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Chinese like U.S. Real Estate

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.7995

In a recent AP article, it was documented that current market conditions in both the United States and China are contributing to a growing number of Chinese investing in U.S. real estate.

The Chinese are looking at taking advantage of the slumping real estate market knowing that near term, there will be a real estate recovery and prices will rise.  The Chinese ultra rich have been buying property in the United States for years.... rising income levels in China and the great values in U. S. real estate are leading to a growing number of transactions involving Chinese buyers. 

A major objective for Coldwell Banker Sky Ridge Realty  this selling season will be to develop relationships with agents tied in with the Chinese market and expose the lifestyle and values to them and their buyers.  Several multi million dollar transactions last summer were Chinese buyers looking to take advantage of what Lake Arrowhead has to offer.  

Real Estate Myth's

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

From my experience, there are many myths on both sides of the home buying and selling fence.  Here are 4 untruths held by Sellers and 4 by Buyers.

Seller Myth #1: I can always reduce my price later. 

Sellers frequently price their home high initially for a time period just to "test the market."  What sellers need to know is that buyers shop in price brackets... if your home is in the wrong one, you will just help sell everyone elses home while yours sits there overpriced.  Agents will use your home to show how much of a better value other properties are.  As time goes on, you can always reduce the price later and you will have to reduce it below where you could have sold it if you would have priced it in the market.

Seller Myth #2: The first offer is never the best offer.

Some sellers believe that it is better to hold out for something better.  From my experience 4 times out of 5 the first offer you get is the best you are going to see.

Seller Myth #3:  Don't Respond to the Low Baller.

Some buyers in this market feel compelled to throw out a low-ball offer to see if the seller bites.  The best strategy is to remove the emotion... respond to all offers in a professional and realistic manner.  Many times the buyer will come up and make the deal.

Seller Myth #4:  There are'nt any buyers in the marketplace.

There are absolutely buyers out there.  Properties that are percieved value, or have some unique quality or amentity are the ones in our market that are moving.  Transaction sides are down... particularly in the $500,000 to $1,000,000 range, but those under $500,000 and those over $1,000,000 are currently seeing a lot of activity.  Sellers need to be mindful that there are fewer buyers in the market, but to say there aren't any is an overstatement.

Buyer Myth #1:  You shouldn't buy before the bottom.

There is no bottom.  There are many deals out there at the moment that are priced below the bottom.  Your agent knows of deals that are out there that are priced in this way.  If the most important part of the experience for you is buying at the bottom, those deals are out there.

Buyer Myth #2:  You can't buy a home with less than 20% down and perfect credit.

The mortgage market has tightned down... rightfully so, but there are still scenarios out there where minimum down payments... in the 3.5% range are allowed that do not require perfect credit.  As time goes on, the lending guidelines will loosen further.  If you need information on what is available in the way of mortgage products, contact our local mortgage brokerage... Arrowhead Home Loans, Inc.

Buyer Myth #3:  Sellers today are desperate:  

Some are, but most aren't.  Especially in our market, there are a lot of folks who have a lot of equity in their property or resources that would allow them to not be desperate.  As I said before there are some opportunities to buy below the bottom of the market.  This accomplished when a seller is desperate, or the property is bank owned.  Your agent is the best source of this information.  In our market l would suggest that a small percentage of the sellers have to sell.

Buyer Myth #4:  The longer the house is on the market, the more they will negotiate.

My experience is that length on the market is not a good indicator on willingness to negotiate.  In fact in some instances, it says to me exactly the opposite.  There are factors that would indicate willingness to negotiate.  In my opinion length of time on the market is not one of them.

Are Home Prices Negotiable?

Steven Keefe, Broker/Owner 
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

Home prices are always negotiable - especially in a Buyer's Market. A better question is "what price reflects the present value of this property?" Finding the answer to this question is often helpful when buyers are trying to determine what price to offer. 

The list price or asking price is the seller's view of what the property is worth. Prospective buyers have their own views.  A deal is made when the buyer and seller come together at an agreeable price.  In most cases, the parties “negotiate” until they come to terms.

What determines value? The value of a property depends on your perspective. To a homeowner who views the property as his or her "home," included in the value may be intangibles such as memories, neighbors, time and money spent on improvements. To a prospective buyer in most cases, the property is valued by its potential. 

To determine the "right" sales price, whether you are a home seller or buyer, value must always be considered in the context of the neighborhood, other homes for sale, and general market conditions. The assistance of an experienced and dedicated Realtor can help you gather the information you need to establish fair market value, saving you valuable time and money. 

Here are some of the factors that contribute to the sales price of a house: 

What is the seller’s situation? 

Real Estate professionals agree that in most markets they are putting three types of transactions together.  First, is the standard sale where the seller has sufficient equity in the transaction to sell the property and pay off any liens.  Second is the short sale.  In a short sale, the seller does not have sufficient equity in the property to cover all the liens.  In this type of transaction, the seller can approve a sale, but the shortfall needs to be approved by any lien holders before the sale ca be completed.  The third type of transaction is the bank owned, or REO sale.  In this instance, a homeowner has lost the property due to default and it is currently owned by a bank. 

The Seller's Motivation:

There three kinds of sellers.  Seller 1 has to sell his home.  In this instance, there is some compelling reason.  Either they have to sell it or they are going to lose it, or there is some other compelling reason… job transfer etc.  Seller 2 would like to sell his home, but doesn’t have to.  Seller 3 would sell his home if he got his number.  Seller 1 is most motivated while seller 3 is least motivated to make a sale.  

The Buyers  Motivation:

Does the buyer have to have it?  In most cases unless the property has some unique qualities or amenities, most buyers don’t have to have some thing. 

Comparable Properties: 

Realtors utilize comparable properties to establish value, knowing that buyers will be comparing what is available and what has sold when choosing a property and the amount to offer.  Size, location age and condition are all factors that are compared to evaluate a property against similar properties.    

The Community:  

Value is certainly affected by the surrounding community.  A property can be elevated, or negatively affected by the surrounding properties or community.  In our market, properties located in the woods which have lake rights are of a higher value than those outside the boundary.  There are many factors that must be considered when evaluating and factoring the community into value.

Summary:

When emotion and circumstances are removed from the process, the market value of a property can objectively be arrived at by comparing similar properties that are available and that have sold.  It is only when the emotion and circumstances that are added to the equation that the difficulty occurs. 

Very little emotion, and circumstances whereby banks or sellers in trouble want to unload the property is contributing to many REO and Short Sale transactions going together at below fair market value.  A fewer number of “normal” sales are going together where sellers are understanding that much of the emotional attachment they have is less significant to buyers in the current market. 

If you are ready to buy or sell in mountain communities, we would be happy to assist you with any of your real estate related needs.  Please contact our office at 909.336.2131, visit us at www.mountainmoves.com, or send us an email at steve@cbskyridge.com   

Measuring a Real Estate Firm's Performance

Steven Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

Click on the following link to go to video I have done that explains how to measure the performance of a real estate firm.  I give statistical information for the top 6 companies in the Lake Arrowhead market.

Visit the following link to watch the video:  http://www.viddler.com/explore/lakearrowhead/videos/4/

Thanks for Watching

Steve Keefe

Rim Association of Realtors MLS: Why your Agent should be a member.

Steven Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty 
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
909.336.2131

The MLS (Multiple Listing Service) is the single most effective tool a Realtor uses to do their job.  The MLS is a private database in which Real Estate Brokers advertise properties for sale and offer compensation to other cooperating brokers who are also members of the MLS.  Cooperating brokers use this database as a resource to assist potential buyers and sellers.

The Rim Association of Realtors MLS is unique in that it is a "Members Only" database with no reciprocal agreements with any other MLS systems.  Realtors who are not members of this MLS will not have access to necessary information contained in the MLS database, nor are they entitled to a commission on any properties that are advertised in that MLS without separate agreement. 

If the agent you are using to either buy or sell property is not a member of Rim Association of Realtors MLS, you probably should ask why.  Here are a couple of reasons why it is so important.

First as a buyer, your agent needs to have access to the latest and most complete information available to make sure that you make a good investment.  Isn't one of the biggest reasons to use a Realtor is to make the home finding experience easier?  Using an agent who does not have access to the best information is kind of like shopping for a home half blindfolded.  While they may have some limited information at their disposal, unless they have the data from the local MLS, they are dealing with incomplete data that could cost the buyer dearly.

Second as a seller, 95% of all homes in our market are sold by the agents that are members of the Rim Association of Realtors MLS.  As a seller, your home needs to be advertised to those agents who have buyers that are buying in our market area.  The local MLS is the most effective way to advertise to those agents.  If your property is listed in an off the hill MLS, how are the agents in this market going to find it?  Do you want to market to the 95% of the agents that are going to sell the property or the 5% off the hill.

If your property is invisible to the local agents the chances are it will not sell.  Regularly we see properties that have been listed with out of area agents in outside MLS systems not sell.  When these same properties are re-listed with a local member of the Rim MLS, they then sell within a reasonable time period.

Whether buying or selling in our market, make sure who ever you are working with is a member of the Rim of the World Association of Realtors to insure that you get the necessary local expertise and results.

Discount Real Estate Brokerage Bites the Dust

Steven R. Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@mountainupdate.com
(909)  336-2131

This last week, discount real estate leaders Foxtons Real Estate announced it will be closing its doors due to a downturn in the housing market. The West Long Branch, New Jersey-based real estate company, known for its discounted commissions and Mini Coopers, said it is contemplating bankruptcy for an orderly shutdown. According to an article in the Asbury Park Press, the company will continue with only a “skeleton crew”-laying off 350 of its 380 employees.

Calls to the company yesterday were met with a recoded message saying that the discount brokerage was closed.

Foxtons was founded in 1999 as YourHomeDirect.com by Glenn Cohen, an entrepreneur with the idea of paying a salary instead a traditional commission.

According to the article in the Asbury Park Press, the business model, however, was unproven. Real estate agents were unmotivated to show their buyers Foxtons homes, knowing the commission wouldn’t be as much.

Foxtons never made any kind of impact in the California marketplace, however, there are multiple real estate models with the same premis operating in the California market that will likely go the way of Foxtons as consumers gravitate to full service models like Coldwell Banker to insure they get the best services and representation.

In the current market climate, sellers can not afford to gamble with a limited service company.  They need full exposure to insure that they get top dollar within a reasonable time period.  The odds are better in vegas than with a limited service or discount brokerage.

Coldwell Banker Commercial

Steven R. Keefe, Broker/Owner
Coldwell Banker Sky Ridge Realty
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@cbskyridge.com

We are known as the market leader in the San Bernardino Mountains for Residential real estate, what many don't know is that we operate a commercial division that services the commercial needs of our customers.  For information on how we can assist you with all of your commercial real estate related needs, please contact me at steve@cbskyridge.com. 

Coldwell Banker recently released the 2007 Corporate Real Estate Survey, to download a copy click here....Download 2007NREISurveyReport.pdf

Time to Buy a Vacation Home!

Steven R. Keefe Broker/Owner
Coldwell Banker Sky Ridge Realty
Arrowhead Home Loans, Inc.
www.mountainmoves.com
steve@cbskyridge.com
(909)  336-2131

So you want to buy a vacation home. You've been daydreaming about a cabin in the mountains, perhaps, or a horse ranch or lakefront estate.

Maybe you even have the property picked out. You know you can swing it financially, but you're not quite sure you're ready to take the plunge. Is this the right time to buy real estate … really? I say absolutely yes- there couldn’t be a better time to make a vacation home purchase.

The National Association of Realtors (NAR) just released the results of its annual Investment and Vacation Home Buyers Survey and the results are amazing.  They signal a definite green light to anyone thinking of buying a vacation property.

The survey showed that vacation home sales rose to a record 1.07 million in 2006, an increase of 4.7 percent from the 1.02 million sales occurring in 2005. Indeed, vacation home sales and investment home sales together accounted for 36 percent of all existing and new residential transactions-a very healthy slice of the real estate market.

It just goes to show that you can't lump second home sales in with overall home sales.  They really are two separate and distinct markets. So don't let the doom-and-gloom-sayers discourage you, and don't let a sluggish real estate market in other

California

markets do so, either. You're on a whole different playing field.

Still need a bit more analysis to help you make a decision? Here are a few insights and tips:

• Many speculators are out of the market, so the playing field is a bit more stable. Although the aforementioned 36 percent figure is impressive, in 2005, the vacation home/investment home sales total was 40 percent. That means part of the equation has fallen-and that part is investment home sales.

Investment home sales are actually down 28.9 percent since 2005.  That is good news for vacation home shoppers. Why? Because speculators tend to drive up prices and muddy the water. If you're buying a second home for your personal use, you don't want to compete with speculators. You want to take your time and make a thoughtful purchase you can feel good about.

• Home prices have dropped slightly. Interestingly, according to NAR, in 2006 the median price of a vacation home was down 2 percent from the previous year-falling from $204,000 to $200,000.

The significance of this drop is not that you can pick up a bargain, but that the market is normalizing.  I think it's always best for buyers to have a clear, realistic picture of what a home is worth. I've always viewed real estate as a solid, blue-chip long-term investment, and that means going into a purchase with the right expectations.

• Sure, you must be financially comfortable to buy a vacation home-but you don't have to be wealthy. The NAR study found that the typical vacation property buyer in 2006 enjoyed a median household income of $102,200. While this is up significantly from the previous year's median income of $82,800, it still falls solidly in the "middle class" range.

The perception that you have to be rich to own a vacation home has fallen by the wayside.   Even if you can't comfortably afford two mortgages, it's not difficult at all to offset the cost of your vacation home. Just rent it out part-time and you're set. Often, if you rent out your home only seventeen weeks out of the year, you can still break even.

• No need to put off your purchase until you're older. People are buying vacation homes at younger ages than ever. "The typical vacation home buyer in 2006 was only forty-four years old, according to the NAR survey.  In 2005, the median age was fifty-two. That is a significant change, and it's interesting to speculate on why more people are exhibiting this 'seize the day' mindset. I do think children of Baby Boomers are more inclined to live for the moment, so maybe that has something to do with it. Or maybe it's a result of the 'nesting' phenomenon Faith Popcorn predicted back in the '80s."

• Remember that real estate is almost always a good investment. Here's another possible reason why the age of vacation homebuyers has dropped: maybe people in this age bracket view real estate as an alternative to the stock market. Although the NAR report doesn't frame it that way-indeed, it points out that 79 percent of buyers want to use their home "for vacation or as a family retreat" and only 34 percent say it's to "diversify investments. 

Look at the stock market's track record over the last decade or so-it's all over the map," points out.  I think people of my generation have been burned by bad investments. NAR reports that 25 percent of vacation home buyers paid for their properties with cash. I think that makes a pretty significant statement about what people feel is a 'safe' place for their money.

• Don't feel that you have to buy close to home. The NAR survey found that the typical vacation home buyer purchased a property that was a median of 215 miles from his or her primary residence. (In 2005 the typical vacation home buyer purchased a property that was a median of 197 miles from his primary residence; however, 47 percent of vacation homes were less than 100 miles and 43 percent were 500 miles or more.

Last year's median distance represents a good three-and-a-half-hour drive. This makes sense given the younger ages of buyers; they're not intimidated by a long drive like older buyers would be. But I think it's also indicative of the fact that the whole vacation home 'lifestyle' is becoming more mainstream. Globalization has made a 'mobile' life seem normal. You may be traveling overseas for work, you're connected to the rest of the world via the Internet … so driving four, five, even six hours to get to your second home seems reasonable.

• If you don't want to rent out your vacation home, you're in good company. (But don't be surprised when you change your mind.) Of course, all this talk of renting out vacation homes assumes you're even interested in going that route-and if you're like most people who answered NAR's survey, that's the last thing on your mind. Only 18 percent identified "to rent to others" as a reason for purchasing their vacation home.

I've found that there's usually a honeymoon period of two to five years between the time people buy a vacation home and the time they decide to rent it to others.  But I've also found that when people do decide to start renting it out, they are delighted to discover how easy it is and how profitable it can be.

In fact, once you get into the vacation home rental business, you may well discover it's like opening a bag of chips: you can't stop with just one.

The NAR survey notes that 55 percent of vacation homebuyers said they were 'likely to purchase another property within two years. "Fifty-five percent! I think that statistic speaks for itself. Buying vacation homes and renting them out is contagious. It's just a good way to live, a good way to meet people, a good way to make money. So if you've thought it through carefully and you know you want to make this purchase-go for it! The timing will never be better.

Think 6% is a lot??

Steven Keefe, Broker/Owner Coldwell Banker Sky Ridge Realty
www.mountainmoves.com
steve@cbskyridge.com

Home purchases in Europe by an out-of-country buyer are subject to the highest transaction costs in Russia, according to a report this week by Global Property Guide, an international real estate research firm.

Transaction costs are about 25 percent of the property value in Russia, 24.9 percent in Bulgaria, 19.7 percent in Monaco, 17.9 percent in Belgium, 17 percent in Italy, and 16.3 percent in France, the company reported.

The report is based on the total cost of buying and selling a property, including taxes and fees, for the purchase of a property by a European buyer who is not a resident in the country where the property is purchased.

Also, the sample is based on the purchase of a condo in a major city that is worth about 250,000 Euros, or about $339,500 in U.S. dollars based on the current exchange rate, and served as the seller's principal residence for the past 10 years.

"Residential investments in Europe incur punitively high roundtrip transaction costs in many countries, exceeding 15 percent in several cases," according to the report.

The United States was not listed in the report, which focuses on Europe. Real estate transaction costs were listed at 5 percent in the United Kingdom, which is toward the bottom of the scale. New or renovated properties can carry additional taxes, according to Global Property Guide.

Transaction costs can total 33.75 percent of the property value for new properties in Monaco, while those costs can total about 31 percent in France, according to the report. "Real estate agents' fees are highest in Scandinavian countries ... this is because the agent guides buyers throughout the property registration process."

Some countries require the assistance of lawyers in real estate transactions.

The transaction-cost research is based on input from local real estate agents, government agencies and the World Bank Doing Business Web site, according to the research firm.

When is the DOJ going to get it?

From the desk of Steve Keefe, Broker/Owner Coldwell Banker Sky Ridge Realty
www.mountainmoves.com
steve@cbskyridge.com

The U.S. Department of Justice is investing a fortune in taxpayer dollars in a real estate industry witch hunt. How long will this last? How stupid do they think the public is? Where is the public outrage?

The DOJ is assigning words like "conspiracy" in many cases to sound business decisions that let brokers "opt out" of online listings. There are times when a responsible broker does NOT want to see his listings marketed on other sites. Does it make good business sense to let other brokers show his listings alongside valuation estimates that do not support the list price? Should brokers be forced to let their listings appear on sites where there is little or no control of public (and the competition's) comments and feedback? Is this really what the public really wants?