Sarah Jarvis Team at One South Realty

at One South Realty

Buying

What Does A Buyer’s Agent Do?

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representA buyer’s agent works for YOU when you buy a home.

When we say ‘works for YOU‘ we mean that it is YOUR interests that are the primary focus. While all agents are supposed to be on their best behavior when it comes to no lying, cheating or stealing, the difference between a BUYER’S Agent and a SELLER’S Agent is whose pocketbook is being looked after.

A BUYER’S Agent’s sworn goal is to help you pay as little for a home as possible. A SELLER’S Agent is trying to get you to pay as much for the home as possible (to the benefit of the seller, obviously.)

But how can this be so? A house is worth what a house is worth, correct?

It really depends.

The comparable sales that are shown to buyers and/or interpreted for them can be made to illustrate vastly different values. Comparing a home to others which have varying degrees of applicability can yield radically different (yet TOTALLY believable) results and it is the job of your advocate to understand this.

I would rather save the commission…

Doesn’t really work that way.  The listing agreement is between the seller and their agent, not between you and the agent.  Odds are, you are getting no representation and the agent is getting the entire commission.  They would LOVE to help you, obviously.

I don’t want to tie myself to any one agent…

Then in essence you are tying yourself to every other agent you meet.  If the LISTING Agent thinks you are not working with a BUYER’S Agent, then you will get their full force sales pitch on both why their home is best and why you should use them as the agent.  Once they know you have chosen a BUYER’S Agent, the dynamic changes as they know they are dealing with an informed consumer that has an advocate.  Facts are forthcoming and the constant sales pitch ends.

Don’t Trulia and Zillow show sales?

Trulia and Zillow can be described as ‘helpful’ at best and ‘wrong’ at worst. In effect, a computer located in San Francisco and/or Seattle is telling you the value of property in Richmond.

Would I use them IN my analysis?  Sure.
Would I use them AS my analysis?  No.

By their own admission, only 90% of the value estimates fall with 10% of the actual value.  Stated differently, only about 90% of the time, these sites can tell you that a $400,000 home is worth between $360,000 and $440,000…and 10% of the time, they cannot even get that close.  And it sure would be nice if they told you which ones were the really bad estimates…

But I get an appraisal, right?

Sure, but the appraiser knows the sales price going in and in most cases, the goal is simply to justify the sales price to the lender. If the appraiser had no idea as to the contract price prior to the appraisal, it would have more value and thanks to the Dodd-Frank legislation, lenders have little control over who is doing the appraisal.  Do you really think it is a good practice to have a Goochland Appraiser valuing properties in Church Hill?  It happens all of the time.

So you are telling me that Realtors determine price?

Far from it.

Realtors, much in the same way as appraisers, look to the comparable sales to help EVALUATE the price of a potential home, but ultimately, the market sets the price and it is the agents job to help you interpret all of the data.  Where an appraiser is trying to justify the value of a home at a specific point in time, they have no obligation to communicate to you the factors at work that can impact values in the future.  Understand that your agent has seen the same inventory and seen your reaction to it.  They understand your motivations (or at least they should) and they know your goals.  Most importantly, a good agent will help you to understand the things that drive value in your marketplace.

So how do we find a good Buyer’s Agent?

The key to understanding a GOOD Buyer’s Agent is to interview them. Ask about their background and how they help interpret values. Find out how they see the world and if their style matches yours.

  • Can they compute an absorption rate?
  • Can they band $/SF?
  • Do they recognize different builder’s signature styles?
  • Do they understand development momentum?
  • Do they know inventory levels?
  • Can they communicate the underlying market dynamics?

Invest a few minutes in an interview and see just how capable your agent is. Compare them to others and see if the advocate you have is the right one for you.

 

Flipping Houses in a Static Market

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flippingAs we find 2010/11 a smaller and smaller object in the rear view mirror, the real estate world appears to be returning to some sort of normalcy.  The number of foreclosed properties is down as is the number of short sales. As you can see below, the number of REO Properties (Bank Owned), while still available in numbers above the levels before the adjustment, are still down considerably from darkest days of 2010 and 11.

The impact of this is twofold.

First, the opportunity to find cheap homes is far lower now than even 2 years ago.  Foreclosed properties (a list can be found here) have always provided the ‘flipping’ community with ample numbers of homes to purchase, at discounts, to be fixed up and resold.  While several lending rules were put in place to discourage the abuse of the system (which in reality, was another poor policy that prolonged the slump), there were still those that found homes cheaply enough to purchase and renovate despite a still declining market.

The number of cheap homes (and by cheap, I mean priced artificially low for quick sale) in the market are largely gone.  As we move into 2013, the collective inventory of homes for sale, both REO and non-REO, are approaching critically low levels.  Many neighborhoods, especially those mature urban neighborhoods with higher values, are off by 70-80% of their traditional available supplies (see the chart below of inventory levels in 23221 zip code)

 

Secondly, the removal of the large swath of foreclosures from the marketplace means that we should begin to see some slight improvement to the collective market values of homes across the US.  These slight increases will be stronger in some places than others (see the Back to the Future Series) as the the lack of available inventory drives prices higher.  Any market whose property values are increasing is obviously a great thing for ‘Flippers’ as the assets they own are increasing in value during their hold period.

So what does this mean?

It means that prices are heading higher until we size supply correctly and that it will be harder to find homes to flip.  It also means that the community of ‘Flippers’ will need to look elsewhere for opportunity.  Homes with unfinished spaces that can be completed for a reasonable cost and are located within neighborhoods that support the additional value will be an avenue to find opportunity.  The other will be to find homes in need of additions.  The 3 bedroom 1 bath colonials or cape cod styled homes in many of the neighborhoods built during the 1920-1940’s are one area.  Smaller Fan and Museum District homes are also good targets.

The days of the easy ‘Flip’ are somewhat over and in order to continue to make money as a ‘Flipper’ one must become increasingly skilled as a contractor.

Are Foreclosures Good Deals?

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It depends.

 

According to the statistics below, since 2011, in suburban Richmond, the REO market (Real Estate Owned by banks)  accounted for roughly 5.6% of the market (228 of 4,028 sales) and traded at an average of nearly 15% lower ($114/SF to $97/SF), respectively.

 

 

 

If this $16/SF difference is viewed in the context of a 2,500 SF home, then the average price difference is $40,000.

 

Is that enough?

 

It has always been a buyer tendency to over-estimate the cost of repairs.  People that walk into a home that is in need of paint, flooring, appliances and light to medium drywall repair and feel put off by the repairs.  “If the naked eye can see the items in the home that are in need of repair (they reason) then what CANNOT be seen is something that will bite them later.”  It is a legitimate fear but one that is often over-estimated and thus, REO property gets discounted more heavily than non-REO property.

 

Does that mean that you should seek REO property?  This doesn’t suggest that you should or shouldn’t but it does suggest that REO property is treated differently than non-REO property.  It also gives insight to the bank’s view of the property they own and their expectation of the value at which they should sign an offer.

 

The following list contains primarily suburban REO property that is priced between $200 and 800k.  The information on this site may lag up to 48 hours as do all IDX search sites.

 

Contact us at 804.201.9638 (our call policy) for an up to the minute/real time list of all distressed property.

Price per Square Foot | A Critique

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sfThe most important thing to remember about price per foot is that it is not linear.

The next most important thing to remember about price per foot is that it is not linear.

What do I mean?

Just because a 3,000 SF house is worth $400,000 does not make a 6,000 SF house worth $800,000 or a 30 SF house worth $4,000.

So often, people get hung up on price per foot as the absolute gospel when it comes to house valuations.  Price per foot, while a tool that can be very insightful when applied correctly, tends to act as a point of contention to ‘price per footists’ when the price for a home exceeds the price per foot within a neighborhood.  For whatever reason, a price per foot average within a neighborhood tends to drive decisions far more often that it should.

Here are things to take into account:

  • For price per foot to be at its most effective, lot prices, finishes, age, materials and other features (garage sizes, basements) must be very similar.  Examining homes in the same suburban neighborhood with similar features will be a good use of $/SF.  Using it to compare a brick ranch built in 1957 to a colonial built in 1987 is not the right use.
  • Comparing a home with a finished 3rd floor or basement against a home with unfinished areas is wrong.
  • Comparing home built prior to 1940 or so is really not a good idea as time has really eroded the accuracy of the measurement.
  • Using $/SF to compare different builders is also an issue.  Buying a home built by Ryan because it is cheaper by $10/SF than Boone is a very flawed decision.

I like to use $/SF as tool in the following manner:

  • $/SF can be used to establish neighborhood minimums and maximums.  This needs to be looked at in companion with aggregate sales prices in the neighborhood.  In other words, if a neighborhood has a average $/SF of $160 but a maximum price of $300,000, then be careful of a home that is 2,000 SF priced at $360,000.
  • $/SF works really well in new construction within the same neighborhood.
  • $/SF is a helpful tool in renovation or addition properties.  It can help the decision process greatly.
  • $/SF is helpful when it benefits you and a pain when it does not.  I use it to defend appraisals and listing prices or to argue down pricing for my buyer clients.

When the dust settles, using $/SF to make a decision is a bad idea.  When it is one part of an overall analysis, then it can be powerful.

We Bought an Office!

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2012-12-11 12.16.07We recently closed on 2314 W Main Street as the future home of One South.

Sometimes known as the Richmond Kickers Building (as it was at one time the home of the soccer team and the mural on the side and front are well known), it is an 8000 SF warehouse that is being renovated into our new home.

When complete, we will have 4500 SF dedicated to office use and 5 apartments.

 

804.201.9683

How Do I Schedule a Showing?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.
kendall@richmondvamls.net

804.909.0184

How Do I Determine What I Can Afford?

With over a decade of mortgage industry experience, Chris knows what it takes to provide the very best service for each of his clients and truly believes in forming lasting relationships with his customers.
Cowens@southerntrust.com
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Equal Housing

The Sarah Jarvis Team agrees to provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, national origin or sexual orientation of any prospective client, customer, or of the residents of any community. Any request from a home seller, landlord, or buyer to act in a discriminatory manner will not be fulfilled.

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All of the information displayed here is deemed to be gathered from reliable sources but no warranties, either express of implied, are made part of this site. Additionally, the IDX Feed for listing information may contain descriptions of properties not represented by One South Realty, its agents or staff and any violations or misrepresentations are the sole responsibility of the listing brokerage of the subject property in violation.