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Video: Agent Training – Fighting Appraisals

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Full Video Transcript

Wynn:

Good morning, everybody. We are talking appraisals today appraisals something that most of the time we don’t have to worry about. We have to know what to deal with. It’s you know, the bank’s going to send their appraiser out. They’re gonna take care of it and it’s gonna come back and they’re gonna say, Hey, you’re good. And that’s all we care about. 95% of the time, 99% of the time. That’s all we care about is, Hey, we have a good, good appraisal and you never see this appraisal report. You never do anything. Everybody should have a copy of the appraisal report. Yep. If you haven’t had an opportunity or a reason to look at one, you’ve probably never wanted to. And I would recommend if you never have to, never look at one of these things, right? So the full report is normally 30 to 40 pages.

Wynn:

I just printed out the first 10 pages because that’s where all the good stuff is. The last, last two thirds of it are all pictures. They’ll show, here’s a picture of the house here are the neighboring houses, if there are any deficiencies they’ll show pictures of what you need to fix. So like for VA or FHA, if there are lender-required repairs, they will note them on the report and they’ll show pictures on the report. So you would then know, Hey, I gotta fix this siding. I gotta fix this window. I gotta fix this door. And there’ll be actual pictures there. If there aren’t pictures there, always call the lender or call the appraiser because when we’re representing our sellers, we don’t wanna be writing blank checks to say, Hey, you have one that said, what’s that? Well, the windows replace fogged windows. Well, yeah, no, not all of that. Like tell me specifically what ones, same thing here with, with the repairs. Anything that needs to be, has to be specific. So we’re not gonna get into the last part, but we do want to delve into the first part.

Sam:

And, and like, for example, if it’s a VA, especially if it’s VA appraisal, those have to be fixed before closing.

Wynn:

Those have to be fixed before loan will get approved. Correct, yep.

Sam:

All right. Is there, I mean, because does that ever happen with FHA or conventional?

Wynn:

What FHA maybe does, does what happen with FHA conventional

Sam:

Where things are specified in the appraisal? Like this has to be fixed before the loan?

Wynn:

Well, it it’s all, so if there is an appraisal and all, so if you want to, we’ll, we’ll stay at this topic if you wanna switch to,

Wynn:

To reconciliation. Okay. right in that last little bottom section, you’ll see on this report here, which is one of my properties says this appraisal is made either as is, subject completion of plants and specifications on the basis condition of the improvements that have been completed or subject to the following repairs or alterations on the, for the repair. So, so in this case, we don’t need to do anything to the house, but if you need repairs, it’ll say, you know, it’s subject to the following repairs needing to be done. And then right, if you look so it’s three. So at the very bottom says there are two lines, it’s all caps, right? Assumes all systems function properly, blah, blah, blah. This will state where these caps are down in the bottom of page two, it’ll say rotten woods, fix, fix sodding, fix this, fix that, or it’ll say see pictures, page 12, 15, 18, or whatever.

Wynn:

It’ll specify. If you don’t have specification, you don’t know what you’re fixing, but we gotta gotta clarify, but it will say subject to. So yeah, if it does, you gotta handle it immediately. A lot of times, we’re so busy that, you know, we’re not necessarily Johnny on the spot with repairs. So couple notes with repairs, never do any repairs until due diligence or other contingencies are over with. Right? Because if you do a repair the house terminates under due diligence and the seller just paid a thousand dollars for repairs, it goes back on the market. And then the new buyer doesn’t give a crap about the repairs you just did. And you’re out a thousand bucks. So always wait until due diligence ends to do any repairs at all. I like to wait until all the contingencies are over that they can’t back out for any reason.

Wynn:

Then if they do, we would at least have the earnest money to compensate us for the repairs that were done. Now, in this case, some of these repairs may be extensive or lengthy and it might take a little bit of time. So you might need to schedule them up front. So as soon as you get these things back, call ’em immediately and get on the counter, say, Hey, if you need a roof repaired, right, don’t wait until the day before closing to say, Hey, can I get a roofer to repair a roof? So you can schedule the repairs, but I would recommend waiting until – what’s that?

Kelly:

You can get your quotes.

Wynn:

Yeah, you can get your quotes, get it on the calendar, get it all set to go. Because typically you’ll have, you know, 10 days or so between all the contingencies that end and the closing date to do all the, you know, spend all the money. But some of these things will, will need, you know, some wood siding, painting, exterior, replacing some roof shingles, things like that. For VA and FHA and that’s not necessarily a next day project. Unless you have a Tucker

Kelly:

Sam mentioned conventional but that does not include conventional.

Wynn:

Thank you by the way, say again,

Kelly:

Conventional appraisals

Wynn:

Do not conventional appraisals typically do not. I have seen one conventional appraisal in all my years that actually had repairs needed for a conventional loan. So it is possible. I was floored. I don’t even remember. I just remember it. I was like, it’s a conventional loan. I’ve never had a, never had a problem with that. But it can’t happen on any, anything. So let’s, let’s go ahead and delve into what a appraisal report looks like. I I said if you’ve seen them before, great, if you haven’t and this is the first time we’ll kind of break it down, I’ll go quickly. Because the purpose of this training is to what do you do if you have a low appraisal, right? How do you fight an appraisal? So the top part is the subject property got like part, top part of our top part of our purchase and sale contract.

Wynn:

And it has the contract price in the second. So they know what the contract price is, right. They know the answers to the test when they go out and look at this thing, they have all this information, they know the neighborhood, the site, all these things are there, you know, they gotta check the box for all these various, you know, if it says public, private, well, all these various things on the top part then you move down here to improvements. So the bottom part, the bottom third of page one talks about the improvements. In this case, this was a townhome you know, has heating, has a slab, all the various siding and walls. The interior exterior, you can see how this is all kind of broken down of what the subject property looks like. All the way down to the bottom of the first page.

Wynn:

So this is all, a lot of work goes into an appraisal. So like we, we love our appraisers. And they do a lot work and they’re doing all these all the time. So it’s not like we’re the, they’re the only ones that are doing the appraisal. I mean, they got 10 of these things to do 20 of them sometimes. So they knock them out, but it it’s it’s time. It’s very time consuming to do an appraisal and do it well. Well. what we’re normally typically concerned about is page two. So for, for realtors, page two is the comps, right? So first part talks about the property itself. Second part talks about the comps. So in this, in this case, there are three comparable sales. They can do more, you need at least three. Now in this case there were actually nine, nine comparable sales.

Wynn:

You need a minimum of three. Typically they do four to five. They’ll throw a couple extra in because if, as long as there is a nice bulk of houses, you know, they’ll throw a couple extras in just to make sure that they’re good. But what we’re gonna, we’re gonna look at here top of page two. The first column is our subject property. So underneath the subject, it shows sales price, price per square foot down below 1400 square feet it’s a townhome, quality of construction. Age is 12 years old, condition. There are various condition levels, C one C two C three number of bed rooms, number of rooms total, gross square footage of the unit. And then down additional features, patio, fence, updates, renovations, good insulated windows. So all these things are big bulk items that the appraisal looks at. Everybody tracking and following?

Wynn:

And then he looks at three other sales that are comparables in, in their mind. So in this case, you see the addresses up top and we’ll compare them all right here. So the first one here was, it sold for one, for $152k, right? Go on down. It has date/time of sale. So let’s circle this. Now this contract we had was done, this appraisal was done in March, right? March was when this contract was done. Date, time of sale. It says S for sale 05/21. All right. So in May of ’21, this house sold and because it sold so far in the past, they’re giving a credit of $15,061 in the credit plus column for that. Right. moving down a little bit more. It’s a townhome. So it’s comparable quality is the same quality, same condition, baths and bedrooms, right?

Wynn:

6, 3, 6, 3, 2 and a half square footage is 1740. So it’s a little bigger, so the detract $7,600 because it’s a bigger, and they’re saying you have to take value away from yours because that one is bigger. Okay. all the way down here, garage that has a two car garage that has a two car driveway. We have a one car garage drive-in garage. So they’re giving us a $5,000 credit because we have a garage and this subject number one did not have a garage. So we get a $5,000 credit and then the updates and renovations, we were good, they were average. And so we got a $6,000 credit. So they add and subtract up and say, that’s a net net adjustment of $18,461. So they throw that eight. They throw that on top of the $152k that they sold it for. And they say in today’s present value, it’s worth $174,610 is their adjusted sales comp.

Wynn:

Okay. And then we can do the same thing on two and three. So we’ll just kind of go through number 2, $155k sales price that one sold is 6/21. So June of ’21. So the first one was 10 months old. The second one is nine months old, right? They’re giving us a credit of $13,000 subtracting a little bit for square footage, giving us a credit for the driveway or for the garage and giving us a credit of $14,000 total after all the pluses and minuses, same size, everything else saying it comes in at $169k. And then lastly, the last one here sold in 8 of ’21, which was seven months old doing the same thing. Now this condition says C2, it’s a better condition. So they’re subtracting $5,000. It’s bigger, they’re subtracting square footage, this one has a covered patio, subtracting that. And at the end of the day, they’re saying it’s $183k. So those are the first three comparables. So the comparables on the first sheet are weighed slightly heavier. Not all comparables are comparable. So comparable number one, two and three, there is a slight weight difference to them as far as what’s, what’s most comparable.

Kelly:

Is there a difference when it’s a covered patio, Wynn? That you typically see, it’s not like screened in or anything. I’m just trying to remember the differences in value difference in value.

Wynn:

That, I’d have to look to see OP/CV patio. Yeah.

Kelly:

I didn’t know, what, screen – I would assume they could say maybe screen or something open. I would think open.

Wynn:

OP/CV patio, I’d say cover open, covered patio. I would say so. Just covered no screen. And so based on that, right, we’re just gonna keep going down. So based on those three comparables and the various weights that they have on one, two and three, you’re gonna come down to just above the reconciliation. And it has a right above that thickly line that says indicated value by sales comparison approach $175,000, right? Bad news. Huh? That’s bad news. Because we have a contract for $206k, $206,000. That’s a $31,000 difference. That’s a problem. That’s a problem. So what do you do when this happens? Right. First thing is after you get done crying, right? So the order of the order of things all goes back to the contract. What’s the contract say if an appraisal comes in low, the contract will say what has to happen.

Wynn:

That agent needs to notify us within a certain amount of time and provide us this information. And then we have a certain amount of time per the contract to renegotiate out what we want to do, right? So the four things that can happen, 1) we can drop our sales price to $175k. 2) They can come out of pocket $31k and meet us at $206k, because that’s what the contract price is. 3) We can work something out and negotiate, meet in the middle 50/50, or 4) if we can’t in this case, it was just too far. We came down, they came up, we just couldn’t make it meet, contract terminated. So if you get to a point where you need to fight an appraisal, right, there’s a process for fighting the appraisal, which we’re gonna go over here in a second. So then the next couple pages, I’ll just look real quick.

Wynn:

So that was the comparison approach. The, there are a couple different kinds of, there’s a comparison approach appraisal, which is used a majority of the time looking at past sales, what they’ve sold for and what, you know, what yours is worth based on sales comparative, right? The other is an income approach, right? They look at rents. So sometimes where we do a lot of stuff you will have rentals, maybe in a bad part of town that the sales, you renovate a house, the sales aren’t there, because everything else is a hundred thousand dollars, but yours is where $200,000. You just renovated it. If you can justify that price based on rentals, based on an income approach, sometimes they use that. So a lot of the business that we do income approach is used versus comparables because when you’re in some of these neighborhoods, you can’t, there are no comps, right?

Wynn:

So you do income. And from the income approach they do a gross, a gross rent multiplier. They take average rents that are typical in the area and then they multiply it by a factor that factor kind of fluctuates. But typically it’s somewhere between 1.3 and 1.5 times the rental amount of typical rents. Now the negative with that is when you are in a lower income, when you’re in a turning neighborhood, that’s getting gentrified, the rents are typically low around the whole area. So like it doesn’t help you out when you are trying to rent it out for $1500 a month because that’s what market rent is. But everything else in the neighborhood is $800 a month because they’ve had 10-years tenants. And that’s what the leases are. So I ran into that with one of my units here that I renovated where great renovation, I know what market rents are, but we got, we got dinged on the appraisal because even with the income approach, it still came in low because everybody in the neighborhood rented it under market. Right.

Sean:

You have like like my property has this situation. There’s no comps around it. And it has an amazing amount of rent. And has like five or six years of history. You can’t use that?

Wynn:

Well, they will take your, they will take your rents into account. So if you can provide your rents and your documented rents that weighs heavily because you can show, this is what is worth. The higher, the, the, the, in an appraiser’s mind, the higher, the rent, the nicer, the house, which makes sense. Right. So if you can rent something out for $2,000 a month, that’s gotta be a better house than renting it out for $600 a month. Right? Absolutely. So if you have documented rent yourself, that can go a long way, but if you’re flipping a house or buying it to rent it out and you don’t have documented rents, you need to go outside, you’re still gonna need to go outside to get enough sample size, to, to justify all these things. But that’s definitely one way that you can do it, the income approach. And then the last one is the cost approach. How much is it could do to cost? How much would it cost to build this whole thing up? Brand new construction, right. Based on all the various factors now, unfortunately there’s a lag with what appraisers have on their sheet. Like the cost of lumber is tremendous. Right. That’s not necessarily reflected. So it’s not up to date when they look at their data sheet, $90

Speaker 5:

$90 a square foot to build a brand new

Wynn:

Yeah. And that’s why that’s that just not the case. Yeah, I mean, years ago, so that’s so the cost approach, I’ve never seen used income approach. I’ve used, I’ve seen used a couple times with some of the business that we do, but more times than not, it’s the comparable approach. They look at sales and that’s what it is. Right. So back to page seven and eight. So the next couple pages are just his signature. So page one page. So it’s a six page page. One through six is quote on quote, you know, the, the business part of the appraisal page one through six, you got your three, three comps, everything else. Boom, boom, boom. And it says with $175k,uif they, after page six, they start adding on other comparables, the pictures, all that stuff. So here he actually added on three more comparables – comparables 4, 5, 6, 7, 8, and 9 on the next two pages. And you can see once again, there’s always the same subject property. So you know what you’re up against and then comparables, right? So here’s one, $213,000. Great. That’s better. Right? Let’s see. It’s better shape. So we’re subtracting $5,000 we’re we’re on page seven right now,usubtracting $5,000. It’s bigger subtracting $6,300 at the end of the day, it says, Hey, it’s worth $201,700, but that one closed October. So that was only a five month old. Right. U

Speaker 6:

I guess that was under the impression that he had to be within 6 months.

Wynn:

Ah, very good. Exactly. Six months is the standard. So when I’m looking at this and I’m real, wait a second. Our top two were 10 months, 9 months and 7 months old. Where are the houses within six months? Because in today’s market, 6 months ago to today is years, right? I mean that’s it’s night and day with the difference. So you want the closest sales in the closest amount of time. So we’ll transition to, how do you fight an appraisal report? What do you do? So you’ve been notified. The appraisal came in low. You say, what can we do? Try and work it out first, Hey, I’ll come outta pocket. I’ll drop the price, whatever, whatever, whatever. If that doesn’t work out, your first call is to the lender. Whoever the lender is, give them a call and ask them what the process is to fight an appraisal. Everyone lender has different protocols. Every lender has different procedures. With a VA loan, it’s called a Tidewater. You have three days. If a VA appraisal comes in low, the government gives you three days to justify why you need a reappraisal. Not a business business days,

Kelly:

Correct?

Wynn:

Business days, correct? Three business days. Um so it’s called Tidewater for a VA loan for conventional and other type loans. There’s not necessarily a name for it that I’m aware of.

Kelly:

From the time the lender’s notified that the appraisal is low? Or from the time I’m notified?

Wynn:

From the, from the time, from the time. That’s a great question. I think it’s from the time that the appraisal comes in and the lender gets it. Okay. Which is once again, I’ll just keep talking about the importance of a good team, having a good team that calls you immediately like Rhett, as soon as that comes in, he’s on the phone and he tells me it’s good or it’s bad. It’s good. It’s bad. Hey, what do we need to do? Because once you’re outta your time window, you may not be able to fight it. So if you are in your time window which is another reason of staying on top of timelines, right? When the appraisals do, you know, be talking to the other side, be talking to the other agent, constantly Hey, is the appraisal back yet.

Wynn:

How we looking, all these things. I got an email from a lender out of the blue yesterday. Hey, the appraisals back. I’m like, great. I gave them a call. Are we good? Are we not? He said, came in at value. I’m like perfect. The other agent did not send me anything, but they don’t need to. It’s good. It’s good. But don’t expect, never expect somebody to do our job. So like a lot of times we’re having to do both sides, keep an eye on the appraisal, even though we’re the seller, let’s keep an eye on the appraisal. Keep an eye on the lender, make sure all this stuff’s going.

Kelly:

I don’t mean to interrupt, but just for Sam’s knowledge, what I do Sam is when we get through due diligence, I reach out to the buyer’s agent, find out if it’s been ordered and when’s a date when it’s due back and I just mark it on my calendar. So because a lot of times it’s like you said, you only hear it if it’s bad, but it’s you good to like be in the know of what’s going on.

Wynn:

Yeah. Cause a lot of times your seller will ask, Hey, did the appraisal come back? And we always wanna have a

Kelly:

Most sellers obsess about the appraisal, especially in today’s today’s market.

Wynn:

Especially in today’s market. Um and of course we wanna have those answers when they call, we don’t wanna have to say, Hey, let find out and call you back. You know, we want be proactive. So when the appraisal comes in be let’s reach out to the client say, Hey, guess what? Appraisals good. One less thing we need to worry about on the way to closing. But if we need to fight it, here’s what we need to do. So call the lender, explain the situation and say, what do we need to do? And they will tell you what their process is. Every lender’s different, right? In this case they say type up an email, provide me with comps that you feel are good, right? You, you, and that’s where we need to do our digging to come up with comps that justify the sales price, right?

Wynn:

So you go into you do your comps, just like you normally do when you are doing anything else. And you need to find things within six months is the window. I mean it’s the same process of trying to find comps from the neighborhood, if not, zoom out, try and see same types and everything. Because we are not trained to do you know, one has a two car garage. One has a one car garage. You’re gonna get a $2500 credit. Like we’re not, we’re not at that level. Right? We just need sales, comparable houses to do it. When I looked in this case, there were 22 sales, 22 townhouses that sold in, within the last six months. Out of these nine properties that were on this report. Only four of them were on that report because the other five were longer than six months out.

Kelly:

Why would you do that?

Wynn:

I have no idea, but the

Sean:

One with the 10 and nine month sales.

Wynn:

Yep. Oh, better yet. Here’s another one. This one here was a two bedroom. So mine’s a three bedroom, two bath. One of these comps here that sold for $140k, by the way. So $140k was a two bedroom, two bath. Why he added a nonconforming house? Did the appraise report? I have no idea, but it’s on there. So once I got away from all the, all the old ones I went and I saw 22 houses, townhouses that sold within the, the area. I took away all the two bedrooms. I took away all the four bedrooms and I was left with 11. So I was left with 11 houses left that I could use to justify. Now here we are on the selling side. So we are trying to get the most amount of money for our seller.

Wynn:

So we want to pick out the best properties we can to justify why it would be. And so I followed the instructions. I typed up an email. Here are the comps I gave them the listings, I gave them the comps, I gave them the stats, all the, everything. I also gave my justification as to why I felt that these were not appropriate with a nice long soliloquy of boom, boom, boom, boom, boom. Got it all set up, sent it over there. She sent it up to the, they say, okay, well this is a two step process. One. They send it up to the board, to the appraisal board and then it goes back to the appraiser. So a couple days later, get an email back saying, yep, I reviewed everything. But I stand with my $175k value because basically you’re telling me how to do my job, which very, very few times you get to fight an appraisal and win. Very very few times because you’re telling somebody that they don’t know how to do what they’re doing.

Wynn:

But it’s our job to do everything we can for our client, our job to go down swinging. And if we get a low appraisal, we need to follow that quickly follow that process and do everything we can to get to, to, to come to a resolution. Now, would they go from $175k up to $206k? Probably not, but could we maybe get something right? Something’s better than nothing, right? Even if you can get something, maybe we can meet in the middle. This, this deal ended up falling apart over about $10,000. I, okay. We came down 10, they came up 10. There was about a $10,000 gap that, had this appraisal, maybe not gone all the way up, but say it goes from $175k to $185k. That’s maybe the difference is all you need.

Kelly:

And this was what kind of loan?

Wynn:

Keeping this. This was an FHA,uto keep this deal going. So,uyou don’t necessarily need perfect but better. And our job is to our clients and their client, our client’s best interest. So,uyeah, it’s a, it’s, it’s, it’s a lot of extra work. Ubut that’s what we, that’s what we do. I mean, that’s what we that’s our job. Ubut if you do get a low appraisal call immediately to the lender, see what the process is to fight it, follow to the T what they want. Some people want it emailed. Some people want a form. Sometimes there’s forms. You fill out this form. Sometimes you go online. Some, sometimes there’s like a portal. You go online and upload all your stuff. Uit all depends, but get it quickly, do everything you can, justify with not just a listing, don’t just send listings and nothing. I mean, right out of big paragraph. Here’s why, here’s why I don’t think this and this, and this was fair. This is why this and this and is better. Uyou know, and, and do the best we can to, to try and better

Sean:

Isn’t there a 3rd party who can, like, it sounded like you had six months comparables to better comparables. And this guy was using incomparable properties that were,

Wynn:

In my opinion, in my opinion, it was, they were old properties. One of them, wasn’t not a compare. Now I understand like if there were only three sales around, that’s one thing, but there were plenty of sales that he could have chosen.

Sean:

But there’s not a third party who can over cause the guy can just blow it off as like a

Wynn:

No, I mean, there, there is an adjudication process. I’m sure. To do that, but is that going to be within the time timeline of this deal? No. So like we could, we could I’m sure. Send a, send a you know, a strongly worded letter to the board and, and say, Hey, and in 6 to 9 months, when they get around to it, they may pull this up and say, Hey, you did it. But I mean, it doesn’t help us out now. And so I, I don’t wanna say we can’t do that, but like, it doesn’t, it it’ll serve a purpose in the long run. It just doesn’t serve a purpose now to try and help our client. But to your point though, you don’t want the same appraiser doing the same thing again and again, and again, if you have a bad you know, a bad appraiser, bad realtor, bad lender, if you have somebody that’s, that’s not doing what they should be doing.

Kelly:

Yeah. This would make me mad because you have 111 Birch circle at $217k.

Wynn:

Oh yeah. So you want the purpose of a profession versus a job is self-policing right. Military medical. We are in a profession, right? A lot of people don’t think of us as in a profession, but we self-police our own kind. And if there are bad apples, we need to make sure that we’re you know, helping everybody rise up with the sea level, whether it be other training. I mean, nobody’s trying to get anybody fired, but we wanna make sure this doesn’t happen again. And the justification, but yeah, there, and then my next question was this – of all of these you’ve chose nine. Why, why didn’t you choose this one here on page one? Why is this one on page seven? So 111 Birch sold for $217k. The comparable value is $220k. 20 Ashley Lane. So for $197k

Kelly:

So those not on these front 2 pages, it’s not weighted as heavily, correct?

Wynn:

It’s not it’s weigh as heavily, correct? It’s the back pages are more of a justification to back up the first page. Sorry. So cost of repairs. So the cost of the repair that’s gonna be on this report may not be actual cost of in real, in real. So Kelly had a question of going over just basic cost of repairing the basic typical repair list. So like

Kelly:

A window,

Wynn:

A window. So if you have to replace a window, windows have gone up. So a window replacement. It is, if you need to replace a whole window, you’re probably looking about $600, right? So every window you need to replace, now that’s a whole window. That’s the frame in everything. $600. because the window itself is gonna be $300, $350, and then it’s gonna be another couple hundred bucks to have somebody install it. So a typical window is about $600. Now if you only have to replace glass, so you have a foggy glass, a blown seal, right? Call a glass company. Rick’s glass. J is it J and L yeah. J and L they’ll come measure. And those are typically about $300 to, to they’ll come on site, take out the old or

Kelly:

Like three, $400, Big pane

Wynn:

That was a big I’m I’m saying your typical your typical 36 by 30. I mean your typical windows are on average about $300. Right? Somewhere in that ballpark. So these are rough estimates. Now they’re gonna come out and they’ll measure. And if it’s a weird size, they have to cut it. It might be a little bit more, but

Kelly:

This is a dumb girl question when, but what, when you’re looking at something like that and it says repair and or replace window and or glass, when, when, you know when you have to, what, what causes you to replace a whole damn window versus just the glass?

Wynn:

So for me it’s functionality. Okay. Right. So there’s nothing wrong with the window and it works. It opens, it stays open. You know, it locks, it has, I mean, it’s a good window.

Kelly:

Because those lock like the, what do you call ’em that keep the window up? The stoppers?

Wynn:

Yep. Yep.

Kelly:

You, you can’t replace those. It’s pain in the ass is what I’ve ran into a million times.

Wynn:

Like the, like when you open up window and it slams shut. Yeah. No, actually so Jesse there are, they tear apart people who know how to do windows, make you look like an idiot, cuz they’re like, oh da da da and it’s done. And it’s like, wait a second. What? those, there are adjustments in there and it’s spring loaded and a lot of times it Springs will break and they can just replace the spring. And then it works. So now, and the older windows are counterbalance. Right. You’ll see some of the old wood windows with like a pulley. Those are a little trickier because

Kelly:

Or and old one that’s like maybe rotted out or something.

Wynn:

Yeah. Yeah. If it’s, if, if it’s got the pulley on it, normally the pull, like it’s not worth break

Speaker 7:

Yeah the whole thing collapses. The window breaks. Pulley’s stuck.

Wynn:

It’s painted shut. Like it’s, it just, it’s not worth it. I would replace the window or if it’s rotten, like a lot of the on the exterior, you’ll see like rotten, the bottom part, kinda rotted out, just replace the whole thing. Some people Bondo and paint depending on the severity of the window, once again, it’s, if it says repair or replace, you can repair a window with Bondo and paint. Absolutely. Just have to make it functional. Right. You need to make it, make it look good, make it functional. Because if I’m buying a house for hundreds of thousands of dollars, I want a window that’s functional. And I’d be upset with a seller. And with a seller’s agent, if you know, they just put lipstick on a pig. So windows replacing the double pane glass about $300 a pop ish, replacing a window about $600 on average ish repairing wood rot behind underneath a you know, the the door door jam.

Wynn:

That’s typically about a hundred bucks on average to replace that. Somebody’s gonna come cut out some wood, put it in, caulk it, fill it, paint it typically about a hundred bucks to replace that. What are, what are some other repairs that are typical on amendments to address concerns? Chipping paint. So chipping paint paint is typically well when it’s, when it’s paint repaired depending on the patch. You can normally get away with a couple hundred bucks for chipping paint. If you need to paint like soffits if you’re going around in the soffit fascia are, are, you know, you know, to, to paint, repaint, that paint to match is typically $300-$400 to, to repaint that. Some wood repair, a lot of times you have some rotten wood around soffits and fascia or on siding typically repairing siding to replace about 30 linear feet of siding is about $600 to replace and repaint. Some of these older wood houses

Speaker 8:

Now are these Wynn Martin painter prices?

Wynn:

No, these are, these are contractor prices,

Sean:

30 linear like

Wynn:

Yep.

Sean:

The entire wall? Or,

Wynn:

Well, I’m just saying 30 linear feet per board. Not 30, not, not 30 linear feet. I’m saying if you get a, if you get the board and you need to patch in stuff, about 30 linear feet of patching. Not, not of, not of side. Yes, no, no, not a side. Let’s see, let’s talk blown-in insulation because I have the answer to that. We’re doing that right now. So blown in insulation in an attic an attic that is 600 square feet is probably gonna be about $800 to have a company come out and do blown-in insulation in an attic is about $800. Square feet, 600, 600 square foot attic, about 800 square, about $800. Leaks. A lot of times you have leaks under the sinks under the house. More times than not, it’s a leaky gasket. It’s, you know, parts, you know, those typically would run

Wynn:

$150, $200 for a plumber to come out, licensed plumber to come out and just kind of fix a couple things up. They have all the supplies on the, on their truck, so they don’t need to run to Home Depot. They don’t need to do all that. So it’s a service call, which is a hundred bucks and then, you know, an hour worth of their time. So $200 ballpark would have them fix the leaks around a house. If you need to repair a water line running a main water line is about $900, $800-$900 to have somebody come out and run a new water line from the meter into the house. Let’s see. What are some other things that we’ve had to repair? Paint. yeah, so I mean your, your typical amendment to address concerns, the bill is gonna be $1500 to $2,000 on average, right. To, to kind of do these things. Hey, how are you?

Speaker 9:

Good! I’m Dave with Ameris Bank Mortgage.

Wynn:

Hey, come on in, come on in. We’re finishing up here. Okay. So something to the things that I always, the way that I phrase this to my sellers is this, when you’re buying your next house, do you want that to be move-in ready? And they’re almost always like, of course I do. Yeah. Okay. Well, if you’re expecting that at, on that end, you’re gonna need to expect to sell yours in that same condition. Because everybody doesn’t want to pay a dime to sell their house yet. They’re gonna want them to do all their money before I buy that house. Now, if you don’t care and I’m gonna buy it as is and sell it as is, that’s cool. Or if I’m gonna fix it and fix it, but you can’t have an inequity of whatever and setting an expectation for the sellers to say, Hey, no matter how nice your house is, they’re probably gonna ask for some repairs, just know that it might cost, you know, on, on average $1500 plus or minus, maybe $2000.

Kelly:

What about lifted siding or lifted shingles? Can that get flagged on the appraisal?

Wynn:

Typical. Typically not typically, not.

Kelly:

Okay I thought it was weird that they didn’t ask for that.

Wynn:

Typically not no

Kelly:

On the front they’re all lifted. They didn’t

Wynn:

Ask typically not. Yep.

Kelly:

Like, like they’re lifted like bowed off the house where water intrusion. Like if I was a buyer’s agent, I would be like, you need to fix that because water can get in.

Wynn:

Is that a conventional loan? Yeah. That’s why see now if it’s a VA, it was a VA. They might flag it. If it’s a VA or an FHA,

Kelly:

Sometimes agents will do that. They’ll get all their little finicky repairs and the due diligence because they know an appraisal, and if the seller, if the contract says, oh, the seller’s gonna do $5000 or $6000 work, they’d be like, well I’ll just get her around the back end. Yeah.

Wynn:

I had a contract fall out when inspection report came, fell out. I was privy to some of the repairs that needed to happen. And before we took the next contract with there doing the home inspection right now I got with the seller. I was like, Hey, here’s some things that they found that are gonna be significant that anybody’s gonna find. So let’s fix th,em now before we take another contract and make sure the home is ready because we didn’t know before what some of these issues were, now we do. And so we wanna make sure that the home home’s good. Because once again, we wanna sell a good home. We’re not, we’re not in the business of selling bad homes to people. We want to, we wanna do what’s right? Yeah.
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Video: PCS Webinar Recording – Our Best PCS Tips in 30 Minutes!

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Full Video Transcript

Hey, everybody. Thanks for tuning in. My name is Pat Wilver. I’m one of the co-owners of Trophy Point Realty Group. I was a third ID veteran stationed here from 2014 to 19, and I decided to stick around Savannah after I got out of the army. We’re here today to talk a little bit about some things to consider when doing a PCS move. So we’re gonna start off with selling a home. We’re gonna, we’re gonna assume that you’re selling a home wherever you’re coming here from, and we’re gonna go over some, some tips and tricks in that regard. If that’s not the case, if you’re not selling, feel free to go ahead and skip ahead past this section, because it’s not gonna be super relevant to you. Now, when you look at selling, there’s a couple things to consider. First of all, is the, is the, the money factor, the monetary factor.

And that is, “Hey, if I sell this house, can I take the equity that I have in that house and take that cash and go put it to use somewhere else that’s gonna make me more money than if I were to hold onto this house and rent it out?” And if all you care about is the money, that’s the only question you wanna look at. If the answer is “yes, I can find a better use for that money elsewhere,” then you should sell you should sell or you should at least refinance and pull out some of that money. Also personal preference comes into play. Maybe you don’t want to be a landlord. Being a landlord can, can kind of be a pain. And some people just don’t want to do that. And that’s perfectly fine. There’s nothing wrong with that. So that’s the reason to sell. And then third, you might have to sell maybe you can’t qualify for a second mortgage.

Maybe you can’t you can’t qualify for a second mortgage or maybe you’re having a divorce or changing your financial situation where it’s just not feasible for you to to actually keep onto that house and then buy a second one. So those are the three main considerations. So let’s take a look here. Next slide. Alright. So factor one that we look at is money. So we already kind of talked about this a little bit, so let’s just go ahead and go to the next slide, but we’ll get a little more detail. So this is an example. Let’s say you can sell your home and put $50k in your pocket or you can rent it out and make $5,000 in profit each year. And that’s, let’s just say that that’s your cash profit. That’s your, your cash flow. The cashflow of about $450/month.

That’s a, that’s a really good cash return on your equity. Actually, that’s, that’s really good. You, if that was me, I’d probably wanna look at, hold on. How do I hold onto that rental and buy something else? If I was making that much cash that’s, that’s pretty solid. Especially if you bought that home with a VA loan and you don’t have any money down, that’s, that’s pretty sweet. So, but let’s say you’ve got that $50k of equity and you know, you’re not gonna cashflow or maybe you’re gonna be cash negative. That’s gonna be a situation where, you know, look, look possibly to selling that property. And, and there is some other options too, we’ll talk about later. You don’t necessarily have to sell, if you have a lot of equity in your home, you can look into into a cash out refinance perhaps, and you can pull out some of that money, not all of it, but some of it and your cashflow will probably go down a little bit, but that’s, that’s a way to hold onto your property.

So personal preference, right? So we, we kind of talked about this. Do you want to rent, even if the numbers don’t necessarily add up? You can, you can do a HELOC which basically you know, as a line of credit, that’s tied to your home, that you can, you know, take out money. A lot of people use those to renovate homes, people who flip houses like to use HELOCs for those or cash out refinances, put a new 30-year loan on, pull out some cash. Other personal preference – do you wanna be a landlord? There’s property management, there’s answering tenant questions and issues quickly, there’s covering maintenance items. You know, it’s, the air conditioning goes out, you know, boom, there’s probably a $7,000 bill that you, you have to cover. So that’s, you know, some people don’t wanna do that.

And then, you know, maybe, maybe you have a use for that equity outside of, outside of making money as an investment. Maybe you’d need it to make a down payment on your next house. You about to send your kids to college. Maybe you have some credit card debt that you’d like to pay off. That’s, that’s a use, that’s a good use of that equity. And that might be a reason to sell outside of, you know, looking for a better investment. So necessity, right? Maybe you need to free up your VA entitlement. It is possible to have two VA loans at the same time. I actually myself have done that. There are some things you need to go to. You’re gonna want to talk to a good lender about your situation and, and ask a question. Can I get a second VA loan?

And if so, you know, in my case, when I got my second VA loan, I had to bring some money to the table as a down payment. So you, you may have to do that. Especially if the house you currently own on your VA loan is, is worth a good amount of money. So maybe you need to free up that VA entitlement. Maybe you need to maybe you just can’t qualify for two homes at the same time. Maybe you’re starting out your career in the army. You’re not making a ton of money yet, or maybe you’ve got a lot of other debt obligations out there or your credit’s not so great. Again, that’s a lender question – you have to ask if you can even qualify for a second mortgage. Like we kind of talked about maybe you need to access home equity in order to make the next purchase. And then of course changing your financial situation, divorce, things like that. Sometimes will make it necessary to, to sell a house, even if you don’t want to.

All right. So let’s look a little bit into renting out your home after you move away. So let’s say that you decided you want to rent out. What does that look like? Here’s the bottom line up front. If you, if you want to self-manage, if you want to not have to pay a property manager, then you need to already have connections with handyman, contractors, and other vendors that you’ve worked with and you trust. It’s very difficult to, to self-manage from a distance, unless you already have these relationships built. And there are people that, you know, you’ve worked with before and you trust them. So if you’re going to PCS in three months and you’re trying to self-manage and you haven’t built any of those relationships, yet, it, it might be a little bit too late to do that. So that’s important. So let’s talk about, you know, what are some landlord duties, right?

Well, the hardest one is really placing a tenant. It’s finding that tenant placing in under property. This is very, very difficult. I tried to do it once from a distance and it just didn’t work out. I ended up hiring a friend of mine who is an agent. This is before I became an agent and I was still in the military, and I just hired him to find me a tenant. It’s gonna be very, very difficult to do from a distance, not necessarily impossible, but you’re gonna have to pay somebody to do something. If you pay an agent to do it, and they’re doing this as a one-off I’d probably expect to pay one month on rent and commission for them to do that work. Maybe if they do you a solid, they do it for cheaper, but you know, me personally, I, I don’t really even like to place tenants.

It’s a lot more work than it’s worth to me. Unless it’s a rental property, that’s really close to where I live and it, and it’s not a burden for me to drive over and show it. So we’re also, you know, figuring out tenant issues and questions. Tenant calls you, Hey you know, the, “the sink’s clogged” the, you know, “I locked myself out” or, “Hey, I think there’s something wrong with the, with the stove”. These are things that come up. And, and what makes it difficult, this is the important contingency plan, right? You know, what, if you’re at NTC, what if you’re deployed? What if they can’t get ahold of you? Who, who a) is gonna answer the phone when you can’t and b) who can make a decision, say if you’re out in the box at NTC and say, you just went out and you got 10 days and air conditioning goes out and it’s summertime, you know, who’s, you need to have somebody who can make that decision for you while you’re not around, because your tenants are not gonna wanna wait 10 days for you to get back from the box to approve a $6,000 repair, right?

So that’s important. That’s very important. That’s something, if you don’t have a good answer to that, you should just have a property manager to handle that for you property management, typically a low-margin business. So it’s a natural incentive for property managers to cut costs. There’s, there’s some good ones. There’s a lot of bad ones, most real estate people who do property management, they typically do it as a way to keep their their past clients kind of in-house and top-of-mind, because eventually down the road they’re gonna want to sell. And, you know, you want to be the first person they think of. So a, a lot of the incentive to do property management, it’s not so much to make money on the management. It is just to kind of keep your past clients kind of in the, in the circle, right?

So get recommendations – investor Facebook groups are a good place to go, you know, find your local area and search on Facebook for real estate investors. Ask some, ask some people there. You know, if not, Google, call around, I find referrals typically to be the best. And then cost, you know, in this market is typically 10% plus tenant placement fees. And the Savannah market is typically a half a month rent is tenant placement. Other markets are as high as a full month rent, tenant placement. And you also need to vet these people, right? So interview a couple, don’t just go with the first person you talk to. Go meet with them, check out their offices. It look organized, you know, do they, do they speak well? Do they write well? Ask them, you know, what kind of software did they use?

Are they using a professional software like Appfolio, or are they, you know, old school or, or no software at all? How many properties do they have under management versus how many people on staff? Right. If they have 300 properties under management and only one person on staff, that person is gonna be overwhelmed and they probably won’t be doing a good job. And then it’s also good, I think, to call as a tenant. You know, look up a property they’re advertising, pretend to be a tenant. “Hey, I’d like to see this property.” How responsive are they? Right. do they get back to you or do they kind of just, you know, let things slide? Because I, I see properties sometimes, you know, listed for rent that are at a good price that should have rented. And they don’t. And I, a lot of the times it’s because the property managers are just not following up with those leads. So you don’t want that to be your house.

All right. So let’s, let’s say you decided to sell, let’s say selling’s the best best decision for you. And instead of going that route. So hey inventory is super low, right? The pretty strong seller’s market, even with rates going up as they are we still find it’s a pretty strong seller’s market. So you think the house will sell itself. Right? And that’s not always the case. There are a few things that you can do to get every dollar of equity possible out of the sale of your home while – and this is bold and underlined – making the process smooth and easy. Because you got a PCs move. You there’s a lot of, there’s a lot of steps and a lot of moving pieces that go into selling a home. And it’s, you know, a lot of work when you’re also trying to clear post and, you know, figure out the, the kids schooling situation and find a new house where you’re moving, et cetera.

So the first steps, right? So we have here, number one, call trusted agent, as soon as you can. Of course, I’m an agent I’m incentivized to get you to use an agent, but there, there are really two big reasons why I recommend that. And one is I myself will use an agent in a market that I do not understand. Other markets that I invest in. I use an agent, even though I’ve done a hundred plus transactions here in the Savannah/Fort Stewart market. I just do that because there’s so many different things and it’s not just, you know, figuring out what the market value of the home should be, but there’s different customs and different things that people do in different markets. That if, if you don’t know how those things work you know, it’s, it’s, you’re gonna be missing out on some things making it difficult on yourself and possibly leaving money on the table as well.

If you don’t know an agent, like I said, I always say, ask your friends for recommendations first. Right? That being said, your friends might have worked with a dud and not even known it. So you still want to vet these people, but, but ask and always talk to a couple different agents. You want to, you want to interview them, you wanna make sure that they return your calls, right? If you’re talking to, if you’re talking to somebody who say they take, takes them a day to get back to you, right. You know, typically either they’re, they’re too busy, you know, to take you on or they’re just lazy. One, one or the other. And I’ve been there before where I’ve, you know, sometimes forgotten to text people back. And that’s when I decided to start bringing on new agents onto my team, because I knew that I was getting busy to the point where I myself could not provide the level of service that I need to.

So I hired more people and, and now we do that. And take a peek at some of their listings. Right. you always wanna ask them “Hey, can I see some of your old listings?” Or if you go on Zillow and you search that agent you’ll, you’ll see their old listings the ones where they represented the seller, look at some of the photos. Did they, did they look professionally down or were they cell phone pictures? How did they sell? Did they go under contract quickly? Things like that. You know, the good thing about when you’re trying to vet a real estate agent is it’s very easy to look at their past work, because it’s on Zillow, it’s on realtor.com for you to see, you know, how they are. And how much deal flow they have. Are they doing 20, 30 deals a year or are they doing two or three?

You probably don’t want to work with the guy that’s doing two or three or the person that just started. Unless that person is working with a, you know, a team like mine, where they have people that they can reach to for guidance and, and wisdom and things like that. Our, our younger agents, we always take them under our wing and their first few months in the business, until they’ve established and they got rock and rolling, we, we help them every step of the way. So not necessarily bad to work with that rookie, as long as that rookie’s got a mentor, that’s helping them out, right? Sometimes I find rookies are the best because they have the most time and they’re putting in the most work. And they’re so scared about doing a bad job, that they can be very, very, you know, really very good.

As long as they’ve got some guidance. So what it’s next, right? Call your agent and look at some look at some, what are some home improvement projects that we can do, right? What, what’s some stuff that we can do to add some value? There might be some very easy things that you could do to add a lot of value to your home, um depending on what you’re looking at. So here’s some examples, you know, you can mulch the flower beds, replace your beat-up doorknobs, fixing dents in the drywall, touching up paint, easy things. This is something, if you’re a little bit handy, you know, you can take, you know, the two months before you go to move and you can just work on that, you know, Saturday afternoons and get that done. And I think it’s good. That’s why you wanna call an agent sooner rather than later, because you can agent in your house six months before, you know, you’re gonna move, um they can go over some of that stuff. And that way you’re not stressed out trying to get all these projects done right in the last month before you PCS. And then there’s some bigger projects too that you might want to hire out to a contractor. Maybe your flooring is really beat up and it’s time for some new flooring. Maybe your kitchen cabinets are just trash and maybe you want to, you know, do a little bit of a bigger project. That might be worth it. That might not. That’s why you want a listing agent’s help. So your agent should be able to ballpark you what it’s gonna cost, estimate how much value it’ll, it’ll add to the home and then provide recommendations for good contractors who will do the job, right and at a fair price.

So there’s some things not to do, right? If you’re, if you’re in a cheap, cheap, old starter home and all the homes around you are cheap starter homes it’s not gonna get you a bunch of money to put in stone countertops. Okay? It’s just probably not gonna be worth it. Go for butcher block. It’s gonna be a lot cheaper. It looks nice. Like for real also the real hardwood flooring, you almost never, it almost never makes sense to put real hardwood flooring. I met a couple sellers who wanted me to sell their house and they were just bragging, “oh, I put this real hardwood in, it costed so much money. It’s gonna add so much value,” and it’s, they never want to hear it when I tell them it’s not, it’s not gonna add value because every other house in this neighborhood has the laminate floors, the vinyl plank floors, buyers here are totally satisfied with that.

They’re not gonna pay you $15,000 more for their hardwood that they don’t really care about anyway. Right? so yeah, take a look at recent sales in your neighborhood. You know, what, what do they look like? And of course, again, talk to your agent. They should know. And you know, anytime you’re thinking of any home improvement project, maybe you just moved into your house and you’re thinking, “Hey, you know what, if I do this?” Call your agent, ask him, “Hey, is this gonna add value?” and just because it won’t add value doesn’t necessarily mean you don’t do it. If you want to do it for you because you would enjoy it. But that way you at least know you know, how much money are you gonna invest in this project versus how much will you get out when you sell it?

So getting to the market, right? Talk to the lender and figure out how much your debt to income ratio can support a second mortgage. If you can get approved for second mortgage, I recommend buying your new home and moving into it. Before you sell the old one and that way vacant houses typically are able to sell for more 1) because you are going to, it’s gonna be a lot easier for agents to schedule appointments. They can just show up versus having a schedule, makes it easier on you as well. Also you can really do a deep clean, you can really make sure everything’s perfect. And you know, especially I know when, when I was in the military and even now to an extent, because I’m kind of cheap. I had just had all this beat up furniture because I was PCSing all the time and it all looks terrible.

And sometimes it, I haven’t, you know, sold a house PCSing. I kept everything I bought as a rental. But if you were like me and have beat-up, ratty furniture, it’s better if that stuff’s out of the house, right? Staging, staging is sometimes good even in this hot market. I recently did a, a renovation project, a flip it was a beautiful, gorgeous flip. And I spent, you know, about $2,000 staging and I think it was worth every penny. Sometimes it makes sense. Sometimes not – depends on your situation and you don’t necessarily have to stage all the rooms. Sometimes just a few little decorative pieces can go a long way. Your agent should know who a good stager is. So let’s take a look. This is the timeline. This is a rough timeline. So let’s say, you know, June 1st is your move-out day, right?

These are your kind of big touch points here, right? So you want to do the cleaning after you move out. You want to do the staging after that if, if that’s something you’re gonna do. The day after that, professional photos, photos take a day or two to get back, boom, listing’s live on the seventh, right? If it’s priced well in this market, you know, if it’s priced well, you typically under contract – say you list on a Friday morning. Typically by Sunday night, Monday morning, you figured out who’s gonna buy your house. Right? Couple days later, buyer’s gonna do their inspection, a couple days after that they’re out of due diligence. And that means basically they’re buying the house unless it appraises low or they somehow don’t get approved for the loan. Takes another week after that, and then we can typically expect to close typically in 30 days.

So June 10th, July 10th, typically 30 days is that that’s most contracts that we’re seeing, right? So we’re looking at about a 40, 45 day period between the time you move out and the time that that house is being sold, more or less. Now what this doesn’t account for is sometimes an, an inspection happens and a buyer backs out. Well, that’s gonna add, you know, five days, five to seven and days on your timeline or it doesn’t appraise and the buyer backs out. That’s gonna add about 20 days onto this timeline. Those are things that happen. It’s it’s, you know, anytime you go under contract on that house, just keep in mind that it’s not, it’s not happening until the, the money hits your bank account, right? So always, you know, don’t start making big plans until you’re getting closer to that, to that closing time.

Alright. So getting to the market, so hey, most people won’t be able to move out before listing that’s okay. We just modify that timeline. You know, you get the, you get the cleaning done while you’re still living there and we just work around the schedule. That’s not so big a deal. The big thing is, try to take it down some of your trinkets some of your different photos and stuff because you want to have the house be as neutral as possible to appeal to the widest amount of people. And so that they can imagine themselves living in the house, right? If it’s all, you know, all your personal effects and all your trinkets, well, they’re gonna come in and that’s still gonna be your house, not theirs. You want them to walk through the home and, and imagine their own personal effects on the wall. Also, you know, try to keep the moving boxes, put them in a garage, put them in a spare bedroom. It’s much better if all of your random junk is in one spare bedroom and, you know, buyer can open a door and say, oh yeah, this is where they’re stashing all their stuff versus having moving boxes all over the house. So yeah.

All right. So here we go. There’s a couple things that we can, we can look to do to make the, make the transition easier. Right now in this market, sellers are pretty successful in getting a seller rent-back period. And what’s good about that is you can, you can basically sell your house, say you sell your house on June 30th and you still live in it until July 30th, right? That allows you to do two things. One, it makes your move less stressful. And two, the biggest thing is it makes purchasing your new home in your new duty station a lot, lot easier because it is very difficult right now, if you make an offer, say you’re going to Fort Carson and you make an offer. And in that offer, it says, “Hey, this is my offer and it’s contingent on my house in Fort Stewart selling”. That offer is probably not gonna go anywhere.

It’s probably not gonna get accepted. So if the house is already sold, you don’t have to make that that contingency, right? So that’s a good thing about that. Especially if you can’t qualify for that second mortgage without selling the first home, that’s a great thing to look at. And that’s, that’s why you want, you know, we see this next bullet point, lots of moving pieces, right? The agent helping you sell your home and the agent that’s gonna help you buy your new home and the lender that’s gonna give you the money to buy your new home, should all be kind of touching base about your situation, because you know, the, the, the agent that’s gonna help you buy a new home and the lender are gonna have information that the agent agent who’s helping you sell your home needs to know. So make sure that, you know, you trust both these people. If you don’t know someone, you know, in a duty station you’re going to you know, ask, ask your agent. If you ask me, “Hey, do you know a good agent in Carson?” “Yes, I do.” “Lewis?” “Yes, I do.” Bliss, Hood, you know, Bragg. I, you know, so especially if your agent does a lot of military PCS moves, they I’m sure they know somebody where you’re going. Somebody who’s good.

So what’s the relationship look like? You know, you can be as involved as, as you want to. Most of the time, you know, our clients don’t wanna be involved cause they have a bunch of stuff going on. They don’t have time to worry about it. That’s why they hired us. You should hear from your agent at least once a week typically, you know, at least once a day, your first weekend on the market just kind of keeping you updated, “Hey, we got these offers,” this, that, “let’s, you know, let’s pick a time to talk about all of them.” and then you sit down and you go over all the offers and the pros and cons each one, you pick one, you go under contract. Once you go under contract, you know, it shouldn’t be an everyday kind of thing, just as things come up you should hear from your agent. Um you know, it’s best to let your agent do the job that they’re good at, but always trust with verifying.

Don’t be afraid to ask why. It’s something sometimes I forget to explain why upfront. I just assume that people know things that, you know, they shouldn’t know, or they wouldn’t know. And so, you know, I like when my clients ask me, “Hey, why are we doing this?” “Oh, well, this is why we’re doing it because of, you know, this thing.” never talk to buyers. Don’t talk to buyers, do not talk to buyers, do not talk to buyers. I have never seen a seller talk to a buyer and do anything but give the buyer information that the buyer can use as leverage. It’s best not to talk to them. Really, whenever buyers are looking at the house, you should not be in the house. Couple reasons – one, you know, they’re not going to, they’re going to feel rushed. They might feel like you’re looking over their shoulders.

They’re not gonna say the things to their agent that they want to. But two, the biggest thing is you never do anything good by talking to those buyers or especially their agent. I love when I’m working with a buyer, I love when the seller’s in the house and I just love to talk to them and I put on my friendly face and I’m I’m friendly, but I’m always trying to get – what kind of information can I get that’s gonna help me negotiate the deal? You don’t want to be there. All right, so, Hey, let’s move on to buying, right. How do we buy? So when do you make your money in real estate? It’s not when you sell. It is when you buy, right? You make your money when you buy. What that means is if you pay too much now, it doesn’t matter what happens in the market, you’re gonna be in a tough spot later. You know, why I like owning real estate is the homes tend to appreciate over time. And every month, you’re paying off your mortgage balance instead of paying off your landlord mortgage. And you, the other good thing is too, you buy a home, you own a 30 year fixed mortgage. Your payment’s not gonna change. Whereas rents have traditionally always increased. So how do we do it remotely? When we look at some, some quick things, let’s say, you’re, you’re gonna be somewhere for only a year. Maybe you’re going to you know, Fort Benning for the captain’s career course or something, probably don’t buy there. Right. I, I didn’t buy when I went to the career course. It’s probably best to rent. Unless you just find a smoking good deal, which are kind of hard to find in this market.

Right. do you believe housing prices would be worth more when you, when you leave? So say you’re PCSing to a duty station that just got word that they’re gonna lose a whole brigade that might make a big impact, right? A negative impact on the housing prices. So, you know, do a little research on the local economy you know, like Savannah Savannah’s growing Fort Stewart’s growing. It’s, it’s the only the only port it’s, it’s the only armored assets on the east coast, the only armored assets within 50 miles of the deep water port. I don’t think Fort Stewart’s going anywhere, right. It they spend a bunch of money modernizing the brigades that, you know, so anyway, I’m bullish on Savannah and on the Fort Stewart market. And then will you be able to cashflow the house as a rental when you PCS?

It’s always something to look at. If, if you expect that you’re gonna be somewhere for five years, that’s not so much of a consideration because in five years, you know, there might be some fluctuations in housing prices, but typically in five years you’re gonna see appreciation not only in housing prices, but in rental amounts. So that should be a, a little safer, but I think it’s always good, like, “Hey, can I at least break even, if I have to rent this place, can I at least break even on it?” “if something crazy happens to the economy and I have to rent this thing for a year or two after I PCS, can I?” And, and at least kind of break even it’s a, it’s something important to look at. So here’s an example. If you’re going to Stewart and you’re buying a house in the mid $200,000 price point in Richmond Hill, those places usually run for $1700 to $1850 a month give or take.

And here’s some of your numbers here. So with your mortgage property management costs maintenance, vacancy reserve, you’re looking at, you know, roughly two to $300 every month in cashflow. So, so that’s good. All right. Awesome. and in addition to, you’ve also got increases in your equity that come from paying off your mortgage every month and from appreciation. So I I’d say that’s a good deal. And, and don’t forget these property taxes and insurance is not the same everywhere. It’s different in Richmond Hill than it is in Savannah. And, you know, it’s, which is different than it is in Texas and North Carolina. So if you’re going to on different market, you know, these numbers might be a little different for you. And also this mortgage payment, I mean, rates are going up, right? I did just edit this, you know, two months ago when I did this slide, it was $1100 a month.

You know, now it’s closer to $1200, it could be more or less whatever. So key players, right? It’s real estate. And we’ve, I, I think I’ve hit on this a lot. They should put your interest first. They should be candid. They should have a decent background with recent transactions. And communicative is, is the biggest thing. If they’re responsive and they get back to you quickly and they, and they work hard and they have some work ethic ethic, that is probably the most important thing that you’re looking at. Home inspector, right? I have my home inspectors that I like and I use over and over and over again for my own transactions and for my clients. I found that every time a client wants to use their own home inspector, it doesn’t go well. I, I had a client use one that he wanted to use and the inspector ended up missing about $20,000 worth of foundation issues that should have been found. So lender, you know, I have lenders that I like to work with. And again, I find when clients bring their own lenders, I’m typically not too satisfied. Although sometimes I am, I have found some good lenders from clients of mine, but I’d say four times out of five, they bring me a, a terrible lender. And now as always trust but verify, right? Look at reviews, Google, Facebook, Zillow, things like that.

So get acquainted with the area, right? If you can, fly out. Even if it’s a couple months before, and you’re not even ready to buy yet, just fly out. Tour some neighborhoods, meet up with your agent, drive around for an afternoon with them and, and get to know what you’re looking at. That’s important. All right. You can’t always do that though. So Google street view goes a long way. If you’re looking at a house and you can’t go see it, pull it up on street view drive kind of “drive” around the neighborhood on street view, and check the check, the date stamp on that imagery. If it’s from 2008, you know, it’s probably not good imagery anymore, right? And then check the overhead map, right? Are you close to an airport, interstate, railroad check the commute, you know, you can go on Google and you can, you can put the commute from that address to where you’re gonna be on post and you can, can actually set your arrival time to say, “Hey, I want to arrive at 0630” or really probably 0615 at least.

And see what, you know, you can see what gate traffic’s gonna look like. And as always, your agent should be able to provide insight as well. So common pitfalls, right? Generally, you know, your homes built after ’85 are gonna be up to current building standards, except some of those between like ’85 and ’90, you’re gonna have polyline plumbing, which isn’t that big of a deal really, but they don’t use it anymore because it has had some issues. If you’re buying something that was built in 2005, there’s probably nothing majorly wrong with it, right. You know, big ticket items: HVAC water heater is, you know, they typically have a 10 to 15 year service life $5k-10k for an HVAC, depending on how large your house is. And typically $1,000-$1500 hundred bucks to get a water heater replaced.

And people always freak out about water heaters. Like that’s really not a super expensive item. And then your roof, 25 to 40 years, depending on the type of shingle. $5K-$10K to replace those roofs, typically different markets are different. You know, I was talking to somebody who’s doing stuff in Virginia and he says, he typically has to pay a lot more than that. This is, this is for, for my market in Savannah, kind of what I typically pay for a roof. So, you know, it’s always the old houses you gotta watch out for. But the newer houses are typically pretty easy, especially for me as an experienced agent who does a lot of renovation projects, I can typically know pretty well, whether the inspector’s gonna find major issues. Virtual tours, right? So you’re, you’re remote. What I like to do is, you know, I got a little stabilizing gyro and I run it on wide angle lines at 60 frames per second.

And I send the videos. I don’t FaceTime because FaceTime gets grainy. I’ll send videos keep them kind of short so they send easily on iMessage and WhatsApp. And I, and I give narration, I can kind of anticipate the questions that somebody would ask on FaceTime and I’ll say, “Hey, these counters are made out of this. And this flooring is made of that. And you know, the flow in the shower is good, et cetera.” you know, some people, especially if you’re a really, really kind of picky person, maybe you want to get some short term rental set up for the first couple months that you are, you know, do your PCS, get a short term rental, and you know, actually go that route. That’s not, there’s not anything wrong with that. And of course, if possible, you know, you, it’s not very efficient for you to fly out when you’re viewing homes, right?

Especially in this market, you’re gonna probably lose some bids before you lock one up, so lock it up. And then during your due diligence period, when that home inspection’s going on, if you want to see it, then fly out or drive out and, and take a look. It’s definitely, definitely what I would recommend. So here’s, here’s how we kind of lock them down, right? It’s like, like I said, this is a seller’s market. So what do we do to win offers? Well, number one is price. I mean, cash is king, you know, how much money you coming in with. That’s the most important tied into that is kind of the escalation clauses. So we can say, “Hey, we’ll pay you $225k, but if you have a higher offer, we’ll go up to $235k to beat it,” something like that. No seller closing costs, right?

It’s hard to get to sellers to pay your closing costs. I, I don’t ever recommend that people ask for closing costs in this market. Typically your average home that people buy here in the Fort Stewart market, you’re looking at $6,000 in closing costs for like a low $200,000 home. And if you up to $500,000, you’re probably looking at closer to like $12k, $13k in closing costs, just to give you an idea of what that’s gonna cost. An appraisal gap, you know, that’s that’s a way to win. You say, “Hey, if it appraises low, we’ll pay the difference up to $10k in cash,” boom, you know. Large earnest money deposits. Your earnest money is a deposit that you make within a couple days of going under contract that gets sent typically to the closing attorney to hold onto. And that’s kind of your good faith thing.

It means, “Hey, first of all, I’m in the financial financially secure enough position to make this deposit. And two, if I don’t fulfill the terms of the agreement that we agreed to, that you get to keep that money. So if it’s the day before closing and I back out of the deal you keep that money, right?” It’s a little bit of security. Option money is that’s an optional thing. And that basically says, “Hey, I have this due diligence period where my earnest money is, is refundable, but you get to keep, you know, $200-300 bucks regardless. If I back out during due diligence, because I find some problems, you still keep that money.” it helps keep your due diligence periods tight. You’re not gonna get a two-week due diligence. Okay. A couple years ago used to be able to get a two-week due diligence. Nowadays, I don’t recommend any more than 10 days and really 5 days should be enough time to get an inspection done on most houses.

This is an important point. You don’t need to pull all the available levers, right? I, I won one. Oh, here’s the most important – seller’s needs and wants, right? So I find out from a seller one time that he needs to sell his house before he can buy a new one. So we offered him a 45-day rent-back and that’s what won us that bid. There were higher bids, but we offered the rent back and we won it. So it’s always important for your agent to ask that seller’s agent, “what do you need? What do you want? What are things that we can do to win this bid that are important to your seller?” so that that’s an important piece as well. Awesome. So that pretty much ties it up guys. You know, this isn’t a live thing, so there’s not gonna be question and answer from the audience.

This is a recording. I encourage you, if you have any questions leave us a comment. Send us an email or, or a text. We’ll put some contact information up. We would love to talk to you. And there’s a lot of, this is a very general try to make this somewhat fast. There’s a lot of information in your specific situation that we probably didn’t cover. So hopefully now you at least know what questions you should be asking. Please reach out to us, ask us the questions, ask how we can help. Even if you’re not doing business in Savannah or Fort Stewart. And you’re trying to go somewhere else. If you happen to see this video and maybe you’re moving from Carson, to Bliss, give us a shout. We’re happy to recommend friends of ours out in those markets and help you out. Thanks, guys!
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Investing Selling a Home

Video: Making Your Home WOW – Design Tips with Kelly, Pat, & Wynn

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Full Video Transcript

Pat Wilver:

We’re here today to talk about some of the design decisions that we made when laying out this home. And I think this will be a very useful video for you, whether you’re getting into home flipping, maybe you’re thinking about selling your home soon, and you wanna know how to get the most value out of it. Or even if you’re considering a renovation, maybe you never want to sell the home. There will be some useful tips and tricks that you can apply to really knock it out of the park.

Wynn Martin:

Nobody has an unlimited a budget. So where you put your resources is very important. Most of the time your kitchens and bathrooms are gonna be the best bang for your buck. Once the renovation project is complete, do you, or don’t you stage it? Pat and I are in hundreds of houses a month, some staged some unstaged. And when we do our comparables, when we run all the numbers at the end of the day, the staged houses that we’ve been in do sell for more. Even in this hot market.

Kelly Duncan:

Patrick gave me a call. He had a unique flip coming up. It had a very unique layout. You name it, it had it – from floral wallpaper to hideous wall color, to awful carpet, a very outdated kitchen.

Pat Wilver:

From the first time that I walked into this house, I could see the vision and I could see what this could be, even though it was a total atrocious dump back then. And now when we walk through, we’re immediately greeted by the, the black accent wall, that corner wall with the fireplace, and it catches the attention, kind of draws you to turn right, and the black accent wall, really make it so it’s not a dull space. And it’s interesting, you got this beautiful natural light with these huge windows.

Wynn Martin:

It’s a good focal point for the beauty of the room. Lets in the natural light. And as you can see the way it’s staged it just looks great.

Kelly Duncan:

When I walked into this space, I knew it had that modern feel. I knew we had to have white bright walls. So as the light changed throughout the day, the colors of the walls would not. We picked a very light flooring to brighten the space even more, wood tones throughout and black metals and shag rugs. The uniqueness of this living room space is it almost had an alcove, and I knew immediately it had to be an additional sitting space. So a buyer could come in and visualize that this is an extra large living room.

Pat Wilver:

This is a great space to entertain, to have friends and family over plenty of places to sit. We’ve got the beautiful kitchen that we come through. In the kitchen, we wanted to make it different with this shelves and vent hood that’s that’s in right now. And we’re able to do that because there’s so much countertop space, plenty room to put in microwave. The gray cabinets, again, it’s unique. We tie everything together with the, the color of the handles and the, you know, the faucet is something unique.

Wynn Martin:

It’s really cool! Black and gold, it’s got a whole bunch of little widgets and everything like that. For the cost that he mentioned, it’s well worth the cost. Having a really nice sink – farmhouse sink, kitchen looks great. And he did upgrade the stone. The stone. He could have gone with a level one kind of granite or something like that. He spent a little bit more money, a little bit extra and it looks like a million bucks.

Pat Wilver:

That faucet that we used is maybe $100 more than a more standard one we could have done. So we’re talking $300 worth of difference for, you know, I don’t have the exact number, how much more money did I get because of that? I’m not sure. I know it’s more than $300. The bar room is the really, the only space that I didn’t put a personal touch on because in this case, that’s something I wanna leave up to who buys this home. People could do so many different things with that, but it’s there. It’s ready to go. It’s gonna be a great space. The hall bath is spacious. It’s well-designed, but it’s a hall bath. There’s not a lot of thrills. The master bath and the master bed is really the statement here. A huge, huge, huge master bed. Nice big closet, much larger than most of the houses in this neighborhood so we stand out. In the bathroom with the, the massive double vanity what we did with the lights and the mirrors and, and the black I think is, is good. Not a lot of people are doing black right now. So I like to be, as we said, I like to be different. And I, I love the shower. It’s so big. You don’t even need a door on that thing. Really, really happy with how this turned out,

Wynn Martin:

Whether you’re doing a personal project or whether you’re doing it for a client this case here, this beautiful home we’re in is Pat’s. Any of our clients, anybody that works with us knows that we do it right. Trophy Point Realty Group – we want to do things the right way, honesty, transparency, integrity. We need to tell you what you need to hear, not what you want to hear. And that goes a long way in the finished product. In working with professionals, Pat mentioned professional contractors staging, design we’re certainly professionals. And we want to make sure that every experience that anybody has is top notch.

Kelly Duncan:

You get the full package with us because I’ve had years of experience in home staging and picking design materials. We can give that to all of our clientele. So if you are an investor that is out of state and doesn’t wanna pick materials, but doesn’t wanna pay that designer price, you can reach out to Trophy Point Realty group. We offer all of it.

Pat Wilver:

Whether you have a heavy lift or you just need a couple little pointers, maybe you’ve got a weekend and $300 you want to spend to add some wow factor to your house. We’re happy to help and pass on our lessons learned so that you don’t have to reinvent the wheel. You can draw on our experience to help you.
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Buying & Owning a Home Investing Savannah Market Selling a Home

Savannah Suburb Flip: Before & After

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Full Video Transcript

We’re heading out to a new property out in Georgetown little suburb of Savannah, about 15 minutes from downtown, and it’s a new place. We just bought it on Friday. Today’s Tuesday and we’re starting demo day. Got my contractors out there. They’re already out there. So we’re hoping to to catch ’em before they get too much done. It’s just fun. I don’t know, swinging a hammer, knocking out cabinets, like that shit’s fun. Right? Who, who doesn’t like getting licensed to destroy a house? You know?

I wanted to talk a little bit about the numbers and about, you know, how I decide what a good deal is. So this particular deal, first thing you do is just a little bit of digging and the easiest thing to do, you can do it from your computer is what will this house be worth when it’s fixed up? $289K was my number. It’s gonna be worth $289k. It’s a 4 bed, 2 bath, 2400 square feet. Big house. We’re gonna make it nice. The next thing I look at is where’s the seller at right now on his number? What does he want? And I knew that he was around $140,000 on what he wanted for it. So I said, well, that’s, you know, we could make that work. $73K is the rehab budget. If we add purchase price and rehab budget together and round up a little bit, we’ll call that $220k is our, is our all-in for hard costs.

Do not forget to factor in your various soft costs. My interest closing costs – it’s gonna be around $5k or $6k and then insurance is gonna run me about $1,000, you know, power and water. And so all in our soft costs are, are gonna be around $15k. I know I can sell it for $289k. Obviously there’s a good bit of room there, right? There’s, you know, sounds like we’ll make money. So I feel pretty good about this. You know, these, these projects, they should make you a little nervous going into ’em. And, and I find that, you know, the action is what takes away the nerves. When I see my contractors out there, you know, getting it done early in the morning makes me feel good. You know, we’re seeing progress. So demo days, man, they’re fun. Check it out. We are finally done with 18 Red Fox here in Georgia. I’m so excited to be done with this. It’s taken a little bit longer than we wanted to, and it’s always a little bit stressful, but we’re under contract already. We’re selling a place – we didn’t even have to go to market. So I gonna take you through, I wanna talk about all these different design decisions and how it led up to the final product, what you see before you right now. So let’s go take a look.

I love how you’re just greeted instantly with natural light from those windows. This is very well laid out – staging, I think, looks great. And I love the fireplace wall. I think looks great. You know, white and black is in right now. So we’re always trying to stay on top of the trends, but not only is it trendy, I think it’s something that’s gonna look good still 10 years from now, because this is a very classic kind of thing. One of the things we like to do when we’re flipping a house is we wanna try to make it appeal to the most amount of people as possible. So, I love how this turned out. I think the staging here really ties this together. When I walked in after the staging and I saw what Kelly, the stager, had done with this space, it just made sense. It just clicks with me. I’m like, oh, of course we’re gonna put chairs there. That makes total sense.

Love the kitchen. Man, they say kitchens and baths sell houses. So, if you’re gonna spend money in a house by God, spend it here. In, in this kitchen, some of the design elements, we wanted this to kind of be the statement. And you, you walk in and your, your attention’s drawn to this, right? Shelves are in, stainless steel vent hoods are in, you know, subway, tile back splash to the ceiling taking that all the way to the ceiling. Did it cost a little bit more money? Yes. Okay. A lot of people will stop it. You know, maybe at the top shelf or maybe they’ll just do a little run of back splash, but we’re talking a couple hundred bucks maybe. And, and what’s the difference in quality in that wow factor? I think, I think it’s pretty huge. So I love the way this turned out.

It kind of makes a statement and it’s very functional. Look how much space there is. This is a large run, and believe me, I know because I spent a lot of money on this stone, right? But it’s large. It’s very functional, you know, for cooking large meals, we can have some, you know, stools here for a little breakfast nook if somebody wanted to do that. Very, I think this is a really great combination between functionality and just, it looks good. So the color are good. You see the colors here. Grays, whites and blacks are very neutral. So that’s why we kind of go with, with this. And then we, you know, we throw on these, handles it just kind of give it a little, a little touch of pizzazz right? Or this sink. I love farmhouse sinks. I think it looks really good. It costs a little bit more money than a standard undermount sink. But well worth the money I think. And I love this. It took me a while to figure out how to even use this dang thing because it’s coming out here, but then what do you do here? And look at that, you know, that’s just, that’s cool. You know, that’s better than the sink I have at my house. So, you know, I kind of live in a shitbox and I make all these nice places for other people.

We definitely spent a lot more money in the master bath than the hall bath, but we still want this to look good. It doesn’t make any sense to have a kitchen that looks like that and then put like a vinyl insert shower, right? That just does not flow well. This costs more than a vinyl insert. Probably spent $2,000 to $3,000 more tiling this than if we would’ve just got one of those inserts that you get at Home Depot. But again, that’s, in my mind, a money well spent kind of thing and, and we didn’t get too fancy. This tile on the floor is pretty cheap. I think it’s like maybe $2 a foot. This subway tile is not very expensive. This vanity, you know, is, is kind of like an off-the-shelf. You could probably go to Home Depot right now and buy this, but it’s the simple things.

I think the black all the black fixtures are modern and it’s, and that costs just the same as any other fixtures would’ve cost. Maybe we spent a little bit more money on this light bar than another one, but we’re talking $50. I can’t stand when flippers – I’ll go into somebody’s house, they flipped and they’ve got the same frigging, $100 ceiling fans that everybody else has. And it just, there’s no character, there’s no style and they could have spent $50 a fan more just to go the extra mile. Just doesn’t make any sense to me. So we spend a little bit more money, not much. I think it looks great. This is the master. So this is huge, great closet. I love this bath. I don’t even remember what was here. It was dingy, nasty straight out of 1975.

I love this. This is one of the biggest showers that I’ve done. You’ll notice we don’t have doors on it. So I had some people ask me, oh, why not doors? You know, whatever. A couple reasons. One, honestly I think it’s big enough that you can get away without a door. Two, they cost a lot of money. They’re kind of hard to get right now with the supply chains and all that. And three, it doesn’t really stop a buyer from buying this place. This is a strong seller’s market, as we know, right now. So just not really worth it. If this was a smaller space you know, we probably would, but you know, we’re not even, we’re not even getting water over here. Right. So I don’t think it’s really strictly necessary to have that. So I hope you enjoyed this whole video and seeing the before and after and all the decisions that we made. I hope you learned a lot from it. We’re very excited about this. And you know, we just wanted to say that we do this for ourselves. We flip houses for ourselves and we also love to help clients. If you’re an investor and you’re thinking about doing this, or even if you’re just a homeowner and you want some advice – “how do I sell my house for more?” “What easy projects can I do to get top top dollar?” Or, or maybe you don’t even wanna sell. And you’re just wanting to do a renovation for yourself. Please give us a call. We’re happy to give advice, take a free consultation.

And, and I’ll be honest with you. It’s more important to me to do a good job for my clients because that’s their money. My money, you know, it’s my money. If I lose it, the only person I disappoint is myself. And I, I don’t wanna disappoint anybody else. So we love doing this for ourselves. I genuinely enjoy the process, and seeing a house transformed and then sold on to a new homeowner or a renter, depending on the situation. I love helping other people do it. I think it’s very exciting. It’s a great way to earn a living. So thanks for joining me.
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Selling a Home

Video: The Importance of Home Staging

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Full Video Transcript

My name’s Kelly Duncan. I’m a realtor with Trophy Point Realty Group in Savannah. I’m also the proud owner of Pelican Watch Furniture that specializes in interior decorating and home staging.

Home staging is crucial. It is your first impression. This house, for example, that we are shooting in today was listed in Midway at $154,900. Within 24 hours, we had an above-asking offer on the table. Uh within 48 hours, we had an offer that was almost $6,000 over asking price. It helped these sellers achieve top dollar for their home. The facts are there that they sell at higher value. So I have the ability to create a design quick for that home, that appeals to that space and can have pieces turned around for my clients very quickly. And the biggest perk is as a seller, you will see little to no cost when you list with me for the cost of home staging. Wynn Martin and Patrick Wilver, the owners of Trophy Point Realty Group they taught me everything I know about being a realtor and it makes us the full package. We can give our investors the design help they need that a lot don’t have time for. We can give the home staging side that listings need to sell their properties. And then we have the foundation work of amazing realtors that I’m honored to be a part of.
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Investing Selling a Home

Video: Hinesville Flip Walkthrough

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Full Video Transcript

Pat:

Right. So we’re in Hinesville, we’re driving out to check out one of our flips that’s been under progress. We closed on it about, about a month ago, a month, five weeks ago a client of mine closed on it. We’ve been managing the, the renovation process and we’re, we’re wrapping up here. So I’m coming to check it out. This project has been basically just a cosmetic-only rehab. We did fix some some rotten wood on one of the sheds, but other than that, you know, new roof, new floors paint inside some paint outside, new kitchen. We got new cabinets in, new countertops. I think the countertops go in today, so hopefully we can see that. Appliances are on order. The total budget was about $32,000 for all that stuff. Which is actually pretty good. I mean, we spent kind of the breakdown was the new roof on the house,

And one of the bigger sheds was about $8,000 and that includes the roof and a on this shed, there was a lot of rotten wood. We had to replace basically all the the 2×6’s on this shed. And the kitchen we spent probably another $7k or so – countertops cabinets just off-the-shelf cabinets, stuff like that. Paint inside was a couple grand, we put new we called LVP. It’s basically vinyl plank floors. It’s that stuff that’s looks like wood, but it’s not that’s very popular in a lot of houses, lot of, lot of buyers like that stuff. Typically we spend about $4 per square foot installing LVP, and that’s the price of material and of labor. So that cost us about $5,500, I guess. So this, this project’s been running along pretty, pretty quick. We’re actually a little bit ahead of schedule, so that’s good. The one thing that’s going to kind of hold us up is with the coronavirus and everything. Actually, the appliances are on back order, because they’re, you know, I guess most of those get made in China and the supply of chains are all messed up. So we’re gonna probably have to list it without the appliances in the house, which is not ideal, but you know, we’ll make do.

Alright, Hey, we’re here at 303 South Maple Drive in Hinesville. We’re gonna check on some progress. What we’ve done so far is you see, we’ve got a brand new roof on there. We’ve already painted. So this, this was just kind of nasty-looking so we painted this. I think it’s come out pretty good. These new shutters. I think, I think this goes really well with the house. This door is new. Of course we’re gonna mow the lawn right before we list this, but not a big concern just yet. This is redone. This is painted. And then you can see this little, little bit of concrete here. This is actually we did this because when we tore out the wall inside, we’ll take a look at it, but there was a lot of rot and the reason was, is water would come down and it would slope and it would get underneath the wall here. So you know, we had the contractor, you know, we said, Hey, let’s, let’s kind of seal this off and now it’s it’ll slope, you know, water will come and then it’ll run out. So that’s why that’s there. That’s a little, that’s a little thing. That’s something we didn’t really have to do. Because no, buyer’s really gonna catch that, but it’s, it’s good to do it. It’s gonna save somebody, you know, a lot of trouble because the same thing would’ve happened that, that wood that’s in that wall. Would’ve just rotted again, it probably take 5 or 10 years and you know, that’s a pretty cheap fix for us to do. Let’s go inside. So this is the LVP I was talking about on the floors. So this is what it looks like.

So this is the this is the LVP that vinyl plank. So it’s pretty thin. What, what a lot of people like about this is it looks pretty good, right? When you look at the floor, it looks good and it’s super durable. You know, you got pets, um you know, somebody, one of the dogs takes a pee on the floor, you know, if you, if you, if it’s on hardwood or if it’s on especially hardwood laminate, and you don’t clean it up right away, it’s gonna ruin that floor. And this stuff? Good to go. No, no problems. So most new construction is gonna have this if you own any rental properties, I would definitely recommend just, just put this in, right? It’s gonna be more upfront cost than carpet, but it’s gonna last so much longer. It’s a lot less hassle. I mean, this is just good stuff. And you can can buy this, um the cheapest I’ve seen is about a $1.60/foot usually about a $1.80/foot. And then like I said in the car, you know, the you’re gonna pay somebody to install. It’s gonna generally be about $2/foot to get this in.

So this was before, this was like an ugly tile in this room and we just, we just put the floor right on top of the tile, save a lot of money that way. Taking out the tile, um that’s, it’s kind of an arduous process. Um looking that way, we had some water damage over there that’s been repaired. So this is, you know, they came to the job said get it replaced, it got replaced, um repainted of course. The, this is new. There we go. This is a new light fixture. We’re keeping the original windows. These are double-paned windows, don’t need to replace them, even though they’re a little older looking, they still function just fine.

Alright. So in this bath we’re gonna clean it up. This is, this is basically the bath that it was before. This is, this is just gonna get cleaned up. We thought this was in good-enough shape. And this is an odd size vanity to find. This would’ve cost us some money to replace this. And now we’re gonna put a mirror in um. This light bar is new. I forget what it was before, but it was kind of ugly. So we just put a new light bar in here. This shower itself um,

We kind of debated on possibly taking the seat out. There’s that, there’s that seat there, right? It would’ve, if we would’ve had, if we would’ve taken that out, it would’ve cost us so much money to retile it. We said, forget it. Let’s just leave it. Somebody’s either gonna like it or not, you know, whatever. At the end of the day, it’s the hall bath. So it’s not as important as the master bath, which we’ll take a look at just in a second.

So here is our master bedroom. So we still got some doors on order that need to come in. You’ll probably notice throughout the whole house, we don’t have any of the air vents yet. So that’s, that’s a punch list item that we usually get towards the end of the project. Umthis window was not trimmed out before. So we put the drywall in here, and we put this window sill in. And this – let’s see.

So here’s our, here’s our doors, right? Our closet doors. This bathroom was actually already, this tile was already up. The previous owner, I guess, had started doing some work, you know, didn’t finish it. We put this new vanity in, we put this light bar that matched the other one. We’re gonna put a mirror in. Other than that, pretty much haven’t done anything. I think we’re, I think we do have a budget for some new, new fixtures here. I can’t remember if that was in the budget or not. There’s really nothing wrong with these the way they are, right. This is Hinesville, you know, we’re not, this isn’t a $300,000 flip, right? So, you know, you kind of want to look at your cost-benefit when you’re looking at money to spend um. Let’s start at the kitchen, and I’ll talk a little bit about some of those considerations.

Totally new kitchen in here. Um these are these are off-the-shelf cabinets. This is, I believe, where our sink’s going to go. So this hasn’t been cut out for the sink yet. This is where it’s gonna be dishwasher here. Stove’s going to be right behind you here. And then you can see this is, this is set up either for electric or you could do gas and I think we’re just doing electric. This will be your microwave and vent. So we kind of talked about all that stuff’s on back order with the coronavirus stuff. Typically, when you bring a house to the market, you want to have all the appliances in it, right? In this case, our choices are, you know, we can bring it to the market next week without some of the appliances, or we can wait three weeks for the appliances to come in. We’re just gonna put it on the market. You know, it’s not ideal, but better get on the market. Somebody’s still probably gonna buy it.

So that’s that so installation of new cabinets and countertops is $4570. All right. So that’s these new cabinets. These are off-the-shelf cabinets. This is butcher block countertop. We like butcher block because it still looks good. We’re gonna stain this a little bit darker. And it still looks good. I think in my opinion looks better than, than the laminate countertops, but it’s about the same price. This price point doesn’t make sense for granite, right? We don’t really spend granite until we get over a $200,000 house. And even in Hinesville, even a $200,000 new construction, they usually don’t have granite. Doesn’t make sense for granite. So butcher block is gonna look sharp. This gonna be stained a little bit darker. There’s gonna be some subway tile around. So I, I think it’s going to be good. You have like a darker wood floor with white, and then darker countertop, stainless appliances, you know, nice deep sink. It’s gonna go right here. Some subway tile. I think it’s gonna look pretty sharp. So we’re excited about that. We put these can lights in can lights are cheap. And I think these were all five of these lights cost us – Hey Gus what did the can lights cost us? Do you remember?

Gus:

I don’t know, $40-50/piece probably.

Pat:

$40-50 bucks a piece. Right? That’s one of those things that it’s worth it. Like put the can lights in people like a lot better. I think there was just like a, was it a fluorescent light?

Gus:

No, it was a some design. Like they had up there with little globe, little little, remember it had like, no, no that was one of the bathrooms. May have been a fluorescent in here.

Pat:

We, we got, we got pictures. We’ll take a look. Yeah, yeah. But whatever it is we looked at, we thought, look, we spend a couple hundred bucks, put some can lights in. It’s gonna look so much better. Looks a lot better. Kitchens, kitchens sell houses. If you’re gonna spend money anywhere, spend it on the kitchen, we spent little extra money. I think it’s gonna pay off well for us in here. So that’s, that’s the kitchen, right? Whenever you’re looking to flip, always check the electric system, right? This is a newer, this is built like ’84. So this is, you know, circuit breaker, right? The, some of the houses in Savannah that are older you’ll see a lot of fuse boxes and stuff, you know, and you might even see some, knobs and tube wiring. Luckily built in the ’80s. Don’t really have to worry about the electrical system.

We did a little work in here. You know, we got a new, new plumbing for the for the washer and dryer, right? So we come in here water heater, right? So, there was, this is like a pressure release valve right here, this little tank that was not on the hot water heater before. And then when you’re, when you look to sell a house to like an FHA or VA buyer, the, the appraiser’s going to come in and if they don’t see this, they put it in there. So we want to, we already know this is gonna go to a VA buyer most likely. So we just put it in before they even ask for it. So that’s something you want to budget for before looking at some of these flips. We, we replaced the whole, the whole roof. So we got new shingles on the house, new shingles here. And we also had to replace the actual you know, roof joints in here. They were two by fours, which is not, it’s not thick enough. Right? So they were all warped and sagging. So we put 2×6’s This was, this was all rotting out.

So I’ll get in the door so you can see, here’s our, our new see the ceiling here that we put in.

This was all rotten out. The reason this was rotten out is you can see the picture of this roof is it’s not very steep, right? When you have, have a shallow roof, you’re not supposed to use like the three half shingles that you see on the house over there. You’re supposed to use like a rolled roof because a shallow pitched the water doesn’t run off fast enough, basically. So you can’t have shingles like you see on a regular roof or else the water will kind of get stuck in there and it will seep through. And it’s just no good. So that’s why this was, this was rotted out.

So this this building here, this is the it’s an outside toilet, right? So it’s a little weird. You don’t often see that. The previous owner used to have a lot of, you take a look in there, used to have a lot of parties, I guess, and people be hanging outside and he thought, well, I want to have a toilet outside, so people don’t have to go in the house. The problem is what are we gonna do this building? We thought maybe, maybe we just tear it out. Right. But if we tear it out that costs money and then we gotta break up this slab and that costs more money, this concrete slab. So what we decided to do was let’s just finish it. So we finish it just to make it look better. And ultimately that’s cheaper than just tearing it out.

Right? Most people, you know, I don’t think this really detracts from the value to house. You know, either, either you want a bathroom outside or you don’t, if you don’t, you just never use it and, you know, whatever. I mean, heck they can tell the new owners can tear the toilet out and the sink and make it a little storage shed. I mean, whatever. You, so, so that’s why we just let that that’s the cost benefit, right? What’s what’s, the cost of tearing this thing out? Probably would’ve been $2k. So we thought let’s, let’s spend $500 or $600 instead just to make it look a little better. So that’s what we did.

So I think the last, the last video we shot was before it even hit the market, right? So we were driving around in the car, you know, my awesome video guy’s gonna edit that and it’s gonna be great. And, and that was a couple days before we hit the market. So we hit the market. You know, we had the photographer, did a really good job and he did 3D photos as well. And it’s like super cheap really worth it. Especially in Hinesville, you have a lot of the military people – like the buyer who, who chose our house actually was moving from a different part of the country. So like he never saw it in person until like a couple days before we closed on it. So I think that the 3D the 3D stuff really helped, you know, I don’t know why, you know, anybody wouldn’t do it for how, how cheap it is.

So we came to the market on like a Thursday. We had, I, we had 3 showings over the course of the first, like 4 or 5 days, which is a little bit, you know, less, definitely less than we’re used to. In like, you know, Savannah. But this is Hinesville. It’s a little different. It was still a little bit less, you know, we were hoping for more, we, we did know that the price that we listed out was probably a touch high. You know, $165k was more where we should have been, we were $169k. We said, Hey, let’s go for it. Like we staged it. We think we really crushed this, you know, this is better than the average house in the neighborhood so let’s, let’s get a little bit more we had one offer at like $160k and they wanted some closing costs.

And we said, no, I mean, we’re not even gonna counter that. Like, you know, that’s, that’s a game we do sometimes, you know, you don’t especially first, first week on the market, I try to get buyers to bid against themselves. You know, you give me a low ball at like the first weekend on the market. I don’t even want to counter it because if I counter it and you agree to it, what if somebody else would’ve taken a look at it, they could’ve put in their own offer. I’ll say, come on, you know, I’ll go to the agent and say, come on you, you gotta do better than that. So we did that and then somebody else showed it, they brought a full price offer. They asked for closing cost assistance, like $5,000, which is typical. Like we expected it. So we said, sure, we’ll go with these guys.

Pretty clean process. They did their inspection and of course they found things. Yeah. They gave us like a, they basically just copy and pasted the inspection report and well some of the stuff was ridiculous. So we just came back and said, look, we’ll do you know some of these, some of these things that ended up costing, like another couple hundred bucks that took about a month little bit more. I think it was like 34 days or something. We got delayed a couple days because of the lender which going into it, you know, they said that they were closing the month and a lot of loans, especially VA loans have been kind of slow lately. So, you know, I said to my client and said, I, I’m not super confident this is gonna close when they say it is. And it didn’t, but it wasn’t that big of a deal because we already kind of expected it.

So it did close, a couple days late. You know, it was a pretty smooth process. The appraisal was just fine, you know, the inspection, like especially any flip, there’s gonna be some things that get overlooked. So when they, when the buyers come in with their home inspection, they’re gonna find some stuff, you fix it, we want to make it right for them. So we did. And then actually, so it closed, it closed late. Right? And the buyer wanted to move in before closing, which is like, no, like you don’t don’t ever do it. I, I, I wouldn’t almost, know, I do have a different deal where we are doing something like that, but that’s a different, you know, high-price-point deal like this is, we just don’t do it, especially right now. There’s an eviction moratorium, a lot of people don’t even know whether you can get somebody out of house.

Because what if you let them move in and then, oh my God, they lose their job and now they can’t get approved for the loan, but now they’re living in this house, like that’s just nightmare fuel, you know, you don’t. We said, Nope, don’t move in. So it’s kind of a burden to him that kind of sucks, but I got to protect my seller, you know, at the end of the day. So anyway, we closed it, closed on time. After that, you know, they said, Hey, we need a couple more days. And they closed it when they said they would after that. And, and it went well, my seller made let’s see, I think $30k, somewhere between $30,000 and $40,000 you know, profit on that. His investment was, I think $18,000 is what he had to make a down payment for when he purchased it.

So he bought for 60… I think it was $66,000 or $68,000. We put about $35k close to $40,000 in repairs into it. And of course it sold for $169k. So after, after paying some of the buyer’s closing costs paying, you know, me, my commission and the buyer’s agent commission, he, he made out a pretty good check. And he didn’t even he was in New York the whole time. He lives in New York. He’s literally never seen his house. So it’s a pretty good, pretty good deal for him. We’re glad that we linked up with Gus up there our contractor, who’s got another job in progress that we’ll show you probably in the next video and he’s, and we’ve probably got another one coming up soon within the next week or two that he’s gonna start. So I think we got a good, good thing going.
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Categories
Military Selling a Home

PCS Moves, Part Three: Selling Your Home

Hunter army airfield homes

Maybe you decided renting isn’t for you right now, or maybe you’re still curious and want to know more about the selling side before choosing what to do. It’s no small decision, so I’m glad you’re continuing your research and reading these blogs to figure out what’s best for you and your family. Selling your home is a pretty attractive option right now – housing demand is high & supply is low. But, as a real estate agent (incentivized to convince you to sell your house), I’m actually going to challenge the current narrative that selling is easier than it’s ever been and definitely the best option for everyone. Let’s take an honest look at what it would look like to sell your house in this market and the best practices to get the most out of your situation.

Housing inventory is as low as it’s ever been. This is a strong sellers market, so the house should sell itself, right? Not quite. While it is easier to find a buyer, it is still as important as ever to put your best foot forward as a seller. The truth is that there are a few easy things we can do to extract every dollar of equity possible out of the sale of the home and do it as painlessly as possible. So, what are the steps to selling a home once you come down on PCS orders?

First, we recommend that you call a trusted agent as soon as possible after receiving your orders, or even just when you are reasonably sure you will be coming down on orders soon. If you don’t have a trusted agent, ask your friends for referrals and interview at least 2 to 3 agents.  Make sure they return your calls, write and speak well, and have experience in the market. Take a look at a couple of their past listings to make sure they look good aesthetically and check that they actually sold!

You’ll want to consult with an agent as soon as possible because they can recommend home improvement projects that will make sense to do. There are a lot of easy things that can be done in your free time over the months leading up to your PCS move that can make a huge difference. Even things as basic as spreading new mulch in the flower beds, replacing beat up door knobs, fixing the dent in the drywall from that time you tripped bringing the new bed up the stairs, and other easy fixes can make a big difference.

There may also be bigger projects that would make sense to get done. Maybe it’s been a few years since the home has had a fresh coat of paint, or maybe some flooring needs to be replaced, etc. If you don’t want to do it yourself, then your agent should be able to recommend a few different contractors for you to call. Your agent should also be able to give you a ballpark estimate for what these projects will cost and how much added value they should bring to the home.

Most importantly, your agent will know what projects NOT to do. Some projects will not add as much value to the home as you think. For example, if you live in a low-price-point home, it might not make any sense to put in marble countertops – buyers will be plenty happy with laminate or butcher block.  I also promise that no buyers will consider paying $10k more than the house is worth because you put in real hardwood floors – I only really notice a difference in pricing with hardwood vs click-and-lock vinyl flooring (LVP) in price points above $400k or occasionally old homes where a buyer might expect to see old hardwood anyway.  It won’t make a difference in your 2018 built home in the suburbs that sells for $285k – those buyers will be expecting LVP.  (This is something to keep in mind any time you want to do a big home project, not just when you’re getting ready to sell. Talk to an agent about your project so they can recommend which materials & ideas are or aren’t worth your time & money according to the projected home value.)

Now that you have recommendations on house projects, you can spend a few months leisurely knocking out those tasks. When do you actually want to put the home on the market? Again – it depends! The main consideration should be whether you need to sell the home BEFORE going under contract to buy a home at your next duty station.

To find the answer to this question, you need to have a conversation with a good lender about whether your debt-to-income ratio can support you covering a second mortgage for a short period of time. If the answer to this question is no, then I find it best, from a money perspective, to list the home after you are out of the house. Why? All the clutter will be gone, there won’t be moving boxes everywhere, you can have it professionally cleaned, and buyers can tour the house at any time without having to coordinate the showings through you and your agent. AKA, your home will be more presentable leading to more and/or better offers.

And what about staging? Is it really necessary? Sometimes. Again, ask your agent for their opinion. I flip houses and am always selling my own houses, and sometimes I don’t stage them. If they’re a cookie cutter house with a simple floor plan, I typically don’t. If they’re unique or have a floor plan where a buyer can’t immediately envision where they might place their living room setup, then it really makes sense to stage because you want the buyer to be able to imagine them living in that space. Staging is also good to get a buyer’s eyes off imperfections in the house. It might also be good to stage if you’re living on goodwill furniture like I was as a cheap young Lieutenant! Also keep in mind that you don’t need to stage everything – sometimes even adding a couple nice decorations on the walls, kitchen, and baths can go a long way and is very cost effective. Last note on this – it’s almost never necessary to stage bedrooms unless you have a small or awkward space.

If you are willing and able to list after moving out, your timeline will likely look like this:

    • Move out day (let’s assume this will be June 1st)
    • Professional cleaning (or DIY):  June 2nd-3rd
    • Move in staging furniture (not always necessary):  June 4th
    • Professional photography (coordinated by your agent):  June 5th
    • Listing goes live on the market (June 7th)
    • Accepted offer (June 10th)
      • Typically move-in ready homes will go under contact in a weekend in the Savannah market unless priced too high
    • Buyer conducts inspection (June 15th)
    • Buyer ends due diligence (June 17th)
    • Appraisal (June 25th)
    • Buyer closes on home (July 10th)

This timeline assumes that the first buyer does not back out after their inspection – this does happen sometimes, so you’ll need to prepare for it. Sometimes appraisals come back bad as well, but not as frequently, and in today’s strong seller’s market we are sometimes able to get the buyers to agree to cover an appraisal shortfall when they first go under contract to mitigate this risk. Occasionally, a contract will fall through at the last minute because of the buyer’s lender not approving the loan, though a good agent will recommend strategies to mitigate this risk as well.

For many people, this isn’t possible and that’s okay. You’ll just want to take extra care to spend the week or two leading up to the listing date cleaning the house top to bottom, trying to keep your moving boxes out of the way in a garage or spare bedroom, and taking down as many personal effects as possible so that the buyer can more easily imagine their own photos and trinkets up on the wall. It might be worth the money to hire a professional cleaner to come just before listing – if you’re like me and hate cleaning, it’ll be a few hundred dollars very well spent.  Once you actually list the home for sale, the rest of the timeline will be very similar to the one above.

Another important thing to consider, for those of us who need to sell a home before buying the next one, is that there are things we can ask buyers for to make our transition easier. The best thing to ask for is a seller rent-back after closing. This means you can sell your house and continue to live in it for a couple of weeks while you prepare to execute your PCS move to the next duty station. This is important to those of us who cannot qualify for a second mortgage or don’t want to have two mortgages at the same time, because you can start making offers on homes in the next duty station after selling (but still living in) the first. The reason you might want to get the first home off your books before trying to buy the next is because this strong seller’s market exists across the country and it is VERY difficult right now to find a seller who will accept an offer that is contingent on the sale of property elsewhere. Imagine if you’re selling your home here at Fort Stewart and a buyer says “I’ll pay you asking price, but I want to be able to back out if I can’t sell my house at Fort Hood first.” Would you be inclined to accept that offer if you had another offer that didn’t have this contingency? Probably not.

The big takeaway to selling a home when PCSing is that there are a lot of moving pieces and everyone’s situation is different. You’ll make your life so much easier if you hire dedicated professionals to help guide you along the way. It’s also very important to make sure that the agent who is helping you sell your current home is connected with both the agent who will help you to buy the next one and the lender who will help you borrow the money. Everyone needs to be talking, because the market conditions in the market you are moving to may influence the decisions you need to make as you sell. If you don’t know any lenders or agents in the area you’re PCSing to, ask the agent who will help you sell if they have any recommendations. At Trophy Point Realty Group, we have relationships with agents in most military markets because we work with so many military buyers and sellers. We would love nothing more than to connect you to someone that we trust and work well with, so that all of us can coordinate your efforts to make the PCS move easy and lucrative! More on buying a home remotely in the next blog of this series.

—

Written by: Pat Wilver

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Categories
Military Selling a Home

PCS Moves, Part One: Sell or Rent?

homes for sale near fort stewart ga

You’ve come down on orders and you own your current home – is it better to rent the home when you leave or sell it? It depends – there are both monetary and personal lifestyle considerations to take into account.  Before making any decision, we need to fully explore and understand our options, so let’s take a look.

If you’re only concerned about the money, then this shouldn’t be a very tough decision to make; it boils down to this question: if I sell this house, will I be able to use the check I’ll get at the closing table to make more money than I would make if I kept the house and rented it out instead? If the answer is yes, then sell. If not, then it’s better to rent it out.

But finding the answer to that question can be tricky, especially if you’re new to real estate investing, so let’s look at an example.

Let’s say you can…

a) sell your home and put $50k in your pocket, or

b) rent it and make $5000 in profit each year. This equates to a 10% return on your equity, which is pretty decent.

If you can put that $50k to work making more than 10%, then perhaps you should sell. If not, look toward renting it out.

You might be thinking at this point “well how do I know exactly how much equity I have, or what my property will rent for?” Glad you asked – the easiest thing to do is to seek the advice of a trusted real estate agent. Keep in mind that an agent will have a significant monetary incentive to convince you to sell the house (that’s how agents get paid!), so make sure that this person is someone you really trust. If you don’t have someone like that, ask around for some referrals and interview two or three to get their opinions on market sale price vs rent price. Then, when you’re ready to run your numbers, check out our blog on running the rental numbers.

Savannah real estate

But, it’s not usually all about the money. We all have a personal preference. I like to be a landlord, and I don’t like selling houses once I own them. I’ve held onto homes even when I have a lot of equity in them that could better be put to work elsewhere. In cases like this, you might want to explore doing a cash-out refinance of the home, or even using a home equity line of credit (HELOC) to access some of that home’s equity if you don’t want to sell it. This will, of course, make your payment go up, but it may be a great option to access some equity.

Other folks just don’t want to be landlords, and I understand that. I sometimes get frustrated answering tenant questions and maintenance requests, especially when they call me at an odd hour to ask a dumb question (one time I had a tenant who didn’t understand that you’re supposed to brush the toilet bowl every once in a while and complained about mold in the toilet!)

There are ways to mitigate this hassle, the best being to hire a great property manager. A good manager will only bring the most important issues to your attention, but they will typically cost you 10% per month and also charge tenant placement fees.

In addition to the occasional late-night call, a landlord also has to be prepared to fix tenant issues quickly. You NEED to have a reserve fund set aside to cover major maintenance items that come up from time to time. In Georgia, for example, if the heat goes out, you must fix it ASAP (even if that means paying a few thousand dollars out-of-pocket to replace the HVAC system). So even if you do want to keep the house and it makes sense as a rental, make sure you can cover a major expense. Even home warranty companies do not always come through like they promise, so don’t rely on them.

As a practical matter, it is pretty difficult to self-manage after you PCS to a new duty station. But more on that in the next blog of this series!

Until then – need some questions answered? We love nerding out about this stuff! Reach us at our contact page.

—

Written by: Pat Wilver

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Categories
Selling a Home

Seller Checklist

THE SELLER'S CHECKLIST

a guide to selling your home.
sell my home savannah ga

You’ve decided that someday soon you’ll sell your home & start a new chapter – how exciting! Whether you’re ready to make a move next month or next year, there are a few things we’d like you to know up front so your selling experience can be as smooth as possible!

Let’s break down the process step by step, and at the end we’ll discuss a few pitfalls and things to watch out for.


First Things First!


The very first and most important thing on your checklist (even before doing any repairs or beautifying your home) is to chat with your Trophy Point Realty agent & determine two things: 1) whether selling the best fit for you & your family, and 2) your goals. There are a lot more factors to selling a house than just the money (although that is a big factor for most people)! What’s your desired price & timeline? Do you want to ask buyers to give a seller rent-back after close? Will you prioritize getting the highest price above all else or would you be willing to flex on price if it means a sure-fire closing (looking for the all-cash, short contingencies, big earnest money, etc.)? Knowing what you’re after will only help the process. The more you know and fill your agent in, the more we can do for you! Once we know your priorities and goals, we can narrow down which (if any) handyman jobs, staging, cleaning, etc. will need to be done to get your home ready to sell according to your goals.

We have inside access to great resources within our team, so here are some things we can also help with that may open up an option that would’ve been closed to you without our resources:

1. Arrange short-term furnished rental accommodations (we have inside access to a premier furniture and staging company)

2. Find awesome agents wherever you’re moving to (if outside the Savannah area) and work together with those agents

 

Make Your House Shine

Once we create a strategy for you according to your goals, we’ll need to ensure any necessary repairs, cleaning, staging, painting, etc. is taken care of so we can get the best photos to market your home. The vast majority of all properties for sale are listed through the MLS (Multi-Listing Service – it’s what all Savannah-area agents use to search for properties), so this will give you the best chance to be seen by buyers quickly. Your agent will also use our team’s wide network & a few different marketing tools to get the word out about your home. When you list with TPRG, your listing gets uploaded to about 3,000 websites (including all the big names) for maximum exposure. But before we market it, we need to know it’s ready for pictures & ready to be put on the market. We will likely need to get a few documents from you to have a strong listing that appeals to buyers:

1. Community Association Disclosure

If you have any HOA-type memberships or fees, then you’ll need this document. It outlines for potential buyers what those fees and rules are, and ensures to them that there are no outstanding balances or infractions on your part.  We can help fill this out if you don’t know all the information – many sellers don’t, and we want as accurate info as possible on the disclosure.

2. Seller’s Disclosure

Most listings have a seller’s disclosure because it tells potential buyers what you know about your house – what you’ve updated, what might need repairs, what should be good for another 10 years, etc.

3. Lead-based paint disclosure

This is only required for houses built prior to 1978, since that’s when the law was passed banning lead-based paint. This disclosure is simply a legal requirement that asks if you know of any lead-based paint in the house.  If you haven’t tested for it and nobody disclosed it to you when you bought, then you have nothing to worry about.

It is almost always better to take our time and do it right than to rush into a quick listing. We only have one chance to make a great first impression when we come to market – let’s take our time and make it count!

 

Open Houses & Showings

Alright! You’ve gotten your house listed – it’s on the market & buyers are dying to see your home. We want your home to sparkle for as many people as possible. When potential buyers come to look at your home (through an open house if you choose to have one, and when other agents schedule showings), your agent will likely ask for you to prepare your home. This includes:

– Putting away personal items like family photos & little knick-knacks.

– Plugging in some scented wall plugs throughout your home.

– Ensuring your home is clean.

– Turning on all lights & opening all blinds.

– Keeping any moving boxes in the garage and out of the way.

– Arranging furniture to maximize the space & make it look as open as possible.

– Decorate with neutral colors & objects so it appeals to the most people.

This will ensure that those potential buyers can quickly envision THEIR family’s photos & knick knacks in your home. It really sells the idea of the potential buyers’ families loving life in your home, and therefore makes it much easier for them to pay top dollar for your home.

 

Getting Offers!

You’ve got a bite! Awesome! Your agent will be the one receiving offers from other agents in order to protect your contact information & keep things straightforward. When they get an offer, it usually includes a few parts & they’ll walk through every part with you so you & your family are set up for success. Here are the key parts to every standard contract:

1. Purchase & Sale

This is the document most people pay attention to first, since it holds the price the buyer is offering, when they want to close, how much money they are willing to put up as an earnest money deposit, as well as any special asks they are making.

2. Financing exhibit

This outlines how exactly the buyer is planning on paying for this home. It also tells you how many days are in the financing contingency period, aka how many days the buyer will have to get approved if they’re using a loan. Lastly, it lets us know how many days are in the appraisal contingency period, aka how many days the buyer and their agent have to get the appraisal back and determine their next move if the appraisal comes in lower than the purchase price. The appraisal is done by a certified appraiser to determine a home’s market value. Our agents really know what they’re doing, so they will keep this appraisal step in mind as they set an asking price with you and as you consider which offers to accept so that we don’t run into issues with the appraisal.

If you get multiple offers on your home, we will prepare a spreadsheet so you can get a side-by-side comparison of the various offers. Interested in what may constitute a strong offer aside from the purchase price? This will have a lot to do with your priorities & goals, so here are some things to consider:

1. How much closing cost assistance the buyer asks for

The negative side here is that if a buyer is coming in above-ask to get some closing costs from you, the appraisal becomes riskier. With multiple offers, it’s typically best to pick an offer with no closing costs, even if it is a bit of a lower net proceeds to you.

2. Closing date

Earlier is usually better for most sellers, but it varies situation to situation. However, if a buyer using a loan is telling you they can close under 30 days, they’re not being very realistic.

3. Earnest money deposit

This is a good-faith deposit that the buyer puts into escrow. You will receive this deposit if they do not fulfill the terms of the agreement (but that’s rare).

4. Due diligence period

During this period, the buyer can back out for any reason or no reason at all and will get their earnest money deposit back. This period is when inspections are done.

5. Option payment

This is basically a non-refundable earnest money deposit. Recently, buyer’s have begun to include option payments in order to make their offers stronger. It’s typical to see an option payment between $200-500, though most buyers are still not willing to do this.

6. Special stipulations and other contingencies

Before this strong seller’s market, it was typical for buyers to ask for termite bonds and home warranties (these cost on average $500 each). Now, it is much less common. Sometimes you will also see a special stipulation stating that the sale is contingent on the buyer first selling another property – this is one to watch out for, and your agent will explain what that means if you receive an offer like that. There are many different special stipulations and contingencies but these are the most common.

7. Financing and strength of pre-approval

Not all pre-approvals are the same. We like to see local, trusted lenders write pre-approvals whenever possible, and we also like to call lenders who write them to assess the lender. Are they responsive? Do they feel good about the strength of the buyer?

The strongest type of pre-approval is called an underwriting approval. It means that the buyer has already gone through the underwriting process. These are rare to see, but if you see one, you can feel good about the buyer!

VA and FHA loans are nothing to be afraid of – we assess these pre-approvals just like any other and their likelihood to close is not any lower than a conventional loan.  The VA or FHA appraisal process does involve an inspection by the appraiser, but as long as your house is in good shape, there will be no concerns. Things like chipping paint, rotting wood, or improperly installed water heaters are the major things that trip up a VA/FHA appraisal. The only downside is that a VA/FHA appraisal sticks with the property for 6 months, so if the appraisal comes in low and you terminate, then any other VA or FHA offer you receive for the next six months will be tied to that appraisal. (Conventional or cash will not.)

Cash is obviously king – but we want to make sure we see proof of funds if it’s a cash offer!

We also look at the lengths of different contingencies in the financing exhibit because the buyer’s earnest money is tied to these. For example, if the buyer receives a loan denial before the end of the financing contingency, they are entitled to get their earnest money deposit back. It is typical to see financing contingencies of 21 days and appraisal of 25 days, though a buyer will often shorten these to make their offer more appealing to you. Note: by law, there is no end to a VA or FHA appraisal contingency – which is one of the few downsides to those kinds of offers.

Buyers can also promise to make up for a lower appraisal in a special stipulation called an appraisal gap. We will typically want to see some proof of funds to support this.

 

Moving Towards Closing

Once you sign on an offer, or if you made a counteroffer and the buyer signed it, congrats! This is when we’ll officially be “Under Contract”! The date that the offer was accepted is known as the “Binding Agreement Date”, which starts the clock for all contingencies and deadlines stated within the offer.

Our team will send the full contract to the closing attorney and the buyer’s lender so they can start their process of title work and loan documents to get us to the closing table smoothly and on time. They will likely reach out to you for information towards the beginning of the Under Contract period. Communicate with them in a timely manner to ensure the process stays on track.

Your agent will continue to be in touch with the buyer’s agent and share updates as they come with the buyer’s inspection. The buyer will likely ask for some repairs after the inspection – sometimes those repairs are bigger or smaller, but you have your agent to walk you through the repairs and help you decide which repairs you are willing/unwilling to do. Of course, your agent will discuss these repairs with the buyer’s agent as well to negotiate so you get as much money as possible out of selling your home.

We’ll also work with you to prepare logistics for closing. Usually, we’ll need to figure out a time that works for you for closing, and we’ll ask you for utility information so that the buyer can have all the info they need to transfer utilities smoothly.

Closing Day and Beyond

The day of closing is easy – you’ll go to the attorney’s office and sign a bunch of documents.  Closing typically takes between 30 and 60 minutes. Then the money moves as needed and you’ve officially sold your home!

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Categories
Buying & Owning a Home Investing Loans & Financing Military Selling a Home

Building Wealth with the VA Loan: Cosmetic Repairs and Appreciation

BUILDING WEALTH WITH THE VA LOAN

Today’s post is a guest post from our friend Jonathan Lee of Military Money Matters. Jonathan studied economics at West Point and has made it his mission to provide high quality educational content to help the military community invest their money wisely. This particular post is an introductory post geared toward those who wish to buy a property, conduct some cosmetic renovation while they live in it, and sell once they have orders to a new duty station. I’ve included some of my own commentary in italics.

The focus of today’s post will be the accumulation of wealth from a powerful tool available to you: the VA loan. For details on how to use your VA loan, see our post here. Today’s topic will be understanding how to generate wealth from the loan. There are two ways to do so: cash flow on rental properties (after you’ve moved out) and appreciation. Today we will talk about appreciation.

Appreciation is an increase in the value of the home you purchase over time. For example, if you purchase a home for $120,000 and sell if for $150,000, it has appreciated by $30,000. Bear in mind that there are significant closing costs associated with selling a home so all of that money doesn’t necessarily go to you. You can typically expect to pay between 6% and 10% in commissions, closing costs, and maintenance expenses on the sale. Here’s a 3 step look at how to make money through appreciation with your VA Loan.

 

Step 1: Choose the right home!

If you’re looking to make money from appreciation this step is essential. Certain areas appreciate more than others. Hawaii, for example (where I purchased my first home) tends to appreciate rapidly. Look at historical data for the community to see what drives growth. The Zestimate (see Zillow.com) may provide a good tool at predicting prices as well, but given the number of factors that drive house prices, it’s not always accurate.

Editors Note: Realtors hate Zestimates, but if you aren’t a real estate agent or haven’t been tracking the local market, Zestimates aren’t a bad place to start. Just don’t be surprised when your agent tells you that the Zestimate is wrong.

fort stewart homes

Other things to consider on this step include the specific neighborhood and the quality of the home. If you’re trying to flip the house, you never want to purchase the nicest house in a bad neighborhood. It’s already been flipped! You also don’t want one that’s already entirely redone. Try to avoid those granite countertops when purchasing a home you intend to add value to.

Additionally, look at big projects in the area. Is a new shopping mall going up? Is the city undergoing a huge re-imaging campaign and building new parks and recreational areas? If the answer is yes, that’s a good sign.

Editors note: Check out our post about future development in Savannah here and here. Jonathan gives great advice when he says to avoid the nicest house in the neighborhood, and it’s also not wise to renovate into becoming the nicest house– spend enough money to make your house as nice as other recent renovations in your area and no more. It’s also important to note that when buying a house that needs work with a VA loan, cosmetic repairs are fine but if there is anything wrong with the home structurally or mechanically, the VA will not underwrite the loan.

 

Step 2: Renovate!

If you’re looking to increase the value of your home, certain upgrades pay off more than others. As a rule of thumb, minor kitchen and bathroom improvements drive up the value of homes, but don’t shoot for anything excessive. Top of the line granite countertops do just about as much as generic granite. The top value producing renovations are listed here.

If you’re really looking to generate wealth through appreciation, this can be a powerful step if you purchase older homes, foreclosures, or short sales. In these homes, however, check to ensure that the home is available to purchase with a VA loan first! Also, make the home look good for staging. Prior to selling, consider a new paint job, modern light fixtures, or other small repairs.

Editors Note: You don’t always have to renovate to see a nice appreciation on a home. If you PCSd to Stewart in 2013 and bought a nice three bedroom home in Georgetown, for example, you likely paid about $135k. That same home would sell for about $165-170k today even if you did no renovations. However, if you only spend two to three years at a duty station, it is unlikely you will see great appreciation in that short amount of time– but you’ll still have more money in your pocket than if you rented!

 

Step 3: Timing the sale

This is probably the hardest step but can significantly impact the sale price of your home. While you need to do what’s right for you, (maybe you’re about to PCS) timing the sale can make thousands of dollars in difference. In certain markets, for example the summer moths cause a boom in housing prices of 2-3%. People like to purchase homes in the summer because their kids are out of school or they’re PCSing to a new location.

Editors Note: The Savannah market specifically does see these shifts, and they are more pronounced as you get closer to Fort Stewart. I think 2-3% is a tough high for the change in pricing here, typically prices will remain similar but days on the market may increase during the winter months.

If you purchased in that up-and-coming neighborhood, the time to sell might be when 50-75% of the homes in the area have also been renovated or “flipped.” Maybe the new park down the street has been built and you’re ready to sell.

Editors Note: To me, the best time to sell if you’re a novice is when it’s time to PCS. If you’re interested in making money by flipping houses, then I recommend buying a second house to work as a flip from day one. Flipping houses is part science, part art, and to really make the best returns you have to buy a dump of a place, fix it up to be line with what the market wants, and sell quickly.

Trophy Point Realty Group would like to thank Jonathan for letting us cross-post this blog, and we look forward to some more collaboration the future! If you are in the military or a veteran, you really need to go check out his blog — he’s got great insight on everything from real estate, the TSP, blended retirement, GI bill, transition, and everything in between. www.militarymoneymatters.org

Interested in using this plan to build wealth here in the coastal empire? Trophy Point Realty is owned by military veterans who have used the VA loan themselves and are experienced in renovations. We’d love to be your trusted advisors and we work in Savannah, Hunter AAF, Fort Stewart, Hinesville, Richmond Hill, and Pooler. Get in touch with us today!

Author: Jonathan Lee

Editor: Pat Wilver

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