Double Whammy for High-End Luxury Realty Market

THE high-end luxury real estate market is facing a double whammy. The demand from domestic buyers has already dried down and now even non-resident Indians (NRIs), who constituted a significant market for luxury real estate developers, are developing cold feet. “With the US property market witnessing a correction due to subprime crisis, the NRIs are expecting the same to happen in India and are holding back on their purchases,” says Delhi based real estate firm Omaxe CMD Rohtas Goel, who recently launched a luxury project in the National Capital Region (NCR).

Three-four years ago, there were only a few big developers into the game of building luxury homes. But the higher margin in the business prompted many others to join.“The developers entered the luxury segment without a proper assessment of the market. Now they are faced with a major supply-demand mismatch. In Punjab, Delhi NCR and Mumbai suburbs, the supply far outstrips demand,” says real estate consultancy firm Jones Lang LaSalle Meghraj India chairman Anuj Puri, adding that the exit of speculators and investors has impacted these markets, where the supply exceeds demand by 25-35%.

Adding to this is the near absence of NRI buyers, who constitute around 20% of the luxury home buyers, according to property consultants estimates, “The price correction in the US has prompted NRIs to evaluate buying properties in their local market, where they can easily control and manage them, unlike in India, where managing property has been an issue with them,” says Cushman & Wakefield Director (residential) Aditi Vijayakar. She also points out that Indian developers carry a wrong notion that every NRI is a billionaire and can afford a Rs 2-3 crore property. Besides a demand problem, the competition among developers has intensified as they are wooing the same segment of NRIs. Says Ansal Properties and Infrastructure, president (marketing) Kunal Banerjee says, “The NRI market is a bit too crowded these days. Therefore, we are looking at attracting PIOs (person of Indian origin).”

PIOs are second or third generation people across the world, whose forefathers had migrated from India during British Raj and settled abroad. There is a good population of PIOs in Africa and Australia. The recent attempts by the Indian government to renew ties with PIOs by hosting Pravasi Bharatiya Divas may also have a positive push to the marketing efforts of developers such as Ansals.

Besides targeting a new segment, developers are also offering freebies to woo NRIs. “Firms are offering free tickets to potential NRI home buyers to visit India and take a look at their property. This is done in association with banks, which maintain a list of high net worth individuals,” says Knight Frank India chairman Pranay Vakil.

Souce: indianrealtynews.com

Serviced Apartments emerge as an alternative to hotels in Bangalore

With the rise in Indian and international business traffic to Bangalore, the demand within the hospitality industry has skyrocketed. The new genre of serviced apartments has hence emerged as a cost effective alternative for business travellers and tourists. These serviced-apartments are largely operated by apartment owners or builders and usually offer entire apartments (1, 2 or 3 bedroom) or studio units or shared apartments.

According to real estate services firm Cushman & Wakefield, Bangalore currently has approximately 15 professionally managed serviced apartments including Homestead, Chalet, Sterling Suits, Halcyon among others, which are spread across high interest residential areas like Lavelle Road, Langford Town, Brunton Road, Vittal Mallya Road, Airport road and Indiranagar.

Largely catering to corporates, business travellers, tourists, expatriates and families, the tariffs range between INR 1,500 per day for a 1-bedroom/ studio to INR 6,000 plus per day for a 3-bedroom apartment. These serviced apartments allow the flexibility associated with short-term accommodation avoiding longterm commitments.

Most professionally run centres are not class-comparables to 5-star hotels though some of them offer facilities like guest lounge, swimming pool, spa, restaurant, housekeeping, business centre and other clubhouse facilities. Occupancy levels in these are usually around 90%, indicating the tremendous latent demand in the market.

Apart from these, there is also a large unorganised market in the city, which is driven by mom and pop establishments. These however do not provide the facilities offered by the professionally run centres and their rates vary depending on the duration of stay, location, services provided, ambience etc.

Unlike Mumbai, prominent hospitality brands have not yet entered the serviced apartment sector in Bangalore. The advent of international brands like Oakwood and Ascott which have plans to launch shortly, would lead to an increase in healthy competition and thereby improved services and products.

Cushman & Wakefield expects several more centres to come up in peripheral areas such as Whitefield, Bellary Road and Hebbal.

Courtesy: INRnews

Ahmedabad Municipal Corporation to tag property tax with education cess

The Ahmedabad Municipal Corporation (AMC) is to levy an education cess on the property tax resulting in an increase of 5%-15% on tax on residential properties and 10% to 30% on tax on commercial properties.

The cess will be applicable based on the amount of property tax paid. AMC will also send separate bills for education cess for the period 2001-02 to 2006-07.

Easing the Transition to Your New Home

Use the right boxes, and pack them carefully

Professional moving companies use only sturdy, reinforced cartons. The boxes you can get at your neighborhood supermarket or liquor store might be free, but they are not nearly as strong or padded, and so can't shield your valuables as well from harm in transit.

Use sheets, blankets, pillows and towels to separate pictures and other fragile objects from each other and the sides of the carton. Pack plates and glass objects vertically, rather than flat and stacked.

Be sure to point out to your mover the boxes in which you've packed fragile items, especially if those items are exceptionally valuable. The mover will advise you whether those valuables need to be repacked in sturdier, more appropriate boxes.

The heavier the item, the smaller the box it should occupy. A good rule of thumb is if you can't lift the carton easily, it's too heavy. Label your boxes, especially the one containing sheets and towels, so you can find everything you need the first night in your new home.

For your family's safety and comfort

Teach your children your new address. Let them practice writing it on packed cartons. You can lighten your load and reduce any storage space you need to rent by hosting a garage or yard sale.

Fill two "OPEN ME FIRST" cartons containing snacks, instant coffee or tea bags, soap, toilet paper, toothpaste and brushes, medicine and toiletry items (make sure caps are tightly secured), flashlight, screwdriver, pliers, can opener, paper plates, cups and utensils, a pan or two, paper towels, and any other items your family can't do without. Ask your van foreman to load one of these boxes, so that it will be unloaded at your new home first. Why the second box? In case the movers are delayed getting to your house on the day of the move.

Keep your pets out of packing boxes and away from all the activity on moving day.

Let all your electrical gadgets return to room temperature before plugging them in.

Since you may need to call old neighbors or businesses from your new home, pack your phone book.

Work hand in hand with your mover

Give the mover's foreman your reach numbers and email addresses so you can stay in contact.

Read the inventory form carefully, and ask the mover to explain anything you don't understand. Make a note of your shipment's registration number, and keep your Bill of Lading handy.

If you're moving long distance, be aware that your property might share a truck with that of several other households. For this reason, your mover might have to warehouse your furniture and belongings for several days. Therefore, ask your mover whether your goods will remain on the truck until delivered. If they have to be stored, ask whether you can check the warehouse for security, organization and cleanliness.

Source: totalrealestatesolutions.com

What Real Estate Agents Really Sell

For people looking to buy or sell homes, it can be difficult to ignore the prospect of hiring a real estate agent. That being said, what do real estate agents really sell?

What Real Estate Agents Really Sell

If you go to a doctor, you inherently rely on that person’s years and years of experience. You know they have spent a long time learning the intricacies of the body and you feel comfortable relying on their expertise. The same goes for practically any profession. In the case of real estate, most people assume that a real estate agent has also been trained over and over on the finer points of the real estate transaction. This is not particularly true.

If you ever have the time and money, I strongly suggest you become a real estate agent. It is an eye opening experience unlike any other. You will study a bit and then take your state test to get a license. The test is very, very simple and easy to pass. Your next step is to join up with an experienced realtor to learn under a steady hand. Once you do, you will be surprised by what they teach you.

Real estate is a fairly simple game. There just is not that much involved in buying or selling properties. Most real estate agents learn how to handle the nuts and bolts of the process over a few days of study or even by reading a few books. That doesn’t mean they don’t study and attend a lot of seminars, however. They certainly do, but the subject matter has little to do with the real estate process.

Real estate agents spend all their time and money learning how to sell. The product they focus on, however, is not property. It is you. There are endless seminars and meetings where the only thing addressed is how to get you, their client, to jump on a home or retain the real estate agent to sell yours. The goal of the agent is three fold – get you as a client, figure out how to manipulate you into taking action that will generate a commission and then deal with the property issue.

There are experienced real estate agents that are very good at helping their clients. Most, however, are primarily interested in just generating a commission. By going FSBO, you have the ability to avoid this process, save money and get on with the process of buying or selling your property.

What’s the Best Way to Find Deals?

This one of those questions that must be answered by another question, to wit: what’s a good deal? And this is not a facetious question, because the answer depends on:

1) Your exit strategy.
2) Your financial resources.
3) Your skills.
4) Your goals.
5) The risk and hassle involved in a particular property.

So let’s say this: I’ll let you in on my favorite ways to find good deals—after I explain why they’re good deals to me.

First, let’s talk about exit strategy. If I put a property under contract, one of two things is going to happen to it. If it’s in very poor shape or out of my “farm”, I’ll wholesale it to another investor for a quick cash profit. If this is the case, a “good deal” is a 1-3 unit building that I can get under contract for about 60% of its “as is” value. The other thing I might do is to close it and lease/option it for a year or two. In this case, my “good deal” will be a one family that needs cosmetic work in a decent area that I can buy for 70% or less of the as-is value. In any case, my exit strategy determines what I think is a good deal. If I find a 40-unit apartment building that can be had for pennies on the dollar, I won’t necessarily consider it a good deal, since I have no desire to be a landlord, and know few wholesale buyers who want such things. Ditto a commercial property or a historic rehab.

Your financial resources, including the cash and credit you have available to you, also determine what a good deal is to you. Imagine you have no cash and poor credit, but find an owner who will finance with no money down If you pay 100% of the value of the property, but his terms are such that you can still rent it out for a $300/month positive cash flow. Is this a good deal for you, despite the fact that you have no equity? Could be. Is your time well spent looking for these types of deals? Yes, since they are what you can manage. Is mine? Probably not, since I can find lots of deals that cash flow AND have 30% equity the day I buy them. What’s the difference? I know how to offer owners cash. You can’t.

Your skills also matter. If you don’t understand repairs, looking for properties that need major mechanical work in order to rehab and resell it isn’t the best use of your time. And for heaven’s sake, don’t start looking for “good deals” in large multi-families until you’ve taken at least one landlording seminar! If a deal doesn’t meet your goals, it’s not a good deal no matter how cheap or how good the financing. If your goal is to hold properties long-term for the tax advantages and avoid major rehabs, no junker should ever turn your head. If you flip it, you’ve created a capital gain that you don’t want. If you rehab it, you haven’t met your own goal of avoiding rehabs.

Finally, the risk and hassle involved in a deal affects whether the price and terms are “good” or not. I’ve noticed that my wholesale buyers will pay 70% of the after repaired value of a junker property less the cost of repair—as long as the cost of repair doesn’t exceed about $15,000. More than that, and you’re talking really major rehab. Buyers of these types of properties typically want a higher overall profit. Similarly, people who buy rentals in warzones often look for yearly returns approaching 50% of the purchase price. Why? Management hassles, rent collection hassles, hassles with the city...you get the picture.

So, in light of what I consider a good deal (a 1-3 family property that I can get for 70% or less of the as-is value by offering cash) what are my favorite ways of finding good deals? In order of importance:

a) Direct mail.
b) My ad in the paper.
c) Referrals from other investors and wholesalers.
d) The MLS.
e) Door-to-door flyers.

There you have it!

Attention: For Sale By Owners!

Why People Are Afraid To Buy From You!

Many homeowners believe that to maximize their profit on a home sale they should sell it themselves. At first glance, they feel selling a home is simple and why should they pay a broker fees for something they could do themselves? In fact, close to 25% of all the homes sold last year were sold for sale by owner. (FSBO)

However, close to half of the FSBO’s said that they would hire a professional next time they sold. Thirty percent said they were unhappy with the results they achieved by choosing FSBO. Why?

Many FSBO’s told us that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings were even more disappointing. By the time they figured the amount of fees paid to outside consultants, inspectors, appraisers, title lawyers, escrow and loan officers, marketing, advertising... they would have been better off having paid the broker’s fee which would have included many of these charges up front.

Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself serious money. Some FSBO’s discovered that the lost money as a result of poor decisions outweighed the commission.

Before you decide to sell FSBO, consider these questions and weigh the answers of assuming the responsibility versus employing a professional. A little time spent investigating up front will pay off tenfold in the end.

Questions To Consider:

Do I have the time, energy, know-how, and ability to devote a full forced effort to sell my home?

One of the keys to selling your home efficiently and profitably is complete accessibility. Many homes have sat on the market much longer than necessary because the owner was unwilling or unavailable to show the property. Realize that a certain amount of hours each day is necessary to sell your home.

Am I prepared to deal with an onslaught of buyers who perceive FSBO’s as targets for low balling?

One of the challenges of selling a home is screening unqualified prospects and dealing with lowballers. It often goes unnoticed... how much time, effort and expertise it requires to spot these people quickly. Settling for a lowball bid is usually worse than paying broker commissions.

Am I offering financing options to the buyer? Am I prepared to answer questions about financing?

One of the keys to selling, whether it’s a home, a car... anything, is to have all the necessary information the prospective buyer needs and to offer them options. Think about the last time you purchased something of value, did you make a decision before you had all your ducks in a row? By offering financing options you give the home buyer the ability to work on their terms and open up the possibilities of selling your home quickly and more profitably. A professional real estate agent will have a complete team, from lenders to title reps for you to utilize...they’ll be at your disposal.

Do I fully understand the legal ramifications and necessary steps required in selling a home?

Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your states disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, a professional would be a wise choice.

Do I have the capability of handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented?

Ask yourself if you are well versed in legalese and if you are prepared to handle disputes with buyers. To avoid any disputes it is wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.

Have I contacted the necessary professionals....title, inspector (home and pest), attorney, and escrow company?

Are you familiar with top inspectors and escrow companies? Don’t randomly select inspectors, attorneys, and title reps. Like any profession there are inadequate individuals who will slow, delay and possibly even cost you the transaction.