Real Estate Cincinnati Style

How we go through life is a state of mind.  I haven’t always been a Jimmy Buffett fan, and wouldn’t  call myself a parrothead,  but I have gone to his concert in Cincinnati for the last two (2) years and have acquired a true appreciation for his lyrics and his attitude…escapism, relaxing and enjoying life, despite what is happening which is my prelude to this month’s State of the Market.

Last month we reported that sales continued to climb, closings were up, average sales price was up, and absorption rate remained on the low side.  As you take a look at this month’s numbers you’ll say to yourself…wow, what a difference!

Keep in mind…the tax credit expired April 30, 2010; mandatory closing for the tax credit was to end June 30, 2010 and, at the very last moment, was extended to September 30, 2010…now look at the charts…

Sales are down by 31% from July 2009, absorption rate skyrocketed from 6.8 months to 11.5 months (up 41%), and average sales price remained the same.  WOW…what a difference!

Keeping with the Jimmy Buffett theme, his song, Changes In Latitude, Changes In Attitude, comes to mind because when there are changes in latitudes (sales on the downside, absorption rate on the upside) there are changes in attitude.  When singing this song, Jimmy is conveying his message of escapism, whether you think of it as escapism or looking for the positive matters not, what matters is that you find the bright spots and concentrate on those. 

The bright spots I see are, we continue to enjoy a wide choice of housing inventory, favorable pricing on homes, interest rates that continue to remain low and have even gone lower than a year ago and it continues to remain an incredible time to buy.  If you’ve listened or read my other pieces about the market you’re going to say, “Yeah, yeah, yeah, Karen, you keep saying the same thing”.  You’re right, it is still true!

And yes, we have our challenges, too.  We continue to have tightening of financing, challenging inspections, encumbered titles, short payoffs for sellers requiring them to bring money to the table or negotiate with the lender(s), increase of foreclosures,  properties appraising below sales price, and yet people continue to buy and sell real estate.

And in the middle of all of this, we change our company name, we’re now answering our phone, Comey & Shepherd, REALTORS.  Last week I found myself saying, “Hi, this is Karen Schlosser, RE/MAX Unlimited…I mean, Comey & Shepherd…well, no matter what, I’m still Karen Schlosser, I haven’t changed”.  We can all agree, “market conditions change, companies change, the trusted source of good advice does not”.  A very important concept to convey to all we know.

In fact, in our current environment, now is the perfect time to reach out to our friends, family, past and current clients…let them know

Although we have a new marketing identity, we’re still the same person they know and love;

despite what they hear, people continue to buy and sell real estate, in fact, since January 1 there have been an average of 50 homes selling a day, the same average we’ve had for at least the last 3 years;

market conditions couldn’t be better to buy real estate, and for those selling they should understand the benefit to them when they go and buy.

The state of our market is truly the state of your mind.  And if your state of mind needs a little adjustment, heed Jimmy Buffett’s other philosophy…it’s five o’clock somewhere!

Last week the U.S. Senate passed an amendment that would extend the homebuyer tax credit “Closing Deadline” from the current June 30 date to September 30, 2010.  That amendment was part of a larger piece of legislation referred to as the “Extenders Bill.”  Unfortunately, the bill failed passage in the Senate three times this week.  The next possible vote by the Senate will be the week of June 28, 2010.  The best advice is to proceed with any pending transactions as if the June 30, 2010 closing date will remain final and binding.

Here’s my suggested piece of legislation that I sent today to the four (4) Senators in Ohio and Kentucky as well as my Representative:

I am licensed to sell real estate in both Ohio and Kentucky.  I see firsthand the deals that will not close, through no fault of the parties, by June 30, 2010 as required by the law to take advantage of the home buying tax credit.  How sad that people came forward to purchase a home incentivized by the tax credit, to have it dissipate into thin air.  Why can’t Congress pass a single issue bill that would take 5 minutes to write, 5 minutes to read and 5 minutes to vote on?  Here’s my proposed bill:

Any person who has an accepted contract to purchase that was executed on or before April 30, 2010, and otherwise eligible for a home buying tax credit, may close the transaction on or before September 30, 2010 instead of the original deadline of June 30, 2010.

I so move…

Pass it on to anyone you know…

A penny saved is a penny earned…don’t pay too much for your fuel. Go to http://www.GasBuddy.com/, a website which helps you find the lowest gas prices in your local community.

Where to go to find what you need to know….no more guessing…no more trying to remember…tax rates in Ohio for Municipal Tax, School District Income Tax and Sales & Use Tax:  http://tax.ohio.gov/online_services/thefinder.stm.  Great for clients when comparing communities!

Fannie Mae and Freddie Mac are now allowing struggling homeowners with loans backed by the government-sponsored enterprises, or GSEs, to sell their properties through a Short Sale or deed-in-lieu of foreclosure using the HAFA Short Sales Guidelines if they can’t get a loan modification. 

To be eligible for HAFA (Home Affordable Foreclosure Alternative), Fannie and Freddie loans must first qualify for and enroll in the Home Affordable Modification Program (HAMP). GSE loans are eligible for HAFA only after HAMP and other home-retention options have failed. 

Freddie Mac and Fannie Mae servicers must comply with the new HAFA procedures by August 1; the program expires December 31, 2012.

Is it the time,
Could it be now,
To refinance my loan,
Or to buy a new home?

I know rates are low,
Inventory is plentiful,
And pricing is right,
It is an incredible time to buy.

I like my house,
I like my neighbors,
I think I’ll stay,
And lower my payments.

No more tax credit,
Why should I buy,
But with rates this low,
I think I will give it a try.

Do I stay or do I go,
Is the question of the day,
I want a place to call my own,
There is no place like home.

‘ve been through bull markets and bear markets, buyer’s markets and seller’s markets, but have you ever been in a “you” market?  Yes, you have.  A “you” market is one shaped for you, by you, by your inner motivation, enthusiasm and passion for what it is you want to accomplish.  Everyone you know has been a part of a “you” market…friends, family, peers, clients…at every point in their life.

One of the most memorable “you” markets I participated in occurred in January 1980 when I decided it was time to buy a house.  Interest rates hovered around 12%, my downpayment was in the bank, monthly budget had been created, and I was off to look for a home.  I settled on a home, put 10% down, and closed with a payment that included PMI (private mortgage insurance).  Despite interest rates and despite the fact that I would have to pay PMI, which was a good chunk of money, I bought a home.  It never occurred to me that I would do anything else.  Part of that I’m sure had to do with my parents, my grandparents as well as my great grandparents owning homes.

I didn’t go into buying a home blindly, there was guidance from my parents about building credit and the responsibility of owning and maintaining a home.  For instance, when I went to buy my first car I had enough money to pay cash, but Dad told me to borrow $1,000 and pay it off in 12-months to establish credit…great advice! 

In the early 80’s, with rising interest rates, mortgages were out of reach for some people but many were able to use land contracts and assumable loans to purchase homes both of which required down payments.  People created “you” markets without tax credits, without the promise of adjustable rate, interest only and other exotic loan products.  They did it by saving for a downpayment, keeping current with bills knowing credit history ranked high, and submitting their life history along with a pint of blood to qualify for a loan.

We need to get back to the place where people want to own a home simply because they want to and are ready to and stick with a system that ensures they are qualified financially to own a home. 

It’s imperative in today’s environment that buyers, sellers and agents need to create their own “you” market. 

If a seller decides to go on the market, they need to determine what is best for them by paying attention to local market stats (street, development, school district, market area), their financial ability to sell their house, as well as the current market conditions (interest rates, housing inventory, rate of sale).  A seller should also look at the possibility of renting vs. selling.  Forbes.com has a Rent vs. Sell House calculator that can help:  http://www.forbes.com/tools/calculator/caprate_rent_vs_sell_house.jhtml.

A buyer in this market needs to create a “you” market by paying attention to the same elements as a seller in addition to an analysis of renting vs. buying.  Here’s an online calculator to use:  http://www.nytimes.com/interactive/business/buy-rent-calculator.html.

An agent’s “you” market requires paying attention to what’s going on around them with showings, sales, housing supply, listing inventory, whose talking about real estate, who may be moving.  Agents should be reaching out to all they know to offer assistance and guidance about buying and selling on a continual basis becoming the “go to” resource so that people are prepared and when ready to buy or sell, the process is a pleasurable one.

What does your “you” market look like?

The Eulogy

We had a lot of good times, in fact great times.  Although you were not with us for very long, you will be sorely missed by many.  Today let’s not dwell on the sadness, let’s celebrate what we had, the opportunity to introduce you to everyone we know, you were an asset to many of our client allowing them to achieve their dreams.   You were loved far and wide.  May you rest in peace knowing all the good you provided. 

Life After Tax Credit

Yes, the home buyer tax credit expires May 1, 2010…not to fret, interest rates remain at historical lows, favorable housing prices continue, and the housing inventory has increased maintaining great opportunities.  In addition to those factors, the new HAFA guidelines are in place allowing for a more orderly processing of short sales.

Market Conditions Change, The Source Of Good Advice Doesn’t

We need to continue to provide good advice and information to buyers and sellers so they can make informed decisions about what’s right for them to participate in this market. Stay in touch with your friends, family, clients and customers on a regular basis (email, voice, in person, mail), at least once a month with relevant and value-added real estate information.

Don’t Just Talk ‘Price’ With The Buyer, Talk Value (Price + Financing)

Sometimes too much attention is placed on the price.  Price is important but not the be all and end all of a transaction, financing is a huge part of the equation.  If prices soften and rates go up (as predicted by some experts), financing becomes very important.  Take a look at this chart and see for yourself what a raise in interest rates does to a mortgage payment and compare it to the “price” (a.k.a. loan amount).

There Is Never A Bad Product, Only A Bad Price

Pricing a property to sell should not be as difficult as we sometimes make it.  Nobody wants to leave money on the table, everybody has their reasons for selling…hence the conflict that typically prevails and leads to overpricing.  All pricing is a matter of supply and demand. As the tax credit comes to an end and the Federal Reserve exits the mortgage business (forcing interest rates to increase), the demand for housing could decrease. If more and more families find it impossible to pay their mortgage there will be an increase in housing inventory (supply). That doesn’t mean houses will stop selling. It means that for a house to sell it must have a compelling price.Using information at hand: recent sales, current actives and pendings, property history, property features, seller field trips and the housing supply for the specific market area, a compelling price can be placed on the property and turn a Just Listed property to Sold providing the seller with the highest price in a timely fashion with little inconvenience.

“If It Is To Be, It Is Up To Me”

The real estate industry will not come to a halt on May 1, 2010.  People will continue to buy and sell houses if for no other reason than changes in life.  Your attitude and commitment will determine your success this year - nothing else.

MARKET STATS:  February sales were DOWN by 17% and the average sales price UP by 13%.  Lender-involved sales were DOWN by 15% and the housing supply was UP 1.5 months from 2009.  Days on market DOWN by 11% and the pending sales were UP 8%.

RANDOW THOUGHT:  A seesaw (also known as a teeter-totter) is a long, narrow board pivoted in the middle so that, as one end goes up, the other goes down.  In a playground setting, the board is balanced in the exact center. A person sits on each end, facing the other and gripping handles to help steady the ride as they each take turns pushing their feet against the ground to lift their end into the air, resulting in an “up and down” ride (no batteries required).  Oh, the carefree days of going to the park to ride the see-saw, swing up in the air and slide down the slide with not a thought of anything other than to have fun.

Market Stats + Random Thought = A See-Saw Real Estate Market

TIE-IN:  A childhood favorite, the see-saw, is like the business of real estate.  It [the see-saw] relies on people’s cooperation to get the job done encompassing elements that can be controlled like emotions, communications  (method, frequency, completeness)  and disclosure of pertinent information related to the property or the transaction, in addition to less controlled elements such as, interest rates, housing supply, government programs (i.e. tax credit), appraisals, inspections and available financing.Buying or selling a home in a see-saw market can become very stressful if one allows it. 

SEE-SAW RIDERS:  Seller and Listing Agent, Buyer and Buyer’s Agent, Buyer and Seller, Buyer and Lender, Seller and Lender, Buyer and Inspector, Buyer and Appraiser, Seller and Appraisal, Seller and Inspection Report, Listing Agent and Buyer’s Agent

PHILOSOPHICAL:  Wouldn’t it be nice to adopt the same carefree attitude we had when going to the park…not a worry in the world…everybody gets along…

REALITY:  Not everyone is going to be nice, not everyone is going to like you, not everyone will like your house, not everyone will like your offer, not everyone will like your listing, not everyone will like your feedback.

SUGGESTION:  When one of those stressful moments hits you, take a deep breath and repeat the following words, as many times as necessary:

Grant me the serenity to accept The things I cannot change,

The courage to change the things I can,

And the wisdom to know the difference.

TIP: Easy Changes Your Web Visitors Will Love

Here are some steps from Inman News columnist Bernice Ross that can increase traffic and turn lookers into leads:

• Get your own URL. Having a page on someone else’s site sends Web traffic to them, not you.
• Choose a URL that reflects your real estate specialty.
• Take your own picture off the home page. Studies show it can drive away traffic.
• Make sure your home page has your up-to-date contact information prominently displayed.
• Add an easy-to-use lead-capture link–something like “Free Report” on something appealing like “How to Reduce Your Property Taxes.”
• Post at least 20 pictures for each featured property.
• Add a video for each property.
• Link to community information and such sites as Walkscore.com.
• Include testimonials from previous customers.

INSIGHT:  A Happy Client Tells One Friend, An Unhappy Client Tells Everybody               

The “everybody” today can mean hundreds, thousands even millions because people can use the web tools so readily available to them (i.e. Facebook, Twitter, Craig’s List – Rants & Raves) to tell their story.  So, picture this, a website where someone can login and “rate” a real estate agent and the rating is viewable by anyone who goes to the website.  Interesting…so, people are making their opinions known, “telling the world”, the good, the bad, and perhaps the ugly.  One such website is: www.realestateratingz.com, there are names you may recognize on the website, perhaps your own.  Another website www.incredibleagents.com allows a consumer to rate you and allows you to create a profile including photo and other info.  This site also allows a consumer to contact agents via the website, ask questions and choose an agent to work with by viewing their profile, etc. 

This topic reminds me what Abraham Lincoln once said, “You can please some of the people all of the time and all of the people some of the time, but you can’t please all of the people all of the time.”  Although we can’t please all of the people all of the time, we can put our best foot forward in our real estate transactions so that if someone rates us it will be only the “good” that appears and they will refer us to their friends and family members.