Unit Sales in Maine Rise!

 Posted by at 6:06 am
Sep 252009
 

According to statistics released by the Maine Real Estate Information System yesterday, REALTORS sold 1050 homes in August 2009, up 9.95% from August 2008. This is more “good news, bad news” because the median price dropped almost the same amount (9.56%) to $162,800 for the same period. (The median price indicates half the homes sold for less, half sold for more.)

The same report includes country data based on a three month “rolling average.” For the months of June, July, and August our local counties shaped up like this:

  • Piscataquis County unit sales were UP 20.83%. MSP dropped 23.4% to $72,000.
  • Penobscot County unit sales were UP 17.01%. MSP dropped 4.26% to $135,000.
  • Somerset County unit sales were up 9%. MSP dropped 18.86% to $100,000.

Interesting stuff, eh? If you are buying or selling in thse areas, I wouldn’t get TOO excited about these numbers… but at least for the short term we have SOME good news.

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The Immutable Laws of Service

 Posted by at 1:09 pm
Sep 212009
 

One of the less pleasant things I must do occasionally is “let a client go” and suggest they find a different agent. It’s not a decision that comes easily unless, of course, that client is clearly dishonest or expects dishonesty of me. The unpleasant ones are those where it becomes apparent the relationship just isn’t working. Fortunately, it’s not something that happens often. It’s hard to generalize but most often the “laws of service” are involved. There are several such laws and they just can’t be ignored.

The law of cause and effect is still in force. Real Estate is not physics or natural science, but it’s not hard to understand that giving more (service), means you oftentimes get more (clients and transactions). My experience bears this out as most of my new business is referral business based on the success of previous transations and relationships.

Of course that means working smart and it sometimes means working hard. I don’t hate hard work, but the point of that work is to give service and make sure nothing goes wrong. I don’t work because I have nothing better to do. And I can only work so hard!

When it comes to working hard there is one limiting factor. The number of hours in the day are finite and I have to determine how to invest them. I learned a long time ago that it’s impossible to be all things to all people and to be everywhere at the same time.

While it’s true that providing a high level of service drives my work, good will doesn’t pay the bills–at least in the short term. I work hard at real estate and do enjoy it. But I could also work hard at fishing and would probably enjoy that more! So every day I must consider cause and effect and make decisions that have a positive influence for both my clients and my cash flow.

There are lots of slogans about “putting the customer first” and they are not without merit. However, most of those customer service slogans are a myth. “The customer comes first,” but which customer? Everybody can’t be first. The second law of service is Continue reading »

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What Was I Trying to Do?

 Posted by at 1:07 pm
Sep 212009
 

Can you stand some more statistics? According to “Zillow” real estate market reports for July 2009, buyers paid 3.3% less than the last listing price during the month. Obviously this will vary by market, but clearly buyers continue to negotiate price nationwide. An important part of the formula (actually a precise one doesn’t exist) is the amount of inventory available and what makes up that inventory. In markets where low-priced foreclosures dominate, there’s a lot less room for negotiation.

Concurrent with the general trend towards lower offers we send a pattern of listing price reductions. The same Zillow report showed that nearly 23% of all homes listed for sale have had at least one listing price reduction. A similar report from Trulia, Inc. tells us that nearly 26% of homes currently on the market have been through at least one reduction. The average discount has been remaining around ten percent.

Figures like this make for interesting reading, but what do they really tell us? Should we list our property ten percent higher than the market value because we expect lower offers? Should we automatically offer at least ten percent below the listed price? The numbers change (or get spun by media moguls), but the story really doesn’t change.

Sellers: Work with your agent to price your home based on fair market value.  (See the post “Don’t Sell the Price; Sell the Property.”) Fair market value is primarily judged based on recent sales, but your competition (what’s on the market) will have an influence.

Buyers: The same advice applies. Base the amount of your offer on “fair market value” using the same criteria. Factor in how much you love the property—how much it is worth to you.

(These rules do change a little bit when we’re dealing with investment property.)

Any transaction will involve some discussion and negotiation, but that should not get in the way of the objective. It’s easy to get so “wound up” over a strategy that one forgets what they were trying to do in the first place. Use the data but don’t forget that if you’re selling the objective is to sell and if you’re buying the objective is to buy.

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Who Stole My Castle?

 Posted by at 9:50 am
Sep 172009
 

I’m not so sure about Maine, but “house stealing” is a fast growing nationwide scam according to a recent article in the AARP Bulletin. The article reported how easy it is with an example using the Empire State Building! A reported downloaded the existed deed, bought some forms at Staples and transferred title to a phony company. The next day the Registry of Deeds showed him as the rightful owner.

Please note this is not a “how to” article! No, wait! Yes it is! But it’s about how to avoid having it happen to you.

In some cases, the thief resells the property quick. More often the stolen home is used as collateral for a loan. (Mortgages may be “tougher” to get, but home equity loans not so much so.)

  • It might make sense to check your property records at the Registry of Deeds occasionally. This is relatively easy–in some cases it can be done right online.
  • If you receive a payment book or loan information that isn’t yours, follow up immediately by contacting the loan company.

This might seem paranoid, but title transfers are not difficult and people are often tempted to make them a “do it yourself” project. I have several real life examples that relate. A and B (two individuals) owned property “together” over a number of years. During ownership they would transfer title… sometimes A would own it; sometimes B would own it; sometimes they would own it together. Most of these transfers related to loans using the property as collateral.

Unfortunately, A died. B called me to list the property for sale and I discovered she didn’t own it! They’d “lost track” or failed to record a deed, because A was the owner of record. Since A died without a will it remains to be seen who will end up with title.

In another example, C called to list a property he’d received from D in exchange for an unpaid debt. Since C had no use for the property, selling it was logical. No, there were no problems with the title or deed (although it would have been easy for D to transfer title to property he didn’t own). In this case, the property was basically worthless on the open market because it was “landlocked” and inaccessible.

Title transfers are serious stuff and “do it yourself” carries risk. Just because you can do something, that doesn’t mean you should.

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It’s in the mail!

 Posted by at 7:30 am
Sep 172009
 

Allegedly one of the oldest lies… but if we’re talking about the print edition of my newsletter it it’s the truth! Yesterday’s issue was mailed at the Newport Post Office and is now speeding on it’s way… hopefully to everyone! Since this is the first issue since my computer meltdown, it seemed appropriate to let everyone know here… if you don’t get your copy soon let me know… I’ll send you a copy and make sure you’re added to the list!

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Good News–Bad News

 Posted by at 9:14 am
Sep 052009
 

One of the more interesting things about the current market is how many different opinions there are based on basically the same information. There’s good news and there’s bad news. Some folks are very excited that existing home sales jumped 7.2% between June and July. Others are focused on the fact that prices are down 15% from last year.

With thanks to Ron Taplin of Maine Mortgage Services, I’d like share a couple of points made recently by Anthony Mirhaydari, a researcher for the Strategic Advantage investment newsletter.

We start with the fact that current buying trends are by no means normal. Sales are up, but a large percentage of those sales are transactions rooted in some form of financial distress. Some reports indicate only 10% of sales are coming from a “normal” process. July foreclosures increased 7% in July and the Mortgage Bankers Association reports more than one in eight mortgage holders are in some form of trouble.

One troubling aspect is that these troubles are not coming from risky (sub-prime) borrowers. Last year 49% of foreclosures were sub-prime borrowers. This year that number has dropped to 33%. In layman’s terms, more people who are (or were) “good” credit risks are getting in trouble.

If your eyes haven’t glazed over yet, you could get interested in the “looming wave” of loan resets. ARM (Adjustable Rate Mortgage) holders are facing the prospect of higher payments in the not too distant future.

But wait, there’s more!

Inventory continues out grow at a rate exceeding sales… and there’s some “pent up” inventory of people who want to list but are waiting until the market “improves.” It wouldn’t be unreasonable to apply this same logic to foreclosures–not only are we seeing more people “in trouble,” we also probably have a backlog of properties in the foreclosure pipeline.

What does all this mean? I’ll of course point out that “all real estate is local in nature.” I can offer examples that run counter to the statistics: a parcel of land I listed that went under contract at full listing price after only two days on the market, a buyer who keeps inquiring about homes only to learn they’ve gone under-contract before we can get the information. These are, however, exceptions.

Personally, I think it’s going to be a long cold winter and the best advice I can give to Maine folks is “get yer wood in…”  If you want to talk about buying or selling real estate, the best advice is to do just that: talk about it, think about it. This is not a good time for generalities. Your real estate decisions need to be made thoughtfully and deliberately–not based on national headlines and statistics. We certainly need to be aware of what’s going on, but it’s also a time to write your own news story based on your individual circumstances as well as your very local market.

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