Saturday, March 31, 2007

Olathe, Kansas and Single Family Home Real Estate Investing

Olathe, Kansas
Population 112,000

Median Family Income $78,630
Median Home Price $220,883
Median Rent $529
Median Age 30.5
Job Growth 20.01%
22% Renters


Olathe, Kansas is a great place for your real estate investing capital. First, it is a city on the grow. By 2050 one recent projection put our population right at 320,000. There is good disposable income here, an excellent school district and plenty of shopping and dining.

A recent perusal of Hot Pads showed that there are currently 9 single family homes for rent here in Olathe. (We all know there are more but most people do not know how to market their rental properties.) But these 9 should give us a pretty clear indicator of the trends of Olathe. The 9 homes have a combined value of $1,719,000. (per Johnson County, Kansas courthouse tax records) The asked rental values of these homes is $14,465 per month. This translates to a 8.41 Gross Rent Multiplier.

Olathe, Kansas is a major suburb of Kansas City and offers endless choices when looking to invest in rental property real estate. Olathe also has an ample supply of duplexes. So whatever your criteria when looking to invest your hard earned capital you should at least look at Olathe, Kansas. If you are from out of state I can point you towards some very good property managers.

Feel free to call or email me to find out more about single family homes for your real estate investment portfolio.

The numbers from above were gleaned from Hot Pads and CNN/Money.

Zarda's Bar-B-Q: Some of Kansas City's Best Beans

It has been a while since I've done a Barbeque review so I'm going to take a few moments here to do one. Now, in the interest of full disclosure, I worked at Zarda's from about 1980-1983. Started as a bus boy and when I left after my senior year in high school I was a crew supervisor. (I knew you would be impressed!)


Love that Zarda's BBQ. That's all there is to it. Slightly behind Smoke Stack beans, the Zarda beans are the next best. The meat is smoked just right and is always moist and juicy. The burnt ends are to die for. I cannot think of any redeeming nutritional value of eating BBQ, it is just so enjoyable!

Zarda's has two locations: Blue Springs and Lenexa. They also offer catering. (Pay no attention to their Overland Park location mentioned on the web. It just closed down. Almost an exact duplicate of the Lenexa store with the exception that it was a lousy location. It was actually closer to my home but I still would go to Lenexa.)

On my BBQ scale of 1-10, Zarda's is a 9.5.

Thursday, March 29, 2007

Finding Quality Tenants for Your Rental Property is a Blessing!

Finding a quality tenant for your income property can be a daunting task. It takes proper screening, a little bit of a gut feeling, and some luck. But when you have them, great!

I manage a property for one of my out of state clients. Both sides are Section 8 through the Independence Housing Authority. One tenant was in when my client purchased the duplex, the other we put in shortly after his purchase. And we got a couple of good ones.

First, working with the IHA is a delight. They are reasonable, responsive and fair. The IHA did their annual review of the property on the east side and came up with a list of about 7 repairs that needed to be tended to for them to continue to work with us. Little things like a slow drain, a missing dust vent, etc. I determined the necessary repairs and called to make an appointment to get them fixed. The phone had been disconnected.

Now, an experienced landlord would immediately begin to worry a bit. If the phone is being turned off...

I decided to deal with it the next day. I would drive over, put a note on the door to contact me and to notify of when I would be in to do repairs. But before that time came I got a call from the tenant. She wanted me to know her new phone number and that she had completed repairs on all but one of the items. An item she didn't know how to do. Could I help?


Well, of course. I was excited that the letter of repairs that she had clearly stated that it was the landlord's responsibility to make these repairs. But she felt that the little repairs were her or her children's fault and that she wanted to take care of them.


That, my friends, is a quality tenant. And believe it or not, there are plenty of them out there. I think a lot has to do with my landlords. I will not manage a property that is not properly maintained. If something is broken we get it repaired. We respect the tenants. In turn, they respect us. (Is Matthew 7:12 coming to mind?)

Tuesday, March 27, 2007

Rental Property Rent Price Evaluations

Here is a neat site I found regarding rents rates for your income properties. I originally found it here. So I want to give credit where credit is due.


It's not exact. But then nothing is. Just go to rentometer to see how it works.

Rental Property Appreciation in Kansas City

I have to confess to you here and now that I am a numbers guy...when it comes to investment property. I like to know what the returns will be, how profitable it will be (if at all) and exactly what my money will be doing here rather than there. And that, in turn, is how I counsel my investment property clients. You see, to me, owning rental property is all about the returns. And with appreciation being one of the 4 benefits to owning investment property I thought I would discuss it here.

One of the most popular questions I get is "what is the rate of appreciation for this property?" My standard answer is "I have no idea." Keep in mind that even the most educated real estate agent on earth cannot tell you what appreciation will be. He can tell you what it was. He can give you a historical perspective. But that's it. Anyone who tells you any differently is guessing, at best.

Here in Kansas City the average historical appreciation is right at 5% per year. The Bulls Eye, if you will. Take any 10 year period and that's about what it will average out to. But some years it has been 10%. Some years 2%.

So when I'm figuring returns for my investor clients I will always use 5% or less. Recently, because of the flat to moderate growth we've been getting here in the KC area, I've been using 3% to 4%. I also put a big asterisk next to the number saying "Best Guess". I want people to know I cannot forecast something like that. Heck, if two more planes tragically fly into New York high rises anytime soon I would say 4% would be a dream. (Get my point? I cannot see what will happen next month, or the month after.)

In my opinion, an investment property should make sense at 0% growth for the first year. You should know pretty accurately what your rates of return will be BEFORE you purchase and that is without appreciation.

And one last thing to keep in mind. Income property will appreciate, by in large, separately from regular housing. Emotions and demand drive housing to appreciate quicker than it should. But with rental property the demand will drive it to some degree but appreciation can be tied very closely to rent rates.

We just exited a period of time when everyone and their brother could get a loan under almost any circumstances. Rents fell slightly or in a best case scenario held steady. Rent incentives were common. But now that mortgages have gotten a little more difficult to obtain and foreclosures are up rents have firmed and are even starting to rise while housing appreciation is very flat.

It's not an exact science. That is why it's important to be in tune with your particular criteria. Or work with someone who is.

Monday, March 26, 2007

Negotiating Real Estate Purchases

There are many, many schools of thought when it comes to negotiating for a property. And I have to point out that the schools can differ widely when it comes to negotiating for a personal home versus and income property.

For investment real estate purposes, I recommend using time as your friend. Especially in this market. Let me explain.

First, you are trying to purchase a future. Not a house. You are buying this rental home because you believe it will help you retire in comfort. Not because you need something to do on weekends. So the first item of business it to come up with an offer price and a walk-away price. A price you will not exceed because the property won't be profitable "enough" (whatever that is) for you.

Then, when you make your offer you need not be in a hurry to end the process. If you've offered low enough you will invite a counter offer to see how far the seller is willing to move. But don't offer too low as I've talked about that here. Anyway, I always like to let the seller stew over night...or even over two nights. I want him to know that he has a viable buyer on the line and that he might let him go if he's not careful. And if he is countering over your walk-away price I want him to know that you are walking away. You would be surprised how flexible a seller can be once a buyer has walked.

I'm not going to go into the complete psychology of this. I'm not really qualified. I can tell you that it works more often than not. But you do HAVE to be willing to walk away and look for another property. It's the only way it will work. Because remember, the seller (also an investor) has experience at this, too.

Sunday, March 25, 2007

Overland Park and Olathe, Kansas Investment Property Market Updates

I spent quite a bit of time this morning putting together market reports for Overland Park and Olathe, Kansas multi-family homes used for investment purposes. The Overland Park report for income properties can be found here. The Olathe report can be found here.


If you are in the mood to find out more about the current market as it pertains to real estate investing, I would strongly urge you to read the reports. The reports consider only full duplexes, triplexes, fourplexes and apartments.

Friday, March 23, 2007

Kansas Jayhawks Move On To Elite 8 & Some Real Estate Thoughts

I'm trying to keep my mind on real estate today. But I have to be honest and let you know it keeps going back to last night's game and forward to tomorrow's game against UCLA. Don't worry, however. I had a closing today. Showed a couple places. Writing an offer tonight. So I haven't stopped working. Just have Jayhawks on the brain!

Kansas City real estate seems to be getting quite a bit of attention from around the country. I have probably had 11-13 inquiries this week by phone and email asking about our market, what places rent for, where is the best place to own? Owning rental property to help fund your retirement is a great idea. And Kansas City is one of the few metropolitan areas around the country where investment property is still "affordable".

And don't forget...there are 4 Benefits to owning income property in Olathe, Kansas City, Overland Park, etc.

  1. Cash Flow Before Taxes
  2. Principal Reduction
  3. Depreciation
  4. Appreciation

I spotted some great condos in Lawrence, Kansas yesterday. Priced at $73,000 they are converted apartments with new mechanicals and vinyl siding. Two bedrooms and one bath located a few minutes from the campus of the University of Kansas. Rents should be $550-$600/month. Priced at $73,000. Email me for more info.

Thursday, March 22, 2007

Olathe, Kansas - Poised for Housing Growth

There are many reasons to consider Olathe, Kansas as a place to live or invest. Quality housing. A school district that is second to none. Ample dining opportunities as well as shopping. Good road network. Safe communities.


If you are looking at Olathe as an investor an article in yesterday's Kansas City Star had this to say;

The growth boom in Olathe is not expected to slow anytime soon, city planners have predicted. So much so, that according to their estimates, they expected Olathe’s current population of roughly 120,000 to grow to 325,000 by the year 2050.

Wishful thinking? Not by City Planner Bryan Dyer’s numbers.

“We might be off by a person or two,” he joked when discussing the numbers with members of the Olathe Planning Commission recently. “We know there is a strong interest out here, and as long as we keep roads and city services growing the population will continue to follow that trend.”

Dyer, who leads the city’s Long Range Planning Division, said he also expects the city to grow from its current 60 square miles to more than 90 square miles in the next 50 years.

Seems to me that is very good news for the rental property owner as well as the "regular" home owner.

Wednesday, March 21, 2007

MAREI of Kansas City

On the evening of April 10, 2007 I have been asked to be a guest speaker at the Mid-America Association of Real Estate Investors (MAREI) meeting. Kim Tucker has asked me to speak on the advantages of Buy & Hold real estate. My favorite subject. Especially with today's current state of affairs in the real estate market.

By following the link above you can find out the details and even plan some time on your calendar to come on out and listen. It is my hope to make it worth your time and money.

Tuesday, March 20, 2007

Family Given a New House And Other Housing News

Thank you Extreme Makeover for the house you gave to a family in need. This Kansas City Star article will warm the heart.


The housing market had some mixed news today, as reported in the Washington Post. In short, new starts were up, but permits were down. Folks, this is a natural correction, a needed one, that everyone will survive. You keep hearing that investors have lost money. I would argue that. Speculators have lost money. Investors will hold their properties taking advantage of all the new renters coming back into the market. Then, in a year, or two, or three when the market is hot again, they will sell. (Hopefully using the 1031 exchange where applicable.)

Monday, March 19, 2007

Stock Market vs. Real Estate Investing

I have discussed before the 4 benefits of owning residential investment property. And today I had a little fun with a stock broker from Kansas City that was, well gloating I think would be the term, on the fall of real estate as an investment vehicle.


Really?

I know I shouldn't do these things, but I decided to have a little fun with him. Here is some simple math;

$100,000 invested in the stock market returning 10% a year (his number) will give you a $10,000 increase in your portfolio after one year. Not too bad, actually.

$100,000 invested in real estate, however, should net you around the $20,000 in the same period of time. Is that better? Let me explain.

Take the $100,000 cash and purchase $400,000 worth of real estate (4 $100,000 houses, 1 $400,000 apartment...really doesn't matter) with a historical appreciation rate of 5%. That leads to a $20,000 increase in property value after one year.

Now you may want to say what if houses don't appreciate 5% this year? Good question. But if you are holding for 6-8 years, does it matter for any one year what appreciation is? Remember, historical appreciation in Kansas City is 5% on average. Some years have been 10%-12%. Other years, like last year, were -2% to +3%. Heck, my zip code was 6.6% last year.

"Wait. We're not done here yet," I told him. "Remember, real estate yields four benefits; cash flow before taxes, principal reduction, depreciation and appreciation. We've only discussed one of the benefits!"

Investment Real Estate Profitability

You MUST know your numbers when you are going to purchase investment real estate here in Kansas City. Or anywhere, for that matter. Here in Kansas City, I feel like I'm alone in this proclamation. And as I look around the country, I find very few professional real estate agents who truly work with and understand the purchase and management of rental property.

If you have some time, I would urge you to bounce around to a few of the real estate links you will find on the right hand column of this blog. One is Bawld Guy Talking. He is an investment real estate agent out in the San Diego area. His blogs are always worth reading.

Last week I added Indiana's own Land Chasers. He has some good posts over there.

Yesterday, I added Equity Scout. It is another blog certainly worth your time if you are involved with, or thinking about investment real estate. I believe it is authored by Christopher Smith and he has another blog. And here is a link to that blog and an extremely relevant article.

Kansas City is a great real estate market for the investor. And it never hurts to get opinions from other professionals, especially if it takes you just a moment of your time.

Saturday, March 17, 2007

Collecting Rent in Kansas City...or Anywhere

Listen, most of us don't want to admit it but money makes us make silly or bad decisions at times. And KMBC news reports that a terrible decision was made today by both a landlord and tenant in Kansas City.


No details were given other than the tenants were moving out. I can only assume rent was still owed and the landlord wanted it. But reasons are not what is important here. What is important is that one man has lost his life. Another is in the hospital and facing capital murder charges.

Don't get yourself in this position. Hire an attorney, a property manager, whatever. Just don't risk your life or freedom for one, two or three month's rent. The trade isn't worth it.

Friday, March 16, 2007

Real Estate and Life in Kansas City

Just some meandering links to help you see what I'm reading...

This article is found in today's Kansas City Star. From my own personal view let me say that what the United States is allowing to go on in the Sudan is absolutely terrible. Genocide is unacceptable. This article that you can read is great news for this individual, however. A true success story.

The housing/foreclosure crisis that is quickly setting in will have impact on you. No question about it. Even if you have great credit just one or two foreclosures in your neighborhood will help to further bring down property values. Columnist Steven Pearlstein of the Washington Post has written a column that I really can't argue to much about. Worth your time.

Conversely, if you have cash right now you are KING! The market is opening up to you in big ways. Loans favor the 80% LTV buyer. Sellers favor the buyer with cash to invest.

The Olathe Serve Day put on by volunteers from Olathe Bible Church (my home church), Indian Creek Community Church, Life Church and College Church of the Nazarene went splendidly. This article in the Olathe Daily News spells out the home building that went on. In addition, a team of volunteers changed oil and did car inspections for single mothers and widows and another group cleaned up and landscaped at least 10 of the local schools that I know of. Congratulations and thank you to all.

Kansas gears up tonight for their first round game against Niagra. Go Jayhawks!

Wednesday, March 14, 2007

Olathe, Kansas Has A National Championship!

Congratulations to the men's basketball team over at MidAmerica Nazarene University. (Just 1 block from my house!) Last evening I watched them defeat Mayville for the NAIA Division II Championship. If you have never seen a game over there you really should take the time. The gym is small, the student body loud and the games very entertaining. Check out the Olathe Daily News for more details.

Now if my boys over in Lawrence, Kansas could bring home another banner!

Tuesday, March 13, 2007

Mortgage Lenders: "Easy Money Is Drying Up"


For those of you paying attention to this blog and several like it, money is getting a little tighter out there for those looking to purchase a home. And the forecast for home sales is dipping a bit. And current mortgage delinquencies are creeping ever upward.

This is great news for the qualified buyer! Especially the real estate investor.

Listen, I work hard. Utilize effective marketing techniques including all aspects of the internet. I am up front with my clients. Things work out for me. I do well in all markets.
For sellers, however , life is a little more difficult. On the other hand, if you have good credit, some ready cash and you are looking to make a move to begin or increase your real estate portfolio you may want to take a very serious look at the Kansas City housing market right now!
To discuss what this market means to you just drop me an email.

Investment Real Estate Glossary

GRM. ARV. Determine your NOI before I can tell you what LTV you will need. What? If you are new to real estate investing these terms and initials can really get you jumbled. But here are a few that will help you sort through some of what you read.

ARV - After Repair Value
CAP Rate - Capitalization Rate
CFBT - Cash Flow Before Taxes
GOI - Gross Operating Income
GRM - Gross Rent Multiplier
NOI - Net Operating Income
LTV - Loan To Value
3B2er - You have to go to here to find out. (Funny Video)

But don't get too caught up in all of this. As you gain experience it will be easier and easier to talk the lingo. What is really important is that you learn how to determine profitability. You'll need your own formula or to work with someone that has successfully worked with investment property.

Monday, March 12, 2007

Termites in Kansas City: They Got Me!

Termites. As a professional real estate agent they cause me trouble. Buyers don't like them because they believe all termite damage is bad. Very bad. Seller's don't like them because they have to pay, sometimes big money, to get rid of them and possibly repair damage. Me, I don't like them because I am usually the bearer of bad news when it comes to working with either the buyer or seller.


And now they (the termites) have found out where I live! Obviously, for years I have been an advocate of killing any and all termites that I come across. I urged sellers and exterminators to "kill'em, kill'em all!" Every last one of them. The mothers, fathers and yes, even the little children termites. They must not have liked this very much. They formed a plan and went to work.

You see, late last fall I was cleaning out the gutters of my home and son-of-a-gun I recognized the tell tale sign of mud-tubes coming down from one of the gutters. Crap. I immediately called my termite guy, Ken Nelson of Extreme Pest Elimination. He came all the way over to my house to confirm that, yes, I was not an idiot and yes, those were indeed mud tubes. He recommended waiting through the winter for treatment. I still have to replace a few shrubs around my house and do some minor landscaping up against the house before treatment. Why? Because if I treat first it will probably disturb the barrier we would be setting up with treatment.

Anyway, do your homework on termites. Rental property owners should remember to have their houses inspected at least every other year. Just because you don't live there and just because you don't spend a lot of time there doesn't mean the termites are not lurking. They are crafty little devils. And should you want to read more about them from an independent source, check out the link to the Kansas State University Research and Extension center. They are always a good resource.

Friday, March 09, 2007

Another Freaky Friday

The Kansas City Star has a list of the wealthiest people in Kansas and Missouri in today's edition.


Ambucs is a charity based on providing people with mobility and independence by providing AmTrykes, providing services for people with disabilities and providing scholarships for physical therapists. They made a big difference in my daughter's life. I urge you to check them out and, if so led, to give of your time or money.

My Kansas Jayhawks are set to storm through the Big XII starting today. Best of luck to Bill Self and the boys. I'll be pulling for you!

ShakeGently, a technologist's view of the world of advertising, is a blog from a local guy here in Kansas City that is a good relaxing read. Give it a try.

If you have 22 minutes to kill and you are wondering just how lacking the American Education System has become, click here.

Thursday, March 08, 2007

Always Attend A Home Inspection

As a home inspector, I am asked by friends all the time: "What kind of stuff do you see? Do you see lots of crazy things?" Of course the answer is always "Yes".

Home inspectors see the same things that most well versed home buyers can see. Wood rot is often readily visible. We see the same water stains in ceilings. The same cracked garage slab floors. The same leaking toilets that won't properly shut off.

But more importantly, we see the same crazy stuff that most home buyers WON'T see. Aluminum wiring. Un-insulated attics. Unsafe electrical panels. Water stains in finished-basement ceilings as a result of improper flashing on roofs. Improper clearance between furnace combustion vents and flammable materials. Unprofessional repairs to structural framing.

I recently inspected an average Kansas City home for a retired couple that has owned many homes in their lifetime. Most home inspections for this 1500 square foot house take between 2 and 3 hours. This one lasted 5 hours. They asked lots of questions. And their questions led to more questions. By the time I was finished, the gentleman said to me, "I think I've learned more about homes than I've learned in the rest of my life until now".

After this inspection, the home buyers and I were talking about homes, in general, and they asked me - "Do you see lots of crazy things?" Again, the answer was "Yes - I see home owners with Zinsco Electrical panels in their house all the time." They nodded, and knew exactly what I meant, because they had just attended the inspection and asked lots of questions. And they took full advantage of the time and experience they were buying from a certified home inspector.

Many buyers don't attend a home inspection, and it’s too bad. After all, what are you buying from the home inspector? A report? Many home inspectors take pride in delivering a thorough, informative report. But you're really buying their time and expertise. The question you should ask yourself - did I learn anything from the experience, and did I take full advantage of having a professional on-site?

Can you now identify the crazy stuff that a home inspector will see in the home when you get ready to sell it?

John Clason
Crown Home Inspections
ASHI Certified Inspector

Wednesday, March 07, 2007

Missouri Finally Gets It

Congratulations Missouri. You are finally getting the message. Today's Kansas City Star reports that the state of Missouri is forming a special task force to help root out mortgage fraud. Even though Kansas City is somewhere around the 26th largest market in the country we have the 6th highest rate of mortgage fraud. Don't believe me? Visit Mortgage Fraud Blog and look at the entries for the Kansas City area. Real estate and mortgage fraud is and has been a problem here for quite a while.

Here's an idea. Require licensing for the mortgage brokers. Kansas does. You require licensing for the real estate agents. It's really ridiculous that a crook can lose his license in Kansas and move his office 4 miles to the east and re-open with no oversight.

Tuesday, March 06, 2007

The Penguins are coming...The Penguins are coming...or are they?

The sports web sites are alive with all of the passion you would expect on the topic of the Pittsburgh Penguins moving to Kansas City. Kansas City has offered a sweet deal and apparently the ownership of the Pens is growing tired of the lack of urgency on the part of the City of Pittsburgh and the State of Pennsylvania.


I don't know whether they will come or not. I hope they do. But I would much rather Kansas City get an expansion team than have to take over another franchise. Pittsburgh has proven to be a great hockey city. They deserve a team. But if they have to leave, I hope they come here.
When I lived in Washington, DC I loved to go the Washington Capitals' games. Most of you know I am a college basketball nut. But you have to experience a Stanley Cup playoff game to really know how exciting professional sports can be. I still follow the Caps to this day.
Last note: If the Penguins do move to Kansas City they should be required to leave their name, tradition and records in Pittsburgh. Their fans deserve that.

Monday, March 05, 2007

Seller's Agent in Kansas: Who Does My Agent Represent?

Earlier I posted on what a Buyer's Agent is, or is supposed to be. Today I want to go after Seller's Agency. Probably the most abused agency, in my opinion. Again, let's see what the State of Kansas has to say about what the duties of a Seller's Agent are.

SELLER’S AGENT

The seller’s agent represents the seller only, so the buyer may be either unrepresented or represented by another agent.

The seller’s agent is responsible for performing the following duties:

· promoting the interests of the seller with the utmost good faith, loyalty, and fidelity
· protecting the seller’s confidences, unless disclosure is required
· presenting all offers in a timely manner
· advising the seller to obtain expert advice
· accounting for all money and property received
· disclosing to the seller all adverse material facts about the buyer that the agent knows
· disclosing to the buyer all adverse material facts actually known by the agent, including the following:
Ø environmental hazards affecting the property that are required to be disclosed
Ø the physical condition of the property
Ø any material defects in the property or in the title to the property
Ø any material limitation on the seller’s ability to complete the contract.

The seller’s agent has no duty to:

· conduct an independent inspection of the property for the benefit of the buyer
· independently verify the accuracy or completeness of any statement by the seller or any qualified third party.

The matter seems pretty self explanatory. Where I see it run in to trouble is on the every day application. You see, many a real estate agent out there gets so excited when they receive a call off of one of their signs or ads that they will readily throw their Seller under the bus in the wink of an eye. Forgetting that they (the agent) signed an Exclusive Right To Sell Agreement with the Seller when the house is listed they immediately will want to buddy up to the caller, answer all of their questions and have a great chance of either obtaining the caller as a new Buyer to work with, or better yet, selling the home they called about and thus earning both sides of the commission.

Now, stop just for a second. It's okay to to assist a Buyer and a Seller in the sale of a home. It's called being a Transaction Broker in Kansas. And it will be discussed in the next post. What is not okay is violating agency to do it.


When a sign call turns into a possible Buyer off the house they called about, it is most likely that they are an Unrepresented Buyer. For example, If Buyer A calls me about my listing at 123 Main Street and I disclose that I am a Seller's agent and they see the home with me and then make an offer with me and then close on the house with me it is almost certain that they were unrepresented throughout the entire process.

Make no mistake, I still have to treat them honestly, help them fill out the paperwork, disclose any defects in the property I am aware of, etc. But at no time am I trying to help them negotiate, disclosing that the Seller would take less for the property, etc. I cannot mislead them. I just can't advise them to my Seller's detriment.

So Sellers, make sure your agent isn't acting as a Secret Agent. Are they disclosing to their sign calls/ad calls/board calls that they are YOUR agent? Or are they signing a Buyer's Agency Agreement with them as soon as they get done showing them your house so that they can immediately flip them and you into a Transaction Brokerage Agreement to make their job easier.
You see, they are probably afraid that when they tell the potential Buyer that on this house and this transaction that they would be the Seller's agent. They are afraid the Buyer will go off and find another agent to represent them. They are afraid they have done all the work and won't get paid for it. It never occurs to them to treat the Buyer like a grown-up. To explain the facts to them. And hey, if they want their own representation they are entitled to it. The agent doesn't have to pay their representation, but they are entitled to it.
Is this clear as mud? Great. Be sure to email or call with any questions.

Kansas Buyer's Agent: Real Estate 101

One of the most confusing things for most people to understand is who exactly a real estate agent is working for when they are buying or selling a home. Each state has their own particular rules regarding real estate transactions. For instance, I am licensed in the states of Kansas and Missouri. (For those of you not intimately familiar with the area the city is split in two by a road called State Line. On one side is Kansas. The other Missouri. Kind of like Western & Eastern Avenues in Washington, DC and Maryland.) Both states have their own set of rules and I have to adapt as I move from one state to the other.


Today I want to talk about Kansas. It is my home state! And in Kansas a real estate agent can represent you in one of three ways. You can download the brochure to get your own copy of the three. (You can also be unrepresented, that's a whole other subject.) There is Seller's Agency, Buyer's Agency and Transaction Broker status. Over the course of this week I will discuss all three in detail. Today we will start with what you should be getting from a Buyer's Agent.

The State of Kansas says:

BUYER’S AGENT

The buyer’s agent represents the buyer only, so the seller may be either unrepresented or represented by another agent.

The buyer’s agent is responsible for performing the following duties:

· promoting the interests of the buyer with the utmost good faith, loyalty and fidelity
· protecting the buyer’s confidences, unless disclosure is required
· presenting all offers in a timely manner
· advising the buyer to obtain expert advice
· accounting for all money and property received
· disclosing to the buyer all adverse material facts that the agency knows
· disclosing to the seller all adverse material facts actually known by the agent, including all material facts concerning the buyer’s financial ability to perform the terms of the transaction.

The buyer’s agent has no duty to:

· conduct an independent investigation of the buyer’s financial condition for the benefit of the seller
· independently verify the accuracy or completeness of statements made by the buyer or any qualified third party.

In short, the Buyer's Agent is looking out for the Buyer's best interest. Let me give you an example; REALTOR A has been working with Buyer A under an Exclusive Buyer's Agency Agreement and Buyer A decides there is a For Sale By Owner they want to check out. (Another term, more correct, for FSBO is Unrepresented Seller.) So REALTOR A gives the Unrepresented Seller a call and identifies himself, his agency and his purpose of the call which is to set up an appointment. The Unrepresented Seller then decides he/she will work with the Buyer's Agent and they work out a commission agreement before showing the home...in writing. During the course of these conversations the Seller says to the Buyer's Agent, after having been told the Seller will be unrepresented, that the sales price is $100,000 but that they would take $97,500 for the house.

The house is shown to Buyer A and they love it. They decided to make an offer on the home of $99,000 because they really do not want to lose the house. Should the Buyer's Agent:

  1. Write the offer for $99,000 because he will get a slightly higher commission?
  2. Keep the Seller's $97,500 number private since the Seller told him in confidence?
  3. Advise the Buyer that the Seller confided in him that he/she would sell the home for $97,500?

I'll await your answers... You can contact me by clicking on "comments" below or through the new feature of the IM by Meebo on the right column. The IM is already proving to be very popular.

Saturday, March 03, 2007

Kansas City Real Estate Links That Help: Localism

Most of you know my policy on open information regarding real estate in Kansas City. I'm completely for it. Open the MLS. Open the tax records. Open the comparable sales. The more information the consumer has to make intelligent real estate home buying decisions the better I can do my job. And that is to help them secure (or liquidate) the right home(s) for their situation and to negotiate the best deal possible and then walk them through to success closing.


To that end I have provided you with Free, no registration, Kansas City MLS searches, links to investment clubs like MAREI and KCIG, private MLS sites like Trulia and write this blog and this blog to allow you insight into what a real estate agent does and how he thinks.
So today I want to give you a new link. It is still in Beta. But Localism is a great site that you will start seeing in your real estate searches. Localism is a real estate agent driven site that allows you to learn about your state and community and your local real estate conditions. There are even homes for sale sections and great articles about the current state of the market.
Of course, there are some REALTORS that are better writers than others. Some that seem to put more effort into the posts than others. Obviously, some are just fishing for leads. Some are really trying to serve the public.

The great thing about it is you get to decide. It's like an interview with an agent. Like what you are hearing? You can leave a comment or question. Get to know more about them without actually meeting in person or making the phone call. In short, you get open information about your next real estate agent. You learn how they think, what they specialize in, where they live, etc. You get to decide who the best agent for you will be instead of just stumbling into an open house an working with that dude.

Check out the site. You'll find me on the Kansas side. Due to an oddity of the system,since it's still in Beta, I cannot do both Missouri and Kansas.

Friday, March 02, 2007

Ameriquest & The Sub Prime Loan Debacle

Today's Kansas City Star reports that the $295 million settlement with Ameriquest is about to begin taking hold and that consumers should start receiving their refunds in April. It seems they were taking advantage of people with their loan vehicles. The article even contains a link that describes in detail the settlement. If it affects you, it might be worth your time to read the links.

My own personal word about sub-prime loans is "caution". I have had clients that have used them to their advantage. And I've had clients (who probably never even should have purchased a home) continue down the path of financial disaster with them. Seek sound financial counseling before deciding whether or not a "B" or "C" paper loan is the way to go for you.

Here is a great story of someone that used it to their advantage: I had some clients call and say they were two years out of bankruptcy, had $1,900 in cash and wanted to buy their own home. They readily admitted that their own financial stupidity is what caused the bankruptcy. For their family of four they were paying $925/mo for rent in a 3 bedroom apartment.

We talked about the positives and the negatives of what they were about to do and talked about the loan they would be taking on. It was a 100% loan and the interest they ended up paying was 8.7% with all closing costs paid by the Seller. After adding up principal and interest and taxes and insurance and working out their tax situation we discovered that their real dollars house payment was $963/mo. So yes, the interest was very high, but no they weren't any worse off than they were renting. They had kept the style and price of the home very affordable.

Three years later and they have just refinanced their house and did it at 7.0%. The house had appreciated enough and they had paid down enough of the loan to end up with an 80% LTV.

There, my friends, is a great example of how sub prime loans can and should be used.

Investment Clubs in Kansas City

Last night when I picked up my mail I had a flyer from MAREI (one of the two investment real estate clubs here in Kansas City, KCIG being the other) announcing a Conference that they were conducting and selling tickets for. It looks to me like most of the topics are covering issues surrounding Buy & Sell (flipping) real estate transactions and Subject To financing, foreclosures and the like.

I am not endorsing this conference but I am telling you about it because I know I have quite a few readers that Buy & Sell or would like to. I think I've made my feelings be known about Buy & Sell (I'm not against it...just be wary) and if you would like to go it looks like they have some speakers worth hearing from. And there is probably worth to the Buy & Hold real estate investor, as well.

Not everybody I recognize, but certainly Jerry Clevenger and Jeffrey Taylor are two that jump to the forefront. In fact, Jerry Clevenger is interviewed by Dave Jenks/Gary Keller in the Millionaire Real Estate Investor book I often speak about.

If you go, get back to me and let me know how it flies!

MAREI = Mid America Association of Real Estate Investors
KCIG = Kansas City Investment Group

Thursday, March 01, 2007

Postcards From Australia

I want to invite you to my son's new blog. He launched it last weekend and is already receiving good traffic. In fact, on Monday he had more visitors than me! It's a shameless begging blog...but I'll let him tell you about it.

Kansas City Real Estate Market Condition Forecast

Yesterday I was out driving in my MINI and noticed a behemoth cloud mass growing to the south. So I pulled over and grabbed my trusty little Canon Powershot A530. Not my good camera but one I throw in the bag for moments like these.

Anyway, this huge mass had with it lightning, thunder and later came massive amounts of rain and first pea sized hail, followed by dime sized hail followed by quarter sized hail right around midnight. (Can't wait to look at my roof carefully.) The streets literally filled with hail.

But I think this photo represents the Kansas City real estate market right now. As a photo, the image is static. Oh sure, it's easy to see what happened in retrospect. But for those of you not familiar with the weather from Kansas City to Tulsa you know that the clouds could have just built, rumbled and produced nothing. On the left side of the photo it's blue skies and clear sailing. The right side brings an ominous forecast.

Which side of the photo do you see the real estate market from? My own feeling is we will have a 2007 that closely resembles our 2006. Nothing great. Nothing bad. Just waddling along.