All Forum Posts by: Karen Margrave

I'm in Redding, CA, and we have a lot of demand for homes under $450k, and rentals. However the higher end is beginning to soften.  Prices are at all time highs as are rents. We have a lot of investors that rent space  as Airbnb (limited to 400 units)  and room space to students from a local ministry school, as well as others looking for more affordable options. 

 If Trump wins, there may be a little tiny bit of light at the end of the tunnel for builders. Supply and demand drives the train. Unfortunately, in CA driving the train is a lot more expensive, as our fuel's touted to go up at least .46 a gallon, and it's already $5. That means the price of everything used in construction goes up, so no help with supply side. Add to that insurance costs, etc. and it's not looking good.

However; what Trump can do that will help is to cut out some of the environmental regulations, etc. that drive the costs of development up. 

Unfortunately all the lawlessness, and homelessness in CA doesn't help. As long as interest rates are going up, there's not many people wanting to sell their homes, unless they're leaving CA, or going into Senior Living, which is happening more and more. 

Then another thing I see coming down the pike is the credit card debt. So many people are living on their cards, hoping that something is going to happen where the cost of living gets lower, and trying to hang on. But, if something doesn't change in the economy, they will fall behind on credit cards, then mortgages, and things will begin to fall. 

As bad as CA is, people won't vote them out. Crazy times. I know we're not supposed to talk politics, but the reality is, it's politicians that set the policies that affect real estate and construction, so it is relevant. 

It's a 2 way street. A few years back we had a huge fire in our area, and it burned hundreds of homes. All the rentals were leased up fast. People that had lost everything were desperately looking for homes, and some of the rental companies were taking rental applications, and families were paying for multiple application fees. Those management companies knew they had no units available. Families paid out hundreds of dollars, and the companies make a killing. It's wrong.

Also, with inflation being what it is, rentals scarce, etc. people cannot afford to be paying for multiple rental applications. There needs to be a better way.

As an agent I pay for the home warranty for my clients, that way should something go wrong, it's covered. It's important to stay current and ask around about which company is responding fastest, as sometimes they are overwhelmed, not having enough local vendors, and service is slower. If you can find a warranty that allows you to use the vendors of your choice, that helps. 

For myself, we built our home several years ago. It was big, and had 3 AC units on it. I was going to sell the house, so put a warranty on it. One of the units went out. I'd only had the policy a few days and thought for sure it wouldn't be covered. The unit couldn't be fixed, and the AHS put in a new unit. It saved me a lot of money!

There's a saying in real estate, "all real estate is local". Every area have things specific to them that affect the supply and demand for real estate. Nobody knows when or if the market is going to crash. There are so many things going on in the world, it's impossible to say. All we can do is look at what is happening TODAY. What is going on in your local area? Are businesses shutting down, people moving, etc., or is there something there that is a draw for people, where they want to buy homes? Is there an abundance of homes on the market, or is the market tight? On rentals, are there a lot of vacancies, or a huge demand and prices high? 

Real Estate is all about supply and demand. In CA there's no big supplies coming on the market in most areas where there aren't mega developers. The costs to build are too high, and until fuel prices drop and the environmental regulations are toned down, that won't change, meaning existing housing will continue to go up. Other areas may have lower costs to build, etc. and if there's huge demand, it may make sense to do spec homes, etc. 

First and simplest, ask your agent to please give you something in writing showing what the total amount of commissions being paid will be, not just what they are asking you to pay. The person that responded above misunderstood the question, thinking you were asking about if the agent was acting for both the buying and selling side, which makes them a dual agent. However; that wasn't your question. But, since it was referenced, an agent would need to disclose that to the client. 

Either way, agents must disclose their commissions. What your question was referencing is if your agent negotiates with you to pay the buyers commission, how would you know if they were also being paid by the seller? Agents must disclose to you if they are being paid by the seller. Don't be afraid to ask them. Agents are not allowed to make "secret profits". All of the DISCLOSURES signed by buyers and sellers are to protect them, and disclose information. Buyers and Sellers deserve to know all the facts related to their transaction, not just what an agent decides to give them. Tell your agent that you would like to see, in writing, a breakdown of any and all commissions being paid so that you have a full understanding. 

Also, Commissions are a shown on the estimated closing statement from the escrow company. 

Never be afraid to ask questions of your agent. You have every right to be an informed consumer, and know what you are paying for. Never sign anything or agree to anything you do not fully understand. 

Commissions have always been negotiable in CA. Most buyers don't have the money to come in with to pay down payments, plus commissions in this market, so I don't expect a lot to change. Buyers usually don't understand all that goes in to selling real estate. The number of listings shown before an offer is made. The time spent meeting pest inspectors, home inspectors, roof inspectors, HVAC guys, septic inspections, any contractors for work that needs done, photographers (paid by selling agent) signs and other marketing, Omissions and Errors insurance, MLS fees, NAR/CAR fees, car insurance, gas, only to have a deal fall apart over something. Payments to transaction coordinators, etc.

Then the contracts, disclosures, etc. coming in around 100 pages. Yep.... the life of an agent is so dang easy, they get paid so much for doing nothing! LOL 

I just ran across this post again and was curious what you ended up doing, and how it all turned out? 

It's great for contractors. There's too many people flying under the radar and having work done by people professing to be contractors, that aren't. Though it may seem to save them money, many homeowners end up with shoddy work being done that isn't to code, and end up paying a fortune to get it corrected.  Homeowners are going to be required now to actually verify licenses, which isn't hard at all to do. 

Sellers need to understand, Buyers are requiring home and pest inspections. They, and their agents, oftentimes go online to check and see what permits were pulled, and work done. If a seller says a home has a new roof, deck, addition, etc. and want to get credit for the value add, but there's no permit to back up the claim, forget it. Also, as licensed agents, if a home has work that wasn't permitted, we are required to tell the buyers, that should they purchase the home without permits, and the City or County finds out about it, they can make them remove any additions, etc. If it was done to code and not permitted, they also could just say to submit plans, pay fees, and have inspections. However; there's no guarantee that's the option that they will do. 

I'm not sure if you're still interested in the deal you posted, but thought I'd weigh in. Deals are about balancing the Risk and Reward for investors. To put deals together you need money, experience, and knowledge of the area. Ask yourself, what is it that you bring to the table of those? Do you have money to put into the deal?  Over the years I've been involved in spec building projects of houses, small office parks, office/retail condos, etc. Aside from seeing a parcel and knowing a great project could be built on it, it's necessary to be able to show precisely what can be built, how much it will cost, and have real numbers, based on actual bids to back up your projections. 

Experience has more quantifiable value. Curious, why did you choose Architecture or General Contractor? 

As a moderator on BP for years, though I've been away for awhile, I've answered this question many times in one form or another. Ask yourself, what are you good at? What are your strengths? What is your experience in anything related to real estate, construction, development, etc.?  Developers are the ones that pull all the pieces together on a project, but even that's not set in stone. A developer can work with an end user on a project they want done, find agents to locate the land with proper zoning, location, etc. to support the type of project. Find architects or designers, engineers of all types, general contractor, etc. to design the project, and know how to keep the design where it's functional, cost effective, but has appeal. There's so many pieces to the puzzle. Developers can also do their own projects, and sub out all the different trades, etc. 

There are also a variety of skills that contribute to the development of a project. Sales, marketing, legal, etc. ALL of these things have value on a project.  Every state has different requirements, depending on the type of jobs. Some states you can do an open book test to be a contractor or a developer. Other states you have to be licensed for residential, but not commercial. 

What are your goals? What type of project would you like to develop? It may be working for another developer would have the most value, or a GC, Project Manager, etc.