Real Estate Blog

I’ve been watching the "Flip That House" program on TV lately and find it interesting.  I am, however, quite bothered by the way they calculate "profit".  They have a very simple (and misleading) formula for calculating profit.  They take the difference between the final sales price and the original purchase price (plus the cost of renovation):  
   (Selling Price) - (Original Purchase Price + cost of renovation) = Profit.    WRONG!

What they have not plugged into the formula were the loan origin fees (to finance the purchase price) OR the selling costs involved to sell the house at the end.  Loan origination fees generally run from 1.5% - 3% (and up).   Selling costs will run about 8.5%, depending on the county and state.  When working with a real estate agent to sell the property, the fees are negotiable so there is some flexibility… but I’m trying to show you a realistic picture of buying and selling costs.  And, be sure if you’re getting a loan on a property you intend to "flip" (selling quickly), be sure you do NOT get a loan that has a pre-payment penalty.  These penalties can be substantial.

Anyway, let me show you a couple of scenarios from yesterday’s programs:

Home #1
Purchase Price   $152,000
Cost of renovation  58,000

Total cost of acquisition:  $210,000
Sales Price $315,000
Reported profit:  $105,000   WRONG!

Reality:
Purchase Price  $152,000
Cost of renovation  58,000
Finance fees @ 1.5% on 80% LTV   $1,824
Total cost of acquisition   $211,824

Sales Price  $315,000

Less 8.5% selling costs: $26,775
Net Sales Value:  $288,225 (less original cost of $211,824)
Actual profit:  $76,401

* * * * *

Home #2:  This one is very alarming when you look at the bottom line!
Purchase Price   $1,050,000
Cost of renovation  85,000

Total cost of acquisition:  $1,135,000
Sales Price $1,249,000
Reported profit:  $114,000   WRONG!

Reality:
Purchase Price  $1,050,000
Cost of renovation  85,000
Finance fees @ 1.5% on 80% LTV   $15,750
Total cost of acquisition   $1,150,750

Sales Price  $1,249,000

Less 8.5% selling costs: $106,165
Net Sales Value:  $1,142,835  (less original cost of $1,150,750)
Actual profit:  <$7915>   NET LOSS

Do you see the point I’m trying to make here.  When you are calculating profit, please be sure to include ALL costs of acquisition and ALL costs of selling.    It’s critical to the actual bottom line.

For answers to your real estate questions, please contact:
Carol@TopPropertiesWenatchee.com
www.TopPropertiesWenatchee.com

source: Profit From Flipping Houses

Below is a list of addresses for homes currently scheduled for auction in the Wenatchee, East Wenatchee and Malaga areas. If you find one of particular interest, let me know. I can suggest the best course of action for contacting the owner or lender.

In my opinion, pre-auction properties hold more potential than foreclosure properties. These are people who are having difficulty making their mortgage payments but have not yet gone into foreclosure yet. Not all these homes will actually be auctioned because the owners will find a way to pay their delinquent account before that happens. If it does go to auction, it is usually because there is not enough equity in the home for the owners to bother trying to salvage it. Where there is substantial equity, they often find a way to pay-off the delinquent payments before it actually goes to the auction. Because these homeowners are having difficulty making payments, you may be able to negotiate a good sale price and get a better value than on a home that is already in foreclosure.

Once a home has gone into foreclosure, the bank has incurred additional expenses and tacks those fees onto the base price of the home. Foreclosure properties tend to be in less desireable condition. People who are losing their home to foreclosure do not continue to maintain the property and often leave it in a state of disrepair.

East Wenatchee:


1127 N. Devon Ave. 3 bed / 2 bath

1761 Manhattan Dr 4 bed / 3 bath

1801 - 3rd St. N.E. 2 bed / 1.5 baths

520 Lacy Place 2 bed / 1 bath

1604 Flora 2 bed / 2 bath

3126-E Sunset Hwy 2 bed, 1 bath

215 S. Kentucky 3 bed / 2 bath

576 Morning View 4 bed / 2 bath

1026 Gilbert Ct. 4 bed / 3 bath

20 N. Nile 3 bed / 2 bath

1617 N. Astor Ct. 3 bed / 2 bath

2513 N. Ashland Ave 4 bed / 3.5 bath

612 S. Larch 3 bed / 2 bath

Wenatchee: (Sorry no bed or bath info)

1314 Poplar Ave

1791 Judkins

1602 Walnut

165 Brookside

1710 Springwater

545 Chrisand

550 Methow

704 Okanogan

834 Walker

512 Red Apple Road

360 Crawford

404 S. Chelan

1329 Castlerock

1036 Madison

932 Monroe

1005 West Park

1309 McKittrick

820 Monroe

343 Malaga

820 Monroe

1261 Millerdale

1639 Ridgeview Loop

Malaga: (Sorry no bed or bath info)

3499 Marlette Place

For answers to your real estate questions, contact:

Carol@TopPropertiesWenatchee.com
www.TopPropertiesWenatchee.com

source: Pre-Auction Homes

Homeowners often face the decision as to whether they should remodel their existing home or just sell and find another home more suited to their needs.  I recently read an article on the Seattle PI real estate blog that identified the pros and cons of each.  It’s worth a read.

If you have real estate questions, please contact:

Carol Williams, Realtor, ABR, e-PRO, GRI, PME, REI
Carol@TopPropertiesWenatchee.com

source: To Move or Remodel ?

A beautiful new listing has just come on the market… 100 feet of Columbia River Waterfront property near East Wenatchee, with a contemporary 3200 square foot home, boat dock and riverfront prestige and lifestyle.  Listed at: $899,900.   For complete listing details and to schedule a preview of this beautiful Lake Entiat waterfront home, contact:

   Carol@TopPropertiesWenatchee.com

Search all homes and land for sale in North Central Washington

source: Columbia River Waterfront

Hopefully time will permit me to be more diligent about posting current information on properties that are scheduled for Auction and also those Bank Owned foreclosure properties in the Wenatchee and East Wenatchee area.  Occasionally, I will take the time to research outlying areas such as Rock Island, Malaga, Waterville, and Cashmere.  But, in the meantime, if you’re interested in a specific town or zip code (local, state, or nationwide) let me know and I can do a custom search for you. 

Here is the current count, as of 09/05/06, for local Auction and Bank Owned (repossessed) foreclosure properties:

East Wenatchee -

46 scheduled for auction

15 bank owned

Wenatchee -

44 scheduled for auction

15 bank owned

I have details for each of these listings, so for further info please contact:
Carol@TopPropertiesWenatchee.com
www.TopPropertiesWenatchee.com

source: Current Wenatchee Foreclosures

Here is an excerpt from the Bankrate website about what’s happening with home mortgage interest rates:
"Rate: 6.49 percent (30-year fixed) Average points: 0.36
Mortgage rates rose a tiny amount after falling five weeks in a row. Rates didn’t move much because there has been little economic news of note in the past two weeks. That is set to change later in the week, with the second-quarter GDP report coming Wednesday and the August employment report arriving Friday. The bond markets will scrutinize the employment report for signs that the economy is weakening or that it is unexpectedly strong. The average 30-year fixed rate rose to 6.49 percent from 6.48 percent. The average 15-year fixed, which is a popular option for refinancing, rose 1 basis point, to 6.2 percent. A basis point is one-hundredth of a percentage point. On bigger loans, the average jumbo 30-year fell to 6.73 percent from 6.74 percent. Adjustable-rate mortgages fell. The popular 5/1 ARM dropped 2 basis points to 6.22, while the one-year ARM slipped 2 basis points to 5.98 percent".

I like Bankrate as a source of current information on mortgage rates, but they also have articles on just about anything involving money.  Bankrate.com is only one source of information and it’s good to shop, but this is definitely a site worth bookmarking and checking in on occasionally.  From a customer service point of view, I almost always prefer to have my clients work with a local Wenatchee area lender (versus internet lender).  In my experience, the rates are competitive… and transactions generally close faster and smoother.

For answers to your real estate questions contact:

Carol@TopPropertiesWenatchee.com

Search for homes and land for sale in East Wenatchee, Wenatchee, Cashmere, Rock Island, Malaga, Entiat, Waterville, and Leavenworth.

Stay current with real estate news, info, and trends in the Wenatchee area

source: The State of Mortgage Rates

•Use better financing for today’s real estate market.

•Maximize the benefits of leveraging with smarter loans.

•Decrease taxes, and increase net profits.

•Use 1031 exchanges to increase your wealth while decreasing your investment risk.

•Use long-range planning to build your portfolio at a faster and more profitable rate.

This seminar is presented in cooperation with Liberty First Services Inc., Puget Sound 1031 services & Investment Dream Services LLC and is open to the public, there will be NO solicitations, registrations, or sales offers associated herewith.

source: Free Real Estate Investment Seminar

The other day I received an e-mail asking what the taxes are for a specific property.  This was from someone (approaching retirement) who now lives in an area where taxes have skyrocketed.  He was annoyed that his taxes have increased so much and wanted to move to an area with lower taxes.

The thing you need to know about property taxes is the actual "tax rate" probably doesn’t change that much over time.  What increases taxes is the escalating values, making the total tax bill higher.  I don’t know what the property tax rate in King county is (for example), but I would guess our rates in Chelan and Douglas counties are a little higher, yet our taxes are lower.  The reason for that is the total tax is based on value.  Our values are considerably less than King county so, therefore, our property taxes are actually lower… despite a higher base rate.

A typical tax rate of 1.25% (of assessed value) in this area would create a total tax of $2,500 on a $200,000 home.  This $200,000 home may be $400,000 in King county, thereby creating a much higher tax bill.  As the baby boomers are moving here to build or buy their retirement home, my advice to them is "Build or buy the home you want and need, but don’t make it any bigger (or more expensive) than you really need it".   If you pay $200,000 for a home that increases in value 15%, your new tax bill will be around $2875 (up from $2500).  If you pay $300,000 your current tax bill will be around $3,750 and your future tax bill (at the 15% appreciation rate) will be $4,125.   Do you see the point I’m trying to make here?

The up side of buying a higher priced home is that appreciating values are generally on a percentage basis. 15% of $300,000 is $45,000 whereas 15% of $200,000 is only $30,000.   You’ve made an extra $15,000 (on paper anyway).  Looking at it in that light, in an escalating market, it is good to buy the most expensive home you can afford.  However, once the appreciation rate flattens out, you’re stuck with higher taxes. 

Theoretically, you would think the local governing agencies, setting the property tax rates, would be able to lower the rate as values increase.  This isn’t likely to happen, so weigh the pros and cons and make an informed decision based on YOUR goals and budget.

For answers to your real estate questions, contact:

Carol@TopPropertiesWenatchee.com

Search the entire Wenatchee MLS for homes and land

source: Wenatchee Property Tax Rates

I recently received an e-mail with the following question:

"I’m researching new construction in Wenatchee, looking for 4 bdrm home around 1800-2100 sq. ft. What builders and communities are you aware of in this range?  It is hard to find builders, prices, floorplans and neighborhoods on the internet."

My reply went something like this:

What budget are you working with? New construction in the Wenatchee area currently runs from about $125 - $175 per square foot (and up), depending on quality of construction, upgrade package,  lot size & location. Most of the 4 bedroom homes have more square footage than you indicated being interested in, but there are certainly floor plans to accommodate your inquiry.   I have contact with builders in all price ranges and can heartily recommend some and consider others to need more "supervision" during the project.  Please let me know how I can help".  

Carol@TopPropertiesWenatchee.com  
Search local, state or national listings

source: Wenatchee Builders, Prices, Floor Plans

Here is the current list of homes that will have open houses hosted this week-end in Waterville:

115 E. 2nd - $95,900

420 S. Central - $119,900
100 W. 1st - $ 169,900
703 E. Locust - $184,900
603 W. First - $249,000  
601 E. Birch - $269,900
404 E. Birth - $386,000 - $416,000

We may have one or two more added before the end of the week.

For answers to questions about real estate contact:

Carol@TopPropertiesWenatchee.com 
Search all of the MLS in the Wenatchee Valley

source: Waterville Open House List