In 2010 we have seen sales of previously owned homes fall 0.6% in February from the month prior, according to the National Assn. of Realtors in Washington.  Your InvestorCompsOnline account has and will continue to provide essential real estate comps and valuation expertise to prepare you for this current market.

Given that home sales have struggled since December, when they plunged 16.7% from the prior month, the result of lackluster activity following a surge last fall as buyers scrambled to take advantage of a federal tax credit for first-time purchases.  The after repair value knowledge gained using your InvestorCompsOnline account will prove valuable in the coming months.

The tax credit of up to $8,000 for first-time buyers had an initial expiration of Nov. 30, though Congress extended it through April and expanded it to include up to $6,500 for current homeowners.

Unfortunately the tax credit funds ran out and left the housing market soft.  In addition,  the extended credit has appeared to have little to no effect on the market to date.

Previously owned homes sold at a seasonally adjusted annual rate of 5.02 million units in February, down from 5.05 million in January. That was 7% higher than the 4.69-million-unit pace of February 2009.

Inventory rose 9.5% to 3.59 million homes for sale, an 8.6-month supply at the current pace. Raw unsold inventory is 5.5% below a year ago.

A sign of broad home price stabilization is if a surge of home buying is seen in comparison to the fall in the months that lead to the original tax credit deadline. This will mean enough inventory has been absorbed to ensure this promising step forward.  Utilizing your InvestorCompsOnline account can give you the edge you need to be prepared!

What  exactly is an REO?  The term REO has been discussed in many publications concerning property sales, on the assumption that the reader knows what REO means.  Here is a brief explanation of REO, so you, as a prospective investor, can take advantage of the information out there on it.  Using your InvestorCompsOnline account to access real estate comps will prepare you to make smart financial decisions these regarding properties.

REO stands for “real estate owned, which means the bank or lending institution has full ownership of the property.  You can think of it as a property that has “defaulted.”  However, REO is a bit different from plain foreclosure.  Let us look more closely at the process by which a property becomes REO.  First, the party making payments on the house misses payments, to the extent that the property becomes foreclosed.  The lending entity to which the person was making the payments usually tries to short sell the property, or put it on the block at a foreclosure auction.  The bank will most likely be looking to sell the house or apartment for at least the remaining amount of money owed to it by the previous resident.  Thus, the asking price has already been reduced, sometimes significantly.  However, if a buyer or investor may not be found, then property becomes an REO.

By now, the property’s price has been marked down even more.  It may be in terrible condition, but the price is often very low, because the bank often cannot devote a great deal of time and/or resources to improving the property for investment purposes.  Basically the bank often just wants to unload the house.  InvestorCompsOnline can provide you with important valuation information to assist with determining which property or properties will be profitable.  You can then purchase the house, make some repairs, and then sell it on the market for a much, much higher price than the rock-bottom one at which you bought it.

If you are interested in REO properties as investment real estate, here are ways to find some:  1). Talk with a local community bank or credit union and ask if they have any non-performing real estate assets on their books that they would like to sell.  2). If you have significant funds, you may be able to purchase REO’s from an asset manager at a major bank like Wells Fargo in bulk. Banks of this size have entire departments that are specifically dedicated to handle REO properties.

Whatever source you use, buying a REO can provide excellent opportunities or profit if executed diligently.  Utilizing your InvestorCompsOnline account to do your due diligence will pay off tremendously each time.

The number of foreclosed homes owned by banks or REO inventory is predicted to peak in 2011.  The total inventory of foreclosed homes that have not been taken over by lenders is around 2 million homes.  InvestorCompsOnline can equip you with the Real Estate Comps needed to make wise investments during this season.

Currently it takes two years for a home to go from the beginning stages of foreclosure to becoming REO inventory.  The two main reasons for the delay in processing these foreclosures are:  the massive backlog of foreclosed properties which are causing lenders to have to deal with a ton of legalities and paperwork that are involved with the foreclosure process.  The second reason is that lenders likely do not want to release alot of properties on the market all at once, which would affect property values.

The huge number of homes that will hit the market over the next several years will likely cause continuing downward pressure on home prices for the near future.

What should you do to be prepared for the surplus of properties coming available in 2011?  Take advantage of your InvestorCompsOnline account to access the comps information and property data to make sure all of your investments are sold and turn into successful deals.

One of the best strategies to use for beginning real estate investors is Wholesaling. Why is this technique a great beginning? Because wholesaling properties does not require the investor to use any of his or her credit or money to complete the deal (as long as you know what you are doing).

So what is wholesaling? Here is how it works: An investor finds a property using Real Estate Comps that is well below its market value, gets the property under contract, and then assigns or sells the CONTRACT to another investor or buyer to complete the purchase!

You do NOT improve the property; just get it under contract and SELL the contract to another investor who is looking for a house in need of repair. That’s it! It’s as simple as that! You can typically sell a CONTRACT for anywhere between $500 – $10,000+ profit!

What would be the steps necessary to complete a successful transaction?

Step 1- Determine the After Repair Value (ARV). The most successful way to determine ARV is to use InvestorCompsOnline to  provide comparable property information. Analyze a set of the lowest comps in the area and the highest comps of the area. For your purposes, when making an offer, seek out the lowest comps in the subdivision.

Step 2- Calculate the repairs. Do a quick drive by, look the property over, and determine what repairs may be needed. As a rule of thumb, it is a good idea to figure in a set amount as repairs when making an offer. If the amount of repairs turns out to be significantly higher than you originally set, then you may need to walk away from the deal. If lower than you thought, then you may increase the assignment fee.

Step 3- Make an offer. Understand that you are making offers that will benefit your business, so your asking price will be lower than what most people’s expectations are. Expect 90% of your offers to be emphatically declined, 10% of your offers to be countered, 5% to be interesting, and 1-3% to accept. Also, it is best to construct an offer that will allow your end buyer to profit. Many new wholesalers make the mistake of not caring about the end buyer. If the end buyer cannot sell to someone else, then they will not be in business long and you will have lost a good partner. Losing partners will cut YOUR career short in this business. 

The end goal is a win-win transaction for all. You make money and the end buyer does too. Use your InvestorCompsOnline account to access more wholesaling training on the support desk.

Today I want to demystify what social networking entails and how you can use it to your business’s advantage.

Social media, web 2.0, social networking. These terms are mentioned in just about everything business owners read and hear, but the majority still don’t completely understand what the buzz is about. Yes, keeping up with emerging trends can seem daunting, but social media is one trend business owners need to keep on their radar.

Basically, there are two aspects of social media. The first aspect encompasses things like blogs, podcasts and videocasts, which many businesses have readily adopted. The other, more social aspect includes applications like MySpace, YouTube and Twitter.

Using the social side of social media to market your business can be tricky. Recently MySpace has gotten a bit of unfavorable attention from the media because of sexual predators taking advantage of the site. And while YouTube has become a favorite way to share videos online, you can never be sure as to what kind of video the service will show after yours plays. Some of them may be highly inappropriate for your audience.

So, as a business owner, how do you determine which sites to target, how to approach them and what returns to expect? Here are some nuggets for you to keep in mind as you consider leveraging social media in your own company.

Examine your target market. Are you marketing to finance types or Gen Y’ers? The more social aspects of social media may not be the best place to find and communicate with your audience if you want to do business with stock brokers. Yet if you’re marketing to a more casual customer, social media may be just the carpet ride your business needs.

Focus on the return and the investment. Because social media has garnered so much attention, many have gotten caught up in the hype of stories about businesses seemingly going from zero to 60 overnight. As a result, some companies have become much more focused on their return than their investment. Figure out well in advance what you’re willing to invest to get the return you want.

Set and measure your digital yardsticks. As the saying goes, “If you don’t know where you’re going, any road will take you there.” Establish some basic goals for metrics that you’ll monitor regularly. If you’re starting a MySpace page, set a goal for how many friends you want to have within a certain period of time.

Contribute to the social network–don’t just market to it. I suggest you first listen to the community and understand what the issues and who the influences are. Don’t just try to push your wares.

Protect your brand. The sad truth about the more social aspects of social media is that there are some not-so-savory characters that’ll be using the same medium to get their message across. Examine where you’ll be placing your brand and what types of companies are going to be sharing that space with you.

Social media can have a positive impact on your business, if done right. You already understand the importance of networking; now it’s time to take it online.

All the best,
Mark Jackson (MJ)