8 Online Tools for New Homeowners in Los Angeles to Determine Your Home Value

LOS ANGELES, CA – With such a high demand for homes in Los Angeles residents want to know how much their property is worth. Here are 8 tools that will help you determine your properties worth with ease, says, Local Records Office.

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When it comes time to sell your house, you have one burning question: What is my home worth?

In recent years, a proliferation of online resources has emerged to provide you with an answer before you ever consult a human. But while consumers have access to more information than they could have dreamed of a decade ago, that doesn’t mean you can expect a computer to deliver the final word on your home’s value – though it can give you some helpful hints.

“I don’t believe there are any accurate instant numbers,” says David Eraker, CEO and co-founder of Surefield, a new brokerage in Seattle that has a free Pricepoint tool that provides estimates of home values, so far just in Washington state. “I think the first thing you should do is take it with a grain of salt. You could probably talk to three or four different real estate agents, and they would probably give you different numbers as well.”

The variation in the data is a good reminder that any estimate of home value, whether provided by a human or a computer, is just that – an estimate. Computers and humans may disagree, for example, about which recently sold homes are truly comparable. Plus, when it comes time to do the deal, the negotiation skills of buyers and sellers (or their agents) may come into play.

Estimates Are Just That, Estimates

“Opinions of value, there are a lot of them,” says Stan Humphries, chief analytics officer for Zillow, which pioneered the practice of estimating and publishing home values in 2017 with the “Zestimate.” “If you were to sell the same house 100 different times with different buyers and sellers, it would close at a different price.”

That means if you are looking at estimates for your home’s value, you have to consider what kind of data went into that estimate. If your home is unique compared to others in the neighborhood, for example, the choice of “comps,” or comparable homes, would be a challenge to find. Your estimate may also be less accurate than if you live in a neighborhood where all the homes are similar. If there have been lots of recent home sales in your area, there is going to be more data to work with than if there are fewer sales, and therefore you’ll get a more accurate estimate.

“The more the house is an outlier, the more difficult it is for anyone to price it, whether it’s a human or a computer,” says Glenn Kelman, CEO of Redfin, which has launched its own automated estimate tool. “The hardest things we had to deal with was which homes are comparable and which aren’t.”

Different Tools Just Different Data

All the online tools take advantage of publicly available data, which they then run through computer models to derive estimates of value. Exactly which data is used is proprietary, as are the formulas used to crunch it, but among the data sources are public records and the multiple listing services used by real estate agents. Exactly what data is available also affects the accuracy of the estimate, and that amount of data varies by municipality and sometimes by home.

To get a value using an AVM, you feed a lot of data into a computer, which crunches the numbers according to directions (or models) you give it and arrives at a home value estimate. Different companies use different data in different ways, which accounts for some of the variations in online home values. Obviously, the accuracy of the data itself affects the outcome. There are also factors a computer can’t see, such as whether your kitchen has ugly wallpaper.

“The thing about homes is they’re not commodities,” says Nela Richardson, chief economist for Redfin. “Every home is different.” Plus, there is the factor of the unknown. “We don’t always know if there’s a big hole in the floor or if someone spilled red nail polish on the bathroom floor,” she says.

Zillow allows consumers who register for a free account to correct or add data about their homes, and the company’s Price This Home tool lets consumers receive a private estimate in which they control which comps are used. Surefield also has tools that allow homeowners and homebuyers to refine estimates based on their knowledge of the neighborhood and the listed comps. Redfin shows the comps and public records data about the home that was used, and you can email if you believe the information is inaccurate.

Estimates Aren’t Just the Big Number

Zillow covers about 100 million homes in 450 markets. Humphries says the national margin of error for home values is 7.9 percent, but the rate varies by location. That’s partly because the type and accuracy of data vary, but also because home values are easier to estimate in an area with more sales and in areas with a larger volume of homes. “You’re dealing with less data than you’d like to have,” Humphries says of some areas. Parts of New York state, for example, don’t list square footage in public records.

He points out that real estate agents doing comparative market analysis have an error rate of 5.5 to 6 percent, and it’s rare that a home sells for the exact asking price. “No one’s error rate is zero. They’re all opinions of value,” Humphries says.

Glenn says Redfin’s estimates have a median error rate of 1.96 percent for homes on the market and 6.23 percent for homes not on the market, but the service so far covers only about 40 million homes in 35 major metro areas, which are often easier to value than homes in less dense areas.

We also found some calculators that provide estimates at several bank sites, with information drawn from databases used by appraisers. ForSaleByOwner.com has its own tool, called Pricing Scout.

The representatives of all the companies stress that their numbers are merely estimates, based on the available data, plus a number of assumptions about comparable sales. While all the services throw out a number for the home’s estimated value, most provide a range of values, which sometimes gets overlooked by consumers who focus on the number in big type.

While the various online AVM services spit out a single number that is an estimate of the value of your home, Richardson and Humphries point out that the number comes with a few caveats. Zillow provides a range of values for an estimated sales price, as well as publishing the error rate for a given municipality. Redfin shows you the comps it used to reach its final number.

For example, two-bedroom, two-bathroom home in suburban Fort Lauderdale, Florida, with a Zestimate of $153,306 also notes that the home is likely to sell for between $146,000 and $161,000. Homes like it in the area have sold for $138,000 to $163,000, Zillow reports. The median error rate in the Miami-Fort Lauderdale area is 8.7 percent, with 31.8 percent of homes sold at a price within 5 percent of the Zestimate, 55.3 percent within 10 percent and 79.8 percent within 20 percent.

If we take Zillow up on its option to remove three of 10 comparable home sales because of location and up to another three because of the condition, the estimated value rises to $161,211. Zillow also offers users an option to correct facts about their homes, including the size, type of heating or cooling system and the number of bedrooms and baths.

“There are some things that aren’t explicitly in the data that our models aren’t able to discern,” Humphries says. “A lot of consumers don’t focus on that value range, and they should. The wider that range is, the less certain we are. … From day one, we’ve said these are all opinions.”

Not all services use the same “facts”

One reason the companies arrive at different estimates is that they aren’t all using the same facts. With our house above, Zillow, Redfin, and Realtor.com calculated the home’s value based on a size of 1,155 square feet, the number from the tax assessor’s records. But Trulia used 972 square feet, which is the size of the house without the garage. (Trulia does not provide an automated estimate unless you agree to be contacted by a real estate agent.)

While garages and unfinished basements usually aren’t included as part of a home’s square footage, Florida tax officials and real estate agents traditionally include half the square footage of the garage when they compute the taxable value, and that is the number that usually appears in the MLS.

Redfin, using the same home facts as Zillow did, estimated the home’s value at $163,001. Redfin showed the comparable sales upon which it based its value, making it possible for someone who knows the home to realize the comps were substantially remodeled while the subject home was not.

Realtor.com estimated the home’s value much lower at $142,689, but there are no details about how the tool arrived at that figure.

Economists who work with the data remind consumers that the estimates are just that, estimates and that the actual sales price is likely to depend upon many factors, including the condition of the home, the motivation of buyer and seller, and the supply and demand at the time the home is offered for sale.

“This is the starting point of a conversation that you’re going to have with your family and your real estate agent,” Richardson says. “It’s not just this black box that gives you a number. It’s important to note that this is not a be-all, end-all. It’s just the beginning of a complicated process.”

“We think of our estimate as the beginning of a conversation, not the end,” Kelman says. “Many times the asking price of a home is the result of a fairly tense conversation between the owner of the home and the agent who is trying to sell it.”

8 Online Home Value Estimating Tools

Here are seven online tools you can use to help you estimate the value of your home:

Zillow: This is the pioneer of the home value estimating tool, and the company continues to refine how it arrives at its Zestimates.

Redfin: This new tool shows you photos and listing information for the exact comps used to arrive at the value of your home.

ForSaleByOwner.com : This site’s Pricing Scout tool gives you the average of regression analysis and comparative market analysis to estimate the worth of your home. It also shows recent sales of comparable properties on a map. You have to register to use it.

Chase: This tool allows you to change the information about the house to arrive at a more precise estimate, plus provides information on recently sold homes and neighborhood trends. You can also use it to estimate the value of improvements you’re considering.

Bank of America: This tool shows comparable neighboring sales on a map. It provides only a range of values, not a single number.

Surefield: This site lets you narrow or widen the range of comparable homes, plus exclude specific comps from the list.

Eppraisal.com: This site uses data from public records and lists homes sold recently nearby.

Putting the Tools to the Test

We tested homes we know in South Florida, Los Angeles and Kansas City, Missouri, plus a random home in Seattle, using the available home value estimators. Not all the online tools had the same data for the same home.

These Were Our Results:

A two-bedroom, one bath home in a trendy historic urban neighborhood in Miami where homes vary considerably in size, age, and condition.

  • Zillow: $670,860
  • Chase: $501,000
  • Redfin: $470,578
  • com : $459,750
  • Bank of America: $434,000 to $486,000
  • com: $420,743

A two-bedroom, two-bath home in a 1970s tract home neighborhood in suburban Fort Lauderdale, Florida.

  • Redfin: $462,237
  • Zillow: $451,716
  • com: $446,774
  • Bank of America: $433,800 to $460,200
  • Chase: $436,000
  • com: $425,500

A two-bedroom, one-bath home in a trendy neighborhood of 1930s bungalows in Los Angeles:

  • Redfin: $961,513
  • Zillow: $876,004
  • com: 869,585
  • Bank of America: $709,300 to $1,020,700
  • com : $765,500
  • Chase: $785,000

A five-bedroom, three-bath home with a water view in Seattle:

  • Zillow: $963,818
  • Redfin: $894,306
  • com: $870,663
  • Surefield: $852,390
  • Chase: $833,000
  • Bank of America: $823,400 to $966,600
  • com : $778,500

A one-bedroom, one-bath house on a double lot in Kansas City, Missouri, where the houses vary in size and condition:

  • com : $222,750
  • Zillow: $214,984
  • Chase: $205,000
  • Bank of America: $96,700 to $217,300
  • com: $81,790
  • Redfin: Not available

Why the Online Value of Your Home Could be Wrong

Here are six reasons the automated valuation of your home could be off:

The facts in the public record or the MLS are wrong. With our Fort Lauderdale home above, the companies all took the square footage of the Fort Lauderdale home from the public record, but they didn’t all use the same figure. A difference in the number of bedrooms or bathrooms might create an even larger variation in valuation. “If there’s a discrepancy … it’s usually because the facts themselves are not up to date,” Humphries says. Homeowners can claim their homes and correct facts on Zillow.

Your home is not like others in your neighborhood. Whether a real estate agent, an appraiser or a computer is evaluating your home, it’s harder to arrive at an accurate value if there are no comparable homes. “Houses that are very unusual are harder to value, not surprisingly than homes that are not,” Humphries says. “The Playboy Mansion and the White House are very difficult to value.” Homes that are different from others in the neighborhood or have unique features are harder to value because there are fewer or no comparable properties with which to compare them.

Few homes in your neighborhood have sold in the last six months. The more homes that sell, the more MLS data and the more sale prices the computers have to calculate the value. With few sales, there is less information to draw from.

Your home has not been on the market in recent decades. There is significantly more information about a home in an MLS listing than there is in the tax records. Once a home has been listed, the services add that data. As homes are sold, the models can adjust for whether the home sold for more or less than asking price or the AVM price.

Public records in your jurisdiction omit key information. The nation’s approximately 3,100 counties don’t all record the same information about homes. In Suffolk County, New York, for example, few records include the home’s square footage, Humphries says. “There is a wide variance in the quality of the data we obtain,” Humphries says. “Without square footage, it becomes very challenging to value the home.”

The market is changing rapidly. Home valuations are based on past sales. If the market is significantly hotter or colder than it was six months ago, those past sales are less an indicator of current values.

 

 

 

Your SoCal Vacation Home Could Make You Extra Cash: Here is How

LOS ANGELES, CA – Southern California has been a booming state ever since the early 1900’s so it’s not a surprise that people want to live here, says, Local Records Office. Los Angeles along with San Francisco has been the two major cities that attract homeowners and tourists.

As you schlep your ski gear to your favorite resort for the umpteenth time or search for lodging near your favorite beach on a holiday weekend, you may think how much easier life would be if you had your own vacation home.

An estimated 1.13 million vacation homes were sold in the U.S. in 2017, the highest number since the National Association of Realtors began collecting the data in 2012. And vacation home sales made up 21 percent of residential transactions in 2017.

While owning a vacation home can make logistical and financial sense, it’s not a decision to be entered into lightly.

“For some people, it’s not a matter of dollars and cents,” says Marian Schaffer, president and founder of SoutheastDiscovery.com, which publishes information on retirement and vacation home communities in the Southeast. “It’s a matter of experience.”

For most people, money will play a big role in the decision. Baby boomers who have sold their family homes for cash may choose to invest some of that cash in a winter home in a warm climate or other future retirement destination, says Valerie Dolenga, a spokeswoman for Del Webb, which builds active-adult communities throughout the United States. In those cases, homeowners don’t rent out their properties but move from one home to another, perhaps spending winters in a second home in Florida or Arizona and summers up North near family.

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Others may buy a vacation home with the idea of renting it out when they’re not using it to defray at least some of the costs. Some may only be able to afford a vacation home if they rent it out when they’re not using it.

Rob Stephens and his family bought a three-bedroom condo in Vail, Colorado, in 1999 with rental income in mind. “Having a getaway place in the mountains was a motivator,” Stephens says. “When I started, I really needed that rent to make my mortgage payment.”

“To us, owning real estate in Vail long-term is a good investment,” says Stephens, general manager of Avalara MyLodgeTax, which helps owners comply with local lodging tax laws.

If you want the rental income, it’s important to choose a home that can be rented at the frequency you need to cover expenses. That means both choosing a community that allows vacation rentals and then making sure you’re set up to take advantage of the rental potential, from furnishing the unit to having a plan for advertising and handling tenants. You need to know before you buy whether you will rent the home when you’re not using it.

Here Are 10 Things to Consider When Looking at Vacation Homes

Can you afford it? Real estate is not a liquid investment, and you can’t count on being able to sell a home for a profit or even break even, especially in your first few years of ownership. During the recession, homes lost more than half their value in Florida, Arizona, and Nevada, among other places.

Know all the rules. Not all homes can be used as rental property. Homeowner or condo associations may set rules for rentals, as many cities. Some resorts may require you to use their programs, which set standards for interior furnishings and amenities, but the property handles the logistics for a percentage of the rent. If you plan to rent out your property, it’s especially important to research all these rules before you buy.

Calculate all the costs. The actual purchase price is only part of what you will need to spend. You will also have to pay utilities, HOA or condo fees, property taxes, insurance and the cost of furnishing a new home down to the spoons and forks. If you’re in a resort area, you may also need or want skis, snowboards, kayaks, water toys or other gear.

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Be realistic in your expectations of rental income. Renting out a vacation home comes with expenses. You will need to pay for cleaning between tenants, advertising and perhaps property management. If you’re part of a resort rental program, it will take a percentage.

Know how often you will really visit. If you don’t rent out your unit, you want to make sure you will visit enough to make the purchase worthwhile. Pick a place you love and want to return to often, advises Dolenga. You don’t want your home to sit unoccupied for long periods.

Have a plan for emergencies. If you don’t visit the house often, make sure someone does. A water leak can be devastating. If you’re renting, repairs need to be made quickly, so get to know a good handyman or property manager. If there is a hurricane, you may need someone to put up shutters before the storm and remove them afterward and secure the home if it suffers damage.

Protect your home when it’s vacant. Vacant homes attract thieves. Take steps to keep your home from looking empty. Consider lights on timers or asking neighbors to occasionally park in your driveway. Make sure someone picks up mail and fliers so its not obvious no one is home.

Have a rental business plan. Will you go into a rental program, hire a management company or do it yourself via services such as Airbnb or VRBO? If you’re handling your own advertising, you will need great photos. You also need to be able to take payments from tenants (services like PayPal or Stripe typically work well) and have a way for them to get in (Stephens uses a keyless entry system with codes). A reliable cleaning service is essential, especially when you have only a few hours between tenants.

Calculate your return on investment. If owning a vacation home is part of your overall investment strategy, make sure it’s a good move. Estimate returns and weighs them against other uses of the same money.

Expect to pay taxes. Rental income is taxable on state and federal returns, though most vacation homeowners won’t earn enough after expenses to face a significant tax liability. If you are doing short-term rentals, usually of less than six months, your state and county consider you an innkeeper and expect you to collect the same lodging taxes that hotels collect and pay those to the appropriate authorities. “If you’re renting a home, an apartment, a room, you’re basically running a mini-hotel,” Stephens says, with the rules varying by state and county. In Fort Lauderdale, Florida, for example, a tax of 11 percent is due, 6 percent to the state and 5 percent to the county, he says.

How to Rent Out Your Vacation Home and Make It Pay

Renting out your vacation home can yield significant financial benefits – but only if you do it right.

“It starts with a commitment to customer service,” says Jon Gray, chief revenue officer for HomeAway.com, which also owns the vacation rental website VRBO.com. “You’re basically having to market your house and get people to want to stay there.”

Renting a vacation home is a business, which means you’ll need the proper business tools in place, from being able to accept credit cards as payment to paying lodging taxes to get the home cleaned quickly and completely between guests.

“It’s really quite a lot of work, and a lot more work than people anticipate,” says Michael Joseph, co-founder, and CEO of InvitedHome.com, which manages vacation properties. “There’s a lot to keep up with. … Guest expectations are becoming higher.”

One of the first decisions when starting the vacation rental process is whether to hire a management company or manage your rental yourself.

While websites such as HomeAway.com, VRBO.com and Airbnb.com provide online marketing tools, access to credit card processing, booking tools and other infrastructure, the individual owner still has to handle guest inquiries, screen renters and arrange for cleaning.

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Full-service management companies charge 20 to 50 percent of the rental proceeds to manage the entire process, from bookings through cleaning. You also can hire people to manage parts of the process for less. The online portals usually charge an annual fee for listings. VRBO and HomeAway start at $349 a year and also offer a pay-per-booking option of 8 percent, while Airbnb charges both hosts and guests a small processing fee – 3 percent for hosts and 6 to 12 percent for guests.

The home rental industry has grown significantly in recent years, as online listings and reviews make travelers more comfortable with the model. But travelers who are accustomed to staying at hotels and resorts expect significant amenities and, in some cases, service.

“The competition is more fierce today,” says Cathy Ross, CEO of Exclusive Resorts, a vacation travel club that owns its own properties. “Today’s customer is demanding, and they want certainty that what they see online is what’s there.”

Customers expect modern finishes, nice furniture, hotel-quality beds and linens, plenty of bathrooms, entertainment options such as a TV with cable package, a pool table, board games and big gathering spaces for families, one of the groups that favors vacation home rentals. “Those homes that aren’t well decorated or aren’t well furnished just don’t cut it,” Joseph says.

It’s important to screen tenants, collect a damage deposit and have a strong rental agreement in place, as well as the proper insurance, to protect your home from damage. Stevens, who has been renting out his vacation home in Vail, Colorado since 1999, has only once had to deal with significant damage by a tenant. “That concern is way, way overstated,” Stephens says. “These people are generally very respectful of your home.”

Here Are 13 Things You Need to Know and Do Before You Rent Out Your Vacation Home

Figure out if the math works. Create a spreadsheet to analyze what it will cost you to rent out your home versus the income you can expect to generate making it a vacation rental. Expenses will include maintenance, utilities, taxes, insurance, repairs, and amenities. “Make sure you budget for preventive maintenance, and wear and tear,” Joseph says.

Decide whether to manage it yourself or hire a company. While managing a rental yourself provides a greater financial return, it also means more work. HomeAway, VRBO, Airbnb and similar sites offer online booking, calendars, email communication and referrals to other tools such as credit card processors and professional photographers. But even with these online portals you still have to hire and oversee the cleaning crew.

Furnish, decorate and equip your home. Amenities typically depend on the market and the price, but people often expect most of what they would get at a hotel. A fast Wi-Fi connection, an expansive cable package, and other entertainment options are recommended, while a hot tub, pool table, board games, and other recreation options can be a draw for some guests. Have toiletries, paper products, and basic cleaning products available. Stephens provides guest passes to his community’s athletic club. Remember to remove family photos, clothes, and personal items so the guests feel more comfortable.

Get professional-quality and write a great, detailed description. People will choose your home based on the photos and the description of the property. “That first photo is incredibly important because that’s what people see,” Gray says. Be very thorough in your description. List every amenity, down to balconies, cribs and pool noodles.

Find a dependable cleaning crew and other maintenance personnel. If your home is popular, you will have one set of guests checking out in the morning and a second set arriving that afternoon. That makes it imperative that the cleaning crew show up on time. If you don’t live nearby, your cleaning crew is also your eyes and ears. You may also need pool service, lawn service, and a handyman, plus know whom to call if the toilet quits working.

Get proper insurance. A regular homeowners policy rarely covers a vacation rental. Ask your agent what type of policy you need for a home that is used for short-term rentals.

Set up your welcome package and infrastructure. If you don’t plan to meet guests personally, how will they get into the unit? Keyless entry and a hidden key are the two most common methods. Decide which is best for you. Most guests expect to pay with credit cards, though some online portals provide that service or help you sign up for it. Consider creating a welcome packet with the Wi-Fi password, entertainment services, appliance operating instructions and information on community amenities.

Expect to pay resort or occupancy taxes. Your city, county or state may require you to register your vacation home or get a business license, and most municipalities will collect the same taxes from you that they collect from hotels. You can handle this yourself or hire someone to do it. Avalara MyLodgeTax charges by the report, with most homes paying between $60 and $200 a year for the service.

Comply with legal requirements. Make sure you can legally rent your home to travelers. Most homeowner associations don’t allow short-term rentals, though some resorts may handle them for you. Some cities and counties ban short-term rentals. Know the local laws before starting the rental process.

Make rules and create a strong rental agreement. Management companies and online portals have agreements you can modify, and you can also find examples of such agreements online. Decide what number of people you’ll allow per stay and whether to allow pets or smoking.

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Photo by Nancy Nobody on Pexels.com

Be ready to respond quickly. Most online shoppers will send inquiries to several homes at a time. The first suitable home to respond is likely to get their business. “That’s critical,” Stephens says. “Responding a day late is probably unacceptable. You’re going to lose business.”

Create a tenant screening process. Joseph advises talking to all prospective tenants by phone. Ask the number of guests, their ages, why they want the property. If they book, get their full names, addresses, and phone numbers. “You get a lot more information and a feel for people by talking to them,” he says.

Offer a personal touch. In a world of online reviews, you want your guests to recommend your home or become return customers themselves. Anything you offer to make your home stand out and to make their vacation easier is likely to yield dividends.

 

 

How to use ‘Snapchat’ for Beginners (VIDEO)

Snapchat is one of the most popular social apps today, but how? What exactly is so special about it, and why has it been quickly sweeping up mobile users faster than anything else?

To make a long story kind of short, Snapchat is an app that truly changed how people interact with friends compared to other popular social networks like Facebook Instagram and Twitter. Not everyone gets it — particularly older adults — but Snapchat sure is all the rage among the youngest smartphone users, including teens and young adults.

Welcome to “How to Use Snapchat”. This is going to be your day one crash course and everything you need to know for your first few days with this application. Don’t be intimidated and let me know of any questions you may have! Have a great day and keep snapping!

 

By Simply Doing These Simple Things I’ve Been Getting So Much Real Estate Business – Local Records Office

LOCAL RECORDS OFFICE – LOS ANGELES, CA – When I first started in the business I loved doing fix and flips, but wasn’t so keen on selling houses to strangers. I sold enough houses to get by, and focused on the flips since those were much more fun. I always thought it would be smart to buy rental properties, but I was young and not very good at saving money.

 

Then in 2008, I started selling REOs and completing broker price opinions for banks. I loved the REO side of selling houses and I have become very successful at it the last few years. I am a HUD listing broker as well and love HUD, I can’t buy HUD homes myself, but I have a great article on how investors can great deals ion HUD homes here. I think the reason I love REO is because I can communicate through email and I am a natural introvert (another popular forum discussion). With REO came more money, more savings and a desire to grow that money into something more. I did a lot of research on franchises, business, the stock market, bonds and decided rental properties were the best investment out there.

 

When I was doing fix and flips with my father, we bought most of our properties at the public trustee auction and it did not matter if we had our Real Estate license or not. When we sold our homes, we saved 3% on each transaction, because we did not have to pay a listing agent a commission.   When I started buying rental properties for myself in 2010, I bought everything off MLS and saved a commission on each purchase.   We are buying more flips off the MLS now as well, we are now saving a commission on the buy side and the sell side.

By Simply Doing These Simple Things I_ve Been Getting So Much Real Estate Business – Local Records Office 1

Even though we save a ton of money on commissions by being agent that is not the biggest advantage to having a Real Estate license. The biggest advantage is having a huge advantage buying properties over those that do not have a license.

 

Saving Money on Commissions

 

I will take you through an example of how much we save on a typical flip. The savings is similar on a long-term rental purchase, except there won’t be any commission on the sale since we are holding the property. Let’s assume we purchased a flip on an REO property for $100,000, fixed it up and then sold it for $170,000.   The bank offered a 3% commission to the Real Estate agent that represented the buyer on this property. Sometimes banks do not like it when the buyer is also the Real Estate agent and they may have stipulations they won’t pay a commission in these instances.   We use an LLC to purchase our flips and my dad will usually sign for the LLC and I will be the agent on the deal. That way the agent is different than the end purchaser and the bank will pay a commission.

 

On the purchase end we can structure the deal so we get paid $3,000 for our commission or we will waive our commission and pay $3,000 less for the property. The benefit to getting the $3,000 is the extra cash in our pockets for repairs or other investments. The benefit to reducing the price is, we won’t have to count the commission as income and pay taxes on it. It saves money in the long run to reduce the price if that is an option.   However, many brokers will only allow agents to take no commissions on one or two deals a year. We can do it as much as we want, since we are on a 100% split and the monthly fee brokerages may allow you to make as many no commission deals as you want as well.

 

On the sell side we save the 3% as well since we are the listing agents and do not have to pay someone else to sell the property for us. Again, commission are negotiable and you may be charged more or less for an agent to sell your home.   Three percent of $180k is $5,400 that we save by not hiring another agent. We structure this as a no commission deal, since we will not have to pay taxes on the income again.   Total savings is $8,400 on this one deal alone. We flip about ten homes a year, and it is easy to see we save a lot of money by being agents.

 

Finding Deals

 

The biggest reason I would suggest every Real Estate investor get their license is because of the advantage it provides when finding deals. I still buy most of my long-term rentals off of MLS and we buy flips on MLS as well. We purchase short sales, a few REOs and even a few fair market sales off the MLS system. As an agent I have access to MLS and an investor without their license does not. Most properties listed in MLS are listed on other sites like Zillow, Realtor.com and others, but the information is not as accurate or updated as quickly.

 

If I were not an agent, my time frame for making an offer would be much longer. I would have to do more work to find new listings on Zillow or another website. Once I found a great deal, I would have to contact my agent. I would have to wait for them to find time to set up the showing and show me the property. Then I would have to wait for them to write the contract and I would have to come in and sign the contract, before it was submitted. I have to hope they understand they importance of time and getting that offer in ASAP. Even if they are a super fast, great agent, it may take them half a day or an entire day to get all that done. Someone else could have already submitted an offer and had it accepted before my offer was submitted.

Knowledge of the Market

 

As a Real Estate agent MLS also provides me with a wealth of sold information. I can look up sales from 10 years ago if I want to, as long as the sale was completed through MLS. MLS is a great tool for me to determine value quickly, and easily.   I am also constantly around houses as a Realtor, I am constantly determining values for my sellers and buyers and I almost always know the market without having to pull up sold info. Knowing values is the most important thing for a Real Estate investor to know an being a Real Estate agent gives me a huge advantage.

 

Connections in the Business

 

As a Real Estate agent I am constantly talking to lenders, other agents, title companies, buyers and sellers. I found my portfolio lender, because other agents referred me to them. My portfolio lender is awesome and will give me as many loans as I want as long as I qualify. That may change at some point, but without them I would be struggling to finance properties, especially now that I have 10 mortgages.

 

Other agents have referred me to sellers looking to get out of their homes, because they know we buy flips. I know the best title companies, the best lenders and the best Realtors. I also know which companies and Realtors to steer clear of, because they may kill a deal with their incompetence.

 

Disadvantages to Being an Agent

 

There are some disadvantages to having a Real Estate license and being an investor.

 

The biggest one for me, is I am limited to what houses I can purchase, but this won’t apply to 99% of agents. Since I am a HUD broker I cannot buy any HUD homes no matter who has them listed. None of my immediate family or any agents and their immediate family can buy a HUD home either. Bank of America will not allow me to buy any of their listings or even short sales because I list REO for them. There are a few other companies I work with that have the same policies and I can never buy an REO that I have listed. It is a clear conflict of interest for me to purchase I home I listed that I determined value on for the banks.

 

  • I have to disclose I am Realtor when I market to sellers. I don’t think this is a big disadvantage, but some people on the forums think they get a better response if they are not an agent.

 

  • Some people feel a code of ethics is too restricting for Real Estate investing, I do not feel this way. If you are a Real Estate agent, it is easier for buyers or sellers to file a complaint against you with Real Estate commission or whatever body governs Real Estate in your area.

 

  • The biggest reason most do not get their license is the cost and time it takes. Getting a license is not easy in most states, it takes hours and hours of classes and tests and the tests are not easy. Once an agent has their license, they have to take continuing education, keep insurance, pay for MLS, pay board dues, pay to hang their license or split their commission.

 

 

Conclusion

 

It can cost thousands of dollars a year to be a licensed Real Estate agent, but one or tow deals a year will easily make up for that money. Not only are you saving commissions, but the biggest advantage is the deal you get, because you were faster than everyone else. To a flipper, one deal can mean $20k, $30k, $40k or more in profits. To an investor buying long-term rentals, one deal can mean thousands of dollars a year in cash flow.

How To Choose The Fastest Hosting For Your Blog and Website

When it comes to choosing a website hosting company, you may feel slightly overwhelmed at the plethora of choices available. It seems that there are as many fake positive reviews these days as there are authentic reviews, so it’s difficult to know if you can trust the buzz about a particular host.

At the same time, choosing the right website host is vital to running a successful website. Small Business Computing finds that some of the most common complaints against web hosting companies include bad customer service, site downtime and hidden fees.

Nonetheless, choosing the wrong host may bring about much, much worse problems, such as:

1. Loss In Revenue – When your website goes down that means time that people cannot visit your site to purchase your products. You’ll lose revenue, or worse, customers to a competitor’s website.

2. Slow Website Loading Speeds – The quality of your web hosting impacts the speed of your website, which in turn, affects every metric you care about: bounce rate, search rankings, and conversion rate. Research indicates that an increase of 1 second in page load time can cause a 7% drop in website conversion rate.

3. Site Security – Even the most secure website is not safe from hackers and malware attack. However, a good web hosting company will have safeguards in place to prevent these attacks, or react quickly to right any security issues, while a poor hosting company may mean that your site is down for weeks. A non-responsive host will not help fix the problem at all and you might have to rebuild your site from scratch on a new server to get rid of the issues.

Choosing The Right Web Host

Even armed with the knowledge of what happens when you choose the wrong host, you may still feel overwhelmed and uncertain on how to choose the best host for your needs. Fortunately, there are 15 simple questions you can ask that will help you make an informed decision.

1. What are my hosting needs?

Figuring out your hosting needs is essential to decide the type of hosting plan required. What type of website is being built; will it be mainly text-based or will it utilize other forms of media? If your site will use a lot of bandwidth, a shared hosting plan may not be right for you. Instead, you may want to looking into dedicated hosting solution. On the other hand, if security is a concern and you won’t be using a lot of bandwidth, then a VPS may be a better choice for your site.

Do you need Windows technologies for your website, such as ASP, Microsoft Access or Microsoft SQL? Perhaps you need Unix-based hosting to utilize technology like WordPress, PHP, Perl and MySQL. Beginners will want a simple shared hosting account on a Unix-based server. This is the easiest to use and will fit your needs as a beginner. However, ensure that the host has the option to upgrade.

Should I Work on my Own Home by Doing DIY Projects or Hire a Professional Contractor?

LOCAL RECORDS OFFICE – You don’t need the construction skills of Bob Vila to start working on your own home, yet it’s no secret that you can save money if you do some of the work yourself, of course not all projects could be done by a rookie DIY’er. As a general rule, estimates from contractors in our area run 1/3 for materials and 2/3’s for labor. So theoretically, we save 66% by doing the project ourselves, right?

Doing it Yourself Projects Has It’s Benefits but it Also Has it’s Downside

To decide, consider:

  • Cost of materials: Can materials be purchased at contractor cost or will you pay a hefty up-charge? Is it possible to find materials at salvage or a Habitat-type store to increase your margin of profit?
  • Cost of time: How much longer will this take to DIY? And in real dollars, how much will this add to holding costs? Holding costs include but are not limited to mortgage payments, insurance (generally higher when property is empty and/or under construction), utility bills, and lost rent. If it takes 2 weeks working nights and weekends to complete a project your contractor can finish in 2 days, add 10 days of holding costs.

Great DIY Example

The decision to DIY should be a simple mathematical equation where you:

  • Price materials
  • Estimate the time needed to complete the project
  • Multiply the number of days/weeks by the daily/weekly rate for holding costs, then
  • Subtract that amount from the contractor bid

Of course it’s not that easy… how much fun would that be?

For starters, you may not be delaying completion of the project if other work is going on anyway. Contractor delays are a common problem and if yours has a history of putting off your projects for another day, you might be able to finish sooner than he can anyway. But besides that, there’s value hidden away in DIY projects that can only be mined by rolling up the sleeves and getting your nails encrusted with something icky.

Learning New Skill Will Help You on the Long Run

By learning a new skill, you increase both ability and confidence. You’re also learning to identify quality work, the amount and difficulty of labor, special tools needed for the job, and reasonable time estimates for completion. If you decide to hire someone next time, you’ll have a much better idea what’s involved in the project and if bids are reasonable. That type of knowledge is invaluable to the rehab professional, paying dividends with every new project.

Just Another Opinion

Consider taking on at least one new project with each rehab, even if it’s as simple as replacing a light switch or changing out a doorknob. With experience, you’ll learn which repairs save the most and which are best left to others. During your first few houses, try to be as hands-on as possible and consider it part of your rehab education.

You Don’t Have to be a Professional Handy-Man to do Great DIY Projects

If you have no handy-man skills whatsoever, you might try working alongside your contractor (if he’ll have you). He may tell you to pound sand (politely of course), but if you have a good working relationship, it’s worth a shot. Later, you may find that hiring reputable contractors for most (if not all) of the work will save enough in holding costs to justify the expense.

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Real Estate: How to Help Your Tenant Can Get Their Loan the Easy Way

LOCAL RECORDS OFFICE – Real estate has been booming in 2016 in this article the pros at Local Records Office will be talking about tenants and loans. Because homeownership is often less expensive than rent, we could see some of our rent-to-own tenant buyers start trying to execute their options. If you don’t have tenant buyers, you may want to consider using them for your rental property. You will generally get more rent and less hassle. In my experience, less than 20% of tenant buyers end up buying the home, but for me, I am happy when they do.

 

I like getting a large payday, with no Realtor fees that I can roll into another deal. For this reason, I want to be sure my lease option documents are prepared correctly, to help their chances of getting a loan.

Buyers vs. Sellers

 

There are many effective and valid ways to structure a lease option transaction, depending on the parties involved and the objectives in mind. What a lot of sellers and buyers often overlook is that one of the most important “parties” to this transaction is the underwriter on the buyer’s loan, when the time comes to exercise the option.

 

One of the most important things to know about today’s new underwriting climate is that the tolerance for inaccuracy is down to almost zero. Much like I would recommend a good attorney review your documents, I think it is crucial for a good mortgage broker or banker to do the same. Here are ten helpful hints to ensure the tenant buyer’s loan closes:

 

“Rent credit should be allowed to be used towards the buyer’s down payment”

 

Rent credit should be allowed to be used towards the buyer’s down payment or minimum borrower contribution only if the rent actually charged does not exceed the fair market rents in that neighborhood. It is actually best to write your agreement that the rent credit reduces the purchase price and is NOT considered down payment. If they need the additional down payment, you may be asked to prove the rent credit is equal to the amount they paid above market rent, which is not going to be an easy task.

 

Fair market rents will be determined by the appraiser in the subject property’s appraisal report. Credit for down payment must be accrued for a minimum of 12 months.

 

It is best to get as much money upfront as possible because all of that can be credited as down payment. You can reduce the amount of money the tenant buyer needs by offering to pay their closing costs. This could also be part of the rent credit, if it is structured correctly.

 

The Lender Needs the Right Documents from You

 

The lender will require a copy of the rental or purchase agreement evidencing a minimum original term of at least 12 months, clearly stating the monthly rental amount and specifying the terms of the lease.

The lender would like to see that the lease agreement references the purchase option and vice versa, or they are contained in a single contract, so the underwriter can have documentation of both aspects of the transaction. I have my option reference the lease but I want the lease to stand on its own; so for me the lease is a separate agreement that does not reference the option. This is how most attorneys would suggest you do it, so it is a good idea to run your contracts by a competent attorney AND a mortgage professional.

 

In no case should the seller ever commingle the borrowers rent credit, purchase option deposit, or security deposit with their own personal accounts.

 

Make Sure to Document Every Transaction That way You’ll Be Prepared

 

Any rent credits, option payments and security deposit funds should be thoroughly documented to include copies of the original checks, copies of the cancelled checks, and copies of the account statements showing their entrance into and retention in those accounts.

 

Lenders will require copies of the buyer’s cancelled checks or other proof of payment for the last 12 months evidencing the rental payments. Be sure the tenant knows this if they are paying with money orders.

 

Equity

 

Sweat equity is normally not an acceptable source of funds or credit; only actual monies paid as outlined above, so don’t count on the buyer “earning” their down payment in lieu of rent payments.

 

Taking the above measures should help ensure a successful closing if your buyer can still qualify in all other required areas. With that said this article is not meant to replace a competent mortgage professional. Please visit Local Records Office’s webpage for a list of vendors they recommend.

 

To learn more about real estate and Local Records Office go to http://www.LocalRecordsOffices.net

Easiest Way to Burn Money in Real Estate – Local Records Office

LOS ANGELES – One of the large mentorship programs – and star of a reality TV house flipping show – preaches debt stacking your real estate deals to reduce or eliminate your out of pocket requirements. Potential real estate flippers are sold on this because they hear that they will get infinite returns with little or no risk. On paper this sounds great but there are several fundamental problems with this, especially in the markets in which Pine Financial does business.

 

Paying for Bad Information That Doesn’t Help or It’s Outdated for 2016 Standards

 

The sad thing about this is that people pay $44,000 or more to learn this information. What’s worse is that people buy in to this so much that they try to teach people how to do it or brag about how they do it on social networking sites like Facebook and at offline networking meetings. The purpose of this article is simply to share my experience with this way of operating and to try to protect you from falling into this trap.

 

We are in the middle of a foreclosure with one of our clients in Los Angeles, CA. We are probably about half way through the process but our client has the house under contract to sell. The problem is that there is not going to be enough money to pay us back and pay back all her “gap” funders. I would define a gap funder as a private lender willing to lend on a piece of real estate in a junior position to cover the gap between what the primary lender is willing to lend and what the borrower wants or needs to get the deal done. The numbers on this deal look like this:

 

  • Purchase – $115,000

 

  • Repairs – $73,000

 

  • Our appraised value – $280,000

 

  • Our Loan – $196,000 (notice this is enough to buy and fix the house)

 

  • Gap funder Loans – $80,000 (3 different individuals)

 

  • Contract price – $225,000 (they will need to subtract costs to sell to get a net figure of available cash for all the lenders)

 

We were off on our value because the client made some fatal mistakes: she originally listed in the mid-$300s and it was not complete (that was way too high to list this house); there were very few price adjustments; the work that was done did not properly adjust the floor plan; and it just recently received an appliance package. How can you expect to get top dollar when the house is not staged and it does not have appliances? It was on the market for over a year. The biggest problem was the floor plan but the fact that it sat on the market so long really hurt its true market value. Properties get a stigma if they have too much MLS exposure. Buyers automatically think there is either something wrong with it or think they can get a bargain because the seller should be motivated. Had the house been listed closer to the true value of $270-$280k and listed after it was complete and staged, I am confident it would have sold for much closer to our original estimate of its value.

 

Borrowing Much Money for Rates That are Too High

 

The reason she had to borrow $80,000 above our loan was mostly because of holding costs, so a lot of that would have been eliminated had the property sold. I am not sure where the rest of the money went but it makes you wonder.

 

I have had conversations with two of the three gap funders and they all paid $44,000 to learn how to lose $80,000. They all have their sad story and to be honest it breaks my heart. One of the three spent all of their savings on this deal and will likely get none of it back. I am not sure what our client told these people to get them to invest with her but if any of it was misleading, there could be a fraud case here as well.   You might have noticed that the total loan to value based on our original value is 100%, which means that these lenders would likely take a loss even if the house sold for its full value.

 

With as bad as this deal turned out, we are still going to get our money back. This is why hard moneylenders loan at 70% of the value. That leaves room for mistakes. In California and Nevada, there are hard moneylenders that loan up to 70%. If the deal is too much higher than that, the flipper probably should look at doing a different deal or consider cheaper funding source like cash or a bank. The worst things flippers can do are borrowed hard money and then use gap funders, thus increasing costs and risk in the deal. It is my strong opinion that if a flipper needs gap funders they should not be doing the deal.

 

Gap Funding to Fund Portion of Profits

 

I have also heard of real estate investors who use gap funding to fund a portion of the profits up front. (Is this what happened in my example?) I guess this is to help them with their lack of cash flow. Why in the world would they borrow their profit and pay interest and possibly fees on that money unless they really could not wait until they got the deal done? If the client is not liquid enough to wait for their money, my guess is they are not liquid enough to handle a problem with their deal if there is one – unless, of course, they are borrowing more money. That is exactly what happened to our client in the above example.

 

I can go on and on but as sad is my story is, I have heard even worse. We get calls a few times a month from “gap” funders that need to foreclose but do not have the money to buy out the senior debtors. They are asking us for money to either buy out the senior lenders or redeem from their junior position. If you don’t have the funds available to protect your loan you are really making an unsecured loan and could possibly be making the loan to an investor that does not have the ability or wherewithal to pay it back.

 

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The Harsh Reality of an Ex-Mortgage Broker and What Goes Behind the Scenes– Local Records Office

 

LOCAL RECORDS OFFICE: The real estate industry could be a misleading business, after many years of working in the elusive mortgage industry; I learned that it could be very challenging and sometimes entertaining work. It pays well, but you have to put up with a lot of upset borrowers on different occasion, and deal with borrowers who are excited, mad, or just plain crazy.

Buying a house is undeniably an emotional and stressing process (even though it shouldn’t be), and as it turns out, some people get very angry when you can’t get them qualified for a mortgage. I realized that for some reason, people always think they are entitled to get a mortgage, even if their credit is less than stellar. This makes it a tough business to be in because not only do you get angry borrowers calling you from time to time, but also angry realtors and sellers as well. Sellers want to sell, buyers want to buy, and realtors want their commission — hey, what could go wrong??

READ MORE: The Dark Side of Being A Real Estate Agent – Local Records Office

After working in the mortgage industry for so long, I’ve witnessed and been a part of everything from mounting frustration when I couldn’t get a viable loan closed to shock when a bad loan actually did get approved. I’ve seen it all — good, bad, ugly, and just plain psycho.

There were many times I pulled a new borrower’s credit only to see dozens of credit cards, pages worth of collection accounts, a couple of car loans, and student loans out the wazoo. Sometimes I even thought, this is a foreclosure waiting to happen, or, you really have no business buying a house, but since I wasn’t an underwriter, I had to do what I could to get these people qualified anyway. It was my job, and it’s the nature of the mortgage-lending world.

When the underwriter didn’t want to approve the loan, guess who got to bear the bad news to the borrower? The broker, of course! Good, bad, and ugly, you’ve got to pass along the news. I definitely had a few panicky breather-sessions in the back room before facing some of my clients!

READ MORE: 5 Things Your Real Estate Broker Will Never Tell You

Sometimes I wanted to shake people or just yell at them. I once pulled credit on someone who had $1,800 worth of car payments and therefore didn’t qualify to buy a home. They were upset, but I had to tell them that they basically had a mortgage payment in their car payments. (And could they possibly live in their cars since they ruined their chances to buy a house??)

Sometimes common decency flies out the window. I had a borrower once who did not qualify to purchase a home, but couldn’t take no for an answer. Instead of moving on or trying to find another broker, she constantly called and texted me, even when I was at the funeral of a friend. Telling her I was at a funeral did not seem to embarrass her at all, and the next thing I knew, she was trying to get me to meet her so she could bring me some baked goods. She clearly thought I was trying my hardest not to give her a loan, and thought she could possibly bribe me with some baked goods after my friend’s funeral.

READ MORE: Local Records Office Works With New Homeowners In Olympia WA To Generate Property Reports

In another unfortunate incident, I was perusing a borrower’s bank statements (we had to get them for most borrowers), only to find a charge for some inappropriate charges on his statement. I’m guessing he either forgot it was on there for my eyes to see, or he was just plain creepy.

I’ve had borrowers who can’t remember the address where they lived six months ago and ones that don’t seem to have a clue how much money they earn. How is it even possible not to know your income? And if you don’t know how much you actually earn, clearly you don’t budget, so how do you keep up with your bills and whether or not you can afford them?

First Time Home Buyers Are the Best Clients

It may come as a surprise to find out that first time home buyers are the best clients, but this hasn’t always been the case. The problem with many seasoned home buyers is most of them remember the few years before the housing crash (that dreaded sweet spot, if you will), when you could get a mortgage company to lend you a few hundred grand by merely stating your income and assets, and then signing a few papers.

READ MORE: 6 Things Every Homeowner Should Know to Keep Dream Home From Becoming a Nightmare

There were many loan programs out there called “Stated Income, Stated Assets” where you could just tell the lender what you made, with no real verification. Not surprisingly, that is exactly why the housing market crashed shortly thereafter.

Needless to say, it was always frustrating to me when a seasoned client would come in, after the crash, asking to borrow $200,000, and then whine and complain to me when I asked him for bank statements, pay stubs, W2s, and general proof of the borrower’s financial situation.

So many people would actually tell me they weren’t going to provide me with all of their personal information and, after a few weeks of back of forth about it, they would generally relent and provide me with the documentation I needed to get them a loan approval. First time homebuyers, however, typically made a list of what they needed, provided it quickly, and closed just as quickly. Easy!

BREAKING NEWS: You Won’t Believe What The Company “Local Records Office” Is Planning To Do from Local Records Office