Archive for March, 2011

Firstly, let’s get the terminology right.  Flipping a home means purchasing, renovating and selling in a very short time frame without ever living in the home.  That’s a very different approach to purchasing, renovating while you live in the home and then selling, say in 2 years.  The issues and returns are different with each scenario.  So say what you mean!

When someone says that they want to view properties that can be “flipped”, we need to sit down and talk about how they really want to approach this. 

Here are my quick tips:

KNOW WHAT YOU REALLY WANT TO DO!  You need to be realistic in knowing what you are capable of achieving, what skills do you have, what time are you able to dedicate to this project and what your end-result objectives are. 

KNOW YOUR NUMBERS!!  You need to understand the financial model for flipping homes – cost of borrowing, insurance, opportunity costs, etc.  You really need to have a high amount of expertise with property values in the specific area to be able to calculate what the home will sell for once it has been renovated and ready to sell in turn-key condition.

KNOW WHAT YOUR POTENITAL BUYERS REALLY WANT!!  Don’t over improve the property for the area.  You need to know what will get the home sold quickly and what is likely to be the best return on your investment given the type of buyers looking for homes in the area.  A highly experienced agent will be invaluable here! 

PUT YOUR TEAM TOGETHER BEFORE YOU START!  You need to surround yourself with a team of professionals that you trust and can rely on.  You will need a Home Inspector, a Lawyer, a Real Estate Agent, perhaps a Financial Advisor, a Mortgage Broker and of course, a Contractor.  Unless you are an experienced contractor yourself, don’t try to take the DIY approach to flipping homes.  This is not a good idea and not the best place to start!! 

These are just some highlights, and there are many more points to consider.

Once you have the right recipe, flipping residential properties can be both lucrative financially and fulfilling from a creative standpoint.

The coolest part is that you are creating a nice safe, affordable home for someone.

If you are interested in flipping a house, please give me a call.

Kris

Once your new home purchase has been completed, it is important that your credit history stays intact until the day of your closing.  This is true even if you have previously obtained mortgage approval to cover your purchase. 

Changes to your credit (new purchases, additional accounts, closing accounts, fluctuating credit card balances) can result in the lowering of your credit score and if your credit score changes, that can affect your interest rate and even the loan approval itself. It is extremely important you do nothing that would result in major changes to your credit and/or to the basic information provided for your loan until the process is complete. 

To ensure that your loan will reach final approval, you should adhere to the following:

• DO NOT charge any new major items on your credit cards – higher balances will lower credit scores.
• DO NOT apply for any new credit cards or loans.  New lines of credit and even a credit inquiry can lower credit scores.
• DO NOT buy or lease any new major purchases – especially cars, furniture, appliances, etc.  Even a “no interest” loan should be avoided since it can appear as a new credit trade line and will affect your debt to income ratios.
• DO NOT co-sign for anyone else’s loans for any reason.
• DO NOT allow anyone to check your credit unless in the shopping process, and even then, know the consequences – each inquiry may lower your credit score. 

A few other things to keep in mind:

• A change in employment may result in loan denial.
• DO NOT start any new remodelling jobs
• DO continue to make all payments on time! 

A new credit report will be pulled by your financial institution before closing to make sure that no new credit has been established and any inquiries will have to be verified to that effect.  Following these simple rules will ensure a stress-free loan process – at least as it pertains to your credit report.

Kris

It often seems that potential Sellers don’t completely understand what the Listing Agent does for them or what work is actually involved to get the home sold. 

There are some agents who use the “Hope and Pray” method – they simply put the listing on the MLS® System of the Ottawa Real Estate Board and then hope and pray that another agent has a Buyer who will magically appear to buy the home.  This is definitely NOT my philosophy!

In my opinion, the most important thing for a listing agent to do is to set expectations right up front.  It is the Listing Agent’s job to market the home in order to create Buyer interest and there is a specific set of activities that normally take place to do this.  These activities may not be as obvious to the Seller as bringing a Buyer to view the home, but they are taking place, in the background.

When I talk with potential Sellers, I explain that it is likely NOT going to be me bringing buyers through to view the home – statistics show that this is more likely to be another real estate agent.  I also explain my marketing plan and strategy (both short and long term) so that Sellers understand what I will be doing to ACTIVELY market their home.    It doesn’t matter who “sells” the home.  What matters it the home gets sold.

Kris

Some people confuse Home Staging and Interior Decorating.  Here’s the difference:

Interior Decorating is the art of decorating a room to suit the personal taste of the home owner.  An interior decorator will take into account the desired theme and style of the person using the space and try to create an individual setting for that person while focusing on the ease of upkeep and the functionality of the space.  The main goal of the Interior Decorator is to create a tailored environment that will contribute to the happiness, well-being, and productivity of one person or family in particular.

Home Staging is the act of preparing a private residence for sale in the real estate marketplace.  Most of us have “personalized our homes”.  The goal of staging is to make a home appealing to the highest number of potential buyers, and to create an environment where buyers can easily see themselves and their belongings in the home.  Staging usually results in a faster sale for more money.

Staging techniques focus on improving a property’s appeal by transforming it into a welcoming, attractive space that anyone might want.    A Home Stager will focus on :

• The use of neutral decor to appeal to as many potential buyers as possible
• The elimination of almost everything that speaks about the seller’s personality (e.g. photographs, quirky nic-nacs)
• Showing off the strong points of the property
• Using what is already there to the maximum
• Ensuring potential buyers can imagine living in your house and calling it home

A Stager is not creating your dreamhome, they are, instead, trying to create a home that anybody would like to call their home.  It takes special knowledge of the real estate market,  a good understanding of what buyers want and lots of experience for a stager to be successful.

The concept of Home Staging is still quite new to our real estate market. I believe, if done well,  it can help to sell homes.  Feel free to call me if you’d like to chat about this concept.

Kris