KC Metro Housing Stats — Ten Years of Septembers

September Fast Stats

Hi there, everyone.  Hope you are doing well today.

Fair warning….This might be my wonkiest blog post of all time.  If you aren’t keen on charts and statistics, I’ll catch you on the next blog post and hope you have a great day!

For those of you that stuck around…..here we go!

Looking at the full month of September fast stats, the months of supply is still deep in seller’s market territory and the inventory (active properties on the market) is again lower when compared to the previous year at this time.  What’s new, right?  We’re in a seller’s market.

This lower KC Metro inventory (properties for sale), coupled with a consistent demand, is causing these tremendous gains in sale prices, lower days on the market, and a race for buyers to get under contract rivaled only by the Oklahoma Land Rush of 1889.

I’m so used to seeing that downward arrow on inventory on the monthly updates, I wondered when was the last time we saw an increase or even holding the line?  That began my search for “10 years of Septembers” in our KC housing market.

Inventory

The top chart on this blog post shows 16.7% less housing inventory than the previous September.  They are combining new and existing homes to get that figure.  That’s fine for a quick glance, but I researched those two groups independently to get a better idea of how they have looked over the past decade.   This chart shows that almost every month of September Fast Stats indicated a decrease in inventory when compared to the same month/previous year.

Between 2007 and 2009, both new and existing home inventory was on the decline….no shock considering we were in a housing crisis at the time.  Sellers didn’t want to sell at lower prices and credit was drying up for new construction projects.  Except for a jump on existing home inventory in 2010, we continued to lose ground year over year until 2014.  I’m speculating that the bump on existing home inventory in 2010 included sellers that could no longer wait for prices to increase before they had to sell plus the short sale/foreclosure inventory flooding our KC market at that time.

By 2013 and 2014, existing home inventories had lowered to the level of home buyer demand —  a neutral market not really favoring the buyers or the sellers.  Wow,  did things change from 2015-2017.   Existing home inventory just kept right on dropping and that, coupled with a home buyer demand that didn’t let up?  Welcome to the seller’s market.

The chart below makes the point a different way.  Instead of percentage changes, it shows the number of homes for sale.  Notice the almost continuous reduction from 2011 to present.

Number of Homes for Sale

So why have existing home inventories continued to drop?  Simply put, “why do we have fewer owners selling in our metro?”  It isn’t valuation.  Seller’s could enjoy tremendous sale prices on their properties so this isn’t a waiting game on a better market.   Is it the economy?  Fewer homeowners need to sell just to capture a profit.   Are investors holding up the inventory they purchased during the slump?  Could be a contributor.  The chart below shows sales on investment properties.  They are trending up as many are wanting to take their profits, but we don’t know how much investor inventory is still out there.  I’m suspicious that there is much more particularly since large syndicates of investors have discovered that the KC Metro is a great place.

Investor Sales

 

I don’t want to paint a picture that lower inventory alone makes a seller’s market.  It’s always coupled with the demand.  Changes in demand would be impacted by unemployment or hints of big companies moving out-of-town, interest rate increases, down payment assistance availability, etc.  Since we aren’t seeing any of those types of signs that would put the brakes on home buyers, the only way this market will even out (in the short-term) is additional inventory.

So why does all of this even matter to Domicile One Realty?   We work with a great number of first time home buyers and this is a rough market for  clients to purchase in.   I would love to give them some light at the end of the tunnel so I’m searching for trends that might point to signs of a change.   It’s impossible to pick the top or bottom of the market, but I am diligently searching for that inflection point/that 4-6 months where our inventory is even or above that of a previous year.   If we can string a few of these together, we might be looking at the beginning of a change.   Believe me, if I see it, I’ll write it up in what I’m sure will be the 2nd wonkiest blog post I’ve ever written.  I’m attending a residential real estate forecast event next week and I’ll make sure to post what we learn as well.

Thanks for hanging in with me on this post and take care,

Terry Jackson  |  Domicile One Realty  |  www.DomicileOne.com  | 913-488-5623

 

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HGTV’s Impact on First Time Home buyers in Kansas City.

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With the recent announcement of the final season of HGTV’s Fixer Upper, it seems appropriate to lend a bit of time on the impact this network has had on KC Metro home buyers….particularly first time buyers.

There is no denying that HGTV has inspired countless home buyers and owners to restore properties…bringing them back to great condition and benefiting their neighborhoods with an increase in both curb appeal and property valuation.  The before and after photos of some of these properties is simply stunning.

As a Realtor, I love it and hope it continues for as long as possible.  Another perspective I get as a real estate professional are the different types of buyers that look to bank-owned, short sales or properties in poor condition where no repairs are being made.  Basically, it is these types of homes that are typically the canvas for “HGTVers” to paint on.  Having the inspiration is one thing….acquiring the property, however, is very much another.

So what type of buyers are purchasing these “fixer upper” homes?

Buyer #1 — The Investor

Their profile is fairly straightforward.  They are buying with cash and they typically have a team they work with on renovation/repairs or have the skills themselves.  They might decide to rent the property or resell for a profit. (Click here to see our previous blog posts on purchasing investment properties).  This ain’t their first rodeo and they know what they are doing and how to maximize their purchase.

Buyer #2 — Non-investor purchasers (owner occupied) who specifically want a rehab home.

They want to occupy the property and are looking for a value.  They don’t mind the hassle of repairs/rehab.  They are either purchasing with cash or have a specific type of loan suited for the property condition they are getting into.  (ex.  Limited FHA 203K…click to go to the FHA site to learn more about loan summary and specifics).  These are wonderful products that allow you to acquire the property and the costs of the rehab in a single loan.

The big takeaway for this type of buyer is simple.  They are clear on what they want and they have done the legwork to acquire it.

They might find themselves competing for a property with investors, but at least they have the correct loan for the property condition they are going for.  In some scenarios, these buyers don’t even need to compete with the investors.   If you go to websites such as the HUDHomeStore, you will see that new listings always have an interval where only “owner occupied” buyers can bid.  This allows a non-investor a window to get their offer in and under consideration before they have to worry about the investor group.

Buyer #3 — Non investor, owner occupied who are financing the purchase… that sort of back into this space.

In a hot seller’s market, I know that buyers get frustrated having to race around to get a look at a house only to find they are in a multiple offer situation…again.  That is simply the reality of our KC Metro market right now.  Some of these buyers throw their hands up and begin to look toward what they perceive is a calmer segment of the market….bank owned properties/foreclosures and short sales.  Why not, right?  The price tag looks attractive, these don’t always fly off the market like a move-in ready home, and they feel somewhat empowered by what they see on some of these shows.

It is perfectly fine to switch gears, but it is this classification of buyer that is about to discover an entirely new process in their home buying journey.  If you want to step into this space of rehab and fixer upper, your loan product may very well have to switch gears too depending upon the property condition.  Some loans are just not a good fit for a property in need of repairs.   Remember that the lender will be sending out an appraiser to assess valuation (purchase price) and condition.  A typical FHA 203B  loan is getting appraised on what is…not what will be.

Let’s say that you do want to consider a home to renovate/repair.  You now know that there are loans that will fit that bill, but not all lenders handle renovation loans.  This means that the original lender you received pre approval from  (back when you were looking at move-in ready properties) might not be the one that gets you to the closing table.  The earlier you can speak with a Realtor or Lender on this topic, the better.

Summary:

As with all topics on this blog, you get the idea that preparation is critical in your home buying journey.   We don’t expect you to have this knowledge and know everything about these types of purchases beforehand.  We simply encourage you to reach out to us so we can advise you of your many options to get to your goal.

You may very well have a great rehab story to tell one day and we want to do all we can to help you achieve that.

Please don’t hesitate to contact us with any questions you have on this topic.

Take care,

Terry Jackson  |  Domicile One Realty  |  www.DomicileOne.com

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Is the KC Real Estate Market Showing some Signs of Softening?

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This past year and a half has been so crazy for our local real estate market.  Just a runaway for the sellers.  If you look at the sales data today, there is no doubt that the sellers are still running the board.  Still, I’m starting to see the tiniest signs of change.

 

Example #1 — The pace of sales is declining.  Only by the tiniest increments in our metro area, but that is the direction it is heading.  Granted, if it continued at this rate, we’d still be in a seller’s market for another year or more, but maybe it won’t be the insane pace it is today.  How would this look in practical terms?  Buyers might be able to think about it for a day or two!  Buyers might be able to get a second showing with friends and relatives!  They still might have competition on their offer, but they might get some additional time.  That is something they don’t get much of now.

Example #2 — The builders are back.  New residential single-family housing permits continue to trend up.  The Home Builders Association of Kansas City’s August report includes an article showing that single family home permits are up 10% over last year.

With supply increasing year over year,  this can only help our beleaguered buyers.

Example #3 — Some buyers are hitting the tilt button.

In the current market, if a buyer sees a home that has been on the market for 20 days (and is at all informed on current rate of sales), their initial reaction is usually “what’s wrong with it?”.   Could you imagine that just a handful of years after the housing “incident” (where good homes with fair prices sat on the market for a year!), we’d be hearing this type of comment?  Just shows how things do change.   More than a few times this summer, we would run into this situation.  When I’d inquire with the agents on the days on the market, we’d hear stories like the buyer got out of the contract after inspections with no repair requests.   They just got out.

This could be caused by many things no doubt, but I’ve wondered if the buyers might have initially been elated that their offer was accepted only to later regret what they had to offer to BE the primary contract.  Over this past spring and summer, buyers not only had to hustle to get to the showings before the house went under contract, but put in a mighty strong offer to be considered and full list price doesn’t do it in most scenarios.

Note:  This is why we prepare our buyers for this current market, but stress to them to make an offer that they will feel comfortable with whether they get the contract or not.   Not easy to do, but we want to get them into that mindset.

None of these examples alone or combined, will flip this market overnight.  And with more syndication of buyer groups investing in rental homes in large scale, we might see a new normal when it comes to available supply in the KC Metro.  For the time being, however, those of us that work with buyers will still be lacing up our running shoes!

If you ever have questions about a more specific area of the city, we’d love to hear from you.

Best regards,

Terry Jackson | Broker-Owner at Domicile One Realty | www.DomicileOne.com |

 

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KC Metro Area Drop sites and pickup for Limb Debri

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Hi everyone…..Hope all are well after this crazy week of storms we’ve had around here.

I’ve gathered some of the area city website links if you are need of limb/debri pickup or drop off locations.  You will want to check closely on these links for instructions.  Most city drop sites require proof of address and some have restrictions on contractors.

KCMO

 http://kcmo.gov/neighborhoods/leafbrushdropoff/

KCK

http://www.wycokck.org/Home/News-Slider-Data/Large-Set-One/News-Title-(2).aspx

Olathe

I didn’t see anything on their website, but direct number is 913-971-8600

Leawood 

http://www.leawood.org/public%20works/curbsidelimbpickup.aspx

Prairie Village 

http://pvkansas.com/Home/Components/News/News/3528/31?backlist=%2f

Overland Park 

https://www.opkansas.org/

Grandview 

I didn’t see anything on their website, but direct number is 816-316-4800

Belton

Could not find info on their webpage.  Direct # is (816) 331-4331

Shawnee http://www.cityofshawnee.org/WEB/ShawneeCMS.nsf/vwNews/743FFD791BB14AF78625812400557129?OpenDocument

Independence

From their Facebook account…..

 

If you don’t see your city on this list and need help, please reach out to me and we can see what is available in your area.

Take care,

Terry Jackson — Realtor at Domicile One Realty — 913-488-5623 — www.DomicileOne.com

 

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Tips on selecting your Real Estate Buyer’s agent in this Sizzling Hot Market.

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Hi everyone!  With the sizzling Kansas City weather lately, I’d say one question to ask your buyer’s agent is….”Can you handle this heat during the showings?”  Just kidding.

Back to the sizzling market though and what you need from a buyer’s agent:

#1 — Preparation.

Your buyer’s agent is going to need to walk you through the process of home buying, approximately how much you will be spending and what part of the timeline you will be spending it at.   It is worth it to spend 30-40 minutes discussing process prior to when you start to house hunt.  Why? Things move quickly once you start your showings and you want concepts to be familiar.  Another Why?  You might be eligible for down payment assistance in Missouri or Kansas and we can make you aware of area lenders that participate. Click to go to Missouri Housing Commission Programs.

#2 — Experience in both transactions and the area market.

This is a must.  Your agent needs to be familiar with many types of transactions (private, probate/trust, HUD, Fannie Mae, Freddie Mac or local bank owned) and the ends and outs of each.   Our buyer clients are committing their time and their money and need someone that can get them to the finish line without squandering either.

The area market experience is more than just area sales comparisons.  It’s understanding the pace of the market as well.  Things are moving quickly now and your buyer’s agent will need to be just as quick to get you to showings and get offers together.

#3 — Responsiveness….are you getting your calls and emails returned?

Number #1 complaint against Realtors is this issue.   Simply put, this is a must if you are going to be successful as a buyer in this market.   If you have homes you want to see, your agent will need to jump on those to get showings scheduled.   Once under contract, this agent will be responsible for critical timelines and you don’t want any surprises.

#4 — Do they have a good track record?

Check out their referrals and see what past clients think.  Are they involved in their local associations or city chambers of commerce?

#5  — Interview several agents before you select one.

Look for that experience PLUS communication skills and rapport.    You want to work with someone that is enthusiastic to walk this path with you.

Hope this is helpful to you and please do not hesitate to contact us with anything you need in your home search.  We would be thrilled to be one of the buyer’s agents that you choose to interview with.

Take care,

Terry Jackson — Domicile One Realty — www.DomicileOne.com — 913-488-5623

 

 

 

 

 

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First honey bottling of the summer.

bottled honey

Hi there, everyone. Fingers crossed….It looks to be a good year for our honey production.  We were able to start some bottling last weekend and we got about 25 pounds off each hive (ten frames per hive).  It’s that nice, light, early summer hue that you get from the bees foraging on clover.

As those of you that are bee hobbyists are aware, you never really know what each season will bring and you learn something all the time.  As an example…I haven’t been very good about mowing around the hive boxes this season and some of the weeds got a bit high.   Because of it, ants were easily able to get into the hive box.  I learned that cinnamon can take care of that issue.  Who knew?

We hope to get another harvest in late summer or early fall.  Where we live and keep the hives (Northeast Kansas), we are fortunate to have a great deal of clover and a good variety of wildflowers.  This keeps them foraging for quite some time.

 

Our bottling process (remember, we are hobbyists), is to simply drive out to the property with plastic containers with lids.  We open up the super (that’s the top box) and take out the full frames that are sealed with beeswax.   These are put in the plastic containers with the tops put on.  We take them back to the house and begin to remove the beeswax layer with a hot knife and then extract the honey from the frames for straining and eventually bottling.  Once done with everything, we take those same frames back to the hive boxes and put them back in.  That’s what they mean when they say “raw and unprocessed”.  It’s wonderful to give a bottle of honey to a friend on Wednesday and share with them that it was in the hive just days ago.

Tips:

  1. If you are bottling for the first time, you will learn all of this very quickly, but this might save you some headache.  When you are working with the frames where you are bottling, everything you touch will get sticky.  Bottoms of shoes, doorknobs, absolutely everything so have plenty of wet, warm hand towels around before you begin.
  2. I’ve seen those wonderful movies where the “bee whisperer” just reaches into the hive and pulls out the honeycomb.  That is a movie.  These bees have worked long days to store that honey and they are not happy about it being robbed.  You absolutely need protection — suit up with veil, full suit and gloves and have your smoker ready to go to.

 

Hope you all have a wonderful weekend and please don’t hesitate to reach out if you need anything.

Take care,

Terry Jackson — Realtor and Broker Owner at Domicile One Realty

913-488-5623

 

 

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Is an Investment Property for You? — Pt 2: Flips

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Hi there, everyone.

This is a continuation of our discussion on homes as an investment.  In Part 1, we discussed an investment property as a rental with some tips and suggestions.  Today, we cover purchasing a home to update/upgrade and then bring back to the market to sell at a profit — flipping.

There are some companies here in the metro that do this exclusively.  They purchase  20-30 homes at a time and have the resources to renovate/update efficiently and profitably.  They watch the market closely and know when to get into a purchase so that they may maximize their profit.  In the seller’s market that we have right now, many of them are sitting on that cash waiting for the market to neutralize.

You do not need to purchase 20 at a time to participate in this type of investment, however, there is much to be learned from those that do this exclusively.

#1 — Do the math.

Flippers are looking for homes that need work.  Sounds obvious, but it is worth stating that you don’t want to by a move-in ready home with upgrades already completed and think you can simply mark up the price and resell.  Even in this market, that is not a sound strategy.

You want your net proceeds at sale to cover your purchase price and any costs to renovate/upgrade/repair/finance plus some type of profit that will justify your efforts on that project.  You want to know what number that is before you go into any purchase.

#2 — Get expert advice

— Bring your contractor along with you on your showings of potential purchases.  Get their take on renovation and repair costs.  Every home will have a different set of issues.  You will want to consider padding your budget somewhat for those overages and gotchas that come up.

— If you are not paying cash, talk to several lenders about options.  If you are financing, you will have interest and fees that will work against your bottom line so shop around.  There are more and more “hard money” lenders popping up where they understand this process and offer short-term loans.  Their rates can be a bit eye popping, so you need to really know what you are doing so that you can complete your renovation and sale on time and on budget.

— Talk to your realtor about area sales prices on homes that have similar floor plan and features you intend to provide when you sell.  Ask them what the monthly sales trend is in the area you are considering.   Talk to them about how you intend to purchase the property.  If you are financing, ask them if they have concerns about appraisal based on condition of the home with your specific type of loan.  Finally, run your repair list by them.  I have seen flips that have beautiful kitchens and bathrooms, but I could stick two fingers into the cracks I saw in the basement walls.  Buyers care about the bones of a house as well.

#3 — If you are new to flipping, avoid an emotional decision.

All of the leg work described in sections 1 and 2 is necessary for you to make a good decision about the property you are considering.   It is exciting to move forward on an investment property, but remember that it is just that….an investment.  You want to make sure that the estimated return on your money is worth the time and headaches that you will inevitably encounter in any renovation project.   Don’t change your criteria just to get that specific home under contract.  If it doesn’t meet your formula, there will be others that do.

As always, please feel free to call with anything you need.

Take care,

Terry Jackson — Domicile One Realty — www.DomicileOne.com — 913-488-5623

 

 

 

 

 

 

 

 

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The Bees are Getting Busy

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Hi there, everyone.  Hope that you had a wonderful weekend.  I thought I’d add a new Spring thru Late-Summer segment on this blog on the bee hives.  There always seems to be some interest in how the hives are doing and this might be a great forum to share and provide a bit of knowledge on beekeeping.  It really is a very interesting hobby and a fun thing to do with friends.

We have three hives on some acreage south of Paola.  We would keep the hives in our backyard, but our city does not allow that.  There are numerous municipalities within the KC Metro that will let you keep hives on your property so, if you have interest, you might want to check your city’s ordinance and find out their requirements.

The clover is coming in and, with the Spring warm up, the bees are out foraging/collecting nectar.  We went out and looked at the hives yesterday and they are very strong.  This is the time of year we add a box on top of the hive called a “super”.  This box is has 10 frames of comb and is where the bees will store their nectar.  Once they fill the comb, the bees will cap it with beeswax.  These storage areas (frames) will be collected when full.  Sometimes, when the hive is very strong, we might add two of those top boxes (supers) if they are running out of space to store.

One item I’d like to note.  This time of year is what is referred to as “swarm season” for the honey bees.  Sometimes, a large section of the bee colony will take off with the queen.   Since they aren’t in the hive any longer, they will need to be looking for a new domicile so to speak.  If that turns out to be your tree limb in the backyard, or the eves in your attic, you will want them out of there.  The photo above was a swarm hive that we collected and took out to the farm.  You can see that they had begun to build out their honeycomb.  Call us and we will put you in touch with a swarm removal company (yes, that is a thing) or we will do it ourselves depending on where they are.

Looking forward to our next post and the progress over the summer!

Have a great week,

Terry Jackson — Realtor and Broker Owner of Domicile One Realty

913-488-5623      www.DomicileOne.com

 

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Is an investment property for you? Part 1: Rentals

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Hi there, everyone.  We are going to cover investment property purchases and, specifically, rental properties today.  I own investment property and I property manage it myself so what I’m sharing with you I’ve learned from professional education as well as the school of hard knocks.  There are several topics, however, that you will want to speak with other professionals such as an attorney and a CPA to get your specific questions answered.

#1 — Get clear on what you are trying to get out of this?

Investment property is not a “liquid” investment so you will want to get clear on your goals.  Are you looking for a monthly income supplement in the short term, are you simply trying to get someone else to pay off this mortgage (the tenant) so that you may supplement retirement income  or sell it at the appreciated value in 20 years?

Also consider whether you have the right temperament for being a landlord.  If you have the mentality that “someone is living and messing up my house” and you feel that you need to drive by your occupied property 3 times a day, this might not be the adventure for you.

#2 — Selecting the property.

OK, so lets say I select that I want to purchase a property and finance it for 20 years….the tenant(s) effectively pay off the loan for me and I will continue to rent it as a retirement supplement in the future and one day sell it for its appreciated value.  So the goal is clear….now what?

I like to select property that speaks to the masses.  Yes, it is great to have a 5 bedroom home that you can rent for over $3,000, but how many people are looking for that?

Consider this as an example:

1400-1600 SF/3 bedroom/2 full baths/2 car garage/ fenced backyard/good storage areas/good school district/proximity to parks and shopping.

This description checks off a lot of boxes for your prospective tenant.

Who is your customer?  Why do they want to be in a rental home and how does your home solve their problem?    Could be an apartment dweller with pets and sick of paying high pet fees (fenced back yard).  Could be a young family that has outgrown an apartment, but doesn’t have their down payment together for a home purchase (two car garage, storage,2 full bath)

Be thinking about your specific policy on the home.  What is your pet policy?  How many?   What weight?  Know that your individual rules or flexibility won’t take priority over an HOA or your city ordinances/codes so check into that beforehand.  Don’t forget to indicate whether the unit is smoking or not.  Who is going to be responsible for the yard work? Be specific and put that in your marketing materials right up front.

#3 — Financing the property?

Unless you are paying cash or have inherited the property, you will need to know a few things about financing this investment purchase.

Remember when you financed the home you now live in?  Whether it was an FHA or conventional loan, you had some minimum down payment requirement.  FHA is 3.5% and Conventional is 5%.  Well that works for owner occupied homes.  Non-owner occupied is a different animal.  If you are financing through a traditional lender, you will need 20% of the purchase price toward your down payment.

#4 — Attorneys/CPAs/Insurance Agents/Realtors

Talk to the pros to make sure that you are moving forward in a constructive way.  Some suggestions are as follows:

Attorney:  Personal liability, tenant laws, lease preparation, city licensing.

Insurance Agent:  Policy on rental home and any additional liability insurance.

CPA:  Tax time deductions,  tips on organizing accounts for expenses and rental deposits.

Realtors:  Check out 5-10 year property appreciation in the area you are contemplating.

#5 — Budgeting and Property Management

Let’s use an example of an investor purchasing a home with 20% down.  The monthly payment with principal, interest, taxes and insurance is $1000.  You see that rentals in the neighborhood for this type of floor plan go for about $1400.  So far so good.  We can’t go run out and spend that $400 bucks just yet.  You will have repairs, maintenance, some annual fees (ex. cities have rental licensing applications/fees,  if you form an LLC you will have fees for that as well).  You will also want to save some of your monthly profit toward things that you know are coming some day…new furnace/ac, roof, driveway, tree trimming.  These are just examples and I’m not trying to discourage you, but give you an awareness.

The main takeaway here is that we don’t want you to be in the negative each month right off the bat.  If your monthly payment is almost the same amount as what you can get in rent, that home is not going to be a good candidate.  You absolutely want some cushion there.

One other item to consider.  Are you going to market the property, screen the applicants and property management yourself or are you going to hire a service?  There are many property management companies throughout the KC Metro.  Some only do property management and others are real estate brokers who also offer prop management services along with their other offerings.  If you are the sort of person who does not want to deal with the day-to-day operations of managing your rental, you might prefer an arms length solution such as this.  I would recommend that you shop around on their fees and check reviews and client testimonials.  Some will do it all for you or you might just want them to market/show property/screen applicants and you handle all the maintenance calls.

Safety Note:  One item I’d like to stress.  If you decide to market the property yourself, please use caution in your showings.  You will be contacted by people you do not know to meet you at this home.  Never go alone…bring a friend or two along and make the caller aware that you will be doing just that.

#6 — Are you a good landlord?  Keep a good tenant happy.

Your tenant wants what you want in a service provider. Good quality, reasonable prices, good customer service and quiet enjoyment of the home.  It’s not just good karma we are going for here.  This is a business and we want our properties to stay occupied.   Remember that cushion between rent and monthly payment we talked about above?   There is zip cushion if the unit is empty.  Not only is an unoccupied property costly, getting it prepared to go back on market costs money too.  Tenants do move on and people don’t stay forever, but certainly don’t let your own demeanor and customer service “style” be the cause of that.

We’ve covered a lot of material here.  Please feel free to give me a ring to discuss and I’d be happy to help you house hunt to find your property.

Take care,

Terry Jackson  —  Broker Owner — Domicile One Realty — www.DomicileOne.com Terry@DomicileOne.com

 

 

 

 

 

 

 

 

 

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Tips for buyers in a hot seller’s market.

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Hi everyone.  As we have shared over and over….the seller’s market continues in the Kansas City Metro.  Great news if you are a seller….you will be getting a great price and won’t be on the market very long.  If you are a buyer trying to get under contract, you are going to have to show some hustle.

Buyers, there are things that you can still do that will prepare you and potentially put you at the top of the pile when it is selection time.  Some of these things don’t cost any money either.  So let’s review these homebuying tips:

Step #1:  Financing

A preapproval is just a given in this market.  If you can’t write an offer without possession of a preapproval letter, you won’t be a competitive candidate.  Even if your offer is strong, your ability to get financing is an unknown to the seller and a risk they don’t need to take in our current market.

Be skeptical if a lender tells you that they can close on your financed loan in an extremely short amount of time (and I’m talking about days).  Professionals in our industry understand how long the underwriting process takes and claims of a speedy turnaround are often met with raised eyebrows and concern as opposed to happiness.   Most transactions take at least 30 days from contract signing to closing…..45 days is typically a good number to shoot for.

Step #2  Do all you can to avoid being in a multiple offer situation

This is easier said than done these days because if the home is in good condition and priced competitively, it is very challenging to negotiate one on one with the seller.  Listing agents know this and don’t be surprised if you hear that they have received multiple offers and they will all be presented to the seller at a specific date and time.   Ever wonder how a home listed at $200,000 sells for $204,000?  This is how.  Multiple offer scenarios drive buyers to bring their best offers in and some of them offer higher than the original list price to be competitive.

How do you avoid being in a multiple offer scenario?  There is no way to avoid it 100%, but speed and preparation are key.  Preparation is having your financing lined up and it also includes having done some house hunting with your agent.  Showings will make you a better educated buyer….seeing what you like….noticing condition issues with other homes….noticing traffic noises or proximity to commercial areas or schools.  There is no substitute for gaining this knowledge through showings.  Once you have that experience, decisions about whether to move forward with an offer are much easier and come quickly.

Speed is next.  When your agent tells you about a new listing (or you find it yourself), do all you can to get there that very day to look at it and get your offer in as soon as you possibly can.

Step #2  Earnest Money

When you write an offer, it is standard to include a check for earnest money.  This money is deposited into an escrow account and credited back to the buyer at closing.  This signals to the seller that you are “in earnest” and your intention is to perform according to your written contract and make it all the way to the closing table.  Some legitimate items might come up that cause you leave the contract (inspection report items that you don’t like, resolution to repair requests can’t be agreed upon, appraisal doesn’t come in high enough and new pricing cannot be agreed upon) without you losing your earnest money and that is fine.  The main takeaway, however, is the seller wants to know that the buyer has some skin in the game and won’t walk away from the contract if they find a place they like better.

If you know you are in a multiple offer situation, consider a higher amount on your earnest money to make that point.

Step #3  Closing Date

I know that buyers are anxious to get into the homes as soon as possible, but being flexible on this date might go a long way with the seller.  Have your agent ask if the seller’s need some extra time or if they need an ASAP turnaround.  Try your best to be accommodating.  The fact that you even asked about what works better for them will make you stand out and it won’t cost you a dime.

Step #4  Purchase Price

When your agent pulls comparative sale data from the neighborhood, you will know if the asking price is in the ballpark based on recent sales, the home’s overall condition, age of roof/systems, etc.   This along with your own homework of house hunting will make you pretty confident on the offer price.

When the market was a bit more balanced, the back and forth of counter offers could still produce a win-win and there was time to work out a good deal.  With the market tilted toward the sellers, that time is no longer available.  Buyers need to be ready to make a fair, but strong offer right out of the gate because even if your offer is the first one in, others are not far behind.

Step #5  Be able to look back without regret…win or lose.

It never feels good to miss out on a home you felt strongly enough about to even offer on, but it certainly happens in this climate.

I always try to counsel my clients that you want to be in a position of looking back without regret on the offer.  If you your offer is not selected, at least you know that you offered as much as you could and felt comfortable with.  On the other hand,  if you did get it,  we don’t want you scared and nervous because you went too far and put yourself into a hardship.  We are wanting to find that middle ground.

I hope this helps you out and, if you have any additional questions, please feel free to reach out to me.

Take care,

Terry Jackson — Broker Owner — Domicile One Realty                                                   Specializing in First Time Homebuyers

www.DomicileOne.com            913-488-5623    Terry@DomicileOne.com

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