When "Bend" Could Break This Seller

No matter what the condition of the real estate market, the advertising and marketing of million dollar and up listings is always a challenge. There are always fewer potential buyers to go around. Even more concerning is that, frankly, it is not always the sharpest of realty agents that work their way up toward handling the luxury and high end properties.

This becomes an even bigger challenge when a listing is in or near a small town or community which often depends on luring in a buyer from out of area.

With this in mind, I decided to look for a current advertisement for a million dollar "plus" home in Bend, Oregon, which is a smaller community that I personally have never been to. Therefore, I would need to know something about the area as well as its "best" listings.

I went to the Bend Bulletin (local newspaper) web site and searched. Instead of my usual random pick of a listing, I decided to go for my "least" first impression and comment on that.

Out of ten listings that came up from my initial search, the home at 17062 Cooper Drive caught my attention above all of the others. Here is why.

The search page, even for homes at over $1,000,000, came up, like most, with one thumbnail photo and the first part of the description copy. In other words, it is intended to be (and NEEDS to be) the most flattering photo and most enticing description. With, in this instance, nine other homes to choose from, the first impression is of the utmost importance.

Keeping in mind that I did this search during September, I was amazed to find the photo of this listing showing snow on the ground and covering the home. I literally moved up closer to my computer screen and noticed that I could not see any shoveled or cleared path (not even a sidewalk) leading to the front steps of this home or to the snow covered porch. Incredibly, I could not see a garage or driveway! And this is for a home listed (at press time) for $,1395,000.

Thus, my first visual impression was a large home surrounded by snow, and this is September!

Next, I started reading the less than two sentences of the description next to this photo. And it begins by saying "This amazing 1.25 acre property has seven bedrooms......".

Let me add that one of the homes in the same area, listed at $1,499,000, which showed ABOVE this Cooper Drive estate, shows "A gated estate on 25.72 acres....." at the beginning of its thumbnail description.

Notice the significance of this first impression. I looked at this Cooper Drive thumbnail to see a photo of a snowbound home with seemingly no easy access, after having seen another property in the same general area with NO snow and with literally 24 MORE acres available for about $100,000 more.

If you were looking in the community of Bend for a property valued at near one and one-half million dollars (and it was September), which of those two properties would you gravitate toward?

Chances are you said the larger property.

This is my point. There is the importance of a first impression. One agent placed a flattering photo and started right off with the huge size of the lot and location within a gated community, while another uses a photo outdated by months and a poor comparison fact up at the beginning.

It didn't matter what else came after, because potential buyers are far less likely to click on the Cooper Drive home for more information. Again, chances are most of the potential buyers are from out of area, meaning that a couple of miles of location makes no difference. The street address means nothing, in this instance.

I did go ahead and click on the listing detail page. And I found that it gets worse for the seller. A big part of the description copy which followed touches upon the large deck and the hot tub. Below that, the first of the features of the property detail was "central air".

Normally, those factors are not a problem. Might even be important to a potential buyer. However, the only photo I have seen, to this point, shows the home as if it is snowbound. Hardly a fit for sitting on the deck or in the hot tub, let alone being concerned about the air conditioning.

What makes this more frustrating is that there are several additional photos available on the full page advertisement, and most of them are very flattering for the listing. Simply put, all this agent had to do (and should have done) was to pull the snow photo completely, and re-arrange the copy to highlight the features of the interior.

But since the listing agent did not do this, I'm afraid that the sellers on Cooper Drive will face the upcoming winter being snowed in at their unsold estate.



http://homes.bendhomes.com/realestate?classification=mdRealEstate&temp_type=results&tp=Homes.Bendhomes.com&cf_min_beds=2&price_range=1000000-1500000&cf_min_baths=1&cf_city=Bend

Watching The Competition Helps To Sell

While researching for my upcoming book about selling "your" home and getting the price "you" want, I stumbled across an agent doing an effective job of selling against the current local competition. That is all too rare of a find, even in this uncertain market.

Among the many problems with how agents advertise properties is that the vast majority of property advertisements do little to nothing to combat the "competition". As a home seller, you should be making sure your agent knows how and why to distinguish your home from others nearby.

I found the ad for a home at 3803 Landlubber St. in Orlando by looking for the home with the most bedrooms in its price range, and then looking to see if or how the listing agent presents it. Usually all this type of search does is provide me with more ammunition for my book and for my clients. But not this time.

This advertised home has five bedrooms, more than any other Orlando home within the $10,000 price range I chose. While I will grant you that a city wide search brings a lot of different quality neighborhoods and communities into play, I also couldn't help but notice that this nice looking five bedroom home is priced at less than a 3-bedroom home which is a foreclosure.

Although the specific ad, which I found on HomeFinder via a search on the Orlando Sentinel web site, could use some improving (as do about 99% of them!), I'm considering this one to be a positive because of the first impression it provides.

Having just one photo of any property, especially when most other ads in the same city and price range have multiple photos easily available, is not a good thing. At least in this instance the photo used is a very flattering exterior shot showing a well maintained lawn and garden, driveway and attached garage, and a well painted and trimmed home. It did make me want to see more, even though it is frustrating not to be able to.

The description copy highlights facts which are "outside" of the home, such as the fenced pool, new a/c unit, corner lot, "A" list schools, and being near restaurants and shops. Those are all important and, in this case, positive facts, which, again, makes me want to find out more.

This description copy also includes mention that "This is not a short sale or foreclosure so there is a quick response to all offers".

Sticking with this copy for a moment, it is all positive. Chances are the potential buyer for a five-bedroom home has a big family. Having an attached garage, pool, a large lot, and being near "A" schools are likely important factors for initial consideration.

Pointing out the home is "not" a short sale or foreclosure is not always a necessary thing. But in this case, when it is priced among other homes, with FEWER bedrooms, in the same price range which are, this mention is a direct attack on "competition" properties in the same city.

That includes area homes whether short sale, foreclosure, or not. This ad is basically saying "You get at least one more bedroom and these benefits for the same price!". And I like this approach.

We can also tell that his home had been listed for exactly two weeks (as of the day this is written), unlike other area homes which have been listed for months.

It's good to see the listing agent presenting this listing with benefits against the other homes in the same price range, instead of on its own merit. You see, my search was for "2+" bedrooms, and this was the only five-bedroom home that came up within the $10,000 I selected. Obviously, anyone looking for a five-bedroom home in this area would also pull up this property. The fact that I wasn't but it came up and appears favorable against two, three, and four bedroom homes in the same city is a strong one.

Of course, this ad could use some improving upon. The fact that there are no interior photos and no mention of anything specific to a five-bedroom home does make me skeptical. I could not find anything about a basement and/or rec room, about the capabilities of the kitchen (where meals for a lot of people would be created), paint, carpet, closets, or storage.

Even though the lack of information about the interior is a glaring omission, I can just about let it go for this example for one important reason. There just might be enough here that if I really was looking to buy it might get me to contact the agent for more details. Of course, that agent had better be ready to promote the amenities inside, or I'd be on to the next property and another agent quite quickly.

A good start on how to sell against other homes in the area!

http://www.homefinder.com/FL/Orlando/3803-Landlubber-St-100076568d

No "Saxon" Appeal For This Allentown Home

Here is another example of why the advertising is the problem. A 2-bedroom home in a respectable neighborhood (Allentown PA) priced at $135,000, but it hasn't sold in more than four months of being listed.

It's not hard to understand why. Let's review the advertisement. I found this property and this ad via random search through the Allentown Morning Call web site, which links to an outside web site for this ad for 2725 Saxon Street, now at $132,000 (as of press time).

The primary photo, always a key part of the first impression, shows a big tree in the front yard which blocks our view of part of the home. Although there is nothing wrong with a big tree in the yard for a lot of people, having it impede our initial view does not make much sense. Especially when you look further and realize that the home clearly sits on a hill.

Looking at the larger version of this photo, it is easy to see that the lawn is NOT well maintained, and that there is a path in the lawn from people walking across the grass to get to the front door. Already, it shows carelessness on the part of the seller, and that is not good either.

Before even reading the description copy, I went through the remainder of the photos. One of the additional exterior photos shows the back yard, and reveals an equally uncared for lawn. These exterior photos show a potential buyer that it will take a lot of work before walking inside. Not good.

But that's not all. The interior photos reveal that the home is empty. As a result, a potential buyer has no means to imagine what their furniture might look like inside, since they cannot grasp the size (or lack thereof) of an empty room. And it gets worse.

The photos of the basement make it difficult to determine whether the surface is a real floor or carpet. This shows a potential buyer that there could be plenty of upgrading to make the basement worthwhile, again, before learning more about the home.

Then, the photo of a bathroom reveals a two-tone room, with a light green paint job on half with white paint on the other half. By this time, I couldn't help but wonder if it was half a paint job to cover something else or what happened. However, the worst part of this photo (which, again, is supposed to help to sell this place) is that we can clearly see either a large dent or mark in the wall near the door handle that is not explained.

Next, it was on to the description. This is where the "sizzle" is supposed to be, and this home is listed through a reputable national realty firm.

So how does the copy begin? "Price reduction! Sellers are motivated! Welcome to your Home Sweet Home located at.....".

OK, I'll bite. If the sellers are "motivated", why didn't they leave at least some furniture in the photos to give a potential buyer an idea of what the house COULD look like? Why are they long gone?

Upon further reading, we learn that that the "newer" roof and water heater were both "installed in 2009". Newer?

We learn that the "refrigerator, washer, and dryer are all included". How about that? Appliances included within a home purchase! 

And we learn about the "finished recreation room in the lower level", which I suppose is the basement photo I saw and couldn't even determine if it was ugly carpeting or bare floor in an empty room.

In addition, we are told that the price was recently reduced by $3,000, and the ad shows that it has been in place since April 2013, over four months ago.


Meanwhile, there were more than 20 more properties in the same general area priced within $10,000 of this one.

I simply do not see how a typical "buyer" would have any reason to pursue this property. Chances are that after four months, any local rehabber would have already looked into this home to see if it could be easily and affordably upgraded. But no takers.

How is a $3,000 price reduction going to attract anyone?

My point is that it doesn't matter how few or how many other area homes have sold in the past six months on and near Saxon Street. There is no reason for anyone to want this property (at least at this asking price) based on the way it is presented now. Again, the advertising and marketing is the problem.

http://www.homefinder.com/PA/Allentown/2725-Saxon-St-95552980d

A Mountain of Denver Real Estate

Things appear to be looking up in the Denver area according to separate reports just issued. A realty firm issued a report showing that sellers are getting a larger percentage of their listing price this year compared with 2012 and that homes are spending about nine fewer days on the market compared with Summer 2012. MetroList shows an increase of available homes from April of this year to July 15, 2013.

Although neither report included comparisons to prices for these homes to prices prior to 2006, there are some positives with this information. It shows that there is reason to believe the Denver market is on the comeback trail.

However, as I continue to point out, more inventory means that each home for sale has more immediate and local competition. Thus, the need is still strong to properly advertise and promote each home for sale.

Trying this like a potential home buyer, I searched the site linked via the Denver Post (the largest local newspaper) in the $150,000 to $200,000 range for 2-bedroom single family homes in order starting with "lowest price".

I wasn't surprised with my finding, but am certainly disappointed. The very first house on the search (And how many agents would LOVE that placement?) merely served as another example of my point.

It was for a 3-bedroom home in Denver on Lowell Blvd. The primary photo not only showed a lawn in horrible condition (as much dirt as dead looking grass) but it turned out to be of the back yard. The "front view" photo also showed the terrible looking lawn and that there is (or did not appear to be) no garage, driveway, or on-property parking. The next photo showed the rear area with a mass of dirty concrete and a storage shed. Not one of these photos was flattering, to put it mildly.

Upon finally getting to the interior photos, we then see that the home is empty. In several photos, all we see is a dining room set, one chair, and the appliances. One of the photos shows what is either a basement or empty room with what is either concrete or horrible carpeting on there.

Simply put, not one of the photos (with the possible exception of a bathroom shot) adds any appeal to this property.

It took reading the description below to find out that two of the photos are to show the "new furnace", even though none of the photos reflect the "new carpeting" stated. We also then find out that there is a "rear driveway" for parking, even though this is not shown in any of the photos. We are also told that the sewer line "has been replaced".



http://www.zillow.com/homes/for_sale/fsba_lt/denver-co_rb/2-_beds/150000-300000_price/#/homedetails/1900-S-Lowell-Blvd-Denver-CO-80219/13380077_zpid/


Some of the next homes in my search had decent ads for them, but certainly not enough. If I was truly searching from out of area, I would probably have moved on after seeing that first ad, thinking if that was all $150,000 gets me I'd rather go elsewhere.

Just because the market conditions are better, it does not mean that an agent can be that careless about how a listing is advertised.

Attention To Detail In Marketing

If only the listing agents and sellers would check advertisements carefully before putting them out there. It doesn't help the industry, either.

This ad is for a home up for Short Sale in a Chicago IL suburb. In this case, the "problem" is not with the incredibly short copy that tells little to nothing about the interior.

The problem is in one of the photos, and not from the angle of the picture. There is an interior photo (as of this writing) that clearly shows a date of May 2, 2010 on it. Granted, this could actually be a recent photo and the camera was not set to the proper date. Nonetheless, it gives the appearance of being an old and outdated photo. Someone could think that no one could sell this place for more than three years and be scared into looking elsewhere.

I simply can't believe that an agent would allow this to be published. For that matter, the seller is under a Short Sale and obviously wants to move on with his or her life as well. Why don't those involved double check every advertisement?

To make matters worse, this is how it appears on Realtor.com. It's not some out-of-the-way publication that only the advertisers actually read.

I have no idea how copy such as "Looks like a model" to accompany the potentially outdated photo is acceptable as a sales pitch either, but that's for another column.

Yet, many agents and those in the industry continue to go with prior home sales statistics and other factors as being the primary reason that certain homes don't sell. Look again:


http://www.realtor.com/realestateandhomes-detail/6142-Washington-Ct_Morton-Grove_IL_60053_M87462-85097?row=17

Sales Trends Don't Tell The Story

Two "home sales" stories from this week coming from two different geographic and population density parts of the country bring two different stories. Or do they?

The Northeast Tennessee Association of Realtors went ahead and published statistics which show a decline in local home sales over an 11 county region for June 2013 compared with June 2012, with a sale price decline of more than $9,800. When comparing June 2013 with May 2013 the report showed a 5% decrease in sales.

A few hundred miles northeast, the Philadelphia Office of the Controller issued a report showing an 18.5% increase in area home sales for June 2013 when compared with June 2012. This report went on to list the most "popular" neighborhoods, which were South Philadelphia, Fishtown, and Fairmount.

Same time period, but with results at the opposite end of the spectrum. That tells me these are not "different" stories.

What this means is that it is only a select few neighborhoods and communities that are turning around in terms of sales and pricing.

The latest from Fairfax County (VA) over the same June-to-June period can also be interpreted any one of a number of ways. An agency report claims the number of homes "on the market" throughout the County dropped by more than 15% from June 2012 to June 2013. Yet, the same report shows that the median home price actually increased about 7.5% during that same time.

In this instance, fewer homes on the market is the most likely reason for the price increase. Thus, a possible buyer in that area now has less bargaining power by not being able to show as many lower priced "comps" available in the area. A long-term real estate investor is also less likely to find a bargain to keep until the market returns to past levels.

From a selling standpoint, if hundreds or home owners in Fairfax County now decide to list, it would mean a short-term decrease in the percentage of listings sold, and likely expand the average time that homes are on the market.

Potential buyers and potential sellers have different reasons and motiviations to enter the market. An investor likely sees a sales decrease over the course of a full year as a reason to look elsewhere. A potential "move-in" buyer sees that decline as a reason to come in with lower offers because he/she now knows that it is a tougher sale.

Put all of this together, and what these stories all combine to tell us is that the market is still very much uncertain. That's not how it is supposed to be done.




 

Sellers: Stay One "Strike" Ahead of Commuters

Good marketing of a home (or any property) for sale should include information about the area and relate to a potential buyer. It's too bad that most of what is out there does not.

One example of this is attracting a "commuter" to a home located within close proximity to a commuter train station. Before you attempt to sell, you should know how close your home is to a commuter train station, whether you personally use it or not.

With gas prices continuing to gouge consumers, a few dollars more in the mortgage could actually SAVE money to a commuter who drives a long distance each day. But that potential buyer won't know that if YOU don't point it out to them.

My long-time readers may recall my column a couple years back about Chicago area research showing a higher home price value of homes specifically located near the main commuter train line. On that same point, a similar column was recently published about proximity to the BART (Bay Area Rapid Transit) trains in the San Francisco Bay area, and its impact, especially right now due to the most recent transit strike.

Maxime Rieman of NerdWallet.com has provided us with an overview, which is reprinted with her permission:

A 2013 study commissioned by The American Public Transportation Association concluded that close proximity to a fixed-guideway transit system, those like BART, correlated with stable property values during the Great Recession. The study, entitled "The New Real Estate Mantra: Location Near Public Transportation," also found that while homes near commuter stations may command higher prices, they also help the owner save immensely on transportation costs. These factors often add up to a higher demand for real estate in close proximity to commuter lines.

 

However, there is a downside to living near public transit and, according to the Center for Housing Policy, it comes in the form of "nuisance effects." A particularly loud public transit system, for example, can negatively impact the value of residential property, as can pollution from fumes. But nuisance is often, though not always, outweighed by convenience and mobility; a young person wanting to commute safely to nightlife may fare better living closer to a light rail station, and put up with the noise that may come with it, rather than living in a far-removed suburb.

 

But these factors don't include strikes—and there's a reason: they're too infrequent and they don't last long enough.

 

So when would a strike actually affect a local real estate market? Well, there are a variety of answers, but the most obvious one is if the strike were to last months on end, if not for years—an unlikely scenario. More likely, however, is if there is a culture of labor strikes in a given area with transit—like there is in the San Francisco Bay Area. If such a culture exists and strikes become an all too common occurrence, the value of real estate surrounding public transit, both commercial and residential, will likely taper-off if only by a little bit. Again, this is hypothetical: even in the Bay Area there hasn't been enough public transit strikes to show a direct effect on the value of nearby real estate—it may marginally add to the cost of living, and, depending on the success of the strike, to what you pay into local taxes, but it won't have as big of an impact as, say, the number of housing units available.

 

And the number of housing units available is determined by demand. The Bay Area doesn't have one of the strongest real estate markets in the country without reason: there is a high demand by people in and wanting to be a part of the tech industry, because of the local culture, direct access to various industries and inherently, the well-paying jobs.

 

Oakland is a great example of this phenomenon: the city has one of the worst police forces in the nation (now being directly watched by the federal government) and a huge crime problem. The city shares BART with San Francisco, and it has its own public transit system AC Transit, on strike. But the real estate market is growing. The reason: cheaper real estate compared to San Francisco and Silicon Valley, direct access to what smaller tech firms need and a growing industry.

 

Now all this isn't to say that transit strikes don't have an impact. They do. The BART strike alone is estimated to cost the local economy nearly $200 million. But strikes—impermanent and sporadic—have a far smaller impact on the value of long-running real estate market. Strikes, unless they signal a large cultural shift, have little impact on the value of homes.

 

(Maxime Rieman is a writer for NerdWallet, a financial literacy site that can help you find insurance company and other helpful consumer information.)

 Since we have readers from around the country, chances are the majority of you are not impacted by transit strikes such as the Bay Area is going through. The point here is the significance of selling a home with a "location location location" convenient to commuter transportation.

 

For those that do not live convenient to commuter trains or buses, information such as this means you should be ready to show potential buyers how other advantages and amenities your home provides would outweigh "commuting advantages".

 

 

Impact of the Improved Rental Market

Some interesting findings in the just released CoreLogic report regarding rentals across the country. Overall, it COULD be good news for the entire real estate industry. Emphasis on "could". Home owners and realty agents need to make it good news. Here is why.

CoreLogic's "Renter Applicant Risk Index" shows a rise in rental applicant scores in terms of credit and "ability to meet lease obligations" among what it terms "prospective apartment renters" over the past year. In addition, the other significant finding from this report is that applicant incomes were up during the first quarter of 2013 compared with last year. (This report includes single family rentals as well as multi-family housing.)

As positive as this sounds, it seems odd that while the economy struggles and job uncertainty and availability has shown little to no change in most areas that more people are better qualified to rent. We need to explore why that is.

My theory is that too many people are afraid of buying a home in this market and plan to wait it out. Part of this is the fear of losing a job and factors not directly tied in to the real estate market. In addition, the days of merely sitting on a home and having the value increase are long gone. Until or unless they return, a percentage of people will be content to rent.

Many of those who fit into one or both of those categories currently have the funds to make a decent monthly payment, but do not wish to commit long term. Hence, the ability to rent for six months to one year and have the flexibility to buy if conditions improve.

Meanwhile, too many home owners who are not able to get what they need for their homes and thus cannot sell, are not interested in renting their homes as a means to get into another property.

This is why the research report COULD be good news. With so many more and qualified rental candidates out there, why can't more sellers offer a "rent to buy" situation for their home?

It will take the realty agents to come around to this way of thinking, and to this point I'm not seeing it. While it does delay a full commission to the agent, an agent having several "rent to buy" situations is setting up for a nice payday down the road even though much of the "work" will have already been done.

Hopefully instead of waiting for the realty association to publish statistics comparing home sales to past years (which is not a motivation for a potential buyer), they will begin to promote a "rent to buy" scenario as an option to get sellers out of their current property.

The fewer homes for sale there are at a given time, the better the chance that home prices will return to previous levels and again show promise of profit potential over the years.

By not doing so, and with the increase in "quality" rental candidates, chances are many current home owners looking to sell are losing out because qualified "buyers" are renting where they know there are availabilities instead.

That is why these renters statistics COULD be good news. But first, the potential renters need the additional choices that current home owners could give them!

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.