Moments after posting my comments about how the HARP program is delayed while the banks and local government officials continue to burn up hope for reviving the real estate industry, along comes this story:
http://blogs.palmbeachpost.com/realtime/2012/01/10/unemployed-borrowers-may-get-more-time-with-no-mortgage-payments/
The above linked article says that a new program is scheduled to begin within the next month that grants relief to the unemployed regarding their mortgages.
Don't think that some people in poor financial straits won't find an excuse to lose their jobs so they can skip out on mortgage payments. And to think this program could go through before the HARP program, which is designed to reward those who have faithfully made all of their mortgage payments on time but can't refinance because their homes have lost value.
This all leads to even more people who can't make their mortgage payments, are not able to sell their home, and are not able to financially qualify to purchase a home.
Showing posts with label real estate marketing. Show all posts
Showing posts with label real estate marketing. Show all posts
Tuesday, January 10, 2012
Thursday, October 13, 2011
It Doesn't Snow In October
Even in the Chicago area, it doesn't snow in October. Looks like I need to point that out to some realty offices in the area.
It so happened that I was doing some market research on some residential properties in a specific northern suburb of Chicago this afternoon. As part of that, I went onto Realtor.com to check on the status of a couple of listings. This is October 13th, and to the best of my memory, there hasn't been any measureable snow in the Chicago area since late March.
Yet, there I was checking listings within one zip code and within $150,000 on a price range. I'm sure many of you are familiar with Realtor.com and its listings, which include a thumbnail primary photo to attract attention.
To my amazement, I saw four, that is FOUR, primary photos which had snow on the ground on the photo which is supposed to make me want to click on the listing. What makes this even worse, if that is possible, is that these four listings were from three separate realty offices.
Yes, it wasn't as though there was one careless and incompetent agent or office making the other agents in the area look bad.
Instead of an outdated photo, they might as well have posted "Been on the market so long there is no urgency - Wait for still another price reduction!" instead. Sorry, but that's how it looks.
Suppose I was looking to purchase in that area. My first impression before clicking on ANY of the listings would have been that these listings are stale, there has been no interest, and even the local agents have given up on updating the information. Since it is not one agent or office being careless, it makes the "good" advertisements look like part of a lackluster effort to make the area's homes look like hot items.
Over the past couple of years while the real estate market has been in dire straits, I have preached over and over about the need for more effective marketing by agents and sellers. Yes, the sellers too.
You see, I'm not only putting the blame on careless and thoughtless realty agents for not so much as taking a few minutes to swap out photos and keep the information fresh. I can't believe a truly motivated seller isn't checking his/her/their ads online (especially on the busy Realtor.com site!) every couple of weeks if not more often.
A motivated seller should be watching other similar local listings to see if and when there are price reductions, new listings, and what advertising strategies are being presented. And since the agent is supposed to working for them to sell, the sellers should be alerting their agent to anything and everything that could be improved.
This is why I would be completely discouraged from buying in this zip code. Seeing FOUR photos with snow on them the next October tells me that the sellers AND the agents have given up hope. And chances are those are nice and attractive properties.
Those agents keeping the snow photos up there should be glad they aren't my agent. (Although that's not going to happen after seeing this.) I would be asking him/her how they expect me to pay them thousands of dollars to represent me when they don't have time to update an important photo.
Frankly, some of these realty agents are pulling a "snow" job on their clients, and on the neighborhoods they work.
It so happened that I was doing some market research on some residential properties in a specific northern suburb of Chicago this afternoon. As part of that, I went onto Realtor.com to check on the status of a couple of listings. This is October 13th, and to the best of my memory, there hasn't been any measureable snow in the Chicago area since late March.
Yet, there I was checking listings within one zip code and within $150,000 on a price range. I'm sure many of you are familiar with Realtor.com and its listings, which include a thumbnail primary photo to attract attention.
To my amazement, I saw four, that is FOUR, primary photos which had snow on the ground on the photo which is supposed to make me want to click on the listing. What makes this even worse, if that is possible, is that these four listings were from three separate realty offices.
Yes, it wasn't as though there was one careless and incompetent agent or office making the other agents in the area look bad.
Instead of an outdated photo, they might as well have posted "Been on the market so long there is no urgency - Wait for still another price reduction!" instead. Sorry, but that's how it looks.
Suppose I was looking to purchase in that area. My first impression before clicking on ANY of the listings would have been that these listings are stale, there has been no interest, and even the local agents have given up on updating the information. Since it is not one agent or office being careless, it makes the "good" advertisements look like part of a lackluster effort to make the area's homes look like hot items.
Over the past couple of years while the real estate market has been in dire straits, I have preached over and over about the need for more effective marketing by agents and sellers. Yes, the sellers too.
You see, I'm not only putting the blame on careless and thoughtless realty agents for not so much as taking a few minutes to swap out photos and keep the information fresh. I can't believe a truly motivated seller isn't checking his/her/their ads online (especially on the busy Realtor.com site!) every couple of weeks if not more often.
A motivated seller should be watching other similar local listings to see if and when there are price reductions, new listings, and what advertising strategies are being presented. And since the agent is supposed to working for them to sell, the sellers should be alerting their agent to anything and everything that could be improved.
This is why I would be completely discouraged from buying in this zip code. Seeing FOUR photos with snow on them the next October tells me that the sellers AND the agents have given up hope. And chances are those are nice and attractive properties.
Those agents keeping the snow photos up there should be glad they aren't my agent. (Although that's not going to happen after seeing this.) I would be asking him/her how they expect me to pay them thousands of dollars to represent me when they don't have time to update an important photo.
Frankly, some of these realty agents are pulling a "snow" job on their clients, and on the neighborhoods they work.
Wednesday, June 29, 2011
Home Sales vs. Home Prices
The negative statistics about the current state of real estate continue day after day. Instead of any positive ones. Yet, over the past few days, I have been seeing more and more stories about the drops in home sales prices be presented in a positive light.
As much as I have been preaching the need for positive stories dealing with real estate, I also preach that these should be legit stories. Yes, home prices are generally dropping even further in much of the country. However, that doesn't mean it is a positive.
The point is being made that more recent drops in average home prices are not as much due to foreclosures and short sales as they have been over the past couple of years. This is being treated as a positive. I'm not certain that's the case.
That fewer homes seem to be getting foreclosed upon is certainly a positive. But that is not enough to group this fact with others relative to home sales.
Home prices being much lower than 5 years ago is not a positive for a large group of home owners around the country, perhaps the majority.
Even though foreclosures are down now, there are still a ton of homes around the country for sale at foreclosure or short sale prices. Those are in addition to distressed properties practically abandoned by builders and developers. The mere availability of this many properties at lower prices serves only to bring down the value of the homes surrounding it. And that is not a positive for more people than the number who can buy under current market conditions.
Too many home owners are right now stuck paying more than the property is now considered to be worth, and are under water with their mortgage. They cannot sell "for less". If they take a loss and have to write an additional check at the time of sale, there is no money for a down payment and to finance a new purchase. So there is no choice but to wait until or unless the local market returns to the point where they could get a price high enough to justify selling it.
Meanwhile, many who would like to take advantage of the buyers' market out there cannot. The availability of mortgages has gone full spectrum, from having been too easy several years ago to being way too difficult now. And that's for those who can even afford a sufficient down payment.
The same banks which contributed to this crisis are now cutting back instead of getting in there and actually (gulp) helping their customer bases. They are loaning on fewer properties, cutting back or eliminating options such as reverse mortgages, and sitting on defaulted properties they technically own due to foreclosures.
As a result, the banks are really a big factor in keeping home prices down, just as they are in keeping home sales down from where they could be. With no end in sight.
If only the news media would keep all of this in mind when reporting the "positive" news about the current status of real estate.
As much as I have been preaching the need for positive stories dealing with real estate, I also preach that these should be legit stories. Yes, home prices are generally dropping even further in much of the country. However, that doesn't mean it is a positive.
The point is being made that more recent drops in average home prices are not as much due to foreclosures and short sales as they have been over the past couple of years. This is being treated as a positive. I'm not certain that's the case.
That fewer homes seem to be getting foreclosed upon is certainly a positive. But that is not enough to group this fact with others relative to home sales.
Home prices being much lower than 5 years ago is not a positive for a large group of home owners around the country, perhaps the majority.
Even though foreclosures are down now, there are still a ton of homes around the country for sale at foreclosure or short sale prices. Those are in addition to distressed properties practically abandoned by builders and developers. The mere availability of this many properties at lower prices serves only to bring down the value of the homes surrounding it. And that is not a positive for more people than the number who can buy under current market conditions.
Too many home owners are right now stuck paying more than the property is now considered to be worth, and are under water with their mortgage. They cannot sell "for less". If they take a loss and have to write an additional check at the time of sale, there is no money for a down payment and to finance a new purchase. So there is no choice but to wait until or unless the local market returns to the point where they could get a price high enough to justify selling it.
Meanwhile, many who would like to take advantage of the buyers' market out there cannot. The availability of mortgages has gone full spectrum, from having been too easy several years ago to being way too difficult now. And that's for those who can even afford a sufficient down payment.
The same banks which contributed to this crisis are now cutting back instead of getting in there and actually (gulp) helping their customer bases. They are loaning on fewer properties, cutting back or eliminating options such as reverse mortgages, and sitting on defaulted properties they technically own due to foreclosures.
As a result, the banks are really a big factor in keeping home prices down, just as they are in keeping home sales down from where they could be. With no end in sight.
If only the news media would keep all of this in mind when reporting the "positive" news about the current status of real estate.
Monday, June 27, 2011
While HUD Has "no comment"?
After commenting earlier this month about the reduction of reverse mortgages, this article points out even more evidence of my point that seniors are looking at even fewer financial options in an effort to not outlive their savings:
http://www.chicagotribune.com/classified/realestate/ct-mre-0626-podmolik-homefront-20110624,0,6324717.column
The truly disturbing part of this article actually comes at the end, where the writer points out that HUD "had no comment". To me, this is an even bigger story than a large bank putting the stop on future reverse mortgages.
HUD is a government agency. The same government which appears to have practically wasted millions of dollars with its bank bailout program a couple years back. All that seems to have done is to bail out the coffers of some of the executives who may have helped to create this mess.
Having a government agency with "no comment" about this situation and its possible to probable negative impact on seniors is not a good sign.
Add this to the growing list of matters your local politicians should be discussing, but are not doing anything about.
Not that reverse mortgages are mass appeal or even ideal for every senior citizen. Without them, it is one less option for seniors. Here's hoping these seniors remember this when those same local politicans, who are now not helping them, come up for re-election.
http://www.chicagotribune.com/classified/realestate/ct-mre-0626-podmolik-homefront-20110624,0,6324717.column
The truly disturbing part of this article actually comes at the end, where the writer points out that HUD "had no comment". To me, this is an even bigger story than a large bank putting the stop on future reverse mortgages.
HUD is a government agency. The same government which appears to have practically wasted millions of dollars with its bank bailout program a couple years back. All that seems to have done is to bail out the coffers of some of the executives who may have helped to create this mess.
Having a government agency with "no comment" about this situation and its possible to probable negative impact on seniors is not a good sign.
Add this to the growing list of matters your local politicians should be discussing, but are not doing anything about.
Not that reverse mortgages are mass appeal or even ideal for every senior citizen. Without them, it is one less option for seniors. Here's hoping these seniors remember this when those same local politicans, who are now not helping them, come up for re-election.
Tuesday, June 21, 2011
An Orange Crush From China?
It appears that some of the smarter realty agents are also aware of what I pointed out months ago when it comes to seeking places that buyers might come from. A couple months back I pointed out the increase in cash buyers from Canada who knew to take advantage of certain Canadian tax laws in order to purchase properties in certain U.S. markets.
Now comes word of a noteworth increase in home purchases in the Orange County California area, specifically from buyers coming over from China.
http://www.ocbj.com/news/2011/jun/19/chinese-buyers-spur-luxury-home-sales/
Those agents who have been on top of this trend stand to do quite well for themselves by figuring this out at the right time. There is definitely money to be made, and buyers and sellers to satisfy, instead of continuing to knock on the same doors week after week.
All this going on while some agents continue to dwell in negative statistics about the market instead of seeking opportunities from wherever they can find them.
The next opportunity for aggressive realty agents might be seniors. With the uncertainty about Social Security these days, many more seniors are even more alarmed about outliving their funds along with their property losing value.
Meanwhile, some of the banks continue to bungle their finances and add to the chaos destroying the real estate market. This week Wells Fargo has announced it is discontinuing adding reverse mortgages:
https://www.wellsfargo.com/press/2011/20110616_Mortgage
This means even fewer options for seniors. While several mortgage brokers continue to offer reverse mortgages, they tend to be less aggressive about marketing them. I'm afraid that many seniors will read or hear the Wells Fargo announcement and give up on considering this option. The result will be less activity on the mortgage side.
Combine that possibility with the number of buyers from China paying cash instead of going the mortgage route, and it increases the financial bind that banks and lenders are finding themselves in, along with the many who seriously need to sell their homes.
If you are among those who need to sell, remember to look for sources and places your buyer could come from. Chances are the buyer you need is not local or you would have known about it by now. There is a whole world of potential out there.
Now comes word of a noteworth increase in home purchases in the Orange County California area, specifically from buyers coming over from China.
http://www.ocbj.com/news/2011/jun/19/chinese-buyers-spur-luxury-home-sales/
Those agents who have been on top of this trend stand to do quite well for themselves by figuring this out at the right time. There is definitely money to be made, and buyers and sellers to satisfy, instead of continuing to knock on the same doors week after week.
All this going on while some agents continue to dwell in negative statistics about the market instead of seeking opportunities from wherever they can find them.
The next opportunity for aggressive realty agents might be seniors. With the uncertainty about Social Security these days, many more seniors are even more alarmed about outliving their funds along with their property losing value.
Meanwhile, some of the banks continue to bungle their finances and add to the chaos destroying the real estate market. This week Wells Fargo has announced it is discontinuing adding reverse mortgages:
https://www.wellsfargo.com/press/2011/20110616_Mortgage
This means even fewer options for seniors. While several mortgage brokers continue to offer reverse mortgages, they tend to be less aggressive about marketing them. I'm afraid that many seniors will read or hear the Wells Fargo announcement and give up on considering this option. The result will be less activity on the mortgage side.
Combine that possibility with the number of buyers from China paying cash instead of going the mortgage route, and it increases the financial bind that banks and lenders are finding themselves in, along with the many who seriously need to sell their homes.
If you are among those who need to sell, remember to look for sources and places your buyer could come from. Chances are the buyer you need is not local or you would have known about it by now. There is a whole world of potential out there.
Wednesday, May 18, 2011
Try The International Angle
Desparate times call for desparate measures, to borrow the cliche. This real estate market is certainly as desparate as many of us have seen in our lifetimes.
Sellers shouldn't give up hope, even if their agents have. I have commented several times over the past couple of years about looking to identify the logical potential buyer for your property. Face it, if your property has been listed for weeks (or longer), chances are the one buyer you need is not local, or has not been approached with an enticing reason to act.
While doing some research for one of my clients, I came upon an interesting piece from this past weekend. It contains suggestions for Canadians about steps to take in order to purchase U.S. real estate, and explains some of the factors to consider.
Upon first reading, the article seems complicated. Then again, I don't know Canadian tax laws and how their financial dealings within the U.S. work in comparison to this country.
This brings me to an important point. Properties are not selling. Yet, too many realty agents are staying within their territory, comfort zone, and the same approach no matter what. Sellers should expect more, or start doing their own research and homework to help their property sell.
Instead of reading the constant flow of negative sales statistics and passing out business cards at the local flower show, agents should be at the library or online researching the answers to questions they have about the Canadian tax laws raised in this story. I would do that in an attempt to find out which price range(s) would be most appealing to Canadians. If I had to, I would contact a financial planner or expert I know and have him or her help me with answers.
And I would do this by this Friday, with the idea of identifying a price range and ways to make properties appeal to Canadian buyers both financially and logistically.
Why by Friday? Because I would want to place an advertisement for the coming weekend's publication, perhaps the Globe & Mail which ran this story. They would be publishing stories geared toward their target audience, which tells me they are reaching at least some affluent investors who would find the story interesting.
If those same people saw an advertisement the following week (while the original story is still fresh in their minds) it would likely draw some responses.
Presto. I could gain some Canadian buyers ready to move on one or more properties to their liking, and demonstrate the financial advantages to them. And then collect buyer commissions in the near future, while developing a network for the future.
If I had a large property to sell, I would probably do this personally, and then tell my realty agent I have a buyer but I'd want a commission reduction because I got that buyer on my own. Even if I don't get that consideration, I would have helped to get my property sold while others are still sitting around on the market.
Although I don't normally give away my commission generating ideas this easily, for the sake of example, here is the article I'm referring to:
http://www.theglobeandmail.com/globe-investor/personal-finance/the-ins-and-outs-of-buying-us-real-estate/article2022807/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2022807
Keep thinking about who COULD buy your property, instead of retreading who can't or won't.
Sellers shouldn't give up hope, even if their agents have. I have commented several times over the past couple of years about looking to identify the logical potential buyer for your property. Face it, if your property has been listed for weeks (or longer), chances are the one buyer you need is not local, or has not been approached with an enticing reason to act.
While doing some research for one of my clients, I came upon an interesting piece from this past weekend. It contains suggestions for Canadians about steps to take in order to purchase U.S. real estate, and explains some of the factors to consider.
Upon first reading, the article seems complicated. Then again, I don't know Canadian tax laws and how their financial dealings within the U.S. work in comparison to this country.
This brings me to an important point. Properties are not selling. Yet, too many realty agents are staying within their territory, comfort zone, and the same approach no matter what. Sellers should expect more, or start doing their own research and homework to help their property sell.
Instead of reading the constant flow of negative sales statistics and passing out business cards at the local flower show, agents should be at the library or online researching the answers to questions they have about the Canadian tax laws raised in this story. I would do that in an attempt to find out which price range(s) would be most appealing to Canadians. If I had to, I would contact a financial planner or expert I know and have him or her help me with answers.
And I would do this by this Friday, with the idea of identifying a price range and ways to make properties appeal to Canadian buyers both financially and logistically.
Why by Friday? Because I would want to place an advertisement for the coming weekend's publication, perhaps the Globe & Mail which ran this story. They would be publishing stories geared toward their target audience, which tells me they are reaching at least some affluent investors who would find the story interesting.
If those same people saw an advertisement the following week (while the original story is still fresh in their minds) it would likely draw some responses.
Presto. I could gain some Canadian buyers ready to move on one or more properties to their liking, and demonstrate the financial advantages to them. And then collect buyer commissions in the near future, while developing a network for the future.
If I had a large property to sell, I would probably do this personally, and then tell my realty agent I have a buyer but I'd want a commission reduction because I got that buyer on my own. Even if I don't get that consideration, I would have helped to get my property sold while others are still sitting around on the market.
Although I don't normally give away my commission generating ideas this easily, for the sake of example, here is the article I'm referring to:
http://www.theglobeandmail.com/globe-investor/personal-finance/the-ins-and-outs-of-buying-us-real-estate/article2022807/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2022807
Keep thinking about who COULD buy your property, instead of retreading who can't or won't.
Tuesday, May 10, 2011
One Sale Does Not Change The Market
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.
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.
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, 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.
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
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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