POKER RUN TO BENEFIT OCCUPAWS

Saturday, July 18, 2009 at 11 am

Ride starts at Shelton's Bar, 1821 Main Street, Cross Plains

Route will cover 65 miles traveling through Martinsville, Sauk City, Spring Green, and Black Earth

Help us raise money and awareness for OccuPaws, a local non-profit that

supplies guide dogs to Wisconsin's visually impaired at no cost.

$25/person*

* $25 will get you food, drink, raffle entry, bandana, koozie and entertainment

Everyone welcome to ride/drive including all 2, 3 & 4 wheel vehicles

Yes, not only do I help my clients properties to fix and sell for profit, but I do the same for myself.  Recently, I have had the um, fortunate, opportunity to do a project with my family. 

In the past, it has just been my husband and myself, and we have been very sucessful at making a profit, every single time.  We had our disagreements, but with only two "cooks in the kitchen," decision making wasn't too hard.  We were able to quickly agree on cabinets, paint colors, flooring choices, etc.

Fast forward to our current project...there are 4 of us involved in this project.  Its a 4 bedroom, 2300 square foot home on a country lot in Cottage Grove, Wisconsin. The home is structurally sound and we basically finished it from the studs out. The participants are my husband and I (both experienced flippers) and my parents (newbies).  I also have the benefit of being a Realtor, so I know what buyers look for in their new home, what they don't look for, and in which rooms we should invest the most. Lets just say, the decision making process has been a bit longer then usual.  We disagreed on everything from lighting to flooring to what details needed to be addressed and which ones didn't (ie the screws on the hinges of the doors...no, I'm NOT kidding). I finally ended up being the one to do all the shopping for fixtures, flooring, countertops, etc.  Things went much smoother at that point. We are  near the end of the project and should be finished in the next couple of days.  The house looks fantastic and should make any family a great home. We were even able to stay under budget, and still put in high end finishes, fixtures and appliances.

My question is this; Has anyone else had the pleasure of this experience?  We plan on making a go of this, but any suggestions on keeping the peace would be helpful!

The question posed, is this market increasing the days on market for single family detached homes in the area?  Here is what the statistics are showing:

Average Days on Market for East Madison:

2006: 53 (1,147 homes sold)

2007: 61 (1,113 homes sold)

2008 (YTD): 77 (633 homes sold)

Average Days on Market for West Madison:

2006: 60 (1,682 homes sold)

2007: 70 (1,561 total homes sold)

2008 (YTD): 67 (935 homes sold)

Average Days on Market for Dane County (excluding Madison)

2006:  57 (2,238 homes sold)

2007:  68 (2,186 homes sold)

2008 (YTD):  90 (1,193 homes sold)

So, while we are seeing a slight increase in total days on market, the average is still under 90 days. The stats are also showing a slight decrease in the total number of homes sold as well.  However, the average sales price is holding steady, and increasing in many parts of the area.

I just returned from a VA seminar where I was a presenter.  I was surprised when it turned out that I actually learned more then I thought I would.

A representative from the Wisconsin Department of Veterans Affairs was there to discuss the State VA lending programs.  Being married to a veteran myself (and having our home currently financed with a Federal VA loan), I am very excited at the different programs they have available.

For instance, if you've been out of the military less then 25 years, you can get a 30 year FIXED mortgage at 5.75%! If you've been disabled through the military, all your closing fees and points can be waived! What many vets don't realize is you can purchase up to a 4 unit property with this program, as long as you intend to owner occupy one of the units. In addition, you can own other property, and use this program, as long as you will be owner occupying.

There is also a Personal Loan Program, where you can a loan up to $25,000 with an interest rate as low as 5.85%. The State of Wisconsin Department of Veterans Affairs, also offers home improvement loans as well.

One other exciting bit of information I learned was about the Wisconsin GI bill, where Veterans (or their spouses, if the veteran is 30% or more disabled through the line of duty), can go back to school for 4 years for free, even if they already have an undergraduate degree!

Phew! Exciting stuff in my opinion!

Apparently the the housing news isn't as bad as we all thought. Again this news comes with a disclaimer that all real estate is LOCAL!!

The National Association of Realtors reports that the Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 5.3 percent to from May, although its still lower then June of 2007.

Getting back to all real estate being local, each region showed different results for the PHSI. In the South, it jumped 9.3 percent to 92.4 in June but is 16.6 percent below June 2007. In the West, the index rose 4.6 percent to 101.0 in June but remains 1.7 percent below a year ago. The index in the Northeast increased 3.4 percent to 79.6 but is 15.4 percent below June 2007. In the Midwest, the index rose 1.3 percent in June to 79.6 but is 13.3 percent below a year ago.

As I wrote about in a previous blog, the $7500 tax credit may help increase sales as well. It is estimated that roughly 2.5 million first-time home buyers taking advantage of the temporary tax credit, existing-home sales are likely to rise 7.0 percent to 5.51 million in 2009 from a expected total of 5.15 million this year.

Another factor that is helping the market is the fact that the 30-year fixed-rate mortgage is likely to stay around 6.5% for the remainder of 2008 and the following year.

With all the negative press, I have many buyers who feel that we have not yet "hit the bottom" of the housing market and feel homes are still overpriced.  They are writing 15%+ under list price on homes that are already priced very competively for our market.  Even if I show them comparables for the area, they still feel that there are some major deals to be had.  Now, I'm not saying there aren't, because there still area, however, it would great if there was a way to give them a wake-up call.

While there is a 1 in 100 chance that the seller may be more desperate then one realizes, and be willing to take a very low offer, buyers often end up losing the right home for them.  The inevitable then happens that they compare all other homes to the "one that got away."

Here in Dane County, Wisconsin, average home prices have not yet fallen year to year.  We are still showing appreciation in the value of homes.  How does one get the point across that Real Estate is local, so what California or Florida or Michigan may be experiencing is different from what we are seeing locally.

Another example is on our foreclosure/short sale market.  Many of our foreclosures that are priced quite competively, are receiving 3 or 4 offers within several days of going on the market.  At this point, the bank asks for "highest and best" offers from all prospective buyers.  My latest investor client, upon hearing that there were 3 other offers to compete against, DROPPED his original offer price by $10,000 on a $140,000 home!

HELP!  How are you dealing with this issue?

 With the current market we are in, getting creative in marketing to help our seller's get their homes sold is a must.  I was given this idea by a local lender on how to help your seller net more, and get the buyer into a home.  In addition, I feel it would work great for a home that is to be value range priced. The idea is Seller buydown where the seller can "buydown" the interest rate for the buyers.

This tool is designed for a competitively priced home that is not receiving a proper amount of inquiries. The seller agrees to concede proceeds from the home's sale to buy down the buyer's interest rate. This method can save the buyer thousands over the term of the loan, and not reduce the value of the home which can negatively lower the whole neighborhood's home selling values. 

 Basically, with value range pricing, you could range the home from $500,000 to $530,000.  If the buyer chooses the higher end value range, the seller could buy down the interest rate of the loan. The following will explain how the buyer will actually end up with lower monthly payments, and will need less income to qualify as well.

Let's say you are trying to sell your home. After a price reduction from $530,000 to $500,000 you are still not generating any interest. You, and your agent, believe the current price to be very competitive. 

A buyer could offer $500,000, with 20% down. This makes the loan amount $400,000. The buyer, as of this moment, would expect a rate of 6.50%. A thirty year fixed, fully amortized payment is $2,528. But wait, this seller isn't getting any offers at the current price! We need to take some action.

Strategy One:

Using a price reduction of $20,000 to $480,000, with 20% down, the loan amount becomes $384,000. The same rate of 6.50% is used to produce a payment of $2,427, a net savings of $101 per month.

Strategy Two:

Utilizing a rate reduction, the sales price remains $500,000 and the loan amount is $400,000. The seller concedes $9,800, or 2.45 points to buy down the interest rate to 5.625%. This results in a net monthly savings of $225. In addition, the seller nets more then with a standard price reduction.

 A rate reduction also qualifies more buyers for the purchase of this house. Let's say the lender requires housing expenses to account for less than 40% of the buyer's income. A price reduction strategy requires buyers to make at least $92,314. A rate reduction strategy requires an income of only $88,578.

 Discount points are used in the rate reduction strategy. If $9,800 is used to buy down the interest rate, the buyer can claim the discount as a tax deduction for the year the home was purchased. As always, consult your CPA or tax professional for specific information.

 This shows you the power of reducing Rate versus Price. If you have any questions, or would like a specific report prepared for you, let me know.