110426 flexibility vs bad appraisals

SavingThe PlanetOne HouseAt A Time

G r e e n E a r t h E q u i t i e s . C o m © 2010

The Market Has ChangedBlessed Are The Flexible....

Following are some of the strategies that are working at

GreenEarthEquities to Keep On Fixing Houses

Keep On Doing DEEP Energy Retrofits

Keep On Providing The American Dream Of Home Ownership& Keep On Saving The Planet

One House At a Time (Mission)



Purchase PriceImprovements $

OccupantEnergy Retrofit

Carbon FootprintGreen JobsTax Base

Neighborhood

$70,000$10,000RenterZero

No ChangeZero

LoweredDragged Down

$70,000$50,000

New OwnerEverythingReduced

YesRaised

Lifted Up

The Flood of Cheap Flips (A) has created APPRAISAL Challenges for

Quality & Green projects (B)

House BHouse A

They Started Off The Same

Then Everything Changed

No Problem

SELLINGBut W

ill It

Appraise?



House BHouse A

The Success of Conventional Investors with their philosophy of minimal cosmetic

improvements (Lipstick on a Pig) has established an easy valuation technique

that can be used by uneducated or lazy appraisers,

(who dont know how or wont take the time to evaluate energy efficiency of a home)

The Success of A ... Is impacting B



Cur

rent

Exa

mpl

es In

“M

y N

eigh

borh

ood”

Assuming we buy at 60 ... We

need to sell at 160. Not

difficult to add that

much value but difficult

to get appraisal



Text

The Success??? of this type of investing gives the

Appraisers & Bankers the ammunition they need to protect the status quo and their jobs and minimize all improvements

that Energy Wise investors and homebuyers would like to bring: Less Carbon, More Green Jobs, Less Imported Oil, Higher Tax

Base, Improved Neighborhoods... Is anyone listening?



The Problem In A Nutshell1. Lipstick Flippers have been

too successful.

2. This has caused (lazy)appraisers to evaluate homes

based on these numbers.

3. This has made retail flips with DEEP Energy Retrofits

more difficult to sell at fair margins

Solutions?.......



#1 Sell Them Before They Are Done

This is a continuation of what we have been doing all along.

More than half of our projects have been sold before they

were complete.

I wish I could attribute this to the Energy Package, but it is

really a result of all 3 Packages ... And mainly the

WOW! Package



#1 Sell Them Before They Are Done

You can build a project and get a qualified buyer

to want to buy it for a fair price

BUT

Can you find an appraiser to appraise the home for

that price? ....

And If Not ... What Then?



Sold Right But Appraised WrongOne Solution:

Example: You complete a project and have a buyer who would love to buy it for

your asking price of $160,000. Appraisal comes in at $145,000

One Solution:Lower the price to $145,000

Receive the additional $15,000 through a Personal Note*

(unsecured)

(This works best if the option is discussed with the buyer before the appraisal) Also 203K & EEM



#2 Sell Them Before You Buy ThemThis works well if buyers have seen your work (even photos of previous work plus a compelling presentation)

and know that’s what they want.

Get them pre-approved and use the 203K loan.

Property must appraise (physical inspection plus appraisal of the plans

and specifications)If it doesn’t appraise you can still use a Personal Note*

* Personal Note with UCC filing. May not be acceptable to Lender

#1. Find another Lender #1. Disclosure is always the best policy.



#3 Dont Sell Them, Keep ThemNo Sale = No Appraisal

To Kill The SaleYou will soon run out of money

with this method so plan on:

CASH OUT RE-FI& Continuing Positive Cash Flow

At 60 to 80% of appraisal, these will return most of your invested

capital for further investment.

(Limited to 10 of these (FHA). Most lenders only allow 4)



#4. Partner With An Investor Who Wants A Long Term Green Investment With

Positive Cash Flow

This includes lots ofbenefits for the investor besides

positive cash flow (tax credits,

lower property taxes, etc)



#5 Use All The ProgramsSMUD, Redding & other cities, Utilities, PG&E, SCE & others HUD 203K Loans, EEM LoansCHF 0 or 3% Energy Loans, ECO Fund loans

Note: Most of these programs are designed for

HOMEOWNERS & BPI Contractors, Not Investors

$17K Total...Wow!= Flexibility Required



#6 Do A Little Less = (GEE Lite)YUCK!!!

This idea flies in the face of one of our favorite mantras: “Do Everything, Everytime”

Therefore we will look to other options first ... In order

to continue doing DEEPER Energy Retrofits.

And Stay More On Mission



But, If We Had To .....Options:

1. HVAC. Keep the Equipment. Seal, and add Return (s)

& Insulate Ducts.

2. Single Mini Split with bath fan powered jump ducts (25 SEER)

3. Re Weatherstrip Windows

4. Storm Windows

Never Ever EverSkip the Shell Seal, ever



More Than One Way.....

Stay “On Mission”



Information at Zillow.com

This shows what we do and how our

projects are treated by the Algorithms

(This one appraised at $160,000)



3332 N Ezie

Same Neighborhood

Same Graph



5664 E Bernadine, Clovis, CA



145 Gettysburg,Clovis CA

Perfect “100K Spread”

Example



Not Enough Spread

(paid too much, even after haircut

to 65)

Still A Great Deal For The County

...compare next door



Purchase PriceImprovements $

OccupantEnergy Retrofit

Carbon FootprintGreen JobsTax Base

Neighborhood

$70,000$10,000RenterZero

No ChangeZero

LoweredDragged Down

$70,000$50,000

New OwnerEverythingReduced

YesRaised

Lifted Up

The Flood of Cheap Flips (A) has created APPRAISAL Challenges

for Quality & Green projects (B)

House BHouse A

They Started Off The Same

Then Everything Changed

No Problem

SELLING



House BHouse A

The Success of Conventional Investors with their philosophy of minimal cosmetic

improvements (Lipstick on a Pig) has established an easy valuation technique

that can be used by uneducated or lazy appraisers,

(who dont know how or wont take the time to evaluate energy efficiency of a home)

The Success of A ... Is impacting B



Text

The Success??? of this type of investing gives the

Appraisers & Bankers the ammunition they need to protect the status quo and their jobs and minimize all improvements

that Energy Wise investors and homebuyers would like to bring: Less Carbon, More Green Jobs, Less Imported Oil, Higher Tax

Base, Improved Neighborhoods... Is anyone listening? (mayors,

governors, presidents, utilities?)



Finding These Graphs On Zillow1. Put the address in the

Google Search Box.

2. Search for the Zillow entry from the choices. Click.

3. Dont go directly to Zillow and type the address in there.

That will lead you to a different set of data.

4. For the next address, go back to Google & Repeat.



Q1. So, Why would you NOT

add Solar?

Q2. Which would save more, $17K of Solar,Or $17K of Home

Performance?

Q3. Which adds more comfort?

Q4. Which are Appraisers closer to

understanding?

Questions



“Better Than Break-Even”

Yahoo!!!

... But Will The Appraisers & Banks

Wake Up???

So Politely Put.....



The Following Is Not A Sales Pitch!

(But you can use it however you would like.)

So far, everyone who has heard this G.R.I.P. Presentation

has said, “Yes, that makes sense,

Let’s do it.”

Your mileage may vary.

Next Week:Complete Outline of GRIP



5 ways to be in the Green Renovation

business in addition to the

standard Retail Flip

Next Week

110426 flexibility vs bad appraisals

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