Who is going to finance the fixer upper and new home repairs??

Credit to Jerry Bronstrup, President of Bristol Restoration. Please check out our links to see WHAT WE CAN DO FOR YOU AND YOUR CLIENTS. THANK YOU.

Contact by email: skannier@bristolrestoration.com 

Call:(661) 254.1812 (for info)

“Minus the safety, security, and cleanliness factors, this house is our dream home!”

Let's face it, this is not your grandma's real estate market. Buying a home in today's market is different than buying a home a few years back. The standards of house conditions have fallen drastically in a relatively short period of time. New homebuyers are no longer expecting to find their dream home that's in move-in condition when escrow closes. The current real estate inventory is cluttered with junky houses and fixer uppers.

Banks are not willing to put in a lot of money into a property they are already losing money on in a foreclosure. Short sale properties, well, they are short sales for a reason, so don’t expect any major improvements or concessions from the sellers. With regular listings, a homebuyer is not likely to get a lot of help from the sellers who are competing with bank owned and short sales on the market.

As a contractor working in real estate construction services, we see all the hidden gems in properties… faulty plumbing, rusted out water heaters, moldy bathrooms, hazardous electrical issues, unidentified odors, “discolored” paint, holes in the walls, ceilings caving in, decks collapsing... just to name a few. Some of these issues are visible eyesores and can be easily fixed with some elbow grease, but MANY repair issues are not so obvious to the eye and involve the SAFETY OF SYSTEMS, and these are the issues homeowners need to be MOST concerned about. 

Plumbing systems, electrical systems, HVAC (Heating, Ventilation, Air Conditioning), and secure supporting structures such as decks and balcony’s should be the areas of greatest concern to homebuyers. A homebuyer might be able to get away with putting off painting a room, but they cannot put off a leaky water system or hazardous electrical lines. 

Keep in mind, most of the homes in today's real estate market offer zero concessions in repairs. There are typically no available funds to even make NEEDED repairs involving the safety and security of the home. Also, a homebuyer needs to understand that a house sold in AS IS condition does not mean the house is SAFE to move into. Most cities will not make you pass a thorough safety inspection prior to buying a house and most listing agents will not perform an inspection on the property.

In fact, it is our experience that some agents provide as little disclosure as possible in regards to the true condition of the property. Recently, we red flagged a current listing on the market with MAJOR electrical and structural defects. The stairs to the balcony nearly collapsed on us and hot wires were exposed in the house with hidden water leaks throughout. The listing was taken off the market because it was a major safety hazard for those viewing the home. The Realtor was not real happy to learn the listing was not able to be shown until the issues were fixed. Unfortunately, this is a far too common problem with the listings we find on the market today.

Even with homes brought to "marketable condition" it takes a constructive vision to sell the distressed property to a homebuyer looking for an immediate move in. Once the Realtor or homeowner can visualize personalizing the house, making it safe and secure, and turning it into their dream home, another problem exists..."Who is going to pay for the repairs and upgrades?"

REPAIR AND REHAB PAYMENT OPTIONS

1.Buyer's Cash

The buyer can pay for repairs and rehabs themselves. Simple if the buyer has the cash on hand.

2. Seller's Cash

Seller can concede funds for repair and rehab work. If the bank is the seller, the buyer is likely to get the bare minimum for issues, such as code violations, if any assistance is given at all. A short sale will likely allocate zero funds for the Buyer. In a regular sale, the seller might choose to make the repairs themselves or just choose to refuse all repair requests, and/or renegotiate the price of the house.

3. FHA 203K

FHA (Federal Housing Association) offers financing on FHA homes. In order for the home to receive financing, two conditions must be met. One, the buyer must be approved for the loan through FHA. Two, the home must be approved for an FHA loan. FHA 203k can be used to fix the home to make it FHA complaint. There are a number of restrictions and requirements, but overall, the FHA 203k is an option for most rehab and repair work once conditions are met. A licensed contractor is required in most cases to provide the bid and do the work.

4. Title-1 Loan options

Most homebuyers can get a quick and easy $25,000 to fix up any property- bank owned, short sale, or regular sale. It’s simple to do and opens up every listing to buyers who are not quite happy with what they see on the market or who are short on funds to improve their new purchase. If a buyer qualifies for a conventional or FHA loan, chances are they also qualify for the Title-1. The paperwork is very easy, and there are no delays in escrow, unlike the FHA 203-k which can take as long as 90 days.  

Rates are from 6.99% but generally fall into the 8-9% range. Terms are up to 240 months, and as short as 60 months. Minimum loan amounts are $5,000 to a maximum of $25,000. Funding is dual check- owner/contractor and funds as quickly as 10 days after escrow closes. There is also an additional $20,000 unsecured loan that 75% of the buyers will qualify for that can be tacked on to the top for work above the $25,000. That’s $45,000 for upgrades, rehabs, or additions.

If you need more information on repairs and financing options, contact (661) 294.1812.  

Is "moral" fraud the hidden crime in the real estate industry??

Credit to Jerry Bronstrup, President of Bristol Restoration. Please check out our links to see WHAT WE CAN DO FOR YOU AND YOUR CLIENTS. THANK YOU!

Contact by email: skannier@bristolrestoration.com 

Call:(661) 254.1812 (for info)

“The first and worst of all frauds is to cheat oneself”... Philip James Bailey
Let's just deal with this. Moral fraud might be the hidden crime that nobody knows how to address in the real estate industry. 
In real estate circles legal fraud is often associated with predatory lending and the misleading tactics of banks in persuading investors and potential homeowners to purchase bad loans. Fraud is defined as an intentional deception made for personal gain or to damage another individual.
In order for an act to be considered fraud under common law there are certain criteria that must be met.
Basically, a fact is presented and then proven to be a false claim. Many people make false claims in ignorance, but the difference in a fraudulant claim is that speaker of the claim acknowledges the fact to be false and intends for the other party to see it as truth for the personal gain of the speaker. The speaker takes advantages of the others ingnorance AND reliance on the speaker for truth. In business, this is basis of illegal activity and the reason why CEO's end up in the slammer. 
Basically, fraud is a lie...a stretched truth, a purposely hidden fact, a false statement, a false impression, an inaccurate claim. The lie is used to persuade someone to make a decision that will give the lier some type of advantage for personal gain. 
When was the last time you stretched a truth, purposely hidden a fact, made a false statement, given a false impression, or made an inaccurate claim lately?
The public depends on professionals in the real estate industry for one word- TRUST. They trust us with their greatest investment for the safety and security of their families, their homes. Real estate professionals are not in the business of just buying and selling homes. Real estate professionals are in the TRUST business.  If that was just about who could buy and sell the most homes, fraud would run rampant in this industry (OR does it?).
Realtors defend the profession against stereotypes of being "used car salesman." The reason why this stereotypes exists is because of HOW the public TRUSTS those in the profession. It has NOTHING to do with how hard Realtors work, how many hours of training they have, how hard it is for someone with no experience to do their job, how seriously they take their job, and it is not even about the product they are selling. (Even though these are typical topics listed in the Realtors defense against such a "horrible" claim.) Again, it is about TRUST.
I recently had a discussion with a Realtor about her listing. She "specializes" in short sales and has just over 20 current short sale listings. I asked her about a particular repair issue on one of her listings that was brought to my attention by an agent that was showing the property. The issue concerned an outside balcony deck that presented a major safety hazard in selling AND showing the property. The deck was not secured to the wall and I asked the agent about their plan to address the issue. The Realtor said that she was not aware of the issue and there is no plan to fix it. I told her that if she was not aware of it (which I highly doubt), she was now, and at the very least, should be disclosed as a hazard. She said, and this is her words, "I am not an inspector, I can only disclose what I know. I am representing the seller. Besides, the new buyers can get an inspection."
Even though she thinks she is legally protected by the potential homeowner's right to have the property inspected, is she still "morally" obligated to point out the "potential" problem.
Not disclosing potential problems and hiding repairs issues might be obvious legal issues, but what about strongly suggesting a house to a client only because of it's commission, hiding a better offer because you want to double end your listing, not presenting all offers to the client, misrepresenting the listing on the MLS to other agents... the list is endless.
We have ignored the distinction between legal and moral fraud, says Francis Talyor Piggott in his book Pricniples of the Law of Torts  'I am of the opinion, said Bromwell, L.J., in Wier vs. Bell, "that to make a man liable for fraud, moral fraud must be proved against him... in truth we are discussing a legal aspect of a moral question, and, as we have seen, the common law does practically adopt the same standard of morality... to take advantage of his agents fraud is in itself a moral fraud.
He goes to say that Morality is a general term like the words "cattle" and "horses" and under this false idea of morality to a minister is one thing, a teacher another thing, to attorney another, a business man another. It is high time for earnest teaching to correct these errors in the public mind. Morality is like TRUTH. It has no varieties. It is the same thing in every place in every relation, whether it appears in the pulpit, in a business transaction, in the court of justice, in the homes, or political affairs.
... Simplifying the legal standard, it may be easily understood that the law considers questions of morality as governed by the golden rule.
The Golden rule... isn't that what it always boils down to? 
instead of worrying about what is legal as you build your real estate business, ask yourself, "Is this morally right?" Chances are, if you think it is morally wrong, it is likely legally wrong as well. 
"The first and worst of all frauds is to cheat oneself."... Philip James Bailey

Lesson from a banana sale...condition is the primary thing.

Credit to Jerry Bronstrup, President of Bristol Restoration. Please check out our links to see WHAT WE CAN DO FOR YOU AND YOUR CLIENTS. THANK YOU.Via

Contact by email: skannier@bristolrestoration.com 

Call:(661) 254.1812 (for info)

I never thought about buying a banana at a gas station. I was just paying for gas, but noticed the freshest banana I had ever seen at the counter. Just a single banana. Perfectly ripe. I love bananas but usually miss out on the "perfect timing" of eating a banana in its prime. I took advantage of the opportunity, and began eating it while I waited for my change.
Hold that banana thought...
"Buyers in this market are not concerned about property conditions. They are more concerned about buying the property than the condition of the property. Property conditions are secondary, if considered at all." Yes, a Realtor actually told me this yesterday.  "IF CONSIDERED AT ALL."  Am I missing something?
So, using some analogies:
People buying cars are more concerned about buying a car than the condition of the car.
People buying a television are more concerned about buying a television than the condition of the television.
People buying shoes are more concerned about buying shoes than the condition of the shoes.
People buying bananas are more concerned about buying the bananas than the condition of the bananas.
Am I the one going bananas here, or maybe I am not on the same page... but, isn't buying more than "buying?"
...going back to banana sales.
I have been buying bananas for the past year at the same gas station. Yes, a gas station. I never buy them at the grocery store anymore. Just a single banana. Ripe and delicious. The condition of the banana is the most important aspect to buying the banana. Who cares about the price if it's not a good banana? if its too brown..will have to use it for banana bread. Too green... not enjoyable and makes me sick. The condition is everything. When it comes to buying bananas, for me, condition is the primary thing.
Now, being the banana connoisseur that I am, I decided to research some on banana sales and this is what I found, interestingly enough...
In 2005, Chiquita began researching ways to sell more bananas. They found that by keeping individual bananas fresh longer they can be sold in more places and not just in bunches at supermarkets by using convenience stores, gas stations, coffee shops, drugstores and other outlets to increase revenue. They believed they could raise profits if people could buy a single, perfectly ripe banana off the shelf, as they would a candy bar or a bag of chips.
At Chiquita's packaging plants, workers now hand-pick the bananas heading to convenience stores and other fast-food outlets for their ideal size, color, shape and ripeness. The single bananas are laid on top of one another in boxes covered with a semipermeable membrane that allows oxygen to pass through but controls the flow of carbon dioxide to delay ripening until the box is opened.

"This allows shops to sell bananas at the perfect stage of ripeness, that look absolutely yummy — and they can sit on a retailer's shelf and not go mushy and not go ugly," said Gregg Bauer, a vice president at Gen3 Partners.
"If you can come up with a way to make food fresher, it has a ready and willing market," he said.
Lesson learned. Buying is more than buying.
As it is with bananas, so it is with houses.
Caldwell Banker Real Estate did a survey of its brokers last year, the company found just 7 percent who say they’re encountering novices who are willing to look for fixer-uppers to buy at a lower price and renovate. Instead, 81 percent say their first-time buyers want their houses to be in ship shape from Day One.
Do you still think condition is secondary, or not considered at all?
I think it's of prime concern for buyers. In fact, as an agent, focusing on condition can be a great marketing tool in this market. An agent who understands market conditions and house conditions will have an edge over those just looking to get a deal in escrow.
How many times have you taken your buyers out and they complain about the "brown bananas" in the market? It's time to step up and provide solutions.
I asked a lender who works out of a large brokerage if any of the agents are using the 203k prgram. He told me that most agents are not aware of the program. We even recently started to offer in house financing for rehabs and repairs. How many agents are researching these solutions for their clients? The bottom line, condition is important, very important.... and buying is more than buying.
Here's to fresh bananas... and houses!

'What's in it for me?"...language Realtors speak with us "outsiders." My rant.

Credit to Jerry Bronstrup, President of Bristol Restoration. Please check out our links to see WHAT WE CAN DO FOR YOU AND YOUR CLIENTS. THANK YOU. 

Contact: Jerry Bronstrup Jerry@bristolbuilders.org (661) 294.1812

I have so many solid leads for agents that I can not give them out fast enough. Do you want one, please? RESPA has also given me the green light to provide all print materials to you for free, that's right, absolutely at no cost to you. You want postcards sent to your farm area twice a week... no problem, consider it done! I am also guaranteeing that if any one of your buyer leads, qualified or not, do not buy a home with you within the first 3 property views, I will personally buy any home from you within 3 days to offset any wasted time on your end. In fact, just through a couple of listings on a dart board and let's have some fun! Oh, I forgot to mention, I also provide a service to your clients that you might find helpful. I do repairs and fix systems, you know like electrical and plumbing...things that your clients might want to have in good working condition in the house. I'm sorry, what did you say? Oh, yes, of course, I am on your side. I will do exactly what you say to close the transaction. We can deal with the hidden mold problem later. In fact, I kind of see it as just discoloration too. I can not wait to do more business with you! You know what they say how one hand washes the other. I am here to wash your hands. In fact, I am a professional hand washer and your dirty hands need washing quite a bit I see.
Ok... here is my rant.
I spoke with a Realtor about our services this morning who frankly asked me, "What's in it for me?" Ok, let's start with, "We fix homes, we make sure home systems such as electrical and plumbing, are safe and to code. We cure issues that only a licensed, bonded, and fully insured contractor can do.. legally and ethically. We make sure your clients are taken care by providing a house free from hidden problems in regards to property condition."
Wah, wah, wah, wah... I am like Charlie Brown's teacher... until. Until I drop the bomb... I can market your listing for free on our website by cross linking your site with our new site we are about to launch at the end of the month. All of the sudden, he perks up and I am no longer speaking in a foreign language. This is a pattern taking place with new Realtors that I meet. Why? Is it because someone has told them all service providers are "tools" to close a transaction or acquire more leads? 
I have been meeting with Realtors for years. I have an open door invite into many our offices our area. I am not there to sell my services, nor I am there to sell their services. I am there because we share something in common... people. We work together to serve clients by giving them best possible real estate transaction and experience. We can do this best by focusing on "What can we do for them?". NOT... "What can you do for me?"