May Sales Information

 Posted by at 8:06 am
Jun 242012

I found it mildly amusing that the MREIS (Maine Real Estate Information System) issued their monthly press release regarding May sales at about the same time I announced my vacation. Were I inclined to feel self-important I would speculate this is not a coincidence and there was concern that my vacation announcement might impact expectations regarding sales in July. (“Walter’s not working; sales will go down.”) I assure you my contributions (or lack thereof) will not significantly impact the sales data of either the county of the state.

Of course you’ve probably heard that statewide unit sales of residential property were up 32%. That’s certainly good news, but is tempered by the fact that comparing this year to last means comparing this year to a “bad” one. If a picture is worth a thousand words, the graph will show that the overall sales trend for May from 2007 continues a downward slant. But also do not forget this only represents one month–basing a trend on one month is not especially valid statistically.

Of perhaps more interest is the localized version… these releases include a “three month rolling average” by county.  For the months of March, April and May Piscataquis County Sales were up by nearly 13%–but understand that 13% represents four additional properties sold this year versus last and a median sales price this year of $60,000. (The median sales price indicates that half the homes were sold for more and half for less.)

The truly “bright spots” (measured by largest percentage increases) in our state are Washington County (162.5%) and Lincoln County (78.6%). Franklin County was the only county showing a loss (1.7%).

What all this means probably depends on your own bias and interest. Logically, with interest rates and prices this low, demand should (and will) increase–eventually. My instincts suggest that the road is a long one and I would be prepared for plenty of ups and downs.


Don’t Get Too Excited!

 Posted by at 7:53 am
May 272012

While it is not my desire to squash optimism, the recent sale of rose-colored glasses deserves some pause. If you have property listed in Piscataquis County I would not suggest you start planning how to spend the proceeds from your sale.

The latest press release from the Maine Real Estate Information System headlined the fact that sales and median sales price both were up in April (8.7% and 4.5% respectively). However, the numbers for Piscataquis County tell a slightly different story. County numbers are always reported on a three month “rolling average”–so the statistics I’m about to share are for February 1 through April 30. We’re comparing this year (2012) with last (2011). By the way, it’s important to remember that last year was not exactly a stellar year for the state or the county.

For the period noted, unit sales in Piscataquis County were actually down by 12.5% and the median price dropped a whopping 17.8%. Our county is a long way from “economic recovery” in just about every sense of the word.

To get a better sense of the market, consider the County Seat, Dover Foxcroft. (For those unfamilar with the area, our county is geographically large and very rural. The population of Dover Foxcroft is slight above 4,000.) There are (using MREIS data) currently 112 residential properties listed for sale in Dover Foxcroft. For the past six months, 18 have sold–an average of three per month.

A generally accepted real estate measure is “days on market” or “DOM.” Basically, this is a measure of how long it takes property to sell. You do not have to be a math whiz to see that with 112 properties for sale and sales rate of three per month, it will take… slightly over three years for all these listings to sell.

Now there are a lot of things “wrong” with this analysis–the largest being that it’s based on totals and really needs to be broken down either by price or location. The other observation that needs to be made is this area has always had a longer DOM that many others. If you are in the market in any way (selling or buying) further analysis is recommended, but it’s probably safe to say this is not a hotbed of real estate activity.

Markets with high inventory, low median price, and slow sales rates are often thought of as a “buyer’s market.” So while there’s plenty to choose from and prices are low (the median price for the rolling quarter is currently $60,000) it might a good time to buy. Again, further analysis of your individual situation is warranted.

(For those who are curious, one reason for the state-wide increase was a 20% increase in unit sales in York County. However, the median price of those sales did drop slightly.)


No Whining!

 Posted by at 5:25 am
Dec 052011

As if to reinforce my previous post, I read a news item this morning pointing out that pending sales are up but along with that REALTORS are reporting a signficant number of “settlement failures.” (A settlement failure happens when a buyer and seller agree to a “deal,” but something happens and the sale doesn’t actually take place.) The talking heads are of course blaming this on the lenders. (By the way, the statistics on the failures are not hard numbers-they are based on a survey of REALTORS who are reporting they are experiencing the problem.)

One comment posted to the story by a REALTOR included the observation that the “entire industry is being held hostage to ridiculous underwriting standards.” I confess to chuckling a bit.

I have an idea for her. I think she should start making $100,000 plus loans, asking herself just how much assurance she wants that her borrowers are going to pay her back. My guess is she’ll want some underwriting standards, documentation, and won’t be making loans to just everybody. If she can come up with enough money, she can turn an entire industry around.

 (Just to put the lending risk into perspective, a separate article notes that in cases where the lender or federal government modified mortgages to assist the borrower nearly half are in foreclosure again anyway.)

There’s no doubt that mortgages are a lot harder to get now than a couple of years ago. Personally, I’m not sure that’s a bad thing. But to those who are whining, I would suggest that unless we are going to start opening our own banks, “it is what it is” and we (REALTORS) need to start dealing with it. Whining about it isn’t going to help one bit.

We can’t continue to shout, “It’s a great time to buy!” because it’s only a great time to buy for those who can and not everyone can.

My personal experience is that it’s not THAT difficult–there are lenders with money to loan who have reasonable expectations. Buyers (and agents) who are looking for the slam dunk are going to be disappointed. You do have to work for the mortgage and the sale. Sorry.


Salesmanship is NOT a dirty word!

 Posted by at 6:43 am
Nov 282011

For a long time now I’ve been “preaching” to those who will listen–“It’s high time for those of us in the real estate industry to realize we are not in the business of selling houses; we are in the business of helping people make intelligent decisions regarding real estate.” I would call your attention to the fact that I said “selling houses.” I didn’t say “We are not in the business of selling.”

Some years ago I wrote a short booklet called Salesmanship Is Not a Dirty Word. I can assure you that I’m not “anti-sales.” I happen to think that selling is an important skill–even if we have to call it something else to make it palatable. 

So this morning I read an article on RIS called Warning: Your Sales Techniques May be Under Fire. It’s actually a pretty good piece. The author notes that while brokers have traditionally been “selling information” (because of the historical emphasis on the multiple listing system) things have changed. Buyers now have all that information available to them thanks to the Internet. (I wonder how that information gets there… hmmm.)

Therefore, he somewhat rightly concludes, buyers of real estate are looking for someone to “assist and consult.” But, like all good ideas, when you push this to the extreme it doesn’t work. “No dialog, technique, or pitch needed,” he goes on to say.  That’s where the author lost me.

 This is the age-old debate–it’s not a new one based on some new paradigm. Every industry has always had salespeople who put their personal gain before their customer’s. Real estate is no different. Well, except for one thing, maybe.

If you hire me (or somebody else) to “assist and consult” with you… wait. How are you going to decide to hire me? Will you draw my name out of a hat? Should we develop software that is a random broker generator to pick your broker for you? (Banks are doing that with appraisers these days–interesting back story there.)  No, I think we’re probably going to have some dialog and while we may not like calling it that, I’m going to “sell” you on the value of hiring me.

Let’s assume, however, that somehow you do manage to hire me without any influence on my part. So if we assume I’m not supposed to use sales techniques, let’s consider what that means. If you’re a buyer and you decide to make an offer on a home I’ll just submit the offer and we’ll see where the chips fall? Or maybe you are about to make a truly “bad” decision… you don’t want me to try to talk you out of it, right?

See, when we write articles like this we can afford to be conceptual and puristic. When we’re out in the trenches we have to deal with reality.

If you’re entering the real estate market as either a buyer or a seller I think you absolutely need a broker who knows how to sell and is pretty darn good at it. Remember, it’s about perspective. He or she is supposed to be using that skill on your behalf–not on you for his or her own gain.

Unfortunately, the information aspect of this business makes it very easy to end up working with a broker without much thought. You call a number on a sign because the house looks interesting. You don’t think about selecting your broker. You’re leaving that to chance. Wouldn’t it make sense to find out what that broker’s perspective is?

I often tell students that they’ll make their biggest mistakes in the business when they are broke. Why? Because it’s about perspective. It becomes very easy to put the transaction (sale) ahead of the client when you can’t make your mortgage payment.  Just like in dating; desperation isn’t pretty. Don’t hire a desperate broker.

Customers and clients really do need a sensitivity to this–is your broker truly working in your best interest? Extreme cases are relatively easy to spot because you feel “pressured.” 

There are two questions you should be asking yourself constantly:

  1. Do I feel like I am making my own decisions with all the information and options available to me?
  2. Do I feel like my broker is my partner-working with me?

If the answer to either question is not a resounding “yes,” it’s time to reassess your relationship.



Don’t Blame The Lenders

 Posted by at 5:05 am
Oct 192011

I’m actually having some fun these days working with a buyer client and lender to put together some “unconventional” financing by today’s standards. But it also makes me a little crabby when I hear people whining about lenders and blaming them for everything that’s wrong with the economy and real estate.

But then again I also smiled when I heard what Greg Rand, CEO of OwnAmerica, had to say on “Rand on Real Estate”–his radio talk show. Admittedly he focuses on the commercial market, but he also makes a point that’s worthy of some thought. Lenders aren’t trying to make things difficult; they are simply returning to standard lending practices they were using a few years ago.



Home Inspections…

 Posted by at 6:40 am
Oct 112011

Home inspections are always a good idea for buyers… and they actually can benefit sellers! But a home inspection is not a pancea–there are things that can go wrong with the process. The “House Detective” is nationally syndicated columnist Barry Stone–he writes a great blog and answers some tough questions. There’s some interesting reading even if you’re not considering buying a home!


Low Downpayment Buyers Note!

 Posted by at 9:59 am
Aug 302011

Occasionally taking what appears to be a minority position has its rewards! Several months ago I posted a plea for some objectivity regarding the proposed Qualified Residential Mortgage Requirements. While much of the industry is predicting doom and gloom over the proposed requirements, there’s much to be said in favor of them.

Well, in an article published by RIS Media, I’m joined by a writer who at least somewhat shares my perspective. He offers an interesting twist, however, by pointing out an impact of the doom and gloom predictions. “It seems the speculation and debate surrounding QRM is causing some low-downpayment home buyers to believe they will not be able to obtain financing.”

Interesting–and it makes sense. Those who are crying that these new requirements will “kill” the real estate market, are actually contributing to the depression?

What’s actually needed right now is concrete, objective information. Yes, underwriting standards are higher, but at the same time rates are at historic lows. Those lows mean lower payments and lower payments mean more people can qualify based on debt ratios. Prices are lower. There’s a lot going on that makes it feasible for many more people to buy and “low down payment” mortgages are not going to cease to exist.

The best advice for potential real estate buyers is “turn off the television and put down the newspaper and contact a real estate and/or mortgaging professional and get some credible information regarding your specific situation.”


USDA/Rural Housing Fee Changes

 Posted by at 10:58 am
Jul 312011

I’ve never really pretended to “keep up” with all the mortgage and financing programs and their changes… thankfully, I’m able to depend on a few really good folks to keep me informed or work with clients when the need arises. One of those folks is Ron Taplin at Alpine Mortgage. (You’ll find a link to him in the “Buying Real Estate” Section on the left sidebar.)

Ron recently advised that there are some significant changes coming (effective October 1, 2011) to Rural Housing Fees. You may hear that the “up front fee” is being reduced and that is true: from 3.5% to 2.0%. But that is also not the entire story. There will also be a new annual fee: .30% per year for the life of the loan based on the unpaid balance.

Depending on how long you expect to keep your mortgage, this could be a significant increased cost even though the upfront rate is being reduced by over 40%. The short analysis is that if you are considering buying a home using this type of financing, you’ll want to get moving and get your commitment before October 1st.


Bugs in the Well?

 Posted by at 9:38 am
Jul 072011

Buyers who are purchasing a home or camp with well water are wise to make their purchase contingent on a satisfactory water test. There are, of course, various types of tests for different substances. The most common problem we see with these tests is the presence of bacteria–particularly in systems that have been idle (such as camps) for sometime.

Even if you aren’t considering selling your property, an occasional water test is a good idea. You’ll find some easy to understand information at the University Maine Cooperative Extension website–you can download two brochures for free. One will explain the testing process–this can be a “do it yourself” project. The other will explain the process used for disinfecting your well if bacteria is found. The direct links to the well information are:

How to test your well.

How to treat your well.

“Disclaimer” — One of my volunteer positions is president of the executive committee for the Piscataquis County Extension. Even so, I can say with some objectivity that your local extension office is a great resource… as is extension in general. In fact, that’s one reason I agreed to accept the positon. If you’re thinking about moving to a new area, visit the chamber of commerce and the extension office. There’s lots to learn!


Couple Forecloses on Bank!

 Posted by at 6:02 am
Jun 092011

No, the headline is not a mistake. Turnabout IS fair play. It seems that Bank of America (BAC) foreclosed on the wrong house in St. Petersburg Florida–a house which had been bought for cash and had no mortgage. The homeowners spent some 18 months trying to convince BAC of their error, racking up attorney’s fees and other costs in the process.

Ultimately, BAC admitted the error. But in yet another example of the sorts of fiascos surrounding the foreclosure business, they failed to pay the homeowners the court ordered costs. Ultimately, the homeowners went back to court and “foreclosed” on BAC’s branch office in Naples–a judge agreed to allow them to seize bank assets for the unpaid debt. They and their attorney showed up at the branch office with a moving van and a court order. Apparently the branch manager was “visibly shaken” by the order, but BAC found a way to pay up within hours.

If you are currently involved in a short sale or foreclosure, you’ll want to read the entire article. An important piece of this fiasco is that the homeowners bought the home as a foreclosure. There is some speculation that their names got “transposed” during paperwork. This is not the first time things like this have happened. It’s a wonderful story of man biting dog, but it’s also fair warning to anyone involved in foreclosures or short sales.

Read USA Today’s version of the story.