New Careers Site is Launched

The new Illinois real estate career web site is now up and running. There you will be able to find information on a career with Prudential Starck Realtors®, links and information about our partner real estate school, Your House Academy, web links to sites we've discovered, material on prelicense course work, the State of Illinois exam, the new format for the Illinois broker exam, some general information about working in real estate, and we'll be adding content frequently. You'll find the site under the old URL of prudentcareers.com. Let us know what you think.

Lenders Are Terrible Sellers

It's been said time and again ... As soon as we get rid of this inventory of foreclosed and short sale properties, the market will be back on track. Well, anyone who's been actively involved in the residential sales market lately can easily see where the real problem comes from ... it's the fact that BANKS JUST DON'T KNOW HOW TO BE SELLERS ... They're just awful!

An agent in my office put it this way ... "It's like the Wild West. There are no rules, no common courtesies and nobody cares who gets hurt!"

The lenders are taking weeks and often months to respond to an offer to purchase a foreclosure property ... and much longer if it's a short sale.

The banks are "stacking" offers and seem to be waiting for a better one even though there are good and honest contacts that have already been presented. They just don't seem to be in any hurry ... and why should they be? They got billions of dollars in government bail out money and they really don't care how long this mess hangs around. They don't care about the property and they don't take care of the property ... driving the values ever lower because of their neglect.

As a result of all the nonsense, we even have middle men who, for a fee, will expedite the transaction. Expedite the transaction!? I thought that's what agents and brokers are supposed to be doing.

There's been lots of blame thrown around since this whole mess began ... greedy lenders, dumb buyers, poor economy, and on and on. But right now, the blame is squarely on the lenders. Someone should give them all a good lesson on how to simply be a good seller.

New Careers Web Site

Prudential Starck Realtors® will soon have a new site dedicated to providing information to both new and experienced agents. Obviously, the focus will be on attracting agents to our company, but we sincerely hope the information will prove valuable to all. The site will gather information from various news sources, Realtor® groups, our partner real estate school (Your House Academy), and articles by licensed instructors. It is right now a work in progress, stay tuned.

Simple Math?

A math type question often seen on school finals as well as the State exam, involves calculating a purchase price given a loan amount and down payment percentage. The question may be slightly compounded by stating that the purchaser paid points amounting to some amount without giving the loan figure. Take a question like, "The buyer paid two points totalling $1,400 and had an 80% loan to value ratio. What was the purchase price?" Well, since we know that one point is 1% of the loan amount, we can calculate that the loan was equal to $70,000. Now since the buyer put down 20%, we would want to add that amount to the $70,000. This is done by dividing the loan amount by .80. In other words, if you want to add a percentage to something, divide by the residual. Another typical example is, "A seller tells an agent he wants to gross $100,000 after the brokerage fee. What selling price would be needed?" If the brokerage fee was 6%, you would need to divide $100,000 by .94 to add the .06 to it.

How to Calculate Property Size from Legal - The Easy Way

Suppose you have a legal description reading something like "...the S 1/2 of the NW 1/4 of the S 1/2 of the NE 1/2 ....of Section 17, T12N, R3E..." and the State exam asks you to calculate the size of that piece of property. Well, you DO know that a section has 640 acres, right? So, instead of drawing out the problem just divide backwards, in other words, 640 divided by 2, divided by 2, divided by 4, divided by 2, and you'll have the answer: 20 acres. The only catch is that if the description you get has an "and" in it, you need to calculate two amounts and add them. So, S 1/2 of the NW 1/4 and the S 1/2 of the NE 1/2 would be much larger and amount to 240 acres (640 divided by 2, divided by 2 plus 640 divided by 2 divided by 4).

Capitalization Approach to Value

Several of our students have been having problems understanding the cap rate, or capitalization approach, to estimating value of an income producing property. If you remember that the higher the net income produced by a property (or investment), the higher the value, it follows that a property returning 3% income is worth less that one returning 7%, all other things being equal and not considering radical changes in the properties' economic environment. By researching the sold statistics of income producing properties, an agent can calculate the rate of return investors are after. In other words, if most of the sold properties show a net income of around 5% (not considering cost of financing), then it is probably safe to estimate that the property you're trying to value should use 5%, or perhaps more, as a benchmark for estimated market value. Using the formula of Income (net after expenses) over Rate (in this case .05), estimated value can be calculated. So, if the subject property produced a net income of $35,000 and we know that figure should be around 5% of the value for investors to be interested, we can simply divide income by rate and suggest a market price of $700,000.

YourHouseAcademy.com

Your House Real Estate Academy is now offering online courses and has links on the site to the bookstore and Mr. Real Estate's Illinois Exam review, a series of CD's. They have also posted a series of informative articles designed to give a prospective real estate agent some additional information and advice. Here at Prudential Starck Realtors our Saturday morning course continues to crank out folks ready to sit for the Illinois exam: we had another 3 students pass the course final during the last session. If time is at a premium for you and you're not too far from Palatine give us a call about the workshop.

Prepare Differently for Broker License Exam

In February 2009 the multiple choice testing format for the broker license exam was changed to a scenario, information gathering, and decision making Simulation format. Whatever the reason, we now have an exam that is absolutely different from anything we've seen before and real estate educators are scrambling to figure out how to prepare broker students to pass this new test.

It's obvious that we cannot use the same teaching methods used in the past for the multiple choice test. The abysmal 35% passing rate for the first 3 months proves that. Our current textbooks are not designed for this type of testing. Many of the questions and situations in the new exam and not covered in the standard texts. That being said, the Simulation exam is not necessarily harder than the old multiple choice test: it's just different.

As before, the exam is given in 2 parts; the national portion and the state specific portion. There are still 40 state specific multiple choice questions. The national portion consists of 10 Simulation questions of which 8 are scored. The other 2 are questions that the testing service is evaluating. Each Simulation question consists of 5 to 8 different segments. After presenting the scenario, the information gathering segments will ask , "SELECT AS MANY AS YOU CONSIDER APPROPRIATE." The decision making segments will ask, "CHOOSE ONLY ONE ITEM IN THIS SECTION."

Real Estate agents are taught risk reduction techniques that require agents to ask numerous questions so that all bases are covered. The Simulation exam, however, awards points for proper responses and subtracts points for improper responses. Therefore it's important to know which are best. Fewer are selections are sometimes better than more. There are no math problems on the Simulation portion of the exam. Fifty percent of the Simulations concern residential real estate, 33% commercial simulations and 17% property management. Also, there's no going back. Answers cannot be changed.

The new test does not use branching. Branching is a testing model that brings the student to a different question based on the previous answer. There are 3 free sample Simulations at http://www.goamp.com/repSimTests.aspx. They're only designed, however, to give you an idea of what the exam looks like. They're not to be used as a learning tool. The questions are not Illinois specific and do not truly reflect the type of question you might see. The testing service does sell a sample exam on goamp.com that can be a good learning tool.

For more information contact Vince DePaul at http://www.blogger.com/Vince@YourHouseAcademy.com