Commentary Archives | Sunshine Guru

Five tips to follow to get your lowball offer accepted

It’s like clockwork – something bad happens that could potentially affect the real estate market, and buyers think it’s their time to start snagging up homes for dimes on the dollar. Investors buyers make a good living buying up real estate for wholesale prices and they consistently make up a small segment of purchasers. Unfortunately, that doesn’t mean that YOU, a traditional retail buyer, have what it takes to dabble in the play-space with the investors just because you think you’re in the driver’s seat.

Mind you, this post came about because colleagues were having a discussion about the topic recently as the buyers have all gotten it into their heads that this is the time that the market has fallen apart and real estate is obviously 50% off this summer. What do we need to tell our buyers that they may not be in a position to make such bargains, but if the situation were to present itself, what would they, or YOU, need to do to be ready for the deal of a lifetime.

There is a level of preparation, and knowledge, that is required to successfully negotiate a deal that is a significantly great deal. You will need to already know everything that there is to learn about that particular house. Not just houses in general. Houses in that neighborhood and of the same age. For your particular house you’ll need to know its history, potential problems that will come up, and things that the house will need.

This will not be the normal way you will go out and buy a home on the retail market. How do you know if you are shopping retail and not wholesale? Are you concerned about the results of a home inspection, and maybe you even want the seller to buy you a warranty? Are you getting an FHA, or a VA loan with a low-down-payment? Did you bring your parents, or other family members to come “take a look” at the house you’re thinking of buying? These are all indicators that you’re buying retail.

So what do you need to do to convince a seller that you’re a wholesale buyer that can make their problems go away?

Qualify yourself

You’re competing with other investors. Remember your seller could select another wholesale offer at the same price as you’ve offered. You’re going to want to make it clear that you have experience owning homes like this before. You know what service issues there are on houses this age, what those kinds of things cost, hidden time bombs, and the like. You know what you’re doing, and you’re the easiest person to sell to.

At the same time, you’re disqualifying everyone else who may NOT know what they’re doing. People who might come back with inspection issues, ask for credits for repairs, or even cancel the deal. Make your seller comfortable that this sort of thing doesn’t come along when doing a deal with you. The only thing that you’re concerned about is the price.

Volunteer commitment

You will want to say “I will pay this much for this house.” Not “I’ll probably…” or “After it all checks out…” or “Well if we can get through all this and eventually…” No. You want to deliver the message with absolute clarity that if you get the price you’ve settled upon, that you are ready to commit and close.

Eliminate your own outs

Once you’ve put it out there that you’re interested in the house for your price, you should be past the time when you need to “take another look,” “bring over another inspector,” “talk to your wife,” or worse “talk to the partners.” This is not to say that you shouldn’t do your due diligence. However you should have learned all that you need to know long before now. Bring your inspector during your first showing or second. You should already know that in the subdivision you’re looking within has cast iron waste lines from the 1960’s and that they’re all going bad right about now. You should already know that the old looking roof is going to cost $12,000 to replace with shingles or $25,000 with new tile.

Close quickly

There is nothing more satisfying, and exciting, than knowing that you have negotiated the deal of a lifetime. You need to have what is necessary to close the deal quickly. Your line of credit should have been arranged long ago, or the cash should already be in your bank. Remember, at this price, if the seller gets wind of a better offer coming, you could get dropped like a hot potato. Eliminate your competition.

Do not complain

You have eliminated your opportunity to keep asking questions. You can carry on friendly conversation, but make it clear that if the seller accepts your offer, they will not hear back from you, or your lawyers, ever again. Anything bad may, and probably will, but you’ve made it explicitly clear that this is the last that we will ever be interacting again.

If you’ve seen those home-made flyers stapled to light-poles all over your neighborhood that start of with “We buy ugly houses…” or “Cash for homes…” these are the guys you are competing with. With a level of preparedness, it’s possible that you too, can work out a wholesale deal of a lifetime.

Giving Back to the community on KW RED DAY along with Pandemic of Love

We are partnering with an incredible community aid organization Pandemic of Love. Simply put, Pandemic of Love is an organized network of trained volunteers who match Recipients in need with Donors who can give. This organization was founded by Shelly Tygielski from Lighthouse Point. Since its inception a few short weeks ago in March, Shelly has received press coverage and celebrity endorsements of her cause. To date Pandemic of Love has matched over 40,000 people in need with willing donors who have given in excess of $5 Million!

Here are our Pandemic of Loves links, one to GIVE help and one to GET help:

Give Help: https://tinyurl.com/GiveHelp-KWPandemicofLove

Get Help: https://tinyurl.com/GetHelp-KWPandemicofLove

LOVE is the virus. LOVE is infectious. LOVE is the CURE. Let’s show the World that sickness isn’t the only thing that can go VIRAL!

Real Estate deemed Essential, and we’re here for you

In these tragic and crazy times, we are still fully functional and fully staffed, and can real conduct real estate showings virtually, consult with clients online and offer marketing advice for an uncertain near future.

We are here to provide and support our clients and our community during a time when people are afraid and not sure what the future holds. They can count on us to be there to not only help with your new home, but delivering actual hope that things will go back to normal.

I have been sourcing and dropping off hand sanitizer and cleaning products to those clients that are afraid to leave their homes. While it continues to be hard to find them, I am on the road daily (in gloves) to support my clients as they have supported me.

We as Americans must face adversity head on, not like an Ostrich with our head in the sand. Here are a few of the latest facts about the corona virus and some helpful advice and encouragement!

It’s a Virus and lives for three to twelve day on most surfaces. So don’t touch things that could have possibly been exposed.
The death percentage is nine time higher in seniors population and especially people with underlying health issues. Proof positive Italy has a population that is 80% senior citizens. In America the senior population is less than 17%. That explains why the death total in Italy is 9 times greater percentage wise than America and triple any other country in the world.
Don’t let this virus consume you have confidence, but remain vigilant. Don’t go to areas where large amounts of people go to. Yes avoid supermarkets and places like Target. I asked my local Publix manager and he said the sales volume has increased since this virus hit. So if you need to go carry a bottle of 90 % alcohol with a spray attachment, and gloves if you have them. Spray the cart and even the boxes and containers and or packaging. Use the antibacterial wipes after you spray with alcohol. Protect yourself by carrying them with you at all times.
We are not going into a recession unless the virus does not get contained. The only American workers expected to be on the job are logistics and trucking, hospitals, grocery stores, warehouses, pharmacies, gas stations and of course, our dedicated and critical first responders.
If all of the world listens and limits contact with others and better yet STAYS HOME, in 3 to 6 weeks we should be on the road to recovery!
Avoid food deliveries and cook your own food. You don’t know who is preparing your food and if they are sick or even if there not showing signs they could still be a carrier for the virus. This is especially true with children.

Lessons learned from Hurricane Irma

Our hurricane preparedness drill is deceptively simple: I go someplace safe and comfortable, and Steve (the Condo Guru) stays behind.

I go because I take care of what’s important to Steve. Mom Nancy. Dogs Lola and Gracie. And this time, one more friend Dustin.

Last year during Matthew, I scooped up the dogs and traveled to Fort Myers and camped out for one night at a family owned condo. Two hours drive. One home cooked meal. Storm passed by. And the next morning we were on our way home.

This year by Tuesday, it was clear we were going to get whacked. By Tuesday night we started making plans. By Wednesday the storm track was right up the center of the state so we couldn’t just dash over to Fort Myers. We couldn’t even dash up to Orlando. To keep the plan’s intent, we had to go pretty far. Atlanta, maybe? Then a friend called. He arranged to drive to Adel, Georgia on Thursday, and onward to Nashville, Tennessee, on Friday. Stay in Nashville until home was habitable. The thing we knew is that even if the house is fine, electricity and gas and water and sewer and fuel could all be out, broke, disconnected, or unavailable for days. Weeks. A month?

He had the same agenda as we did. Grab the elders and the pets, and get them someplace safe and someplace comfortable. The official evacuation plan for the State of Florida says you move dozens of miles (if necessary.) Not hundreds. If you’re in a storm surge zone, you head west and hunker down with a friend or family farther from the coast. You’re not supposed to clog up the highways. There are really only three main roads out of Florida and they can’t handle millions of people in time. But what do you do with your elderly if the house is without electricity (and air conditioning) for days or weeks? Our friend had lived through Wilma without electricity for six weeks. You can’t really live like that. Obviously a lot of people thought the same thing as the official estimate was six and a half million Floridians left the state.

The plan had a few good points. Several of our friends were following the same plan so we had camaraderie in the group. The old folks could take care of the pets if we decided to have some fun in Nashville (which we did.) The location in Nashville placed us close enough to Chicago to make a mad dash north if necessary so that we didn’t keep running up hotel bills. Two rooms for four nights got expensive! But it turns out being cooped up in an air conditioned hotel room for days on end is also mind-numbing. We reminded ourselves that the most important thing we were doing was being safe, but that was not much comfort as all we had to entertain ourselves was CNN and local coverage of the storm affecting our homes and loved ones working in it.

We toured the museums. We listened to live music. We ate the BBQ. We sang show tunes into the night. The storm came and went and it became apparent that the storm was both more and less of what we expected. The Keys were left uninhabitable. Broward County was left largely without power but mostly undamaged. The storm took a wiggle west and severely damaged our friends on the west coast near Fort Myers and Bonita Springs. Strangely, Tampa and Saint Pete were fine. But the storm was still barrelling towards us. Atlanta and Nashville were expected to experience tropical storm winds and rain in a couple days.

We decided to head north. We dropped Mom at her former home in Davenport, Iowa, and then headed to my family home in Chicago. The hotel charges were certainly cheaper and having the comforts of home and family seemed enticing. We rode the EL. We saw the sights. We ate some pizza. We hit the museums. We walked the dogs. We visited the suburbs and the relatives. And we shopped. Oh boy, did we shop.

Meanwhile, Steve was working 13 hour days, fixing pumps, managing cranky residents, chasing elevators, harassing vendors, and generally working miracles. Then he started working on the house. Mostly unscathed, but plenty of trees and branches and debris to clean up. Ultimately, power was out for nine days at the house. Tauntingly, homes across the street got power in 5 days. But their sewers backed up so I suppose we got the better end of the bargain.

Nancy’s condo was completely undamaged, and power remained blissfully unaffected. She was furious to learn that she could have stayed home and been perfectly fine. Her cable TV even remained operational. Steve dutifully emptied our refrigerator and moved “the good stuff” to Nancy’s, along with himself as the condo was calm, cool, and comfortable while the rest of our friends in Fort Lauderdale, Wilton Manors and Oakland Park sweat it out in the dark. Nancy can’t sit for long periods of time, so the 1,700 mile journey was agony for her. Finding herself in Davenport and learning that her place was perfectly habitable, she promptly booked a flight.

As one of our favorite nautical authors says: “Nothing goes to windward like a 747” she was home on Tuesday. Nancy says her lesson is that she won’t do that again. She’d rather meet her maker in the condo. So there’s one opinion.

Me? I’m not so sure.

We could have flown away. But by the time you know you have to go, it’s too late to get a flight. And how does one fly away with two big dogs?
Stay put? But what would living be like in a 90 degree house with 90% humidity for a week or more?
Hope the next storm allows us to drive, but not leave the state? We have friends or family in Naples, Fort Myers, Bonita Springs, Tampa, Saint Pete, Orlando, and Jacksonville. Surely the next storm won’t traverse the entire state like Irma?

One thing for sure, the 2,200 mile round trip took its toll and when it came time to head back for home, the looming drive caused us to hesitate for a couple extra days. Certainly one lesson learned – not quite THAT far.

The By Owner and the Pizza Man

I wish I could take credit for this great post, but it was from a colleague of mine. It’s too good not to share, however.

“A past client of mine – who owns a pizza shop – calls me and proceeds to tell me how he is going to buy a property (FSBO) so they can “cut out the brokers fees.” He goes on to tell me how proud he is that he read “THE BOOK” (what book I don’t know) and is following it to investor success.

In the next breath he asks me to run comps, closing costs, give him contacts for mtg reps and title cos and give him advice on what the next steps are to completing the transaction as well as negotiation tips.

I took a deeeeep breath…told him to hold on I was on my way to his shop and that I would be right there to have this convo in person.

I arrived but before I would let him speak I handed him two frozen pizzas I bought at the supermarket – I asked him to place them in his oven so they could cook, cut them and serve them to me at his table before we could talk business. He was appalled – how dare I ask him to do such a thing, don’t I know that HE makes pizzas and that is how he pays his bills? I just looked at him and smiled … I could see the light bulb turn on.”

Economic outlook for Broward County

At Keller Williams we pride ourselves on watching the market very carefully to be able to advise our clients to the best of our ability. To that end I’ve been examining the economic outlook for Broward County and its impact on both our residential and commercial real estate market.

Demand and rents soar

Growing payroll and a new wave of relocations from outside Florida are major contributing factors to a thriving multi-family sector in Broward County. This year more than 18,500 new jobs were created in Broward County; mostly in the private sector.

Tenant demand continues to rise in the midst of a new construction cycle, forcing rents upward throughout our market.

For the first time since 2000 there is a short supply of single-family houses and apartments for rent.

Related Group—which is the largest development company in the region—has plans that include more than $1-billion in new development for thousands of apartments in Davie, Pembroke Pines, Plantation and Fort Lauderdale. Nearly 900 units are being developed in the Fort Lauderdale sub-market.

Vacancy rates in the county are around 4.7%. The Broward County apartment sector ended the third quarter of 2014 with the second lowest vacancy rate among the three South Florida counties. The average rent is projected to go up to $1,311 per month.

Capital continues to rush into the apartment sector. Small private investors are dominant in the market thanks to acquisition debt available at higher leverage.

Fannie Mae and Freddie Mac continue to underwrite 5, 7 and 10 year loans and offer maximum leverage of at least 80% in most markets. The interest rates are historically low.

Here is some other important information: Do you know that in October, the Fort Lauderdale metropolitan area was named a hot spot among the nation’s top college towns for multi-family investment?

We’ve got incredible opportunity for growth in Fort Lauderdale. I believe that in six to seven years Fort Lauderdale will be one of the hottest areas in the country.

Why are these statistics important? Because I want to convey to my clients that whether they are considering a house to live in, or an acquisition of an investment property, that we will be facing a housing shortage in a few years. Today’s interest rates could not be more attractive and prices here in Fort Lauderdale and Broward County are still remarkably affordable.

Real Estate Porn, Online Listings Accuracy, and the age old battle between consumers’ desire for information vs. Realtors controlling information

Today’s blog post pretty much wrote itself after I posted on Facebook an article describing how much online traffic the two big online Real Estate portals, Zillow and Trulia, have versus the portal controlled by the National Association of Realtors – Realtor.com. Faithful readers began a lively discussion and the entire transcript evolved into an entire blog post. Enjoy!

Zillow and Trulia get more than double the online traffic than the next three major online real estate portals combined, including Realtor.com. Even though listing data on Trulia and Zillow is more frequently wrong or out of date. Do people LIKE being lied to? I guess they don’t call is real estate porn for nothing.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=3&id=311058

The Beyond Syndication 2014 report by Arizona-based Clareity Consulting, a real estate industry information technology consulting firm, said that Zillow and Trulia’s real estate networks’ Web traffic totaled 84.6 million unique visitors in May.

That compares with the 40.2 million combined unique visitors in May of three other online real estate networks, the Clareity report said, including Move Inc., which operates NAR’s Realtor.com website.

Nelson asked: This is so true. What is the best app for more accurate info? What do you recommend?

I replied: On a nationwide basis, the most accurate online portal is Realtor.com. For local searching here in South Florida your favorite local agent or brokerage. My MLS on my personal website contains data from our local MLS. Check out www.sunshineguru.com. For a handheld app, use my app – pulls the same data. Download my mobile app atwww.mobileapp.robertdarrow.com

Mike asked: Without access to the MLS, those sites give more information than any of the other ones – even if it is wrong, most people don’t know that. Looking at any one company is only going to show only its own listings, and not every one lists with multiple services. It seems as though those 2 sites have the most listings and most exposure… SO – if that’s not true, why hasn’t the competition stepped up its game? I understand the need to keep the MLS to the pros – but consumers obviously want a way to search for listings themselves before or during a realtor comes into play. Is there an alternative?

Joe asked: In my humble outside the bizz opinion it is because when you search an address they are at the top of every search, so they are paying the search engines to display them first. I agree about the inaccuracies. Zillow at one time was displaying my property for sale when it was not for sale and was not on the multi-list. Some agent who had a criminal record somehow created the listing on Zillow. I was so worried that I called the security guards to notify them my place was not for sale and not to be shown.

I replied: Zillow and Trulia get most of their data from local MLS feeds, but they don’t do a very good job of making sure the data remains accurate when prices change, or when properties sell. That’s why often you see inaccurate prices, or properties listed that are not for sale.

The best online database on a national level is Realtor.com. Sadly they’re behind the curve as far as the sophistication of their website is concerned. But they are almost finished with a comprehensive overhaul so the site might leapfrog over the other two later this year.

Trulia also owns the website “Postlets.com.” and when a private home owner or a Realtor creates a Postlet for a particular property, it pushes that property data up into the Trulia database. But a Postlet has a few problems. (1) anyone can create a Postlet for any property. If I were to create a Postlet for a house, then that house would show up on Trulia as an active listing. (2) Postlets don’t have accurate property information about the status of the listing. No one polices when a property’s price changes, or when it goes under contract. So some properties that are listed by Postlet creation just live in the database in perpetuity.

Local websites, for both COMPANIES and for AGENTS usually get their feeds of property data from their local MLS. So MY website, and MY handheld app reflect exactly what is available in my local MLS. Same for my office’s website, and should be the same for you as well. For example, my brother-in-law likes using the website for Rubloff because he just likes it best. Other people like the website for @properties, or Coldwell Banker. But each LOCAL office website should be accurate in your market. The down side is that these public websites only display current homes for sale. By agreement, they cannot display historic information or sold data for specific properties.

This happened to me as well. Trulia has some sort of database hiccup where a LOT of local (south florida) old Postlets got sent to Trulia by mistake even though the postlets were old and long expired. In that massive data dump, my hose showed up as a new listing as well, and having such nosy neighbors, I had a stern knock on my front door one evening this spring with my next door neighbor demanding WFT I was doing by selling my house so quickly after moving in. The data included all the old photographs and listing information and you’d never have known that the listing was a complete and utter fabrication.

Mike commented back: That down side you mention is a big one – I look at it from the consumer side… As society moves towards (or gets more comfortable in) an “information at your fingertips, i want it now and don’t want to talk to anyone” mentality with the internet, sites like zillow and trulia DO offer sold data and historic information (again – whether it’s right or not doesn’t matter because no one is telling anyone that it’s wrong, and I honestly think it’s more informational than anything else). That information can help someone say “well, maybe I could sell my house,” or “prices are lower now than 5 years ago – maybe I can jump into the market,” or even they’ll find something their realtor missed cause people are never clear in what they’re asking for. Is there data to show that people aren’t using realtors because of these sites? Anything we saw on Zillow had a realtor attached to it if we wanted to see something. I’ll be interested to see the realtor.com changes and whether that reporting is accurate or not.

I replied: The changes that Realtor.com will release will of course be mostly to the usability of the site, the community aspect (Trulia also owns Active Rain – a very popular online community of agents and active property afficianados) but they will never release the historical data. The level of people who buy, and who sell, with a Realtor stays historically fairly constant with fluctuations due to market conditions. When the market is hot (like now) you see more FSBO sellers able to sell successfully. But the number of FSBO sellers does stay remarkably constant around only 12% of transactions. Sometimes more, sometimes less, but right now 88% of FSBO sellers will eventually list their homes with a Realtor to sell. The reason is the whole concept of “Agency.” It means “I stand for you.” You hire me to sell your home, and it’s not just the MLS, or the fluffy brochure, or the coffee and crumpets at open house. But the entire concept of me (and my network of colleagues, extended through the MLS) going out, finding a good qualified buyer, negotiating with them, and making sure they fulfill their terms of the contract, that has stood the ages. The whole concept of Agency in this way has been in place since Feudal England and apparently no matter how much information that home buyers and sellers gain access to can negate the underlying principal of having one person representing YOUR interests, working their contacts and sphere, and getting someone to come to the table with a giant pile of money to exchange for your property. Or the other way around in the case of an Agent working for a buyer.

Mixed emotions–Jealousy and Rage–about Rent Control

On the MyFace today I stumbled on an article about the now-famous Herbert J. Sukenik who lived in rent-controlled apartment overlooking Central Park.

http://www.celebritynetworth.com/articles/entertainment-articles/stubborn-tenant-holds-absolutely-insane-amount-money-finally-leave-rent-controlled-nyc-apartment/

Herb was a bit of a loner who moved into a small 350 square foot apartment back in 1974 and settled in for the long haul.

The short version of the article above was that a developer eventually paid Herb $17-million to move out of his apartment AND let him live in another $2-million apartment for the rest of his life at a newly negotiated LOWER rent of $1 – a month! All this in order to be able to demolish the old structure on Central Park West for which they had purchased for $401-million and developed for $1-BILLION.

I would LOVE to be that guy!

Argh! Can you imagine? You move into a little studio for $750 per month and eventually turn it into $17-million and a free apartment for life? And you never put up a dime of your own money? Amazing!

What kills me…

The whole notion of real estate ownership is that YOU (as the owner) should be allowed to do whatever you want – because it’s YOUR property.

It makes my entrepreneurial soul cringe when I hear that a property owner is losing $1800 a month because a rent-controlled apartment SHOULD be renting for $2500 a month but is rent-controlled at $700 a month. Where’s the incentive to be a landlord? How do you plan for improvements? Besides the fact that you can’t afford to upgrade the apartment, nor why would you when someone is paying below-market rent…. But what if the building needs upgrades like an updated fire-safety system, or a new roof, or new elevators?

What would YOU do if you were in Herb’s shoes?

Or better yet, what would you do if you were in the OWNER’s shoes?

We don’t have rent-control in South Florida so this isn’t an issue that we have to deal with here. In fact, I’d say that the climate is even more favorable for landlords and property owners in South Florida. A lot of landlords let tenants rent on month-to-month leases, which are convenient for the tenants that need flexibility (or are deadbeats who are barely living month-to-month anyways) but it sure makes it easy for a landlord to give notice and move a tenant out of an apartment for nearly any reason. In fact, on month-to-month leases here in Florida, without a longer notice written into a lease, the required notice is TWO WEEKS! Yikes!

Where are folks coming from & leaving to: Interactive map at Forbes.com

I love this interactive map at Forbes.com! You can enter any major metro area, or county, in the search box, and a map will pop up showing where most of the residents are moving from, or moving to, when they move in or out of the area.

http://www.forbes.com/special-report/2011/migration.html

My favorite two searches: Miami/Dade County vs. Collier County (the Naples & Fort Myers area) in Florida. Why do East Coast residents traditionally choose the Atlantic Coast and why do Midwesterners typically choose the Gulf Coast?

Because I-75 runs from the mid-west straight down the gulf side, and I-95 runs from the Northeast straight down the Atlantic Coast.

You’d think this was illegal, wouldn’t you?

Check out this story from the Sun Sentinel about a condominium association near Venice, Florida. This association just passed a new rule prohibiting leasing to unmarried couples. The only permitted lease or sale is to a single person, or to a married couple consisting of a husband and wife.

And here in Florida this is perfectly legal.

This surprised the daylights out of me as I came from Chicago where people were protected by three layers of laws. The city of Chicago had an equal protection law; Cook County had a Human Rights Ordinance; and the State of Illinois also passed a law banning discrimination against discrimination of gay couples (and unmarried domestic partners) in most accommodations.

Well it looks like we have some work to do down here in the backwater of Florida.