Keep Going!

 Posted by Walter at 8:01 am
Jan 072012
 

I recently announced that I was not making any new year’s resolutions, but I was adopting a slogan: Keep Going! After a week or so of operating with that simple slogan I’m convinced I made the right choice.

The beginning of a new year is always a good time to reassess and it’s no great surprise that the calls and emails currently reflect that. People do seem to be considering what they want to accomplish this year: buying a home, selling property, taking a course. It’s all good stuff, but the problem with resolutions is also the problem with goals. Enthusiasm can fade quickly–especially when external factors (like the market and the economy) seem to be constantly working against us.

That’s when we have to “Keep Going.”

All of those decisions (goals and resolutions) have an obvious financial aspect. One of the things that still amazes and distresses me a bit is the amount of “financial illiteracy” I encounter with students and real estate clients. However, I can’t be too critical of it–because I’ve found myself feeling pretty ignorant when I talk with my financial advisor. Things have gotten pretty complicated in the financial arena. Consider, for example, how many different program choices a buyer has when it comes to mortgaging. I’m convinced that one thing keeping prospective first time home buyers from acting is they just don’t want to deal with the complexity.

Conversely, I’ve worked with clients so determined to achieve their dream they didn’t want to deal with reality. “The bank won’t give me a mortgage I can’t afford; that’s what got them in trouble.” At the other end of the spectrum, this is easy–all that matters is what I want. Part of my job is to make sure buyers understand that the price of the house and the mortgage payment are only one small part of the cost of home ownership.

Those who might be feeling a bit overwhelmed by all this financial “stuff” will find it easy to “keep going” but may not be thinking about where they are going to end up. (I’m reminded of the wisdom “If you find yourself in a hole, the first thing to do is stop digging.”)

One of the new courses I’m developing for this spring is “Cash as a Crop.” It’s part of a You Can Series we’re developing as a collaboration between the Piscataquis Valley Adult  Education Cooperative and Piscataquis County UMaine Extension. There are a number of courses geared to giving people information and skills emphasizing what you can do–some are very basic, but all are about facilitating a sense of independence and control. (That, by the way, is one of the driving motivations for owning your own home!)

In that spirit, let me share with you several resources for getting your financial affairs in order. Here’s a great site with some very practical financial advice… http://www.thesimpledollar.com/. I liked his explanation of mortgage rates a lot… and found his advice to someone who is considering walking way from their mortgage interesting, because ethical considerations aside, there are some serious financial aspects that most people don’t consider.

Another resource is http://www.totalcandor.com. Frankly, it’s a bit self-promoting, but with some justification. I met Michael Rubin at a financial literacy conference and found his approach refreshing because it’s down to earth and he’s got a great sense of humor. You might check out his blog and consider his book “Beyond Paycheck To Paycheck.” It’s a good read.

I don’t think it’s too late to make a resolution, set a goal, or adopt a slogan. Given the financially troubled times we are living in can be discouraging, but let’s keep going!

 Buying Real Estate, Education, Financing, Home, Home, Home Ownership, Selling Real Estate  No Responses »

Salesmanship is NOT a dirty word!

 Posted by Walter 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.

 

 Buying Real Estate, Camp, Camp, Home, Home, Land, Real Estate Business, Selling Real Estate  No Responses »

Home Inspections…

 Posted by Walter 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!

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Time to Lower the Price?

 Posted by Walter at 7:41 am
Jul 132011
 

We’ve had our property on the market for a while and there’s been very little interest. How long should we wait before reducing the price?

Tough question, and maybe not the correct one to be asking. The first question I’d ask is whether or not your property is priced properly–at or near market value. Assuming it is, I’d look at recent sales activity in your town/market. One way to do this is to calculate what’s called an “absorption rate.”

Let’s say there are currently 75 residential properties on the market  and in the past six months there have been 26 sales… statistically speaking there is a 1.44 year supply of inventory.  So if you’re priced correctly and your property has been on the market for a couple of weeks… well, calm down. In that situation, unless we get ahead of the current 75 listings, it could take a year and half for your property to sell.

Reducing the price is only one of the ways to get ahead of everybody.  There’s a lot of emphasis on price these days, and the tempting conclusion is to think the price sells the property. What sells the property is locating a  ready, willing, and able buyer. So the real question we need to ask is “how are we going to find a buyer?” Part of that consideration is “are we priced too high to attract a buyer?” If you’re close to market/appraised value, the answer is “probably not,” so sit tight.

(Bear in mind market value can change very quickly and you should be revisiting your price position regularly. And don’t forget that market value is both science and art.)

The exception to this is when a property ends up priced so low a buyer can’t resist it. I remember years ago my mother came from shopping once with a container of “drip” grind coffee. We pointed out that she didn’t have that kind of coffee maker and she replied, “But it was so cheap I couldn’t resist it!” That’s an example of price “creating” a buyer. 

So price may “create” a buyer. But you still have to ask yourself “How many buyers can I create by reducing to an irresistable price?” Remember that if you only consider price you are competing with foreclosures… and that IF you can create a buyer with an amazingly low price that buyer STILL needs to either have the money or the ability to borrow it. I have a couple of low priced properties that generate frequent calls. Most of the calls start with “will the owner finance?” Guess we didn’t create a buyer after all–or at least not a qualified one. Would you be surprised to learn that another question is “Is that price negotiable?”

If you make it all about price… it will be all about price! Sell your property, not your price.

 

 Home, Market Information, Real Estate Business, Selling Real Estate  No Responses »

Bugs in the Well?

 Posted by Walter 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!

 Buying Real Estate, Camp, Camp, Home, Home, Selling Real Estate  No Responses »

Who’s Buying Maine?

 Posted by Walter at 8:28 am
Feb 132011
 

The answer might surprise you!

For several years now, MREIS (Maine Real Estate Information System) has tracked where buyers of Maine property live(d) when they purchased the property. The 2010 data has just been summarized and I’ve tabulated some of the results–specifically single family homes.

The data shows that three out of four (76.5%) of the single family homes sold in Maine last year were sold to people already living in Maine.

When we add the New England States we learn that just over 90% of the homes sold in Maine last year were sold to people already living in the Northeast.  (Massachusetts accounts for 7.17%, New Hampshire 3.7%, New York 1.45%, Connecticut 1.3% and Vermont .43%.)

One item that I confess surprised me a little was that 1.3% of the sales were to buyers from Florida. I suppose these might be “seasonal” homes, but we could wonder if perhaps a few people are trading some sun for some snow.

While the numbers aren’t statistically significant it is interesting to note that the states of Pennsylvania, Virginia, California, Texas and Maryland have provided Maine with a number of buyers and 43 (.36%) of the homes sold were purchased by “International” buyers. And would the one person from Mississippi who bought a home in Maine last year please raise his or her hand?

“What about land?” you say. The numbers are not signficantly different. Just under 76% of land sales in 2010 were made to buyers already living in Maine.

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Seller Financing Caveat

 Posted by Walter at 12:26 pm
Nov 102010
 

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) was passed in 2008 as part of the federal Housing and Economic Recovery Act. The act required states to establish a registration/licensing process for loan originators. Maine enacted its versionwhich will take effect January 1, 2011.

 There are exemptions for seller financing of the seller’s principal residence and for financing provided to family members. Thus owner financing of the sale of the owner’s home is exempt and parents financing a child’s purchase are exempt. But a buyer who is fixing up and reselling homes would need to be licensed to take back financing. Previous exemptions based on a maximum number of transactions are gone. The purpose of the law is clearly to disallow or at least discourage private, unregulated financing.

Those considering seller financing beyond the previously noted exemptions should check with the Office of Licensing and Registration.

 Camp, Financing, Home, Selling Real Estate, Uncategorized  No Responses »

Can We Bribe A Buyer?

 Posted by Walter at 5:56 am
Aug 012010
 

While I’ve never been asked exactly that question, it’s sometimes implied–especially given the slow moving market we’re experiencing. There’s an obvious temptation to “get creative” when property goes on the market. After all, what was the tax credit? (And for the linguists: what is the difference between an incentive and a bribe?)

Definitions aside, recent changes in the mortgage industry have an impact. For all practical purposes, there are severe limits on what sorts of  (and how much) incentive sellers can offer a buyer. Savvy buyers are often leery because they recognize gimmicks and the risks associated with “rebates” in any form.

Some of the things that do work :

  • Realistic pricing… there’s very little reason for a buyer to pay more than fair market value and it’s easy for them to have some sense of what that is.
  • Curb appeal matters and the old “one chance to make a first impression” logic applies. Keep the lawn mowed and trimmed, plant a few flowers.
  • Keep the inside neat and fresh. You don’t need to create a sterile look, certainly… but neatness counts.
  • Part of neatness is “decluttering.” Pack up and store 1/3 to 1/2 of your “stuff.” It’ll make the house look bigger and you might discover you don’t miss it!
  • Think “exposure.” Don’t be bashful about letting people know your house is for sale… and make sure the information about it is complete and accurate. Facts are important, but presentation makes a difference.
  • Be patient. At least one study showed that it takes as much as 21 showings to sell a house.

These are “safe” and relatively inexpensive buyer incentives. Remember that an incentive is only an incentive if the buyer wants it! At the same time, understand that once a buyer falls in love they may drive a hard bargain.  Be prepared for low offers even if you’re priced right. A lot of buyers are using the “nothing ventured, nothing gained” approach.

 Camp, Financing, Home, Selling Real Estate  No Responses »

Loan me…?

 Posted by Walter at 5:28 am
Apr 192010
 

One of the calls I seem to be getting more of involves the buyer or the buyer’s agent asking, “Will the owner provide financing?” Since these calls are typically regarding property I have listed, I usually try to do a little research regarding the need for owner financing. Fortunately, most of the answers are honest.

Not too long ago, a statistic was released suggesting that over 20% of the people asked thought it was “okay” to walk away from a mortgage in which the holder was in over his or her head. In layman’s terms, I think that means one in five people find it acceptable not to pay back the money they’ve borrowed.

That must have included one call I had requesting owner financing. In reply to my question regarding why owner financing was being sought I got the explanation that the potential buyer for my client’s property was “walking away” from the house and mortgage he currently owned. He is desparate for a place to live and has a “small” downpayment.

And I’m supposed to suggest my seller client offer financing to this person?

I am not unsympathetic to those who have fallen on hard times, but I also do not think sellers should make bad decisions. It’s also no secret that lenders have “tightened up” lending standards–there are very few circumstances that suggest a seller should become a lender with low standards. For that matter, it’s not a particularly good time for a seller to become a lender with high standards.

Currently one of out ten mortgages is delinquent according to Real Estate Economy Watch. This is over 20% higher than a year ago. Foreclosure rates are over 50% higher than a year ago and there doesn’t seem to be any indication things are going to improve much in the immediate future.

If you are selling remember that “owner financing” in almost any form means you are loaning money to the buyer. Typically, owner financing is being requested because the buyer can’t get financing through a bank. There’s historically been a false sense of security with owner financing because the seller can always “take the property back.” Before you owner finance you might want to explore how difficult and expensive that is… and be sure you are making an informed decision.

 Buying Real Estate, Financing, Home, Home, Selling Real Estate  1 Response »
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