By Tom Branch, on February 13th, 2012 
If your home is listed or you are thinking about listing, you need to realize that selling in today’s market is a price war and a beauty contest. Even worse is that you often have to win both!
In many areas there are far more homes available than there are buyers looking. Add short sales and foreclosures to the mix and you will quickly see that you are in the midst of a price war. For buyers, that’s great news. We’re having sale on real estate! For sellers, it means you really have to look at the prices of competing homes and price your home accordingly. I’m not saying that you have to give it away, but if you truly want to sell, you have to be in the ballpark. The good news for sellers is that many are also buyers so the “loss” on the sale can be made up with the purchase of a new home.
Unless you’re an investor, a home purchase is still an emotional decision. Homes that create emotion not only sell, they sell for more. If you’re selling, you and your agent need to create that emotion. Homes that are in good condition, properly staged, always ready for showings, and properly marketed do sell. Want to know the good news? They sell quicker and for more money!
I alway tell sellers if nobody walks in the front door, the home is either overpriced or poorly marketed. If buyers walk in the front door and will not make an offer, it’s because they don’t see the value for the price. There are two ways to fix it–put some make-up on the home or lower the price!
My advice is to take the time to get your home ready prior to putting it on the market. It’s a price war and a beauty contest out there.
Photo licensed from ShutterStock
By Tom Branch, on January 25th, 2012 
There is an alarming trend among many buyers of real estate these days. We’re seeing more and more people who want to “place bids” rather than to “make offers” on a home.
Real estate is not eBay. While some real estate is sold in an auction format, the vast majority of sales are not. I realize that in some markets buyers are in full control given the volume of short sales and foreclosures, but in many places the markets are balanced and in some places there are seller’s markets.
In the north Dallas suburbs, there is a severe shortage of good properties under $150k. Last weekend I was out with some first time homebuyers who had been looking for weeks. We found a home the first day it was on the market. By day 3 there were multiple offers and my clients actually had to offer more than list price in order to secure the contract. It’s a seller’s market for good homes under $150k.
I’ve seen buyers totally upset when their low “bid” was not countered while a more reasonable offer was negotiated and accepted. That’s not to say that a lower offer is not appropriate at times such as with an overpriced property. However, throwing in a bid at 70 percent of market value on a hot property is usually a waste time.
Many investors use this approach but don’t really care if hundreds are rejected while they look for the one seller who will sell at that price. The average home buyer will quickly become frustrated using this method.
Many of our younger buyers have grown up bidding online and to some extent bidding has become part of America’s landscape. While I suspect this trend will continue in consumer goods, I don’t think it will last in the housing market and certainly does not apply to seller’s markets.
My advice is to know what kind of market you’re looking in and use an appropriate strategy rather than always going in with a “bidding” strategy.
Photo licensed from iStockPhoto
By Tom Branch, on January 23rd, 2012 
In Part 1 we discussed how rental price impacts occupancy rate and the impact that can have on annual cash flow. In Part 2, we’re going to explore how rental price impacts the quality of applicants.
Let’s say you have a rental property where the fair market rent is $1500 a month. If you list the property at $1600 a month, not only will you receive fewer applications, we’ll argue that those applications will be of lower quality.
Applicants with good credit and clean backgrounds do not have to overpay for a rental home. Since they can easily qualify, they will spend the time to not only find a well-maintained rental home, they will not pay more “just to get in.”
At $1600 a month, you’ll likely find that your applicants have credit or background issues. They want a decent place to live, understand they have issues, and are willing to pay more. It’s no different than a mortgage applicant who is willing to accept a higher interest rate because they have credit issues.
In some cases the extra cash flow may be worth the risk. That’s a call you have to make based on the total application.
Our recommendation is to price the home at market value to attract the largest number of quality applicants. One bad tenant can eat up lots of time and destroy a property. That little bit of extra cash flow just isn’t worth it in the long run.
Have questions or want to work with an experienced real estate team on purchasing or managing investment properties? Contact us at 214-227-6626.
Photo licensed from iStockPhoto
By Tom Branch, on January 22nd, 2012 
Gina was out showing homes this morning. When she returned she told me about a house where the owner had filled the holes in the bottom of the brick. While this might seem like a good idea…it’s not for a number of reasons.
Most building codes require builders to leave weep holes along the bottom row of bricks. These holes allow any water that might get behind the brick to drain. If the water gets trapped behind the brick, mold can form and the water may damage the supporting structure behind the brick.
When the home is sold, these plugged weep holes will be caught by the inspector and most buyers will want them opened up again.
The homeowner in the right-hand picture above has used expanding foam to seal the weep holes. This will be almost impossible to correct later depending upon the amount of foam injected into the weep holes.
By Tom Branch, on January 21st, 2012 
Over the past couple of months we’ve seen lots of first-time homebuyers entering the market. They are enthusiastic, pre-approved, and ready to buy a home. The problem is a general lack of good homes under $150k.
Gina and I are currently working with four first-time home buyers looking in the Allen Texas area and we have only been able to find one of them a home. Don’t get us wrong, there are homes on the market in this price range, but the vast majority of them are foreclosures, short sales, or are in poor condition.
If you are a home buyer, you need to move quickly when you find a home to view. You simply cannot wait because the good homes are moving quickly. Homebuyers can click here to sign up for home alerts on The Branch Team website. This free service sends you an alert as new homes come on the market that meet your needs.
If you are considering selling your home this may be a great time to list it as homes that show well and are priced right are going quickly. Further, plenty of qualified buyers and low inventories present an opportunity to sell quickly. While prices are down in some areas, Collin County and DFW in general have weathered the storm well. Click here to read “Internet Marketing – The New Curb Appeal” and click here to read “Are You Show Ready?“
Please feel free to contact us at 214-705-2470 if you have questions or need help buying or selling a home.
Photo licensed from iStockPhoto
By Tom Branch, on January 21st, 2012 
The Internal Revenue Service has issued a 255-page guide in the Federal Register. The new rules, which went into effect on January 1, change the way investors can deduct repair and improvement expenses.
In the past, most investors took the one-time deduction of the repair or improvement expense during the tax year in which it was done. The new rules clarify what is a repair and what is an improvement.
An ordinary business repair of an asset is generally tax-deductible in the current tax year. An improvement is usually classified as a capital expenditure and gets depreciated over time.
Eric Lucas, a principal at KPMG LLP and a former Treasury Department tax counsel, said in an interview that this one of the more significant changes” from current accounting policy and could be troublesome for businesses that took “an aggressive view” in deducting repairs.
Investors should discuss these changes with their CPAs or Tax preparers now in order to make preparing their 2012 tax returns easier next year.
Photo Licensed from iStock Photo | Blog based upon a story published in Inman News
By Tom Branch, on January 20th, 2012 
I received an email from a past client today. He had received an email on the subject.
The email read, “Did you know that if you sell your house after 2012, you will pay a 3.8% sales tax on it?” The email goes on to blame the new Healthcare Law and all the damage it will do to the housing market.
Like many email hoaxes, it’s based on a partial truth. Within the new Healthcare Law there is a provision for a 3.8 percent capital gains tax on real estate sales. The reality is that this will not apply to many sellers. Currently the law allows an exception of up to $250k for single filers and $500k for a married couple filing jointly.
So while this will not apply to most sellers, I don’t think it’s a great idea. The main issue is that once they start the taxing it may be easier to move the bar down and tax more and more sales in order to generate revenue for the Federal government.
For the time being most sellers do not to be concerned about paying the 3.8 percent “Healthcare Tax” when they sell their homes. Sellers should always contact their CPA, tax preparer, or attorney if they have concerns or questions.
Base Photo licensed from iStockPhoto
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