Posted: February 17th, 2009 | Author: Joe | Filed under: Economy, Real Estate | Tags: Home Prices, Home Selling | No Comments »
Here’s an article from the AP that now reads “S&P index shows plunge in November home prices“, though when I found it yesterday the headline was “S&P index shows posts sharpest decline in home prices on record”!
I think you’ll agree the latter is a bit more eye catching, if not dramatic.
The point is though, that there really isn’t much of a story here since the index they are talking about (the S&P/Case Shiller Home 20-city housing index) only covers prices since 2000!
Essentially, after housing prices posted one of the largest (if not THE largest) increases in history, they have now falling dramatically. Sorry, but isn’t this to be expected? Assets don’t increase in value forever.
This is like using the value of the NASDAQ from 1998 – 2003! Using an index with an 8 year history is akin to basing your entire world view on your experiences in a single week of your life! There’s no historical perspective here.
We already know that the housing market is in decline, but skewed statistics like these don’t help the situation.
Interestingly, the index itself goes back 20 years, so I’m not sure why they only cover from 2000 in this article…
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Posted: January 27th, 2009 | Author: Joe | Filed under: Real Estate | Tags: home sales, Home Selling, Real Estate | 1 Comment »
Las Vegas, of all places, is seeing an increase in home sales!
This is a good sign, because Vegas was one of the hardest hit when the bubble burst. Since last year, home sales have risen 15%.
The flip side of this coin is that the home prices have fallen 28%. Ouch! But this is all part of what has to happen.
The nature of a bubble is that prices get bid up to an unsustainable level. When the bubble pops, or deflates, prices must fall in order to reach the sustainable point.
I found this in an article on Yahoo! finance:
“The reason? Motivated sellers–those in distress or foreclosure–or banks with too many homes on the books are slashing asking prices in order to unload their properties.”
I think it’s also non-foreclosure sellers coming to terms with reality.
Back when we sold our house, my wife an I were in awe at the other houses in our neighborhood. Every house was identical, save for a window or two over the front door, it was a real cookie cutter neighborhood. Great starter homes though.
Our house was the first (and only in the last 6 months!) to sell. Our secret was that we priced our house at fair market value. There were 7 other homes for sale at the time our sold. Each one of them was asking a price that was the going rate – 6-12 months earlier! They were out of touch with the market place. I can understand that, but I never did understand what realtor in his right mind would take a client that was going to ignore reality and ultimately bring down the realtor’s sales statistics.
Eventually, even these stubborn and fanciful sellers face reality and lower their prices (usually much lower than where they could have started).
That’s what’s happening in Vegas, Phoenix and San Diego where home sales are up 10% and 90% respectively.
Eventually the prices will bottom out, sales will level off and prices will begin to rise again.
Also, remember that real estate is local, even in the post-bubble era. The part of the country where I live never saw the outrageous hyper-inflation of housing prices, and the median home price has gone up 3% over the past year.
Whether you’re a buyer or a seller, you must know your market.
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Posted: June 26th, 2008 | Author: Joe | Filed under: Real Estate | Tags: Home Selling, Sold My house | 4 Comments »
WE SOLD OUR HOME!
Words cannot express the joy and relief my wife and I feel. We were certain we would sell our home in time (by following the points laid out in this post), but we were getting very tired of the disruption to our life from numerous showings.
In the end, our home was on the market only 18 days less than the average when we listed, but as you’ll see that is quite a bit less than our neighborhood competition.
Staging.
People shell out big bucks for professional stagers, and while some will argue that it is money well spent, especially in a buyer’s market, there are a lot of things you can do yourself. This is how we sold our house in a down market, for 97% of our asking price (the average for our area is currently 94%).
Keeping Up Appearances.
OUTSIDE.
This is more than just curb appeal. First impressions count – make sure your lawn, hedges, driveway etc look well kept. Plant some flowers, or hanging baskets out front to add color to the overall appearance. Remove dead branches, cut grass and other debris. Clean the sidewalk and patch the driveway.
If you’ve got lawn equipment lying about the yard or cut wood in a pile, neaten it up. Store what equipment you can in the shed or garage, and stack the wood neatly.
Make sure the front door, and siding look fresh and not faded. Powerwash the siding or paint the front door if you need to.
Make sure the mailbox isn’t leaning like a certain famous Italian landmark.
Fix broken windows and screens. You wouldn’t go to a job interview dressed in rags, why send your house to one like that?
Clean out the shed and garage. If you’re selling your house in the spring, put the snow blower into storage. The perfect garage contains only a car – do your best.
INSIDE.
Eliminate the clutter.
Sell what you don’t need or use at a yard sale or on eBay. Rent a storage unit if you must, but streamline and eliminate what you don’t absolutely need for the next 3 months or more. We put our 6ft entertainment center in storage and put the T. V. on a table just big enough that we borrowed from the in-laws. The result: the living room, which looked like a tight-fit previously, became positively spacious.
Brighten the rooms with a fresh coat of paint, but be careful – stick with neutral colors or risk turning prospective buyers off with too bold a color.
Clean the windows.
Shampoo the carpets.
Polish the hardwood.
Replace the light bulbs with a higher wattage – you want the house to sparkle and gleam with newness, or at least the impression of it.
Clear off the countertops and clear out the cabinets.
Clean the oven and the refrigerator.
Vacuum under things – eliminate dust and debris.
Tighten loose door knobs, and cabinet doors.
Replace or remove peeling wallpaper.
Tips for showing your home.
Do your best to impart a welcoming feel to the home. Light some scented candles, but make sure they are a subtle aroma and only do so about an hour before the showing. You do not want your home to smell like the Yankee Candle Shop when your buyers walk in the door.
Clear out the kids, toys, cat and dog.
Turn on as many lights as you can – you want to make the home appear bright and clean!
Put out a vase of fresh flowers on the table.
Put out your best towels. My wife and I called these our “hotel towels”. Not because they were stolen from a hotel, but because they were new and neatly pressed. We never used them, but we would hang them before a showing.
Make yourself scarce. This is huge. My wife and I looked a dozens of homes, and we were surprised at how many had the owners still inside! Another major DON’T is leaving the television or radio on. You want your buyers to feel like the home is theirs or could be theirs. If the T. V. or radio is on it’s a strong reminder that someone else lives there and the buyer feels like the real owner could return at any moment. Not the vibe you want to create when selling your home.
The Single Biggest Thing You Can Do To Sell Your House Fast.
Set the proper price.
It’s that simple. But that doesn’t mean it’s easy. There is a lot of research and psychology that goes with pricing a home.
When you hire a Realtor, he will show you the “comparables” in your neighborhood. This is what recent homes sold for, what listings are active and what houses were pulled from the market without selling. The recent sales will give you a ball-park idea of what people are currently willing to pay for a house like yours, the houses that were de-listed will tell you what is too much to ask for, and the current listings will show you your competition.
The biggest mistake people make when pricing their home is to start high with the thinking that it provides “bargaining room” to move down when the negotiation phase begins. The problem with this thinking is that if you start too high, you’ve already dropped your price precipitously by the time the negotiation phase begins.
Here’s why.
When your house is priced too high, it attracts lookers, not buyers. It brings the busy bodies and gossiping neighbors out. It brings out the people who wonder, “What have they got that makes that house worth so much?”
When your house is priced too high, it implies you aren’t motivated to sell.
When your house is priced too high, it keeps people away, which reduces showings and eliminates the potential buyers that never make to the negotiation phase.
When your house is priced too high, it makes the competition look better.
When your house is priced too high, may make it difficult or impossible for a buyer to secure a loan if the bank doesn’t appraise the house’s value for the amount you’re asking.
When your house is priced too high, you usually end up dropping significantly and waiting much longer to get a buyer and by that time you have weakened your negotiating position.
The best offers come when the property is newly listed. If the price is right, this creates a “buzz” among realtors and the buyers they represent. Realtors want to find the right home for their buyers as quickly as possible, and when the see a home that fits the needs AND is priced fairly, this makes their job much easier. That translates into more action and offers for you.
I had the opportunity to see all of this first hand. Our neighborhood is approximately 50 houses. They are cookie-cutter, starter-homes, meaning that they all have about the same amenities. Some have gas fireplaces, some don’t, etc.. but they all have the same square footage, number of bedrooms and lot size. There’s very little to distinguish one from another. Given that, you’d expect the price of the homes to be in line with the similarities, but that’s not the case.
Our home was on the market for 72 days. The average time for our area is 3 months (90 days). There are 7 other homes for sale in our development. Only one has sold in that 72 day period. It was ours, and we only had one offer. This means there is serious competition to attract serious buyers out there. In a market with these conditions it’s not about getting top dollar, it’s about getting the buyer.
I am certain that the main reason we got the only buyer to come through the neighborhood in 72 days was that our price was fair market value. Of the 7 other homes in the neighborhood, 3 are priced at $10k more than what we sold our house for (they started at $15k more), 3 of the other 4 homes are $15k more (they have yet to reduce) and the last home is a stunning $20k more (they came down from $25k more!). The average time on the market for those 7 homes is 110 days!
My wife and I loved those homes. With competition like that, it made the process much easier for us.
It will be interesting to see how it plays out, but I would wager that IF those 7 homes sell, they will end up at less than what ours sold for and after much more of a headache.
Technorati Tags: Real Estate, Selling a Home, Home Sales, Buyer’s Market, Home Sales
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Posted: February 15th, 2008 | Author: Joe | Filed under: Real Estate | Tags: Home Selling, How To, Real Estate | No Comments »
The blindingly hot seller’s market of 2006 is over. That market has burned itself out and been shoveled off to the ash heap of history. If you’re thinking of selling your home in the current market, you need to look forward not back. Real estate is cyclical. Seller’s markets come, and the fall by the wayside in favor of buyer’s markets. We’ve just run into the next part of the cycle. Enter the buyer’s market.
Don’t despair though. Buyer’s markets may be painful for the seller, but most people who sell their homes will also need to buy a new one. While you may not get as much for your home when you sell, you’ll most likely be able to get a lot more for your money when you buy.
Still, there are some things you can do to ensure that you are as successful as possible when selling your home. This article is about helping the seller in you when it comes time to find a realtor. We’re getting ready to put our house on the market and we will be buying a new home as well, so there will be future articles for the buyer in you too.
The seller in us wanted to make sure we were doing things the right way, so we went on a learning binge. We took classes, read books and internet sites. We gathered as much info as we could before lining up several interviews with local realtors. What follows is the result of all that research, distilled for you into a list of the 10 biggest points to consider when interviewing your prospective realtor.
1.) How long have YOU been selling real estate?
You’re really looking to get a sense of how much experience the realtor has. Be sure to find out if he has been consistently selling, or only on an on-and-off or part-time basis. You don’t want a dabbler in Real estate. You want someone with several years of experience, preferably in your area. This is especially important in a buyer’s market. Also, don’t let him tell you how long his agency has been in real estate – you want to know HIS history, not his company.
2.) What is YOUR average sales price?
You want a real estate agent that has experience selling homes like yours. An agent that specializes in homes around $500,000 isn’t going to have the clientele or experience selling a house that’s valued at $200,000. The converse is also true; someone practiced in selling a $200,000 home isn’t as effective selling a $500,000 home.
3.) What is the average time for YOUR listings to sell?
You want an agent that who sells his listings faster than average for your area. This indicates a professional who is serious about selling, with a solid marketing plan, knowledge about pricing and wide experience in your area. Be sure the agent tells you his average time and doesn’t just quote the average for his company.
4.) What percentage of YOUR listings actually sell?
Again, you’re interested in your prospective agent’s average and not just his company. No one is 100% perfect, but a good agent should be above average for your location. A high percentage is a good indicator of the agent’s knowledge of the local market and pricing.
5.) What is your list price to sale price ratio?
This is a percentage of how much of the original list price the agent usually sells his listings for. For Example, if he tells you his ratio is 95%, then he usually sells a $100,000 listing for $95,000. This should give you an idea of how knowledgeable he is in determining accurate list prices.
6.) What is your marketing plan for my home?
A good agent should have a step-by-step plan to find qualified buyers for your home. Every agent submits listings to the MLS (Multiple Listing Service) and puts a “For Sale” sign up in the front yard. You’re looking for an agent that uses innovative and aggressive marketing to gain a competitive advantage. A good agent should make effective use of the web as well as local mailers or free real estate guides at local supermarkets to promote your listing. They may use public access cable channels, or techniques to bring other realtors into your home to create a “realtor buzz.”
7.) How much is your commission?
This is an important point for many sellers. Everybody loves a bargain, but beware an agent that offers a big discount. Often times you get what you pay for, and he may just be looking for a listing with little intent of spending much time on it. Of course, you can also find a realtor who charges much more and delivers much less. It’s best to bear in mind that the national average is about 6%, so if a realtor varies greatly then make sure it’s worth it.
8.) How long is the listing contract?
The listing contract should have a specific begin and end date. As with many things, there is no absolute rule for the length of a contract. A general formula is about the average time to sell a home in your area plus 1 or 2 months. You typically don’t want anything less unless you absolutely need to move and have drastically reduced your list price.
9.) Do you have an assistant and other support staff working for you?
You typically want an agent that at least has an assistant. If they don’t have an assistant, it probably means they are either not that busy or they will be overwhelmed with the daily “grunt work” of being a realtor. If they aren’t busy enough to need an assistant, then they most likely lack experience or are not a full-time realtor in the sense that they stay on top of the market.
A good realtor needs an assistant to perform the menial tasks of submitting listings to the MLS and web sites. That being said, you want to make sure that your realtor won’t be an absentee agent either. You’ll want to know that you’ll communicate directly with them when you need to.
10.) What if I’m not satisfied?
Most agents who have been in the business a while and are true professionals, either offer a guarantee or an option to cancel the agreement if you are unhappy. It shouldn’t come to this, but you want to make sure you have an out if something goes wrong or you’ve completely misjudged the realtor.
Remember: These are just guidelines, or points to consider. You may find them useful to begin the interview process, and just see where the discussion leads. No realtor is going to fit every one of these points 100%, so be sure to meet with at least 2 or 3 realtors, and ask plenty of questions.
You should be able to get data for local averages for things like price to sales ratios, average time on market and more by contacting your local realty board.
Happy realtor hunting!
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The point is though, that there really isn’t much of a story here since the index they are talking about (the S&P/Case Shiller Home 20-city housing index) only covers prices since 2000!
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