Using the Web and social media to sell real estate

The Miami Association of Realtors states that 60 percent of home sales in South Florida involve a foreign buyer these days. It is a dominating figure that shows how the stage has been taken by foreigners who are taking advantage of extremely low prices and, sometimes, favorable currency exchange. Most of the buyers are coming from Europe and South America and are taking advantage of the constant flow of foreclosures that keep the prices low and will keep them that way still for some time.

The vast majority of houses sold in South Florida go to international buyers.

Being cash buyers, they usually have more negotiation power and can secure the purchase of the home even when there might be competitive offers from local buyers who need to go through the complex and unpredictable lending processes that are now common in the US (read the original article here).

To developing a direct correction with these international buyers you need to have more than just low prices, but you must be able to provide them qualified assistance on tax and immigration issues that are peculiar to their status and their country of origin.

This can mean the difference between making a sale and simply losing it. There are plenty of properties to choose from and there is only a correct way to buy them if you are an international buyer and most often the correct tax setup for an international customer is quite different from what you would do with a US citizen or corporation. Unfortunately, even in Florida, there are very few CPA’s that understand international taxation issues and that can save tens of thousands of dollars to your client. Make a specific effort to find them and to network with them if you want to be accessible to the 60% of the buyer market.

Roberto Mazzoni

Banks have become much stricter about appraisals and loan values. Now you really need to be in the know for being able to sell your house for what is really worth and not become a victim of a low ball appraisal that will kill your sale and prevent your potential buyer from getting financing.
Aside from a general tendency in reducing values and incorporating bank repossessed houses into the market evaluation formula, appraisers have now different guidelines to follow in establishing the “real” value of a property and therefore steering underwriters towards an approval or a denial of the loan.

Evaluating houses is becoming more challenging.

I have been recently at an official meeting of my Realtor’s organization in Florida and I have gotten a very detailed explanation from a major bank underwriter of the criteria he follows in establishing whether an appraisal is good and in deciding about every single loan application that comes to his desk.

The first idea he as in mind when he evaluates a case is that the house could come back as an REO (bank owned property) and therefore the current trend in REO properties on that specific market and neighborhood is very relevant. Not only the values of recent REO sales are taken into account, but also the tie it took for those properties to sell and any peculiarity in their location.

For example, houses on a very busy street that contains mixed residential and commercial building are very unlikely to get a loan since the bank already knows that they will be very difficult to sell. They they consider four key factors in establishing the correct value:

1)The comparable sales must not be older than 90 days. If you have comps that are 6 months old or even one year old, you are in bad shape and it is very likely they won’t be considered at all and a new evaluation will be asked or the application will be denied.

2)In order to be considered a real comparable, the sold property must have a size (square feet) that is very close to the subject property: usually between plus or minus 10%. It is actually advisable to have comparables that are a bit bigger or a bit smaller (an approach technically called “braketing”) but you should stay within the 10% variation.

3)Room counts and bathroom counts must be equal. The bank will not consider a 2 bedroom/1 bathroom house as a valid comparable for a 3 bedrooms / 2 bathrooms. A 3/1 could do.

4)Distance is a bit more flexible than before. The usual role used to be that you searched for comparable properties within 1 mile radius from the subject; but now that you need to be much stricter on the square footage and the room/bathroom count, they will allow you to stretch up to 2 miles and, in some rare case, up to 4 miles. This is particularly true when you have very peculiar houses, like water front mansions, and you need to travel some distance to find something really comparable.

Age or effective age (the rejuvenating of a property due to rehabbing) are not very important and the presence of other peculiar amenities, like inlaw apartments (small dwelling units separated from the main house), are usually disregarded in the overall evaluation.

These rules are both important for investors, that now need to consider them when acquiring a property to rehab, for sellers that need to establish a reasonable value for the home, for buyers that need to make sure they can be financed, for appraisers that need to play by this tune if they want to keep their job and for brokers or Realtors that have to improve their evaluation skills to not lose sales.

Roberto Mazzoni

I have reviewed the traffic statistics of my blog and there are 5 articles that have gathered the most attention of my readers in the last few weeks.

Picking the best for you.

Here they are in the order of preference expressed by the readers themselves:

Selling a Home in 21 Days

Which provides practical suggestions for a very needed ability, today.

The top six mistakes in social media

A nice summary of the most common errors people face while dealing with this fascinating new world.

Being captured by the third tribe

An introduction to a completely new way of doing marketing, which is much closer to the spirit of a blogger like I am.

Learning from a magazine publisher

The best advices I have gathered in a long time.

The top ten sites for real estate investing

This is very recent and comes from detailed research I did on the subject, which gives a very complete description of the various different approaches.

Roberto Mazzoni

Recently I met a Realtor who works part time, only in the morning, because she has a regular job in the afternoon. She meets only motivated buyers that are contacting only her to show them very well targeted houses, that means one or two, that they buy in a couple of weeks paying cash.

Real estate doctors.

She spends few hours researching the properties based on very well detailed specifications of her clients and then she spends a few hours showing them to the buyer and, since it is a cash deal, she has no problem getting the seller to come to terms, and she earns her commission every single time.

No driving around tire kickers, no financing issues, no changing minds and most of all no delays. This is all real and happening in today’s market right here in Florida, where I leave, that is one of the most distressed real estate markets in the nation.

Would you like to be in her shoes? I bet you do! How can you get there? Well it’s time to thinks of of the box and get out of the typical “vertical niche” approach that Internet Marketing has tried to force on us (because it works to well for affiliate marketers) but that doesn’t really apply to real estate selling.

This lady, who has been in real estate for a long time, has developed an horizontal market niche approach. In her professional career she has also worked for some major pharmaceutical companies and has developed personal relationships with many medical doctors that were dealing with her for other types of businesses in which they were ALSO making money.

This has created very good personal and professional relationships and who do you think these medical doctors go when they need to sell or buy a house? They go to her of course. Therefore she has only a very definite set of clients, which all belong to the medical profession, and that entertain her services in real estate due to her license and knowledge in that field also.

It is a very simple and dynamic concept that will assure her a market forever. She has created her buyers’ list first and now THEY go to her asking to buy.

Could you develop something similar in your own market? I bet you can. You say you don’t have experience? What’s the matter? It is not important what you know, it is important who knows you. Once you have the relationship secured, you can get mentoring or training and get up to speed.

Roberto Mazzoni

P.S. If you have some aspect of real estate that you don’t quite understand and would like to get some help. Drop me a comment on the blog or on Twitter and I will get back to you.

Today I participated to my local real estate investor association meeting (you see a short video below). The consensus amongst the active investor present there are at least six strategies that are working TODAY in the current market to sell a house.

There are at least six different ways for selling a house today.

Not all of them work equally well in all markets, but again real estate is a field that requires judgment and you will need to figure out by yourself what works for you.

The six strategies are as follow:

1.FHA loans are the king of the hill since they provide a very easy way for home buyers to get into their new home. The qualification process is somewhat stringent: they need to have at least 620 credit score and the house you are selling need to appraise correctly, otherwise they will not get the loan and you will have to reduce the price to what the appraiser has established to drop the deal. Yet there are is a big number of buyers in this category that are using this system.

2.Cash buyers: they are still pretty much around and looking for very good deals, therefore you need a house in good shape that is below current market value (let’s say 80% but this is just to give you an idea – there is no fixed number). Domestic cash buyers are estimated to be 40% of the buyers out there.

3.Lease option or rent-to-own buyers. These are people who can’t qualify for a loan yet, but could qualify later, once they have corrected their credit score. They usually get in the house by paying an option fee (often non refundable) and them by paying rent every month untile they can get a loan and cash you ouy.

4.Seller financing is still one of the preferred techniques in creative real estate transactions. You need a seller who owns the house free and clear and who doesn’t need all the money right now. It is the fastest way to get a buyer since you bypass all of the lending process, but will tie up you capital for a longer time.

5.Foreign cash buyers: they are not so common but yet are out there and can pay cash for close to full market value, if you provide them all the needed services for a long distance transaction and for the subsequent management of the property.

This shows that the real estate market is still alive and kicking even if the rules of the game have changed.

Roberto Mazzoni

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