Monday, April 29, 2013

Why Home Sellers Should Monitor The Advertising

A truly motivated home seller should not simply "leave it to the agent" to properly promote and advertise their property. Maybe it's my personal 20+ years of examining and creating property ads from coast to coast. But although there are some severe challenges to the real estate market at the moment, a lot of the problem continues because of how poorly many properties are advertised and marketed.

Frankly, a seller should be monitoring all of the advertising and promotion the agent is doing. Too many advertisements for properties are either poorly created to start with, and/or not updated or improved when the situation calls for it.

For example, this afternoon, I decided to do an online search for a 3 bedroom home in the Denver CO area priced between $200,000 and $240,000, using two separate "national" web sites. First, I went onto and entered in the search criteria. What came up were results showing that 13 of the first 17 listings I found are "foreclosure" listings. Since I do not live in the Denver area, the "message" conveyed to me is that "This must be a distressed area. I don't want to live where so many homes could be empty or abandoned."

Of course, the number of foreclosures could have some appeal to the large cash-buying investors looking to purchase and flip homes over the next few years. For a potential home buyer looking for a home for him/herself or family, seeing this search did not look promising. Granted, this is not the fault of the agents who create ads for their "legitimate" sellers. My point is that, if I really were looking for a home for my family, I would have been scared off before seriously looking at any of those listings. The agents representing those non-distressed homes should keep that in mind before paying to advertise with a service that allows foreclosed and distressed properties to dominate an area.

However, I then went to, which is the national home (and property) search site updated and maintained through the National Association of Realtors. While it is true I found a large list of properties to fit my criteria, including some short sale listings, I found a few which do nothing except verify my contention that agents and sellers need to monitor their advertisements.

If you want proof, do a search for 20793 E 38Th Pl Denver,CO 80249. You'll see what I mean. (By the way, this listing ad was chosen randomly and I do not know the agent, nor has she ever been a client of mine.)

As of the day of this writing, the home has been listed for more than a month. Yet, there is only one photo, total, available to a potential buyer, whereas the majority of the other homes within the same area and price range offer multiple photos. The one photo in use is an exterior shot, which clearly shows a raw lawn, grass spots growing out from under the paved driveway, and each of the windows open to what look to be empty rooms. To put it another way, the only photo used shows the exterior as being poorly maintained.

Since has a uniform template for the descriptions of the properties, this agent was on equal footing regarding the creation of this listing advertisement. Keep in mind the purpose of this advertisement is to make this listing stand out among the others listed.

Yet, the "Interior Features" portion of the description includes the following:

Garage Door Opener
Smoke Alarm
Fireplace Insert
Cable Available

Isn't it amazing what $200,000 gets you in Denver these days?

Yes, this agent needs to point out that if you buy this home, you will have a refrigerator and a smoke alarm! It doesn't say if that smoke alarm covers all three bedrooms, however.

And then, if you look at the "Exterior Features" portion of this advertisement, you'll see that the property has a "Fence" and a "Spinkler". Then again, if you look at the lone photo available, you can see the fence for yourself. However, you will also be surprised, based on how that lawn looks, that there really is a sprinkler.

Although I don't know for sure, my hunch is that this advertisement has been the same for more than the one month it has been listed. What I do know for sure is that this home, unless the advertising is improved upon, will become another statistic about a home which hasn't sold (or didn't sell).

In this instance, and the many others like them, advertisements such as this one won't help to sell a home in any real estate market. We can't simply blame the agents. I'd like to know how a truly motivated seller would accept an advertisement like this to "best" represent their property.

Monday, April 22, 2013

How Apartment Renters Could Be Costing Home Owners

Denver (Colorado) County assessors have completed their property 
valuations which are used to help determine property taxes charged 
for 2014 and 2015. Colorado’s Property Tax Administrator, JoAnn 
Groff, said at a news conference to announce the findings that 
“Property owners are still getting the advantages of the downturn 
in the economy”.

The latest figures show that residential property valuations for 
Colorado were down approximately 2.5% compared with the 2010 
study. In Denver County alone, the value of single family homes 
(including condos) declined by .9%, although condo values actually 
dropped more than 7%.

On the surface, this appears to be good news from home owners 
who in many instances will see a slight drop in the amount of property 
taxes which will come due. Estimates are that better than 60% will 
pay less in Denver County.
However, this actually should be “better” news than it really is. 
The report goes on to state that, based on higher occupancy and an 
increase in rents, apartment buildings in the County combined to show 
a 22.6% increase in value. The majority of those come from the “high 
rise” apartment buildings, which results in big bucks value  increases.

What does the increased value of large apartment buildings have to do 
with property taxes for a single family home development on the other 
side of the County? More than you might think.

The County Assessor considers these high rise apartment buildings 
to be “residential property” just the same as one single family home 
on a single piece of property. As a result, the 22.6% increase in 
apartment building values has served to collectively raise residential 
property values in Denver County.

This means that a condo owner, whose property may have lost upwards 
of 10% of its value within the past two years (given that the average for 
the County is 7%), does not see a 10% decrease in their property taxes 
going  forward. Instead, that owner may see only a 2.5% decrease, 
likely a difference of hundreds (or more) dollars.

Although you cannot take the percentages in the above paragraph 
literally, as specific properties are assessed based on several factors,
the point is that the “overall” findings do impact the property taxes 
going forward. 

What this does show is that owners are being impacted by renters. 
I’m sure that many of the owners of those apartment buildings are doing 
cartwheels about these findings. The “increased rents” help to increase 
the value of their properties, which translates to increased cash flow (if 
not profit) for them. Yet, the lost value of single family homes serves to 
reduce the amount of property taxes those owners will pay for at least 
the next couple of years.

Going forward, it will be interesting to see if the investment groups which 
 have been focused on picking up bargain foreclosures and short sales 
(and driving down the single family home prices) over the past couple of 
years would now turn their attention to large apartment buildings instead.

Obviously, this situation in Colorado might be very much different from 
what is going on in this regard in your area. If you are not certain, it might 
be worth looking into!

If you are a home owner, keep this in mind even if you see a decrease. Be 
 sure you are aware of any options to  appeal your next or next year 
property tax assessment.

Friday, April 19, 2013

Is Your Home Where The Jobs Are?

Here is still another instance of why Market Research for real estate agents and companies needs to be more comps and local home sales statistical comparisons.

Earlier this week, an urban research report showed some data which could be of use to realty agents in the suburbs surrounding Kansas City. So far, not one of them, that I know of, has jumped on this yet.

A report from the Brookings Institute shows that over the past six years, Kansas City is going against the national trend and showing more employment moving to its suburban areas instead of downtown or the "core area" of a large city. The percent share of jobs in Kansas City's "core" for the year 2010 was 6% lower than the national average among the 100 large cities studied for this research.

If you are looking to sell a home in a K.C. suburb, or are an agent representing a seller in that area, you should be all over this information. A chart from this report shows that, as of 2010, there were roughly 200,000 more jobs located "10 to 35 miles from the city's core area" than there were "3 to 10 miles from the city's core area".

Where there are jobs, there will be people with reasons to move into the area. Agents looking to sell homes should be aware of where the jobs are, whether a specific large company is hiring, new businesses are opening, and/or commerical buildings are being built. It's not just Kansas City, as every market sees the occasional news story about a business expanding or entering a market, or perhaps moving from downtown to a suburb or vice versa.

Yet, I don't see this research reflected in property listings. An advertisement for a home could just as easily say "Next to XYZ Electronics, Benson School District. 3 bed 2 bath, attached garage, yard". Even that one sentence paints the picture of "Family could live near the job, reduce commute time, send the kids to a decent school, and not have parking issues".

In this instance, that information could be far more important to a potential buyer, who may only look at the advertisement for the property for a few quick seconds. If the ad instead starts with the usual "3 bed 2 bath, new carpet, large kitchen......", someone now working at 'XYZ Electronics' might not even see the most important benefit and continue through the endless list of homes which may or may not reach his/her critieria.

This is how knowing where the jobs are (or are going) is important toward finding the hot button for a potential buyer. It doesn't matter how many or how few homes in that area sold a year ago. The potential buyer needs reasons to consider a specific home today. Those reasons often require some market research. And employment is only one avenue.

Start finding out about employment trends near your home. Follow the business news for information about commercial development, and business relocation.

Why should a potential buyer look at your area instead of downtown? Or look at downtown instead of the suburbs? Unless you give them reasons, your home will be "just another" listing.