Just read a fascinating report from CNNMoney about the prospects for the housing market in 2008. First, they talked about about all the major predictions for 2007 that were way off base. From Bernanke's speech in November of 2006 saying that he saw "encouraging" signs in the housing market, to NAR's prediction of a 1% drop in prices, to the most pessimistic prediction of Standard & Poor's David Wyss of a 7% drop in prices, most were way too optimistic. Depending on what you read, and how badly they've confused a drop in sales units with a drop in prices, sales were down about 12.5% in 2007, with prices overall down almost 7% nationwide. This is not much help to those of you who live in areas where sales were off 35% and prices down 15%, but as I've mentioned before, there were some parts of the country where sales were up and prices were up, and that softens the averages.
The scariest part of the report has to do with the Chicago Mercantile Exchange's futures contract for 10 major metropolitan areas. That's right, you can gamble on housing prices going up or down in various regions. By the end of 2006, these contracts were pointing to price declines of 5-7% nationwide. In other words, they were right on the money. The bad news is that these futures contracts are currently indicating price declines of 4-14% in 2008! Here's how I'm consoling myself when I look at these numbers. First of all, just because the CME was right about prices last year, doesn't mean they'll be right again. Futures contracts are indeed a gamble, and the house wins more often than not. Also, all real estate is local, and the west in general and the Denver metro area in particular seem to be improving. In my customer service job I get to talk to dozens of Realtors every week, and virtually all of them are reporting a significant increase in activity and closed business over the past 2 months. I know this isn't happening for everybody yet, but in this area at least, signs are pointing to a very healthy spring. Hang in there!
No matter how you choose to celebrate this holiday season, here is my wish to you. Take a moment and do something kind for someone. Even if it's letting them have the good parking spot - maybe just a friendly smile.
It will help to help to make the world a better place.
Most homebuyers want a good deal. That's certainly no secret, and there's certainly nothing wrong with that. There are as many theories and strategies about how to accomplish that as there are homebuyers.
Fortunately, there is one simple tool that study after study shows to be the best way to get a good price on a home, and that is to use a buyer's agent. A quick history for you first time buyers :
Traditionally and historically, real estate agents always worked for the sellers of property. If a family was moving from Virginia to Colorado, and I took them around in my car for 3 weeks and took them to lunch and told them all about how great it is to live in Colorado, I was still supposed to work for the sellers of every house we looked at and represent the seller's interests. Since we all show each others listings, I usually did not know the sellers, so all I could do was protect their price. It was a HORRIBLE way to do business. Recognizing that buyers needed representation, California and Colorado led the way, and most other states quickly followed, passing laws that allowed the real estate agent to work in the buyer's interest. Now, with a level playing field, the seller had an agent and the buyer had an agent. There have been many legal refinements to this over the years, but this is only a thumbnail sketch.
Since a buyer agent's job is, essentially, to get you the best deal possible, the idea of calling the listing agent directly because "They won't have to split the commission" doesn't work anymore. The commision is a prior agreement between the sellers and their agent.
Walking into the model home in a new community without an agent doesn't work either. Remember, the listing agent's job is to get as much as possible for THE SELLER.
The bottom line? Studies by Money Magazine, Kiplinger's, The Realty Report, NAR and the New York Times all show that homebuyers represented by buyer's agents during 2005 paid an average of 5-7% less for homes, depending on price range and part of the country. On a $300,000 house, that's as much as $21,000!
I don't know about you, but there have been times in life when I would have wrestled an alligator for $21,000, when all I had to do was use a buyer's agent.
I get dozens of requests every week from people wanting to buy foreclosed property. Many have seen magazine articles or late night cable shows about making millions in foreclosed properties, and have only a vague understanding of how the process works. Here then, are a few basic ideas about the smart, safe way to buy foreclosed property.
Don't buy a list of foreclosed properties! Many companies sell subrictions to lists like this, but it's public information. Look at www.hud.gov for a complete list of government foreclosed homes. Also, Realtors can often set up the MLS system to send you new foreclosed listings automatically. (It is wise to use that Realtor when you buy and sell - they can only do so much work for free).
Don't buy sight unseen on the courthouse steps. You are competing with experienced pros and may end up with a house needing tens of thousands in repair or having to pay off other loans.
Proceed slowly and carefully, and do a lot of research. Find out about other sales in the neighborhood. Just because a property has been foreclosed on does not mean it's a good deal.
Talk to a lender first. Be armed with a pre-approval from a strong, stable lender. Any bank you buy from is going to require it anyway.
Like all good investments, the higher the return potential, the higher the risk. There are great deals to be had in many markets, just like there are great ways to lose a ton of money. Let's be careful out there.
Here's a perfect example of how Realtor's thinking gets stuck in the past. Ever notice how many listings are priced at a number ending in 900? Such as $299,900 or $349,900. Does anybody believe that this kind of pricing costs you showings? Let me explain. Back in the dark ages when I started in real estate we all used the MLS book. If your listing was $100 less than the competition, you might appear on a previous page and get a few more showings. Now that it's all done on the computer, think about how listings are set up. If there is a group of buyers looking between $275,000 and $300,000, and your listing is $299,900, that's fine. What about the group looking between $300,000 and $325,000? Your listing might be perfect for them, but IT'S INVISIBLE! Many realtors will look in slightly higher range, assuming some negotiating will take place, but in these days of increased inventory, most do not look lower, because they have plenty of listings to show. Do your sellers a favor. Round up $100 (especially if you're at a multiple of 50,000 or 100,000), and catch a few more showings. By the way, expaining this to a potential seller makes you look much smarter than the competition.
Please, please, please get out those digital cameras and add pictures to your listings. Virtual tours, too. As a customer service manager for a major real estate company, I'm amazed at how often homes listed for sale have no photos - often homes that have been on the market for months. This is by far the #1 complaint I get from consumers, and they often refuse to even consider a showing of a home with out pictures. Believe me, it's almost impossible to have too many. We live in an information driven world, and with minimal or no photos you look like you're trying to hide something. Along the same lines, let's take a quick look at the pictures that don't help.
Multiple shots of the front of the house from slightly different angles.
Believe it or not, taking one step back and to the left does not give a consumer more information.
2. The toilet close up.
This is my personal favorite. I know bathrooms are small, especially half baths. Unless there is something unique (like a gold plated toilet seat), if standing in the doorway only gives you a view of the toilet and the side of the tub, don't bother. We've all seen toilets. Most consumers assume that at least one will be included.
3. The window shot.
If you stand in a dark bedroom and point your camera at a bright window, you will get a picture of a black square with a window in the center of it.
These are just a few ideas. I know that when a house is vacant and the power is turned off, it's hard to get enough light for a good photo. I'm just asking for common sense (See #2, above). Don't forget about virtual tours! We know that homes with tours sell faster - we have a fiduciary responsibility to the seller, and yet I see hundreds and and hundreds of high end listings with no virtual tour. Yes, they cost money! It should be part of your marketing budget. I don't want to start ranting and raving about this, but I want you to know that this is what he buying public wants. I hear it every day. I wish more Realtors could hear it, too.
I had the pleasure of spending Monday with several hundred Realtors from the front range range of Colorado in a state required update class. Yes, it can be boring, but I'm an information junkie and it's good to learn about new contract changes, recent legal decisions affecting home buyers and sellers, and the best ways to escape the foreclosure demon. The best part for me, though, was catching up with dozens of agents that I don't get to see anymore and find out about their lives. Incredibly, the vast majority of them had good news to report! NAR has been telling us that the Denver market is starting to come to life, but until I hear it from the mouths of working Realtors, I'm skeptical. Agent after agent mentioned that although the summer had been brutal, business was really picking up. One Coldwell Banker agent from my old office in Boulder said that after one closing in July and none in August he was considering a career change, but since then he had sold almost $4,000,000 in volume. I know that this is all anecdotal, and having a relative handful of Realtors report good news is not proof, but it sure felt very different from the past few "doom and gloom" meetings I attended. Any other Colorado real estate agents have good news to report?
Every home has a story. Yet with all the technological advances of real estate marketing, the stories about our homes aren't being told. As humans, we crave story. It is that craving for story that compels us to go to the movie theatres and the book stores and that our children beg for at bedtime. Stories are one of the primary ways we make sense of our information-rich world.
Almost all of us can tell the story of Goldilocks and the Three Bears. We know how to describe beds being too firm, too soft - porridge being too hot or too cold and chairs that possess varying degrees of comfort and sturdiness. We might even throw in a few enhancements to our voice to really drive home Papa Bear's indignation that someone has entered his home and ransacked the place! Stories convey information - in a way that is meaningful, memorable, and engages our senses and emotions. That's why stories can be so persuasive.
More than a few of us have had the distinct pleasure of trying to memorize the periodic table of elements. One of the common devices my fellow chemistry classmates employed (before I dropped the class) was to make a story out of the elements to help with the memorization, you know, something like "Once upon a time a nice little Hydrogen atom was wandering through the forest when she came upon a small cottage inhabited by 2 Helium atoms. Inside the cottage were 3 Lithium ladles and 4 Beryllium bowls and 5 Boron baskets..." Just one example but you get the idea. Those cold hard facts out of context are difficult to remember and relatively meaningless to English majors trying to score some science credits.
The same is true with most homes for sale. The internet provides gigabytes of information: square footage data, room dimensions, photos, proximity to Old Town, estimated commute times, school districts, property taxes, etc., etc. I don't mean to diminish the importance of that information - but it is just that - information. Where's the context? Where's the piece of the puzzle that makes your home rise above all the others that are being scanned online? Where's the story behind the data? If you've ever bought a home, you know that it is a visceral experience. We very often make our decisions to buy a home on a ‘gut' feeling rather than just the data. That ‘gut' feeling usually comes from story - either the story the marketing information provides or the story we make up in our heads as we move through the home ("Honey, look at the size of this workshop! - If we bought this house, I could build our baby's crib that will become a family heirloom and be passed down to our children's children's children!").
My suggestion here is that when you put your home on the market - be sure that your listing agent not only knows your home's story but that the marketing material and the photos tell your home's story. The story needs to appear in as many places as it can. For example, why not have a nice welcome letter framed on a table in the entryway that could read something like this:
"Hi, we're the Nelsons. Welcome to the place that's been our home for the last 15 years. Enjoy yourselves as you tour our property. Be sure to linger on the rear deck. We've enjoyed glorious sunsets over a glass of wine in the summer and steaming hot chocolate in the Winter! We've loved this house very much and hope you do too!"
Even a brief story like this one about the deck will help others who visit the home identify personally with it and begin to make it their own. It is an opportunity to accentuate the positive and help foster an emotional connection that will be difficult for a potential buyer to set aside.
Currently, the most visited internet site with homes for sale is http://www.realtor.com/. At this site, listing agents are provided space for up to 2500 characters of description about the home. That's a lot of space to fill since all the raw data like baths and bedrooms and square footage is provided in the margins. Use that space to tell your home's story! Give your listing agent the back-story of how you found the house and why you fell in love with it. Tell her how you used the doorjamb to measure your children's growth spurts and how your kid's friends would gather in the backyard for summer twilight games of hide and seek or swing the statue. Tell the story of the 2007 snowstorms and how the neighbor with the 2-stage multi-horsepower snow-blower cleared the walks and the cul-de-sac out to the main road so people could get out to the store.
We all have great stories to tell and our homes deserve to have them told. When you're interviewing REALTORS to list your home - make sure that part of the marketing plan includes telling your home's best stories.
Chris Hardy is the Managing Broker for Coldwell Banker Residential Brokerage at 702 W. Drake Road in Fort Collins. If you have any questions about real estate or would like to contact him please send your emails to: chris.hardy@coloradohomes.com or by phone at 970-419-2201. Visit http://www.joincoldwellbankernow.com/.
Here are variety of good news pieces about real estate. It's not all doom and gloom out there! This is taken from an e-mail I got called "Postive angles"
Nov. 15, 2007 Issue No. 12
What are real estate professionals saying to homebuyers and sellers about current market conditions? The successful brokers and sales associates are talking about the strengths that exist in the market - not the negative media hype. Below are positive angles that appeared recently in the media and underscore why it is a good time to buy real estate.
Recent Quotes about the Positive Signs in the Real Estate Market:
NAR Housing Report: 2007 Ranks as the Fifth Best Year on Record
Ø "Places like Houston, the Kansas City area, Indianapolis, and the vast middle section of the United States offer affordable prices and continued job growth. On either coast, Seattle and Raleigh, N.C., remain solid. And markets that experienced recent growth declines - like Boston, Denver, and Washington, D.C. - have already shown signs of recovery."
Ø "For buyers who qualify for conventional financing, mortgages are available at favorable rates. Major FHA reform will also help first-time home buyers enter the market and will provide safer alternatives for many subprime buyers."
Ø "Buying a home is not a quick-in, quick-out investment, like buying a stock. Homeownership builds wealth over the long-term."
The weakening dollar may be providing the fuel for one unintended - and very welcome - benefit: a rally in the housing market driven by foreign investors.
"If there are 2,000 houses on the market and 200 houses sold last month, that means it's taking 10 months to sell a house. That's pretty simple math, but nobody ever does it. If you price your house like everybody else, it might take 10 months to sell it. Given the cost of carrying your home and the risk prices might fall further, would it be cheaper to slash your asking price? If you're going to lower your price, do it right away - or wait until early next year."
"The key to housing is the employment rate. As long as the employment stays basically full - say, under 5.5% - I see no major crisis in the housing market. Yes, we have a subprime issue. Yes, we have a lot of investors who got hung out, but I don't see the crisis the way the media portray it. We're building a lot less houses now. For many years, we averaged about 1.6 million houses a year. And then in the last four years, we went to 2.1 million. We're regressing to the mean. So there will be a period of indigestion but no crisis. No meltdown in the housing market. That's ridiculous."
-- Sam Zell, chairman of Equity International, "The Human Barometer," Time Magazine, Nov. 8, 2007.
NAR Survey Results: Consumers Very Satisfied with Agent Performance
The survey shows that 79 percent of home buyers and sellers used a real estate professional, up from 77 percent over the past three years, and nearly nine out of 10 buyers were very satisfied with their agent's knowledge of the process. More than eight out of 10 sellers and nearly nine out of 10 buyers would definitely or probably use the same agent again or recommend him or her to others.
Regional Update: Good News from Several Markets Around the Nation
New Jersey Shore
"Home shoppers continue to stream in, even though the beach season is officially over. The number of sales we had was up 16 percent in Asbury Park this year in the period up to Labor Day, and so far, the fall open houses we hold every weekend are very well attended."
-- Gregory Demaras, a broker in Asbury Park, N.J., "Where Sales Are Buoyant," by Antoinette Martin, The New York Times (registration required), Nov. 4, 2007.
New York City
The average sales price for a Big Apple dwelling climbed to $782,000 in the third quarter of 2007, an increase of 20 percent over the same period a year earlier, according to a report released by the Real Estate Board of New York.
"Healthy real estate markets in Kentucky and Midwestern states are being hurt by national news reports of problems in other areas. There is absolutely zero bubble in Central Kentucky, and the area's housing remains very affordable - maybe even undervalued."
-- Lawrence Yun, chief economist, National Association of Realtors®, "Kentucky Real Estate Holding Up," RISMedia, Nov. 6, 2007.
Arizona
"The housing market is correcting itself. The Federal Reserve cut interest rates two times. Major banks are changing and improving their guidelines as a way to encourage people to buy. There is talk about increasing Federal Housing Administration loan limits. There is so much growth in Arizona that I am optimistic change will continue as we approach 2008."
Over the last 18 years I attended and taught hundreds of classes concerning what to say to buyers and sellers. With the benefit of hindsight, here's a little speech that all Realtors should memorize:
"Folks, before we go any further, I want you to think for a moment about this decision. I know the bank says they found a way to make this deal happen, but are you really sure that you can handle things if you have an economic downturn such as an injury or illness, or if your adjustable rate loan starts to increase rapidly? I want you to make sure you have enough of a reserve or a back up plan just in case of trouble"
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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