START OF RECORDING
The following program was paid for by Templar Real Estate. The views and opinions expressed on this program are not necessarily those of the staff and management of WMTR. As always, it is advisable to consult a professional before making a major decision. It’s time now for the Templar Real Estate Talk Show. Here’s your host for the program, Joseph J. Zoppi.
Joseph J. Zoppi:
Hi, this is Joseph J. Zoppi, real estate investor, consumer advocate, author, and managing partner of Templar Real Estate Enterprises. You can reach us at templarbuyshouses.com or call us at 973-240-8593. We are not a real estate agency and I’m not a real estate agent, but we do have individuals on staff that are agents. We’re an investment firm. We buy houses for cash. We have agents that sell houses for the traditional Real Estate Multiple Listing Service. We invest individual’s money in real estate; we purchase apartments, buildings. We do joint ventures with other real estate investors, do not speculate, and are very protective of our money and our investors’ money. The show will go over everything that is about real estate and those things that impact real estate, the economy, interest rates. We’ll discuss trends in the real estate market. Real estate is the biggest investment for most individuals, so it’s important that you know as much as possible, whether you’re buying a property, selling a property, or investing in real estate.
Last week I discussed two of the twelve points when you’re looking to use a cash buyer just like ourselves. The first one I said to make sure you look out for, was how long the company was in business. I explained how to look at the business, how to research it. The second was for the Better Business Bureau. I highly recommend if you’re dealing with certain types of companies and businesses that you look at the Better Business Bureau and look on their website and make sure they have good ratings, contractors being one of them. I said that before. I’ve heard too many horror stories of contractors taking money and not fulfilling their obligations. The BBB really helps with that.
The next one we have to cover today is to sign a contract, so what is that? A lot of investors will negotiate a deal with the seller. They’ll have a contract, they’ll put it together, and one of the clauses within that contract is that they could assign the contract to someone else. Basically, that says that they’ll put it under contract and then have someone else fulfill the obligations of that contract. Those obligations are paying for the property. The reason they do that is they might not have enough cash or credit line to purchase the property. So, what you’re doing is you’re leaving it up to that individual to find someone else to source the money and then purchase the property. Now, if you go into that eyes wide open, that’s one thing. It’s another thing if you don’t realize that.
Obviously, the best option is to purchase a property or to sell a property really, with someone that has the money. We don’t normally assign contracts. We under very, very rare circumstances. We might work with the seller and they’ll say, “Joe, I really need to sell this property” and I’ll say, “I just can’t buy it.” Because there are certain things that I don’t like about it, maybe the location or usually it’s the location. Or, if it’s in a flood zone, but it’s something that’s pretty drastic and we won’t buy it. But, I said, “If you want to work with us, we will look for an investor.” And we make it very clear that we might not be able to find an investor. But it’s very important that you know the pros and cons of signing that contract. One of the reasons why individuals do it and they engage in it is because they feel desperate. They say there’s no one else out there that’s going to buy my home and that might be the case.
And under that scenario it might be good to have that in the contract to reassign it. But holistically, we really don’t like that, and we frown upon it and we encourage individuals that are looking for a cash buyer not to go into the contract under those scenarios. Now, when I had brought this up to a number of sellers, they said, “Well, we’re not really concerned because our attorney will take care of it.” And I said, “That’s not necessarily the case because not all attorneys will look at that and write that out of a contract or recommend changes.” Each attorney looks at it differently and some will just go by it and say, okay. That’s where again, education and to look at different scenarios and to understand them is important.
The next one is we have certain investors, they’ll come to you, uh, and they’ll present a contract and they’ll say, “Just sign it and then you could send it to your attorney after that.” Now, in the past, I didn’t have any issue either way with that because usually there’s a clause in there for attorney review. But most recently come upon an individual that called me up and there was no attorney review process and he had a lot of problems getting out of that contract because the contract was so poorly written and it was very strongly in favor of the buyer as opposed to the seller. There was a lot of things that he could not do.
And because of that, he went through a lot of angst and concern about that. The contract was basically he can’t reassign it so that individual that was going to buy the property was looking to reassign it because he did not have the money. But on top of that, he locked the individual end for approximately 120 days into that contract, so he couldn’t find someone else to buy the contract or anything. He was very, very concerned. I worked with him and we were able to assist him in getting out of the contract. But he went through a lot of pain and a lot of worries. I was very surprised because I’ve never seen that before where there wasn’t any legal review. So even as many transactions I performed, you really never know, and it depends what’s in the contract and that’s why you need a good attorney. And in future episodes, I’ll be bringing on an attorney or two and have questions for her or him, and we could discuss certain things like that. But it’s very, very important that you know going in what are the issues, what are the pros, what are the cons to a certain contract.
Again, to not sign anything until you get an attorney, that is very important. And if the company or the individual for the company says, “Well, then they’re going to take the offer back” just head for the hills. Do not succumb to anything like that. So again, it’s very important how long the company’s been in business, being part of the Better Business Bureau, ensuring that the contract doesn’t have a reassignment clause or if it does, you know what the pros and cons of it are. And again, the pros are, if you have a property you can’t sell and you’re really worried and you’ve talked to other cash buyers, then maybe a reassignment would be fine. But those are under rare circumstances.
We had one where we were looking at a house in Teaneck and it had a base five or a six-lane road in front of the property. So, the chances of selling that property after I purchased it were going to be really low. So, we talked to the woman and said, “We’re not going to buy it, but we could put a contract together and then look for a cash buyer or an investor that would be interested.” Afterwards she did get a good offer on it and that was, I was very happy with that. But we would not have purchased that property. And again, we’ll never force an individual to sign a contract immediately. We really want to take the time for it to be done properly. Thank you very much.
Joseph J. Zoppi:
Hello, this is Joseph J. Zoppi. Welcome back to the Templar Real Estate Radio Show. And right now, I’d like to discuss a couple of things. One is when you’re putting offers to purchase a house. So, there’s a couple of ways of winning a bid. Sometimes you might have a bidding war and there’s, a couple options there in terms of how to win the house. One of them is an all-cash offer, so that’s going to trump everything else for the most part. There was an article in Realtor Magazine that listed out different strategies to win in a bidding war. And we have some still, the market’s cold a little bit. You’ll usually see this more in the summer when the market’s a little hotter. But this will happen anytime in terms of a bidding war.
First, like I said, is an all-cash offer. So back in 2016, 2017, Realtor Magazine was given a percentage that you’d win out like 90% of the time and now it’s more like 206%. Why the increase? Well, because the market’s cooled a little bit. Previously you could just keep the house on the market longer back in 2016, 2017. Now the cash offer really trumps everything. We had a situation where it was back in I think 2018 and we had a cash offer. We had a lot of traffic coming through and they presented to us a cash offer, it was less than our asking price. And we said, “Yeah, let’s go for it.” We didn’t like that it was discounted as much, so we negotiated, and we moved it up, um, a decent amount. They assumed just because there was a cash offer, they could discount it considerably, which wasn’t the case.
And so, they came back, they raised it and then they changed the terms again, they wanted to reduce the price. So, once that happened, I started to become very wary. They then said that they had an agent and we said we would pay an agent fee. Normally we do, but they had already negotiated and then all of a sudden, they supposedly had an agent. So, then that was going to be another 2.5% and we closed that down quickly because the contract was already signed, and they were just trying to negotiate a better deal. So, we continued with the transaction and then we had an inspection and the agent, which we turned down, she selected the inspector and that individual came in and just listed everything under the sun. We redid this house completely and the things he was saying were just, it was never so bad.
They were saying that every floor had to be replaced because it was warped, which wasn’t the case. He was saying that the lights had to be replaced because, or the entire light, because they were high hats and we had some burned-out bulbs. He didn’t say, “Well, check the bulb first and if the bulb isn’t working and a good bulb is put in and it’s still not working, it needs to be fixed.” But he didn’t anything like that, it was just replace this, replace this, replace this. So, after that we just said, we’re not going to go any further with this. This happens once in a while to us with an appraiser or an inspector, especially when a house is rehabbed, they take some joy in trying to look for every possible thing.
Subsequently, we had another inspector come in and he picked off the usual four or five different things that were I think wrong with the property that needed to be fixed. We’ll never fix 100% of the property before sale. Even though it does look good, there will be some minor imperfections because you can never fix everything first of all. Second of all, the inspector has to find problems because if they don’t find problems, people are going to question whether the inspector is doing a good job or not. I had a client just the other day where we had a contract it went to the attorney and the attorney had no issues. Well, the person that hired the attorney said, “Well, there’s something wrong with the attorney because he didn’t find anything.”
It was a pretty basic contract that we put together when we purchase a house, so a lot of times we don’t have issues with contracts. But this individual said, “No, I’m going to get another attorney because basically he didn’t find anything wrong with your contract.” So, again, when we’re listing houses and we rehab a house, we do leave a few things so the inspector can catch them and justify his position and that’s fine. Everything that’s glaring we always fix, and we want to make sure from a safety perspective it’s corrected as well as an esthetic perspective. So, we do all those things and we want to make sure that it’s a good product that’s put out. But it is something that we always look out for.
Besides an all-cash offer, another approach is really a client letter. So, we’ve had situations where individuals have given us letters, especially young couples saying, this is our dream house, we would love to have this house. We had a bidding war on one of these situations and they sent us a letter and we liked the letter, we liked the people that wanted to buy the house. They’re young couple and it was nice, it was really, really nice. And they were getting married, so it was a good story. We liked it a lot, and we were going to take that offer even though it was probably $4,000 less. It was under our own company, so we didn’t care if we were going to lose $4,000 as opposed to the other offer. You know, if it was an investor, one of our investors, we would have taken the top dollar. But under this situation we were leaning very strongly towards the young couple. But then when I told the real estate agent for the other bidder, they raised the price again. It’s all of a sudden it wasn’t 4,000, it was 10,000. So unfortunately, we had to take the other offer because it was just too much, it was just substantially more. But a client letter will work, and it definitely does persuade individuals. A lot of things are based on emotion, that’s the way it is. We’re professionals, so we try to take emotion out of the equation as much as possible. But in certain situations, we will go a certain way, we’ll go with our heart. Especially when we’re working with individuals on tough situations where we have to purchase their house. We work very closely with them and that I think that’s really important and really separates from other individuals.
There are other things that you could do when you’re in a bidding war. You could waive the inspection, waive certain contingencies, finance contingencies, things like that. But they really don’t impact the situation too much. And in terms of inspection, I would always make sure you have an inspection because you really never know. The one scenario where you could probably wave it is like a townhome or a condo because you’re really just dealing with the inside. You don’t have to worry as much about the roof, the foundation, things like that because that’s usually taken care of by the Homeowners Association. Unless of course there’s water coming in, then you kind of need to know that, if it’s going into the basement, especially if it’s finished. So that’s where we are with that. And thank you very much for this segment of a bidding war and how to win it. Thanks.
Joseph J. Zoppi:
Welcome back to the Templar Real Estate Radio Show. I’m your host, Joseph J. Zoppi. Right now, I’d like to go over certain economic news and where home prices are and where they’re going. The Labor Department reported back in November that 266,000 jobs were added, which is very strong. If you recall, I had stated that you hear these individuals talking about recession and you really need to take everything with a grain of salt, unfortunately, because everything right now is built on politics. It doesn’t matter if your economist or not, it seems that that’s the way it’s going, that people are leaning a certain way and that’s how they’re interpreting things. Or, hoping that things are going to do or perform or occur. As I said before, I don’t see a recession right now. I’ve seen a number of indicators that stated that and now they’re saying the same thing, that there probably will not be a recession.
In addition, even that occurred then all of sudden also the negotiation with China, they’re going to ease up some of the tariffs, so that has also helped in a way, but previous to that the job market’s been very strong. A lot of people I’ve talked to have said the same thing. I deal with a lot of individuals, a lot of investors throughout the country. As I said before, it’s about 150 to 200 investors throughout the United States and we talk almost on a monthly basis. Where their business is, how it’s going, what’s impacting it, what are they seeing. So, I get a good macro view of the United States and see what areas are tightening up and what areas are still doing really, really well.
In terms of home prices, right now they’re thinking that some of the prices are going to go up to 5.4%, they’re looking at. But I think in our area it’s not going to be as high as that. Over the last year, year over year, New Jersey was up just a little over 1.5%. A number of other areas are very, very strong. You have States in the Midwest or the West really and also in the South that are doing very well. Nevada was up 3.2%, Georgia 4.3% in terms of home sale prices. Mississippi 5.1%, Alabama 3.3%. You’ll see some of these markets where you wouldn’t think they’re growing as much. So, you have Mississippi, you have Alabama they’re all growing a lot, I know a lot of investors that have started doing work in those areas and they’re pushing very hard and it’s really [unintelligible 00:26:27] Whereas Louisiana was at, I think, one point something percent, so they’re still very depressed, that state. But you’re going to see over the next year, I think prices will still be flat, maybe they’ll be up a little bit. Maybe if the tariffs are removed completely, it might push it a lot higher. But right now, there are still a lot of properties on the market and there is a decent amount of inventory, especially in certain areas.
Next thing I want to talk about is cameras. So, there was the surveillance cameras, the use of cameras for surveillance continues to increase. Right now, China’s number one in surveillance, America’s very far behind in that in terms of anything we do. There’s a big push for surveillance and use of cameras in certain cities like Orlando, Chicago, areas like that. I had a situation, we just purchased a property and it was a four unit, it was a small property. And it had a security system and I was like, okay, that’s fine. I looked at it briefly, it wasn’t as important to me, the numbers were more important. The surveillance was not that important. But of course, two weeks into it and I get a call and one of the tenants says that the person downstairs is throwing eggs at their car.
So, I went down there, pulled up the surveillance cameras and of course that camera where it was pointing wasn’t working. So, we looked at a number of things, I had someone fix the camera or about to fix the camera, I think. I called in one of my guys that does a lot of work on our properties and I said, “Can you come down and fix the camera?” I won’t be available until Saturday and I wanted to come down just to talk to him especially because it was a new property and I wanted to be there for it. I show up in the morning for the property and the one neighbor parked the car again in the driveway where I was hoping they wouldn’t have parked, I just thought it was common sense. And what was on their car again? Eggs. Can’t you just park someone else for the time being until I get that camera going?
We got the camera going and I said, “For the time being, please do not park in the driveway.” There’s a lot of street parking and everyone parks on the street. And I said to them, “Wait until I figure out this security camera system and how much footage it keeps and to get remote access and those types of things. Because it was set up rudimentary, it was just set up basically and it all the bells and whistles aren’t set up. So, right now I’m looking at that camera system and the surveillance associated it and looking at possibly upgrading it. But I highly recommend if you have some type of apartment building, even if it’s just four units on up, to get a camera system. I think it’s very important just to spend the money, especially in this day and age.
The camera systems and surveillance systems that they have now are just unbelievable with how you can pick up, night vision, audio. They have one camera right now that they use in China that could track someone 4,000 feet away. China’s builds a lot of facial recognition to track people. It’s really pretty crazy what’s out there and at a relatively inexpensive cost. Right now, you can get a decent system for below $2,000 even maybe under $1,000. I rather spend more money. A lot of times I want to spend a little extra on anything that we do because I just want it to be right and I think that’s very important. But for a basic homeowner and if they have a rental property, four units, five units, then a basic system is fine.
I’d like to thank everyone and if you have any questions you could always reach us at Templarbuyshouses.com. Thank you very much.
The preceding program was paid for by Templar Real Estate. The views and opinions expressed are not necessarily those of the staff and management of WMTR. As always, it is advisable to consult a professional before making a major decision.
END OF RECORDING