Time to Lower the Price?

 Posted by 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.

 

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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!

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Where Have All the Buyers Gone…?

 Posted by at 3:06 pm
May 212011
 

Okay… would you like to play the numbers game again? The Maine Real Estate Information System issued a press release recently informing us that for the month of April, unit sales of single family homes was down nearly 24% over the previous year. Part of the explanation for this huge drop was that last year’s numbers were “skewed by the homebuyer’s tax credit…”  Obviously, that’s a tough statement to disagree with but it does raise the question “by how much of the decrease can we blame on last year’s tax credit?”

Opinions are easy and it’s mine that last year’s tax credit for the most part rewarded people who were intending to purchase a home anyway and probably succeeded in “condensing” those transactions into a tighter time period. (In other words, if we’d left things alone most of those sales would have taken place anyway—just not necessarily at the time they did.

In another attempt to rationalize the downward sales trend, lenders are coming under fire because lending standards have become stricter and “frustrating.” Again, that’s a tough statement to disagree with, but it wasn’t too many months ago everyone was blaming lenders for not having strict enough standards.

Speaking of standards, here’s an interesting observation from the Real Economy Watch by Stephen Cook:

For the month of April, 45% of foreclosed properties were damaged and not inhabitable without renovation. Because mortgage financing is generally not available for foreclosed properties that need major repairs, investors often buy these properties for cash. Fifty-five percent of damaged foreclosed properties were bought by investors in the month of April, while only 27% were bought by first-time homebuyers.  (These are national numbers, not Maine.)

Maybe I’m not asking the right people, but I’m not sure why or how we should fault lenders for not making loans to people who might be considered “poor risks” on properties that are considered poor risks. If there’s an explanation Continue reading »

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I Thought I Owned It!?

 Posted by at 7:22 am
May 022011
 

One thing that no longer comes as a surprise to me is the occasional prospective listing client who, it turns out, doesn’t actually (legally) own the property he or she wants to list for sale. Sometimes it’s a mere technicality; sometimes a misunderstanding. These issues are often referred to as “title defects” or “title problems.”

These situations also can affect buyers. During one recent transaction where I represented the buyer we discovered the “seller” ( a corporation) no longer existed–it seems the owner(s) of the corporation dissolved it and took title personally. The good news was they had done it properly. The bad news was they hadn’t told anybody–including their listing agent.  I didn’t point out to him that technically he was no longer the listing agent since his contract was with a non-existent corporation.

Some of the more common are created by confusion over similar names, missing heirs or surviving children left out of a will, wills not probated, signatures of minors or people of questionable competence. Undischarged mortgages and tax liens are also fairly common.  In short, there are a lot of things that can “go wrong” when title is transferred from one owner to another. Sometimes these escape notice for several transactions.

So what happens if somebody comes knocking on your door and announces they believe they have a claim against the title to your property?

You did buy title insurance, right? When you did the Title Insurance Company ordered a title search of public records to determine whether or not someone other than you might have an interest in the property.  Any discovered risks were either mitigated (or excepted) prior to your purchase. That policy is your protection against legal fees and any losses you might suffer based on a claim.

The “even better” news is that most of these policies cover you after you’ve sold the property! But wait, there’s more! You only paid one premium, at closing. (If you financed the property, there were two policies involved–a lender’s policy and an owner’s policy. The lender’s policy covers the lending institution’s interest for the life of the loan.) If you are in the market for a real estate purchase, make sure you understand the concept and buy some peace of mind!

 Buying Real Estate, Financing, Selling Real Estate  No Responses »

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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“How’s the real estate market?”

 Posted by at 6:52 am
Feb 172011
 

A few years ago I wrote an article regarding how often I was asked “How’s the market?” I hadn’t realized it until last night, but I’m not getting the question so much anymore.

I realized that when a client commented, “You know, I probably know as much about the market as you do.” He immediately apologized and explained his position even though I agreed with him. His point was not who was smarter; his point was it’s darn tough to understand this market and almost impossible to make predictions.

Unfortunately, this is not a case of clients getting smarter (nor for that matter is it a case of me getting dumber!). The media is doing a great job of keeping information about “the market” in the news. We can debate the quality of the information; we can disagree with the conclusions… but the point here is that folks have a much higher awareness of the economy and market events. They truly don’t have to ask; they know. The problem for all of us is, in part, we mostly know that we don’t know!

An interesting example of this was a major story that hit my inbox just yesterday morning. Corelogic (a company that collects mortgage and property data) issued a press release stating that “Statistics published by the National Association of Realtors appear to be overstate sales of existing homes by 15-20%.”

Whoa.

If you thought it was bad before, this number gets your attention. In practical terms, NAR says the unsold inventory on the market last November represented a 9.5 month supply. CoreLogic says it’s a 16 months supply.

NAR’s response to CoreLogic’s claim is that it’s “premature at best.” You probably don’t want to hear the explanations. Most of us would prefer to think this is not rocket science but rather a simple counting exercise. 

My point is that assuming my client and I both read this article we both know:

  1. Sales are down, NARs thinks by 5%–CoreLogic says 12%.
  2. The glut of homes on the market represents either a 9.5 month supply or a 16 month supply.

Of course what’s especially interesting is that none of these numbers are of particular interest or value to a buyer or a seller. More localized numbers might be, but even those numbers are just that: numbers.

Market’s don’t buy and sell real estate, people do. And I still “sell” properties (admittedly far less than in the past) the same way I always did: one at a time.

I’m not suggesting we should ignore the “market.” But if you — for whatever reason — are in a position to buy or sell property, you should focus on your objective. Almost all of this “market data” is history and a lot of it is at best “spongy.” If you want to buy or sell it’s important to remember that history doesn’t create the future and you are not the victim of history; you are creating it.

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Who’s Buying Maine?

 Posted by 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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Piscataquis County Does It Again!

 Posted by at 5:30 am
Dec 282010
 

Without making too much fun of the spin placed on November Maine Real Estate Information System (MREIS) statistics, it’s exciting to note that Piscatquis County’s rolling quarter average is once again bucking the state and national trend. Unit sales from September 1 through November 30 were up nearly 10% for 2010 versus 2009. The only other counties in Maine showing positive numbers were Franklin (4.29%) and Lincoln (1.01%). As noted last month, we’re not talking huge numbers here, but it’s still pretty exciting!

Statewide the number of units sold is down nearly 24% for the month of November. The spin doctors are focusing on the fact that the median price continues on an upward trend and claiming this indicates some stabilization of the marketplace.

Perhaps ironically, Piscataquis County continues to buck the trend with a 20% decrease in the median price during the rolling quarter cited. This suggests there is an increase in the number of lower priced properties being sold.

If you promise to remember that this is a huge county, I’ll share another generality regarding  the state of affairs. As of this morning, Piscataquis County shows 427 active listings on MREIS (aka Multiple Listing). These are residences of some sort—we’re not talking any land parcels. In the past six months there have been 93 sales. That’s not great, but it’s not horrible either. And it’s actually an improvement. During the previous six month period there were only 70 sales. If we ignore seasonality, unit sales in Piscataquis County are up nearly 33% for the second half of the year!

It might not seem that way if you have an unsold  house on the market, but there are properties selling and there is reason for hope!

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Season’s Greetings!

 Posted by at 6:26 am
Dec 232010
 

Greetings of the Season!

While it has become traditional, it is not habitual! The holidays are a great time to say “thank you!” I’ve enjoyed your confidence and friendship this past year and it is satisfying to know that a lot of people—buyers, sellers, colleagues, affiliates and students—are achieving success as a result of our work together. It’s a great time to look back and a great time to look ahead—and this year there’s plenty to talk about! 

As I think about this year’s news I’m reminded of the truism that “the more things change, the more they stay the same.” Before we talk about change, let’s review what has and will remain the same. My focus hasn’t changed, but it continues to increase. Attention to detail has always been important; it’s now critical. Diagnosing problems and understanding clients’ needs has always been important; given the increasing complexity surrounding the buying and selling of real estate, now it is vital. Working with clients as partners and providing information and options is a major component of good real estate brokerage. Now more than ever you need a partner who knows how to learn and who knows how to teach.

We could write a book about how much the real estate market (and business) has changed. My crystal ball is no clearer than anyone else’s Will the market improve? Yes. When? Darned if I know, but I do think it’s going to be a long time coming.

I also believe that the market shouldn’t control us; we should look ahead and consider what we need and want to accomplish. If you are going to be involved in a real estate transaction, I want to be in that transaction with you!

Thanks for your confidence and the opportunity to work with you. Do let me hear from you… have a meaningful holiday and a new year filled with health, happiness and prosperity.

 Buying Real Estate, Just for Fun, Selling Real Estate  No Responses »

Moving to Mallett!

 Posted by at 6:25 am
Dec 202010
 

            After nearly a decade of serving clients, Maine Choice Realty is being “absorbed” into the Realty of Maine Organization. Also committed to excellence in client service, Realty of Maine has over 100 agents and seven regional offices including Newport. All of us associated with Maine Choice Realty were invited to become part of this new office starting with the new year.

            This change provided an opportunity for me to revisit my own personal goals and how I’m approaching my business. Most readers know that instructing is my first love—I’ve even joked that I only practice real estate brokerage to gain stories to tell in class, I don’t do it for the money!  (Good thing based on the way the market has been!)

            For the past year or so I’ve been reporting an opportunity to get “more focused” and as I’ve look at the brokerage side of the business over the past few years, I’ve concluded that this is a good time to get even more focused. To the end, I’ve decided to move closer to home, further reduce my costs, and target my participation in the market. I’ve accepted an offer to place my license with the Mallett Real Estate Agency in Dover Foxcroft. This independent agency has a long-standing leadership position in the Dover Foxcroft and Piscataquis County Market. I’ve known Neil and Patsy for a number of years and we’ve always worked well together.

            Active clients have already received several communications regarding this transition. Maine Real Estate Law is quite specific on a number of points. The most important point for those who are not currently “under contract” as a client is that you have the right to choose where you do business.  Note that my email address and cell phone number will not change should you wish to discuss this or any other real estate matter. So there’s a minimum of confusion, you will be dealing with me as a licensee of Maine Choice Realty through Monday, December 20th. Starting on Tuesday, December 21st my affiliation will be with Mallet Real Estate Agency.

            You can perhaps appreciate there’s a lot that has to happen in conjunction with this. From a “business” perspective the good news is this is all scheduled during a relatively slow time—the week between Christmas and the start of the new year. Of course the good news is also the bad news in that we are all busy with the holiday season. I’m doing my best to make this efficient with the least amount of intrusion and inconvenience possible. If you have any questions or concerns drop me an email or give me a call!

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