Cheap Maine Land!

 Posted by at 7:16 am
Apr 252011
 

An “inside joke” among Maine REALTORS has always been out-of-state buyers who call or email asking about “cheap Maine land.” A few years ago I developed a trade show exhibit that involved a bucket of dirt, a scoop, some plastic bags and a sign that read, “Cheap Maine Land-five cents per scoop!”

Whether property is on the market due to foreclosure, short sale, or just a desperate seller, price is now an important aspect of nearly every transaction.  While buyers can find some real bargains, all too often there’s just too much emphasis put on the bargain at the expense of common sense and basic diligence. Sometimes it seems like it’s not about buying a home or property, it’s about getting the lowest possible price.

Some things haven’t changed.  Common real estate logic used to be “location, location, location.” That logic really hasn’t changed. Property values are still dramatically impacted by location both at the macro and micro level.  Unless your goal in life is to live in a cheap home, you ought also to be looking at neighborhoods, school districts, infrastructure, local economy, amenities, etc.

But you aren’t going to live there you say? I recall getting an excited call from a Boston-based buyer back when one of our local towns lost a major employer. He explained that he’d heard you could buy homes there for “pennies on the dollar” and he wanted five of them. When I inquired of his long range plans, he explained his intention was to turn them into rental properties and garner a great return on his investment.  He hadn’t, of course, considered who he was going to get for tenants.  I occasionally have to explain that my “job” sometimes is to talk people OUT of doing things.

There is something to be said for “at this price I can’t afford not to buy it,” but there still needs to be some caution—especially when dealing with vacant homes that can deteriorate quickly.  Again, logic suggests that you should determine the true cost of owning the home you are considering. A professional home inspection will do that by reporting issues that should be addressed immediately and some that will require attention over time.

It’s strangely ironic that in an earlier market one could sometimes stifle interest by pricing a property too low. Buyers would suspect there was something wrong and avoid considering it! This was also a time when buyers would often require prodding and pushing to do the research and make decisions. Buyers were afraid of making a bad decision. Now it seems like many buyers are afraid to purchase because the price might go lower. A bad decision at a rock-bottom price is still a bad decision!

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Your Tax Dollars at Work

 Posted by at 8:27 am
Apr 232011
 

One of my favorite real estate news aggregators is Real Estate Economy Watch. A recent post revealed the somewhat shocking news “The federal government spent about $244 billion on housing-related grants and tax expenditures in fiscal year 2009, or roughly $2,085 per household…” That is, it seems to me, some serious money.

One of my good friends opines that we’d fix a lot of our tax problems if we did away with withholding from paychecks and instead required people to write out a check every week. Using his logic, according to this study, your household is contributing (writing out a check) to the Federal Governement every year in excess of $2,000 in support of the housing industry. You have a right to ask what you are getting for it.

Of course one of the fundmental realities of federal spending is that it’s all but impossible to get an accurate handle on where the dollars go…  but the cited study cited offers some interesting comparisons.  To whet your appetite, federal spending on housing is about ten times comparable spending on energy ($212 per household). You might want to read the article in its entirety and then access the study. They are your dollars.

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Tell it like it can be?

 Posted by at 6:56 am
Apr 192011
 

Scott Leavitt of Oakley Signs & Graphics, Inc. sends out a weekly newsletter to customers that is both helpful and thought-provoking. In today’s issue he quotes Robert Orben, a magician and comedy writer from the early 1900’s. “We have enough people who tell it like it is. Now we could use a few who tell it like it can be.”

He uses this  as a springboard to suggest those of us who work in the real estate market can and perhaps should impact buyer and seller confidence and thereby “help” the market improve.  As one who prides himself in “telling it like it is” I found his suggestions more realistic than the organizations who want me to put on my rose-colored glasses and parade down the street shouting, “It’s a great time to buy! Things are getting better!”

Since I don’t have a brass band at my disposal, I especially liked his rhetorical question, “So, as a real estate professional, is it your duty to simply report the market conditions, or should you be helping buyers and sellers see how it can be?”

To my way of thinking, “how it can be” must include a healthy dose of realism. I suppose given our current economic state it’s easy to have too much realism and not enough “can be.” But as I think back over the various times I’ve reported statistics and market conditions I think I’ve done so with a fairly consistent observation that the statistics don’t create our future; we ultimately create our future and the statistics.

It is interesting, for example, that the most recent Sales Agent Class I’ve taught has a higher enrollment than the last year or two’s average class size. We can debate whether or not this is an indicator of the market but I do know this: Many of those students are creating their future. They have a plan, have identified a niche and are going to create an opportunity for themselves.

Should I buy? Should I sell? Should I get a license and get into the business? How you determine the answer to those questions may be more important than what the answer is. Leavitt refers us to an article in Forbes Magazine. that offers a positive (but conservative) outlook. Understand it’s fairly technical and reading it may make your eyes glaze over. But it contains some great examples of how one’s view of the world can influence one’s future.

Do you want to buy? sell? get into the real estate business? If the answer is “yes,” you may be thinking about how it could be! Think some more. Success always comes when preparation meets opportunity.

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