to start getting this look of "life after people". I took one look at the front door and pretty much decided that it was not going to be easy to get in: a dead bolt and a key set greeted me, tight fit too. I took out my camera and started taking out side pictures. I wasn't going to tackle "gaining access" just yet. I remembered one of the terminator movies where the cyborg Arnold is taught to look for keys above the visor before he rips wires from under the dash to start the car. I figured I would walk around first, maybe meet a neighbor with a key or spy a hidden one first. One look in the front window confirmed what I already knew. No one lived here any more.

Along the side I saw that the air compressors were still there. (A common problem in our area is thieves steal the compressors from vacant homes.) The shed behind the front fence had remnants from a former handyman - some left over tools and yard junk. No neighbors with keys, just a family of German shepherds next door. There was more long grass, a few empty beer bottles, an old wheel barrow, and a large screened porch with double doors and some painting tools waiting for someone that will never show up again. I saw grass growing in concrete cracks and a tree frog still alive inexplicably between two layers of glass in the back window.

Ahhh, I could see double doors with a little give into the house from the porch. I went back for my tools and in a few minutes was in: stale air, cobwebs, a few bugs, no electric. Evidence of a displaced family long gone; photos left on the floor; an orphaned stereo speaker, and a paint scraper.

I went through and took a few dozen pictures. Honest pictures. Not just the ones for show. I snapped the bathroom with the dusty toilet; the kitchen with it's only adornment a lonely garbage can in the middle of the floor. I took a picture of the room that was obviously decorated with love and care with animal character painted along the wallpaper border. Unlike some houses I visit, this home had been cleaned up - or at least picked up.

But there were signs of stress. The cobwebs across the hallway told me that no one had walked in there in quite some time. The spider that engineered the web was not even there anymore. His source of food long ago locked out. There was a layer of undisturbed dust lay in the floor; dead bugs adorned the crooked Venetian blinds; and an inspection sign-in sheet from a property manager that was never filled out lay open on the counter.

This home did not have the sterile feel of never having been lived in. I could imagine this house becoming a home again. This home has what I call cat pee on the carpet. That is, things wrong with it that are easy to fix.

After I changed the lock, I walked the neighborhood to see what I could learn. I let a few people know the house was being reclaimed and the yard would soon be presentable again. The last thing I did was put my sign in the overgrown yard.

For some reason, I wasn't stressed anymore.

Chinese takeout on the way home to Gail.

Produce Our Way Out of the Doldrums

Right now I handle most of the REO inspections myself, I do the BPO, the listings and take the photos. This I am sure will change soon as we get too may properties to handle, but I was discussing this with one of my friends the other day. One way out of our economic malaise is to produce our way out. There is no room for layers of management and directors. I stopped in to see my architect friend Mike Sheeley this week. He is doing the design for a medical building for me. He was working on the plans in his office. Two years ago one of his employees would be doing his kind of work.

We can't wait for the wind to change to alter our doldrums. We have to start paddling!

Many asked to be on the REO List

After last weeks blog I received about 10 requests to be "put on the short list" of investors that want to buy REO homes. I have posted a list - and it's quite long - of new REO properties. Click here to see it. But to get you an offering list - I need to know what you are looking for: telling me you want a "good deal" just isn't enough.

I would ask that if you are interested, let's have a phone conversation. We can look at and discuss:

REO's
Short Sales

•· Pre MLS listed REO's (Like the house I described above. I will take offers for these houses while I am working with the bank to come up with the price to list in the MLS. The last house I listed like this sold three hours after I posted it: mainly because I had already shared the details with my subscribers.

•· Buying Notes

•· Fixer Uppers

•· New Homes

•· Chinese Drywall Homes

We have a mapping program that is quite detailed. One example is in the link above.

As always, call me with questions or comments: 800-439-1580 ext 52 or email me at GFous@marketamericarealty.com

Gregg

The Survival of the First

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 08 Mar 2009 11:01:59 -0500

Being First or Best? In Real Estate or life, getting advantages for being first is just a human thing.

I have a lot to talk to you about today: some new reports from our agents, the situation at Oasis condominiums on the river in Fort Myers, the upcoming Real Estate Showcase next weekend at Harborside Convention center, and the opening of Hotel Indigo downtown. Before I get into these specific topics I would like to share some observations.

Way before moving closer to downtown, Gail and I lived at Harbour Isle, a gated riverfront boating community in South Fort Myers. It was our initial taste of both condo living and waterfront living and we loved it. Mike Sheeley designed it, BBL built it, and Nauman developed it. Two condos to a floor, over 3000 sf of living space, a garage, private elevator, and a boat slip to boot. I still measure all other riverfront condos against the high standard set by Harbour Isle.

A very short walk from our home at Harbour Isle was the amenity center that housed the gym. For an energetic period of my life I got up early every morning and worked out. When I arrived at the dark and empty gym, I would flip on the lights and tune the TV to Fox news and spend the next thirty minutes on an elliptical trainer while I caught up on the news. For three weeks this became my routine. Then one Monday morning as I arrived close to the gym I saw the lights on as I approached. As I entered I saw a strange woman on a treadmill and the TV was already tuned to NBC news.

Thanks goodness she was not on my elliptical trainer!. I suffered though the next thirty minutes with my mind wandering about thoughts of what "being first" meant while my morning routine was shattered by a distinctly human civilized trait of allowing someone to have control simply because they were first!

I watch my two dogs ignore this "first" thing: if little Katie has snared a bone and Jackson comes along: first shmirst!; it's bigger and meaner that matters; Jackson gets the bone. Darwin talked about survival of the fittest, not survival of the first!

I remember thinking as I was working out that morning, " Hehe....wait a minute, I'm bigger, I'm stronger....but manners kept me watching NBC.

How about getting in line the day after Thanksgiving for the bargains being offered

by the big box retailers? First counts there as well. In nature we would be able to buy our way to the front of the line, or at least bid for the merchandise. Somehow rewarding being first is an unnatural thing, the weaker may get rewarded just because they get up early!

Those of you that know me know I get up early. To me this is because beds are very dangerous places - after all most people die in bed! But I'm not sure getting up early ever got me advantages, however. I will tell you one thing: the early bird gets the worm - but only if he finishes eating it before a bigger bird catches him in the act!

Being first in Real Estate has it's advantages - sometimes.

Friday Night Vlatka was in the office with a customer pouring over the MLS looking for bargains. Gail and I were at Artwalk downtown and just happened to walk by and stop in. There was a brand new listing that has just come out late that afternoon and Vlatka happened to catch it. Within 30 minutes of the listing being on the MLS she and her customer had an offer presented. (Vlatka knew the house because she in fact sold two owners ago). Being first will not necessarily get her customer the deal - but in this case it probably will - she offered slightly over asking price ( it was and REO).

Being the first or at least the early condos on the river downtown certainly helped Beau Rivage. Being the latest to the party like Related Groups Oasis has turned out to be a bad thing.

Sometimes being first gives you more choices. Coming later to the game , however, gives you time to learn from the quick-starts. If you bought early in the boom market you most likely have emerged from the bust unscathed.. The late comers paid too much.

For me? I cover all the bases.; I believe in survival of the fittest, the best, the strongest, the richest, and the most competent. but just to give my self an edge, I think I will continue to get up early!!

The Oasis

The Fort Myers News Press today reported that Oasis may be in trouble (click here to read). The paper reported that only 20 of the 420 built have been closed on. There have been many liens files and many of the original buyers that have not closed have filed suit against Related. Perez (Head of Related Group) is a very sharp operator and he is still negotiating with his lenders. I expect this project to mostly rental units for quite some time. We will be watching this project closely. I have prepared a summary of all the condo projects downtown, the pricing is all over the board and it certainly would be wide to get the services of a competent downtown real estate agent before plunging in the riverfront condo market. Now more than ever buyers have to be armed with all the facts - not only about eh physical aspects of the homes, but about he financial strength as well. If you want to see the reviews- please drop me and email: GFous@marketamericarealty.com.

The Real Estate Showcase.

Next week end at Harborside Convention Center - Saturday and Sunday from 10 to 4 there will be an event that any real estate buyer should visit.. (Details Here) Admission is free. My team and I will be there with our Smart Car. Please stop by.

The Hotel Indigo

My friend Phil Hugh and his team at DOC Corp pulled off the impossible and mafde a last minute grand opening of Hotel Indigo in Fort Myers River District. With only a few hours notice to the public, Phil was able to present his showpiece during the crowded Artwalk event downtown. The result was nothing less than spectacular. We were able to tour rooms, visit the three bars and three restaurants, and enjoy the city view from the rooftop pool. You would be remiss not to visit this new Fort Myers jewel. Thanks Phil!

On Friday night the crowds were so large at the hotel that we decided to return last night to dine at Vino d'Note - Hotel Indigo's new restaurant. Gail and I and were more than pleased with the fresh lamb and seafood that graced our table. Gail and I had shaved fennel salad and a pasta with gorgonzola and sausage, after sampling fresh calamari and veal meatballs as appetizers.

Why does the US Print Money?

Gregg Fous (Market America Realty and Investments, Inc.) — Sun, 01 Mar 2009 13:59:16 -0600

Why do they print money?

I'm a pretty simple guy. Thinking too deeply about a subject such as the economic crisis gives me a headache.

Really.

Fortunately I have taken to keeping Ibuprofen at my desk at work.

I have a question for you: How many of you have been mesmerized by the videos of the government printing money on the TV news shows? I know I have. Seems every time they talk about the Bail Out, er, I mean Stimulus Package, they show those presses cranking out sheets of $100 greenbacks. My mind wanders from the actual news story to something like; "Heck, all they have to do is print it. I wish I could print it like that." Next time somebody wanted to borrow a few bucks, or Gail and I wanted to go out to dinner, I could just stop by the ol' color copier.

Then I started thinking about what all this extra money being printed was going to do to the USA.. I have seen it in other countries. About 14 years ago I arrived in Caracas for a weeks worth of business meetings. When I arrived on Monday I bought Bolivars at the airport for about 440 to the dollar. As I left on Friday the exchange rate was 1 to 800! Think what this did to purchases made on a credit card! Restaurants took to putting prices on the menus in pencil. No one trusted anything. I had my agent ask that I paid commissions to a US bank. Companies knew what to change for goods today, but not ones they would produce next week!

This week I started reading up on the subject of inflation and what the bank bailout and Obama's tax and spend plan will do to inflation. Predictably, most articles look back, not forward, and make alarming statements about inflation being too low, prices dropping, and how to control deflation. But if you have some Ibuprofen handy, Google "Inflation" and check the news box and you will see strong opinions on both sides of this issue. I, with that image of government printing presses in my head, am sure we will see a return to inflationary times sooner than later. (Click Here) The good news is that inflation would cut the real value of the US deficit that is now going out of site. But the bad news is that inflation generally surprises us. We don't know about it until we read about last quarter.

What do we prepare for inflation? Number one- don't hold cash (boy that's very contrary advice for today), buy durable goods, and don't pay down long term debt.

In Real estate that means buy at these low prices today, and finance at low rates over the long term.

Do we do this now - or Can we even do this now.? The answer to the first question is that we yes, we should be preparing to buy now. Look for those bargains in the pockets that have bottomed, and buy.

Can we do it? This is a personal situation, but I believe we have to find a way: either by using seller financing, lease purchases, or other more creative financing that we learned when we were starting out. Guess what? It's the beginning all over again.

Oh and why do they print money? That's easy - because they CAN. GFous@marketamericarealty.com