Home Practical

The Blood Sport of Home Selling

2009-02-26T12:31:00.002-05:00

Selling a home has always been a competitive event. It has now become a blood sport.

Too few buyers, mortgage requirements geared to glean only the most credit worthy of applicants and appraisers that examine a home's value with the precision of a jeweler require buyers and their agents to form a closer alliance and develop new strategies to get a property sold.

To this end my networking group here at Coldwell Banker is developing pre-listing packages for Sellers. Home Stagers will be giving the entire home a close look for its visual appeal and making suggestions for any needed enhancements/ facelifts. Handymen will take care of the small need-to-do items that plague most houses that can block a buyer's view of anything else. Licensed Inspectors will perform a whole-house check that will turn up any major problems that can be taken care of before the house hits the market. Housekeeping would also be offered. All of the services will be made available at special rates for our clients.

We'll still have quite a fight on our hands to successfully market a property. But, we won't be entering the ring tripping over our shoe laces.

Clients form plans that work

2009-02-20T15:51:00.006-05:00

Despite this week’s up and down, round and around economic news from D.C and Wall Street, clients appear to be forming their own plans.

Keeping it simple, seems to be their way of finding a home and affording it: Just enough room, best neighborhood possible and conveniently located. Making long-term plans for any purchase, these folks are serious and savvy enough to know quick appreciation is not on their “must haves” list. They have friends whose short term views have led to misery and hopes of someday just getting back to “square one”. No, today’s clients seem to be looking for homes, not mere “financial instruments”.

Maybe my clients still recall the tortoise and hare from childhood bedtime stories; or, was it the Three Little Pigs? ( 3 Little Pigs)

Buying Multi-family properties...

2009-02-12T13:21:00.004-05:00

These past few months I've been paying particular mind to the inventory of multi-family homes on the market. It's becoming a far different market for investors than it was during the 1999 -2006 years. In 2005 I advised all of my clients holding onto these properties, hoping to achieve further gains, to get out - sell them immediately. Keep in mind that most of these properties were speculative "investments": the monthly incomes were less than the carrying costs. The clients balked at first, feeling that the longer they held on the higher they could sell the properties for. They finally saw the wisdom of not living in a house of cards and sold to other speculators who were not so well advised. The market still went up…for a few months… and then the bottom fell out. My clients still thank me.

Now, we are entering different times. Speculative properties have been sitting vacant or only partly rented for some time and often have fallen into disrepair. But, a new wave of investors are now coming back. Not looking for quick turnarounds or "Flips", these are serious buyers looking for a return on their investment and making sure the cash flow is enough to also improve and maintain the properties.

With inventories high, interest rates lowering and more folks considering renting for various reasons, today's investment buyer is looking for it all: location, price and return. They also want to know where their money is - unlike putting it into some investment fund operated by "Uncle Bernie".

It's time, again, to call some of those old investors… Are you there?

Zombie Marketing

2009-02-06T15:04:00.004-05:00

Usually, when we say someone has "expired", we mean dead. Done. Fortunately, for a great many folks hoping to sell their homes and properties, that is not the case. The trick, though, is bringing the dead back to life.

Let's face it, this is one tough market in which to sell a home. Buyers are not plentiful and the competition is strong. Tell me, then, why are some homes being marketed just as they were back in the bad old days. Back then, when Buyers would kill to buy an overpriced property, agents often would only have to stick a sign in the ground and both they and their Sellers would sit back waiting for offers. Hello, 2009.

Most agents are again practicing their craft and conducting business as it should: Determining the real market value of a home, getting it prepared for the market and then launching the marketing campaign. The market value of a property has nothing to do with how much was paid for it, how much a Seller wants to get for it or how much it means in sentimental value. Once a house is placed for sale… it is a commodity. The market determines the value just as it does with stocks, cars or bread. Agents are there to interpret and anticipate what the market is doing and act accordingly to sell the commodity they represent.

Yet, many homeowners - the Sellers - are still not getting it. They continue to place their properties for sale with an agent that will tell them what they want to hear. The agents then hope the Sellers adjust the price as time goes by and that the marketing takes care of itself. Thus, the "Expireds".

In approaching homeowners whose homes had been on the market but did not sell - Expired - as it were, there is one and only one question I initially ask: Do you really want your property sold. If the answer is, "Yes", we proceed further. For then only do we both know that whatever needs to be done, will be done. Then begins my "Zombie Marketing" - bringing the dead back to life.

Goodnight Babsie

2009-01-30T11:20:00.002-05:00

Last night Aunt Faigela and I decided to not cook but to get a bite to eat at a nearby restaurant. Nothing extravagant, just a simple meal - not even desert, thanks to our latest diet. Having these very occasional no-frills nights out gives us both a break from the routine and a chance to just talk. What promised to be a nice night out almost turned into something else: panic.

Babsie, the waitress, took our order. Babsie is a long time member of the staff at this restaurant and we've gotten used to her rather dour manner. Half-way through our meal she came to our table and asked how everything was. Fine, we answered. Then Babsie started talking about the economy, how no one could afford a house (music to my ears you can be sure). As a matter of fact, said Babsie, even eating out in her restaurant was a luxury no one should or could afford anymore. But, said Faigela, we felt the value we received was good: very decent food at a moderate cost. Yes, countered Babsie, but it's still too expensive, no one can afford it anymore.

After finishing our meal - yes, we did enjoy it - we paid up. Before leaving, I glanced around at all the other waitresses. Each was counting on the paycheck and tips generated by folks like us that, while being sensible and frugal, still chose to ignore the Babsies of this world.

Thank goodness Babsie doesn't have a television audience. But, then again, maybe she does.

Waiting for Spring

2009-01-29T13:52:00.006-05:00

These past couple of weeks or so there seems to be a bit more interest by Buyers. Everyone is seeking a bargain, of course, but enquiries about different types of properties have come across my desk with more frequency.

I'm mostly hearing from three types of Buyers: Those working on a limited budget, those seeking foreclosed properties and those seeking investment properties.

Budget conscious Buyers are doing their homework - getting their mortgage pre-approvals in order before the search begins. There is so much inventory right now they have choices. Banks are hungry for their business if they are qualified Buyers. The Coldwell Banker Mortgage division is very competitive and many locally based banks (those not caught up in the flim-flam mess) are doing a relatively brisk business, too.

Foreclosure bargain hunters are a mixed-bag. There are those looking that know that some properties that may fit their needs might just happen to be foreclosures. Others are under the impression that banks are giving the properties away. Not so. Fair market value still rules. That is why banks, once they take over a property, have it appraised and then put into the Multiple Listing system ASAP. They, like every Seller, want the most attention given to a property as possible. Those late-night infomercials offering "special lists" of foreclosed properties are, for the most part, print-outs of multiple listings information and/or lead-ins for taking courses to "make it rich with no money down" in today's real estate market. Right! Switch channels and the same company may be selling potato peelers or Commemorative Inaugural Coins.

Bottom line: Foreclosed properties sell for market value, often need work and rarely are move-in mansions selling for pennies on the dollar.

Next are the investors. Unlike the "investors" of the 2000-2006 era, these are serious, practical folks. They are seeking both residential and commercial types of buildings and there is plenty for them to choose from. Those contacting me are given the "Rule of Ten" talk (see past articles). For the first time in several years, I am again advising my clients to look at investment property.

The one question that each type of Buyer asks me is this: "Should I wait until spring to see where prices go"? My answer is this: By following this method of buying a home or investment you may be waiting until a lot of other Buyers make their move. If you have the ability to buy now, figure what you think the market price may be in 4-6 months and make an offer based on that. A savvy Seller just may say, "Yes".

Lessons from the Butcher

2009-01-14T15:49:00.002-05:00

Working my way through the isles at the local Stop & Shop today turned out to be both relaxing and instructive. I love looking for mark-downs and using coupons for the essentials. For me, it’s like finding buried treasure or a couple of dollars in the pocket of just-washed jeans – an unexpected surprise.

Most times I shuffle through the store concentrating on what I need to pick up and little else. At the big stores, much of the time, the employees seem as anonymous as we are – both of us just doing our jobs. That’s the trouble with the big guys. The store promotes their branding so much that we forget who actually runs the place. Lately, I’ve tried to get to know the folks at the supermarket a bit more, even if just to say hello or thanks. Sure, I know Ellen; and Donna is a familiar face. But the others…?

Today was different. I found a few bargains, but came away with much more.

The meat department had lots of good sales going on today. Maybe Wednesdays are The Day. Tired of chicken, I decided to look for something else. A sign advertised boneless pork chops at only $1.99 lb., but the bin was empty. The butcher was busy in the back (at this market lots of what goes on is very open to the public’s scrutiny – a good thing) so I got his attention and asked about the special on the pork. No problem, just give him a few minutes and he’d have some more packages made up for me to select from.

So, it turns out there was no shortage as I had feared – just an unexpected demand. As a matter of fact, said Oscar, the butcher, because there was so much pork available right now they could sell it for less than chicken. Same thing with some cuts of beef, he said. No, prime rib wasn’t on sale for $1.99 lb. but, then, again, the demand for prime rib had slowed recently. Only a few of his customers asked for it. Oscar figured it had something to do with the economy. But, was the bargain stuff any good, I asked. Sure, said Oscar, and, because it’s not so expensive the whole family can enjoy it or you can have a few friends over for dinner. So, I can do more for less? Yep, and you can add some seasonings and make your own “specials”. So, by not buying the fancy stuff I can still eat well and not go broke? Yeah, haven’t you heard of supply and demand, man? I have, Oscar. Thanks for the tips.

Now, could this apply to buying a house: avoid the high-end fancy stuff, get down-to-earth prices on solid, decent homes and add the right touches to make it your own? In the words of Oscar, Yeah, haven’t you heard of supply and demand?

Good buy or good bye!

2009-01-13T16:14:00.001-05:00

This morning several brokers and I previewed some of the newest offerings of homes just listed for sale. It was surprising, in a way.

With some Buyers beginning to make serious enquiries about properties as well as getting a firm picture of their financial health and abilities, now should be the time for Sellers and their agents to put their best foot forward.

What was visible today were homes still being over-priced and / or homes not even close to being ready for market.

With inventories of housing of every description being plentiful, Sellers must price their home on current values - not on wishful thinking. If not, Buyers are more than willing to wait until the right home comes along at the right price.

Real Estate Predictions 2009

2008-12-30T13:28:00.028-05:00

We made it. We’ve reached the end of 2008 a bit bruised, but still intact.

By sorting out my desk, files and piles of stuff, I’ve decided to get ready – mentally at least - for 2009. In doing this end of year clearing, the famous turban once owned by the one and only, “Carnac the Magnificent”, was discovered folded neatly amongst my collection of Richard Nixon face masks, Screaming Mirrors and Perot for President campaign buttons. Carnac’s turban remains the one, reliably useful object. Let’s give it a try to see what may be in store for 2009:

Mortgage money will continue to be freed up by more banks and brokers as pressure mounts from both Congress and the public.

Interest rates, currently around 5.3%, will remain historically low – at least until April.

Home prices will probably continue to decline through June or so, but less dramatically than the previous 12 months. There may be some areas of the country, mostly in the South, that will continue to see steeper declines, especially for condos. When home prices eventually go flat they will remain so for quite some time - until housing inventories lessen. Bargain hunters and savvy Buyers will be out in force by early March.

Multiple-family homes will again be popular as owner-occupied options and investments. See my earlier Blogs about this type of housing.

Smaller, more affordable homes will attract Buyers, both first timers and down-sizers.

Homes close to amenities will out-sell their more rural counterparts. City and town governments will be open to reasonable re-zoning proposals to lessen the need to drive for even basic commodities. “Neighborhood” will be the new buzz word. Buyers will want to get the scoop on specific areas more than just looking for the features of a specific home. Location, location will mean more than acreage or square footage.

Families will again expect children to share bedrooms – fewer “en-suites” for junior.

For my part, I intend to continue helping my clients by keeping my eyes and ears open for trends and home values, by adding extra services and in… helping them to get home.

Not to worry – Happy 2009!

Certified Value…the real deal

2008-12-12T20:12:00.009-05:00

Several days ago Jonathan Miller of The Matrix blog (see the Other Blogs I Follow link) wrote an article regarding the oft-quoted real estate mantra, “Now’s a good time to buy”. Miller was correct, of course, in stating that when is a good time to buy is very subjective, depending upon the personal circumstances of the Buyer. Whether the market was going up or down was irrelevant, says Miller. But, what if something could be done in marketing a home that did – even if just a bit – make it a “better time to buy”?

Enter the Transition Team of Coldwell Banker’s Fairfield, Connecticut office. We have been charged with developing marketing ideas that deal especially with this current economy and into the future. There are few parameters for our working group; each team member already knows that the days of gimmickry are long gone.

At our most recent meeting, two principle reasons for Buyers holding back from making offers to buy were identified. First, Buyers have serious concerns about their immediate financial future and are awaiting some reassurances from their employers. Second, Buyers expect the market to continue to go down and are unsure about the real current and near-term value of homes. The longer - term value of a home does not appear to be as great a concern to most Buyers as much as affordability (read optimism). It’s the present and near-future real value that worries them. After all, nobody wants to pay too much for anything, especially now.

Regarding the first concern of Buyers, they should wait. Buyers need to know what their financial picture will look like and then make an appropriate decision. For the second concern, the concept of Certified Value was proposed.

Once a Buyer makes an offer on a property, the banks will send in an appraiser to certify the property’s real value. With many banks making Scrooge look like a philanthropist, that appraisal will be dead-on. Banks absolutely do not want to be holding a mortgage for an overvalued property. So, why not cut to the chase and certify the value of a property by having an independent appraiser perform an appraisal prior to marketing. Then, take it one step further – factor in market direction. This Certified Value program will likely be in place by early January 2009, once some of the details have been finalized.

I’ve been using this concept of identifying a property’s true value for my clients for the past 15 years. But, by bringing in an independent appraiser and factoring in market direction, both Buyers and Sellers can be assured of the true, certified value of a home. Both parties deserve nothing less than the real deal.

Investment Properties

2008-12-11T12:51:00.004-05:00

Investment properties, or more precisely, multi-family units had been the albatross of many real estate firms and banks. And it's no wonder. With the Ponzi-schemes rampant during the later 1990's until about fall of 2005, serious investors liquidated or stayed away from that segment of the market. They knew something was afoot and for many, having survived the downturn of the 1980's, they sensed the impending bursting bubble. That banks refused to act on all the warning signs remains a question to be answered.

These last several months have seen an interesting development. Too early to yet call it a trend or turnaround, nonetheless, multi-family units are again selling. And, many of the buyers seem to be following what I've referred to these past 15 or so years as "Uncle Pete's Rule of 10". Simply put, multiply the yearly income of a property by 10 and that is the upper limit of what an investor should pay. Slice and dice the formula any way you want, Uncle Pete was right. The lower the multiple the better but paying over 10 times yearly income and a Buyer went from being an investor to a speculator: "Say, high-roller, baby". A lot of would-be investors came back from the "real estate casino" of speculative buying with just enough pocket change to make a call to a bankruptcy attorney.

But, there are signs that enough Buyers are again seriously looking at multi-family homes as sound investments to take notice. Some, looking to be owner-occupants may pay a bit more than the 10 times ratio to live in an area they find more desirable. The rest, however, seem to realize that Uncle Pete was right.

A Recycling Life

2008-12-07T16:39:00.005-05:00

Early one morning last week before heading into work I was enjoying the last of my coffee while reading another chapter from Tom Wolfe’s, Bonfire of the Vanities. Not sure why I never read it when it was first published, but 20 or so years later it seems few things have changed – at least on Wall Street.

Morning has a pace all its own. Looking out my front window I’ve noticed when the traffic for Fairfield University and Prep starts to increase, when certain joggers or walkers pass by on their daily routines and even when the activity at my side yard bird feeders builds to a noisy, but controlled frenzy. All sorts of things. So when the yellow van nosed into my driveway, parked and two men got out and picked up my and my neighbor’s recycling bins I took notice. Times must really be getting tough if the trash people are downsizing to Econo-vans, I thought. But when these two guys kept glancing up and down the street furtively as they rummaged through the bin it dawned on me – they’re looking only for the deposit bottles and cans. I wondered, are they being more efficient than the shopping cart guys…or just more desperate. These men looked as if only a few months ago they may have been pushing lawnmowers or paint brushes. This winter has already brought a lot of changes.

It’s been a while since I’ve seen grown men, of apparently sound mind, rummaging through trash with the idea of getting a little money from the recyclers. I’m not talking about picking up odds and ends left at the curb and giving them a new coat of paint. No, I’m talking about actually going through garbage.

Bridgeport’s dump in the 1950’s was a marvelous opportunity for junk pickers. My younger brother, Brian, and I would sometimes get to go there with our father to search for copper. We’d climb the huge mounds of garbage along with a handful of other men and boys looking for the tell-tale signs of a pay off – the tangled BX electrical wiring stripped from old buildings during remodeling or demolition and just dumped. We’d take hold of the cables, twist them counter-clockwise and reveal their inner strands, one being the coveted copper. After a few hours we’d take our buckets full of wire to the junk yard across town. Who knows how much it was worth or what it bought for our household – it was worth something and we – my brother and I – had the time of our lives making money from what we considered play.

Fifty years later, because there’s no more dump, men drive to my house to go through garbage. Somehow, judging by the looks on their faces, I don’t think they are having much fun.

Change

2008-12-06T20:38:00.003-05:00

Change. While we may not have much control over what happens around us, we can control how we react.

In doing research these past few weeks my initial focus was on how deeply housing prices have been effected and if any serious prognostication might be offered regarding when prices might hit bottom and level out. For the first question, as detailed in an earlier posting, our area – greater Fairfield County in Connecticut – has seen housing prices, with few exceptions, 22-25 % lower than last year. Of the second question, when will prices level out, I don’t know. No one does.

One question often leads to another and in the searching for answers an unexpected twist sometimes emerges. In researching the historic ups and downs of housing costs I wanted to somehow keep things in perspective. Merely factoring in inflation to determine the relative cost of housing didn’t seem quite enough.

In the years 1945-1950 the cost of buying a modest existing house was the equivalent of approximately one year’s gross salary for a workingman. In 1950, a modest, newly built, home could be obtained for little more than a years gross salary – under $8,000. By 1975 relative prices had gone up, yet, a modest, existing home could be obtained for about 2 years gross salary of a single wage earner– under $35,000 – even within the cities of Fairfield County, Connecticut. By the beginning of 2006, that salary - to - purchase ratio had climbed to 4 to 5 years of gross family income or 6 to 8 year’s gross salary for a single average wage-earner. For a modest home!

Something terribly wrong has happened to the American homebuyer during these past 30 years or so. Whatever changes are coming, let’s hope they are for the better. Maybe, we all need to take a step back.

Fair trade winds of change for cities

2008-11-19T21:58:00.004-05:00

Sifting through all of the economic news it’s rare to find analysis focusing on the fundamentals. Two such tidbits were found on the American Economic Alert’s website and dealt with manufacturing, globalization and free-trade. The tie-in of free-trade to real estate and housing will, hopefully, be made clear.

Alan Tonelson’s article on export-led growth being at the core of our current economic meltdown (http://www.americaneconomicalert.org/view_art.asp?Prod_ID=3068&x=medium&fontsize=large) points out the logic of American manufacturers once again focusing on the domestic market as their best hope for growth and viability. Current trade policies favor other nations exporting to us in exchange for limited opportunity for U.S. manufacturers to export to them. This has been going on quite some time but has taken on gross proportions of unequal trade for the past 15 plus years or so.

Turning away from the financial and economic havoc these trade imbalances have wrecked on the American economy, let’s look at another victim: American urban culture and viability.

Cities and towns that were once thriving because of having manufacturing driving their economic engines are now, to varying degrees, rusting, and rotting shells of their former selves. Their remaining populations are often struggling within a third world- like existence. The global economy, like a gigolo lover, has promised a lot - but delivered nothing.

So, how does this tie in to real estate and housing?

President-elect Obama has long touted populist and working-man rhetoric. Now, it seems he may be in a position to actually make good on those promises (http://www.americaneconomicalert.org/news_item.asp?nid=3501886). If Obama and a recently elected and decidedly more fair-trading, pro-manufacturing Congress (read: renegotiating NAFTA, et al,) can make good on even some of their promises, look for the beginning of an industrial resurgence here at home. If that happens, cities may yet again be sources of jobs, culture and desirable, affordable housing. Economics, like politics, is, after all, local.

Getting back to basics

2008-11-11T14:57:00.012-05:00

Deciding to switch my method of keeping in touch with clients, colleagues and others interested in real estate from my email newsletter (BG on Real Estate) to blogging at Home Practical has been some time coming. More and more frequently I was faced with questions or issues about the real estate market and housing / living trends.These issues needed to be handled in a more timely way and have a wider audience than by what was possible or practical with the newsletter. Referencing of past articles through archiving was also a consideration. But, the immediacy and certain directness of blogging is what is most compelling.

Monday evening 11/ 10 I attended a networking / Open House event with Dr. Veronica Waks at the Fairfield office of Janice Schwartz. Janice is the owner / practitioner of Health Touch (http://www.healthtouch-massage.com/). With things going as they are with the economy, it's no wonder Janice has such a bang-up practice helping people to unwind, detoxify and de-stress. But, it was throughout the evening that I was asked by quite a few people when I thought things would change for the better in the real estate market. Answer: "Who knows"? Mortgage money is available, prices continue to adjust more favorably for Buyers, so for them it's already a good market. Yet...people are yearning for stability and the focus on the real estate market is where they are hanging their hats. Let's see what February brings - after the presidential inauguration.

Meanwhile, most people who own or manage businesses are looking for ways to keep going in this economy. Small businesses may, ironically, again be the life blood of a new economy that will emerge from our present morass. The big box outfits and mega malls are experiencing a reaction to the sameness of it all. People seem to be wanting to have a feeling of connection with those that make and sell what they need on a day to day basis. This topic was touched upon during the 11/13 morning segment of NPR radio during an interview with Miami bookseller, Mitchell Kaplan http://www.npr.org/templates/story/story.php?storyId=96945363

Forming small business networking groups for mutual support and /or referrals is a growing trend in today's economy. I'm part of a newly forming network group that is made up of owners of a variety of businesses and services. We're meeting at my office Coldwell Banker 1700 Post Road in Fairfield @8:00A.M. every other Wednesday. For info just give me a call, 203-254-7100.

In reviewing some of my past writings I came upon The Courage to Change article I wrote this past summer just before things really went south. The idea of simplifying and doing more with less may finally be an idea that's time has come. This theme will be explored more and more within this blog. With a few changes, here again is:

The Courage to Change

Sometimes, what we have been doing for so long seems so deeply ingrained that we barely give it a thought. Perhaps, now is the time when we should no longer ignore that little voice that whispers, “…time to do it differently”.

All of us, must have the courage to change; to change what we think is necessary in our lives and to let go what is not. Most professional “organizers” have a rule of thumb when de-cluttering and simplifying their client’s homes or offices. If something hasn’t been used for a year – throw it out. But, how much better would it have been to never have accumulated so much stuff that there developed a need to hire someone to throw it out!

The principal of simplifying can also be applied to how we live. The building boom of the late 90’s to 2006 saw the expansion of “mega-house” construction. Homes having space of 4,000 square feet and larger – became more and more common. The architecture of these homes is often garish and characterized by wasted, inefficient use of space. The attempt to portray these homes as “energy efficient” or “green” by installing thermal windows and energy efficient appliances was often misleading. Vaulted, two-story ceilings, huge, cavernous rooms and improper materials or installation quite often resulted in highly inefficient homes. Were such homes necessary for the majority of the people that bought them? After a year or so of living in a mega-house, many owners find themselves surprised that the number of rooms or space actually used in the house on a regular basis is much less than they envisioned. The rest is unused or become areas in which to store, “stuff”.

William Morris, an important designer from the Arts & Crafts period of American architecture, said, "Have nothing in your houses which you do not know to be useful or believe to be beautiful."
The same may now be said for the house itself - is it useful, beautiful and necessary? If not, might we ask ourselves, “Is it time for a change”?