Revisiting renting vs. buying

The debate continues about the advantages of renting vs. buying a home in the current economy.

To me, the debate should be continuing within the real estate community about how realty associations and organizations continue to add sparks to the fire instead of constantly going for a positive spin.

Here is another set of media examples:

First, here is a story about a realty association reporting a "mixed bag" of news, including the statistics showing the severe drop in home sales compared with one year ago.

As I keep pointing out, potential buyers at this moment don't care what happened one year ago, especially when it makes the current market look negative. If someone thinking about purchasing a home right now sees that sales are 35% less than one year ago, they might give up their idea, thinking that there are plenty of reasons not to proceed. There is no way this information is positive for local realty agents as a result.

The kicker is that the facts in this media story were provided by the Association of Realtors, which includes hundreds of realty agents paying dues only to have this negative publicity distributed to the media:

http://www.foxprovidence.com/dpps/news/local_news/region_3/warwick-single-family-home-sales-down-in-oct._3663498


Then, from the same day, this story about how in some cases (including this busy area of Southern California) it could cost a family MORE to rent an apartment than to own a condo. That might make some renters want to contact a local realty agent.

The crushing blow is that this is a reporter's story, and not released by a realty company or realty association:


http://www.the-signal.com/section/36/article/37263/


If realty agents and associations are not going to be aggressive and serious about taking steps to improve the marketplace, how is the market going to get any better? Isn't it in their best interests to do so?

Listing of the Day - Tulsa OK

In an effort to improve the impact of the marketing of listings, I randomly choose current listings around the country in a variety of price ranges and comment on their effectiveness. No current clients of mine are used, nor do I know any sellers or buyers or have any additional information about the property.



14?? S. Quincy Tulsa OK 2 + 2 $250,000


http://tulsa.re.adicio.com/properties/search/detail.php?qBackToSearch=qAction%3Dsearch%26qCity%3Dtulsa%26qState%3DOK%26qBedrooms%3D2-%26qBathrooms%3D1-%26qMinPrice%3D150%252C000%26qMaxPrice%3D250%252C000%26pagesize%3D20%26view%3Ddetailed%26qtotal%3D374%26qSortBy%3DPrice%26qSortDirection%3DDESC&qAdid=tulsa_gtarmls_921173&propertyNumber=2


This advertisement is a disaster and an embarassment to realty professionals everywhere.

First, there is no street address for this property. The one I put at the top is a guess based on the street map, and one never knows for sure with Google maps. While it is true that some listings out there, even in this market, do not have a street address either, it is especially odd in this instance.

We can't even tell whether or not this property has been built or completed yet. I can sometimes understand not having an address when there are circumstances such as renters in the property, multi-unit, land value, or commercial or mixed. But there doesn't appear to be any reason why this address needs to be a secret.

Next, this ad boasts a photo spread. Fine, if there were ANY real photos. All we get are drawings. Those are not photos.

Thus, before we get to the description (for anyone still interested), we already do not know an exact location or have any idea of what the unit looks like. Hardly an enticement to read on.

And it doesn't get any better. Square footage for the unit is listed in the advertisement as "N/A". So we don't know the size of the unit either. Great.

The copy reveals this is an "ultra modern condo" yet is in the "Historic" Cherry Street District. The third sentence reads "Custom cabinets, granite, qual upscale appointments". Granite what? Exactly what is a "qual upscale appointment"? Over 20 years in real estate marketing, and I have zero idea what that means.

Then, we are told interior features include a security system and smoke detector. Whoopee doo. How does that make this property unique?

But there is more. Listed under "Exterior Features" are "gutters, sidewalk, sprinkler system". Boy, does this agent know how to impress?

Just to top it off, although the agent's name and listing office are shown, we would then have to click (an additional step) just to get her contact information.

Not only are there plenty of other listings in the same area, but this is not the most or least expensive 2-bedroom home or unit, and this one (whatever it is) is priced at $250,000.

Let me get this straight. They are asking one-quarter of a million dollars for a property based on no street address, no unique features, so square footage, and we aren't even sure if it has been completed or not.

I'll bet that while you are reading this, and hopefully sharing my disgust, the listing agent is probably telling a colleague about how bad the local real estate market is and that she hopes she gets some activity soon.

This agent should be glad about only one thing. That she doesn't have a listing appointment already scheduled with me. And after seeing this, that will never happen.

GRADE: F



Note: This commentary is uncompensated and for marketing purposes only and is no reflection on the featured property. Its accuracy is not guaranteed. Neither Dave Kohl nor First In Promotions shall be held responsible for any representations.

At this time, I have openings for more realty agent/office clients to critique current and brand new listings on an hourly basis. No current or past client listings are featured on this blog.Random listings are chosen around the country.

Your comments are most welcome!

Why walk away from a downtown Chicago condo?

Another article which caught my attention is one from the Chicago Sun-Times about the rising number of potential buyers walking away from downtown Chicago condos just before the delivery date. The story does go on to cite examples, and also to anticipate how this trend might go as some important openings (including Chicago’s Trump Tower) come up before the end of this year.

http://www.suntimes.com/business/roeder/1689945,CST-NWS-roeder29.article

The article quotes one developer about how they have been very successful with overall sales and how that includes significantly fewer “walk aways” for a specific building. One of the major points of this column is to tie the concern about diminishing downtown condo sales to the current real estate marketplace.

Naturally, the story goes on to associate the downturn it reports on to the current conditions in the real estate market. That could be taking the easy way out. I, for one, question that.

We don’t know exactly how many condo developers or sales offices were contacted in total for the story. Yet, of the few that are mentioned, one reports successful sales to the tune of millions of dollars. A success story within a couple of miles of the area covered in this story.

I’m not here to pick on the reporter from this story. It seems to be the same mindset as when realty associations keep pumping out the “latest decline in sales from a year ago” statistics and blame the market instead of only reporting how many hundreds or thousands of homes have sold during the previous month. Yet, if that were “my” story to write, it would have come out completely different. I would be investigating what made the one development quoted in there so successful, whether or not compared with other condo buildings and developments in the same area. But since I am not an agent or developer, I’ll leave that research for someone else.

Some will counter this point because the article refers to people “walking away”, which could refer to their ability to secure or close on a mortgage. I can appreciate that viewpoint. However, the point is that a nearby development is not experiencing anywhere near as much of this same occurrence.

Instead, I’ll offer up my theory, and that is that I would closely examine the pricing of condos in downtown Chicago Within that 3 to 5 square mile area there is plenty of public transportation, retailers, restaurants, and services. . If one development is doing well, the reason for the others to be struggling is not location location location. This leaves price and value.

In other words, the “struggling” developers in the same area either do not have their units priced right for the buyers it hopes to attract, or are not offering enough in value. By “value” I refer to amenities which apply based on the location and the type of property. A major downtown condo best serves when it has parking, proximity to bus and train, grocery store, and plenty of businesses. Other factors such as the size of the units, views, number of stories, and exercise facilities. Is it possible that the “walk away” people did more research and the results told them to back off due to future resale concerns?

While I can’t answer that, I think that is a question that should be addressed with regard to pricing a listing or a development. But for now, we should be looking for reasons why these “walk aways” are happening at some locations but not at others nearby.

Thoughts?

Would you buy an "award winning" home?

My continuing search for positives and much needed creativity continued as I read the story in the Milwaukee Journal about Mayor Tom Barrett presenting the “Mayor’s Design Awards” for design excellence with categories based on design, environmental concerns, and architecture.

The story went on to name various buildings, some city owned, others historical sites, and others which are commercial that are being named and information about what was done to earn the honor. I came away thinking this is a good idea, and then wondering why I hadn’t heard about this before.

Next, I thought about how local real estate offices are supposed to know their community of service inside and out, and even if for selfish reasons want to see local property values as high as possible. The Design Awards in Milwaukee are for some city and some commercially owned properties. What about residential?

I’m sure there are some new condos and developments somewhere which are making a big deal about how environmentally friendly they are, or have an environmental improvement completed or about to be. There are others which take special pride in a garden or gardening arrangement. And the list of possibilities goes on.

Selling a condo in an “award winning environmentally sound building” would seem to be a plus for the listing agent and for the seller when this unit is put up against hundreds of other condos also available in this buyers’ market.

Various city and community leaders should be aggressively looking for anything which could accelerate local property sales. As we have detailed in past columns, each property sale generates thousands of dollars to people and companies (commissions, taxes, transaction fees, moving expenses, etc.) and brings money directly and indirectly into city coffers.

Before you wonder what difference an “award winning condo” or “award winning single family home” might make, start naming movies you have gone to see AFTER you learned that a film had been nominated or won one of the major awards. Yet, you didn’t go see it when it was playing down the street for weeks.

Let’s see if we can work together and develop a residential property awards program.

The right moves by a buyer and an agency..........

It looks as though creative ideas are finally coming back to the marketplace, and it is certainly much better to comment about some of those instead of the negative statistics being needlessly generated from within the real estate community.

I was glad to see a story about a family in Memphis taking matters into their own hands. As many of you know Memphis has been among the most suffering of real estate markets over the past couple of years. This story is about a family man wishing to purchase a house to live in via an auction and getting a good deal. But he doesn’t need to move, so he would only take a good enough deal or not buy. He realizes it is a buyers’ market.

Why doesn’t he need to buy? Because he already has a house for his family and is meeting the mortgage payments. But he sees the value of buying while the getting is good, which pumps more into the economy and he sees how it would put him in the position of strength.

That is because he knows that he would be able to rent out his current home. There are a ton of people out there who can no longer qualify for a mortgage due to credit problems even though they could likely afford one. This should leave him enough flexibility to rent out his current home for the amount of, or perhaps a slight increase over, his current mortgage.
By doing so, and by purchasing another home to move into at a bargain price, this man will have lowered his monthly mortgage payment, significantly increase his net work (by owning 2 homes), and set himself up nicely for the future. Once the market bounces back, he could potentially make a very nice profit on the home he purchased at a bargain.
He could also offer a “rent to buy” option for the original home and begin the road to a profit ahead of schedule. Based on the scenario I describe above, being able to offer a “rent to buy” could be more beneficial. A rent to buy tenant will take much better care of the home compared with a 6-month or 1 year lease tenant.

This is exactly the type of story we should be seeing a lot more often than it seems like we are.
Here is the link, if you’d like to see for yourself:

http://www.myeyewitnessnews.com/news/local/story/Foreclosed-Homes-Go-Up-For-Auction-In-Memphis-Area/rPi1Vx9-jEiVsVN4bQFkMA.cspx

From the industry side comes another version of an idea that for some reason hasn’t taken off yet. People don’t go shopping for real estate by going to the local realty office. Yet, very few realty offices are in high foot traffic locations. I like what CondoOutlet is doing in the St. Johns Town Center in the Jacksonville Florida area.

They have opened a 10,000 square foot real estate showroom with 2 “life sized” condo models. This is in a major shopping center. (This company is not a client, by the way.) While I am not here to promote a single realty company, I mention this because I applaud their strategy.

Over the years, I have been in literally hundreds of real estate agency offices. But maybe 2 or 3 of them in a location with any degree of significant “walk-in” possibility. With the price of gas being what it is and has been, and open houses seemingly always around the same times, this opportunity to be convenient to the public should not be overlooked any longer. That is, to reach the public that hasn’t already found a way to benefit by the current real estate market!