Capitol City Foreclosures Blog

Your Questions Answered, Sort of!

November 14, 2008

Recently I was contacted by a gentleman in Chico who has about a year before he’s ready to move to the Sacramento area but asked a very good question about the Sacramento real estate market.

Because he won’t be ready for a year and wants to make the most of the current market opportunity, he asked,

“Do you think there’s serious threat of a significant rebound in the housing market over the next year?”

This is a good question and a tough answer. No one really knows what the future holds. Based on how things are looking, rising unemployment, the credit markets being pretty tight at the moment and the economy for all intents and purposes in a recession, it’s very hard to predict what will happen over the next year.

In the beginning of 2007, the “experts” said that the market was going to rebound and begin to bounce along the bottom. The “experts” all agreed that this would occur. That didn’t happen nor did we come close to that happening. In the beginning of 2008, I was working for a new home builder and they were saying that we were at the bottom. That didn’t happen either.

The correct answer is, and no one likes to admit it but it’s true, I don’t know. I have only a vague idea of what’s possible as anyone with any sense will tell you.

Change Is In The Air

I’ll say this, I’m glad the election is behind us.

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How to Get an Offer Accepted on a Home in Sacramento – Part 3

November 10, 2008

Part 3 – Terms

The terms of your purchase agreement is the final thing to consider when making an offer on a home in Sacramento. The more favorable you make the terms for the seller, the more likely you’re offer will be considered. Having said that, if you have good terms and an offer price that doens’t fit your financing, down payment while taking into consideration how long the home has been on the market, you’re missing the point.

The terms of the contract, while important, don’t mean as much as the offer price and financing. Every offer I write has the bank paying all costs with exception to the escrow fees which are split. These costs aren’t significant enough for the bank to reject the offer outright if the offer price has been properly selected with one exception…..

The Big Ticket Item

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How to Get an Offer Accepted on a Home In Sacramento – Part 2

November 9, 2008

Part 2 – How Your Financing Affects Your Offer

Once you’ve established a price to offer price range based on the considerations in Part 1 of this article, you’ve got to understand how your financing is perceived by the seller and to narrow your offer price. Many people who have good credit feel that this alone should be good enough and that their offer should be considered regardless of the price.

That’s fantasy.

The sellers (in our market, the banks) focus on the bottom line number. Which offer will make us the most money on this asset. Everyone is submitting pre-approval letters or all cash offers. Constructing your offer so that it’s favorable to the seller is crucial to success in this market. Here’s why:

The banks have no emotional investment in the homes they are selling in the Sacramento region. They want to get these assets off their books. For the most part, they price these homes below market, meaning that they are already discounted, to attract multiple offers. Whenever multiple offers occur, the price goes up but very rarely above the market price and if it does it’s only by a fraction of a percent.

Don’t feel that you’re not going to get a good deal because there are multiple offers. Every home out there sells for the market price based on it’s condition and location. At worst, you’ll pay the current market price for any home in this market.

The trick is getting your offer accepted and that’s about making it look better than the other offers being submitted by other buyers and their agents. Here’s how your financing figures into the equation.

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How To Get an Offer Accepted on a Home in Sacramento – Part 1

November 8, 2008

Part 1 – Know Your Target

Getting an offer accepted these days on a home in Sacramento can be a bit difficult. There is a art to it and if you understand the information below, getting an accepted agreement on the home or investment property you’re interested in will be easier.

In Part 1, I’ll discuss the important considerations you’ll need to know prior to making your offer. Skip this “pre offer” step and there is a good chance you’ll be wasting your time. This information assumes you have already been pre-approved by a lender.

What You Need to Know Before You Write an Offer

Below is a short list of information you will need to help you make the best decision on what price to offer on a home in Sacramento. There isn’t an order of importance or priority. All of these are equally important and all should be considered together BEFORE making an offer. Every home should be evaluated by a similar standard. This can be done quickly and effectively without a need to view the home.

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Your Questions Answered!

November 6, 2008

“Is a Duplex a Good Investment in Sacramento?”

I got asked this question from a seasoned investor yesterday and I thought it was a great one. I prefer a duplex as an investment property more than a single family home, triplex or fourplex. I like apartment complexes’ the best but of the standard residential investment homes, duplexes are my favorite.

As I’ve said before, any asset, something that pays you monthly AND appreciates is a good investment no matter what it is. Positive cash flow should always be the goal.

Here’s why I like duplexes:

Price

In our market right now, a duplex can be had for the price of the single family home. I’ve seen duplexes in the $150K to $250K range that cash flow with 20% down in good rental areas. The foreclosure market being what it is, there are plenty of renters out there right now to fill these homes.

My investor client and I looked at 4 duplexes in the Sacramento area yesterday. Everything we saw could cash flow with 20 to 30% down. Most needed a little repair work to bring them up to “nice”. One we saw, priced at the $175K range was in need of a good cleaning but other than that, it was ready to go. Nice tile, slightly upgraded, it was a perfect rental. With 30% down, the payment came out to be about $850, principal and interest only. Each side produces about a $1000 a month in rent maybe more with a little upgrading and cleaning.