Viki Benbow - The Real Estate Huntress

I just read this article by Liz Davison which was run in Forbes Magazine. None of the content is to be mistaken as mine! All credit for this very potent article goes to the author. I am just sharing it with my clients and friends as I think it is very important information. Viki


As a financial education company, we often see financial crises coming because employees contact us when they have financial problems or concerns they need help resolving. With the recent mortgage crisis, we began to see a major spike in calls on debt in the year leading up to the meltdown. Debt calls in 2006 increased to an all time high—representing close to half of our total calls at the time. Even worse, many callers were frantic. They weren’t looking to simply reduce their debt load; they were struggling to make ends meet. They weren’t asking about putting together a plan to pay off high interest rate debts; they were beginning to consider drastic options like foreclosure and bankruptcy.

It was rather like seeing a car crash in slow motion. You know it’s coming and you can tell the driver to slam on the brakes or swerve out of the way, but it’s too late to do much more.

Today, there’s another mortgage crisis in the works—that is, NOT having one—choosing to rent when you can afford to buy; choosing to forgo building equity in a home as a major source of retirement security—something that may be more necessary now than ever before with a soft stock market and low interest rates. This emerging crisis is not yet at the car crash stage– more at the reckless driving without a seat belt stage. There is time for Americans to resolve this one, but they must change their perspective on home ownership before it’s too late.

Why own a home when you can rent? We are hearing this question much more these days as people choose to “sit out” of the real estate market or disregard homeownership altogether after seeing many of their friends and family end up in short sales or foreclosures. Renting is the low-risk option for these callers. It’s the only way to ensure that nightmare will never happen to them.

The problem is that it will; it’s just a different nightmare. Consider this: A homeowner with a $1,500 monthly payment would still be writing the same check fifteen years later while prices everywhere increase around them. In August 2011 the Consumer Price Index included a .4% increase in rents, the biggest increase since 2008, which represents an annualized increase of 4.8%. If rents didn’t even increase that much but simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation) and of course would end with a final payment. There might even be some real equity in the property, even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement.

The renter, by contrast has no equity in their home, so in addition to almost $900,000 in rent in the above example, the renter would also be giving up $400,000 in retirement assets (and that’s at a growth rate of just 1%– far lower than even the lowest growth rate over a 30 year time period). At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference, not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?

And this doesn’t even include the tax benefits. The US government essentially subsidizes your house payment by allowing a mortgage interest and property tax deduction on Schedule A of the 1040. Any points you pay when you get the loan can also be deducted. Then an amazing thing happens: the IRS allows a tax exclusion on the sale of a primary residence. Owners who live in their property two out of the past five years, who have equity and sell their primary residence, receive a maximum capital gain exclusion of $250,000 (if married $500,000.) Where else can you get a tax break on an investment and then receive the proceeds tax free? I can’t think of another investment like it.

So, deciding that “renting” is safer and there’s no need to take the risk of buying a home or even waiting in an effort to time what is an unpredictable real estate market, buying only when prices have been up for a while, can be very costly. It doesn’t bring with it the emotional trauma of a foreclosure or short sale. But it is a slow drain on your finances, that over time, could compromise your ability to retire or at the very least, to retire the way you want, when you want.

All that said, I’m by no means advocating homeownership for everyone. For many, renting is the right option, at least for now. If you can’t afford to own a home, you shouldn’t even consider buying—one of the key lessons learned from the mortgage crisis. Your mortgage should be under 25-30% of your income not including bonuses or promotions and you should have an emergency fund of 3-6 months expenses in savings before you purchase a home. Also, if you don’t qualify for a reasonable interest rate on a mortgage due to credit problems, if your income is unstable, or if you crave mobility, renting is the better choice. Renting is cheaper than buying in the short term and has other advantages. Repairs: as a renter, when you turn on the shower and freezing cold water spurts out in your face, you simply make a phone call to the landlord and they have to install a new water heater instead of you footing the bill. Mobility: If you have a job opportunity or promotion in another state, you simply give notice and move. You don’t have to go through the arduous process of selling (or not being able to sell) your home. You are free from the obligations of homeownership. Property taxes: As a homeowner, even when your mortgage is paid off you still have to pay property taxes and insurance, and those costs will continue to rise.

If you are one of those people and this article has struck a cord, please give us a call. Let's talk about how today's market is different than the one that got us into this mess and how it can be used to build your future wealth and a more comfortable retirement! Viki

The news media in general continues to call our market a buyer’s market which sets buyers’ expectations of the market totally wrong. I have spoken with a lot of potential buyers who are in a position of investing in a rental property who are frustrated with the process. They have made offers on multiple properties only to lose out to all cash investors.

I took a listing that was a probate sale last week and felt what transpired with that property tells the real story.

The home is a 1500+ sf, 4 bedrooms, 2 bath home which needs some TLC plus a new roof. The market data indicated that with a roof, the property should command about $110,000 but with the current roof was not lendable and the price would have to be discounted to attract an all cash buyer. The estate did not want to mess with the roof and agreed to list it at an as-is all-cash price of $85,000. The property went on the market on Thursday. By Friday I had one full-priced all-cash offer which one of the parties agreed to accept. However, the court appointed administrator was not available until Monday to ratify the contract. Come Monday, there were multiple all-cash offers with the highest being $91,000 from an investor with money coming from Hong Kong. By Tuesday, we had a total of 15 all-cash offers ranging from $60,000 to a new high of $103,000. The bank accounts presented as proof of funds ranged from low six figure balances to the highest being $18,000,000.!

We did not even entertain any offers that required financing. Needless to say, there were a lot of frustrated buyers and agents whose offers were not the chosen one.

In order to get an offer accepted in this market, cash is definitely king, but even that does not guarantee you success as illustrated here. It takes writing an exceptional and relevant offer. I call the listing agent to get a handle on what the seller is looking for with regards to terms and intangibles. Do they need a few extra days to get out or a fast close of escrow. It helps to work with an agent who has a known name and good reputation.

We have been very successful in helping our investor clients successfully negotiate for some outstanding opportunities. If you are thinking about investing, we would love to put our 43 years of experience to work for you and prove, “Experience is not expensive, it is priceless!

In our office meeting this morning, we discussed agent safety. It is pretty common sense stuff, but it is good the remind ourselves that we are in one of the most potentially dangerous businesses because we meet people we do not know in sometimes less than safe environments on a regular basis.

One of our agents stepped forward to reiterate how important those tips are and shared with us that she was very certain she came very close to being a victim this past week. In showing a listing she set multiple appointments to meet potential buyers at a vacant home. The first group was just leaving when the 2nd party showed up. He was a rather unsavory looking man, and the first group offered to hang around for her. They did for about 10 minutes out in the front yard but then left. The minute they drove off the man closed the front door and blocked the agent’s path to leave. Unfortunately her cell phone died just minutes before, but the man did not know that. The agent moved to open the door and he made a move to stop her. She then dialed 911 on her phone and faked the call. He stepped aside and she escaped. However, she was very rattled. Coincidentally the following came across my email today. I think it is important enough to post it for everyone’s benefit.
IT IS VERY IMPORTANT INFO!! Please read and stay safe

A MESSAGE FROM THE OFFICE OF ATTORNEY GENERAL
STATE OF MICHIGAN :


Warning # 1

While driving on a rural end of the roadway on Thursday morning, I saw an
infant car seat on the side of the road with a blanket draped over it.
For whatever reason, I did not stop, even though I had all kinds of thoughts
running through my head. But when I got to my destination, I called the
Canton PD and they were going to check it out. But, this is what the Police
advised even before they went out there to check....

"There are several things to be aware of ... gangs and thieves are now
plotting different ways to get a person (mostly women) to stop their vehicle
and get out of the car.

"There is a gang initiation reported by the local Police Department where
gangs are placing a car seat by the road...with a fake baby in it....waiting
for a woman, of course, to stop and check on the abandoned baby.

"Note that the location of this car seat is usually beside a wooded or
grassy (field) area and the person -- woman -- will be dragged into the
woods, beaten and raped, and usually left for dead. If it's a man, they're
usually beaten and robbed and maybe left for dead, too.

DO NOT STOP FOR ANY REASON!!! DIAL 9-1-1 AND REPORT WHAT YOU SAW, BUT DON 'T EVEN SLOW DOWN.

"IF YOU ARE DRIVING AT NIGHT AND EGGS ARE THROWN AT YOUR WINDSHIELD, DO NOT STOP TO CHECK THE CAR, DO NOT OPERATE THE WIPER AND DO NOT SPRAY ANY WATER BECAUSE EGGS MIXED WITH WATER BECOME MILKY AND BLOCK YOUR VISION UP TO 92.5%, AND YOU ARE THEN FORCED TO STOP BESIDE THE ROAD AND BECOME A VICTIM OF THESE CRIMINALS.

THIS IS A NEW TECHNIQUE USED BY GANGS, SO PLEASE INFORM YOUR FRIENDS AND
RELATIVES.

THESE ARE DESPERATE TIMES AND THESE ARE UNSAVORY INDIVIDUALS WHO WILL TAKE DESPERATE MEASURES TO GET WHAT THEY WANT."

Please talk to your loved ones about this. This is a new tactic used. Please
be safe.


WARNING # 2

Some knew about the red light on cars, but not the 112.
It was about 1:00 p.m. in the afternoon, and Lauren was driving to visit a
friend. An UNMARKED police car pulled up behind her and put his lights on.
Lauren's parents have always told her never to pull over for an unmarked car
on the side of the road, but rather to wait until they get to a gas station,
etc.

Lauren had actually listened to her parent’s advice, and promptly called 112
on her cell phone to tell the police dispatcher that she would not pull over
right away. She proceeded to tell the dispatcher that there was an unmarked
police car with a flashing red light on his rooftop behind her. The
dispatcher checked to see if there were police cars where she was and there
weren't, and he told her to keep driving, remain calm and that he had back
up already on the way.

Ten minutes later 4 cop cars surrounded her and the unmarked car behind her.
One policeman went to her side and the others surrounded the car behind.
They pulled the guy from the car and tackled him to the ground. The man was
a convicted rapist and wanted for other crimes.
I never knew about the 112 Cell Phone feature, but especially for a woman
alone in a car, you should not pull over for an unmarked car. Apparently
police have to respect your right to keep going to a safe place.

*Speaking to a service representative at Bell Mobility confirmed that 112
was a direct link to State trooper info. So, now it's your turn to let your
friends know about 112.

You may want to send this to every woman (and man) you know; it may save a
life.

This applies to ALL 50 states
PLEASE PASS ALONG TO FRIENDS AND FAMILY, IT CAN SAVE A LIFE....

As somewhat a laudee-dah lady I am often asked, “How is it you love to hunt and fish so much?” The short answer is that I owe it to my two grandfathers; Reg Meaker, Sr. and Lin Blondin. My grandfather Meaker was known as the Nevada Desert Sheep Man and my grandfather Blondin was an avid fisherman. However, there is so much more to the story. But to keep this blog reasonably concise, it all started with me being 3, a very precocious 3 and my mother, Beverly and father Reg, Jr. celebrated the arrival of my brother Scott. Shortly thereafter, my mother discovered she was pregnant again with my brother, Mark. Overwhelmed with a new born and morning sickness, I was sent off to the sheep camps with my dad and grandfather. There I lived “in camp” out in the Virginia Mountains of Nevada and the Sierra Nevada’s near Bocha Dam where I learned to eat bacon and eggs out of a frying pan with heavy sheep-herder’s bread to dip in the bacon fat and wash it down with coffee-flavored canned milk. Ahh! I would laugh and play with the Basque sheep herders and the lambs during the day and we would feast on lamb chops at night. My parents claim I spoke fluent Basque which I don’t recall and when brought home to Reno, I could hardly wait to go back to camp. Many a trip to camp, my dad or grandfather Meaker would come back into camp with a buck strapped over the saddle of their horse. To this day I am not sure which is my favorite meat; lamb or venison.

As soon as I could reasonably maneuver the streams in the Sierra’s, my grandfather Blondin would whisk me away to be his companion on daily fly fishing trips to the Truckee and Feather Rivers. When with him, my diet would include fresh caught trout; pan fried with scrambled eggs and milk (regular) or orange juice. I found I loved the thrill of catching a trout as much as my time at sheep camp. But both experiences left me with a deep respect for the animals and that we only harvested what we needed for food.

Fast forward a few years, my parents divorced and we moved in with my Grandparents Blondin in Sacramento. There my love for fishing continued to grow as I would fish with my “Grandy” regularly. Sadly, I never returned to sheep camp. My mother married Bill Beale who would teach me to hunt upland game, but never with a gun. I went along to act as the bird dog while my two younger brothers, Scott and Mark were taught all the things having to do with actually hunting and guns. It was only when I married Jim Laining and he joined the group of happy hunters, that I made it a condition that it would only be if I could go along and this time as a full fledged hunter.

The rest is history. Hunting has become a part of me as well as the fishing and after Jim died, I came to realize that my next partner in life had to have the same passion for the outdoors and hunting and fishing. I wrote an article which was published in the American Hunter titled “Determined to Hunt”. I was training for the Anchorage Marathon with Leukemia, Team in Training. One of my team mates was none other than Alan Benbow who read the article and offered to teach me how to hunt big game. Our first deer hunt sent me back to my childhood and my love for sheep camp. Deer camp was my grown up version of my favorite childhood memories. Add to that venison still remained one of my favorite meats and there was no turning back. Alan had to marry me out of self defense.

Together Alan and I have carried on my wonderful heritage hunting upland game, deer and then we added wild boar and elk. Ask me which is my favorite meat and I would have to say the species on my plate that night!

Alan and I added hunting of elk in 2004. Our first hunt was a disaster. We signed on with an outfitter to hunt Eagle Cap Wilderness out of LeGrand, Oregon. We took a small bush plane into the Minim Unit. We stayed the first night in the Minim Lodge which was next to the world famous Red’s Lodge known for famous guests the likes of John Wayne. From there we set out on horseback 10 miles up the North Fork of the Minim River to our camp. A putrid tent for 9 days of truly rugged living. Our cook was top notch, but our guide, while a very experienced elk hunter had never seen the country before. Needless to say it was a challenging experience. We overheard one of the other wranglers comment that they did not cater to laudee-dahs and that our guide was the only one that would take us on. We never harvested an elk; I was thrown very badly from my horse, but all was redeemed when Alan spotted an elk ivory on the forest floor and then looked for the rest of the animal. There it was what remained of a trophy bull elk. It was definitely that year’s kill. We heard stories of an archery hunter who arrowed a magnificent animal during archery season in that area only to never find him. We tagged the antlers and transported them home and the stately 340 class bull is the full focus as you enter our living room.

Over the last 7 years we moved our hunting to Colorado with Don and Stacy Pinnt of Lodgepole Outfitters of Grand Junction, Colorado. The ranch we hunt is called the Desert Claim near Naturita, Co. Elk hunting is overall the most challenging of all hunting. Elk live at very high altitudes and not only do you have to contend with that challenge; but it is not uncommon to be hunting in blizzard conditions. The first two years, Alan took two respectable satellite bulls before we decided to book late season cow hunts. We found them to be as challenging; the meat was consistently better and a more affordable alternative. The ranch is also home to some magnificent mule deer bucks. I personally have seen bucks with a 30+” spread on more than one occasion. Unfortunately, the deer season ends before the late season cow hunts begin. But it is still a thrill to see those huge bucks!

I am writing this as we are driving back home across the Nevada desert after our most recent hunt. Late season cow hunts run the month of December. The ranch is part of this area’s herd winter grounds. We have heard stories of hunters pulling through the green gate of the ranch to witness hundreds of elk grazing in its valley. Many of the 3 day hunts in late December are over in a matter of minutes. Colorado’s Department of Wildlife manages the herd (the largest in the United States) with these cow hunts. And by virtue of the flourishing numbers does it well. However, Alan and I love the hunt, pitting ourselves against the Wapiti (Ghost of the Forest), have chosen to schedule our hunts December 1, 2, & 3. We did not want to lose the purity of hunting. However, as we head home with empty ice chests and exhausted bodies from 3+ days of hunting in challenging conditions of first shirt sleeve weather, then heavy bone chilling winds with stinging ice crystals and then a full fledged, freezing blizzard without seeing an elk up close, tempt us to consider a later date. But then again, maybe not. While we love the meat, it is not about the killing. It is about preserving that heritage; about taking us back to our youth and times where hunting was truly about putting food on the table. It is to take us away from the computers, cell phones, text messages and to put us back into “us against nature.” I have to tell you, we had an incredible time, and Don worked very hard to put us in the elk. They just had not come down from the high country before our hunt was over. Unfortunately, or fortunately depending on your view, nature won this time. We need to be fair by clarifying that we have been successful 5 out of 7 years which by elk hunting standards is pretty good. So, as we are driving home, yes, we are very disappointed, but are already planning next year’s hunt!

While this is what we do when we are not working, I like to think we put the same passion into our businesses. So if you are thinking about buying or selling real estate and want someone to put this kind of determination along with over 4 decades of experience to work for you, please give me a call. I would be honored to prove that in real estate as in hunting, experience is not expensive, it is priceless!

Labels: Elk, Hunting, Real Estate

Ryan and I attended the Annual Sacramento Association of Realtors Master’s Club Breakfast this morning. (Master’s Club members must sell at least $4 million in sales each year to maintain their membership. They are the 20%-ers of Real Estate) I have not attended one in probably 20 years. However, with Ryan now moving his real estate career forward as a licensed agent, I felt I should set a better example and attend. At first, I was lamenting the $50. I spent on tasteless scrambled eggs and a dry croissant, but at least the bacon was quite good. As the program started I went back to wishing I was back at my desk working – that was until the key note speaker came up and then things changed!

Sanjay Varshney, PhD, CFA and the Dean, College of Business Administration, CSUS spoke. He and his colleagues produce a business and financial forecast for the region that is widely heralded.

Mr. Varshney said that the past several years the forecasts have been pretty much doom and gloom; however, there is a glimmer of positive news in the coming year. To follow is what I was able to recount with Ryan’s help from the notes I feverishly took:

We lost 110,000 jobs here in the Sacramento area. Our Economy is a Retail based GDP vs. the more stable Manufacturing. The only thing he could say good about that was that we are not Stockton. Stockton continues to gain mention in the Wall Street Journal as one of the worst economies in the country.

We have 11.2% unemployment with the highest sectors being 1) Construction; 2) Manufacturing and 3) Financial. ( that includes Real Estate – Alan is a contractor and you all know what I do!) 96% of all employers in the region have 50 or less employees; 83% 20 or fewer employees and those small businesses are hold tight making everyone who remains work harder and do more. A lot of this is possible because of convenience and efficiency of I-phones and other technology.

1/3 of our jobs are Government jobs and with government cutting everything, the number of future jobs lost will continue to grow. It is not expected to grow the unemployment number, however, because our population continues to grow. There are only a few major employers like Intel, Raleys, Kaiser Permanente and Sutter Health to name a few.

The residential real estate market is close to the bottom, hasn’t hit it yet, but he feels it will bottom out in the next 6 to 9 months. The lower end is at the bottom, but the mid and upper markets still have some adjusting in their future. He expects more foreclosures. This is because of two things: 1) we are in another reset cycle of Variable Rate Loans. People who could afford their homes last year, may not be able to do so with the next adjustment. 2) Strategic foreclosures. Many who can afford their homes are walking away as prices continue downward. Many of them are purchasing new homes in their same neighborhoods at a far lower price and then walking from the one they are upside down in. Let me add my words of caution, we are learning of an increase of fraud investigations by the FBI in many such cases. I don't recommend it; I'm only reporting on it!

Last year we sold only 33,600 homes in California. That is about 50% of what was sold at the top of the market.

California, Arizona, Florida and Nevada were and are hardest hit in the country. Of course they were the states that had the biggest boom so they are experiencing the biggest bust.

He also said that contrary to what a lot of people say and think, real estate is not the strongest investment. Year on year, it produces only about a 7% return – long term. It barely keeps ahead of inflation. He feels we have 7 to 10 years before prices will return to their 2005-2006 levels and for the real estate market to rebound in total. I think I take some exception to this. The richest people in America have a majority of their wealth in real estate. I have watched countless people grow old very rich living off their “LAND!” And, in the Benbow household, a major portion of our retirement income will come from the rents on our rental properties.

He said that nationally, the recession is in a double dip. Not so here in California as we have not yet hit that bottom. He thinks we might be spared the double dip, but instead we have just had a longer period of agony without any relief.

Nationally, the credit market has made its u-turn. He predicts that you will find that borrowing money will become much easier in the next 6 months or so.

As I mentioned above with regards to unemployment, our population continues to grow, but sales in all sectors are down. That is an indicator that our growing population is comprised mostly of non-producers (WELFARE!!!)

Government is out of control, broke, bankrupt! And they continue to want more money and more spending.

Savings are up, but that hurts our economy. Remember we have a retail based GDP – 70% of our GDP is from retail.

The Bay Area has come back and prices have stabilized in the housing market. He confirmed what we in real estate have always experienced… it will take about 6 to 12 months for Sacramento to follow.

What can we do here in Sacramento?

• Market our area What are we good at? What is so great about living here? Etc….He said as he thumbs through the Wall Street Journal he sees ads for San Antonio and other small cities around the country. He never sees anything touting the virtues of living in Sacramento.
• Keep the Kings! Regardless of what you think, having a major sports franchise keeps us not only in the national view but the world view. It is critical if we want to do the next two items!
• Try and get a future Olympics in the region
• We need to attract more high end jobs.
• We need to encourage private sector investment – Kings, Olympics , New manufacturing businesses. Etc….
• We need new talent - In the Capital and in all sectors of government leadership.

To the last item, he received a standing ovation! It is not only the “Occupy Crowd” that is frustrated. The Master’s Club is comprised of top producing agents who know how to get the job done. They – we have no tolerance for what is going on at our Capital and Washington D.C. as well as at the local level. Look at what difficulty and road blocks Kevin Johnson has come up against trying to change business as usual in the City Counsel.

So in the end, despite the awful eggs it was worth the $50.00 and I guess I should put it on my calendar for next year. Hope you all got something from it as well!

Labels: Economy, Real Estate, Sacramento Region

But…..
Sometimes We Just Can’t Help Ourselves!

The real estate business has never been easy. Even when thousands of people got into the business because it looked like “easy” money, it was still challenging. During those times all your past clients now had someone in the family with a real estate license.

But in all my 42 years I have never seen our industry so difficult. In order to survive, let alone thrive, we have had to stay on top of our game continuously learning more and more about short sales, bank owned properties, different bank’s and Freddie Mac and Fannie Mae’s ever changing guidelines and still do it with a smile and a lot of patience.

While I have been blessed with a steady business of traditional sales, about 50% or more of my business has been in short sales. We have helped over 100 families avoid foreclosure by successfully short selling their homes. In doing so, we have been deeply involved with those sellers and in many cases their tragic hardships. I literally go from one incredible tragedy to another as I move from one short sale file to the next. My husband has said to me more than once that I would lose that last 20 pounds if I gave up my nightly Chardonnay. My response to him is “Are you kidding?” How do you think I handle those long hard days facing those sad situations with my wonderful, but down trodden clients?

We have prided ourselves in learning everything we can about short sales and as we have blogged about before have even received a national award for our successes. But nothing stacks up to the satisfaction of being able to get a very difficult job done and knowing that it is because we have worked to so hard to be well informed and thorough. And, in doing so, helping people who really need help!

Yesterday I was able to get an extension on a file which will allow the buyer time to finish his financing and close a very challenging short sale. In her email granting the extension, this is what the negotiator said:

“Viki, I appreciate your professionalism and more specifically your updates and good feedback. I can tell you it is very hard to get the agents I have worked with up until now to do what you have done! Based on this, I have no problem giving you an extension until 11-11-11. I will fax it over in a few minutes. Regards NC, Short Sale Negotiator, CITI.”

As one of my colleagues in Short Sale Brokers of California states, “There are two types of agents today…..agents that understand the complexity of short sales….and those who don’t.”

We have specialized in short sales before most agents even heard of them. Don’t think twice to ask us questions; we are here to listen and provide facts! And we would be honored to put our 42 years of experience to work for you and prove, Experience is not expensive, it is priceless!