I'd like to think it was a reporter's attempt to make a story look like an important news story. No matter how large the amount of the transaction, this multi-million dollar mansion purchase is not a "market changer":
http://www.santafenewmexican.com/Local%20News/HIGH-END-Real-estate--10-5M-sale-could-signal-recovery
This story won't put a halt to other sales. But it also does not signal any trend. It is one transaction. In any real estate market, there are a limited number of multi-million dollar residential real estate transactions.
However, the story does cast a slightly negative light on the local market, and that is not good when it comes to the marketing of real estate. This story goes as far as to point out that this single transaction has a lot to do with the reported 18% increase in home sale prices for the quarter. Even though the property actually sold for less than it could have in better markets.
In other words, another potentially positive local real estate statistic shot down in flames. In this instance, it was by a reporter and not by a realty association, which seems to be the case in so many other cities.
As I have been saying for all these months, we need to change the "reporting" in order to change the mindset for marketing available properties.
I would like to think the reporter meant to say "Someone out there is willing to invest big bucks in the local real estate market" in a positive slant. Yet, adding in that this transaction was the reason for a home price increase and making it appear to be starting a trend took away any intended positive message.
Tuesday, May 10, 2011
Tuesday, May 3, 2011
The Rent vs. Buying Debate Continues
This is about to sound like I'm contradicting some past columns, but I don't think so.
Trulia.com web site has introduced statistical research designed to show that in many large cities it is "better" to buy a home than to rent.
http://info.trulia.com/index.php?s=43&item=123
Obviously, I'm in favor of ways to get homes to start selling at a much higher pace around the country. Yet, I don't think this is a way to accomplish this. For as much as I use statistics to make a point, to enhance my enjoyment of sports, and for a variety of reasons, I also understand that there are instances where statistics need to be better qualified to make the intended point(s).
In this case, the "decision" of whether to buy or rent is not based on statistical reasoning. The plane is not equal.
Fewer and fewer potential home buyers can qualify for a mortgage these days. Even fewer have sufficient funds for enough of a down payment to purchase and then secure a mortgage. Each time either or both of those situations occur, it takes away the "rent or buy" as an actual option. If they can't afford to buy, then renting becomes the only option.
Many people already know that the current real estate market is a buyers' paradise. Yet, as our elementary school teachers would have told us in this sentence, the same market does not contain a paradise of buyers.
What the statistics in the article fail to point out is that the majority of the people are not making the choice they are basing their information on.
One of my suggested results actually reduces the distinction between renting and buying, and it would open up both avenues for years to come.
I'll say it again. Make "Rent To Buy" a major part of our vocabulary. This is a drastic measure, but the state of real estate calls for it.
Make homes currently in status as bank foreclosures available for rental only via annual (or longer) leases. The monthly "rent" payment could be used toward a purchase after 5 years if the renter so chooses. After 5 years, the bank would have been collecting the "rent" money and would know the reliability of the tenant. This, instead of sitting on an empty home not generating any revenue at all.
If investors can't buy foreclosure properties at bargain prices, it instantly raises average home prices back toward the level of "real" sellers, instead of foreclosures pulling down the prices for everybody.
And those who currently cannot get a mortgage and/or afford a down payment have instant options.
Meanwhile, apartment buildings would then need more competitive rates for shorter term leases, which would likely help the rental market.
My reason for suggesting the 5 year period before the tenant could then "buy" the home is significant. Again, those consumers who have no other options (or a choice) would be able to establish some equity without the hassle of a down payment and initial mortgage. Yet, those who do have the funds for a down payment and the credit background for a mortgage could then buy now at lower prices. It is possible that 5 years from now, those who buy now could be able to turn that profit by selling high.
This situation can be created, and for everybody's benefit. But as of now, the 'rent' vs. 'buy' consideration is still not a choice. At least 80% of the time.
Trulia.com web site has introduced statistical research designed to show that in many large cities it is "better" to buy a home than to rent.
http://info.trulia.com/index.php?s=43&item=123
Obviously, I'm in favor of ways to get homes to start selling at a much higher pace around the country. Yet, I don't think this is a way to accomplish this. For as much as I use statistics to make a point, to enhance my enjoyment of sports, and for a variety of reasons, I also understand that there are instances where statistics need to be better qualified to make the intended point(s).
In this case, the "decision" of whether to buy or rent is not based on statistical reasoning. The plane is not equal.
Fewer and fewer potential home buyers can qualify for a mortgage these days. Even fewer have sufficient funds for enough of a down payment to purchase and then secure a mortgage. Each time either or both of those situations occur, it takes away the "rent or buy" as an actual option. If they can't afford to buy, then renting becomes the only option.
Many people already know that the current real estate market is a buyers' paradise. Yet, as our elementary school teachers would have told us in this sentence, the same market does not contain a paradise of buyers.
What the statistics in the article fail to point out is that the majority of the people are not making the choice they are basing their information on.
One of my suggested results actually reduces the distinction between renting and buying, and it would open up both avenues for years to come.
I'll say it again. Make "Rent To Buy" a major part of our vocabulary. This is a drastic measure, but the state of real estate calls for it.
Make homes currently in status as bank foreclosures available for rental only via annual (or longer) leases. The monthly "rent" payment could be used toward a purchase after 5 years if the renter so chooses. After 5 years, the bank would have been collecting the "rent" money and would know the reliability of the tenant. This, instead of sitting on an empty home not generating any revenue at all.
If investors can't buy foreclosure properties at bargain prices, it instantly raises average home prices back toward the level of "real" sellers, instead of foreclosures pulling down the prices for everybody.
And those who currently cannot get a mortgage and/or afford a down payment have instant options.
Meanwhile, apartment buildings would then need more competitive rates for shorter term leases, which would likely help the rental market.
My reason for suggesting the 5 year period before the tenant could then "buy" the home is significant. Again, those consumers who have no other options (or a choice) would be able to establish some equity without the hassle of a down payment and initial mortgage. Yet, those who do have the funds for a down payment and the credit background for a mortgage could then buy now at lower prices. It is possible that 5 years from now, those who buy now could be able to turn that profit by selling high.
This situation can be created, and for everybody's benefit. But as of now, the 'rent' vs. 'buy' consideration is still not a choice. At least 80% of the time.
Monday, May 2, 2011
Finding The Best Candidate To Buy Your House
Looking to sell a home? Know your audience!
This article from NASDAQ sums up the current real estate market as well as any other I have seen over the past 2 years. Yet, I’m not showing the link because I think this is a well done article. It is shown to make an important point.
The number of first-time home buyers has declined significantly, even compared with just one year ago when the market was already in decline. As this story relates, the trend for “investors” to pay cash for lower priced properties is still on the rise. While the tighter mortgage restrictions continue to make it a challenge for more and more people to get a mortgage, the number of first-time home buyers likely won’t be rising for some time.
Those who are currently home owners and would like to upgrade or downsize to a different home are often stuck with a mortgage they can’t get out of. If they take a loss to sell, they may not be able to afford what they want instead. And on it goes.
There is an important message in the NASDAQ story. Know your audience. If you are trying to sell your home, chances are you are doing everything you can to make it “family friendly” upon showings, and probably within your agent’s outside advertising. The above referenced article should make it clear that “family friendly” is not your audience.
Now, this doesn’t mean that you don’t need the new curtains or to keep the place looking good as new. But it does mean that you need to focus on the value of your home to an investor. That is who is buying, and, as statistics show, without the agony of waiting on getting a mortgage.
The priority should be on showing your potential buyer the ways your property for sale could make he/she/them money within the next 5 years. Although I have seen only a few examples of this of late, they are too few and far between.
One 3-bedroom home that I know of for sale has a lower level “family room”. It is not a basement, has window decorations and is a separate wing on that level. It so happens that the other homes in the development are all either 2 or 3 bedrooms. A few of the other units (both 2 and 3 beds) are also for sale, and now at well below the original new construction prices. Yet, only the advertising for this home points out that it is ready as a 4-bedroom home. At most, the current or new owner could put up a partition “door” and add more privacy, giving them a 4-bedroom home for under $100 (for the partition).
An investor with cash is more likely to see the value of getting a 4-bedroom house at 3-bedroom home pricing, knowing that he/she/they will eventually have a higher profit capability.
Again, based on current trends, being ready to show a cash investor how to get a 4th bedroom in this home is a more likely “sale” than a first-time buyer with a big family knocking on your door to see it and then trying to get a mortgage.
Before I hear from realty agents out there, I am well aware there is a way this needs to be done. This property needs to be listed as a 3-bedroom home. Understood. But within the description and the “sales pitch” it should be clear that the easy opportunity exists to create a 4th bedroom which would be larger than one of the upstairs bedrooms, without any room additions needed. That is targeting cash investors, and that is, at the moment, targeting who is buying.
Many homes for sale have at least one capability to increase in value with certain additions or improvements that cash investors would be interested in. A cash investor may not care about new curtains and new carpeting, which they could get for a few hundred dollars down the road when they are ready to sell. That same investor may instead notice if the property is zoned for an additional level, a pool, more parking, or whatever it may be.
Sellers should also monitor local business news. Watch for stories such as major retailers looking to open in specific cities or communities, new train or bus stations or routes, and new schools to be planned. A family, married couple, or individual probably doesn’t care about what will be built by 2016 nearby, but a savvy cash investor does. They can buy a property, hold on to it (without a mortgage to bog them down), maintain it, and be ready to put it on the market in time to be convenient to the new train station or whatever is being constructed.
Advertise the home without the “move in condition”, “near schools”, “breakfast nook”, and other sales points which target home buyers looking at 30 days from now. They either aren’t buying right now, can’t get a mortgage, or both. Advertise with any and every sales point that would cause a cash investor to see something that will be of value in 3 to 7 years. Know your audience.
Thursday, April 21, 2011
Live In A Billboard?
The 'turn your house into a billboard' concept actually has some merit from a marketing standpoint.
If you haven't heard, an advertising company is looking at painting selected houses as advertising billboards for their clients, and paying each participating homeowner's mortgage for the length of the contract.
Participants must own and live in the home, and there are some other qualifying points. But in this time of urgency in the real estate community, the thing to do is look at how this could help home sales.
I'm sure some of you are thinking "no way!" and how a home that is a billboard could make a neighborhood less attractive to potential buyers. That could be, but there are a number of positives to consider.
A homeowner having their mortgage paid for several months benefits with the opportunity to sock away a few thousand dollars. That money could be used for a home improvement, toward a down payment of a larger or smaller home in the near future, or to help pay off other debts.
Selfishly, the homeowner doesn't have to deal with an advertisement on the outside. Using my own warped logic over the years, I reason that I spend far more time looking at the inside of my home than the outside. Other people see the outside way more than I do.
Suppose you are a potential home buyer in a community where a home's exterior has been painted to become an advertisement. You would know that the "ad" home will be painted back to its original color(s) within a few months, and in fact will look BETTER at that time because of the fresh paint job. Chances are the seller(s) you approach will be more willing to reduce even further when you act like the "ad" home is a distraction to the neighborhood. Acting that way could get you an even better deal, saving you thousands of dollars, and getting a home sold within that community.
Even if people are annoyed at the "ad" home, they will be talking about it, and probably watching to see when it will be painted back. In today's real estate market, this would be a classic example of the "Any publicity is good publicity" theory of marketing.
With advertising being so omnipresent and scattered these days, having a house being an advertisement might not be any more annoying than large billboards that practically touch an expressway, advertisements in public bathrooms, on trains, buses, and everywhere else we look every day.
Let me add that I know nothing about the company planning this, am not compensated, and have no involvement in this project.
There could be positive benefits for people if this works. The real estate community needs every positive it can get. I can't paint that any clearer!
Monday, April 18, 2011
Can They Market Homes Better Than This?
I'm all for charitable donations and supporting a worthwhile cause. Meanwhile, the real estate market remains in a crisis, still lacking even one desparate measure in desparate times. I'm among those trying to come up with ideas and concepts to spur activity in the marketplace. I'm sure the charity mentioned in this story is worthwhile. Certainly the cause is.
http://www.stltoday.com/suburban-journals/metro/news/article_c996ae02-e223-5e29-9f70-0fa79adf73ea.html
The above story is about how a St. Louis area home builder will make a $1,000 donation to a specific charity for every home sold in a certain development. Fine and dandy - if you know of anyone who would purchase a home in order to have a charitable donation made. If someone is choosing between one of their homes and one or more others, would a charity donation sway their purchase?
I'm not wanting to sound mean. The intent is good. But the idea is to get buyers into homes. This "news story" really isn't good publicity. I'm disappointed that the reporter merely made this the P R piece the builder wants it to be.
Yes, I have a better idea for this very situation. Again, the idea is to get buyers into homes. How about these builders DONATE one of their homes to this charity? Let the charity "sell" the home to the highest bidder above a low reserve. This way, the "buyer" would likely get a better than ever price on a new home, AND it might be structured to be a huge tax deduction. (I'm not sure how the legal aspect would work, but I would like to believe some creative accounting could make this happen.) In addition to selling a home in this development, the builder would generate significant publicity from doing this and call attention to the entire development.
Buyers missing out on the "charity house" are likely to have come and taken a look. Maybe some would consider buying into the development, which would not have been a possibility otherwise. Perhaps other builders would look to do the same, whether for this charity or for another. One more idea out there to put buyers into homes.
http://www.stltoday.com/suburban-journals/metro/news/article_c996ae02-e223-5e29-9f70-0fa79adf73ea.html
The above story is about how a St. Louis area home builder will make a $1,000 donation to a specific charity for every home sold in a certain development. Fine and dandy - if you know of anyone who would purchase a home in order to have a charitable donation made. If someone is choosing between one of their homes and one or more others, would a charity donation sway their purchase?
I'm not wanting to sound mean. The intent is good. But the idea is to get buyers into homes. This "news story" really isn't good publicity. I'm disappointed that the reporter merely made this the P R piece the builder wants it to be.
Yes, I have a better idea for this very situation. Again, the idea is to get buyers into homes. How about these builders DONATE one of their homes to this charity? Let the charity "sell" the home to the highest bidder above a low reserve. This way, the "buyer" would likely get a better than ever price on a new home, AND it might be structured to be a huge tax deduction. (I'm not sure how the legal aspect would work, but I would like to believe some creative accounting could make this happen.) In addition to selling a home in this development, the builder would generate significant publicity from doing this and call attention to the entire development.
Buyers missing out on the "charity house" are likely to have come and taken a look. Maybe some would consider buying into the development, which would not have been a possibility otherwise. Perhaps other builders would look to do the same, whether for this charity or for another. One more idea out there to put buyers into homes.
Monday, March 21, 2011
Were Home Sales Statistics Truthful?
It's bad enough how many realty associations and industry organizations are adding fuel to the fire with the barrage of negative home sales statistics in this marketplace.
Now comes word that this might become a credibility issue as well. A Southern California based real estate data firm, CoreLogic, has issued a report claiming that the National Association of Realtors appears to have overstated sales of existing homes by as much as 20% over the past five years.
This puts a double whammy on the recent statistics. Many realty associations have been releasing data showing the drops in home sales with comparative statistics. These, of course, put the various local markets in a bad light. So if it indeed turns out that the earlier statistics (1 year ago, 2 years ago, etc.) were actually inflated, it means that home sales have been sluggish for even longer than these associations would have the public believe.
Now this is close to becoming a credibility issue totally separate from such a struggling market. The NAR shouldn't have to utilize its resources for crisis management while the very market it serves is in a crisis.
It has been too soon since the tragedy in Japan hit for us to realize how that is also another blow to the U.S. real estate market as well. Estimates are already coming that it will take upwards of five years to rebuild Japan. With the technology and innovations which have come from that country, I have to believe that international investors will be ready with funding to make sure it happens. That is funding which might otherwise be put into commercial properties and real estate related investing here in the U.S.
On the other side, think back to the early 90's and the California real estate boom. That "boom" was brought on in part due to overseas investors paying above and beyond the asking prices for upscale and high end homes in both Northern and Southern California. For many Japanese investors, high end homes in California were then a bargain compared with home prices in Japan at that time, even at inflated prices here in the States.
Now, especially with the incredible disaster facing Japan and the world, any such international activity in the United States is out of the question. Another blow to the U.S. market.
As much as I dislike using negative statistics in this marketplace (although I'm not representing a realty association in doing so), this is already showing up.
This past weekend, the Orange County Register (So. California) reported on the total sales for February 2011 as well as the first half of March for "luxury homes" (millions of dollars) in Newport Beach and Laguna Beach totaled: zero. After there were sales during January.
If only the focus could turn to how to get properties sold, instead of what the statistics should show.
Now comes word that this might become a credibility issue as well. A Southern California based real estate data firm, CoreLogic, has issued a report claiming that the National Association of Realtors appears to have overstated sales of existing homes by as much as 20% over the past five years.
This puts a double whammy on the recent statistics. Many realty associations have been releasing data showing the drops in home sales with comparative statistics. These, of course, put the various local markets in a bad light. So if it indeed turns out that the earlier statistics (1 year ago, 2 years ago, etc.) were actually inflated, it means that home sales have been sluggish for even longer than these associations would have the public believe.
Now this is close to becoming a credibility issue totally separate from such a struggling market. The NAR shouldn't have to utilize its resources for crisis management while the very market it serves is in a crisis.
It has been too soon since the tragedy in Japan hit for us to realize how that is also another blow to the U.S. real estate market as well. Estimates are already coming that it will take upwards of five years to rebuild Japan. With the technology and innovations which have come from that country, I have to believe that international investors will be ready with funding to make sure it happens. That is funding which might otherwise be put into commercial properties and real estate related investing here in the U.S.
On the other side, think back to the early 90's and the California real estate boom. That "boom" was brought on in part due to overseas investors paying above and beyond the asking prices for upscale and high end homes in both Northern and Southern California. For many Japanese investors, high end homes in California were then a bargain compared with home prices in Japan at that time, even at inflated prices here in the States.
Now, especially with the incredible disaster facing Japan and the world, any such international activity in the United States is out of the question. Another blow to the U.S. market.
As much as I dislike using negative statistics in this marketplace (although I'm not representing a realty association in doing so), this is already showing up.
This past weekend, the Orange County Register (So. California) reported on the total sales for February 2011 as well as the first half of March for "luxury homes" (millions of dollars) in Newport Beach and Laguna Beach totaled: zero. After there were sales during January.
If only the focus could turn to how to get properties sold, instead of what the statistics should show.
Friday, March 18, 2011
The Industry Still In Denial
It was just another day of reviewing real estate news looking for something other than the usual real estate professionals releasing negative statistics. Until I came upon a story from Springfield IL.
Of course, the story contains several negative statistics released by the local Association of Realtors. What makes this story so incredible is how the Association President blames "the weather and high gas and food prices" for the drop in home sales.
See for yourself:
http://www.sj-r.com/top-stories/x1777816246/Weather-economy-cited-in-24-3-percent-home-sales-drop
It's time to blame the Assn. President for not giving this story a much needed positive twist. If I had read that during Feburary 165 home sales were completed in the Springfield IL area, I'd could have been impressed. That month included a severe blizzard, a substantial increase in gas prices, etc. Yet, during that time, an average of more than 3 homes were sold every day. Someone could have figured maybe there are reasons to buy in that area.
It can't be that so many agents are in such denial. At least, I hope not. This is perhaps the worst case of the "You wouldn't want to buy a home here, would you?" syndrome I have seen coming from industry members.
We should all be working on solving the current problem. It is getting more serious every day. Many of those who are not afraid to purchase and can afford to can't get a mortgage. Even more can't get rid of their current property to make their next purchase.
Yet, this guy wants us to believe that if there was not a snowstorm, if gas was still at $2.40 a gallon, and the food crop was better this winter, more homes would have sold.
Not exactly a solution.
Here is it a month later. The snow is all gone. I'm still putting gas in my car, and still eating my regular meals every day. But my house still hasn't sold after more than a year on the market.
I suppose that's because of the St. Patrick's Day parades? Guess we'll find out next month.
Of course, the story contains several negative statistics released by the local Association of Realtors. What makes this story so incredible is how the Association President blames "the weather and high gas and food prices" for the drop in home sales.
See for yourself:
http://www.sj-r.com/top-stories/x1777816246/Weather-economy-cited-in-24-3-percent-home-sales-drop
It's time to blame the Assn. President for not giving this story a much needed positive twist. If I had read that during Feburary 165 home sales were completed in the Springfield IL area, I'd could have been impressed. That month included a severe blizzard, a substantial increase in gas prices, etc. Yet, during that time, an average of more than 3 homes were sold every day. Someone could have figured maybe there are reasons to buy in that area.
It can't be that so many agents are in such denial. At least, I hope not. This is perhaps the worst case of the "You wouldn't want to buy a home here, would you?" syndrome I have seen coming from industry members.
We should all be working on solving the current problem. It is getting more serious every day. Many of those who are not afraid to purchase and can afford to can't get a mortgage. Even more can't get rid of their current property to make their next purchase.
Yet, this guy wants us to believe that if there was not a snowstorm, if gas was still at $2.40 a gallon, and the food crop was better this winter, more homes would have sold.
Not exactly a solution.
Here is it a month later. The snow is all gone. I'm still putting gas in my car, and still eating my regular meals every day. But my house still hasn't sold after more than a year on the market.
I suppose that's because of the St. Patrick's Day parades? Guess we'll find out next month.
Wednesday, March 16, 2011
Would Outside Incentives Help The Purchase Market?
Some realty firms and builders have stepped up efforts with offers of an incentive, often worth thousands of dollars, to buyers upon closing. The trend seems to be leaning toward the incentive being something not specific to the property.
Offering or giving an incentive to a buyer is nothing new. In the past, it might be new furniture, a big screen TV, or some sort of a services discount or gift (i.e. free maid service for 3 months).
One big difference with incentives now is that many more are offered to buyers, whereas in the past it was often incentives to realty agents who brought the successful buyer. Even though it was about 20 years ago, I still remember a time I was doing a marketing presentation at a realty association meeting in the Los Angeles area. While waiting, several agents were pitching new listings they had to the other agents in order to draw attention in a then hot market.
The owner of a realty office with about 12 agents got up, pitched one of his listings, and then promised "an additional $5,000 in commission on a sale from any of you who get me an offer by 5:00 PM today". Now that was "creative selling" at its best!
Of course, at that time, his purpose was to attract attention to his listing and make other agents remember it ahead of hundreds currently available within the same area. And attract attention he did. Yet, the eventual buyer of that home had no clue. The "incentive" was used effectively where it needed to be.
Recently, I have seen sellers, realty companies, and builders offering some interesting incentives to the actual buyer. These range from a pick-up truck to installing hardwood floors. Some are specific to the property, others are geared toward the buyers.
A realty company in Birmingham AL offered a 4-year tuition to the University of Alabama Birmingham Medical School (over $22,000) with the purchase of a unit in an upscale development. The Birmingham News reported there were no takers. (On a separate note, that incentive was stopped. That was dumb to stop it. They should have continued it since not many other incentives are valued at more than $20,000, and if they got a "taker" the local and national publicity it would have generated would be worth far more than the amounts paid out!)
I also saw a news story about a seller who allowed the asking price to be reduced by $2,500 per week for several weeks.
In an active real estate market, such methods make sense when the idea is to make "your" property stand out. Agents and builders want buyers to consider their property ahead of others they are looking at. Of course, this assumes there are plenty of active buyers out there.
That's the difference. Right now, thousands of dollars worth of incentives don't matter nearly as much when people who want to buy can't get a mortgage and/or can't sell their current property to guarantee a move. Unless they are the right incentives.
For many, the "right" incentive would be a buyer for their current property so that it can lead to the next sale, or being able to get better financing for a first-time buyer.
Somehow, there has to be a way for "regular" sellers to compete against the foreclosures and short sales. But first, we need for buyers to compete. Period. The fact that there continues to be so many foreclosures and short sales on the market tells me that there people are not buying, even at lower prices.
Until people and investors can start buying a serious number of properties, a big screen TV or a pick-up truck won't make a difference.
Offering or giving an incentive to a buyer is nothing new. In the past, it might be new furniture, a big screen TV, or some sort of a services discount or gift (i.e. free maid service for 3 months).
One big difference with incentives now is that many more are offered to buyers, whereas in the past it was often incentives to realty agents who brought the successful buyer. Even though it was about 20 years ago, I still remember a time I was doing a marketing presentation at a realty association meeting in the Los Angeles area. While waiting, several agents were pitching new listings they had to the other agents in order to draw attention in a then hot market.
The owner of a realty office with about 12 agents got up, pitched one of his listings, and then promised "an additional $5,000 in commission on a sale from any of you who get me an offer by 5:00 PM today". Now that was "creative selling" at its best!
Of course, at that time, his purpose was to attract attention to his listing and make other agents remember it ahead of hundreds currently available within the same area. And attract attention he did. Yet, the eventual buyer of that home had no clue. The "incentive" was used effectively where it needed to be.
Recently, I have seen sellers, realty companies, and builders offering some interesting incentives to the actual buyer. These range from a pick-up truck to installing hardwood floors. Some are specific to the property, others are geared toward the buyers.
A realty company in Birmingham AL offered a 4-year tuition to the University of Alabama Birmingham Medical School (over $22,000) with the purchase of a unit in an upscale development. The Birmingham News reported there were no takers. (On a separate note, that incentive was stopped. That was dumb to stop it. They should have continued it since not many other incentives are valued at more than $20,000, and if they got a "taker" the local and national publicity it would have generated would be worth far more than the amounts paid out!)
I also saw a news story about a seller who allowed the asking price to be reduced by $2,500 per week for several weeks.
In an active real estate market, such methods make sense when the idea is to make "your" property stand out. Agents and builders want buyers to consider their property ahead of others they are looking at. Of course, this assumes there are plenty of active buyers out there.
That's the difference. Right now, thousands of dollars worth of incentives don't matter nearly as much when people who want to buy can't get a mortgage and/or can't sell their current property to guarantee a move. Unless they are the right incentives.
For many, the "right" incentive would be a buyer for their current property so that it can lead to the next sale, or being able to get better financing for a first-time buyer.
Somehow, there has to be a way for "regular" sellers to compete against the foreclosures and short sales. But first, we need for buyers to compete. Period. The fact that there continues to be so many foreclosures and short sales on the market tells me that there people are not buying, even at lower prices.
Until people and investors can start buying a serious number of properties, a big screen TV or a pick-up truck won't make a difference.
Thursday, March 10, 2011
Those Negative Home Sale Statistics
You would think that Realtors would know not to make things any more embarassing when it comes to their take on the current state of home sales.
Now comes word from Minneapolis that home sales in the Minneapolis area declined more than 30% when compared with one year ago for the last week in February. This "report" points out how that week's drop was more than double the 12% decline of the previous week. Put that "report" together and it spells an alarming and disturbing trend for anyone trying to or thinking of trying to sell a house or condo in that area.
This "report" tries to make the excuse that sales were higher a year ago because of the real estate tax credit which was available to first-time buyers and sellers under certain conditions at the time. That tax credit is no longer available. Therefore, by making this excuse, this "report" is really pointing out how the market conditions are really less favorable compared with one year ago since that tax credit is no longer available to anyone. Such a "reminder" to the concerned consumers reading that certainly doesn't help the situation either.
Yet, I am sorry to report that there is one more disturbing element to this "report", as if the negative news to current and potential sellers isn't already enough.
It seems that this "report" that contains all this discouraging information didn't even need to be released to the media to spread the word about how miserable the market is.
Let me put it another way. It SHOULD NOT have ever been released. It could have been prevented.
The source of this information is the Minneapolis Area Association of Realtors. You read that right. The dues money that agents and realty offices throughout the Twin Cities area is going, in part, to have information such as this released to the public.
Why there is this need for realty associations around the country to continue to pump out even one negative statistic is beyond me. I would understand if this information was coming from outside public companies, investment bankers, commercial property brokers, or banks which do not handle mortgages by way of news releases. Entities such as those are looking for large investor monies and would take the chance to bash something competing for investment dollars.
"People aren't buying real estate to make money, but if you invest with us, you could earn x% within 10 years", could be used to entice wealthy consumers to invest in long term bonds or certificates which assure a payoff at some point.
Instead, the industry continues to shoot itself in the foot. Worse yet, they are helping to take down thousands of current and potential home sellers in the process.
Having said that, I have other news to report specific to the Minneapolis area. During the last week of February 2011, just 2 weeks ago, 608 initial purchase agreements for houses or condos were signed. That means that, while some people are questioning the real estate market at the moment, about 600 properties were sold within one week's time in and around that major city! And that's without a tax credit or any other significant incentive.
In fact, I was able to verify that statistic with the Minneapolis Association of Realtors. It again shows that if you dig hard enough, you can find some good news for consumers.
Now comes word from Minneapolis that home sales in the Minneapolis area declined more than 30% when compared with one year ago for the last week in February. This "report" points out how that week's drop was more than double the 12% decline of the previous week. Put that "report" together and it spells an alarming and disturbing trend for anyone trying to or thinking of trying to sell a house or condo in that area.
This "report" tries to make the excuse that sales were higher a year ago because of the real estate tax credit which was available to first-time buyers and sellers under certain conditions at the time. That tax credit is no longer available. Therefore, by making this excuse, this "report" is really pointing out how the market conditions are really less favorable compared with one year ago since that tax credit is no longer available to anyone. Such a "reminder" to the concerned consumers reading that certainly doesn't help the situation either.
Yet, I am sorry to report that there is one more disturbing element to this "report", as if the negative news to current and potential sellers isn't already enough.
It seems that this "report" that contains all this discouraging information didn't even need to be released to the media to spread the word about how miserable the market is.
Let me put it another way. It SHOULD NOT have ever been released. It could have been prevented.
The source of this information is the Minneapolis Area Association of Realtors. You read that right. The dues money that agents and realty offices throughout the Twin Cities area is going, in part, to have information such as this released to the public.
Why there is this need for realty associations around the country to continue to pump out even one negative statistic is beyond me. I would understand if this information was coming from outside public companies, investment bankers, commercial property brokers, or banks which do not handle mortgages by way of news releases. Entities such as those are looking for large investor monies and would take the chance to bash something competing for investment dollars.
"People aren't buying real estate to make money, but if you invest with us, you could earn x% within 10 years", could be used to entice wealthy consumers to invest in long term bonds or certificates which assure a payoff at some point.
Instead, the industry continues to shoot itself in the foot. Worse yet, they are helping to take down thousands of current and potential home sellers in the process.
Having said that, I have other news to report specific to the Minneapolis area. During the last week of February 2011, just 2 weeks ago, 608 initial purchase agreements for houses or condos were signed. That means that, while some people are questioning the real estate market at the moment, about 600 properties were sold within one week's time in and around that major city! And that's without a tax credit or any other significant incentive.
In fact, I was able to verify that statistic with the Minneapolis Association of Realtors. It again shows that if you dig hard enough, you can find some good news for consumers.
Monday, March 7, 2011
More Ways For Banks To Send The Wrong Message
The majority of us can certainly understand the need to tighten up the mortgage industry after the fallout from too many subprime and high risk loans which failed a few years back. However, the punishment still doesn't fit the crime.
Getting a mortgage continues to become even more of a challenge these days, with upcoming additions to the process potentially raising costs for consumers and for mortgage brokers starting in April. At this point in the real estate crisis, issuing mortgages is no longer the problem.
New research starts out as a positive statistic, to indicate that more investors are paying cash for properties as they take advantage of the good deals out there for buyers. New research of the Southeast Florida market (from Palm Beach to Miami) shows that more than 54% of houses and condos sold there during the 4th quarter of 2010 were paid for in cash. (This research was provided by Zillow.com.) That comes to more than 7,500 sold properties PAID FOR WITH CASH!
The purpose of these statistics is to show that homes are selling and the deals for buyers are good. And that could be. In 2006, about 13% of homes were purchased with cash. From a little more than one in ten to more than half - in under 5 years. Of course, in 2006 there were plenty more mortgage programs more easily available.
What does today's trend have to do with the banks? Plenty.
Face it, the majority of the 7,500+ homes paid for with cash were bought by investors. I'm sure a percentage of them bought more than one property at these low prices.
Yet, these investors paid in full instead of going for mortgages. If you have the cash, you'll get a mortgage. But in just this one slice of the country, there were about 7,000 possible mortgage transactions that did NOT happen. It's time to look at why.
My guess is this is because of how little the banks have to offer in return for cash today, even when compared with 2006 when mortgages were the vast majority. A savvy investor wouldn't put up the entire $200,000 for a condo when they could get a decent return on a long-term CD instead. So they would get a mortgage, enjoy the tax advantage, and pay it off as scheduled, while investing the remainder of their funds someplace else.
It could have been CD's, Money Market, or other bank programs that paid more than the paltry amount they pay now. No reason for investors to look in that direction today.
If getting a mortgage wasn't such a hassle, a savvy investor could make a $40,000 down payment on 3 separate properties valued at $200,000 each, and have working capital left over to pay the mortgages for months to come. Then, they could invest their "working capital" into short and long-term CD's to grow their money toward future property payments, or use a home equity loan on one property to help pay down the others.
But now, these investors are passing by the mortgage opportunity and putting their trust into turning a profit as the market turns for the better. Heck, if an investor were to sell later this year and only make $5,000 more on a $200,000 property, they would likely do better than with a 6-month CD.
Some consumers watch for trends by investors. Now they can see that a bigger percentage of people buying property are NOT getting a mortgage, even when they could. Not exactly an incentive for the typical consumer to want to take out a mortgage to buy another property.
Oh, I also have a hunch that the 7,500+ sellers who received cash from the buyer probably didn't use their money to start a savings account and watch it grow.
Hopefully the banks will do what it takes to bring back the home mortgage as a viable option, before it's too late.
Getting a mortgage continues to become even more of a challenge these days, with upcoming additions to the process potentially raising costs for consumers and for mortgage brokers starting in April. At this point in the real estate crisis, issuing mortgages is no longer the problem.
New research starts out as a positive statistic, to indicate that more investors are paying cash for properties as they take advantage of the good deals out there for buyers. New research of the Southeast Florida market (from Palm Beach to Miami) shows that more than 54% of houses and condos sold there during the 4th quarter of 2010 were paid for in cash. (This research was provided by Zillow.com.) That comes to more than 7,500 sold properties PAID FOR WITH CASH!
The purpose of these statistics is to show that homes are selling and the deals for buyers are good. And that could be. In 2006, about 13% of homes were purchased with cash. From a little more than one in ten to more than half - in under 5 years. Of course, in 2006 there were plenty more mortgage programs more easily available.
What does today's trend have to do with the banks? Plenty.
Face it, the majority of the 7,500+ homes paid for with cash were bought by investors. I'm sure a percentage of them bought more than one property at these low prices.
Yet, these investors paid in full instead of going for mortgages. If you have the cash, you'll get a mortgage. But in just this one slice of the country, there were about 7,000 possible mortgage transactions that did NOT happen. It's time to look at why.
My guess is this is because of how little the banks have to offer in return for cash today, even when compared with 2006 when mortgages were the vast majority. A savvy investor wouldn't put up the entire $200,000 for a condo when they could get a decent return on a long-term CD instead. So they would get a mortgage, enjoy the tax advantage, and pay it off as scheduled, while investing the remainder of their funds someplace else.
It could have been CD's, Money Market, or other bank programs that paid more than the paltry amount they pay now. No reason for investors to look in that direction today.
If getting a mortgage wasn't such a hassle, a savvy investor could make a $40,000 down payment on 3 separate properties valued at $200,000 each, and have working capital left over to pay the mortgages for months to come. Then, they could invest their "working capital" into short and long-term CD's to grow their money toward future property payments, or use a home equity loan on one property to help pay down the others.
But now, these investors are passing by the mortgage opportunity and putting their trust into turning a profit as the market turns for the better. Heck, if an investor were to sell later this year and only make $5,000 more on a $200,000 property, they would likely do better than with a 6-month CD.
Some consumers watch for trends by investors. Now they can see that a bigger percentage of people buying property are NOT getting a mortgage, even when they could. Not exactly an incentive for the typical consumer to want to take out a mortgage to buy another property.
Oh, I also have a hunch that the 7,500+ sellers who received cash from the buyer probably didn't use their money to start a savings account and watch it grow.
Hopefully the banks will do what it takes to bring back the home mortgage as a viable option, before it's too late.
Friday, March 4, 2011
How To Win The Buyer vs. Seller Matchups
As I have said throughout the real estate crisis, advertising and marketing continues to play a significant role in turning the market around. Not only how much, but how.
Agents advertising their listings need to, more than ever, focus on who the most logical potential buyer is. I’m not talking about ethnicity or nationality, or anything else that cannot be included within an advertisement. It is where and how you advertise a listing that makes all the difference in today’s market.
If you are a buyer, or an agent fortunate enough to have a sincere buyer, consider their needs. When you have an individual or group which is investing, that is when you might look closely at “fixer-upper” listings. At least, any which are at the lowest of the low in terms of price for the area the property is in.
This way, an investor can be presented with two options. Point out that he/she/they can look at flipping the property in the near future if local price comparisons would work in their favor. Or, point out how by contracting certain improvements over the next few months could place the property in the caliber of a comparable “move-in condition” home in the same community.
For example, suppose you have a 3-bedroom fixer-upper reduced to $175,000. Your research shows a nearby 3-bedroom home in “move-in” condition listed at $188,000. Let the investor see what needs to be done in order to equal or “beat” the $188,000 home, and let the investor determine the approximate cost to make that happen. If there is a fit, the investor then has a direct reason to jump all over the $175,000 home.
Why only show the “fixer-upper” to investors? Frankly, too many agents pushing listings should know the answer but don’t.
With the huge amount of inventory out there, many agents overlook that buyers looking for a home for the family or even themselves don’t need to purchase a “fixer-upper” and spend and work themselves crazy to save a few thousand dollars anymore.
They are finding ready-to-go homes that don’t need much work for right around the same price. Conditions have changed because of all of the lower priced homes out there in most communities. Families no longer have to buy the house without a floor but with cracked walls for less money in order to move in to the area they want. Chances are they can get a great price on a “ready to go” home that lets them spend Saturday afternoons at the movies instead of on their knees scrubbing.
Agents need to keep these factors in mind when trying to move their new listings. That includes advertising and marketing. Some buyers want the best place to move into and have it be functional. You should be able to point out that “for $5,000 more, you save the $10,000 worth of work and the hours of your labor to fix up the other property” to a family.
At the moment, the way to go is to think in terms of matchups. What fits best for the situation. In basketball, the best scorer on your favorite team doesn’t always match up against the opponent’s best scorer. It depends on which player is best equipped to defend. When it comes to a job opening, it isn’t always qualifications. It is often which candidate best fits in with others on the team that determines the hire. And in real estate, it now needs to be the buyer with the “best fit” for the seller. But first, it needs to be pointed out.
Agents advertising their listings need to, more than ever, focus on who the most logical potential buyer is. I’m not talking about ethnicity or nationality, or anything else that cannot be included within an advertisement. It is where and how you advertise a listing that makes all the difference in today’s market.
If you are a buyer, or an agent fortunate enough to have a sincere buyer, consider their needs. When you have an individual or group which is investing, that is when you might look closely at “fixer-upper” listings. At least, any which are at the lowest of the low in terms of price for the area the property is in.
This way, an investor can be presented with two options. Point out that he/she/they can look at flipping the property in the near future if local price comparisons would work in their favor. Or, point out how by contracting certain improvements over the next few months could place the property in the caliber of a comparable “move-in condition” home in the same community.
For example, suppose you have a 3-bedroom fixer-upper reduced to $175,000. Your research shows a nearby 3-bedroom home in “move-in” condition listed at $188,000. Let the investor see what needs to be done in order to equal or “beat” the $188,000 home, and let the investor determine the approximate cost to make that happen. If there is a fit, the investor then has a direct reason to jump all over the $175,000 home.
Why only show the “fixer-upper” to investors? Frankly, too many agents pushing listings should know the answer but don’t.
With the huge amount of inventory out there, many agents overlook that buyers looking for a home for the family or even themselves don’t need to purchase a “fixer-upper” and spend and work themselves crazy to save a few thousand dollars anymore.
They are finding ready-to-go homes that don’t need much work for right around the same price. Conditions have changed because of all of the lower priced homes out there in most communities. Families no longer have to buy the house without a floor but with cracked walls for less money in order to move in to the area they want. Chances are they can get a great price on a “ready to go” home that lets them spend Saturday afternoons at the movies instead of on their knees scrubbing.
Agents need to keep these factors in mind when trying to move their new listings. That includes advertising and marketing. Some buyers want the best place to move into and have it be functional. You should be able to point out that “for $5,000 more, you save the $10,000 worth of work and the hours of your labor to fix up the other property” to a family.
At the moment, the way to go is to think in terms of matchups. What fits best for the situation. In basketball, the best scorer on your favorite team doesn’t always match up against the opponent’s best scorer. It depends on which player is best equipped to defend. When it comes to a job opening, it isn’t always qualifications. It is often which candidate best fits in with others on the team that determines the hire. And in real estate, it now needs to be the buyer with the “best fit” for the seller. But first, it needs to be pointed out.
Thursday, March 3, 2011
Agents - Get Your Clients Into The White House
Now that I have shared this with my valued clients, I thought I'd share something for realty agents to share with some of their buyers and sellers. Especially those with teen children.
The deadline is coming up for applications for interns - at The White House. What does this have to do with Real Estate? Nothing.
What does this have to do with your appropriate buyers, sellers, and clients? It could a lot. In this (or, for that matter, ANY) real estate market, agents need to distinguish themselves. Not just sending out newsletters and reminders which have no bearing to the local market or what he/she is all about.
Suppose you have clients with children in high school. This is a reason to call or e-mail them and suggest that (names) apply for a White House internship. This shows your clients you are thinking of specifically them. They may pursue it, they may not. But chances are they'll tell others about what you did for them.
Once you get their attention, send them this link:
http://www.whitehouse.gov/about/internships?goback=%2Egde_3571887_member_45547363
Of course, I suggest to my advertising and marketing clients that they follow back in a few weeks to ask if (name of child or children) applied. Maybe they received a response from someone at the White House! Trust me. You'll get a more favorable reaction than if you called them to ask about local home prices.
The deadline is coming up for applications for interns - at The White House. What does this have to do with Real Estate? Nothing.
What does this have to do with your appropriate buyers, sellers, and clients? It could a lot. In this (or, for that matter, ANY) real estate market, agents need to distinguish themselves. Not just sending out newsletters and reminders which have no bearing to the local market or what he/she is all about.
Suppose you have clients with children in high school. This is a reason to call or e-mail them and suggest that (names) apply for a White House internship. This shows your clients you are thinking of specifically them. They may pursue it, they may not. But chances are they'll tell others about what you did for them.
Once you get their attention, send them this link:
http://www.whitehouse.gov/about/internships?goback=%2Egde_3571887_member_45547363
Of course, I suggest to my advertising and marketing clients that they follow back in a few weeks to ask if (name of child or children) applied. Maybe they received a response from someone at the White House! Trust me. You'll get a more favorable reaction than if you called them to ask about local home prices.
How Banks Can Turn Around The Real Estate Market
It’s one of the first marketing and public relations tips a young person learns. Do your best to turn a negative into a positive. That thought should be in big, bold letters in every banker’s office in the country.
There I was reading more less than encouraging predictions for the real estate market last night. About how the banks continue to slow down the foreclosure process, claiming it is because of the government’s mortgage modification programs. Whether or not such is really the case or if certain bank executives are too busy counting their millions in bonus money I don’t know. But I do know that this is the single most damaging element to the current real estate crisis.
Considering how the government handed over all those millions to several large banks instead of paying back thousands of specific loans, it is up to these same banks to make the sales of foreclosures the number one priority.
If you wonder why I blame the banks as I do, there is a quote from a Chief Economist at Standard & Poor’s in Banker & Tradesman saying that “The time it takes to do a foreclosure has doubled” in a story published earlier this very week. This is a lot worse than banks with one teller and 10 people in line, and our usual service gripes.
Those few consumers or investors with enough funds and/or secure enough employment to risk purchasing a residence don’t care if the next great deal is a foreclosure or a desperate seller with other motivation. They want a good deal. But if the banks are stalling the sale of foreclosures, it really means that those homes which are not under foreclosure seem “higher priced” to a potential buyer and thus less appealing.
Suppose the banks knew they should thank their lucky stars the government handed over the millions to keep them in business and got serious about helping the economy. And they made it so that homes under foreclosure were EASY to purchase and quick to close. That would entice the investors and potential buyers to get in on the best deals first, while they last.
As foreclosure homes start to sell at reduced prices, it would raise the number and percentage of available homes sold. If several homes under foreclosure in the same community were to sell within a short period of time, that would create a demand for homes in that area. Now the lowest priced homes have been purchased, and that opens it up for the most motivated sellers to adjust their pricing to be the next sale.
However, as long as the banks play the stalling game and degrade the sales of foreclosure properties, home values across the country continue to plummet and millions of current mortgages stay under water. While the banks continue to raise service fees for consumers and businesses and sitting on their foreclosures, they could be taking the lead to stimulate this economy. Here’s hoping they get the message and get aggressive about finding buyers for their properties. Quickly. Or renting them out for a monthly income. Before it’s too late for them, and for us.
Foreclosures are a negative, but I see the way to turn them into a positive.
There I was reading more less than encouraging predictions for the real estate market last night. About how the banks continue to slow down the foreclosure process, claiming it is because of the government’s mortgage modification programs. Whether or not such is really the case or if certain bank executives are too busy counting their millions in bonus money I don’t know. But I do know that this is the single most damaging element to the current real estate crisis.
Considering how the government handed over all those millions to several large banks instead of paying back thousands of specific loans, it is up to these same banks to make the sales of foreclosures the number one priority.
If you wonder why I blame the banks as I do, there is a quote from a Chief Economist at Standard & Poor’s in Banker & Tradesman saying that “The time it takes to do a foreclosure has doubled” in a story published earlier this very week. This is a lot worse than banks with one teller and 10 people in line, and our usual service gripes.
Those few consumers or investors with enough funds and/or secure enough employment to risk purchasing a residence don’t care if the next great deal is a foreclosure or a desperate seller with other motivation. They want a good deal. But if the banks are stalling the sale of foreclosures, it really means that those homes which are not under foreclosure seem “higher priced” to a potential buyer and thus less appealing.
Suppose the banks knew they should thank their lucky stars the government handed over the millions to keep them in business and got serious about helping the economy. And they made it so that homes under foreclosure were EASY to purchase and quick to close. That would entice the investors and potential buyers to get in on the best deals first, while they last.
As foreclosure homes start to sell at reduced prices, it would raise the number and percentage of available homes sold. If several homes under foreclosure in the same community were to sell within a short period of time, that would create a demand for homes in that area. Now the lowest priced homes have been purchased, and that opens it up for the most motivated sellers to adjust their pricing to be the next sale.
However, as long as the banks play the stalling game and degrade the sales of foreclosure properties, home values across the country continue to plummet and millions of current mortgages stay under water. While the banks continue to raise service fees for consumers and businesses and sitting on their foreclosures, they could be taking the lead to stimulate this economy. Here’s hoping they get the message and get aggressive about finding buyers for their properties. Quickly. Or renting them out for a monthly income. Before it’s too late for them, and for us.
Foreclosures are a negative, but I see the way to turn them into a positive.
Thursday, February 24, 2011
Detroit property high on search list?
The NAR has put out some startling news that puts a positive spin on the market, for a change.
Yet, it is hard to believe. They claim that the 2nd most search city on Realtor.com is (Are you ready for this?) none other than Detroit.
http://lansner.ocregister.com/2011/02/24/americas-most-searched-housing-markets/100849/
I can understand Chicago being on top of the list, even with its snowiest February in more than 100 years. My thinking is this is because a number of area residents got so fed up with winter that they would consider selling, and want to compare area home prices. Still others who live within the city limits of Chicago are not happy with the actions of the soon-to-depart Mayor, and are looking to move out of the city and in to the suburbs or perhaps beyond.
But Detroit?
The only thing I can figure is that with houses there being priced so low, and with the banks paying next to nothing for Certificates of Deposit and other investments, a number of people are looking at buying and holding properties in the Detroit area for a few years. They figure somehow the city will be rebuilt or at least be brought back to life somehow.
Meanwhile, this is the sort of information that the NAR should be putting out. It reminds people that consumers are using their sites and continuing to search for properties. This is much better than the damage they do by actually releasing the "home sales are down x% compared with last month and last year" stats they seem to constantly do. Those only reinforce the belief that the market is bad. Not that it is great, but people within the industry need to keep a positive slant at all times.
Yet, it is hard to believe. They claim that the 2nd most search city on Realtor.com is (Are you ready for this?) none other than Detroit.
http://lansner.ocregister.com/2011/02/24/americas-most-searched-housing-markets/100849/
I can understand Chicago being on top of the list, even with its snowiest February in more than 100 years. My thinking is this is because a number of area residents got so fed up with winter that they would consider selling, and want to compare area home prices. Still others who live within the city limits of Chicago are not happy with the actions of the soon-to-depart Mayor, and are looking to move out of the city and in to the suburbs or perhaps beyond.
But Detroit?
The only thing I can figure is that with houses there being priced so low, and with the banks paying next to nothing for Certificates of Deposit and other investments, a number of people are looking at buying and holding properties in the Detroit area for a few years. They figure somehow the city will be rebuilt or at least be brought back to life somehow.
Meanwhile, this is the sort of information that the NAR should be putting out. It reminds people that consumers are using their sites and continuing to search for properties. This is much better than the damage they do by actually releasing the "home sales are down x% compared with last month and last year" stats they seem to constantly do. Those only reinforce the belief that the market is bad. Not that it is great, but people within the industry need to keep a positive slant at all times.
VA Loan Mess Exposed
It's bad enough that even the largest of banks have added to the mortgage mess. Now the word comes out that Wells Fargo, Wachovia, and SouthTrust caused problems on some VA Loans resulting in a settlement just announced for veterans:
http://www.armytimes.com/news/2011/02/military-wells-fargo-mortgage-refunds-022111w/
It turns out this settlement was from a class action suit filed 2 years ago. So the veterans who have served our country get some money back, finally. That's the only good news out of this story.
But hold on. This raises some important questions:
1) How does the government, consisting of people we elected, let this happen? Why did the bank executives receive their millions of dollars in bonuses from the government "bailout" more than one year before veterans who have served received a settlement pittance?
2) Why is this story not all over the media? How come I found out about this via an article in the Army Times?
3) If this lawsuit was filed 2 years ago, how much did the law firm receive from this settlement or via other means? Sorry, but my hunch is that the amount they were paid took away from the pittance the veterans are getting.
4) Are you, the reader, outraged over the quote from Wells Fargo Home Mortgage Co-President Cara Heiden of “We hope that by settling this matter, we can demonstrate to veterans our steadfast commitment to doing right by them.”?
Some commitment. Two years later, a class action suit gets settled. If Wells Fargo was "commited to doing right", why did it take this LONG to pay out?
Time to say this still again. The next time the banks mess up the mortgage industry, let the government pay back the outstanding loans. Let the banks struggle for themselves. Please don't make the same mistake again. They penalized the mortgage holders and helped those who screwed them. Keep this in mind the next time you vote to elect someone to office.
http://www.armytimes.com/news/2011/02/military-wells-fargo-mortgage-refunds-022111w/
It turns out this settlement was from a class action suit filed 2 years ago. So the veterans who have served our country get some money back, finally. That's the only good news out of this story.
But hold on. This raises some important questions:
1) How does the government, consisting of people we elected, let this happen? Why did the bank executives receive their millions of dollars in bonuses from the government "bailout" more than one year before veterans who have served received a settlement pittance?
2) Why is this story not all over the media? How come I found out about this via an article in the Army Times?
3) If this lawsuit was filed 2 years ago, how much did the law firm receive from this settlement or via other means? Sorry, but my hunch is that the amount they were paid took away from the pittance the veterans are getting.
4) Are you, the reader, outraged over the quote from Wells Fargo Home Mortgage Co-President Cara Heiden of “We hope that by settling this matter, we can demonstrate to veterans our steadfast commitment to doing right by them.”?
Some commitment. Two years later, a class action suit gets settled. If Wells Fargo was "commited to doing right", why did it take this LONG to pay out?
Time to say this still again. The next time the banks mess up the mortgage industry, let the government pay back the outstanding loans. Let the banks struggle for themselves. Please don't make the same mistake again. They penalized the mortgage holders and helped those who screwed them. Keep this in mind the next time you vote to elect someone to office.
Thursday, January 20, 2011
Real estate agents - Let Your Dog Help Sell Your Listings
One of my media coaching clients a few years ago had mentioned to me how much he enjoyed walking and how his dog was more or less conditioned to walk a couple of miles with him each day for exercise. Of course, I asked where he would do this and he told me how he would drive the dog over to a big park less than 5 minutes away. Which prompted me to ask him when he sold real estate.
He didn’t get the connection. I asked him why he wouldn’t walk the dog around the neighborhood and meet the other dog owners nearby in the process, and he didn’t know. I told him that’s why he had hired me. Having the training to address a group of people with confidence also applies in one-on-one situations.
His dog-walking time was taking away from his real estate time when it didn’t have to be. At least he was a very good listener, and that’s not something that can be taught.
Starting the very next afternoon, he began daily extensive walks within the square mile area surrounding his own house, which happened to be part of his farm area. He began to notice which houses had the dog houses, “Beware of Dog” signs, and/or the sounds of barking when he walked by. Over the course of the first three weeks, he was able to develop a route to “just happen” to walk his dog by many of the houses owned by dog owners.
Naturally, he got a few opportunities to say hello and meet some of his fellow “neighbor” dog owners. These other dog owners realized his consistent walking of his dog on a regular basis, and they became more familiar with him. After a few casual greetings with them, he would take the chance to mention that he handles real estate within the community and loves to work with dog owners because he so clearly understands their needs and requirements to find a suitable home. He would, of course, have business cards with him during his walks and gradually passed them out to neighborhood dog owners.
Even though his business cards said nothing about dogs, he soon got a referral and was successful at finding an ideal fit for a family with two large dogs and brought them into the neighborhood. Other deals followed over the next couple of years.
There was no extra cost for his marketing campaign. In fact, it didn’t even take any more time out of his daily routine. All it took was knowing how to create and follow up in a marketing situation. So if you still think the real estate market is going to the dogs, then take yours for a walk where it counts.
http://www.RealEstateMediaCoaching.com
He didn’t get the connection. I asked him why he wouldn’t walk the dog around the neighborhood and meet the other dog owners nearby in the process, and he didn’t know. I told him that’s why he had hired me. Having the training to address a group of people with confidence also applies in one-on-one situations.
His dog-walking time was taking away from his real estate time when it didn’t have to be. At least he was a very good listener, and that’s not something that can be taught.
Starting the very next afternoon, he began daily extensive walks within the square mile area surrounding his own house, which happened to be part of his farm area. He began to notice which houses had the dog houses, “Beware of Dog” signs, and/or the sounds of barking when he walked by. Over the course of the first three weeks, he was able to develop a route to “just happen” to walk his dog by many of the houses owned by dog owners.
Naturally, he got a few opportunities to say hello and meet some of his fellow “neighbor” dog owners. These other dog owners realized his consistent walking of his dog on a regular basis, and they became more familiar with him. After a few casual greetings with them, he would take the chance to mention that he handles real estate within the community and loves to work with dog owners because he so clearly understands their needs and requirements to find a suitable home. He would, of course, have business cards with him during his walks and gradually passed them out to neighborhood dog owners.
Even though his business cards said nothing about dogs, he soon got a referral and was successful at finding an ideal fit for a family with two large dogs and brought them into the neighborhood. Other deals followed over the next couple of years.
There was no extra cost for his marketing campaign. In fact, it didn’t even take any more time out of his daily routine. All it took was knowing how to create and follow up in a marketing situation. So if you still think the real estate market is going to the dogs, then take yours for a walk where it counts.
http://www.RealEstateMediaCoaching.com
Friday, December 17, 2010
Do home improvements benefit buyers OR sellers more?
Home owners willing and/or able to fix up before selling will find it interesting that making improvements on the exterior pays off more within the warm weather states.
Remodeling Magazine has released many of the results of its "Remodeling Cost vs. Value Report" and there is a lot be learned from it. Many home owners think that doing even a small remodeling or home improvement job will automatically increase the resale value. Not always the case.
The study shows only one project, which is exterior, actually brings a higher direct return upon the investment upon sale, and this is primarily within warm weather states. Only a "steel entry door replacement" shows better than a 100% recoup of cost upon sale, showing an estimated 102.1% "return" upon resale.
Exterior improvements made more of a difference in the "return" along the west coast (Washington, Oregon, California) and along the South and Southeast corridor extending north only to Virginia and West Virginia.
As with most statistics, there are a number of ways to look at the impact. Sellers who think that by spending $5,000 on a home improvement they could then raise the asking price by $7,500 or more are going to be in for a disappointment.
Among the next highest exterior remodeling projects were upsacle fiber cement siding replacement recouping approximately 80% of the cost. Upscale vinyl window replacements and a wood deck addition each showed an approximately 72% of costs recouped upon the sale of the home.
A "minor" kitchen remodel finished among interior remodeling or improvements at around 72% of cost.
In other words, this annual study again shows that an improvement or remodeling project does not automatically increase the actual value of the property. Rather, (and generally speaking) its purpose is to accelerate the sale process of the property.
If your house shows with more quality, upgrade, or improvement work done recently when compared with similar houses within your community, the chances are better that the one buyer you need will be more willing to make an offer on your home first.
Since the vast majority of buyers and sellers are not aware of this study, learning about its findings could be a nice benefit for either situation.
A buyer, when told of or noticing an interior or exterior improvement or remodeling now has the means to point out that it does not mean an automatic raise in the value of the property, and maybe shouldn't be (in effect) "charged" $10,000 more in the asking price based on a $5,000 remodeling job.
Meanwhile, a seller can use this to point out that he/she recently spent "$5,000 on this project" while not raising or having the asking price reflect this. Show potential buyers that if they do go ahead and purchase you are providing them with additional value for a feature the buyer obviously likes.
Please keep in mind that I have been using some lower than realistic figures for the sake of example. But there is a lot more at stake in upgrading a home for sale. The study shows that a full basement remodeling has an average cost of more than $64,000 and recoups approximately 70% within the sale. Going by that, the seller "loses" $19,200 on the project. Or, if the seller expects to not only have the costs covered and perhaps clear some extra, it really means their asking price could be $20,000 or more higher.
Furthermore, the study shows that improvement projects such as a sunroom addition and installation of a backup power generator recoup less than 50% of the cost at sale.
My take from this is that it shows why so many properties have an asking price above their actual value. I don't know of any seller who goes ahead with a remodel, addition, or interior or exterior improvement who then does not increase the asking price.
If I were a seller, I would point out any such work I had done and its value, and then show how it has not impacted the asking price. In addition, I would become aware of opportunities to upgrade the property to be able to point out to my buyer what he/she could do to increase the long term value of the property.
I might say something like "I learned that for $40,000 we could add another 200 square feet to a finished basement. But it's an option and by not doing that I can keep this home priced at $xxx,000 for you." If my potential buyer does not know about this study, they will probably think that they could spend that $40,000 at their convenience over the coming months and then add at least $60,000 to the resale value. Maybe or maybe not. But I would not have mislead them in any way nor promised anything. Just pointing out future potential "profit centers" they may want to explore.
For those of you currently or looking at trying to sell, this study is worth thinking about before seriously considering spending on an upgrade, addition, or remodel. On one hand, it could mean you can present a more significant value to a potential buyer without spending a penny more. On the other hand, it could be worth comparing improvements you could make and how your home would compare to other similar properties in the area. If your situation allows you to "lose" a few thousand dollars to have the work done, but would help your home to sell faster by offering more benefits, it is also worth considering.
These are the statistics you should be reviewing, instead of the home sales comparisons (which are usually negative) from past years. All you care about is buying or selling the property today.
Remodeling Magazine has released many of the results of its "Remodeling Cost vs. Value Report" and there is a lot be learned from it. Many home owners think that doing even a small remodeling or home improvement job will automatically increase the resale value. Not always the case.
The study shows only one project, which is exterior, actually brings a higher direct return upon the investment upon sale, and this is primarily within warm weather states. Only a "steel entry door replacement" shows better than a 100% recoup of cost upon sale, showing an estimated 102.1% "return" upon resale.
Exterior improvements made more of a difference in the "return" along the west coast (Washington, Oregon, California) and along the South and Southeast corridor extending north only to Virginia and West Virginia.
As with most statistics, there are a number of ways to look at the impact. Sellers who think that by spending $5,000 on a home improvement they could then raise the asking price by $7,500 or more are going to be in for a disappointment.
Among the next highest exterior remodeling projects were upsacle fiber cement siding replacement recouping approximately 80% of the cost. Upscale vinyl window replacements and a wood deck addition each showed an approximately 72% of costs recouped upon the sale of the home.
A "minor" kitchen remodel finished among interior remodeling or improvements at around 72% of cost.
In other words, this annual study again shows that an improvement or remodeling project does not automatically increase the actual value of the property. Rather, (and generally speaking) its purpose is to accelerate the sale process of the property.
If your house shows with more quality, upgrade, or improvement work done recently when compared with similar houses within your community, the chances are better that the one buyer you need will be more willing to make an offer on your home first.
Since the vast majority of buyers and sellers are not aware of this study, learning about its findings could be a nice benefit for either situation.
A buyer, when told of or noticing an interior or exterior improvement or remodeling now has the means to point out that it does not mean an automatic raise in the value of the property, and maybe shouldn't be (in effect) "charged" $10,000 more in the asking price based on a $5,000 remodeling job.
Meanwhile, a seller can use this to point out that he/she recently spent "$5,000 on this project" while not raising or having the asking price reflect this. Show potential buyers that if they do go ahead and purchase you are providing them with additional value for a feature the buyer obviously likes.
Please keep in mind that I have been using some lower than realistic figures for the sake of example. But there is a lot more at stake in upgrading a home for sale. The study shows that a full basement remodeling has an average cost of more than $64,000 and recoups approximately 70% within the sale. Going by that, the seller "loses" $19,200 on the project. Or, if the seller expects to not only have the costs covered and perhaps clear some extra, it really means their asking price could be $20,000 or more higher.
Furthermore, the study shows that improvement projects such as a sunroom addition and installation of a backup power generator recoup less than 50% of the cost at sale.
My take from this is that it shows why so many properties have an asking price above their actual value. I don't know of any seller who goes ahead with a remodel, addition, or interior or exterior improvement who then does not increase the asking price.
If I were a seller, I would point out any such work I had done and its value, and then show how it has not impacted the asking price. In addition, I would become aware of opportunities to upgrade the property to be able to point out to my buyer what he/she could do to increase the long term value of the property.
I might say something like "I learned that for $40,000 we could add another 200 square feet to a finished basement. But it's an option and by not doing that I can keep this home priced at $xxx,000 for you." If my potential buyer does not know about this study, they will probably think that they could spend that $40,000 at their convenience over the coming months and then add at least $60,000 to the resale value. Maybe or maybe not. But I would not have mislead them in any way nor promised anything. Just pointing out future potential "profit centers" they may want to explore.
For those of you currently or looking at trying to sell, this study is worth thinking about before seriously considering spending on an upgrade, addition, or remodel. On one hand, it could mean you can present a more significant value to a potential buyer without spending a penny more. On the other hand, it could be worth comparing improvements you could make and how your home would compare to other similar properties in the area. If your situation allows you to "lose" a few thousand dollars to have the work done, but would help your home to sell faster by offering more benefits, it is also worth considering.
These are the statistics you should be reviewing, instead of the home sales comparisons (which are usually negative) from past years. All you care about is buying or selling the property today.
Monday, December 6, 2010
More reasons not to buy?
Oh sure. People aren't buying in a stagnant real estate market. So let's take a quick break from real estate associations and offices pumping out the negative statistics to consumers.
Now let's look at cities which have decided to increase the property taxes by as much as 9%:
http://www.mainlinemedianews.com/articles/2010/12/06/main_line_suburban_life/news/doc4cf69ed785ba5886372746.txt
http://www.mainlinemedianews.com/articles/2010/12/06/main_line_suburban_life/news/doc4ce4206fb4c61428550764.txt
OK, you get the idea. It's called "Let's tax those homeowners who haven't been foreclosed upon and/or can't leave the neighborhood even more."
And now back to regular programming. The Memphis TN real estate market has been among the more depressed ones over the last couple of years.
How does the Memphis Association of Realtors, which consists of local agents paying their dues, react?
They want us all to know that home sales in that area for October were down 29% compared with one year ago. Now there's a reason to stop whatever we are doing and look into buying property there. If fewer and fewer people are looking there, why should we?
http://www.memphisdailynews.com/editorial/Article.aspx?id=54662
Heck, it's only the local governments and realty associations pumping out the reasons to keep the real estate market at a standstill.
Now let's look at cities which have decided to increase the property taxes by as much as 9%:
http://www.mainlinemedianews.com/articles/2010/12/06/main_line_suburban_life/news/doc4cf69ed785ba5886372746.txt
http://www.mainlinemedianews.com/articles/2010/12/06/main_line_suburban_life/news/doc4ce4206fb4c61428550764.txt
OK, you get the idea. It's called "Let's tax those homeowners who haven't been foreclosed upon and/or can't leave the neighborhood even more."
And now back to regular programming. The Memphis TN real estate market has been among the more depressed ones over the last couple of years.
How does the Memphis Association of Realtors, which consists of local agents paying their dues, react?
They want us all to know that home sales in that area for October were down 29% compared with one year ago. Now there's a reason to stop whatever we are doing and look into buying property there. If fewer and fewer people are looking there, why should we?
http://www.memphisdailynews.com/editorial/Article.aspx?id=54662
Heck, it's only the local governments and realty associations pumping out the reasons to keep the real estate market at a standstill.
Thursday, December 2, 2010
Let's keep the home sales market looking bad......
Another example of how it depends on where you read to track the real estate market.
At least one realty office understands the need to only report positive statistics:
http://www.mainlinemedianews.com/articles/2010/11/29/main_line_suburban_life/news/doc4cd1a06d79004599608009.txt
Yet, still another realty association keeps the NEGATIVE market statistics coming. Amazingly, it's the New York (state) Association of Realtors, which somehow thinks that reporting home sales dropping for the 4th consecutive month is necessary:
http://poststar.com/news/local/3d5c09d6-fbf4-11df-b44e-001cc4c002e0.html
Oh my. If they are going to remind us that fewer people are buying homes, how do they expect the market to get any better?
At least one realty office understands the need to only report positive statistics:
http://www.mainlinemedianews.com/articles/2010/11/29/main_line_suburban_life/news/doc4cd1a06d79004599608009.txt
Yet, still another realty association keeps the NEGATIVE market statistics coming. Amazingly, it's the New York (state) Association of Realtors, which somehow thinks that reporting home sales dropping for the 4th consecutive month is necessary:
http://poststar.com/news/local/3d5c09d6-fbf4-11df-b44e-001cc4c002e0.html
Oh my. If they are going to remind us that fewer people are buying homes, how do they expect the market to get any better?
Wednesday, December 1, 2010
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?
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?
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