Monthly Archive for December, 2008

Homeowner New Year Resolutions

Published
by
kmunsell
on December 31, 2008
in Home Selling, Market Conditions and Online Resources
. 105 Comments

New Year, new ideas, new attitude, right? Absolutely! 2008 was the year of unfortunate news–record numbers of house foreclosures, plummeting house values, and credit gridlock. So, while others choose to grab a towel and head to the gym, I’m looking to remake my homeowner attitude, which means trying to focus on the positives of my little slice of real estate pie. For starters, in 2009, I resolve to:

  • Stop repeatedly checking the Zillow value of my home. Apparently site traffic is not related to the Z-estimate of my home. Repeated clicking is just not working, so I’m giving it up. If you’re not planning on going anywhere anytime soon either, you might as well stop the constant fretting about your home value also, since it just doesn’t matter (right now). Perhaps I’ll resort to chanting.
  • Focus on the positive side of a property value in the toilet. On the upside, my house value is less than what I paid for it just a couple of years ago, so I’ll use this as fodder to combat the evil county property tax assessor, who insists that home values in the Seattle area have been in fact increasing. And, he’s not alone, there are more out there. Keeping an eye on your property value in your neck of the woods could help you eek out some savings over the next year as well.
  • Look into refinancing. Interest rates are on their way down, but there are still costs associated with refinancing. In some cases it will make sense to refinance, and in others, it simply won’t. Refinancing may be practical if you are not planning on selling or paying off your loan within the next 2-3 years or if you currently have an adjustable rate mortgage. To make sense, the estimated savings of your monthly payments over the time you plan to hold your loan should be less than the cost of refinancing. There could be some dollars for many of us to gain here. (Worksheet available here.)
  • Do something special for me, not future homeowners. Time to do some pretty fixer work around the home now instead of later. Why not spread a little bit of love around while you live in the home instead of after? Besides, depending upon the remodeling project you choose, you can theoretically recover some of the cost upon resale, but the sooner you do it, the sooner you can enjoy it!

Wishing you all a Happy New 2009!

Yes, You Could Sell.

Published
by
preynolds
on December 30, 2008
in Home Selling
. 31 Comments

As the market slides downward with no signs yet of a bottom, you hear a lot of discussion bout the merits and disadvantages of buying a home.  But there’s the flip side of that question: Is now a good time to sell a home?

Obviously, most of us would snort dismissively at the thought. Of course not — unless, that is, you’re willing to take some pretty significant losses.  

But wait a minute. Now may be a great time to sell if:

1)  You’re planning on trading up. ”Trading up” means different things to different people. It could mean buying a more expensive home in a better neighborhood with better schools. Or it could mean buying a more expensive home in a downtown location with a high walkability factor. The benefit to you is that though you may be selling your home at a reduced price you will be buying a home at a proportionally bigger reduction, with the added benefit of buying into a high-value neighborhood that will hold its value through the downturn.

2) You’ve been in your home for many years. With all the talk of a falling market, it’s easy to lose sight of the fact that people who bought their homes in the mid to late 90s are still likely to make substantial profits on the sale of a home. For them, selling now could be an excellent opportunity to trade up into a prime neighborhood that would have been unaffordable two or three years ago.

3) Your neighborhood is relatively healthy. If there aren’t many foreclosures in your area you won’t have to compete with homes marked down to bargain basement rates. Though it may take a while to sell, chances are that eventually you’ll find a buyer, providing your house is competitively-priced and in good condition. An added incentive may be trying to sell before another wave of foreclosures kicks in next year as homeowners default on Alt-A loans that are set to reschedule in 2009. If they price competitively, a few lucky sellers may be able to sell now but buy as prices drop again.

And when is selling probably NOT a good idea? Well, if your neighborhood has more foreclosure signs than trees, or if you own a home in a new development where even the developer hasn’t sold all the houses yet,  then it’s likely you should adjust to the idea of sticking around for a while.

Real Estate Connecting at Inman - Coming Soon

Published
by
Editor
on December 29, 2008
in Online Resources
. 12 Comments

Mild weather, mild holidays, and a mild economy has me geared up for the 2009 Real Estate Connect conference coming up in just over a week.  This is my first Inman conference, and I’m more curious than ever to see what’s going on in the rest of the internet real estate/real estate world (are they one in the same yet?).

Microsoft Virtual Earth is a huge tech sponsor of the event, and will feature an intensive program highlighting the benefits of whatever makes it better than Google Earth.  And for one short week, Times Square will be even more annoying than it already is.  Suits aside, I’ll be doing the run-around to see what’s going on in the blogging world (the only world I really know), and less self-reflexively, will look deeper into the world market for 2009.  It’s been said before, but now more than ever is it absolutely necessary to look at all angles of this enormous, dastardly conundrum that is before us.  Hello, globalization.

Technology (duh) is the name of the game this year, according to Mr. Inman himself, and it’s no surprise that embracing T-word and the G-word will bring us the Next Big Thing.  We’re just excited to find out exactly what that screaming baby is going to look like.

I look forward to meeting some of you in real life, but will be happy to return to my up-and-coming neighborhood as soon as you all leave.  Cheers.

Great Expectations

Published
by
kmunsell
on December 24, 2008
in Home Buying, Home Selling and Market Conditions
. 128 Comments

Out with the old and in with the new. Instead of dwelling on the half empty of 2008, it’s time to ring in the New Year with the half-full. For first time home-buyers in particular, the housing market is ripe to dive on in, head first. Though a full recovery is too much to expect in the new year, there are some finer points to hang your hat on. For example:

  • Interest rates are at the lowest they’ve been since 1971. Currently hovering just above 5%, interest rates are likely headed even further downward toward 4.5%. It really doesn’t get any better than that–at least if you’re a qualified buyer looking to buy a new home.
  • Home prices are low and sellers are willing to deal. No matter where you are looking, housing prices are in decline. According to Zillow’s Real Estate Market Reports, home values declined 8.4 percent year-over-year during the first three quarters of this year, compared to the same period in 2007. Though there are some areas (such as Jacksonville, Burlington, and Winston-Salem, North Carolina, and Anderson, South Carolina) that are still seeing slight increases in pricing, but relatively speaking, these prices are still reasonably low for these areas.
  • There are more houses to choose from. Since buying has slowed way up, inventory is building. More homes are available in more areas, and although this isn’t the best news for sellers, it does make it pretty darn easy for qualified buyers to find the perfect home.
  • Watch out people, there’s a new sheriff in town. Hopes are high that President-Elect Obama will make a huge difference for the American people in general. By injecting as much as $850 billion into infrastructure, Obama’s economic stimulus package will likely keep more Americans in jobs and provide more economic stability for the people.

The Value of Staying Put

Published
by
preynolds
on December 23, 2008
in Progressive Trends
. 103 Comments

The land of mobility is no longer that. Last week, the Pew Research Center  reported an astonishing fact: only 13% of Americans changed residences between 2006 and 2007, the smallest share since the government began tracking this trend in the late 1940s. Those who stay put say they do so to be close to family and friends. Those who move are more likely to do so for career reasons.

And why are more Americans staying put? According to Pew researchers, it’s a result of an aging population (we move less as we age) and the rise of the two-career couple. Two salaries are now a basic requirement for middle-class life. But it ain’t easy to pick up two careers and move them across country.

It’s interesting to speculate on what this new immobility trend may mean for American culture. Will we become, as a nation, more rooted in community and tradition? Will our perspectives on life narrow as we are exposed to fewer kinds of people and places? And will more and more people stay put in coming years due to the deepening financial crisis, or will a bad economy actually have the opposite effect?

It’s hard to say what the long-term repercussions of the trend may be, but I’m optimistic. Staying in one place for a long time means that you’re invested in what happens around you. You care about the condition of the roads, the schools and trash pick-up in your neighborhood. You’re around long enough to work on improving any of those things if they’re not up to snuff. You also get to know your neighbors and together you can lend each other — and your community — a hand. 

Best of all, staying put can be a lot gentler on the environment. Instead of continuously circling the country, using up financial and natural resources in the process, we can delight in a simpler life that is also gentler on the planet. Hopefully, developers will take note and build mixed-use retail and housing developments that are constructed for the long haul — not to be razed within 15 years.

As many cultures around the world already know, slowing down and taking stock may be the key to a healthier society, both psychologically, economically and environmentally.

To Go Against the Trend, or Suck it Up: That is the Question.

Published
by
Editor
on December 22, 2008
in Progressive Trends and Uncategorized
. 4 Comments

Just when I thought that every corner of real estate was veering toward “MMMM” (Mimimal Middle-Man Meddling), I forgot the one field that should be as busy as Foreclosure agents– the appraisers.  Nancy Sarnoff at the Houston Chronicle posited that appraisers would be very busy re-appraising homes right now, but an even more interesting phenomenon is going on in the biz: appraisal management companies (AMCs) are undercutting small appraisal firms or offering a one-stop-shop deal, hiring appraisers who are willing to work for less.  The Appraisal Group considers it a means of pimping; I call it scab work.  Scabs!

Okay, maybe not.  Plenty of appraisers are working for AMCs.  To be fair, this is not an entirely recent trend.  Bigger lenders tended to use AMCs over individual firms for over a decade now, since the Super Wal-Mart of appraising takes care of the appraisal management, the panels, the paperwork and the McDonalds/Starbucks combo restaurant by the checkout aisle.  For big lenders, AMCs are a no-brainer, but for an individual appraiser, this means working more for less green.

Your choice as an appraiser: do I risk having a fluctuating, unstable client base of my own, or do I opt for safe, secure AMC employment, working for 50 to 60 percent of what I could make on my own?

In times like these, I’d certainly choose a secure job that makes less money.  So, is this the end of the individual appraiser?  Is this part of something much bigger than the appraisal sector?

I hope that appraisers will still afford their mortgage payments.

Ten Marketing Tips You Can Learn from a Prostitute

Published
by
Editor
on December 21, 2008
in Home Selling
. 158 Comments

(A Special Featured Post from Sellsius Founder and Blogger, Joe Ferrara)

1. Attract the attention of your target market. You must do what you can to stand out from the crowd. A short skirt and high heels work to attract a prostitute’s client. (It may also help a blog post get read). Flaunt it.

2. Market in the places your audience can be found. Whether it’s a street corner or specialty publication, blog or website, get in front of your prospects’ eyeballs. Pros don’t attract clients in church pews.

3. Upsell. After getting a ready and willing customer, expose them to options they might not have considered. Turn a downtown trip into an around-the-world adventure.

4. Have a clever or catchy brand name. Call girls marketing under Fantasy and Desire usually attract more calls than Fanny and Mabel.

5. Offer a product or service people want or need. ‘Nuff said.

6. Make the transaction easy. The less forms and red tape the better. A simple in and out procedure works best.

7. Promise quality and good customer service. The promise may get you a one-time sale but good customer service will have them coming again back.

8. If you want to charge more, offer something they can’t get anywhere else. Just like fruit, the rare and exotic always sell for more.

9. Have a call to action. Ask for the date. Be persistent.

10. Market happiness. Every client wants to walk away satisfied. Give them a happy ending.

Bonus Marketing Tip: Sex sells.

Caveat: There is, however, one thing you should avoid in marketing and sales: Screwing your customer.

Extreme Makeovers Extremely Troubling

Published
by
kmunsell
on December 19, 2008
in Progressive Trends and Technology
. 108 Comments

Great television doesn’t always make for great reality. The popular TV show Extreme Makeover Home Edition with hunkily-happy host Ty Pennington generously selects a worthy family in need and remodels (or more fittingly, replaces) their usually dilapidated, substandard, often unsafe home with a new, larger, grander, even audacious home for the family to live in. Great television–tear jerking, often gut-wrenching, heart-felt drama, which often brings a whole community together to work toward a single cause.

But, what happens when the lights go out, the cameras turn off, and the bus drives away? Unfortunately, it’s becoming a pattern for family after family, where lemonade is turning into lemons. Most recently, the Vardon family of Oak Park, Michigan faced with medical bills and large mortgage payments are teetering on the brink. Earlier in the year, the Harper family of Lake City, Georgia also faced foreclosure after having used their newly reconstructed McManse as collateral for a failed business loan, though they may have been granted a reprieve. Then there is the story of Sadie Homes, who ran a charity from her 7,000 square Florida home and is now facing about $30,000 in fines as the result of her charity work. 

Hindsight makes you wonder if good television is worth these costs. Upon first glance, it looks like an amazing give that these worthy families receive, but long after the TV is turned off, these struggling families are left with all the larger bills of a larger home and the obvious temptation to put their gift at risk for other opportunities. My thought–I bet you could still produce great TV with a moderate home makeover (and there’s a lot of leeway in that definition of “moderate” from where you’re at right now!). Either that, or switch it up for a new series, “Extreme Home Loan Makeover.” This one would probably still get the ratings!

Do Plunge-Proof Neighborhoods Exist?

Published
by
preynolds
on December 18, 2008
in Market Conditions
. 103 Comments

With housing prices in a free fall, I’ve heard a lot of talk lately about neighborhoods where this doesn’t seem to be happening. In the Boston area where I live, several towns have stood out because home values seem nearly iron-clad. In fact, Boston Globe blogger Scott Van Voorhis has pondered whether some rich towns will actually escape the blood bath that the housing market has become.

Towns where housing prices seem to hold up best have a few traits in common:

1) They have good school districts.
2) They were never overbuilt.
3) They are wealthy towns to begin with.

Certainly, in the Boston area, towns like Brookline, Arlington, Wellesley and Weston fall into this category. On the other coast, towns like Santa Monica , while not immune to price declines, have generally suffered less than poorer Los Angeles communities located further out of the city center. According to Redfin, Downtown Los Angeles, Santa Monica and the Wilshire District have been the winners as far as sliding numbers go, with the least number of reduced-price listings in the Los Angeles area in the period between August and November. Likewise, Businessweek reports that the wealthy community of Palo Alto in California saw home prices appreciate in 2008 as other communities have seen prices take double-digit plunges.

Even if all this is true, with the economy worsening on a number of fronts, and with job losses mounting, sooner or later, even a good school district and a great location cannot protect Teflon neighborhoods from serious price declines. Some other numbers suggests that everyone’s going to feel the pain on this one, from the investment banker (Wilshire District) to the store clerk (Torrance).

So look for housing prices in Wellesley and Santa Monica to be heading downward in coming months. Sure, location, location, location is important in real estate, but not as much as a sound economy.

Desperate Times Don’t Call for Desperate Measures

Published
by
kmunsell
on December 17, 2008
in Home Selling
. 107 Comments

They say that desperate times call for desperate measures, but in this troubled real estate market, desperate measures don’t seem to help at all.  For example, there’s Scott Bernard, who’s running a coloring contest on HowToWinMyHouse.com to offload his three bedroom 1957 Florida home. Charging a $49 entry fee, Bernard was hoping to get around 5,400 entrants to his contest. Bernard also promised that $2 per each entry would be given to charity, so in total he was hoping to get a little more than $250,000 for his home–not too shabby, since he paid about $217,000 for the home in 2005. Unfortunately for Bernard, with only a few days left in his contest, it’s not going well. He’s gotten fewer than 20 entries (less than $1,000) so he’ll be returning those entry fees and it’ll be back to the drawing board for Bernard.  

Then there is the couple in Hawaii who is offering a $100,000 “bounty” to anyone who can bring in a buyer for either one of their two Hawaiian properties. One is a 2,500 square foot, four-bedroom home on a 35,000 square foot oceanfront lot in Oahu, currently listed at $1.7 million. The second home is 38 acres of undeveloped land on the Big Island for $1.2 million.  The bonus sounds nice, but there’s always a catch. In this case, the buyer must close on either one of the properties (the couple is offering two separate bounties) at the current list price. Isn’t this just signaling to people that the sellers are willing to sell each of the properties for at least $100,000 below the current asking prices? Is any buyer really going to offer more?

And of course, we can’t forget about Ian Usher who sold his life (including his house, job, friends, car, and possessions) in June of this year. The eBay auction began on June 22nd at a starting price of AU$1 and closed one week later on June 29, 2008 for a final bid of AU $399,300. The amount was significantly less than the AU$500,000 that Usher was hoping for and demoralizing for sure!

These examples echo what we already know–it’s not easy to sell a home today and in the end it all comes down to pricing. In the end, the antics don’t bring in the buyers, but they do bring in the gawkers!