Real Estate Customer Life Cycle

Recently, my wife and I have been searching for new tenants for our rental property.   That’s an irritating customer cycle.   We’ve had more no-shows at the showings than we’ve had prospects show up.   Most people who call seem to think that the rent on a 2 bedroom, 1.5 bathroom house with a big yard and a 3 car garage 5 minutes from downtown Minneapolis is going to match their little subsidized Section 8 apartment.

Not going to happen.

So we keep looking.  In the meantime, it’s interesting to look at how a real estate trainer breaks down the life cycle of a customer.

Enjoy!

NEC Online Degrees

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Buying a Fixer Upper House

English: Fixer Upper in Dorena

English: Fixer Upper in Dorena (Photo credit: Wikipedia)

Have you ever thought about buying a fixer upper house? In recent years there have been some great options for people looking to purchase property for the sole purpose of renovating and flipping real estate. There are some great locations with pretty nice houses that have either been damaged or neglected and are now for sale. These circumstances make it difficult for someone to purchase and remodel the house without spending a lot of money. In recent years there have been a couple of options for people who want to buy run down houses to flip. Mortgage companies have come out with different mortgage options for anyone who is looking to invest in real estate. There are loans tailored to meet whatever goal you have when purchasing a house that even allocate funds for renovation. The two that we will discuss in this post are Home Path and FHA 203 (k) renovation loans.

HomePath Loan:

The HomePath loan program was created by Fannie Mae and is meant to offer foreclosed homes to anyone who qualifies to purchase them. This type of loan is great because not only do you qualify for a loan to buy the house but also receive enough for renovations and remodeling. This pushes buyers to purchase homes that have been foreclosed and thus contributing to the real estate market and the economy as a whole. It’s also great for the buyer because it give them incentive to purchase a space that they might not go for right off the bat. Everybody wins.

FHA 203 (k) Renovation Loans:

203K loans allocate funds for the initial purchase of the house along with funds for the renovations. Companies offer low down payments and flexible underwriting guidelines. Almost any kind of residential property qualifies making it really easy to get approved. Many people don’t know that this kind of loan exists but it is definitely something that is not only beneficial to those taking out the loan but also to those looking to get rid of a place that won’t sell on its own because it isn’t visually or aesthetically appealing.

If you are on the market looking for a home, consider taking out a HomePath or 203k loan designed for houses that might need some fine tuning to look their best. It is a great option for anyone looking to flip property and for anyone who wants to purchase a space that might not be appealing upon first glance. Fixing up a place will not only increase the value of your new home but also probably cost a lot less than if you were to purchase a newly remodeled space for market value.

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Selling Your Home: The Real Estate Agent

If you are not able or willing to sell your home yourself, you’ll need to find a real estate agent.  A realtor is someone who deals with all of the hassles involved in selling your home in exchange for a fee of up to 7% of the selling price.

The hassles include marketing, an objective price analysis, advertising on the internet and in newspapers, providing a yard sign, negotiating the sale price, reviewing and filling out the contracts, and navigating the entire process for you.  The aren’t meaningless duties, so make sure you are getting what you pay for.  You need to find the right realtor for you.

The key to to ask questions, particularly the right questions. You can ask the wrong ones if you’d like, but they tend not to help much.

Helpful questions include:

  • “Can I call your previous clients?” If the answer is no, run away!  If the answer is yes, get the list and call them.
  • “Have you sold any homes near here recently?” Get the names and numbers of the customers and call them.  Find out how it went and what they wish would have happened differently.  If the realtor hasn’t sold nearby homes recently, keep looking.
  • “Will you put your sales strategy in writing?” If it’s not in writing, you may be left paying the full commission, without getting the full promised service.
  • “What will you tell a potential buyer that wants to negotiate?”   Make sure you and your realtor are on the same page.

Now for some secrets that realtors will not volunteer.

  • The selling fee is negotiable.  If you live in a popular development, or if nearby homes have sold quickly, you should be able to get your fee reduced a couple of points.
  • You don’t have to sign an exclusive listing agreement. With an exclusive agreement, you will pay the realtor a fee if the house sells.  Period.  With a non-exclusive agreement, you can list with several agents and only pay the one who actually sells your house.  If you find the buyer, you won’t pay a selling commission at all.

Selling your house can be intimidating and realtors are there to make the task easier for you.   Have you had any problems with real estate agents?

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Refinancing Your Existing Loan to Purchase An Investment Property

Many people are looking at the housing market slump right now as an investment opportunity.  Here are a few of the things that you need to know before getting a new home loan or refinancing your existing loan in order to make that happen.

 Amount You Want to Borrow

 A lot of borrowers go shopping for real estate and have exactly no idea how much money they can borrow. One of the first questions that you need to ask before going real estate hunting is how much can I borrow. You can ask a bank, lender, or financial institution to give you a ballpark figure of the amount of loan that you would qualify for. This will make it easier for you to narrow down exactly what type of property you can afford and what areas you can concentrate on.

 Amount of Interest You Will Pay

 Too many people are overly concerned with the purchase price of the home that they are buying. They fail to find out how much interest they will have to pay back to the bank in order to make their home ownership dreams come true. This is where a home loan calculator can be really useful. You can find out exactly how much interest you will repay over a 10, 20, or 30 year loan time period. You can also change the interest rate and down payment amount on those calculators to see if you can secure a lower monthly payment.

 Credit Score Needed to Qualify

 It doesn’t matter if you are buying a home for the first time or refinancing an existing loan. Your credit score matters. You need to start doing some research now if you want to secure a loan with a really low interest rate. This involves taking the time to see what credit scores traditional lenders are looking for and doing the work necessary to qualify for this loan. Your credit score will make a big difference in determining if an investment property purchase is a profitable endeavor or one that winds up costing you money. It will depend heavily on what kind of loan your credit score allowed you to negotiate.

 Make the Choice

 Once you know how much you will need and exactly how much you will be paying out over the life of another mortgage, you can decide whether you want to refinance your current home loan to get another one.  Adding on another huge debt to an existing one is a big risk.  Make sure to think it through fully before jumping in.

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