Monthly Archive for November, 2008

Selling A House in the Turkey Season

Published
by
preynolds
on November 27, 2008
in Home Selling and Uncategorized
. 104 Comments

Today, Turkey Day, is also the start of Turkey Season when it comes to selling a home. That is, from a seller’s perspective, the going gets tough from here on out.

People are out Christmas shopping. They’re thinking about their holiday parties. They are planning winter vacations to small Caribbean nations. In parts of the country, they are deterred from leaving the warmth and comfort of their own homes due to howling winds and cruelly low temperatures.

They are definitely not thinking of attending your open house.

 So how can a seller successfully attract more potential buyers in this holiday season?

  • Use the holiday as your opportunity to stage the heck out of your home. Holiday decorations, wreaths, holly and mistletoe can make your home seem cozy and inviting.
  • Don’t overdo it or get tacky. Plastic trees, Christmas cards everywhere, and too much tinsel and Santa figurines can make your home seem cluttered and smaller than it is. Opt for a more streamlined look — perhaps a tree in one color theme, along with classic wreaths and red bows.
  • Make sure your home is in top shape, inside and out. In the spring months, you can make even a shabby home feel nicer by planting flowers and keeping the lawn mowed. Winter is much less forgiving. Make sure your home sparkles both inside and out by doing high-impact, low-cost maintenance. Repaint. Shampoo carpets. Upgrade lighting fixtures. And be sure to keep the front walk shoveled.
  • Pay special attention to your windows. Potential buyers will notice if wind is whistling through the window panes. Make sure your windows are well-sealed and consider replacing windows that really need it. Wash all windows as dirty windows are especially noticeable this time of year.
  • Don’t forget about your yard. True, there’s no lawn to mow, but there are branches to trim, leaves to rake and snovel to show.
  • Keep your house warm for a showing. A cold home will immediately raise a buyer’s suspicions that a heating system may not be working well, or will be costly to run.
  • Offer incentives. If there’s anything you can offer to make your home more appealing — to pay closing costs, a decorating allowance, etc. — consider offering it to catch buyers’ interest. 
  • Be aggressive in pricing. Buyers expect deals this time of year, and a property that appears to be a good deal will attract notice, no matter what the season. Now is not the time to “test” the market with a high price just to see if someone nibbles.

Real Estate Relativity

Published
by
kmunsell
on November 26, 2008
in Home Buying, Home Selling and Market Conditions
. 128 Comments

If people are waiting to hear that the market has hit rock bottom before they’re willing to buy a house, maybe this is it, or maybe not. According to a new survey of more than 1,500 real estate agents conducted by Campbell Communications, 52% of real estate agents said that we will see “rock bottom” during the first half of 2009. A smaller proportion feels differently; 7.7% said that prices have already bottomed out, while 16.5% believe that 2010 or later might be a better guess.

This research identifies several obvious problems in the market. For one, homebuyers are having difficulty selling their current homes and obtaining loans. They also fear that home prices will continue to fall after they’ve purchased. In addition, sellers remain unrealistic about what their home is worth and continue to price them well above the going rate.  In other studies, Coldwell Banker research found that more than three-fourths of its agents say that sellers have unrealistic initial listing prices, while Zillow research found that about half of homeowners believe their home has increased in value or stayed the same over the last year.

So how can one rationalize this market and move forward? One way is to consider your decision to purchase under Einstein’s the theory of relativity, which in states that all entities moving at constant speed should observe the same laws of physics. In real estate this means that your current home is losing value similar to the way your dream home is falling in value. Sell low, buy low and in the end it’s a wash.

As always, there’s a difference between any theory and practice, but with a bit of prudent strategy, such as purchasing a home on contingency to avoid owning two homes and working with your bank to pre-qualify for an affordable loan amount, your dream home may be closer than you think….at least in theory.

Shaving $135,000 Off Your Home Mortgage

Published
by
preynolds
on November 25, 2008
in Home Buying and Progressive Trends
. 242 Comments

It’s no secret that life in the suburbs requires a car. You need a car to get to work. You need a car to drop junior off at soccer. You need a car even to do small, mundane tasks — like pick up a quart of milk.

Despite this inconvenience, families have been lured to the suburbs for decades because they seemed to get so much more bang for their buck. Instead of packing into a tight two-bedroom condo, a family could spread out in a 4-bedroom faux colonial, with a big yard and garage. And probably at just a fraction of the cost of the diminutive city condo.

But guess what? None of it was true. In fact, there’s a hidden tax to life in the suburbs and it’s pretty substantial, just by virtue of the fact that owning an automobile is no longer a choice, but a requirement.  In fact, according to real estate developer and University of Michigan professor Christopher B. Leinberger, owning just one car is the equivalent of having an additional $135,000 mortgage in your life after you deduct mortgage interest. That’s because the average cost of owning and maintaining a car in 2008 was more than $8,000 a year, according to the American Automobile Association.  That includes expenses like gas, parking, insurance and visits to the mechanic. The average family must earn almost $12,000 in pretax salary, just to pay for one car. Add two cars to the mix (as is required for almost all surburban families) and that’s $24,000 of a family’s hard-earned salary going just to feed and maintain two cars.

But when was the last time anyone tacked on an additional $135,000 to $270,000 onto the cost of a suburban house while out househunting?  There’s evidence, though, that this is about to change. The public response to the run-up of gas prices earlier this year suggests that homebuyers are beginning to factor in the true costs of living in the suburbs. Leinberger, in fact, has argued that the overbuilt suburbs, without much in the way of public transportation or walkable city districts, will become the slums of the 21st century as the size of American families decreases and as gas and heating costs climb. Supporting this view is the fact that housing prices in recent months have fallen much faster and further in distant suburbs than they have in city cores. In some cities — housing prices in hot city neighborhoods have even gone up.

It may be that homebuyers are finally learning the true costs of home — and car — ownership.

How Much Can you Undercut before you Cut Yourself

Published
by
Editor
on November 24, 2008
in Market Conditions and Progressive Trends
. 10 Comments

I’ve been reading about some of the newer buyer-oriented websites aiming to undercut the big boys of Redfin, Trulia, and Zillow (Yes, all of them are knee-deep in budget cuts and feature add-ons).  The new Boston-based HouseSavvy undercuts the under-cutters themselves, and is one of a handful of bare-bones websites looking to take a chunk of the turning market.

Like Iggy’s House, HouseSavvy is offering free listings on the MLS and a dramatically reduced commission (in fact, Iggy’s House real estate staff is salaried and earn much less on commission than you’d think).  While both websites are aesthetically “meh”, they’ve got me wondering: how low Online Real Estate can go before they cut themselves out of existence?

We can see a lot of analogous business models in other areas, with the mantra of “we are willing to do more for less.”  Is this innovation, or is this a short-term, impulsive reaction to the recession?

These sites lack some of the extravagances of the big boys, like rich content, maps, and other features, but like FSBO’s, their beauty is in their simplicity.

I’m just wondering if the CEOs can feed their children.

If so, kudos.

House Hunting the Green Way

Published
by
preynolds
on November 21, 2008
in Home Buying
. 104 Comments

Househunting has changed a lot in recent years — and for the better, from an environmental standpoint.

 Not so long ago, searching for a new home meant piling into a car to take endless drives through distant neighborhoods. By the end of an intensive week of househunting, not only were buyers exhausted but they had also spewed a good amount of car exhaust into the air.  These days buyers and realtors have wisened up.  Nobody leaves home until there is a substantial amount of data under their belt. Of course, this watershed change has occured thanks to the internet, and specifically, the ability to find MLS property listings on so many different realty websites.

But there are other tools out there that have made househunting a whole lot greener than it once was.

First, by using Google maps, buyers can take a virtual walk through a neighborhood. Using Google’s Street View tool, it’s possible to learn a lot about a neighborhood, including whether it is suburban or urban, whether, it is trashy and dirty or clean and well-kept, and whether streets are tree-lined or devoid of greenery.

After a virtual walk using Street View, buyers can move onto Walkscore.com. At Walkscore.com, you type in the address of the home that interests you and you come up with a score for that home’s “walkability,” along with a street map of nearby businesses. Scores run from 0 to 100, with 100 being a walker’s paradise and 0  meaning driving only. Want to know how close the nearest Chinese take-out restaurant is to your prospective new home? Walkscore will spell it all out, complete with a map, so that you have a precise idea of exactly what sort of businesses will help make your neighborhood a livable one. Even better than a drive-by. 

Delving more deeply into a neighborhood’s plusses and minuses, it is possible to go to places like www.policymap.com and find out the crime stats in your neighborhood, and whether most of your neighbors are Republican or Democrat. You can also determine how much your neighbors make, what kind of loans they’ve taken on their homes, and whether they rent or own their home.

Finally, the last step in green homebuying is taking the leap of physically visiting a property. But here again, there is now a green way of doing so.  Several realtors around the country, including one realtor in Colorado Springs, Coloado have begun offering homebuyers bike tours to look at properties. It’s good for the environment, good for your waistline, and an excellent way to get a feel for a neighborhood.

Of course, green house hunting is only the beginning. Then comes the hard part of living in your new home in a sustainable, earth-friendly way.

Searching for the Perfect Mate

Published
by
kmunsell
on November 20, 2008
in Home Buying
. 1 Comment

Have you ever noticed that house-hunting is a lot like dating?

It can be just as exciting, just as stressful, and just as time consuming.  Of course, some people are old pros at it and are completely on top of all the latest techniques and tools, while others are looking for their first home, or getting back in the game after a very long time. Then again, there are others out there who just like to look, while others are playing for keeps! Of course, that’s not where the similarities end–the game playing rules are largely the same:

  • First impressions are everything. Sometimes the photo alone can turn you off.
  • Curb appeal is important, but it’s certainly not everything.
  • Consider your prospect sans the staging—is this something you can wake up to every morning?
  • Set realistic expectations and understand that an ideal match may not exist. What compromises are you willing to make and live with?
  • Never appear desperate or unstable, even if you do get emotionally involved. These are unflattering qualities in any negotiation and can only hurt you later.
  • Don’t appear too available. This also may harm any leverage you have in negotiations.
  • Don’t string the other party along if you’re not interested.  If there’s no chance of a long-term relationship, let them down nicely.
  • Contingent offers and lowballs can really &%%$ off the other party. Commitment goes a long way.
  • Limit your spending and don’t look outside of your league—you’ll only set yourself up to fail.
  • Seek help when you need it from other people.  Family, friends, or inspectors may be able to identify flaws that aren’t immediately or obviously visible.
  • Take your final decision seriously—you don’t want to have to trade up in a few years…or do you?
  • If this one doesn’t work out, another will come along. There are plenty of fish in the sea.
  • Love at first sight does exist and you’ll know when it’s right.

The New American Dream, Downsized

Published
by
kmunsell
on November 19, 2008
in Progressive Trends and Sustainable Living
. 172 Comments
Danielson Grove Community by Ross Chapin Architects

Danielson Grove Community by Ross Chapin Architects

Green is the new black, small is today’s big, and less is now more. These are the rising undercurrents of the real estate market and of our lifestyles today. As life becomes more complicated, the need to simplify is undeniable.

True to form, the notion of the American dream home is evolving in response to the new economic realities that we all face. Not long ago, the American dream consisted of a 4,000 square foot home in the suburbs, complete with a three-car garage and a media room. We searched for where your dollar could buy you more, but now it seems we seek where your dollar buys you less (square footage, that is).

The small home movement is clearly gaining momentum. According to the National Association of Home Builders, the typical American home has gotten smaller in the last two years. Baby boomers are now empty nesters, the number of families with children has decreased, and Gen X and Yers are falling in love with life downtown. Demand is on the rise for smaller, cozier digs which are less costly to maintain, closer to amenities, and environmentally more friendly.

Some small-house options that are looming large in today’s market include:

  • “Pocket” or Cottage Neighborhoods: Master-planned communities of dense, compact homes arranged around shared garden areas that encourage high-efficiency living. These neighborhoods capitalize around being “livable, walkable, and more sustainable.” Examples include Danielson Grove and Third Street Cottages in the Pacific Northwest, designed by Ross Chapin Architects.
  • Packaged Architecture: A unique line of homes by De Maria Design Associates created from recycled steel shipping containers and predicated on cost and construction savings, as well as energy and environmentally conscious priorities. The prototype and award-winning model is located in Redondo Beach.
  • Active Adult Communities: Targeted at the baby boomer generation, master planned communities such as Trilogy by Shea Homes offer smaller homes organized around community amenities for “active adults.” Higher density neighborhoods allow older adults to enjoy low maintenance, luxury style living around California, Washington, Arizona and Florida.

Let’s hear it from you–with today’s economic and social realities, has your notion of a dream home changed? What home attributes do you find desirable these days?

‘Tis the Season to Buy a House

Published
by
preynolds
on November 18, 2008
in Home Buying and Market Conditions
. 112 Comments

Traditionally, the week before Thanksgiving marks more than just the beginning of the holiday season. In the housing market, it marks the beginning of the winter doldrums, when home buyers can expect to find exceptional deals that just didn’t exist back in September and October. True, there may be fewer homes on the market, but the homes out there come with eager sellers attached. Some of these sellers were overly optimistic during the Spring house-buying season, and are desperate to unload their houses before frigid temps set in. That may be especially true in northern states where homeowners have to worry about pipes freezing, snow-plowing and all the rest.

Depending on where you live, the winter bargain months can be quite pronounced. On average, realtors say that prices drop about 3 percent below average in the winter months with many of the best deals negotiated between Thanksgiving and New Year’s Eve. In some markets the seasonal price deferential is even greater. Of course, the winter “doldrums” doesn’t really apply to toasty warm climes in Florida, and California, nor to winter resort areas like Aspen, Colorado.

But here’s a question for market watchers: will this year’s “sale season” mark an unprecedented bargain blow-out when combined with economic factors such as the credit crisis, mounting joblessness and a growing foreclosure rate? You might think so. After all, 18.6 million homes now sit vacant, the most since the Census Bureau began tracking the figure in the 1960s. So maybe now is the time to shop for deals. But wait.  Many economists, including Nouriel Roubini of New York University, predict further price drops in 2009 — perhaps as much as 20 percent more. Patrick Newport of the economic forecasting firm Global Insight projects a 15% drop next year. So maybe NEXT winter is really the time to start shopping around. Here’s one instance when market timing may actually work in your favor — if, that is, you’re savvy enough to figure out what your timing should be.

So what’s the strategy for those out there who are as confused as I am? Well, to start, look for houses that have been on the market a while. Don’t be afraid to lowball. How much depends on your location, but some realtors suggest starting out at least 13 percent below asking price. Of course, make sure the house is in a great location and makes sense for your lifestyle (because you may be in it for a while.) If you find something that seems an unbelievable bargain, chances are, it is. You might as well make an offer because, as with all sales, if you don’t nab it in time, someone else might.

Canadian MLS Addicts Sad, Angry, Withdrawn

Published
by
Editor
on November 17, 2008
in Online Resources
. 8 Comments

Canadians crying over the MLS.ca website re-launch illustrate exactly how important web optimization is to the new real estate market. 

And the addicts are sad and angry.

Churning 3 million unique hits each month, the Canadian MLS website got a barrage of emails after re-launching, with complaints about the maps feature and general organization that made MLS addicts unable to fulfill their deepest needs and desires.

 The Star posits that this may be a giant conspiracy to make people dependent upon brokers yet again, severing the lifeline of information that has been flowing free since the dawn of Web 2.0 real estate.  The MLS obviously won’t own up to this (and I’m sure the re-design is just “accidentally” un-navigable), but the countrywide freak-out shows how integral the usability factor affects the way we buy and sell homes.

The MLS may be the big, broad example of this fact, but U.S.-based websites are just as vulnerable to abandonment if their features are lacking.  The more these web-enabled companies harness the power of information-sharing, the less we’ll need to depend on an actual, human third-party to make a transaction.  This doesn’t mean that the role of the broker is moot, but the value of the broker is going down.  The middle-man will soon have to make up for smaller commission with a greater volume of sales.

If I were a broker, I’d be talking to my best friend in web optimization today.  Tomorrow, the optimal property search and information website will (absolutely, undoubtedly) dominate the MLS-addicted demographic here in the States.

Why Texas Escaped the Crisis (And What We Can Learn from It

Published
by
Editor
on November 13, 2008
in Market Conditions
. 32 Comments

Talking generally of the Texas real estate market may be like talking generally of the temperature of South America; however, we can all learn something about how the state has stayed afloat in he market downturn.

While home values were taking huge dips in 2007 and through 2008, cities like El Paso and Austin boasted median price increases of 5.8 and 6.1 percent, respectively.  Texasrealestate.com states that the overall housing inventory fell just under seven months, four months less than the national overall inventory.  While the big, Texan market has slowed like the rest of the country, the smaller cities of Texas are still seeing growth. 

The McAllen area is forecasted to have a 4 percent increase in home values in 2009, and is only five miles from the Mexico border!  It is also one of the fastest-growing cities in the U.S.  Like many smaller cities in the country, this area is just being discovered for its unusually amazing climate that compares to that of Tampa Bay.  It’s a college town, and is just one of the many small cities that are seeing growth in the state.

Oh, if you didn’t get the memo, small cities are the new big city.  And Big Texas is full of them.

Looking into cities like Austin, San Antonio, and El Paso shows how the culture of the small city is going to be the next best alternative to soon-to-be-homogenous, big city life.  These cities have identities all their own, and by avoiding the crash of the century, they may be the best model for the next big thing: the New Small City.

I’ll be waiting patiently in New York.  No offense; I’m a renter.