Solving Real Estate Problems Part I: Down Payment

solving problems

The number one reason to hire a realtor is to solve a problem.  As I share the story I’m about to tell you keep that in the back of your mind as I share my client’s recent experience with a competitor realtor:   It’s year end 2018 and my clients were at a Christmas Holiday party.  My clients were enjoying the festivities when they met a competitor neighborhood realtor.  They shared with this realtor that they were still renters living in a duplex and were actively looking at single family homes for sale.  The competitor realtor asked them about their plans to buy real estate in 2019 so they replied that they were ” . . . actively looking for a seller that will accept a smaller down payment or that will accept the down payment assistance we qualify for.”  The competitor realtor was a bit surprised and said “well if you don’t have the down payment it will be hard to buy a house in this market.  Inventories are very tight.  You might want to just wait till you can save enough for the down payment and continue working on your credit.”  At first glance that sounds like great advice – right?  I would challenge that and tell you hands down – WRONG!  Whose problem did this realtor solve?  In fact, when my client asked my opinion of this advice I responded “well, do you feel the realtor solved your problem?”  They obviously said no, to which I then reminded them that like many services professionals, it’s not about the badge one wears but the person behind the badge.  I continued, “your going to meet realtors who have never found creative solutions to solving real estate problems.  They are so intently focussed on how they closed their last deals that they simply cannot think beyond that because of their fear that they won’t get paid.  And THAT, is really the problem that they are focussed on solving.  Not yours.”  On a bigger scale let’s take the situation with the Los Angeles (Anaheim) Angels.  The Angels don’t own Angel Stadium, the city of Anaheim does.  But that hasn’t been a problem for the Angels who, as a professional baseball organization are essentially renters.  Through all the options on leases and lease contracts that the Angels management must negotiate, agree upon and ultimately enter into, the Angels still find a way of showing up on game day to a packed crowd.  A lot of creative juggling, but they make it work.  On a smaller scale, my clients have done the planning that it takes to buy a home.  They know exactly what down payment they want to make and the down payment assistance they are going to use when they find a home they are excited about.  But they aren’t just focussed on the house, they want the deal that they want.  Not just price, but terms!  The competitor realtor’s advice lacked the focus to solve a problem and instead would have sent my away clients off confused and frustrated.  The real estate market is going to do whatever it’s going to do.  It’s not a controllable factor by any one person.  Therefore strategizing how a home will be bought or sold and if the timing is right is what buyers and sellers depend on when they work with a realtor.  Planning is essential in order to getting what the buyer (or seller) wants.  There are times traditional methods will work just fine and times when creative methods work fine.  Either way doesn’t really matter, so long as I’m solving my clients problem and they are getting what they want IS what matters.

If you know someone with a real estate problem or questions feel free to email Paul at his email address at buyorrentmyhomes@hotmail.com.

Paul Krause is a full time real estate professional with Keller Williams in Los Angeles California, DRE #01835890 and CSLB #1029575.

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What is the Most Important Job Skill?

Job Skills

This question was posed to me this weekend when my son asked me how I do my job.  Working in real estate I work with people from all walks of life.  More recently I engaged services with graduate student name Maria (hiding her real identity).  Maria is a full time working professionals seeking a graduate degrees through night school and online learning classes.  Maria was very concerned about how the deferral of her student loans would impact her affording a new home.  This is not uncommon.  The government has reported student loan debt well into the trillions of dollars (https://www.forbes.com/sites/zackfriedman/2017/02/21/student-loan-debt-statistics-2017/).  When I asked about her plan to pay off her loans she answered that; “…hopefully when I graduate I will be able to apply for a higher paying job.”  This leant me to think about my conversation with my son.  In the 80’s an important job skill was resume writing.  In the 90’s job interviewing.  In the early 2000’s it was networking.  Although these all have importance I am learning that financially independent people learn how to creatively financially engineer every aspect of their lives.  New technologies with crowdsourcing in order to finance real estate, movie, even business acquisition and start up projects is only one example of creative financing.  Let’s also not overlook job skills as a fair “trade” to acquire a service or asset.  One example would be to take an equity position in the purchase of a house in exchange for providing services to remodel and oversee the construction of the house.  One partner buys the house and provides funding for the rehab costs while the other does all the work.  This is a strategy I recently used for a house purchase of a single-family remodeling project in southern California.  With my skills in sourcing materials and labor, my partner can focus on finding funding sources that ensure this project can be completed.  Over the next two weeks I will be discussing additional creative solutions to financially engineer real estate transactions.