I have had two situations recently where a "magic number" of price was not met so the sellers wouldn't sell.  And in both instances, the offers submitted were not that far off the "magic number" original price.  In fact, they were both right around 95% of the original price...and in this "slow" market!!  What are these sellers thinking? 

OK, one was a For Sale By Owner, so he had no Realtor offering professional advice or market analysis.  In this FSBO situation, the owner puts a sign in his yard and is asking $107,000 for his house.  An investor looks at the house and offers him $102,000 cash.  The seller says no.  He wants the "magic" $107,000 or no deal.  The investor keeps his phone number and calls him from time to time because he sees the for sale sign still in the yard.  The seller continues to say no.  After over six months, the seller lists with a Realtor and is asking $108,000 now.  I don't know what the commission is on that listing, but I'm sure it's more than $1,000.  So in the end, the seller will not net as much as if he had come off his "magic number" and sold to the investor for $102,000 cash. 

In the second situation, potential buyers liked the property and made a low offer, trying to get the best deal they could.  The seller countered this offer coming off the price only a few thousand dollars.  Then the buyers made another counteroffer quite a bit higher than their original offer.  The seller said they would not go any lower than $135,000.  Original list price was $139,900.  The buyers offered $133,000, only $2,000 less than the seller's last amount.  The seller would not budge.  Negotiations broke down over a 1% difference!                                                  

I guess these sellers were not truly interested in selling their properties.  They had offers on the table that were 95% of the original listing prices and still could not come to an agreement.  I was involved in one of the offers and reminded the seller of the current market conditions as evidenced on the market analysis I had completed.  I also reminded the seller that we were about to enter the winter season, which is typically slower in any market.  But to no avail.  Anyway, the point of this post is to make sure that sellers see the overall net amount of each offer and not hold onto any "magic number" that they think they need to have for a Sales Price.                          

If a picture is worth a thousand words, then 10 would be worth 10,000 words.  And I think 10,000 words describing your house could lead to a sale much more quickly than only one picture, or worse yet, no pictures.  When searching listings for my buyers, I am continually annoyed and disappointed by Realtors that do not include the maximum number of pictures.  And it is totally appalling the Realtors that do not include any pictures at all.  These are not new, inexperienced Realtors either.  I'm seeing this lack of service from experienced Realtors.  So if you're a seller, ask to see the listing that your Realtor has put in the Multiple Listing Service for you.  This MLS is how other Realtors find your property for their buyers.  If your property has no pictures or just one of the front of the house, how appealing is that?  There are just too many houses on the market right now to waste time on one that has no pictures.  Why are there no pictures?  Is it totally ugly and in disrepair inside?  Is it just a little messy and possibly workable?  Who knows?  Buyers are not going to take the time to look at questionable properties.  And that's what a property is with no pictures...one big question mark.  Sellers, please discuss this with your Realtor.  Make sure they have the maximum number of photos allowed by their MLS.  Even with difficult properties, you can find something to photograph.  What good is it to have print ads or internet advertising when it is all words and no pictures?  Your house needs to become a buyer's next home, and nothing helps them picture that better than pictures.  (pun intended)

Even here in Norman, Oklahoma with a pretty stable real estate market, we are seeing properties linger on the market.  And after a house sits for several months, informed sellers will make a price reduction.  And in the unfortunate event of a pending foreclosure or short sale, sellers will sell at just about any price they can get.  Now for the silver lining:  homebuyers can get a really good price on a really good home, especially if they can look past the little stuff.  Some of the houses are vacant, some have had not-so-good renters in them, and some have not been taken care of very well.  In tough economic times, people have to pay for food, gas to get to work, and rent or mortgage payments.  They end up having little or no money to take care of necessary repairs and upkeep.  Many buyers want a move-in ready home or are unable to see past the cosmetic blemishes.  They miss the bargains out there.  But if you have the patience and know-how, you can take one of these houses and fix it up for sell or for your own dream home.  You'll need to consider the costs associated with getting the property back in livable and beautiful condition.  Your Realtor can give you valuable market information so you make a well-informed decision on what to offer taking any repair and renovation costs into consideration.     

Whenever I show clients homes and they really like one but hesitate to write the contract, I hear these words in my head, "This one could be gone tomorrow."  I always inform the buyers of this fact but without these exact words.  It just sounds too much like a sales pitch. "Hurry before it's gone!"  "Last one"  But the reality is that every home for sale could get a contract at any time.  It could be on the market for 10 days or 100 days or 200 days.  It could be overpriced, underpriced; in great condition or a real fixer-upper.  When the right person sees it and sees the potential either for investment purposes or to make it their new dream home, they will write a contract.  And the sellers could take any offer they deem appropriate...maybe even something lower than the sales price, or higher.  So I offer the following guidelines to help buyers in their home search:
    

     1.  Talk to your lender and know what price you can afford to pay.  Also, know the costs
           involved in buying a home:  Earnest Money, Down Payment, Closing Costs, Prepaid Items,
           Inspections, Repairs, Moving Expenses, Utilities, etc.

     2.  Have an idea of what you're looking for in your new home.  How many bedrooms?  Baths?
          One story or two?  Townhome?  Condo?  Big yard?  Small yard?  What area of town do
          want?  Move-in ready or fixer-upper?  And how much work are you prepared to do? 
          Formal Dining Room?  How many Living Areas?  In  town or in the country?  Acreage?
          Think about these options and make a list.  You may change or revise some things
          but this gives you a good idea of what you want before you start looking. 

     3.  Discuss your loan limit and your dream home list with your Realtor.  She/he is a
          professional and can help you find just what you're looking for in your price range.  And
          if you're shopping in the champagne aisle with a beer budget, your Realtor will let you know.
          It is our job not only to assist you in the shopping and buying process but also to educate
          you on the local market. 

     4.  Have fun!  Once you've done your homework and consulted with your Realtor, it is so fun
          and exciting to search for your new dream home. 

 

Even before beginning your search, you can always consult a Realtor for more information regarding your home search and any special circumstances.  She can offer estimates of costs associated with buying a home.  She'll ask questions and can help you pin down what it is you want in your new home.  And she'll educate you on the local market. 

 

So don't delay, consult a Realtor today!

I was touring homes with a couple from out of town last week.  As we drove around Norman, OK, they asked if sellers had stopped putting their homes on the market since summer was almost over.  I responded that while summer is generally a very busy time in real estate, there are always buyers and sellers looking to buy and sell.  Many times life circumstances dictate when you move.  Sometimes a job requires a transfer to a new location, or a couple gets married and wants a place to call home.  Unfortunately, divorce is another reason to move.  Other times families move because they need more room for a new baby.  Then there are "empty nesters" that downsize to smaller homes so they have more free time and money to travel or pursue other interests.  So while many people move during the summer, usually to minimize stress on school-aged children, people buy and sell throughout the year.

So you're ready to buy a home.  You may be a first-time hombebuyer or a seasoned homeowner.  Without even looking too hard, you can become overloaded with all kinds of "helpful" information and advice from many sources like the paper, the internet and your well-meaning Uncle Bob.  Many of these tips are good, such as shop around, do your homework and know the market in your area.  These are all things your REALTOR will help you research.  Another tip that some sources will give you is to let you know that REALTORS are paid on commission.  While this is no secret, these sources think you should know this so your REALTOR doesn't get you as a buyer to pay too much for the house.  "You know, the higher the price you pay, the higher commission your REALTOR gets."  Yes, this is true.  But let's think about it and put pencil to paper.  On an average size home of $150,000,  a price increase of $3,000 would net roughly $45-90 more on the commission.  And then each REALTOR has an agreement with their own broker on how much of that they actually receive, from 50% to 100% after paying some insurance, office and other fees.  Of course, every situation is different and you should always work with a REALTOR who is professional and that you trust.  But don't let well-meaning "helpful" sources make you paranoid that your REALTOR is driving up the price and trying to get extra money in his/her pocket.  We REALTORS want you as a buyer to be happy, thrilled even, in your new home.  This is our career and we want you to refer your friends and family to us not tell them we gave you bad advice.  When you work with a professional REALTOR, he/she will give you plenty of market information and help guide you in your buying decisions so you feel comfortable negotiating price and terms on your new dream home. 

OK, so I kind of took that line from the play, "Oklahoma!".  But it's the truth, especially in these times of attention-grabbing headlines about rising foreclosures and falling home prices.  As Realtors and investors have always known, all real estate is local.  So now the secret is out:  just because the East and West coasts and some other high cost areas have seen huge decreases in prices of late does not mean that the whole US real estate market is taking a nosedive.  Quite the contrary is true!  In the state of Oklahoma, home values have increased by 4.2 percent in 2007, nearly as strong as our record years in 2005 and 2006.  And in the Oklahoma City metropolitan area, home values have increased by 4.68 percent in 2007.  And this is the fifth year in a row that the average home price has risen.  Now I don't call that any kind of collapse in our real estate market.  So, Okies, stand up and be proud...and go out and buy a home!  Owning a home is still the best financial investment you can make, especially here in Oklahoma.

Home value increase amounts taken from Oklahoma City Metropolitan Association of Realtors Newsletter, April 2008. 

 

The housing market is in a slump, The mortgage market is a mess, The whole economy is in trouble.  Sounds like today's headlines, huh?  I'm asking you to take a minute to step back and look at these headlines again.  You've heard the saying "Sex sells", well so does negativity.  I don't know why but it seems it's in our human nature to like to read and hear negative news stories.  Or at least that's the theory the media operates on.  When you read or hear these headlines, look and listen carefully.  The biggest slumps and messes are on the coasts; places that saw the biggest, most insane increases in the real estate markets.  Of course, a correction had to be made.  And that's all we're really seeing is a correction in these overinflated markets.  Here in Oklahoma, we have had the normal seasonal slowdown.  Ok, maybe a little slower than normal, but nothing to make headlines.  And the mortgage mess is directly related to these overinflated prices and the bet that the mortgage lenders and buyers made that the prices would keep increasing.  Again, that's not our local market.  We didn't have many of those "hybrid" interest only ARM loans.  We have a good economy.  We have a great housing market!  You get so much more for your money in our market.  So if you have been thinking about buying a new home, now is the time to buy! 

I have recently had a couple of buyers come to me not knowing what to expect when buying a home.  I'd like to share some information for them and for anyone thinking about taking this big step.  First, I'd like to say that YES, buying a home is better than renting and paying someone else's mortgage.  Now for the rest of the story. 

When you begin to think about buying a home, you should first consult a reputable mortgage professional.  If you don't know where to turn, ask your Realtor to recommend someone.  This person will discuss your income and liabilities (bills) and review your credit.  He will then let you know how much of a home loan he can get approved for you.  But that doesn't necessarily mean how much you can afford or even want to afford.  You need to take a long look at your income and at your budget.  Then decide how much owning a home is worth to you.  Do you like your life just the way it is?  If so, then your new mortgage payment should be right around the same amount as your current rent.  If you really, really want a new home of your own, then you might consider a slightly larger mortgage payment.  Most people usually buy a home with a payment about 1.5 times their current rent.  So you decide.  Is owning a place of your own so important that you could forego that expensive coffee a few days a week?  Great, you can add that amount to your home budget.  If you're addicted to that costly caffeine, or just don't want to cut back, then you might need to lower your budget for a home.  This is definitely the most important decision you will make.  Once you figure out how much you want to pay for your mortgage each month, then you know your target sales price.  Your mortgage professional or Realtor can help you calculate the sales price from the payment.  Then you get to the fun part, shopping for a home!

 Just a few more things to know about buying a home, for now.  You need to know how much money you will need upfront for things like your credit report and appraisal.  You will also need to pay for your home inspection once you have found the right home.  Your mortgage professional can tell you the credit report and appraisal fees and when they are due.  Your Realtor will let you know how much home inspections in your area cost.  Don't be tempted to skip the home inspection.  The appraisal is done for the mortgage company's benefit to be sure the home is sufficient collateral for the mortgage loan.  But the home inspection is done for you.  The home inspector is a trained professional, some have engineering backgrounds or prior experience in the building trades.  He does not have a crystal ball but is aware of warning signs of potential problems like cracked foundation, leaks, bad roof, property not up to building codes, and termite infestation.  Speaking of termites, that's one more inspection you will likely have completed on your home before you move in.  These appraisals and inspections sound like a lot of extra work and money in someone else's pocket but they are an essential part of checking out this big investment.  I'm sure you wouldn't buy a car without taking it for a test drive; these professionals are here to "test drive" your home to ensure all the systems are working and the building is sound. 

Don't let all this talk about fees and inspections scare you.  Owning a home truly is the American dream.  And being informed upfront is the way to make buying a home a rewarding and enjoyable experience.  Now take a deep breath, call your Realtor and mortgage professional, and start shopping for your new home this weekend!

Many local REALTORS in the Oklahoma City metropolitan area attended a blogging class taught by Michael Tritthart from Plano, Texas.  The class was held at the Oklahoma City Metropolitan Association of REALTORS.  We learned the definition of a blog...a web log, for anyone over 30 who might not know the term.  Michael taught a hands-on class where we set up a blog and started blogging.  It's really not so scary after all.  We all have an opinion and this is a great way to tell the world how you feel about anything on your mind.