Jan Skrentny

One of the things that I am proud of is that over the past five years, during this time of real estate frenzy and fizzle, none of the homes that I put buyers into have gone into foreclosure or been repossessed.

Now please understand, a real estate agent in California cannot tell a buyer how much to offer for a property much less what to buy or not buy. But we can show you comparable homes, point out trends in the market, prognosticate (that’s an educated guess) on the future of the market.

During the peak of the market everyone was sure that anything they bought would double in price in no time at all. But what if it didn’t? What if the property lost value because it was too overpriced to begin with. Could you still afford it?

I believe a good agent has the moral obligation to steer clients away from disasters.

The investment in a first or second home is not just financial; it is a life style investment. How much enjoyment will this property provide you and your family often weighs more than how much can I make from the property.

This is remarkable because listings (representing a house for sale) are the lifeblood of real estate agents.

The owner is a woman on social security. She lost her husband to cancer two years ago. She has five dogs (four English bulldogs) that she loves and breeds. Her husband was an avid gardener but since his death she is having a hard time keeping up with the garden, the house, even the animals.

In this market a new listing has to be both well priced and well presented; there is too much competition for buyers to think “okay” is okay. I told the widow to make a plan to have the house and yard fixed up, the interior simplified, and an area developed for the dogs to reside when the house is being shown. I gave her the name of a trusted handyman who could help her do some of these things.

We developed a strategy so that by spring of next year the house will be ready for sale. The seller may have to spend some money to make the changes but it will greatly improve the sales potential of the house and the return on her investment will be rewarded many times over.

You only get one chance to make a good first impression – that’s especially true in this real estate market.

I spent the afternoon looking at “repoes” – bank-owned repossessed homes.

I have several clients who are interested in buying up good homes at very good prices. There is a formula to it: With 20% down the price has to be low enough so that when the house is rented – the rent will cover the mortgage, taxes and insurance. Ideally there should be a little left over to cover repairs.

The point? Say you get a three bedroom two bath for $130,000 (this is possible in the mountains). You put $26,000 down, finance $104,000.  It’s an investment property so the bank rate will be higher than on your home loan, so say 7 ¼%. On a 30 year fixed that is $716.00 a month. Taxes are 1.5% of the purchase price or $1,950/ year – $162.50 a month. Insurance varies but say $800/ year or $67 / month. Total cost: per month: $945.50.

A good house will rent for $1,000 to $1,250 up here.

Four years from now when the market is strong again the home will sell for over $200,000. Your $26,000 investment, after cost of sale (commissions and costs) will net you $52,000 – tripling your money.  Hard to beat at any bank.

The problem? Most repoes are not in good condition. They are troubled, I call it “home-abuse;” technically it is bad or no  deferred maintenance.

That’s why I spent the afternoon looking. Good repoes are hard to find. You have to look hard and act quickly when you find one.

But that’s how money’s made in a bad economy. One Repo at a time.