John Payne Team – Cincinnati Realtor

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Financing a Physicians Loan– Find a trusted partner

In a sellers and shifting market, strong financing is the best offense. The value of a relationship with a verified lender can be the difference between a contract that will not see closing and a successful transaction. It’s the fiduciary duty of the agent to verify and vet the buyer for his or her client. It’s also the responsibility of the buyer’s agent to vet the buyer for the seller’s agent. I recently had an interesting wrench in one of my transactions that I feel everyone can learn from. Here’s the situation that transpired: Buyer was transferring to Cincinnati for a job He had a mortgage on an out-of-state house with USAA He had a strong amount of money in the bank Buyer thought it was in his best interest to use USAA instead of one of my preferred lenders for their home purchase in Cincinnati He wanted to buy a house three months in advance so renovations could be done prior to relocation 21 days from closing, buyer was informed that USAA couldn’t loan money “unless the borrower is within 60 days of gaining their employment” Buyer needed to generate an $20k additional to close with USAA My client then asked me to delay closing from mid-March to the first of May—and that was going to be a deal breaker. When we wrote a contract for the house, we were in competing offers and ours was chosen because of relationships; both offers were identical. Then we talked to my preferred lender, Huntington Bank, which has a portfolio product they can offer my client—a physician loan: 0% down payment, matching interest rate zero Private Mortgage Insurance (PMI) A homerun from the local group! This information intrigued the buyer, but if the financing was changed this close to the closing, closing would be delayed. We evaluated each option and decided to stay the course with USAA, the national provider. To overcome the underwriter’s 60 days from gaining employment rule, the buyer had to bring 5% more money to closing, approx. $19,500—a huge expense! I was fortunate to have a great client with good financial backing who was able to accomplish the transaction and save us from a tailspin that would have resulted in the sellers removing themselves from the contract. The lesson here: Shop your mortgages, but ask the right questions—and work with a knowledgeable agent who can navigate this delicate space. For great service from a local Cincinnati lender, call Huntington Bank’s Matt Miller at 513-770-2060, email matthew.miller@huntington.com. He has the team behind him to service you for physician loans and more!

Baby Boomers transitions

After a half of a century of life, you have accumulated more than you need materialistically. Its time to downsize and create a fresh, clean, manageable lifestyle for yourself. Here are some tips on how you can plan, execute and succeed! Your downsize is relative to your current lifestyle and the lifestyle that you want to create. For the sake of this exercise, lets assume that you are in a traditional 4 bedroom house that is 3000 sqft and you would like to transition to a 2000 sqft condo. Logically, you need to eliminate 1/3 of your everyday room items and you likely need to downsize long term storage by at least 50%. Start with the kids. Memory boxes are distributed to the kids on their birthdays, Christmas, Hanukkah, etc. Its your children’s responsibility to save what they cherish and its likely a large proportion of what you are carrying! Second, the closets should be paired down by being honest to what you wear, fit in, and love. Our family likes to support different causes, but the Veterans will come and pick up your under used clothes and provide those to people who are more vulnerable. Third, downsize your bedroom sets. If your children haven’t already taken the beds for apartments or their homes Now is the time to start asking them if they have interest in their old bed, dresser, rugs, etc. Clean out the room completely and either leave it empty or stage it as a home office, music room, playroom, etc. Finally, yes finally, its your personal belongings- your everyday couches, chairs, end tables, artwork, etc. Depending on personality and how you want to see your transition occur- an Auction could be a good option if you don’t want to micromanage. Locally, we have Everything But The House as the dominate force. Another option is to hire a local consignment shop to market them, or you can talk to regional antique dealer. Emotionally and physically, this process is exhausting! Dealing with (sarcasm) your ungrateful children not wanting your perfectly fine ____, its never easy hearing someone doesn’t want what you have… Ive found that once you are in a place mentally to accept the fact that your stuff is fine without you, it is a liberating and rewarding step towards your transition to a smaller home. I have heard from many people that liquid courage is a fine way to overcome hesitance! As always, have fun with your move and be careful out there Selling and Buying Real Estate! Check out these condos in Hamilton County that are 2+ bedrooms and min. 2 car garage.

Inspect your sewers in Real Estate Transactions

We just closed a transaction with a client in Anderson who bought the most wonderful ranch house. During the offer period, it was noted in the disclosures that the house had a disclosed sewer backup in 2014 and that they have not had issue since. I also noticed that they had a mature, 25 year+ Silver maple in the front yard. I informed my client that it was my opinion that we inspect the sewer in addition to the house, which she was receptive too because she just replaced a sewer in her current house in Clifton. The buyer hired Zins Plumbing, a local Cincinnati company to camera the drain. They discovered a major root intrusion and major break in the sewer line. Zins Plumbing was very professional and marked the location in the front yard and recommended that Metropolitan Sewer District (MSD) to be called and they would see if the blockage went into their sewer main. It is the homeowners responsibility to keep the house sewer to the street clear of roots. This is mentioned in multiple documents found on the public service website- http://www.msdgc.org MSD only becomes involved when the pipe is compromised, cracked or shifted from alignment, within the Right of Way (ROW). In our case, the pipe damage was deemed within the ROW and its depth was over 15’ below the surface. The estimate to perform this repair was well over $10k. The cost of inspection was $200, the cost saved was peace of mind and over $9800. That’s a nice return on investment and something that in my opinion more Buyers and Sellers should investigate as they do maintenance on our homes. Knowledge is Power, and as always be careful out there buying and selling real estate!

Facebook Sold my House

Facebook SOLD my house. It couldn’t negotiate, write a contract or see it to Closing though… In the competitive world I think of cab drivers and Uber, Kroger and farmers markets and Realtors and Facebook. Each has their appeal and place in the market, but do you as the consumer know the difference? Let me tell you. I’ll leave cabs, Uber and Grocery alone- you can watch the news for that headline. Real Estate and Facebook, or social media, has never had higher stakes in my businesses. National data from the National Association of Realtors, 9% of home sales were FSBO in 2013. The typical home sold for $184,000 compared to $230,000 for agent assisted home sales. Source- NAR website. That information doesn’t tell you anything definitive, but it does tell you that the spread between the two is $46,000 and the commissions paid would have profited the consumer who used the agent assisted method. If you have a house under $250,000 or you live in a neighborhood that sells within 14 days of being on the market, you are thinking “I can Sell this myself”. I am here to say, maybe, but I can do it better and it may not cost you anything more once the transaction is complete. I want to Market, Negotiate, and Shepherd you to a successful Closing. Call me to get more information about how I can get you your equity! 513-500-7474.

Loyal to a Fault?

Where has loyalty gone in our society? I am finding that younger generations of clients are significantly less loyal even after getting the same service as my elder clients- I asked myself WHY? Generation Y and the Millennial have grown up with the internet at their finger tips. I am one of them and since Ive had a mobile phone with internet connection, Ive not let an unanswered question leave my mind without a search. I can accomplish anything with my smart phone and opposable thumbs! The baby boomers are internet savvy but they have grown up with a physical rolodex of professionals. They grew up with a physical white or yellow pages!? My hypothesis is past clients and personal referrals create loyalty. “Access to information” hinders loyalty or the perception of need for professional service- the DIY society. I am a Realtor® and I work with a hundred plus clients a year. I end up Closing transactions with approximately 50 clients per year. The difference between the numbers is because I consult with more people than sell or buy. I help people get their renovations correct, make sure that people don’t over-improve without knowing, I introduce contractors with clients because I’ve been blessed to work with amazing professionals during my life of working. I am a professional. I belong in your rolodex. I have had a few clients recently in the Generation Y category work with me, gain knowledge, spend my time and simply go trailblazing on their own- without any trigger. In my industry, they are mostly switching and working with the Listing agent. The reasons are to “Streamline” or “simplify” because they don’t want a communicator, advocate in their camp… it’s frustrating to say the least! Contrary, I have several clients over the age of 50 who send me a steady stream of clients because they have either first hand, or second hand heard that my level of service is a must. Compliments like “You cant do this without John”! I just shared some of my frustrations on this topic with a dear friend who is also in the service business- financial planning/ investments. His opinion is that you need to be clear with your value added and leverage your “raving fans” to continue to gain client base. If you have the choice of 10,000 agents, a friend’s recommendation will set you apart. I am on the phone with past clients now, asking for referral business, because they are experienced! How do you gain loyalty in your industry? Do you see the difference between generations and what I reference as “loyalty”. You can leave a comment, or post a comment on Twitter @RealtorPayne call me 513-500-7474 or email me john@payne-team.com

Truth in Lending RESPA changes August 1, 2015

Per Inman Reports article by Bernice Ross (attached), the landscape of doing Real Estate transactions changes again on August 1, 2015! The Buyers ability to produce accurate financial records and the Lenders ability to communicate this in a timely manner will make this a non-issue for most, but it makes the tolerance for error to become very narrow. Surround yourself with the best people to keep your transactions on track! Without doubt this will cause some short term chaos that Buyers and Sellers will need to be ready and sympathetic to. Agents understanding of the milestones will be more critical and the time under contract will overall increase. TILA-RESPA_August 1 2015

Appraisals : a fail safe in the Buyers process

I just represented a client on a house in Anderson which we had under contract, inspected and then it fell apart because of a “short” appraisal. They call it short because it came in under or short of the contracted purchase price. The house was a renovated ranch in an area of renovated ranches. It has two bedrooms upstairs and one legitimate bedroom in the lower level. I call it legitimate because it has an egress window cut into the foundation as means of egress in the case of fire. The yard was amazing and private and it came with a two car garage which was a great bonus in the neighborhood. The problem with the appraisal on the property is that you needed to go more than 1 mile to get a property that was renovated nicely like this one. Also, you are in an “older” circa 1950’s neighborhood which has many original owners who have either not updated before Selling or haven’t moved- causing a draught of comparables. The contract was for over $210,000 and the property appraisal came back over $50,000 short! That’s ¾ of what we thought was market value! The buyers and I knew that they were paying “top of the market” for the house, so no one was surprised that they were not getting a ‘deal’, but I wash surprised when we saw the independent third parties value on the property. You can challenge an appraisal, but you are only going to get a percentage, not bring ¼ of the value back to the property with justified comparables. The Seller is not out anything financially, but more under the pressure of the market to put unjustified value on the property. The point of leverage here is in the Buyers favor as it can be resolved with a price reduction to the appraised value. Also, the Buyer could bring more money to the Closing- so if the appraisal came back at $200,000 and the contract was for $214,000; the Buyer would bring an additional $14,000 (the difference) to the Closing. Not many people can or want to do this financially, not the most viable option. The Buyers at this point had invested $250 in an appraisal, $450 in home inspections and put money into a loan origination. Fortunate for them, all was refunded except the termite and radon inspection fees with the understanding that all of the “players” would remain the same, but it was a stressful exit from a previous very exciting time! The message here is that you have a risk if you are Selling and Buying a property that is an “outlier”. Your most conservative position on buying a house is to understand your market ‘exit’ and what price ceilings you have to monitor as you elect to do your renovations. Even if you didn’t use me to make your purchase, please feel free to call or email with any questions with regards to your homes value or “market position”.

Is 3.5% Downpayment enough Skin in the Game?

You may think Im an elitist if you read my article Cut FHA PMI- Housing Market going in wrong direction. You’re half right. The fact is that you’re able to purchase a house with little money down is not a problem, its leveraging debt to income and the Lending environments rule. Leverage is a wonderful thing as long as there is a plan in the background! I would recommend that the person comfortable leveraging the numbers would have a successful financing planner working for their money that is not tied up on the house purchase. Also, I would recommend that the person’s accountant would help advise someone with a low down payment in vetting the plan of execution so that your aware of your path towards financial success. My issue with clients with 3.5% down on a house is that when you sell a house, you pay 6% or higher. The broken piece is that your transaction costs and your equity in the property could be imbalanced. In this scenario, when you Sell a house you are gambling on the market appreciation or are you only going to take a clients built equity to pay your agent for that professional service? That doesn’t sound like good business! If you have read my story titled “Is the American Dream, just a dream?” you will have more understanding of the ‘equitable position’ of owning Real Estate. I just had a client in the booming market of Madeira, a suburb of Cincinnati- loose money on a house that they bought in 2010; arguably pre-recovery. On a phone call with the client 2 days before Closing, he said “You know a house is more of an asset if you only do the maintenance, it can be an investment but you need to constantly work to improve it!” That was the best explanation that I have heard to date and I needed to write that down! In summary, I would recommend that if someone is only putting down a minimal amount of down payment, that they have liquidity elsewhere in their life so that the “big gamble” isn’t on the house. Also, this concept of reinvesting constantly makes you wonder if your debt service to income ratio is low enough that you have monthly cash flow for those stabilization projects. As a rule of thumb, you are supposed to have 6 months of ‘Living’ within an investment vehicle that can be liquidated without major penalty in less than 3 days. If you read this and want more information or coaching on the correct next steps for you, I would love to have that conversation and refer you to a professional financial planner so that you can make educated buying and selling decisions. No reason not to Win!

What is Market Value? Avoid the equity loss with sound Strategy!

    As a Listing Agent, I market the property to the active Buyers Market. I evaluate the position of the property within that market based on feedback, data and a dash of gut-guess (trademark pending). The feedback comes from past and present clients as they walk similar homes throughout the region, and then I balance consumers opinions with other agents opinions. The data that I use are the recent MLS sales, the general micro-trends within the market as analyized by National Association of Realtors and finally price per square foot. The gut is typically breaking down the weakest links and educating my client on the perspective of the Buyer when viewing the property. The property that I am highlighting is a property in a suburb of Cincinnati, Indian Hill. Indian Hill is a private municipality that has a shared fire department, independent police and government, independent and highly ranked Schools. It is considered affluent and has some brand recognition among people who know the area as a desirable area if you have had financial success! The topics handled in this entry span- motivation, market position and keeping up with the Market. The topics are many, but none are about how to create financial success, but it is about write an Offer where you have interest, as you NEVER know the motivation of the other person in your transaction. Motivation is what agents talk about when they want to understand how fast they will get paid. If your client is motivated, then the property will Sell quickly, and the result is a Closing. If they are not motivated, then you run the risk of sitting on the market until that “right offer” is brought. If an agent is doing their job of marketing, then the price and inherent motivation of the Seller becomes interpreted public knowledge. I say “interpret” because to a knowledgeable person, with years of information- an agent can make assumptions.  I call them fire sales and am aware of them immediately! The property at 5775 Sugarun, 45243 is the property that I am going to use as an example. The property is marketed as 14 rooms, 5 beds, 5 full baths and 3 half baths on three acres. Its original price on the market on July 19, 2013 for $1,198,000 and after 20 days dropped to $1,096,500. The property expired after 215 days, which during that time it went Pending zero times. The next Listing period began and it was listed with a different agent, but same agency for $1,050,000. It was a Listing period of only 72 days and it was Canceled May 8, 2014. Then, the same company relisted the property for $949,000 and the reduced it at 102 days to $895,000 and then 42 days later, the property went Pending and Closed for $785,000 plus the Seller paid $2500 in Closing Costs! The property Closed for 65.5% of it original List Price and it took 432 Days to Sell! The answer to WHY, lies in how the market values the property. The agents can be faulted, but the agency maintained control of the property during the marketing process, so they must have created confidence with the Seller- more so than the agents who kept being fired! But, the moral of it is that the Seller got market value for their 3 acre outdated property that needed a half million in renovations. Within a ½ mile and 6 months no property has been Listed or Sold under $1M, but the other properties were all decorated and updated- if even superficially. The value of this story is to highlight two major topics- re-invest and move quickly with a Shifting Market. The re-investing part happens after we Sell you the property and as you enjoy that property. The reacting quickly is the responsibility of the agent in our Shifting Market and not allowing the property to become the punching bag for an offer more than $100k or 12.5% of its total value in one offer. Strategically, if the Seller would have reduced the price to $750,000 they may have gotten a better Net, but that is hypothetical in all cases! The responsibility of you, the Owner, is to improve your property to what will make you happy and to maintain a position in the marketplace.  Your requirement to maintain the best position possible is to always re-invest and re-invent to keep up with the Market—as if you do not, your equity built with the property can be lost quickly! Good luck Buying, Selling and as always, please call John Payne and Marcia DeMar (Wycoff) to evaluate, market and List your properties- the Payne Team is your professional Real Estate Advocate!

Is the American Dream, just a dream?

Is the American Dream, just a dream? Or, is it still the investment that our families had during the post war buildup of our modern day communities. I believe that with the correct frame of mind, you can still position yourself in the buying and selling of property- but it is getting more and more difficult! Broadly, People buy homes for two reasons- To gain a tax deduction because of mortgage interest. To further surround themselves with ‘Like persons’. As I was cutting my grass this Spring, cutting every 4-5 days to avoid massive clumps of grass from littering my yard- I had an idea- I should rent a house where I want to live, negotiate the exterior services into the lease and purchase a multi-family property as an investment! I stopped and laughed about the idea, while answering my phone getting a Buyer lead off of a sign. The Buyer was calling for a $1.3M condo with a City view and they couldn’t put together 5 words to utter “how much is this house”. I cordially answered the question and informed her that its only the top floor and its two bedrooms. While you may think that I’m complaining about the fact that someone is interrupting my mowing, the moral of the story is simple- people are looking for Real Estate all the time. It’s a compulsion for some- enough that the industry brands them ‘Looky Loos’ (this Open House is for you!). Real Estate is a fun hobby for some Buyers, it’s a luxury for some Sellers’ within some niche markets, it’s a business for builders and it’s a lifestyle for me as an Agent. Definitions are hard, but the reason why it’s a lifestyle is because it is the sweat on my brow. I get fist pump happy when the phone call comes in to List, when a call is received and the recipient is responsive, and when I successfully negotiate a deal. What most don’t understand about Real Estate is that it’s all risk. My house has yet to write me a check and I tend to over improve our homes which pushes me further into the red. For the group of us who are Agents, Builders and true investors (longer ownership than 10 years) that is built around the risk/ reward model. If you take high risks, your rewards should be sharp and high. If your risk is low, your reward should be equal. The pendulum can only swing so far! The solution to mitigate this is the model that I brainstormed… or a version of such. Balancing the ownership risk is a tough balance. My advise is that look at your home as a flatline asset and never appreciate it over a 10 year course and this is why I would recommend, first, trying to buy the property right. It’s the first real rule of Real Estate, buy with equity, which means you need to buy the ‘shell’ with money in it for improvements. This is critical if your Buyer is needing to preserve an equitable position in the ownership of the property. If the owner has already “written off” the successes of the property, then you can bludgeon, otherwise, approach with caution. Per HGTV “(http://www.hgtv.com/home-improvement/which-home-improvements-pay-off/index.html) The importance of different maintenance issues varies with geographical location, too. Roof replacement (average cost: $11,376) was very important to buyers in the east, according to Remodeling, where homeowners recouped an average 96.3 percent of the cost. In the Midwest, the average return for the same improvement was just 71.1 percent. Cincinnati is more within the numbers of the Eastcoast, but does display strong characteristics of the Midwest. So, I am going to make the assumption of 90% return of investment. With these numbers, the way that I would justify it is that you have a TIP: Know your situation better than your neighbor. You can accomplish this by hiring John Payne and our Team of experts to Buy and Sell your properties. If you would like a free market analysis, please call me at 513-500-7474 or email at john@payne-team.com