Home Sales vs. Home Prices

The negative statistics about the current state of real estate continue day after day. Instead of any positive ones. Yet, over the past few days, I have been seeing more and more stories about the drops in home sales prices be presented in a positive light.

As much as I have been preaching the need for positive stories dealing with real estate, I also preach that these should be legit stories. Yes, home prices are generally dropping even further in much of the country. However, that doesn't mean it is a positive.

The point is being made that more recent drops in average home prices are not as much due to foreclosures and short sales as they have been over the past couple of years. This is being treated as a positive. I'm not certain that's the case.

That fewer homes seem to be getting foreclosed upon is certainly a positive. But that is not enough to group this fact with others relative to home sales.

Home prices being much lower than 5 years ago is not a positive for a large group of home owners around the country, perhaps the majority.

Even though foreclosures are down now, there are still a ton of homes around the country for sale at foreclosure or short sale prices. Those are in addition to distressed properties practically abandoned by builders and developers. The mere availability of this many properties at lower prices serves only to bring down the value of the homes surrounding it. And that is not a positive for more people than the number who can buy under current market conditions.

Too many home owners are right now stuck paying more than the property is now considered to be worth, and are under water with their mortgage. They cannot sell "for less". If they take a loss and have to write an additional check at the time of sale, there is no money for a down payment and to finance a new purchase. So there is no choice but to wait until or unless the local market returns to the point where they could get a price high enough to justify selling it.

Meanwhile, many who would like to take advantage of the buyers' market out there cannot. The availability of mortgages has gone full spectrum, from having been too easy several years ago to being way too difficult now. And that's for those who can even afford a sufficient down payment.

The same banks which contributed to this crisis are now cutting back instead of getting in there and actually (gulp) helping their customer bases. They are loaning on fewer properties, cutting back or eliminating options such as reverse mortgages, and sitting on defaulted properties they technically own due to foreclosures.

As a result, the banks are really a big factor in keeping home prices down, just as they are in keeping home sales down from where they could be. With no end in sight.

If only the news media would keep all of this in mind when reporting the "positive" news about the current status of real estate.

While HUD Has "no comment"?

After commenting earlier this month about the reduction of reverse mortgages, this article points out even more evidence of my point that seniors are looking at even fewer financial options in an effort to not outlive their savings:


http://www.chicagotribune.com/classified/realestate/ct-mre-0626-podmolik-homefront-20110624,0,6324717.column


The truly disturbing part of this article actually comes at the end, where the writer points out that HUD "had no comment". To me, this is an even bigger story than a large bank putting the stop on future reverse mortgages.

HUD is a government agency. The same government which appears to have practically wasted millions of dollars with its bank bailout program a couple years back. All that seems to have done is to bail out the coffers of some of the executives who may have helped to create this mess.

Having a government agency with "no comment" about this situation and its possible to probable negative impact on seniors is not a good sign.

Add this to the growing list of matters your local politicians should be discussing, but are not doing anything about.

Not that reverse mortgages are mass appeal or even ideal for every senior citizen. Without them, it is one less option for seniors. Here's hoping these seniors remember this when those same local politicans, who are now not helping them, come up for re-election.

An Orange Crush From China?

It appears that some of the smarter realty agents are also aware of what I pointed out months ago when it comes to seeking places that buyers might come from. A couple months back I pointed out the increase in cash buyers from Canada who knew to take advantage of certain Canadian tax laws in order to purchase properties in certain U.S. markets.

Now comes word of a noteworth increase in home purchases in the Orange County California area, specifically from buyers coming over from China.


http://www.ocbj.com/news/2011/jun/19/chinese-buyers-spur-luxury-home-sales/


Those agents who have been on top of this trend stand to do quite well for themselves by figuring this out at the right time. There is definitely money to be made, and buyers and sellers to satisfy, instead of continuing to knock on the same doors week after week.

All this going on while some agents continue to dwell in negative statistics about the market instead of seeking opportunities from wherever they can find them.

The next opportunity for aggressive realty agents might be seniors. With the uncertainty about Social Security these days, many more seniors are even more alarmed about outliving their funds along with their property losing value.

Meanwhile, some of the banks continue to bungle their finances and add to the chaos destroying the real estate market. This week Wells Fargo has announced it is discontinuing adding reverse mortgages:


https://www.wellsfargo.com/press/2011/20110616_Mortgage


This means even fewer options for seniors. While several mortgage brokers continue to offer reverse mortgages, they tend to be less aggressive about marketing them. I'm afraid that many seniors will read or hear the Wells Fargo announcement and give up on considering this option. The result will be less activity on the mortgage side.

Combine that possibility with the number of buyers from China paying cash instead of going the mortgage route, and it increases the financial bind that banks and lenders are finding themselves in, along with the many who seriously need to sell their homes.

If you are among those who need to sell, remember to look for sources and places your buyer could come from. Chances are the buyer you need is not local or you would have known about it by now. There is a whole world of potential out there.

Try The International Angle

Desparate times call for desparate measures, to borrow the cliche. This real estate market is certainly as desparate as many of us have seen in our lifetimes.

Sellers shouldn't give up hope, even if their agents have. I have commented several times over the past couple of years about looking to identify the logical potential buyer for your property. Face it, if your property has been listed for weeks (or longer), chances are the one buyer you need is not local, or has not been approached with an enticing reason to act.

While doing some research for one of my clients, I came upon an interesting piece from this past weekend. It contains suggestions for Canadians about steps to take in order to purchase U.S. real estate, and explains some of the factors to consider.

Upon first reading, the article seems complicated. Then again, I don't know Canadian tax laws and how their financial dealings within the U.S. work in comparison to this country.

This brings me to an important point. Properties are not selling. Yet, too many realty agents are staying within their territory, comfort zone, and the same approach no matter what. Sellers should expect more, or start doing their own research and homework to help their property sell.

Instead of reading the constant flow of negative sales statistics and passing out business cards at the local flower show, agents should be at the library or online researching the answers to questions they have about the Canadian tax laws raised in this story. I would do that in an attempt to find out which price range(s) would be most appealing to Canadians. If I had to, I would contact a financial planner or expert I know and have him or her help me with answers.

And I would do this by this Friday, with the idea of identifying a price range and ways to make properties appeal to Canadian buyers both financially and logistically.

Why by Friday? Because I would want to place an advertisement for the coming weekend's publication, perhaps the Globe & Mail which ran this story. They would be publishing stories geared toward their target audience, which tells me they are reaching at least some affluent investors who would find the story interesting.

If those same people saw an advertisement the following week (while the original story is still fresh in their minds) it would likely draw some responses.

Presto. I could gain some Canadian buyers ready to move on one or more properties to their liking, and demonstrate the financial advantages to them. And then collect buyer commissions in the near future, while developing a network for the future.

If I had a large property to sell, I would probably do this personally, and then tell my realty agent I have a buyer but I'd want a commission reduction because I got that buyer on my own. Even if I don't get that consideration, I would have helped to get my property sold while others are still sitting around on the market.

Although I don't normally give away my commission generating ideas this easily, for the sake of example, here is the article I'm referring to:


http://www.theglobeandmail.com/globe-investor/personal-finance/the-ins-and-outs-of-buying-us-real-estate/article2022807/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2022807


Keep thinking about who COULD buy your property, instead of retreading who can't or won't.

One Sale Does Not Change The Market

I'd like to think it was a reporter's attempt to make a story look like an important news story. No matter how large the amount of the transaction, this multi-million dollar mansion purchase is not a "market changer":


http://www.santafenewmexican.com/Local%20News/HIGH-END-Real-estate--10-5M-sale-could-signal-recovery


This story won't put a halt to other sales. But it also does not signal any trend. It is one transaction. In any real estate market, there are a limited number of multi-million dollar residential real estate transactions.

However, the story does cast a slightly negative light on the local market, and that is not good when it comes to the marketing of real estate. This story goes as far as to point out that this single transaction has a lot to do with the reported 18% increase in home sale prices for the quarter. Even though the property actually sold for less than it could have in better markets.

In other words, another potentially positive local real estate statistic shot down in flames. In this instance, it was by a reporter and not by a realty association, which seems to be the case in so many other cities.

As I have been saying for all these months, we need to change the "reporting" in order to change the mindset for marketing available properties.

I would like to think the reporter meant to say "Someone out there is willing to invest big bucks in the local real estate market" in a positive slant. Yet, adding in that this transaction was the reason for a home price increase and making it appear to be starting a trend took away any intended positive message.

The Rent vs. Buying Debate Continues

This is about to sound like I'm contradicting some past columns, but I don't think so.

Trulia.com web site has introduced statistical research designed to show that in many large cities it is "better" to buy a home than to rent.


http://info.trulia.com/index.php?s=43&item=123


Obviously, I'm in favor of ways to get homes to start selling at a much higher pace around the country. Yet, I don't think this is a way to accomplish this. For as much as I use statistics to make a point, to enhance my enjoyment of sports, and for a variety of reasons, I also understand that there are instances where statistics need to be better qualified to make the intended point(s).

In this case, the "decision" of whether to buy or rent is not based on statistical reasoning. The plane is not equal.

Fewer and fewer potential home buyers can qualify for a mortgage these days. Even fewer have sufficient funds for enough of a down payment to purchase and then secure a mortgage. Each time either or both of those situations occur, it takes away the "rent or buy" as an actual option. If they can't afford to buy, then renting becomes the only option.

Many people already know that the current real estate market is a buyers' paradise. Yet, as our elementary school teachers would have told us in this sentence, the same market does not contain a paradise of buyers.

What the statistics in the article fail to point out is that the majority of the people are not making the choice they are basing their information on.

One of my suggested results actually reduces the distinction between renting and buying, and it would open up both avenues for years to come.

I'll say it again. Make "Rent To Buy" a major part of our vocabulary. This is a drastic measure, but the state of real estate calls for it.

Make homes currently in status as bank foreclosures available for rental only via annual (or longer) leases. The monthly "rent" payment could be used toward a purchase after 5 years if the renter so chooses. After 5 years, the bank would have been collecting the "rent" money and would know the reliability of the tenant. This, instead of sitting on an empty home not generating any revenue at all.

If investors can't buy foreclosure properties at bargain prices, it instantly raises average home prices back toward the level of "real" sellers, instead of foreclosures pulling down the prices for everybody.

And those who currently cannot get a mortgage and/or afford a down payment have instant options.

Meanwhile, apartment buildings would then need more competitive rates for shorter term leases, which would likely help the rental market.

My reason for suggesting the 5 year period before the tenant could then "buy" the home is significant. Again, those consumers who have no other options (or a choice) would be able to establish some equity without the hassle of a down payment and initial mortgage. Yet, those who do have the funds for a down payment and the credit background for a mortgage could then buy now at lower prices. It is possible that 5 years from now, those who buy now could be able to turn that profit by selling high.

This situation can be created, and for everybody's benefit. But as of now, the 'rent' vs. 'buy' consideration is still not a choice. At least 80% of the time.

Finding The Best Candidate To Buy Your House

Looking to sell a home? Know your audience!

http://community.nasdaq.com/News/2011-04/allcash-home-sales-set-record.aspx?storyid=71985

This article from NASDAQ sums up the current real estate market as well as any other I have seen over the past 2 years. Yet, I’m not showing the link because I think this is a well done article. It is shown to make an important point.

The number of first-time home buyers has declined significantly, even compared with just one year ago when the market was already in decline. As this story relates, the trend for “investors” to pay cash for lower priced properties is still on the rise. While the tighter mortgage restrictions continue to make it a challenge for more and more people to get a mortgage, the number of first-time home buyers likely won’t be rising for some time.

Those who are currently home owners and would like to upgrade or downsize to a different home are often stuck with a mortgage they can’t get out of. If they take a loss to sell, they may not be able to afford what they want instead. And on it goes.

There is an important message in the NASDAQ story. Know your audience. If you are trying to sell your home, chances are you are doing everything you can to make it “family friendly” upon showings, and probably within your agent’s outside advertising. The above referenced article should make it clear that “family friendly” is not your audience.

Now, this doesn’t mean that you don’t need the new curtains or to keep the place looking good as new. But it does mean that you need to focus on the value of your home to an investor. That is who is buying, and, as statistics show, without the agony of waiting on getting a mortgage.

The priority should be on showing your potential buyer the ways your property for sale could make he/she/them money within the next 5 years. Although I have seen only a few examples of this of late, they are too few and far between.

One 3-bedroom home that I know of for sale has a lower level “family room”. It is not a basement, has window decorations and is a separate wing on that level. It so happens that the other homes in the development are all either 2 or 3 bedrooms. A few of the other units (both 2 and 3 beds) are also for sale, and now at well below the original new construction prices. Yet, only the advertising for this home points out that it is ready as a 4-bedroom home. At most, the current or new owner could put up a partition “door” and add more privacy, giving them a 4-bedroom home for under $100 (for the partition).

An investor with cash is more likely to see the value of getting a 4-bedroom house at 3-bedroom home pricing, knowing that he/she/they will eventually have a higher profit capability.

Again, based on current trends, being ready to show a cash investor how to get a 4^th bedroom in this home is a more likely “sale” than a first-time buyer with a big family knocking on your door to see it and then trying to get a mortgage.

Before I hear from realty agents out there, I am well aware there is a way this needs to be done. This property needs to be listed as a 3-bedroom home. Understood. But within the description and the “sales pitch” it should be clear that the easy opportunity exists to create a 4^th bedroom which would be larger than one of the upstairs bedrooms, without any room additions needed. That is targeting cash investors, and that is, at the moment, targeting who is buying.

Many homes for sale have at least one capability to increase in value with certain additions or improvements that cash investors would be interested in. A cash investor may not care about new curtains and new carpeting, which they could get for a few hundred dollars down the road when they are ready to sell. That same investor may instead notice if the property is zoned for an additional level, a pool, more parking, or whatever it may be.

Sellers should also monitor local business news. Watch for stories such as major retailers looking to open in specific cities or communities, new train or bus stations or routes, and new schools to be planned. A family, married couple, or individual probably doesn’t care about what will be built by 2016 nearby, but a savvy cash investor does. They can buy a property, hold on to it (without a mortgage to bog them down), maintain it, and be ready to put it on the market in time to be convenient to the new train station or whatever is being constructed.

Advertise the home without the “move in condition”, “near schools”, “breakfast nook”, and other sales points which target home buyers looking at 30 days from now. They either aren’t buying right now, can’t get a mortgage, or both. Advertise with any and every sales point that would cause a cash investor to see something that will be of value in 3 to 7 years. Know your audience.

Live In A Billboard?

The 'turn your house into a billboard' concept actually has some merit from a marketing standpoint.

If you haven't heard, an advertising company is looking at painting selected houses as advertising billboards for their clients, and paying each participating homeowner's mortgage for the length of the contract.

http://money.cnn.com/2011/04/05/technology/adzookie/index.htm">http://money.cnn.com/2011/04/05/technology/adzookie/index.htm>

Participants must own and live in the home, and there are some other qualifying points. But in this time of urgency in the real estate community, the thing to do is look at how this could help home sales.

I'm sure some of you are thinking "no way!" and how a home that is a billboard could make a neighborhood less attractive to potential buyers. That could be, but there are a number of positives to consider.

A homeowner having their mortgage paid for several months benefits with the opportunity to sock away a few thousand dollars. That money could be used for a home improvement, toward a down payment of a larger or smaller home in the near future, or to help pay off other debts.

Selfishly, the homeowner doesn't have to deal with an advertisement on the outside. Using my own warped logic over the years, I reason that I spend far more time looking at the inside of my home than the outside. Other people see the outside way more than I do.

Suppose you are a potential home buyer in a community where a home's exterior has been painted to become an advertisement. You would know that the "ad" home will be painted back to its original color(s) within a few months, and in fact will look BETTER at that time because of the fresh paint job. Chances are the seller(s) you approach will be more willing to reduce even further when you act like the "ad" home is a distraction to the neighborhood. Acting that way could get you an even better deal, saving you thousands of dollars, and getting a home sold within that community.

Even if people are annoyed at the "ad" home, they will be talking about it, and probably watching to see when it will be painted back. In today's real estate market, this would be a classic example of the "Any publicity is good publicity" theory of marketing.

With advertising being so omnipresent and scattered these days, having a house being an advertisement might not be any more annoying than large billboards that practically touch an expressway, advertisements in public bathrooms, on trains, buses, and everywhere else we look every day.

Let me add that I know nothing about the company planning this, am not compensated, and have no involvement in this project.

There could be positive benefits for people if this works. The real estate community needs every positive it can get. I can't paint that any clearer!

Can They Market Homes Better Than This?

I'm all for charitable donations and supporting a worthwhile cause. Meanwhile, the real estate market remains in a crisis, still lacking even one desparate measure in desparate times. I'm among those trying to come up with ideas and concepts to spur activity in the marketplace. I'm sure the charity mentioned in this story is worthwhile. Certainly the cause is.

http://www.stltoday.com/suburban-journals/metro/news/article_c996ae02-e223-5e29-9f70-0fa79adf73ea.html

The above story is about how a St. Louis area home builder will make a $1,000 donation to a specific charity for every home sold in a certain development. Fine and dandy - if you know of anyone who would purchase a home in order to have a charitable donation made. If someone is choosing between one of their homes and one or more others, would a charity donation sway their purchase?

I'm not wanting to sound mean. The intent is good. But the idea is to get buyers into homes. This "news story" really isn't good publicity. I'm disappointed that the reporter merely made this the P R piece the builder wants it to be.

Yes, I have a better idea for this very situation. Again, the idea is to get buyers into homes. How about these builders DONATE one of their homes to this charity? Let the charity "sell" the home to the highest bidder above a low reserve. This way, the "buyer" would likely get a better than ever price on a new home, AND it might be structured to be a huge tax deduction. (I'm not sure how the legal aspect would work, but I would like to believe some creative accounting could make this happen.) In addition to selling a home in this development, the builder would generate significant publicity from doing this and call attention to the entire development.

Buyers missing out on the "charity house" are likely to have come and taken a look. Maybe some would consider buying into the development, which would not have been a possibility otherwise. Perhaps other builders would look to do the same, whether for this charity or for another. One more idea out there to put buyers into homes.

Were Home Sales Statistics Truthful?

It's bad enough how many realty associations and industry organizations are adding fuel to the fire with the barrage of negative home sales statistics in this marketplace.

Now comes word that this might become a credibility issue as well. A Southern California based real estate data firm, CoreLogic, has issued a report claiming that the National Association of Realtors appears to have overstated sales of existing homes by as much as 20% over the past five years.

This puts a double whammy on the recent statistics. Many realty associations have been releasing data showing the drops in home sales with comparative statistics. These, of course, put the various local markets in a bad light. So if it indeed turns out that the earlier statistics (1 year ago, 2 years ago, etc.) were actually inflated, it means that home sales have been sluggish for even longer than these associations would have the public believe.

Now this is close to becoming a credibility issue totally separate from such a struggling market. The NAR shouldn't have to utilize its resources for crisis management while the very market it serves is in a crisis.

It has been too soon since the tragedy in Japan hit for us to realize how that is also another blow to the U.S. real estate market as well. Estimates are already coming that it will take upwards of five years to rebuild Japan. With the technology and innovations which have come from that country, I have to believe that international investors will be ready with funding to make sure it happens. That is funding which might otherwise be put into commercial properties and real estate related investing here in the U.S.

On the other side, think back to the early 90's and the California real estate boom. That "boom" was brought on in part due to overseas investors paying above and beyond the asking prices for upscale and high end homes in both Northern and Southern California. For many Japanese investors, high end homes in California were then a bargain compared with home prices in Japan at that time, even at inflated prices here in the States.

Now, especially with the incredible disaster facing Japan and the world, any such international activity in the United States is out of the question. Another blow to the U.S. market.

As much as I dislike using negative statistics in this marketplace (although I'm not representing a realty association in doing so), this is already showing up.

This past weekend, the Orange County Register (So. California) reported on the total sales for February 2011 as well as the first half of March for "luxury homes" (millions of dollars) in Newport Beach and Laguna Beach totaled: zero. After there were sales during January.

If only the focus could turn to how to get properties sold, instead of what the statistics should show.

The Industry Still In Denial

It was just another day of reviewing real estate news looking for something other than the usual real estate professionals releasing negative statistics. Until I came upon a story from Springfield IL.

Of course, the story contains several negative statistics released by the local Association of Realtors. What makes this story so incredible is how the Association President blames "the weather and high gas and food prices" for the drop in home sales.

See for yourself:


http://www.sj-r.com/top-stories/x1777816246/Weather-economy-cited-in-24-3-percent-home-sales-drop



It's time to blame the Assn. President for not giving this story a much needed positive twist. If I had read that during Feburary 165 home sales were completed in the Springfield IL area, I'd could have been impressed. That month included a severe blizzard, a substantial increase in gas prices, etc. Yet, during that time, an average of more than 3 homes were sold every day. Someone could have figured maybe there are reasons to buy in that area.

It can't be that so many agents are in such denial. At least, I hope not. This is perhaps the worst case of the "You wouldn't want to buy a home here, would you?" syndrome I have seen coming from industry members.

We should all be working on solving the current problem. It is getting more serious every day. Many of those who are not afraid to purchase and can afford to can't get a mortgage. Even more can't get rid of their current property to make their next purchase.

Yet, this guy wants us to believe that if there was not a snowstorm, if gas was still at $2.40 a gallon, and the food crop was better this winter, more homes would have sold.

Not exactly a solution.

Here is it a month later. The snow is all gone. I'm still putting gas in my car, and still eating my regular meals every day. But my house still hasn't sold after more than a year on the market.

I suppose that's because of the St. Patrick's Day parades? Guess we'll find out next month.

Would Outside Incentives Help The Purchase Market?

Some realty firms and builders have stepped up efforts with offers of an incentive, often worth thousands of dollars, to buyers upon closing. The trend seems to be leaning toward the incentive being something not specific to the property.

Offering or giving an incentive to a buyer is nothing new. In the past, it might be new furniture, a big screen TV, or some sort of a services discount or gift (i.e. free maid service for 3 months).

One big difference with incentives now is that many more are offered to buyers, whereas in the past it was often incentives to realty agents who brought the successful buyer. Even though it was about 20 years ago, I still remember a time I was doing a marketing presentation at a realty association meeting in the Los Angeles area. While waiting, several agents were pitching new listings they had to the other agents in order to draw attention in a then hot market.

The owner of a realty office with about 12 agents got up, pitched one of his listings, and then promised "an additional $5,000 in commission on a sale from any of you who get me an offer by 5:00 PM today". Now that was "creative selling" at its best!

Of course, at that time, his purpose was to attract attention to his listing and make other agents remember it ahead of hundreds currently available within the same area. And attract attention he did. Yet, the eventual buyer of that home had no clue. The "incentive" was used effectively where it needed to be.

Recently, I have seen sellers, realty companies, and builders offering some interesting incentives to the actual buyer. These range from a pick-up truck to installing hardwood floors. Some are specific to the property, others are geared toward the buyers.

A realty company in Birmingham AL offered a 4-year tuition to the University of Alabama Birmingham Medical School (over $22,000) with the purchase of a unit in an upscale development. The Birmingham News reported there were no takers. (On a separate note, that incentive was stopped. That was dumb to stop it. They should have continued it since not many other incentives are valued at more than $20,000, and if they got a "taker" the local and national publicity it would have generated would be worth far more than the amounts paid out!)

I also saw a news story about a seller who allowed the asking price to be reduced by $2,500 per week for several weeks.

In an active real estate market, such methods make sense when the idea is to make "your" property stand out. Agents and builders want buyers to consider their property ahead of others they are looking at. Of course, this assumes there are plenty of active buyers out there.

That's the difference. Right now, thousands of dollars worth of incentives don't matter nearly as much when people who want to buy can't get a mortgage and/or can't sell their current property to guarantee a move. Unless they are the right incentives.

For many, the "right" incentive would be a buyer for their current property so that it can lead to the next sale, or being able to get better financing for a first-time buyer.

Somehow, there has to be a way for "regular" sellers to compete against the foreclosures and short sales. But first, we need for buyers to compete. Period. The fact that there continues to be so many foreclosures and short sales on the market tells me that there people are not buying, even at lower prices.

Until people and investors can start buying a serious number of properties, a big screen TV or a pick-up truck won't make a difference.

Those Negative Home Sale Statistics

You would think that Realtors would know not to make things any more embarassing when it comes to their take on the current state of home sales.

Now comes word from Minneapolis that home sales in the Minneapolis area declined more than 30% when compared with one year ago for the last week in February. This "report" points out how that week's drop was more than double the 12% decline of the previous week. Put that "report" together and it spells an alarming and disturbing trend for anyone trying to or thinking of trying to sell a house or condo in that area.

This "report" tries to make the excuse that sales were higher a year ago because of the real estate tax credit which was available to first-time buyers and sellers under certain conditions at the time. That tax credit is no longer available. Therefore, by making this excuse, this "report" is really pointing out how the market conditions are really less favorable compared with one year ago since that tax credit is no longer available to anyone. Such a "reminder" to the concerned consumers reading that certainly doesn't help the situation either.

Yet, I am sorry to report that there is one more disturbing element to this "report", as if the negative news to current and potential sellers isn't already enough.

It seems that this "report" that contains all this discouraging information didn't even need to be released to the media to spread the word about how miserable the market is.

Let me put it another way. It SHOULD NOT have ever been released. It could have been prevented.

The source of this information is the Minneapolis Area Association of Realtors. You read that right. The dues money that agents and realty offices throughout the Twin Cities area is going, in part, to have information such as this released to the public.

Why there is this need for realty associations around the country to continue to pump out even one negative statistic is beyond me. I would understand if this information was coming from outside public companies, investment bankers, commercial property brokers, or banks which do not handle mortgages by way of news releases. Entities such as those are looking for large investor monies and would take the chance to bash something competing for investment dollars.

"People aren't buying real estate to make money, but if you invest with us, you could earn x% within 10 years", could be used to entice wealthy consumers to invest in long term bonds or certificates which assure a payoff at some point.

Instead, the industry continues to shoot itself in the foot. Worse yet, they are helping to take down thousands of current and potential home sellers in the process.

Having said that, I have other news to report specific to the Minneapolis area. During the last week of February 2011, just 2 weeks ago, 608 initial purchase agreements for houses or condos were signed. That means that, while some people are questioning the real estate market at the moment, about 600 properties were sold within one week's time in and around that major city! And that's without a tax credit or any other significant incentive.

In fact, I was able to verify that statistic with the Minneapolis Association of Realtors. It again shows that if you dig hard enough, you can find some good news for consumers.

More Ways For Banks To Send The Wrong Message

The majority of us can certainly understand the need to tighten up the mortgage industry after the fallout from too many subprime and high risk loans which failed a few years back. However, the punishment still doesn't fit the crime.

Getting a mortgage continues to become even more of a challenge these days, with upcoming additions to the process potentially raising costs for consumers and for mortgage brokers starting in April. At this point in the real estate crisis, issuing mortgages is no longer the problem.

New research starts out as a positive statistic, to indicate that more investors are paying cash for properties as they take advantage of the good deals out there for buyers. New research of the Southeast Florida market (from Palm Beach to Miami) shows that more than 54% of houses and condos sold there during the 4th quarter of 2010 were paid for in cash. (This research was provided by Zillow.com.) That comes to more than 7,500 sold properties PAID FOR WITH CASH!

The purpose of these statistics is to show that homes are selling and the deals for buyers are good. And that could be. In 2006, about 13% of homes were purchased with cash. From a little more than one in ten to more than half - in under 5 years. Of course, in 2006 there were plenty more mortgage programs more easily available.

What does today's trend have to do with the banks? Plenty.

Face it, the majority of the 7,500+ homes paid for with cash were bought by investors. I'm sure a percentage of them bought more than one property at these low prices.

Yet, these investors paid in full instead of going for mortgages. If you have the cash, you'll get a mortgage. But in just this one slice of the country, there were about 7,000 possible mortgage transactions that did NOT happen. It's time to look at why.

My guess is this is because of how little the banks have to offer in return for cash today, even when compared with 2006 when mortgages were the vast majority. A savvy investor wouldn't put up the entire $200,000 for a condo when they could get a decent return on a long-term CD instead. So they would get a mortgage, enjoy the tax advantage, and pay it off as scheduled, while investing the remainder of their funds someplace else.

It could have been CD's, Money Market, or other bank programs that paid more than the paltry amount they pay now. No reason for investors to look in that direction today.

If getting a mortgage wasn't such a hassle, a savvy investor could make a $40,000 down payment on 3 separate properties valued at $200,000 each, and have working capital left over to pay the mortgages for months to come. Then, they could invest their "working capital" into short and long-term CD's to grow their money toward future property payments, or use a home equity loan on one property to help pay down the others.

But now, these investors are passing by the mortgage opportunity and putting their trust into turning a profit as the market turns for the better. Heck, if an investor were to sell later this year and only make $5,000 more on a $200,000 property, they would likely do better than with a 6-month CD.

Some consumers watch for trends by investors. Now they can see that a bigger percentage of people buying property are NOT getting a mortgage, even when they could. Not exactly an incentive for the typical consumer to want to take out a mortgage to buy another property.

Oh, I also have a hunch that the 7,500+ sellers who received cash from the buyer probably didn't use their money to start a savings account and watch it grow.

Hopefully the banks will do what it takes to bring back the home mortgage as a viable option, before it's too late.

How To Win The Buyer vs. Seller Matchups

As I have said throughout the real estate crisis, advertising and marketing continues to play a significant role in turning the market around. Not only how much, but how.

Agents advertising their listings need to, more than ever, focus on who the most logical potential buyer is. I’m not talking about ethnicity or nationality, or anything else that cannot be included within an advertisement. It is where and how you advertise a listing that makes all the difference in today’s market.

If you are a buyer, or an agent fortunate enough to have a sincere buyer, consider their needs. When you have an individual or group which is investing, that is when you might look closely at “fixer-upper” listings. At least, any which are at the lowest of the low in terms of price for the area the property is in.

This way, an investor can be presented with two options. Point out that he/she/they can look at flipping the property in the near future if local price comparisons would work in their favor. Or, point out how by contracting certain improvements over the next few months could place the property in the caliber of a comparable “move-in condition” home in the same community.

For example, suppose you have a 3-bedroom fixer-upper reduced to $175,000. Your research shows a nearby 3-bedroom home in “move-in” condition listed at $188,000. Let the investor see what needs to be done in order to equal or “beat” the $188,000 home, and let the investor determine the approximate cost to make that happen. If there is a fit, the investor then has a direct reason to jump all over the $175,000 home.

Why only show the “fixer-upper” to investors? Frankly, too many agents pushing listings should know the answer but don’t.

With the huge amount of inventory out there, many agents overlook that buyers looking for a home for the family or even themselves don’t need to purchase a “fixer-upper” and spend and work themselves crazy to save a few thousand dollars anymore.

They are finding ready-to-go homes that don’t need much work for right around the same price. Conditions have changed because of all of the lower priced homes out there in most communities. Families no longer have to buy the house without a floor but with cracked walls for less money in order to move in to the area they want. Chances are they can get a great price on a “ready to go” home that lets them spend Saturday afternoons at the movies instead of on their knees scrubbing.

Agents need to keep these factors in mind when trying to move their new listings. That includes advertising and marketing. Some buyers want the best place to move into and have it be functional. You should be able to point out that “for $5,000 more, you save the $10,000 worth of work and the hours of your labor to fix up the other property” to a family.

At the moment, the way to go is to think in terms of matchups. What fits best for the situation. In basketball, the best scorer on your favorite team doesn’t always match up against the opponent’s best scorer. It depends on which player is best equipped to defend. When it comes to a job opening, it isn’t always qualifications. It is often which candidate best fits in with others on the team that determines the hire. And in real estate, it now needs to be the buyer with the “best fit” for the seller. But first, it needs to be pointed out.

Agents - Get Your Clients Into The White House

Now that I have shared this with my valued clients, I thought I'd share something for realty agents to share with some of their buyers and sellers. Especially those with teen children.

The deadline is coming up for applications for interns - at The White House. What does this have to do with Real Estate? Nothing.

What does this have to do with your appropriate buyers, sellers, and clients? It could a lot. In this (or, for that matter, ANY) real estate market, agents need to distinguish themselves. Not just sending out newsletters and reminders which have no bearing to the local market or what he/she is all about.

Suppose you have clients with children in high school. This is a reason to call or e-mail them and suggest that (names) apply for a White House internship. This shows your clients you are thinking of specifically them. They may pursue it, they may not. But chances are they'll tell others about what you did for them.

Once you get their attention, send them this link:


http://www.whitehouse.gov/about/internships?goback=%2Egde_3571887_member_45547363


Of course, I suggest to my advertising and marketing clients that they follow back in a few weeks to ask if (name of child or children) applied. Maybe they received a response from someone at the White House! Trust me. You'll get a more favorable reaction than if you called them to ask about local home prices.

How Banks Can Turn Around The Real Estate Market

It’s one of the first marketing and public relations tips a young person learns. Do your best to turn a negative into a positive. That thought should be in big, bold letters in every banker’s office in the country.

There I was reading more less than encouraging predictions for the real estate market last night. About how the banks continue to slow down the foreclosure process, claiming it is because of the government’s mortgage modification programs. Whether or not such is really the case or if certain bank executives are too busy counting their millions in bonus money I don’t know. But I do know that this is the single most damaging element to the current real estate crisis.

Considering how the government handed over all those millions to several large banks instead of paying back thousands of specific loans, it is up to these same banks to make the sales of foreclosures the number one priority.

If you wonder why I blame the banks as I do, there is a quote from a Chief Economist at Standard & Poor’s in Banker & Tradesman saying that “The time it takes to do a foreclosure has doubled” in a story published earlier this very week. This is a lot worse than banks with one teller and 10 people in line, and our usual service gripes.

Those few consumers or investors with enough funds and/or secure enough employment to risk purchasing a residence don’t care if the next great deal is a foreclosure or a desperate seller with other motivation. They want a good deal. But if the banks are stalling the sale of foreclosures, it really means that those homes which are not under foreclosure seem “higher priced” to a potential buyer and thus less appealing.

Suppose the banks knew they should thank their lucky stars the government handed over the millions to keep them in business and got serious about helping the economy. And they made it so that homes under foreclosure were EASY to purchase and quick to close. That would entice the investors and potential buyers to get in on the best deals first, while they last.

As foreclosure homes start to sell at reduced prices, it would raise the number and percentage of available homes sold. If several homes under foreclosure in the same community were to sell within a short period of time, that would create a demand for homes in that area. Now the lowest priced homes have been purchased, and that opens it up for the most motivated sellers to adjust their pricing to be the next sale.

However, as long as the banks play the stalling game and degrade the sales of foreclosure properties, home values across the country continue to plummet and millions of current mortgages stay under water. While the banks continue to raise service fees for consumers and businesses and sitting on their foreclosures, they could be taking the lead to stimulate this economy. Here’s hoping they get the message and get aggressive about finding buyers for their properties. Quickly. Or renting them out for a monthly income. Before it’s too late for them, and for us.

Foreclosures are a negative, but I see the way to turn them into a positive.

Detroit property high on search list?

The NAR has put out some startling news that puts a positive spin on the market, for a change.

Yet, it is hard to believe. They claim that the 2nd most search city on Realtor.com is (Are you ready for this?) none other than Detroit.


http://lansner.ocregister.com/2011/02/24/americas-most-searched-housing-markets/100849/


I can understand Chicago being on top of the list, even with its snowiest February in more than 100 years. My thinking is this is because a number of area residents got so fed up with winter that they would consider selling, and want to compare area home prices. Still others who live within the city limits of Chicago are not happy with the actions of the soon-to-depart Mayor, and are looking to move out of the city and in to the suburbs or perhaps beyond.

But Detroit?

The only thing I can figure is that with houses there being priced so low, and with the banks paying next to nothing for Certificates of Deposit and other investments, a number of people are looking at buying and holding properties in the Detroit area for a few years. They figure somehow the city will be rebuilt or at least be brought back to life somehow.

Meanwhile, this is the sort of information that the NAR should be putting out. It reminds people that consumers are using their sites and continuing to search for properties. This is much better than the damage they do by actually releasing the "home sales are down x% compared with last month and last year" stats they seem to constantly do. Those only reinforce the belief that the market is bad. Not that it is great, but people within the industry need to keep a positive slant at all times.

VA Loan Mess Exposed

It's bad enough that even the largest of banks have added to the mortgage mess. Now the word comes out that Wells Fargo, Wachovia, and SouthTrust caused problems on some VA Loans resulting in a settlement just announced for veterans:



http://www.armytimes.com/news/2011/02/military-wells-fargo-mortgage-refunds-022111w/


It turns out this settlement was from a class action suit filed 2 years ago. So the veterans who have served our country get some money back, finally. That's the only good news out of this story.

But hold on. This raises some important questions:

1) How does the government, consisting of people we elected, let this happen? Why did the bank executives receive their millions of dollars in bonuses from the government "bailout" more than one year before veterans who have served received a settlement pittance?

2) Why is this story not all over the media? How come I found out about this via an article in the Army Times?

3) If this lawsuit was filed 2 years ago, how much did the law firm receive from this settlement or via other means? Sorry, but my hunch is that the amount they were paid took away from the pittance the veterans are getting.

4) Are you, the reader, outraged over the quote from Wells Fargo Home Mortgage Co-President Cara Heiden of “We hope that by settling this matter, we can demonstrate to veterans our steadfast commitment to doing right by them.”?

Some commitment. Two years later, a class action suit gets settled. If Wells Fargo was "commited to doing right", why did it take this LONG to pay out?

Time to say this still again. The next time the banks mess up the mortgage industry, let the government pay back the outstanding loans. Let the banks struggle for themselves. Please don't make the same mistake again. They penalized the mortgage holders and helped those who screwed them. Keep this in mind the next time you vote to elect someone to office.

Real estate agents - Let Your Dog Help Sell Your Listings

One of my media coaching clients a few years ago had mentioned to me how much he enjoyed walking and how his dog was more or less conditioned to walk a couple of miles with him each day for exercise. Of course, I asked where he would do this and he told me how he would drive the dog over to a big park less than 5 minutes away. Which prompted me to ask him when he sold real estate.

He didn’t get the connection. I asked him why he wouldn’t walk the dog around the neighborhood and meet the other dog owners nearby in the process, and he didn’t know. I told him that’s why he had hired me. Having the training to address a group of people with confidence also applies in one-on-one situations.

His dog-walking time was taking away from his real estate time when it didn’t have to be. At least he was a very good listener, and that’s not something that can be taught.

Starting the very next afternoon, he began daily extensive walks within the square mile area surrounding his own house, which happened to be part of his farm area. He began to notice which houses had the dog houses, “Beware of Dog” signs, and/or the sounds of barking when he walked by. Over the course of the first three weeks, he was able to develop a route to “just happen” to walk his dog by many of the houses owned by dog owners.

Naturally, he got a few opportunities to say hello and meet some of his fellow “neighbor” dog owners. These other dog owners realized his consistent walking of his dog on a regular basis, and they became more familiar with him. After a few casual greetings with them, he would take the chance to mention that he handles real estate within the community and loves to work with dog owners because he so clearly understands their needs and requirements to find a suitable home. He would, of course, have business cards with him during his walks and gradually passed them out to neighborhood dog owners.

Even though his business cards said nothing about dogs, he soon got a referral and was successful at finding an ideal fit for a family with two large dogs and brought them into the neighborhood. Other deals followed over the next couple of years.

There was no extra cost for his marketing campaign. In fact, it didn’t even take any more time out of his daily routine. All it took was knowing how to create and follow up in a marketing situation. So if you still think the real estate market is going to the dogs, then take yours for a walk where it counts.


http://www.RealEstateMediaCoaching.com