Death of the Real Estate Agent?

The title of this post might be a little provocative but I really think that this is going to happen soon. I was watching CNBC one day and some executive from Zillow was on talking about you can pretty much get the value of your house from their website. I totally agree. How can you market you own house? Here are a couple of tips that will help you sell your own house any day of the week. Put your house up on Zillow and Craiglist and then do this:

  1. Set up a phone number on Google Voice that’s just a voicemail where people can leave their info for YOU to call them back. If you don’t do this you will be getting calls all times during the day on your cellphone or house.
  2. Most important step: Do not show your house to anyone that asks. Before they come to your house you ask them to email, fax or bring with them their pre-approval letter from their bank. This will weed out so many people just casually looking so they do not waste your time. Understand, NOT pre-qualification letter. You need a pre-approval letter. What’s the difference? View here: http://www.investopedia.com/articles/basics/07/prequalified-approved.asp
  3. It matters what state your are in so make sure to get a lawyer that has been doing real estate for a long time.
  4. Make sure you price your house to sell. Do not be greedy or you will be disappointed.

Just doing these things you can sell your house yourself. There are many other things you can do as well, but I just wanted to share the top important things you need to get started. Now maybe a real estate agent can help you buy a house, I just talked about a selling your house in the next post I will talk about how to buy a house from a real estate agent or the owner. I hope this helps you save time and money.

If you have any questions, tweet me @mjassal

(Former real estate agent)

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Which is a better investment: Real Estate vs. Stocks

What is a better investment, buying real estate or investing in stocks?  

I grew up in a family and culture where getting a house is the best thing you can do for yourself. I used to think that to until recently. I decided to crunch the numbers on this and share with you what I learned. I live in NY so I will be using NY real estate numbers. I used calculators from mortgagecalculator.org and bankrate.com (which I think are the best ones out there).  Lets start with the house.

House – $500,000

20% Down payment: 100,000

Interest rate:  4.25% (25 yr loan)

Loan: $400,000

Monthly Payment: $2,687.79

Total Interest Paid: $250,085.72

Total Tax Paid: $156,250.00 (1.25%)

Total cost after 25 yrs of owning a house: $806,335 + $100,000 (down payment) = $906,335

Remember this is just straight cost of the house with no maintenance, repairs, etc. Now you fully own your house and it just kept up with inflation or maybe not. You have to ask yourself house worth $906k after all of this time? Depends on the housing market at that time. Now lets take a look at putting your money in the S&P 500 index fund. I will be using the same numbers.

Vanguard S&P 500 index fund – $100,000

Compound interest rate: 11% (since 1976 this is what the fund has returned, on vanguard.com)

Total Expense ratio: .05% (very very low cost and low turnover)

Total fund value after 25 yrs: $1,342,666 

Now lets say that you start with $100,000 and put in only $600 a month. If you think 11% is too high I have showed you other %’s as well.

At 11%: you will have: $2,272,937

At 10%: you will have: $1,862,379

At 9%: you will have: $1,527,040

At 8%: you will have: $1,253,319

At 7%: you will have: $1,030,013

At 6%: you will have: $847,913

At 5%: you will have: $699,452.

This is how much cash you will have that is liquid at your disposal. There is a big difference here of about 400k and that is just stopping at 25 yrs. If you let your investment grow and live after 25 yrs without putting a dime into it it will skyrocket.  If you left it in for just another 5 years your total in the index fund will be $2,255,139. I highly doubt the house will be worth that much. That said, I do think buying a house at the right price is great since its yours forever and you can leverage it as well for a loan, etc. But as an investment it does not compare to the value of stocks at all. If you want to invest in real estate without being a landlord because you think its better than stocks you can just invest in a REIT index fund. Remember, all these numbers are just math not an opinion! 

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Manpreet Jassal

@mjassal