Doug Boedecker

So, after arranging my calendar to be in the community around lunchtime, I arrived about 11:30. The neighborhood/community of a little over 2,000 reminded me of a beach community(without the beach). There was a great mix of properties in the area: a geodesic dome house, some older, “long-time lived-in” types, some pride of ownership houses, and some obvious rentals. The house I was looking at fit into the latter category.

There were a number of houses being remodeled/re-habbed, and some that had just finished the process. There was also a brand new, large, custom house just built across the street from the subject; so new that it didn’t show up on the map-site we use. The subject house is next door to a church, which can be a good or bad thing depending on the church and the rest of the neighborhood. In this case I viewed it as a neutral. The house itself had a tenant in a un-permitted, converted garage and was in need of substantial re-hab. It wasn't quite a tear down but it was close. One other significant item to note was that all of the neighborhoods streets were graveled; signs were posted saying that they would be re-paved over the next couple of days. The fact the city was actively spending this money here was very encouraging.

When I went to find a place to eat, I was happy to see a new (within the last 5 years) development of upper-scale town-homes. Finding a lunch spot was easy as there was a brisk and busy restaurant area with a great mix of white collar tech workers and blue collar construction types. The word “vibrant” comes to mind (the food was very good too).

So where’s the “hair” on this deal? Well, the amount of re-hab could potentially be too much; we're still very interested, but haven’t had our contractors out yet. The other thing I discovered was that the area suffered some flooding about three decades ago so it's now considered a flood zone. We don’t think that’s a deal-breaker, but it's something to consider. We’re now waiting to see if the bank will accept our offer. There are two notes on it, and we have acceptance on the first, so we're waiting for acceptance on the 2nd.

Hunting was good yesterday, I have 5 properties that look good enough to write offers on. The most for a one-day search in a while. More later…

As a property scout for a large SFR real estate investment & holding company, I get to see, feel, and touch areas of the San Francisco Bay Area I’d otherwise never see or even know existed. What brought me to this particular property was a targeted MLS search that looked interesting.

On a daily basis I scour the greater San Jose area on MLS for “deals”. Since the term, “deal” is very much in the eye of the beholder, let me first qualify what most of our clients think of as a deal. In this market it is almost always an REO, foreclosure or short sale. Typically these properties need some pretty rigorous re-hab, like $20k to $30k worth. We'll need to be able to buy it cheap enough that once we've done the necessary work, marked it up modestly, we will be able to re-sell it to an investor or owner occupied buyer for below the current market value (based on a comparable recent sale).

In this case we had an offer on a 2 bed, 1 bath accepted on a short sale for under $200k - this caught my attention. The first step was to search the entire locality over the last year for comparable sales. When I found that there had been only five sales over the last year that were even near comps, I was encouraged. Next I discovered that none of the sales were Bed/Bath & Sq.ft. matches; the property looked even better. When the closest B/B & S.Fs. were about a mile away and had sold for over $300k, I was very interested. I also discovered that two prominent high tech companies were headquartered nearby and I started thinking that this is too good to be true -something must be wrong.

Ok, maybe there was a deal-breaking element in the mix, but there was definitely enough potential to merit taking a drive. Some basic demographic research never hurts, so while I planned my trip I looked at the Wiki on the area to see what popped up. Nothing on the web brought up any red flags, in fact it looked like a really nice, small community- I even found some great lunch spots for the upcoming trip.

Sorry about the cliff-hanger, but I have to write some offers; check back soon and I'll tell you about the trip and the REO.

This is a NorthPoint spin off. This service will be nationwide soon. One of the goals is to eventually displace Case/Shiller as the "go to" source for the media, et al to get news on what the real estate market is doing in the thousands of micro-markets, not just the 20 ubermarkets Case/Shiller uses.

SmartZip™ Launches New Website for Real Estate Investors with Industry’s

First Residential Property Rating, “SmartZip Score™”

Features More than 12 Million Investment-Rated Properties, Including Foreclosures, in California and Florida

Pleasanton, Calif. - June 23, 2009 – SmartZip, Inc. today announced the public beta launch of its website, www.SmartZip.com, and the introduction of SmartZip Score™, the first analytics-based investment ratings for real estate. Historically, more than 20 percent of all homes purchased in the United States are for investment purposes, and SmartZip.com is the first web site to offer independent ratings and investment tools expressly for residential real estate investors. SmartZip.com launches with ratings on all homes, more than 12 million, in California and Florida, two of today’s top markets for real estate investment. Over time, SmartZip will roll out its ratings across all 50 states.

Home prices and mortgage rates are at historic lows and, in February, Fannie Mae announced a new policy to allow qualified investors and second home buyers to obtain up to 10 loans, replacing the previous four loan limit. “There is immense pent-up demand from investors looking to capitalize on this opportunity,” said Tom Glassanos, president and CEO of SmartZip. “With today’s announcement, SmartZip brings transparency to the best investment values in two of the top markets, California and Florida, opening them up to all investors nationwide.”

SmartZip Score is the first quantitative property rating to offer a risk-adjusted assessment of the investment potential of residential real estate. SmartZip Score applies proven stock and bond rating analytics to the most comprehensive base of real estate investment attributes ever assembled. On a 1-100 scale, SmartZip Score gives investors and homebuyers an easy and intuitive way to assess if a property is really worth buying. Properties are rated two ways: a “growth” score for risk-tolerant investors seeking above-average capital appreciation and an “income” score for risk-averse investors looking for consistent monthly cash flow.

SmartZip.com provides a full range of tools and features, making it the first one-stop online destination for real estate investment. Using visual, color-coded "heat maps," and ratings-based market screening and home search tools, users can research and compare markets, then find and confirm top-rated for-sale and foreclosure properties, all based on investor criteria such as SmartZip Score, cash flow, appreciation, school ratings, and more.

SmartZip offers a variety of benefits to a range of audiences:

· SmartZip for Investors

- Identifies the best markets and best properties;

- Computes rental income and expenses to expect;

- Projects long-term cash flow and appreciation; and

- Assesses how to maximize after-tax returns.

· SmartZip for Sellers and Listing Agents:

- Calculates best price for rapid sale;

- Markets properties to a national buyer pool;

- Differentiates the value of properties; and

- Instills confidence in the value of a transaction.

· SmartZip for Lenders

- Determines present and future collateral value of a property;

- Assesses the size of potential loss in foreclosure; and

- Simplifies the decision to foreclose or modify a loan.

“Online real estate sites are focused on what a home costs and not on what it’s really worth”, said Avi Gupta, vice president of research and marketing at SmartZip. “SmartZip Score is an independent, disciplined methodology that gets to the fundamentals of property value. In a time of uncertainty, fundamentals, not price, count most.”

About SmartZip, Inc.

SmartZip is the leading provider of independent, analytics-based ratings and research for real estate investment. SmartZip is used by investors and homebuyers looking to easily rate, compare and confirm the best properties to buy. The SmartZip Score™ is the first and only quantitative rating offering a risk-adjusted assessment of the investment potential of residential properties. SmartZip Score applies proven stock and bond rating analytics to the most comprehensive base of real estate investment attributes ever assembled. SmartZip is a privately held, venture backed corporation headquartered in Pleasanton, CA.

We knew we had a great property but we were very surprised that we received 10 offers all well over our asking price. This was on a SFR in Patterson, CA. Our research showed a strong rental market for this product that was selling for $500k+ at the peak of the market. The replacement cost is much higher per sq.ft than the $154k we were asking. With 20% down this cash flowed a little positive on a 30 yr.

We did not get a sniff on the investor market (o.k., a couple, but no offers).

Once we put on the MLS/owner occupied market we received 10 offers 10% or more over the $154k asking price within a 5 days. All offers were from local owner occupied buyers. Here's a link to pics and property info: http://northpointgroup.vflyer.com/home/flyer/home/2369089

We are hearing from our realtor connections in Modesto, CA that they are getting about 5 offers per listing, about 50% from the 1st time buyers market and 50% from the investor market.

Not sure how long it will last but we have experienced the shift from a buyers market to a sellers market almost on a dime. I am now lining up buyers in advance of re-hab work being done in order to have the best chance at the best properties. Remember, investment offers may have an advantage over FHA buyers because of the holding costs and other factors.

Is this truly a sellers market or, as one of my more colorful colleagues called it, " a dead cat bouncing"???

Any thoughts?