HotPads Helps Answer The Question: “Rent Or Buy?”

With a new mapping tool released by Hotpads.com, called the rent ratio heat map, users can now quickly and easily determine whether it makes more sense to rent or to buy in a certain area. The tool evaluates each area based on the rent ratio—or ratio of rental pricing to for-sale pricing—and assigns the appropriate heat map color.

While the tool is not perfect, it is a very cool idea that I’m sure will evolve with time. A couple of problems I noted were the comparison properties and the buying costs used to calculate the ratio. In their comparison, they use the number of bedrooms to determine the costs. The problem with this, of course, is that the apartments and other multi-family rentals examined are very different from the homes to which they are being compared. In areas like Manhattan, where single family homes are virtually non-existent, this comparison model makes sense. However, in suburban areas that have a high concentration of single-family homes, things are going to get a little off. Most people in the suburbs would prefer to live in a home rather than an apartment for various reasons. As a result the prices for rental homes tend to be considerably higher than apartments.

Another problem is with the cost they assign to the buy side of the equation. They simply take the cost of the home, but neglect to consider any additional expenses involved in home ownership. This of course includes property taxes, utilities (typically higher than in apartments), maintenance and so on. These costs vary greatly based on which state, and even city, you are in. For example, property taxes in Texas are more than double those in Washington.

This tool is a great idea, and as it evolves and becomes more accurate it will become an incredible resource for people to consult. It is most definitely worth checking out, and you can even use it as a starting block when evaluating neighborhoods, but don’t let it take the place of additional due diligence. This tool is not meant to be the final word on whether a person should actually choose to rent or buy; it is simply meant to be a starting point for them.

Google Mortgage MarketPlace: It’s Coming…

Zillow recently made headlines with their new mortgage marketplace, but Google is quietly testing a mortgage marketplace of their own in the U.K. Whether or not that means that Google will bring the marketplace to the U.S. is unclear, but in all likelihood if things go well in the U.K., we can probably expect to see it hear too.

After seeing the success that Zillow has had with their tool--over 28,000 loan requests in the first two months, according to Zillow-- I can’t see why Google wouldn’t also be successful. Google’s viewer base is more than 50 times larger than Zillow’s and they have a lot more money to throw into designing a great tool for users.

What does a Google Mortgage Marketplace mean? Well, it likely means even more competition among lenders, which means lower rates for borrowers. The main questions will probably revolve around service. Sure it’s great if someone quotes me a loan, that’s lower than another lender, but how can I know that they are going to actually close it? Is this lender someone who is going to pull the old promise the world trick only to hand over something completely different at the closing table?

These are questions that Google is going to have to answer if they hope to have success with their new tool. What I would love to see is the ability for users to rate lenders (it doesn't appear that Google's UK mortgage marketplace has this ability). Much like they have with their shopping site. That way users could compare not only quotes, but also past service records, which offers a much better solution for borrowers. Zillow offers a rating system as part of their mortgage marketplace, and if Google wants to take this thing to the next level they would be wise to add one too, maybe even with some additional features to what Zillow offers. In the end, Google’s name and size alone should allow them to control this marketplace, and I foresee them doing just that.

Estately.com Expanding To Include Portland Properties

Estately.com, a real estate search website that uses referrals to connect consumers, real estate professionals and brokerage companies, is expanding outside Washington state by "adding 35,000+ Portland homes to our existing database of nearly 50,000 Western Washington homes," according to a recent blog post on Estately.com announcing the news.

"The site incorporates interactive mapping and displays details about the proximity of schools, parks, transit stops and restaurants to selected properties. Consumers can subscribe to get updates on price changes for properties and can save property notes," according to Inman News.

Estately.com users can search properties in specific neighborhoods and choose from agents in Estately's referral network by viewing competing bids anonymously. "The company has an agent-ranking algorithm that narrows the list of agents for a given area, and Estately staff research these agents and conduct interviews with some agents in developing its referral network," according to Inman News.

"We hope we make it easier for you, Portland, to search for a home in the hip neighborhoods--Hawthorne, Woodstock, Lloyd, Belmont, The Pearl District, and Sellwood--and the less hip ones. We also hope we make it easier to decide if a house is actually right for you," according to a blog post on Estately.com.

For more information on Portland real estate, see our previous article, Steady Growth in Portland Real Estate.

PolicyMap Offers Tons Of Info For Investors And Developers

PolicyMap is a new online service that was created by The Reinvestment Fund, a non-profit organization that funds neighborhood redevelopment. I read about PolicyMap on Future of Real Estate Marketing blog and thought it sounded like an interesting service. When I went to check it out, I was astonished by the amount of information and customization they offered.

Real estate investors or developers who need to do extensive demographic research should definitely check this site out. They offer more than 4,000 different demographic variables for which you can customize maps and reports. They cover the standard ones such as crime, income and so on, but they also have powerful ones you can’t find anywhere else, such as an estimation of a neighborhood's population in the year 2012 and many others I just don’t have space to mention.

All of this information does not come cheap, however.

They offer limited data and customization for free upon registration, but for the real goodies you have to be prepared to ante up. Their standard subscription starts at $200 a month, and they don’t even publish their premium subscription price. If you are a developer or real estate investor who does a significant amount of deals, though, I think their service is well worth the price. This is especially true if you have to put together presentations for money partners or others as part of your investments. PolicyMap offers data that would make your presentation much better, in addition to tools that should make gathering the data and putting into presentable format much easier.

Real Estate Investors And First-Time Buyers Climb Aboard The Foreclosure Bus

As final legislation on foreclosure rescues near, real estate agents are pulling out the (bus) stops to sell pre-foreclosure and bank-owned homes. Brokers are offering bus and limousine rides to groups as a unique way for investor clients and first-time buyers to view several properties in one meeting.

Agents with The Gold Rush Group in Auburn, California, a suburb outside of Sacramento, have rented a stretch-SUV limousine to cruise clients around properties in style (and efficiency). Other companies are organizing bus tours, complete with slide shows and presentations to educate buyers about the purchase process. One brokerage, RE/MAX Central in Las Vegas has even offered agents on the tour for the purpose of drafting purchase and sale agreements on the spot. Often, guide packages with area details and comps are included in the tours—a great deal for first-time or out-of town-buyers.

These tours, while fun and convenient, feature advertisements and free-with-purchase deals. In the case of RE/MAX CENTRAL, the bus itself is an advertisement on wheels. The benefit to buyers is the ease with which they can view and tour properties, and many first-time buyers and investors are getting into properties they otherwise would have been priced out of or avoided because of these tours.

Cesar Dias, an agent operating out of Stockton, Calif., was covered on a segment of “60 Minutes” to talk about his tour. He said that foreclosure tours accomplish the two goals of finding buyers in down markets and selling properties—all in one fell swoop.

A simple Google search brought up several tours all over the country. This gets me thinking—and cringing—about the term ‘foreclosure tour bus.’ As the foreclosure market looks to be bottoming out, is this a last ditch (and expensive) attempt to sell a few extra homes? Inspectors are on hand at the homes, as are lenders, in an attempt to unload these properties from the banks. Depending on how you look at it, this could either be a sales trap or a great opportunity to buy a quick property. I’m not so sure I’ll be hopping on this ‘buswagon’.