Bang for your Buck, but Don’t Shoot Your Eye Out!

I love the movie, A Christmas Story. Many people do. But I think the main reason that I loved it so much was how excited Ralphie was to speak with Santa Claus to ask for his Red Rider BB Gun and then he froze up at the last minute. Every photo I have seen of myself when I was young, whether on Santa Clause, the Easter Bunny, etc., I was crying or had a look of sheer terror on my face.

So, getting back to Ralphie; he asks EVERYONE for this Red Rider BB Gun and their answer is always the same, “You’ll shoot your eye out!” Well, the thing is, (spoiler here, if you have never seen the movie) he gets his gun and it ends up cracking him in the eye, and he nearly shoots his eye out. But, what if his parents or anyone had told him, Ralphie, maybe we should work on something that is a little bit more age appropriate for you. Now, I know you are all thinking one of two things: 1. What fun is that? Or 2. Do you even have any kids? Who would say that to a kid?

But, the point is when we work on something that is maybe a bit too big for our so called “britches” (pants); then you may get your eye shot out. Or when the time is right you freeze up and don’t ask for the right thing (like price reductions). Let me explain.

So, I visited with Utah Hard Money Lenders and have been seeing a 50% decline in sales month by month due to fewer buyers. There are less people going into the marketplace looking for properties and other hard money lenders think this may be due to the buyer’s tax credit. They feel that the buyer’s tax credit actually pulled the future buyers into the marketplace too early and that is why available buyers are going down in numbers.

I would like to think that no matter what, if your home is the nicest home and the least expensive it will sell. I do not care what the interest rates go to. I do not care what is happening in the economy; in the market place it does not matter. If you have the nicest house for least amount of money your property will sell, no questions asked, always, no matter what.

I also think it is important to realize the availability of buyers. If you are under $250,000 price range I would estimate that 80% of the buyers are there. If you are over $250,000 between $250K and let say $500,000 about 10% of the buyers are there. And from $500K to a million about 5% of the buyers are there and million up give another 5%. I am estimating here. It is just based upon my knowledge and reasoning with Utah hard money lenders.

Getting an idea for what is the availability of buyers is important because the higher you go in your purchase or your sale price, the fewer buyers available that could purchase that price range. (Reference above about getting a bit too big for your britches)

So, if you want the biggest bang for your buck, and you want best odds of selling your fix and flip, then you will want to keep the price under $250,000. Because odds are you will be able to sell the property under $250,000 as the most amount of buyers are in that price range.

The next thing is pricing a property accurately. If you are doing regular price reductions, which a lot of people are when they are trying to sell a property, you have to be careful that you are looking at the comparable. You are looking at the actives, the solds and to look at properties that are under contract. Properties that are under contract can tell you something about the value. You do not want to hang you hat on that. But you want to be looking at those things in determining the price of the property. So I hope this is helpful advice in visiting with some Utah Hard Money Lenders and knowing what is happening in the marketplace, how to price the property and what to look at so you don’t shoot your eye out.

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