Getting Your Philly Of A Deal

Residential investors and rehabbers have what looks to be a great opportunity coming up on Tuesday (7/16) in Philadelphia.

The Philadelphia Housing Authority is ready to, for only the third time, allow for as many as 196 vacant homes (or residential lots) to be auctioned off. Winning bidders receive special benefits for handling the rehab work and are being given up to five years to resell.

The PHA has even allowed the auction company handling this to publish a map of each available property and encourage potential bidders to check out the property BEFORE bidding.

For a contractor which specializes in specific forms of rehab, this could literally be a gold mine, with as many as five days to scope out those properties which they could "fix" with the least amount of challenges for them.

Better yet, the Housing Authority has a link to all of the information, as well as providing links to the map of where these properties are:


http://www.pha.phila.gov/pha-news/pha-news/2013/max-spann-to-auction-200-pha-properties.aspx



If I were a home owner in Philly, I'd be checking back to see what nearby plots sold for after this auction, to see if my home could have more to offer, and faster, to a potential buyer for the area. Even if the sale price of a nearby "fixer" is much lower than years, if you can be in the ballpark with what currently exists, this could create a near future sale opportunity for you.

And if I were a realty agent in the area, I'd be on top of property values surrounding these homes to see where the best deals could be. It wouldn't hurt to alert investors who are clients. After all, they would be buying to sell off, and somebody needs to handle that transaction when the time comes.

Hopefully more cities will do this, instead of ignoring eyesore properties and not helping the real estate market at all.

Never Mind Home Sales Statistics - Check Local Business News

I've heard enough about how home sales are "inching" up, considering how many of them dropped by feet or yards within the past five years. There are still too many areas where current home prices continue to represent losses of five or even six figures for those who bought them years ago and still could not sell for a profit or even a break even.

Instead of waiting on home sales statistics to make some people believe the real estate market has rebounded, your time should be spent on checking local business news.

Here is another example, this time from Austin Texas. It seems a local investor partnership has just purchased the Vista Lago Apartments, located in the Lady Bird Lake area. This partnership immediately announced plans to renovate and then re-open the property, which currently contains 102 units.

I'm sure you are wanting to ask me what this information has to do with the local home sale market in Austin, or anywhere else for that matter. And I'm here to tell you it COULD have a lot to do with it.

Since most of you do not live or work in this area, here is why this answer could relate to your situation, whether you are a property owner or a real estate professional.

For the near future, the renovation of a 100+ unit apartment building will mean a lot of construction and contractor projects and jobs. In some cases, people prefer to move close to where jobs are or will be in order to save on commuting and be available as needed.

Upon completion of the renovation, this partnership will either sell the "new" building and get out or they will look to rent or sell the "new" units themselves. Either way, the owner of Vista Lago will be advertising for new residents for this area, and most likely at market value or higher for rentals in this "new" building.

If I was a home owner in that area, I would immediately spring into action. I would do my homework and research what apartment rents currently are for that area, especially the more upscale apartments or units. Once I come up with a number, I would compare it with my current mortgage and monthly costs. Next, compare that number with what your home has to offer, and see if or how it compares to what a new rental unit would fetch.

Keep in mind it might not be a direct comparison. (I'm making up these numbers for the sake of example, so please don't quote me.) Suppose you would expect a 2-bedroom unit to rent for $950 per month, but your 3-bedroom home with a garage and a private pool costs you $1,100 per month on your mortgage and other costs. I would contend you have something to offer.

Using that comparison, you could offer a "rent to buy" of your home, and be able to promote how "for only $150 per month additional, you get an additional full bedroom, additional enclosed parking, and your own pool to use when you want". Add in the "And you won't hear neighbors through the walls, be awakened by upstairs neighbors' footsteps......." and other selling points.

If I was a realty agent in that same area, I'd be doing this comparison with homes currently on the market (in an effort to attract buyers for buyer commissions) as well as for past clients who live in the area and might want to jump on such an opportunity.

There has to have been enough potential for that immediate area to attract an investment partnership into renovating a 102 unit building in order to profit from it. The sooner you can pounce on that potential, especially before the Vista Lago opportunity becomes available, the more chances you have to generate sales because of it.

You could have "rent to buy" options, which Vista Lago may not even be offering. You could have outright sale opportunities, perhaps being able to offer a potential renter the opportunity to buy for the same general amount.

Even if you don't live in Austin or in this area, the idea is there for you. The Vista Lago complex is certainly not the only large apartment complex to be purchased for renovation. The concept is to track down upcoming residential construction and renovation and see what you can provide to potential buyers or renters in comparison.

That would be far more productive than waiting for home sales statistics to inch your way.

Don't Question The Information - Help Solve The Problem

The latest research findings, courtesy of CoreLogic, show that as we began the 2nd quarter of 2013, we still had FIVE states showing at least 30% of the mortgaged properties as being in "negative equity". Even though the national average just dropped to slightly below 20%.

 

Not be be negative here, but the fact that there are still one in five homes with negative equity across the country, while Nevada, Florida, Michigan, Arizona, and Georgia all have more than 30% in that position, remains cause for concern.

 

To those homeowners, it makes little to no difference that the national average has dropped slightly from last year to this one. At this rate of decrease, it would mean several years before this crippling problem would be behind us. This many people shouldn't have to wait that long.

 

Yet, here we go again with various realty associations pointing out how wonderful this decline is and how the market is improving.

 

One example appeared in a Milwaukee Journal article a couple of days ago, in which Greater Milwaukee Association of Realtors President Mike Ruzicka was quoted. The same CoreLogic statistics showed that in the four-county Milwaukee area the percentage of negative-equity homes actually grew during the same time period that both the state and national averages dropped slightly.

 

Ruzicka was quoted as questioning how this could have happened compared to the report's other findings.

 

I'm sure that Mr. Ruzicka would not agree with everything I said and did while doing my job over the past few weeks. This is not meant to be a personal attack. Rather, it is an example of what is happening within the real estate community. Too much denial and not enough action.

 

You see, even if the Milwaukee negative equity situation had actually declined in line with the national average, it doesn't change how about one in five current homeowners continue in negative equity. They can't sell for a profit, or even to break even and walk away. A couple of percentage points does NOT change this situation.

 

As you know, I constantly complain about how realty associations continue to issue such statistics which really show how much work needs to be done to make the real estate market viable instead of the "improved" trend they try to present.

 

This type of quote continues to come from realty associations around the country, not just Milwaukee. For some reason, we have literally thousands of realty agents acting as if things are much improved when the reality is they are not.

 

What we should be reading is about what the realty associations and their member base are actually doing to SOLVE the problem. Make it "our" problem, instead of "your" problem, and we'll all be happy.

 

Disputing the statistics, when the entity in which he represents puts out its share of negative market statistics doesn't accomplish a thing.

 

Taking this information head-on and addressing it just might accomplish something.

 

If I were able to answer for Mr. Ruzicka, here is how I would have handled it:

 

"Even if the Milwaukee area showed negative equity reduction to below the national average, there are still too many local homeowners that need our help. As soon as we clear up the mess with multiple foreclosures and short sales taking away the fair pricing in the market, you'll see an important increase in equity. That is our priority right now, far above questioning the specifics of that CoreLogic report."

 

Those faced with negative equity on their houses, Milwaukee and elsewhere, yet making their payments and doing their share as promised, deserve a lot better than being a mere statistic to be commented on.

 

 

 

 

 

The Real Estate Summer of Standoff

Until or unless something gives,and soon, in the real estate market, it appears that we are headed for a showdown. Who will blink first?

My mid-year evaluation shows far too little incentive for consumers on all sides of the fence. That is a big concern. Let's take a look at where all sides are at as we come up on the end of the first half of 2013:

HOME OWNERS: Still not selling unless they absolutely have to. Most are not taking the bait. They read about the "home prices up 10%" stories, but realize that over the past five years their own home may have dropped more than 33% in value. These incremental price increases still have yet to reach "profit potential".

INVESTORS: In many areas, "the good ones are gone". It appears that the vast majority of the "steals and deals" have been purchased and in some cases flipped already. Now with fewer foreclosures coming onto the market than in recent years, the best deals are getting harder to find. In other cases, the investment groups have maxed out on purchases, and are waiting for the market to improve to the point of being able to flip for a decent profit.

MORTGAGE BROKERS & BANKS: Many are still extremely busy looking to close the loans they started during the rush of low rates during April. Now that mortgage rates, while still great compared with five years ago, are going back up and may stay higher, they will soon face a challenge.

COMBINED: The home owners aren't eagerly selling, the investors are waiting, and the mortgage lenders are faced with higher rates. Thus, the standoff.

How can we spur some action?

Lender Processing Services, in its April Mortgage Monitor report, shows that nearly nine million Americans are currently eligible to refinance. This number is based on potential borrowers with at least a 20% equity in their homes with credit scores above 720 and currently paying at least 4.5%.
Meanwhile, the Mortgage Bankers Association just reported that the Refinance Index declined by nearly 15% for the week ending May 31, 2013, and sits at its lowest level since November 2011.

Why aren't people refinancing? It could be any of three reasons. Marketing. The market. The fees associated.

MARKETING: How many of those nine million realize that they are eligible to refinance? When so much of the real estate related "news" is devoted to the negative statistics, there is no incentive for current home owners to pick up the phone and investigate. Ironically, this is the fault of the banks and mortgage lenders who should be using market research to their advantage. Nine million home owners who could be current customers shouldn't be that hard to find!

THE CURRENT MARKET: It continues to amaze me about the number of renters I talk to who do not receive mailers or information from local mortgage brokers or realty agents about renting to buy or spending on a mortgage instead of rent money. The recent survey released by Fannie Mae's Economic & Strategic Research Group, based on more than 3,000 renters and owners shows that 42% believe they "will not be able to obtain a mortgage within the next five years".

The Survey results also showed that most renters "understand the advantages of home ownership".

FEES ASSOCIATED: In most instances, there are costs to the homeowner that qualifies for a refinance, and they can be sizeable. Of course, these fees are how the banks and brokers generate their income. Some homeowners have a fear of it not even be worthwhile to research a refinance. For example, suppose a homeowner could save $300 per month by reducing to the current mortgage rate from the one they are currently paying. But suppose that refi would cost them $3,000 out of pocket to complete.

To the homeowner, that means (based on that $300 per month for 10 months) it would really be nearly one year before they would see a direct financial benefit. For that matter, they could perhaps use some or all of that $3,000 for an improvement or upgrade on their home in hope of increasing the value down the road.

In other words, before they start, the consumer may not see a direct value in considering a refinance.

The banks and the lenders, as of now, see no reason to have to reduce their fees.

Therefore, here we sit. Until somebody blinks. Hopefully, it won't take the entire summer for that to happen.

Both The Home And The Ad Have Potential

"Perfect for a large family or a car collector". Not the way a typical ad for a home starts out, but that's a good thing. In fact, this is an all-too-rare positive example of how a property ad should start out.

The above quote is actually the first sentence of the copy. Now you are talking! There is a sentence that makes you want to read more. And when you do read more, you read things like "Covered parking next to house plus 11 car garage".

Remaining copy includes "5 acres of paradise. Horse corral and stables. Basketball court plus putting green. Upper deck patio plus gazebos".

There is nothing in the description copy about the number of bedrooms and bathrooms. And that's fine, even though it took me a moment to find where it says 4 bedrooms 3 baths on the side.

The photo spread in this ad is effective, especially since the primary photo actually matches and compliments the description. Normally, it is not advisable to show a vehicle within a photo, but in this case it actually enhances the photo because it shows how easily several vehicles can fit on the property.

This advertisement rates very well with me for many of the reasons already described. Again, that first sentence does what every real estate ad should do. It makes you want to keep reading. It points out the unique features only. After all, even in the $800,000 price range, not many homes offer parking for more than 11 vehicles, a horse corral, and a basketball court, and so much more.

Strong copy like this makes for a strong advertisement. It helps in a big way that the photos serve to enhance the copy. There is no "Realtor fluff", as I call it. None of the "Must see. This is the house. Won't last long." stuff that wastes valuable ad space.

However, the agent needs to carry this out at least one more step. My problem with this advertisement is that it seems only be on HomeFinder.com. This is not to knock that site, but their property ads, like most other independent real estate advertising portals, are standard in format, which makes it more difficult to make a property stand out and seem more "special" to the potential buyer.

You see, I found this well written ad on HomeFinder.com through the agent's office web site. I saw the primary photo and opening of the description, and clicked on it for more details. Yet, it took me to this HomeFinder.com ad.

With such effective copy and the solid photo spread, there is no excuse for this property not to have its own dedicated web page. The photo spread should be available right away in its entirety instead of having to click through.

The description could be even longer and even more enticing.

If the HomeFinder ad were an additional one in order to get this property on "an additional" site I could understand.

But the agent needs to carry this through. The commission on this property easily justifies being able to provide the treatment this property deserves. Considering that this ad has been up for more than 1 1/2 months, it's not like the agent could tell me he hasn't had time to create an individual ad for it.

You can see it for yourself (as of press time) by searching at 11816 North Loop Dr., Socorro, TX 79927. Hopefully by the time you do, there will indeed be more than one advertisement for it!

    

Update On Foreclosure Process Blog

This morning brings us an important news update from yesterday's blog about the challenge of a "purchased mortgage" foreclosure in Colorado.

The Alabama Supreme Court today upheld a lower court opinion giving MERS (Mortgage Electronic Registration Systems) the ability to "legally assign" mortgages in that state, with this response coming as a result of a challenge similar to the one in Colorado. (Crum vs. LaSalle - in AL)

Upon further investigation, it seems that the Supreme Courts in Nevada, Rhode Island, and Idaho have also recent ruled in favor of MERS in this regard.

Hopefully the Judge in Colorado will follow suit.

Where You Can't "Bank" On A Foreclosure.......

A U.S. District Judge in Colorado is expected to make a ruling this week which could result in an additional challenge for certain banks to foreclose on homes.

 

But there is so much more to this story. As of now, this ruling appears to only impact Colorado, where the interpretation is that certain foreclosure regulations are different from other states. Even though the Bank involved also serves many other states.

 

The confusion doesn’t stop there. The home owner who brought it to the point of a Judge’s ruling may have found a loophole to prevent her home from being foreclosed upon.

 

Many of us know and understand that mortgages are often sold to other banks or investment groups, causing the home owner of that mortgage to need to make their ongoing payments to the “new” owner.

 

In the case that brought this to light, the home owner challenged the “new” Bank, which reportedly purchased her mortgage, to prove ownership. According to a Denver Post report, the service which handles the transfer of mortgage ownership does not have official documentation of their takeover, and therefore was not able to show proof of ownership of the mortgage. Yet, this Bank was attempting to foreclose upon the delinquent home owner.

 

The Judge has admitted that Colorado does not require such documentation. The home owner has not yet involved an attorney, even though the situation has already gotten to this point.

 

Of course, as those who are involved in this matter will recognize, if the home owner in question could afford the lawyer to fight this, chances are she could be making her payments and not be considered delinquent.

 

Even in real estate, two wrongs don’t make a right.

 

If you have been following this blog for a while, you are probably waiting for me to suggest that realty agents in Colorado make their current home owner clients aware of this situation. Perhaps, unless the current system in Colorado is changed, others could challenge the validity of their mortgages. However, I am not going to do that.

 

In reality, it is potential renters who need to be aware of this mess. The local publicity for this story has likely reached into the wrong hands already. A delinquent home owner who knows their mortgage was purchased by another entity now has reason to delay a foreclosure attempt.

 

During this delay, there would still be no public record of the bank (or entity) attempting the foreclosure actually having the ownership right to do so. Thus, the home owner could simply collect a security deposit and a month’s rent, turn over the keys, and be moved to another country. An unsuspecting renter could then face eviction and legal action because they have documentation showing they live at the property in question.

 

To me, the fact that there is a concern for a potential renter about renting a single family home at a time when it should be a more viable option is just as important as what becomes of the foreclosure regulations in Colorado.

 

Here’s hoping that enough people “move” on this one before it’s too late.

 

 

 

 

 

Why the Focus Should Be On Renting Homes

Unfortunately, there does not appear to be anything close to a short-term solution to the ongoing real estate crisis, even though there is a major need for one. Perhaps making a large portion of available single family homes and condos available as "Rent To Own" would be the best way to help.

All of this "Home sales are up!" information doesn't help when the increase is due to lower property values which make it difficult for so many others to sell.

The U.S. Census Bureau reports another decline in the percentage of American who own their homes during the first quarter of 2013 when compared with the same period in 2012. This makes the lowest level of Americans who own since 1995. Yet, during the same one-year period, the number of completed forecloses dropped more than 2.5%.

Thus, even with fewer homes in foreclosure, home ownership is down over the same period. Put this together, and it confirms that the reason home sales are "up" is because cash investors continue to swoop up the bargains in hopes of flipping for a future profit. But that doesn't help the current market.

Add to these facts that construction spending was reportedly the largest drop in 2006 during the month of March 2013, which came after a reported increase for February.

My solution to this is to encourage more "Rent To Buy" opportunities. There are plenty of people who cannot get a mortgage, and/or can't afford a huge down payment at the moment. There are plenty of homeowners who want out but, understandably, do not want to take a loss on their home.

The reason that many cities are boasting "less inventory to choose from" is because a large percentage of listed homes are distressed properties. There is little to no incentive for owners to sell since chances are they would not make a profit, let alone break even in most cases.

Yet, if an "owner" can cover the cost of the mortgage and fees, or come close to it, chances are they could use their own funds to rent or buy elsewhere, and perhaps take advantage of an undervalued property available in a location they want to be in.

However, the realty agents I have talked to about this generally are not receptive to this. Therein lies the problem, even though I can understand their hesitation. A "Rent to Buy" deal means the property actually doesn't sell for months or even years. Hence, the agents see this method as putting their commission potential on hold. So they decided they would rather sit on a listing for six months in hopes of getting a sale and a commission sooner rather than later.

What they don't see is the potential to place the "landlord" into another home sooner rather than later, AND setting up for the seller commission down the road when the "Rent to Buy" tenant finally completes the purchase.

Do the math. If fewer people are owning their homes, it has to mean more people are renting. Those realty agents who won't get involved with rentals are missing out on commissions - sooner. That is one short-term solution to this problem.

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 Homes.com 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 Realtor.com, 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 Realtor.com 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 Realtor.com 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
Refigerator
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.

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.

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.

The Rocky Mountain Way?

For as much as I complain about the lack of positive statistics coming from realty associations, the Denver Association of Realtors has been providing an interesting angle in its tracking of local sales. Rather than simply reporting that home sales are up, down, or steady, the Association has been tracking the number of home sales against the number of homes currently on the market.

By doing so, the Association's most recent report reflects a trend over the past few months clearly showing that a higher percentage of available homes have been selling in the Denver area of late, and a growth of that trend over the past six months.

What makes this data significant is that if the Association did not provide this information, their graph showing the movement of local home sales would only show as being on the decline!

That there are comparably fewer properties on the market than months ago is understandable. With foreclosures and short sales taking up a significant percentage of reported home sales, prices continue to be too low for many long time home owners to be able to sell for a profit or a break even.

In addition, some of the properties currently on the market are still not advertised or marketed like they can or should be.

For a case in point, I went online as if searching for a 2 bedroom townhome in the $100,000 range in the Auroura 80014 zip code. Based on current local inventory, this is a comparably good value for the community it is in.

The first towhome that came up is on the market for exactly $100,000. I immediately reasoned that with this for an asking price, it has probably been on the market for a while. Sure enough, it was listed back in October, more than five months ago. How did I know? Because reducing the asking price even by a mere $50 would make it $99,950 - and give this unit the ability to be marketed as "townhome living in Aurora for under $100,000" or "five figures for two bedrooms", and so on.

Although the advertisement appearing on Realtor.com does have eleven photos, the problem is that the majority of them hurt the cause rather than help. The primary photo shows the corner of a building with a street sign blocking part of the view. It is even difficult to tell on first glance that the photo shows a residential unit. Obviously, not a good first impression, especially when the description claims this is a "ranch style" townhouse.

Four of the eleven photos are indistinguishable exterior photos, which give the unit the appearance of being very small when you can tell it is a residential unit. Another photo is a long shot of a bathroom, which is not especially impressive. Yet another photo shows the washer and dryer with clothes stacked on it.

The ad copy for this unit could just as well have said it has an in-unit washer and dryer. However, it certainly doesn't appear that the agent or writer of this ad put any thought into it. Consider that for "Fireplace Features" the copy says, and I quote, "In the living room".

So are you chomping at the bit to pursue this property?

I didn't think so. And a return to this search brought up four other listings within the same area, also priced at exactly $100,000.

This is pointing out how a larger percentage of listed inventory is selling, even if the number of sales is really down. The Association has brought out a positive that other realty associations and reporters do not. With a better effort to market the current inventory, the Denver market could be "higher" than a lot of other areas.


http://www.realtor.com/realestateandhomes-detail/2280-S-Oswego-Way-Apt-101_Aurora_CO_80014_M17419-02616

They Still Don't Get It

If only the National Association of Realtors would identify the solution instead of the problem. We know there is a problem. The NAR "pending home sales" showed a slight decline for Feburary 2013. As is always the case, the Association points out that the February home sales volume is higher than February 2012, as if that would somehow impact the near future.

The NAR Chief Economist, Lawrence Yun, was quoted as saying "Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels".

Am I the only person who finds this quote alarming? Shouldn't the members be exploring why the "current" housing isn't selling?

It is so simple, really. The homes that are selling are mostly foreclosures and short sales, which are sold at prices designed to satisfy an outstanding loan, and NOT to reflect the actual value of properties.

If only the NAR and its underling associations would know to eliminate any sales via foreclosures and short sales from their monthly statistics and enter them into a separate category. When average housing prices and sales are reported by "legitimate" sales, the property values will go up to where they should be. Once that happens, some home owners will have a reason and incentive to list their homes, knowing they could get full price.

I'm reminded of the story a few years ago about the divorced ex-wife whose "busy" ex-husband asked her to "Sell the Porsche and send me the money" as part of their settlement. She then reportedly sold it to some guy off the street for $500 and sent him the check.

This may be amazing to the NAR, but anyone bringing that information to a Porsche dealer to show that the value of a (whatever year) Porsche model (whatever) had dropped to as low as $500 was not able to purchase a similar car for under $1,000. Somehow, Porsche dealers around the country managed to convince the public that their cars continued to be worth thousands and thousands of dollars more.

Yet, even though a number of houses and condos are selling for half to two-thirds of their value in order to satisfy delinquent loans, thousands of realty agents are allowing their "Porsches" (in the form of houses) to count toward their value in the market.

I'll ask my question again. Am I the only person who finds this quote alarming?

Can Boston "Green Light" Help Stop The Red?

Officials in the city of Boston have begun to accept bids from developers as of this week for 1.3 acres of vacant land in the Mission Hill area which includes eleven parcels. The minimum bid, according to the Boston Globe story about this, is $488,000. The "catch" is that city officials will require the developer with the successful bid to build "green", meeting specific environmental guidelines in the process.

One of the requirements is that at least 15% of the project is to be for "affordable housing". Nearby this site building is already underway on a set of four townhouses, three bedrooms each, which are expected to be available later in 2013. Each of those townhomes is being built with 39 solar panels, an energy producing formula that city officials also expect the successful bidder on this vacant land to follow.

Developers are given through June to place their final bids, with city officials hoping to have the successful bidder chosen and plans in place by the end of this year. Bidders are not restricted to only residential use, as these land parcels are, according to reports, zoned for possible mixed use.

Normally, talk of requiring solar panels, building "green", and producing energy is of little to no significance to me in terms of trying to solve the problems of today's real estate market. However, I'm finding a lot of positives to this approach by city officials.

This is an excellent concept, whether the "building green" direction is used or not. Here are city officials looking at ways to improve a neighborhood with modern development, while providing an angle for certain companies to bid for the opportunity.

Those developers which can or have done "building green" now have the opportunity to be "chosen" by Boston city officials to handle a development. That looks good on their resume, so to speak, moving forward.

More importantly, it looks good for the city of Boston. It's city officials getting involved enough to arrange guidelines, review proposals, and contribute directly toward positive development, whether only residential or combined.

Here's hoping that other municipalities will become aware of this opportunity, and how it plays out this summer. Whether they adopt the "building green" angle or not to move forward with important local development, this is a positive concept.

Frankly, it is one that the banks which have foreclosed upon and are sitting on tons of properties should also be looking at. Consumers should speak up about this. The sooner distressed properties come off the market at the lowball prices they are often listed at, the sooner the real estate market can return to "real" sellers breaking even or hopefully making a profit from being able to sell their home.

That's the "green" we should all be concerned with!

One Two Three Foreclosures

If those who insist in going by the real estate statistics would instead use foreclosures and short sales as an indicator, they would see that the market is not "back" as many would like for us to believe. 

A big part of the problem is that the "real estate sales" statistics still fail to distinguish between distressed properties and what I call 'voluntary' listings. According to the latest CoreLogic report, the number of completed (and that does not even take into account those still in process) foreclosures since September 2008 is now at more than 4.2 MILLION.

As of January 2013, there were still 1.2 million U.S. homes in some stage of foreclosure, although that number is down by nearly 300,000 from early last year. The states with the lowest foreclosure inventory most recently included Wyoming, Alaska, North Dakota, Nebraska and Colorado.

My point is that it is no coincidence that the states with the lowest foreclosure inventory are nowhere to be found among the states with the biggest increases in home sales. By comparison, several markets in Florida (including Sarasota, as mentioned here a couple weeks back) are supposedly among the "most improved home sales" markets in the country.

However, as of January 2013 (still the most recent statistics available as of early March), Florida was reported to have had more than 95,000 homes in the foreclosure process.

What makes this problem even worse than misleading consumers with statistics that do not distinguish foreclosures and short sales, is that foreclosed homes more often sell as prices well under the true market value.

Thus, not only are these foreclosures damaging the truth about the real estate market, but they continue to bring down property values and kill a major incentive for "voluntary" listings.

Worse yet, not all of these foreclosure homes include short sales, even though those (short sales) create the same mess of lowering property values for those who have faithfully paid their mortgage and distorting the sales facts.

I'll say this again. More than 4.2 MILLION homes have gone through the foreclosure sale process since September 2008. As of the most recent report, there were more than 1.2 MILLION homes undergoing the foreclosure process, meaning that the majority remain to be sold at a reduced rate. And be counted as "regular" sales to make people think the market is better?

Let's compare to one other fact. Between 2000 and 2006, the average number of completed foreclosures per month in the U.S. was around 21,000. 

If you take away the 4.2 million foreclosed homes sold in the past 4 1/2 years and removed the lower sales prices they fetched, you'd have a TRUE gauge of the current real estate market.

I'm on this topic for a reason. Last week I received an e-mail from a realty agent that I respect and have used in the past telling me that "Now is the time.....". Within five minutes, I was on Realtor.com to find not one but TWO homes on the same block and within the same development I live in that are for sale right now. Both prices are not only more than $30,000 more than I currently owe on my mortgage, but more than $150,000 LESS than the homes were sold for as recently as 2006.

As a marketing expert, I noted this to use as another example of how realty agents need to think and research before they send something like that out to "everyone". But as a home owner, I noted that these short sales (and foreclosures) not being 'separate' matters continue to damage my options.

It's Not The Statistics, It's The Homes

Statistics do not buy or sell homes. While that sounds so simple, there continues to be too many realty agents who don't appear to take this into account.

Meanwhile, the majority of home sellers, even in the supposed "buyers markets" are still having to wait a long time for a sale, if they are fortunate enough to find their buyer.

The RealtyTrac statistics for 2012 (and that's for the year, not for a one-month period) concluded that roughly 43% of home sales were either foreclosures or short sales. Those were, for the most part, sold for less than the actual value of the home. What is unfortunate is that the sales statistics continue to fail to take this into consideration. Home owners who have paid their mortgages faithfully continue to suffer because nearly half of homes sold last year were underpriced and their chances to sell for a profit are significantly diminished through no fault of their own.

Yet, in reading a report today about supposed "hot markets", the sales process for the increased number of homes sold is still a long time as I see it.

Let's use Seattle as an example. Even with foreclosures and short sales, this region showed a 16% increase in the median sales price for last year, while the listed inventory reportedly declined by 44%. Some experts consider Seattle among the best "seller markets". Realtor.com, in its market analysis, reports that homes in this area spent "an average of just 56 days on the market". 

What this information fails to show is that an average 16% increase does not mean that home prices are back to the level that current home owners paid for them years ago. It is quite common to have had the foreclosures and short sales in most areas drop prices by more than 30% at bottom. In more common terms, many homeowners there still would not profit if they sold at these prices.

Perhaps the reduction of listed inventory is because the "faithful" home owner, whose property is still valued for much less than it was a few years ago, still has no financial incentive to sell. The decline in available properties is likely because many of the foreclosures and short sale properties have been gobbled up by investors waiting to flip them and profit.

In order to save the market, the time has come for the foreclosures and short sales to be completely separated from "non-distressed" home sales. But I'm afraid we'd see a much different picture of the current marketplace.

When Buyers Can Name Their Price

It's all too rare, but creative selling and real estate have met regarding the selling of a commercial development in Colorado. Granted, it is for a multi-million dollar property, but realty agents and property sellers could do well to follow this formula, no matter what the value.


http://www.streetinsider.com/Press+Releases/Hilco+Real+Estate+Auctions,+LLC+Invites+Buyers+to+Name+Their+Price+on+275-Acre+Five-Star+Luxury+Elk+Mountain+Resort/8090500.html

Provided the link still works for you, you might wish to point out to me that this is not an advertisement for the property, and that, techincally, the property is not "listed" in the traditional sense. My response is that you are only half right. It is up for auction rather than a "listing", but the purpose remains to get the property sold.

On the other point, I'm here to tell you this IS an advertisement. The press release both tells the story by providing the specifics, but it also paints the picture. There are several different possibilities for usage. It could be used for one company, or it could be used as a business for profit. This development could be used as a cash flow investment by leasing out the various elements as components.

This is EXACTLY what I preach to real estate and leasing agents who are my advertising and marketing clients. Every property has something unique about it, whether it is a one-room studio or a multi-million dollar mansion, or somewhere in between.

What is also nice about this advertisement is that they allow visitors to explore the property, and have a bidding formula already in place.

And don't try and tell me this is not an "advertisement". It is. It just happens to be in the form of a Press Release. Yet, it communicates the story, paints the picture, provides a ton of ideas for usage and benefits, and includes a call to action. That is what an effective advertisement is supposed to do.

However, I feel like there are real estate agents out there who would write a "traditional" ad for this property like this:

"Commercial property with 47 buildings, some with mountain views, back-on-market, in move-in condition. Shows well. Prestigious Colorado location. Fitness center. Near national park. New carpet in meeting rooms. Must see to believe!"

And they would also show a photo of the entrance way and little in the background.

An excellent job by the writer of the advertisement for that property. The real estate community needs more like this one!