How to Help a Buyer Client in a Tough Seller’s Market

Without a doubt, we in Dallas, Collin and Denton counties, are experiencing the most intense “seller’s market” in our history.  For many years we have been accustomed to a 5 to 6 month supply of available homes from which buyers could choose.  To experience a situation where another buyer might happen to make an offer on the same home that you made an offer on was rare and coincidental.

Today, with only about a one month’s supply of homes on the market, the typical buyer may be competing with four or five other prospective buyers—all submitting a written offer on the same home at the same time.  This situation leads to frustration (at the least) and more than likely panic on any give prospective buyer’s part.

The question now becomes, “how can a professional real estate agent best help their buyer client in today’s tough seller’s market”.  The reality of today’s intense seller favored market means several things to the prospective buyer.

  1. It is not the time to make a low ball offer! More than likely the listing that the buyer wants may attract four to ten written offers within 48 hrs. of being posted on the MLS.  It is not surprising that the lowest offer may at a price above the listed price.  This is not the time to attempt to find a seller who is desperate and who will possibly accept an offer 3% to 10% below the list price.  In effect, the buyer is not so much negotiating with the seller as he is structuring an offer to compete with several other potential buyers.  If the buyer’s offer is too low it will not get any consideration by the seller.  If it is too high the astute seller may reject your client’s offer out of fear that it may be impossible for an appraiser to justify the buyer’s suggested price.  The buyer needs a really knowledgeable real estate professional to help him in a competitive bidding situation.
  2. Don’t lose the competitive bid by a few thousand dollars. Several communities in our market area are experiencing value increases of 1% per month. (This comment is for preowned homes).  Let’s say that you are considering a home listed at $290,000 and with our professional help decide to offer $296,000.  If four appraisers all agreed that today’s market value for the home was exactly $290,000 the market value would likely increase to $296,000 within 60 days from contract date.  Don’t lose the bid over a few thousand dollars.
  3. We are strongly motivated to help our buyer clients decide to purchase a brand new home. Why, because in many communities we are seeing home prices increase by 2% per month (or more).  We recently assisted a prospective buyer submit an acceptable written offer on a 5 bedroom, 3100 sq ft home, at a contract price of $319,000.  The prospective purchaser could have bought the same model home two years ago at a price of $224,000.  That is a phenomenally high rate of appreciation.    If values in that community continue to appreciate at the same rate, this particular home would sell for $454,000 in another two years.  Think this is impossible. No!  It is not.
  4. A comment from lack of knowledge. Every month we talk to a couple who want to buy a larger or more suitable home.  One of these couples might make a statement similar to this. “I think the market is overheated. “  “We may just wait a couple of years until prices come back down.”   These statements do not come from wisdom, but lack of knowledge.  In the past 360 days 13,447 homes were purchased in the submarkets (including McKinney, Frisco, Plano, Allen, Little Elm and Prosper). We know of four new employees who are moving into the same submarket.  The employees from the four employers will alone be seeking over 15,000 homes in the same submarket in the coming one to two years.

The message is clear.  IF you want or need to buy a home in this area, do it now.  You need the help of a professional real estate agent to help you buy the home of your choice.  If you are a seller you do not want to take an offer lower than today’s market value.

Call me to assist you.

Glenda Neel

214 801 1696

Critical Shortage of Homes in Collin County

We are facing a critical shortage of homes available for purchase in Collin County.  As of the date this blog was posted there are 396 homes on the market in McKinney, Tx.  We fully expect that the market for the months of May 2015 will absorb at least 400 pre-owned homes.  Another way of saying the same thing is that every home in MLS today, for McKinney, will be sold in the month of May 2015.  The same critically short inventory of homes is common to not only McKinney but also to Frisco, Richardson, Plano, Allen, The Colony, Little Elm, Prosper, Celina, Anna, Melissa, etc.

Consider the outlook for a couple from southern California who are moving here, immediately, to take a job with Toyota. They have just sold their California home for more than $600,000.  The Husband starts his new job in a week, and the family will be here with their furniture in three weeks.  The husband as head of the family, had thoughts to carefully study various neighborhoods and pick a home to purchase for about $300,000.  They have enough funds from the sale of their California home to pay cash here.

Now that they have met a professional realtor here in McKinney, this family is learning the meaning of a critical shortage of available homes.  The couple has made a full price offer on three suitable homes, only to learn the pain of contract offers significantly above the list price. They are determined to not lose the next home of their choice.  A new residential listing comes on the market and they view the home the first day it is on the market.  Within hours they have signed a written contract offer at a price $10,000 above the list price. They learn their offer has been accepted by the seller and they close on their new home within three weeks of its coming on the market.

Where and when will the above described shortage of available homes end?  Not for a year or two at the very least.  Note that without any influence of new major employers for North Texas/Collin County, we are in a critical shortage market.  Now add to that the following glut of home buyers on the near horizon (1-2 yrs).  We know of the following corporate moves and influx of home buyers that will swamp available inventories of homes to purchase.

  • Employer                                                             # New Employees
  • Toyota                                                                                 4,000
  •  Nebraska Furniture                                                      4,000
  •  State Farm                                                                       3,000
  • Liberty Mutual                                                                 5,000
  • Federal Express                                                              1,200

That is over 17,000 new jobs for this area of North Texas.  Every one of those new jobs represent a new family moving to North Texas, most of which will be wanting to buy a home here.

Talk about a critical shortage of homes…we have seen nothing.

As a buyer, don’t wait to find a better opportunity to buy.

NOW IS THE BEST TIME FOR YOU TO BUY!

The American Dream

Owning your own home, especially owning your own NEW HOME

For potential home buyers in the North Dallas Collin County area, owning a piece of the rock is becoming more and more difficult.  Why?  Because supply and demand forces are pushing potential buyers further north where lot prices are more affordable.

Two years ago we could help a young home buyer couple acquire a new 3br/2ba home with about 1800 sq ft for around $200,000.  That same home today is more likely to cost about $250,000.  The monthly cost of purchasing such a home has increased from about $1400/mo to more like $2100/mo (PITI).

Today, in the Collin County market area, only about 2% of all single family lots being developed are intended for home buyers limited to a $200,000 purchase price.

So what is the answer for a young couple now living in a small two bedroom apartment?  In McKinney such a couple must adapt to soaring prices and look to communities like Melissa, Princeton, and Anna to find a possible location for a new $200,000 home.  Such opportunities still exist, but with shrinking new home inventories.  We believe IT IS NOW OR NEVER!

What about a couple that currently owns a 3 br/2ba home in McKinney who have dreamed of moving to a similarly sized new home (say 1800 sq ft).  We just marketed a 12 yr old home similar to this for $190,000.  We can help you sell your home today for a premium price and get you moved in to your new home in a few months’ time.  You need to act soon.  It is the best time ever.

 

Regards,

Joe and Glenda Neel

Our Internet Marketing Program

The best way to get top dollar for your property is to have it marketed electronically.  Everything we do in our office is done electronically.  Contracts are signed and drafted electronically, advertisements are processed and delivered in mass quantities in just minutes while other agents who represent your buyer receive information with high quality photography on your property instantly.  Each property we market gets sent out to 5,000+ agents, while our Facebook advertisement reaches about 18,000-24,000 people a day.  Out of those 18,000+ that see your property daily, about 1,500 of them engage with the advertisement while we have 50-100 people submit information on what kind of house they’re looking to purchase weekly through our websites.  Nearly 90% of home buyers start their search online and are more attracted to properties that are professionally marketed over the internet in multiple ways.  The right agent for the job is one who prioritizes online marketing and handles presentations of your property in a professional manner.

One of these methods of online marketing that we use is social media.  Social media is the most prominent form of communication and advertisement in today’s society.  The average individual spends an average of 39 minutes per day on Facebook, making it a primary method of advertisement that we use in our office.  With this media source, we are able to contact tens of thousands of people every day with detailed information about your property and the real estate market.  This information is sent to a specific group of people based on the information that cookies on their computer provide to the database.  Our advertisement is then sent directly into their news feed so that people who are looking up anything related to Real Estate will see your property being marketed in a professional manner.

Another powerful tool that we use to get you top dollar in the shortest amount of time is our network of Real Estate agents.  We currently have thousands of agents in constant contact with us.  Whenever we receive a listing, every single agent that we communicate with receives information on your property and they pass the information along to prospective buyers.  With this method, we’ve managed to get over 10 offers on a brand new listing in just a week, all of which were good offers, with some surpassing the listed price for the property.

Home prices in our area are at the highest ever, and sellers are taking the opportunity to collect large amounts of equity. Prices are rising by 10-12% each year for resale properties and up to 20% for new homes.  Now is the best time to sell or buy property while interest rates are low, and a properly marketed home will receive top dollar in today’s Real Estate market.  Let us be the team to represent you and professionally market your home to tens of thousands of people instantly so you can get top dollar in the shortest amount of time with the least amount of stress. Take a moment to check out our websites listed below as well as our Facebook page at https://www.facebook.com/TheNeelGroup

Main website: www.look4dallashomes.com

For sellers: homevaluein2.com/theneelgroup

For buyers: dailyhomeinfo.com/theneelgroup

Achieve Financial Independence in 10 Years

This blog is written to encourage younger couples to plan now to invest in real estate to build an estate of well over $1,000,000 within the coming ten years. The plan is based on living in a real estate market which is steadily appreciating at 8% per year. (The Dallas – Ft. Worth area is probably the most likely area to offer this steadily appreciating market).

The fundamental assumptions behind this plan are:

  1. A home buyer with good credit can purchase a house with an FHA loan which requires only a 3.5% down payment.
  2. If you have lived in a given home for two years or more it is likely that you can rent the house for a high enough monthly lease fee adequate to cover all ownership costs.
  3. Buying a newly built home each two years can be done by buying from a motivated builder who will pay your closing costs for you.
  4. Although the current FHA maximum loan amount for the DFW area is above $321,000 our strategy shown in the attached analysis requires a disciplined homeowner/investor to focus their purchases on moderately priced homes having a market value of only $250,000.  The reason is that you as a homeowner/investor are planning to maintain your living costs at a moderate level with you focused always on your ten year goal and total financial independence rather than luxurious living for now.
  5. You will move every two years into another $250,000 home utilizing the availability of a 96.5% loan to value FHA loan available for owner occupants.

What can negatively interfere with the successful execution of your plan?

  1. Losing sight of the goal.  Either husband or wife longing for an elegant—expensive house which may not be rentable for enough to cover the monthly cost of ownership.  There is no opportunity in this proposed program for swimming pools, or other extravagant features.
  2. Falling in love with any particular home. This plan is focused on average homes in average neighborhoods (a two acre home site on a golf course or wooded creek lot does not fit into this plan).
  3. Staying too long in any given home.  At the end of 24 months, you need to move into a newly purchased home and lease out the home you have lived in for two years.
  4. The plan is focused on acquiring new homes where success hungry builders will pay your closing costs and which will avail you of minimum maintenance costs for the entire ten year investment program.
  5. Failing to save enough cash (about $365 to $520 per month)   to fund an $8750 FHA down payment or a $12,500 conventional down payment every two years.
  6. Failing to maintain an excellent credit rating for the ten years of the plan.
  7. Generally it is difficult to be approved for two or more FHA loans at the same time. However, in our rapidly appreciating real estate market, it is feasible that after two years of ownership any one of your homes owned may have an equity of 25% or more. If so, an additional FHA mortgage for your new home acquisition may be approved. If necessary you may need to refinance one or more of your rented homes with a conventional mortgage, thus freeing up the availability of a new FHA mortgage for a newly acquired home.

 

The ability to create a fortune over a ten year period using leverage and taking advantage of our rapidly appreciating Real Estate market is shown in the charts below:

1st Home: Assuming you have already owned your present home for 2 years…

End of Year Market Value Mortgage Equity Total Equity (EoY 10)
0 $250,000 $200,000 $50,000  
1 $270,000 $197,000 $73,000  
2 $291,600 $194,000 $97,600  
3 $314,900 $191,000 $123,900  
4 $340,120 $188,000 $152,120  
5 $367,330 $185,000 $182,330  
6 $396,720 $182,000 $214,720  
7 $428,456 $179,000 $249,456  
8 $462,730 $176,000 $286,730  
9 $499,750 $173,000 $326,750  
10 $539,730 $170,000 $369,330 $369,330

 

2nd Home: Purchased right away – assuming you have occupied your present home for two years.

End of Year Market Value Mortgage Equity Total Equity (EoY 10)
0 $250,000 $241,250 $8750  
1 $270,000 $237,001 $32,999  
2 $291,600 $232,580 $59,020  
3 $314,900 $227,978 $86,922  
4 $340,120 $223,189 $116,931  
5 $367,330 $218,205 $149,125  
6 $396,720 $213,017 $183,703  
7 $428,456 $207,618 $220,838  
8 $462,730 $201,999 $260,731  
9 $499,750 $196,152 $303,598  
10 $539,730 $190,066 $349,664 $349,664

 

 

 

3rd Home: To be purchased 24 months from the start of your investment program.

End of Year Market Value Mortgage Equity Total Equity (EoY 10)
2 $250,000 $241,250 $8750  
3 $270,000 $237,001 $32,999  
4 $291,600 $232,580 $59,020  
5 $314,900 $227,978 $86,922  
6 $340,120 $223,189 $116,931  
7 $367,330 $218,205 $149,125  
8 $396,720 $213,017 $183,703  
9 $428,456 $207,618 $220,828  
10 $462,730 $201,999 $260,731 $260,731

 

4th Home: To be purchased 48 months from the start of your investment program.

End of Year Market Value Mortgage Equity Total Equity (EoY 10)
3        
4 $250,000 $241,250 $8750  
5 $270,000 $237,001 $32,999  
6 $291,600 $232,580 $59,020  
7 $314,900 $227,978 $86,922  
8 $340,120 $223,189 $116,931  
9 $367,330 $218,205 $149,125  
10 $396,720 $213,017 $183,703 $183,703

 

5th Home: To be purchased 72 months from the start of your investment program.

End of Year Market Value Mortgage Equity Total Equity (EoY 10)
4        
5        
6 $250,000 $241,250 $8750  
7 $270,000 $237,001 $32,999  
8 $291,600 $232,580 $59,020  
9 $314,900 $227,978 $86,922  
10 $340,120 $223,189 $116,931 $116,931

 

Total Equity of all 5 homes at the end of the 10 year investment program: $1,280,359

 

For most couples, the greatest component of their financial net worth is the equity in their home. In our rapidly appreciating real estate market, their home equity may be increasing at a substantial rate, by doing nothing but living in their primary home and paying the mortgage payment on time.

By using leverage, and by purchasing a second home now and an additional brand new rental property every two years, and thus owning five rental homes over a ten year period. It is possible that a home owner/investor can accumulate a total combined equity in their five homes greater than $1,280,000.

Can you really retire with an estate of $1,280,000? Yes! If you invest that $1,280,000 equity in mutual funds earning 6% per annum, you could earn $76,800 per year and live on that without ever diminishing the size of your nest egg.

Of course the program outlined above has a few possible risks. However, the probable rewards far outreach the risks. The greatest risk of all is doing nothing.

Bottom line, call us right now to begin searching for a new home to begin your plan for financial independence.