Using the Web and social media to sell real estate

I have just reviewed an interesting training package written for Realtors and home owners who want to speed up the sale of a property in this slow market. I found it quite interesting and I want to tell tyou about it in this post. First of all it is compiled by home owner who tried various ways to sell a property and then finally found a way so elicit a lot of interest in the property he had been desperately trying to sell.

The story begins with this 46 years old guy who, after living a care-free life as he describes it, ended up divorced, living with his mom and verging toward a financial catastrophe. He then decided to sell a rental house that he had been owning for 20 years and found a Realtor that, after running some comps, gave him a price he was very comfortable with. The Realtor also added that with such a price the house was going to attract a lot of interest.
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Commercial real estate is going to be the next wave of massive foreclosures and that it will provide investment opportunities for international investors as well as domestic investors. The difference is that commercial real estate is more risky than residential because it is not just enough to get a very strong discount on the price, but the property remains unprofitable whatever is the acquisition price if it cannot attract enough tenants, either individuals or businesses.

So some commercial properties are simply condemned and will not be able to be salvaged following a typical investment strategy where investors would be looking for a middle term return (lets say in 18 months).

So there are now projects that are trying to salvage some commercial properties with the issuance of visas and green cards for international investors who wish to invest long term some sizable amount of money into a project they would not be able to control directly (there are specific rules on how this is performed that I won’t describe here).

The interesting fact is that the US government is already moving to put some brakes on the commercial real estate imminent dive by offering full access to the country to foreign investors that are willing to put some cash at risk in exchange of this opportunity.

It is quite an interesting trend, which I don’t think was heard of before, and it will definitely produce results since several people will be interested in in having the US for some other business and will pay this “price” happily despite any risk.

Roberto Mazzoni

Florida is becoming the center of serious interest from international real estate investors. Starwood Land Ventures, an international real estate investment firm, has just completed a deal with one of the major developer in the USA, Lennar, for the development of more than 2,700 home sites in 38 communities across Florida. These are land parcels that constitute one of the most desirable portfolios come to market in years. Starwood Land Ventures had acquired the whole package at a bankruptcy auction last January and now it is planning to work with Lennar to develop first-time homebuyer, master planned, active adult and premier golf course communities in the Tampa, Orlando, Jacksonville and Southeast Florida markets.

This means that development activity is beginning again with single-family homes, townhomes and garden villas priced in the low $100,000s of the above mentioned markets that are already rich in foreclosures and discount properties. The plan apparently is to undercut the offering from banks that provide repossessed or shortsale properties requiring various degrees of repair, and providing instead competitively priced single family homes that are brand new and ready to be purchased by first time home buyers.

Lennar hasn’t disclosed the timing of the project, but it is already remarkable that international funds are triggering new massive development efforts in the state of Florida.

Roberto Mazzoni

The most complex aspect of real estate is rehabbing a property, here you can make the most profit or the most loss since you have many variables to keep under control and you depend on other people for the correct execution of the project within the time and the budget you have set aside. Although it doesn’t seem so apparent, the highest burden for the investor who is dealing with rehabs is to keep track of all the costs associated with the project and project manage all the resources so to reach the final result as fast as possible and as close to the original cost target as possible.

Unfortunately the majority of problems arise during this phase and therefore you can never predict with absolute accuracy the total cost of the project and you should keep some reserve space so that you can complete the project without having to go back to your financing investor for more money, which is always a bad business practice.

On the other hand, you can try to include in the project some elements that can make the house interesting also to an international buyer so widening you marketing scope and possibly shortening your selling time since many international buyers can pay cash or can arrange their financing pretty fast.
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One interesting story comes from Riviera Beach, a Florida resort just North of West Palm Beach. It is a pretty small place built around a harbor on the Atlantic Ocean and with a very nice beach. Wikipedia reports that it “is predominantly an African American city” and “consistently has crime rates well in excess of the United States average and is also notable for its high levels of poverty”.

But, as it sometimes happens in other very poor cities or neighborhoods, Riviera Beach became the target for massive redevelopment so to create areas of very expensive real estate with the objective of eventually turning the whole market around. One of these developers was Cornerstone Group from Hollywood that created a whole gated community called Marsh Harbor with 402 units and various amenities like a fitness center, lighted tennis court, swimming pool and heated spa.

They were selling these townhomes for as much as $ 310,000 in 2007, now these same townhomes are worth between $55,000 and $75,000, according to the County Property Appraiser and to the current listing prices of the many shortsales in the community, and they are very difficult to sell. So Cornerstone Development will auction off 64 of these townhomes on March 13. The first 20 of these townhomes will be sold “absolute” to the highest bidder regardless of price, at the highest discount possible, as a push to get rid of the remaining inventory. The remaining ones will be sold to the highest bidder, with prices subject to approval by the seller.

It is the exact same concept as used for major stores: where you have low cost products that are being offered at a loss so to get people through the store and getting them to purchase other more profitable merchandise. One would never expect to see the concept applied to real estate, but times are changing and any marketing tactic goes, apparently.

Roberto Mazzoni