New Generation Real Estate Team Blog

Understanding the housing mess

2008-08-14T16:35:25Z

Real Estate Market

A common question I keep hearing is "Why do Short Sales take so long if you have buyers ready to buy such properties?"
Well to understand this whole mess it's better to take a look at the big picture and then focus on the little details. First let me set the foundation of this blog to see what happened in the Real Estate Market in the past 8 years.(based on Gilbert AZ real estate market - *Source ARMLS)

I drew a line to help visualize a steady 3% increase in home prices over the years. But I want to talk about Point A which is where the up trend started. The number of homes being sold increased dramatically in the summer of 2003.

What happened in the Real Estate Market in '03?

We were still trying to get out of the recession caused by the dot com bubble and banks were trying to bring liquidity back into the system much like we're trying to do today. It's weird to think that many people don't stop to think about where does money come from and who is really lending all the money being used to buy properties, boats, cars, credit cards, etc. Until you understand this you won't know why we're close to a recession (or in one already depending on your definition of a recession)

Money comes from investors buying credit (Mortgage backed securities, bonds, etc.) or depositing money in banks. Or sometimes it's created out of thin air when the Federal Reserve lowers the discount window. So, here's a simplified version of how you as a consumer are able to obtain loan for a home.

Again this is a simplified version, but basically let's say we have 3 consumers (A, B, C) looking for a loan and they go to a mortgage broker to obtain a loan. The Broker will look at the financial situation of the buyer (Hopefully) and determine what loan to give out based on what other banks (1, 2, 3, 4) are already offering. The mortgage broker is simply putting together the consumer and the bank and collect a small fee (if they are not greedy). So the lender gives out the loan but the thing to keep in mind is that these loans are pre-made and ready to be sold in the secondary market. These loans are grouped together and sold as a Mortgage Backed Security. And so that's where the money comes in to lend to home buyers.

So prior to 2003 there was little money in the market and banks came up with the great idea of using the sub prime mortgage to increase the money supply.

How this works.
As you see the interest rates that you pay the banks is slightly above the interest being paid to the investor who buys these Mortgage Backed Securities. So an investor would buy say $1,000,000 worth of securities and they are offering 5.5% interest rates. That means the investors would get about 4.2% ROI (Return On Investment) for their 1 Million dollars. For an investor, that's a relatively small number.

So they came up with ARM mortgages which start out at small interest rates and after 2 years would go up to 9-12%
That gave investors a higher Return On Investment and then the mess started. Investors saw the higher ROI and started buying Mortgage Backed Securities like it was the new iPhone. Next thing you know we had more money to lend than there were consumers and a bubble started.

In 2004-2005 you basically needed to prove that you could breathe and you were qualified for a loan. To further complicate things the banks offered what's called a CDO (Collateral Debt Obligation) meaning they basically guaranteed these loans to the investors. This was great leverage for investors since they paid about $150K for these CDO's and got about $10,000,000 insured!!!! At first it was OK because home prices were going up and mortgages were safe, but when the trend stopped....ay, yay, yay..... banks were out of luck!

SO now what?

This is why short sales are taking forever to close. You see it's not just a matter of the bank saying "Yes let's discount this loan, scratch the bad debt and move on". They have to take into consideration whether or not the investors who bought these loans on the secondary market bought CDO to protect their investment. If the bank scratches the bad loan they have to pay these investors.

We're back to step one, and again I ask, where does the money come from?

Well this case it's coming partly from us just like in 2000-2003. When the Federal Reserve lowers the discount window they print more money which means that our money is worth less.

So if the banks have to repay say $20 billion dollars and they only have $15 billions, then the solution they are opting for is to make $25 billion dollars out of $15 billions by printing more money. The problem is that when you print more money it is worth less.

So the Fed decides to print more money - Great now $200 dollars is really worth $100 dollars.

Now you see why the dollar is weak? You see why you went from spending $100 a week on groceries to $200? We're essentially paying a tax only it's in a subtle way.

So short sales.

As you can see it's not just a matter of negotiating with the banks. The banks have to see how they are going to have to pay the investors who bought Mortgage Backed Securities and CDO's.

Normally a loan was given as an 80/20.

If the house was worth $200,000 you would have

1st loan = $160,000
2nd loan = $40,000

Property prices fell about 30% from the peak of the market. I actually like saying that prices are coming back to normal, not so much falling but either way the point is that this property that was bought for $200,000 is now worth $160,000.

So what happens if it goes to foreclosure?

Well, the first person to get paid is always Uncle Sam (Property taxes and other assesments)
Then, any mechanic liens followed by the First lien holder (Primary Bank which lend 80% of the loan) and then the junior lien holder which was the secondary bank that lend the other 20%.

As you can see if the house sells at market value (probably not) the First lien holder would get

$160,000 - Taxes - Mechanic's liens (if any) - lawyers fees and other foreclosure related costs (usually around $40,000) = $110,000 roughly

This is a bad asset which keeps the bank from lending any more money, and let's clarify that banks make money by lending money and not by selling homes so it's not in their best interest to foreclose on the home.

This is where the potential to profit from these deals comes in, but it's a little more complicated than this. Each bank has it's own way to deal with short sales but here's a simplified way of the process.

The home owner (seller) submits a short sale package to bank(s) requesting permission to sell the home for less than it's owed. This is done at the Loss and Mitigation department.

It's important to point out that there's not enough people trained to handle these packages and therefore files keep piling up in this department and not taken care of..... (About 60% of homes that went into foreclosure did so because there wasn't enough people working this department).

When this package does get processed the loss mitigation department has to get 2 approvals:

From the investor who holds the mortgage backed security (who can be anywhere from Hawaii to Japan so figure out how easy it is to get a hold of him/her)
From the bank (who might have to worry about paying the investor for the Mortgage Backed Securty if the investor bought a CDO)

Sounds easy enough but here's the other factors that affect a short sale. The person making the decisions on behalf of the banks are usually not in the same state where the properties are at, so the person crunching the numbers and making the decision at the bank has to rely on the appraisal or the Real Estate Agent giving the Broker's Price Opinion (BPO).

Many times these agents giving the BPO's don't know the area very well and end up over pricing the property. Sometimes they do come at market value but by the time the approval comes in it's been a month or two and home prices have fallen another 3-4% by then. The buyers usually walk away and the process has to start over with a new (and Lower) offer.

If you do stick around long enough and get a good BPO you can however buy properties for cents on the dollar (based on today's market value), but this requires patience and true commitment to a house.

Many people ask why not let these banks fail which they should and are, but that has a negative effect. If there are no banks, there are no loans and that's crucial for business to grow and/or operate. If we take business loans away then businesses start to fail and there would be no employers it could collapse our economy, but this is a whole other topic. And that's pretty much why this is a mess.

Getting to Know Power Ranch Gilbert AZ

2008-08-07T14:55:11Z

Power Ranch - Gilbert's Most Popular Community

I'm constantly asked about Power Ranch and it's no wonder since it has been one of the most popular communities in Gilbert ever since it started in 2000. One of the things that has impressed me is how well the community has maintained it's common areas and has maintained a high demand by home buyers looking to move to Gilbert. I was out on a ride on my bike and decided to stop by Power Ranch and take some pictures for those of you who don't live near the area and want more information on Power Ranch.

The greenbelts in Power Ranch have had outstanding maintenance and remain as green as they've always been. It's nice to see that families in the community get to enjoy taking walks, run or bike around through the trails throughout Power Ranch.

Other Things to know about Power Ranch: The master planned community is being built on over 2,000 Acres of land. A population of about 15,000-20,000 is expected when the project is complete. The community has over 200 Acres of open space & greenbelts as well as 26+ miles of trails connected throught the community. Some of the top reasons why more families choose to live in Power Ranch are the schools.

Power Ranch K-8 Elementary School
Cortina Elementary School
Higley High School
Williams Field High School
Chandler-Gilbert Community College at Williams Gateway
ASU (Polytechnic Campus)

Last, homes for sale have remained stable in power ranch compared to the overall market in Gilbert AZ.

If you would like more information on homes please feel free to contact me with no obligation.

Gilbert Real Estate Market Update - July 2008

2008-08-06T19:35:40Z

Gilbert AZ Housing Market

One of the things you need to consider when selling your home is what is the market doing and set a strategy to sell the house based on what the market is doing today. As you'll see from reading some of my past blogs, I don't try to predict the market but rather try to read what the market is doing based on the information it provides me. One of the best examples is the information the market gave us in 2005 when volume dropped from 628 transactions in June to 230 in March of 2006. The fact that the number of buyers was decreasing was telling us that the trend to the upside was coming to an end.

Below I'm just comparing the month of July for the past 5 years.

One of the things to look at is home prices in 2003-2004. Late in 2003 was the begining of the housing bubble. If we are to follow the steady trend of home prices we can say that we are just coming back to normal. I calculate it around $250,000 but the market will do whatever it wants to do.

Months of inventory is another chart that I look at to gauge the activity going on today. If you knew the Real Estate Market, you would make sense of this chart and have a better idea of what's really going on. I personally don't listen to the news. I know we are in a declining market, but the truth is, we've had a very healthy number of transactions in the past 3-4 months.

On June 2005 we had the highest number of transactions of around 628 homes sold in Gilbert. From there we just started decreasing in number of transactions. If we do the math, any home buyer that bought in June 2005 using an ARM loan, their loans reset in June of 2007. It takes 90 days for a bank to take a home into foreclosure. In theory we should have seen the peak of inventory in September 2007. The peak was actually in January of 2008. My guess is maybe that's the time it took to sell if they listed in September which is about 120 days and matches the avg days on market for that month. The other is that some short sales took a while to close. I don't know, but the point here is that I'm not exactly calling a bottom but in order for us to go back to a bad month as it was January we would have to increase our inventory significantly or we'd have to decrease the number of homes being sold. There are many things that can affect that. The new housing bill is going to have an effect. There is no way to know if it will be positive or negative. The downpayment assistance program is supposed to go away and that in my opinion can be a negative thing. On the other hand it's supposed to help reduce the inventory which is a positive thing. For now it's looking like the worst is over. You'll hear people say that we still have another 15% to go. Just beware when listening to these people. There were many people who said that homes were still going to go up in 2006. There were people who predicted that crude oil was going to reach $200 per barrel and we just saw that it stalled at $147. Let me emphasize that this is not a prediction to call a bottom of the market, but all I can do is watch how the market develops and make my decisions based on that.

French Country Homes for Sale in Gilbert AZ?

2008-08-04T17:52:14Z

French Country Style Real Estate in Gilbert AZ

Despite the new changes in the Real Estate Market, we still have an increased activity in home sales in Gilbert AZ. One of the things I enjoy about working with buyers is that I get to see all sorts of decorations and interior designs. Lately, I've come across a few homes which have opted for the French Country Style. Being that I'm young I like the contemporary style, but after seeing a few homes who have mixed the French country with today's demand for stainless steel appliances and granite countertops I've learned to appreciate this style.

What impressed me the most about these homes was the simplicity of the designs and the easy maintenance materials used. The mixture of rustic woods and treated wood gives the home a warm feel with a bit of style.

So what exactly is French Country?

French country is inspired by the mix of a romantic, relaxed, elegant, and rustic decoration look. The idea is to give the house a rough or aged feel. Some of the most popular colors are yellow with a golden or orangey tone as long as it's not too bright. To give it the rustic look you can try textured paint or a color wash effect by using a wet rag to texturize the paint.

Styles of French Country can vary from the old fashioned look mixing yellows with whites, blues, and rustic wood to a more contemporary feel using other rich colors such as red and laying off the white a little bit. When using reds, dark wood furniture is used instead of the white washed wood color .

These decorations are often colorful and mix other rich colors such as red, salmon pink, green, blue, oranges, or rusts.

When choosing pictures or paintings for the walls you can take the typical rooster to get the most authentic French Country style interior design look. If you are like me, you can opt for artwork depicting the french country side like Van Gogh's paintings or other paintings by famous french artists, such as Monet.

I couldn't leave these homes without noticing the very relaxing smell of fresh lavender which make you feel like you're walking the wonderful fields of Southern France.

As if the exquisite smell of lavender wasn't enough, the bright colors add to the house by placing vases and/or jugs of fresh lavender.

One of the things that you'll definitely enjoy with this style is the relaxing nights enjoying a glass of wine and French bread.

Well hopefully this was informative to learn about the different styles of decoration and can help you decide what style you want for your next home.

Do you know of other styles or trends that seem to be emerging in Gilbert AZ?

I will be out on a mission to find the best eats out in Gilbert, AZ. If you know of any places let me know.

Hope you enjoyed this!!

Sell Fast and For Top Dollar - Gilbert AZ Real Estate Market

2008-07-29T15:54:43Z

Gilbert Real Estate

*Bonus: How to get maximum exposure for your listing (scroll down to see video)

When you start looking for Real Estate Agents in Gilbert AZ you want to make sure that their marketing efforts are going to get your home sold in today's tough market. (Note: Not all real estate agents are Reators®).

First let's start with a reality check..... What have prices done in the last few years(2000-2008)?

This is not to show any trends or make any predictions, but rather to show how prices are coming back to their would be "Normal Price" from a long term perspective. The reality is that we are selling on average 390+ homes a month. That was about the average in 2004-2005 when prices soared.

The Difference?

Back in 2004-2005 there were hardly any listings out in the market, which was the reason why people bid up the prices and we all know the end result (the housing bubble).
Today's market your home has to compete with the other 2000+ listings available here in Gilbert.

So here's how we are helping home sellers sell in today's tough market.

The Secret: Maximum exposure........

What's impressive about this is the fact that Google is hands down the #1 Search Engine World Wide. Notice that I'm number 3 out of 150,000 on the Organic Search Results. (The top 3 results are Sponsored links known as paid for advertising, I'm usually in #1-#3 spot on those ones). Getting exposure is crucial in today's market, but there are far more important factors that will determine whether or not your home will sell or not.

Getting your home ready for sale
Pricing Your Home the right way

I will write more about these steps in the near future..... As always, I welcome any comments or questions you may have regarding real estate. Have a nice day.

Luxury Homes for Sale in Gilbert AZ

2008-07-24T13:06:39Z

Gilbert AZ Real Estate Market Update

Here's an update on the Real Estate market in Gilbert AZ.

Our inventory is still down to 2079 active listings down from 2500+ in Jan/Feb this year. Prices overall seem to be stabilizing around $270K - $285K.

My opinion, I don't see the market going anywhere until the end of the year, but I do expect the inventory to start decreasing heavily from here on out. Like I said before, I'm only looking at information generated by the market itself. I wrote about this change in trends back in May (click here to read). All I'm doing to interpret this information is taking price and volume and looking for the price where the most number of transactions occur, which is where we're at right now. I'm still getting many people wanting to submit low ball offers, since the media has helped everyone perceive this as the worst real estate market, only to find out that there's competition. It seems the market has mellowed down a bit since May/June, but as long as inventory doesn't increase dramatically in the next month, May is still the potential bottom for the market.

Below are some featured listings for the Luxury real estate in Gilbert*.

This 4,597 Sq Ft Semi-Custom Home is Listed at $707,000. It features a Resort Style Backyard with it's heated diving pool and spa. This has been one of our favorite listings. You can view more about this listing HERE

This 4,500 Sq Ft Home sits on a waterski subdivision. Listed at $650,000 you're sure to enjoy the space that this property has to offer

This 4074 Sq Ft is listed at $749,000. It's also down as one of my favorites with a separate guest casita and putting green.

Last we have this 4,578 Sq Ft home listed at $694,900. Great Gilbert Location.

*This is not to suggest that Re/Max Elite is the listing agent, but meant to inform you of the great deals that are available when using us as your Realtor.

Homes for Sale in Ashland Ranch, Gilbert AZ

2008-07-12T15:31:25Z

Homes for sale in prestigious Ashland Ranch, Gilbert AZ 85295

Ashland Ranch is a family oriented community in the heart of Gilbert northwest of Val Vista Dr and Williams Field Rd. The community is only minutes away from San Tan Village Shopping Center, which is highlighted as the first Super-Regional shopping center in Arizona. As if that wasn't luxury enough, enjoy the local grocery shopping from places like Sprouts Farmers Market, which specializes in farm fresh produce, purchased from local growers when possible. One of the most attractive things about Ashland Ranch is the school district to which it belongs. Ashland Ranch Elementary School, South Valley Jr. High School, and Mesquite High School have been ranked among the best schools nationwide at www.greatschools.net The city of Gilbert is one of the fastest growing cities in America with much to offer. Gilbert is very well known for low crime, great shopping, and its family oriented culture. I also recommend you stop by Pita Jungle and enjoy a delicious mediterranean style meal.

What you need to know about the Ashland Ranch Community

Ashland ranch offers many common areas and parks which are very well up kept by the Ashland Ranch HOA. Here's information about the community you might find useful.

Learn more about this luxury home for sale in Ashland Ranch at http://1036EOaklandCt.NewGenerationRealEstate.com

Did You Miss the Bottom of the Market? How to Avoid Getting Left Behind

2008-07-01T22:54:35Z

Gilbert AZ - Real Estate Market

If you were to walk into a room with 50 people and were asked what the median height was? it would be almost impossible to tell just by looking at the room.
How can we make this task easier?
Simply by organizing the data we have available.

Here's what the graph would look like with unorganized data.

It's hard to tell the average by looking at this chart, but what if we organize it? Here's what it would look like.

It's a lot easier to figure out what the median height is, right?

Well in much the same way, in the real estate market as well as any other market operating under a free market based on supply and demand, there's plenty of information that the market gives us that allow us to see what's happening in the moment.
Here's a graph that shows how we could have found the top of the real estate market in 2005.

As you can see, volume was decreasing as we got away from $347,000 which was the median price of real estate. The median price is the place where the most transactions ocurred, meaning the point where both the buyer and the seller were able to come together and agree on price. If you do your research, you'll find that anything that sold below the median price lasted very little time on the market since it was perceived to be under market value and buyers quickly took advantage of those prices. As we get above the median price range we find that less buyers are willing to buy since they have either fullfilled their inventory requirements (people that needed to relocate, or had to buy no matter what) or they perceive price to be too high. When the last buyer bids, the auction is over and the seller is forced to lower prices until they find buyers again.

Here's what today's graph looks like and what tells me what's happening on the real estate market, regardless of what the news say.

Since 2007 prices have dropped and so has volume since neither buyer or seller were agreeing on price. The increase in volume this year is a bit different. Queen Creek sellers for example went from getting on average 94% of asking price to 100% of asking price.
Gilbert has also seen an increase from 95% to 97%. What this means is that multiple offers are increasing the price through an auction like process. Remember that the median price is the most accepted price by the market and anything above that is over market value. The only way you get someone to pay above market value for a property is by having the buyer compete against other buyers.

But let's stop for a second here and define the bottom of the market. Are you waiting for home prices to bottom out? Have you thought about financing?

If you would have bought a home in January you could have secured an interest rate around 4.5% compared with 6% now in June since par rate is hovering around the high 5%, low 6%.

Here's what interest rates have been doing this year.

As you see the ideal real estate purchase would have been to secure a low interest rate in Jan-Feb and bought your home around late April or May. That would have brought a savings of about $40,000 if you were to keep the house for 10 years. If you didn't secure a good interest rate earlier this year you would have to negotiate the price of a property down an extra $20,000 to get the same savings.
With the increased competition and so many homes being upside down is not as easy unless you can negotiate a short sale.

If you are searching for the bottom of the market, July and August will be two months that will determine whether or not Jan-Feb was the bottom as far as most money saved with interest rates or May for bottom prices. Either way, when it is confirmed it will be over 4 months after it happened.

You need to keep up with all this information if you want to avoid getting left out.

Gilbert Real Estate Market Conditions (Selling your Home Fast and For Top Dollar)

2008-06-24T21:35:53Z

What's your home worth in today's market

If you're thinking about selling your home, it's critical that you inform yourself as to what the current market conditions are. Many home sellers are losing more money than they have to and keeping their homes on the market longer than they should or many times don't sell at all.

How to Sell Your Home Fast and For Top Dollar

In order for me to do a good job at explaining how to sell your home in today's market, I need to make sure you understand market activity. Afterall we live in a Free Market society and the problem with Free Markets is that too many people don't know how to operate in them and it's the reason why 90% of the people don't make money. You can see this everyday in the stock market. Well the Real Estate Market is no different. As we all know, home prices went up dramatically in 2004 and 2005. Many speculators in the market drove price up more than it should.

Understanding Market Activity.... Picture an auction. You know that less buyers is significant at an auction. When you auction any sort of item, be it livestock, houses, etc, price will continue up until the last buyer has bought. When the auction is nearing its end, the bulk of buyers will have dropped because they have either fulfilled their inventory requirement or price is too high. When no one is left to buy, the auction is over.

Looking at this another way - If the price of peanut butter is too high, shoppers will refrain from buying and the grocer will realize that the price is too high. He will then move price lower until the buyer responds by purchasing the product. If the grocer moves price too low, however, his inventory will be quickly depleted as buyers take advantage of price below value. Consider the following graph

People perceived price to be below value and everyone started to buy. What happens eventually is that everyone becomes a buyer and then there's no one left to buy. At that point everyone becomes a seller. It was relatively easy to find the top of the market with the right information. What if you had access to the following information.

This graph shows the number of transactions that happened at these different prices.

In here you see the actual volume drops as price moves higher. Volume is the clearest indication to know whether price is being facilitated at higher prices. For the trend to continue going up, volume must remain healthy or increase as prices go up.

This goes to prove that every market behaves the same way. What this graph tells you is that the most accepted price was around $340,000. Anything above that is above market value and less buyers are willing to buy there while anything below that will bring in buyers as they will take advantage of lower prices.

Thinking of Selling Your Home?

Armed with this information you can now make a better decision when pricing your home for sale. We all behave the same way; when we are buyers, we want to buy at fair price or below. When we are sellers, we want to sell at fair price or above. Nod your head if you agree with me on this one.

But let's see what happens when we do that in a downtrend market....

If you listed your home for sale in February of 2008, here's what the statistics gave you. (the following is for homes under $300,000 in Gilbert, AZ - Source ARMLS*)

Homes sold at an average of $229,000 in February (these would have been your comps to price your home)
Average Days on the market was about 100 days.

So if it' true that home sellers list their price above market value let's see what happened to these homes that were listed in February when they actually sold in May.

In May of 2008, the statistics gave us the following numbers.

Homes sold at an average of $224,000
Average Days on the market was about 81 days
Average List Price was $229,000
Original List Price was on average $245,000

As you can see $245,000 (original list price of homes that sold in May) is 7% above market value in February when these home sellers listed their homes.

If you would have listed your home at $224,000 in February your home would have been under market value then, and would have sold for that amount or higher since buyers would have tried to take advantage of low prices. If you would have listed your home at market value in February you would have got close to your asking price ($229,000) or even more since more buyers would have been interested in your property. Remember they would have been comparing your property of $229,000 (if you were smart to list at market value) with properties listed above market value $245,000 (if you didn't understand market activity).

Instead most sellers sold in May when the most fair price was $224,000 which means that in order to average out, sellers sold for $215,000-$233,000. (not many were able to sell for higher while the people who sold for less got their homes out of the market faster).

Pricing your home for sale is the single most important factor that determines whether your home will sell or not.

To learn more about selling your home Click here to get a copy of our Free Special report entitled "The 9 Step System to Get Your Home Sold Fast and For Top Dollar".

Get a FREE home evaluation with No Obligation.
Compare homes sold in your neighborhood.

For a Free Quick Over the Net Home evaluation Click Here

Gilbert Arizona - Real Estate Market (Part 5 of 5)

2008-06-24T17:49:34Z

Gilbert Arizona - Real Estate Market

If you're looking at homes for sale in Gilbert AZ trying to find the best deals, you might want to read this...

Here's what you'll learn Click on the link to see past blog entries

Current Market conditions and How to Use the information to your advantage
The best time to buy (long timeframe and short timeframe - I'll explain later)
How to beat out other buyers to the best deals out there
How to get a free list of bank foreclosures and other distress sales
How to best negotiate an offer to get the price that you want (and need)

How to Negotiate an offer to get the price that you want and need.

Negotiation skills can save you or cost you thousands depending on the agent representing you, the seller's agent, you, and the seller's ability to negotiate.

I'm going to talk about four common mistakes I see people make at the negotiating table

1. Saying too much during an offer

Know what your are legally required to divulge and don't say anything more than this in front of someone who is not completely representing your interests. In other words, if you really like a house, don't tell anyone that you're willing to pay over market value unless you're in a hot market and need to compete against other aggressive buyers, then let your agent know.

2. Failing to take time on the counter offer.

Many buyers feel pressured to respond immediately to a counter offer. Negotiation over price is a critical issue and it is quite within your rights to take the time you need to respond effectively.

3. Not asking for everything you want

Many buyers fear that asking for seller contributions towards closing costs or other items like a home warranty, may weaken the deal. This is in part true but if you structure your offer right, you should be able to ask for everything you want. Market conditions may have a higher impact on what the sellers decide to do with an offer. The key here is to structure the offer according to market conditions and what's being asked for.

4. Not understanding the issue of "Dual Agency"

I've come accross many homebuyers who think will be saving money by working with the listing agent. This may or may not be necessarily true.You can only save money if you know how to quantify the amount you are saving. Do you understand market value? Are you able to negotiate on your own?

Your real estate agent should make you aware of the implications of dual agency when it occurs so you can take away a clear understanding of this important issue.

Gilbert Arizona - Real Estate Market (Part 4 of 5)

2008-06-03T14:58:12Z

Gilbert Arizona - Real Estate Market

If you're looking at homes for sale in Gilbert AZ trying to find the best deals, you might want to read this...

Here's what you'll learn Click on the link to see past blog entries

Current Market conditions and How to Use the information to your advantage
The best time to buy (long timeframe and short timeframe - I'll explain later)
How to beat out other buyers to the best deals out there
How to get a free list of bank foreclosures and other distress sales
How to best negotiate an offer to get the price that you want (and need)

How to get a FREE list of Bank Foreclosures and Other Distress Sales.

Many people hear about the foreclosure market and how it can provide great deals on homes. It is no doubt one of the most common way, which investors find the best deals and make money with. Then why can't more people do it?

The short answer is FEAR. I know there are other excuses like, time, money, credit, and knowledge, but ultimately it boils down to FEAR.

Most investors use other people's money/credit to invest. These same methods are available to beginner investors, but they don't use it because "What if it Doesn't WORK?" (FEAR)

There is a wealth of knowledge for FREE on the internet, but most people don't take action because "What if it Doesn't WORK?"(FEAR)

There are many coaching programs which cost a lot of money and will teach you how to invest but most people won't join because "What if it Doesn't WORK?"(FEAR)

There's actually many people who do join these coaching programs and still fail to take action even though they know everything they need to know and we are back to the FEAR factor again...

Understanding Foreclosures....

Many people hear the word foreclosure and they can only think of the auction day when it will be sold. There are 3 stages at which you can buy these homes:

Before the Auction
At the Auction
After the Auction

When you understand each of these you'll have a greater chance at getting your hands on one of these deals.

In my own experience the best deals to be found are before the auction. As you get closer and past the Auction day, your chances of finding a good deal diminish greatly.

Don't get me wrong, you can get really good deals after the auction but the difference is, they are deals created by the investor's imagination. (Meaning it was a good deal all along but no one saw the potential)..... I will be talking more about this later.

There's also what's called REO packages which run for about $10 Million, and you get homes for 30 cents to 75 cents on the dollar.

Getting a FREE list of Foreclosures.......

My friends could not believe me when I told them I was going to share this information, but I truly want to hear from anyone who has benefited from it.

Like I said, you want to find these pre-foreclosures before other people do. Since this is a highly competitive area, you must be ready and willing to compete.

Most people get a list of homes that have a Notice of Default and/or trustee sale from the Maricopa county records. This is a FREE list that many people don't know about.

You can take this list and go knock on doors and find out if the owners are willing to sell the house to you.

Or....

If you truly want to beat other investors, you must advertise to homes in a specific area. We use the same ads that have worked for years, and I'm including a copy here:

I can tell you that it costs about $20 to $100 per lead depending on your market area.

You can also take advantage of our FREE service which gives you access to a list of foreclosures in the east valley.

To learn more about this service please click here

Also, I'm looking for apprentices who want to learn real estate investing and/or are looking to build wealth. We are holding cashflow events in the Phoenix area.

Click here to learn more about these cashflow events

Our next blog, I will go more in detail about how to best negotiate an offer to get the price that you want (and need).....

Become wealthy by playing Cashflow

2008-05-28T15:07:06Z

Cashflow games being held in the Phoenix Metro area

Join a group of Real Estate investors and Entrepreneurs in a game of cashflow this Friday from 6:30 pm to 9:30 pm.

Here's what you'll learn....

How wealthy people think and create wealth, and how you can do the same

The 2 Most Important things you must do if you want to become wealthy or financially independent

How to generate more income to buy real estate and create wealth

Why most people work for money and how you can make money work for you

And much, much more.....

Learn more here

Gilbert Arizona - Real Estate Market (part 3 of 5)

2008-05-24T14:35:15Z

Gilbert Arizona - Real Estate Market

If you're looking at homes for sale in Gilbert AZ trying to find the best deals, you might want to read this...

Here's what you'll learn Click on the link to see past blog entries

Current Market conditions and How to Use the information to your advantage
The best time to buy (long timeframe and short timeframe - I'll explain later)
How to beat out other buyer's to the best deals out there
How to get a free list of bank foreclosures and other distress sales
How to best negotiate an offer to get the price that you want (and need)

Beat out other buyers to hot new listings in Gilbert AZ.

Finding the perfect home is not an easy task. It's not easy for the average home buyer to find these elusive deals that everyone talks about because by the time they finally find a house at a bargain price it already has multiple offers or is pending. Many times the home is sold before the 'for sale' sign is up.

So how do you get to these homes before other buyers?

In answer to this issue we have created an exclusive buyer profile service which gives our VIP buyers priority access to hot new listings as they come on the market. Everyday our computers automatically search out and downloads the most current list of homes that match your exact criteria and notifies you when these listings become available. This way, you'll know about these listings before other buyers do which will allow you to beat out other buyers to the best deals out there.

There's only one way you're going to be able to buy a property for less. You have to find a motivated seller before other buyer's do. Truth is you have to find these sellers before other buyers do (including other realtors and investors).

To learn more about this service please click here

Also, I'm looking for apprentices who want to learn real estate investing.
Only the very SERIOUS need apply.

Click here to learn more about How to invest in the same market the mega rich make billions

Our next blog, I will go more in detail about how to get a FREE list of bank foreclosures and other distress sales....

Homes for Sale in Gilbert AZ

2008-05-16T21:37:26Z

Gilbert Arizona - Real Estate Market

If you're looking at homes for sale in Gilbert AZ trying to find the best deals, you might want to read this...

Here's what you'll learn Click on the link to see past blog entries

Current Market conditions and How to Use the information to your advantage

The best time to buy (long timeframe and short timeframe - I'll explain later)

How to beat out other buyer's to the best deals out there

How to get a free list of bank foreclosures and other distress sales

How to best negotiate an offer to get the price that you want (and need)

So, what do I mean by short and long timeframe.

Well, short time frame would be to own the house for less than 3 to 4 months (no more than 6 months). This would be the case if you want to flip the house. Long timeframe would be anything over 6 months, although I don't really see why someone would buy a house and own it for less than 2 years unless they want to flip it or if it's a second home which can be used for a 1031 exchange.

So when is a good time to buy?

My answer will always be NOW. It doesn't matter as long as you buy the property correctly. Now I have to say this with tongue in cheek because I'm a realtor, but I don't say it because I'm a realtor, but rather because I'm a real estate investor.

Now there are better times to buy for specific strategies, such as buy and hold. That would be when the market is down and there are no more buyers around. By looking at market activity, I would want to guess that January of 2008 was the bottom of the market, at least for Gilbert AZ. You see starting February, we started seeing multiple counteroffers in most properties. Now there are two things that need to happen to confirm the bottom of the market.

Banks must show that they have raised enough capital to make it through the foreclosure tsunami that's coming out between now and Jul/Aug

The volume of transactions must remain steady and above 240 homes per month (in Gilbert AZ)

If that's the case, then we'll know for sure in July or August whether or not January was the bottom of the market. By then, it'll be 7 or 8 months after it happened. This happens in the stock market everyday and it's the reason why 90% of the people who invest in it lose money.

It is absolutely possible to make money in real estate regardless of the market. I know of many investors who made money in 2006, 2007 and are currently investing in today's market.

What's the secret?

There's no secret, there's education. You see most investor's, like most people, don't have a strategy or a method to follow to buy properties. Just like anything else 90% of people fail at real estate investing because they don't know better or they are just doing what they learned at a seminar 5 years ago. The real estate market is dynamic and what used to work 2 or 3 years ago, doesn't work today.

It's amazing how people won't spend $10K or $20K on their education, yet they go out and invest their money and lose twice as much. It happened to me, I lost over $100,000 in real estate investing. Did I learn my lesson or what?......People, listen to this - "ignorance has a price!!!"

Moving on....

Even if you bought a property in 2005, you can still count on your property appreciating. There are no guarantees in life, but overall properties have an average of 6% appreciation over time. Will it take 5 or 7 years? Maybe less, maybe longer.

There were many new millionaires created in 2004-2005. If you were not ready for the real estate boom, you missed your chance of becoming wealthy forever. The next real estate market boom is going to come..... and if you're not ready, educated, and well funded, you'll miss your next chance again!!

If you could buy a property for 60 cents on the dollar in this market, do you think you can make money?

Maybe you don't have money to invest right now, but if you had knowledge and knew that with $20K you can make $40K or more in real estate, do you think you can find someone who'll give you $40K and split profits with them (they put the money, you put the knowledge and/or time).

If you can't think of anyone who will give you $20K to invest, you're just not educated. Every good real estate investor uses other people's money to invest, and I'm not talking about bank loans, or hard money lenders. I'm talking about raising private money to invest. (I'm not saying that if you don't raise private money you're not a good investor, I'm just saying....)

There's only one way you're going to be able to buy a property for less. You have to find a motivated seller before other buyer's do.

Learn how you can beat out other buyer's to Hot New Listings in Gilbert AZ... Click Here

Also, I'm looking for apprentices who want to learn real estate investing.
Only the very SERIOUS need apply.

Click here to learn more about How to invest in the same market the mega rich make billions

Our next blog, I will go more in detail about how to beat out other buyer's to the best deals out there....

Gilbert Arizona - Real Estate Market

2008-05-11T21:56:36Z

Current Gilbert AZ Real Estate Market Conditions

If you're looking at homes for sale in Gilbert AZ trying to find the best deals, you might want to read this....

Here's what you'll learn

Current Market conditions and How to Use the information to your advantage
The best time to buy (long timeframe and short timeframe - I'll explain later)
How to beat out other buyer's to the best deals out there
How to get a free list of bank foreclosures and other distress sales
How to best negotiate an offer to get the price that you want (and need)

Let me start by Giving you the most recent numbers from April of 2008.
Currently we have about:

Active Listings - 2315
Active w/Contingencies - 115
Pending Home Sales - 387
Properties Sold (April) - 282
Avg. Sales Price - $280,898

If you look at these numbers by themselves, they will tell you nothing because you have nothing to compare them against. So here are the numbers for the month of April in the past years: (*source ARMLS)

We had 280 homes sold in 2007 at an average price of $336K
We had 277 homes sold in 2006 at an average price of $376K
We had 481 homes sold in 2005 at an average price of $326K
We had 437 homes sold in 2004 at an average price of $224K
We had 389 homes sold in 2003 at an average price of $194K
We had 269 homes sold in 2002 at an average price of $194K
We had 280 homes sold in 2001 at an average price of $179K
We had 195 homes sold in 2000 at an average price of $173K

If you ever want to make money in real estate or the stock market or anything else that involves a market, YOU MUST understand market activity.
Picture an auction where you see 5 to 10 buyers bidding on a single home. What's going to happen to the price of the home when there is more buyers? It's going to go up. As you can see the number of transactions started going up in 2003. That was an early signal that prices were going to start going up sharply. When prices go up and a higher volume of transactions start to happen, you can expect the price to continue going up. When volume goes down and prices go up, that is an early signal that prices are about to stall. *Notice the volume in April of 2006 and the average price against 2005. When the last buyer buys and there is no one else to buy, sellers will have to lower prices until they find buyers. That is the basics of Market Activity (supply and demand)

Prices have been coming down and throughout 2006-2007 the average transaction per month was about 280. Well we hit rock bottom in January with 150 transactions. Many people listen to the news, but don't verify the information or check whether it applies to their area. Starting February we started seeing multiple offers on some properties here in Gilbert AZ. There are properties being sold in a day. This is invisible to people outside of the industry, why?

It's all about strategy. If you think about it, most people want to live near the city. Investors know that the outskirts of the city are the cheapest and people run away from it during a recession. Queen Creek had 117% more homes sold in April of this year compared to last year. So Investors will start on the outskirts when they are able to buy cheap. They start working their way into the city. In a period of 2 or 3 years, people start noticing prices going up and start buying in the city. There comes a point at which people can't afford to buy in the city and they start buying further away from the city. By the time this happens, prices have gone up dramatically and investors make more money on homes they bought on the outskirts years ago when no one was paying attention.

With this information, now you know that investors are very active out in Queen Creek (most people will not touch it, but the numbers will never lie - there are many homes being sold in Queen Creek)
They are starting to move into Gilbert, but it's still a stealthy move. Most people think the real estate market is still bad. I challenge you to find a short sale or bank owned property with less than 2 offers.

I truly hope you pay attention to this blog and use the information

If you would like to view current homes for sale in Gilbert AZ Click Here

We've covered market conditions, next blog will cover timing. When is the best time to buy.

How to succeed in today’s market (part 3 of 3)

2008-05-11T21:51:55Z

All investments involve risk, but you don't have to be a risky investor

Most people in America know absolutely nothing about investing, yet everyone is an investor in one way or another. We all invest our time, money, and energy in different ways.

The poor and middle class people differ in their way of thinking from the wealthy and hopefully I can show you how wealthy people think and how you can do the same. There is a rule called 80/20 and it goes along with the concept I want you to understand and apply it.

Leverage, leverage, leverage.

Have you noticed that 20% of athletes in whatever sport make more money, score more points, are more famous than the other 80% combined.

Have you noticed that 20% of musicians in whatever genre make more money, sell more shows, are more famous than the other 80% combined.

Have you noticed that 20% of people in whatever occupation make more money, have better jobs, are happier than the other 80% combined.

I could go on and on, but now you’re aware. Entrepreneurs make more money, because they spend their time doing what makes them money, which usually is 20% of the workload. They delegate the other 80% to other people. Entrepreneurs delegate the work they don’t like to do. Is it any wonder people are not happy with their jobs and the amount of money they’re making? I don’t think so, but then again they don’t do anything about it.

I’ve learned that the only people that do something are those who hear themselves saying things like:

I’m tired of getting up everyday to go work for a boss who’s dumber than me, yells at me, and doesn’t pay me enough.
I would like to spend more time with my kids and family..... there has to be a better way
I can’t sleep with overdue bills and all the collection calls I get every day
I want to put my kids through college, but $50,000 tuitions are out of my reach and I can’t afford those high interest rate student loan
My parents are aging and not ready to retire or I’m aging and not ready to retire (financially that is)

It’s true that people can have all these problems and they won’t do anything about them. There’s a big difference between those who WANT to do something about it and those who WILL do something about it.

Most people know that the two best jobs anyone can ever apply for is a Real Estate Investor and an Entrepreneur. 74% of wealthy people are business owners/Real Estate Investors.

Everybody WANTS to be these two but only a few WILL be these things.

But why Real Estate Investing? Here's the difference between making money and building wealth. The one thing that all wealthy people have in common is that once they make money through whatever business, they put their money in Real Estate. Why? It provides passive income - I've heard of many people becoming financially independent buying an apartment complex that kicks out $100K-$250K+ a year!!! Tax deductions - Wealthy people need to protect their money from Uncle Sam and Real Estate is a great way to get tax deductions. Equity - You can create instant equity when you buy a property correctly Appreciation - I've never heard a real estate investor say "I wish I wouldn't have bought all those properties 20 years ago". Leverage - You can leverage your money to make more money.

Start looking around and pay attention to what wealthy people are doing. You may think of Oprah Winfrey as an influential woman, talk show host, publisher, but not as a real estate investor. Have you seen Oprah's real estate portfolio? IT IS AMAZING!!

You see most people can't fathom life as a millionare. They go as far as doing fix and flips making $20K on a property. There are others who move on to the big leagues flipping luxury properties making $200K on a property. That's huge for a lot of people, but there is more levels to investing that makes you millions. Most people don't see McDonald's as a real estate business. They don't see Wal-Mart as a real estate business. People don't read, and that's why they can't make money. Then they blame their failures on other people, just because it's easy and it's the path of least resistance.

I hope you guys enjoyed this three part series. If you truly want to learn more about Building a business and Real Estate Investing, you need to realize that you need help, and that's ok. After all if you already knew how to be more successful and make more money you would've already done it, right? Learn more about starting a business HERE....

How to succeed in today’s market (part 2 of 3)

2008-05-08T22:41:22Z

Generating Business

Welcome back and congratulations on taking the next step towards being successful.

One of the things that came to me as a big surprise early on my career was that clients were not going to come to me just because I was in Real Estate and knew a lot about it. IT JUST DOESN’T happen!!! (You can be good at writing contracts, selling homes, knowing neighborhoods, but if you have no one to sell to - YOU'LL STARVE!)

I was at a point in my life in which my frustration was so high, that I committed myself to learning everything there is to know about starting a business. I didn’t want to leave this to chance… I wanted full control of the situation. That’s when I said to myself, “I am going to do whatever it takes to get this handled”. When you’re at that point, that’s when things really start to come together…. And I’ll talk more about this later.

Getting the business.

One of the best things about real estate, is that it can be a home based business. I love telling my friends that I haven’t applied for a job since I left the Navy and I stay home pretty much everyday.

The secret to getting the business is advertising. I don’t care whether it is through an open house, newspaper, flyers, business cards, postcards, newsletters, online, prospecting, the point is to get the word out there, that you have a product or service so people know you exist. Learn about what people want and offer them exactly that. (the more you tell, the more you sell)

A first time home buyer is going to be attracted to a different ad than a move up buyer or someone buying luxury real estate. If you’re working with first time home buyers, tell them that you know about homes they can buy with their little or no down payment loan. This is one of my best ads and it's great nowadays when FHA is the way most buyers are qualifying.

That’s it, place an ad and people will contact you. After that, you have to come up with a way to get people to work with you. I sign every home buyer into a buyer’s broker agreement. I will not leave it to chance and have them running around freely because if I spend time with them, I want to get paid. If they won’t sign a buyer’s broker agreement, I don’t get sad, I just call the other 15 people on my lead list until I find someone who will sign the agreement. When you have more business than you can handle, you can do this.

You guys run your business however you want to, that’s just how I do it.

As you can see, there are different levels to success. I’ve heard so many times that knowledge is power, but I think that is no longer the case. Information is readily available to many people, yet not many decide or commit to achieve success. Applied knowledge is power. You’re reading my blog because you obviously want to succeed in today’s market, but unless you apply what I just told you, it would do absolutely nothing for you.

Once I figured out how to make money, I came up with a new question. What am I going to do with the money?

Making money and creating wealth are two different things. In fact many Realtors got out of the business in 2006-2007 even though they made a lot of money in 2004-2005. They did not learn how to run a business. I will talk about that in the third series of this blog.

How to succeed in today’s market (part 1 of 3)

2008-05-06T19:45:33Z

Building a business that works

I want to start by clarifying that this is not real estate specific, but rather about business building. Then again, as real estate agents we must realize that we are in fact, small business owners. If you haven’t realized that by now, or want to boost your current business, then read on……

One of the things that led me to become a Real Estate Agent was an experience I went through in 2004. I was enlisted in the Navy serving on the USS Henry M Jackson. Two years into my enlistment contract, I got a call from my mom and she asked me 'what was I doing with the money I was saving?' She convinced me to buy a house in Phoenix and we closed on an REO property on Dec 30th of 2003.

I clearly remember my mom calling me every month after that telling me that a house had just sold $20,000 more than the previous month. I “made” more money in 3 months through real estate than I was going to make working the entire year with 30 days paid vacation time. I learned a big lesson here, “I need to spend more time doing things that actually make me money”

I’ve been involved with real estate ever since…..

I’m going to share the one single secret that has taken my business to the next level. Note that I learned about this inductively, but I’m going to teach you deductively. I want to paint a picture by giving you pieces of a puzzle and at the end we will put it all together.

When I started in Real Estate, I thought I was doing one job, and that was to sell houses. I soon came to realize that that’s not the case and I needed to make some changes in my business before I burned out.

I realized that I was actually doing about twenty different jobs and it wasn’t necessary for me to do all of that. I didn’t need to go put out signs, cut keys, re stack flyers on my listings, sitting open houses, making copies, and on and on and on….

I needed to do what makes me money, and that is to get the business and sell houses.

So just like any other extraordinary business person, I started the path of replacing myself. I sat down and thought about how I run my business and created a step by step system with standards which anyone can follow and do the work as if it was me doing the work. I started to automate my business to free up my time and use it more effectively.

There are three steps to a business. Lead generation, Sales, Client Fulfillment. I won’t cover the third because everyone has a different personality and different target markets, but the first two don’t change whether it’s real estate business or any other business.

So I’ve told you how to grow a business, but you’re probably wondering about getting the business. That’s going to be covered on our next series.

If you want to learn more about building a business read our next series

Home For Sale In Gilbert AZ

2008-04-12T11:51:04Z

This listing is no longer available
Get a FREE list of bank foreclosures, company owned properties and other distress sales
Click Here

New Generation Real Estate Team | RE/MAX Elite | 480 355 2909

17509 S 147th Pl, Gilbert, AZ

Gilbert AZ - Home for Sale

3 Bdrm Single Family House

offered at $459,900

Year Built	1999
Sq Footage	2,143
Bedrooms	3
Bathrooms	2 full, 0 partial
Floors	1
Parking	3 Car garage
Lot Size	47,829 sqft
HOA/Maint	$30 per month

DESCRIPTION

HUGE PRICE REDUCTION-SELLER SAYS BRING ALL OFFERS!! This 3 bedroom, 2 bath home is bursting with personality and offers country living without leaving the city. The master bedroom has space to spare with a huge sitting room and a shower that is to die for. The sellers have added 18' tile in all of the right places as well as updated the kitchen. You will love the HUGE pantry and laundry room. Looking for storage space? The 3 car side load garage is extended length and has tons of built in cabinets. With over an acre of horse property the spacious grounds give you plenty of room to roam, bring the kids, the animals and all of the toys-there is no HOA! Bring all offers!

get a FREE list of bank foreclosures and other distressed sales at
www.GilbertTenBestBuys.com

see additional photos below

ADDITIONAL PHOTOS

Seller contact info:

New Generation Real Estate Team

RE/MAX Elite

480 355 2909

For sale by agent/broker

Equal Opportunity Housing

Posted: Apr 12, 2008, 6:59am PDT