Real Estate News & Updates from the Monadnock Region
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People look at my house, but no offers – What’s Up!?

May 3rd, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News | Selling Tips - (0 Comments)

There is often a lot of discussion about the impact of advertising and marketing schemes on the number and nature of offers on homes on the market. We’ve heard a lot in the last few weeks about how houses are “scarce” and buyers can’t find a house. This seems counter intuitive if house prices are still low and the housing market is still struggling to recover. Often time’s home sellers are sure that if they just change agents or if their agent would just run a bigger ad in the local newspaper or the Walls Street Journal that special someone will come and fall in love with their home – but they don’t, why not?

The work of a listing agent is critical in selling a home but it’s not because of the size or type of ads the agent runs or home many Open Houses the agent does that creates value – almost none of that matters. I have closely tracked lead calls into my office since October 2005 and most of the big real estate franchises have done the same, as has the National Association of REALTORS, and the overwhelming evidence is that buyers look for homes online. If they didn’t, Zillow and Trulia, (bad information that they contain and all), wouldn’t even exist. Good listing agents tell their clients, the Sellers, the truth and help them deal with the home selling market as it is, not as it was or they’d like it to be. Good listing agents help their clients understand that the tax assessment from four years ago is not what the house is worth now and probably never was what it was worth. (It is not unusual in my experience as a REALTOR in New Hampshire to find properties over assessed by as much as 40%. I can sight examples where properties sold for 20% of assessment.) The biggest single problem in determining an accurate market price for a home is Listing Agents not providing accurate information and not working with the home sellers to understand the competitive problems with selling a home. So when the Home Seller guesses about their home’s market value, consider the three biggest factors affecting values in a home based on current consumer preferences and lender requirements. (I had a woman today tell me she couldn’t put her house on the market because in 2005 one neighbor sold their house for 25% more than current conditions suggests, and in 2008 another neighbor sold their house for 50% more than current market conditions indicate.)

Current market conditions and demand are heavily impacted by the three biggest problems for Home Sellers in today’s real estate business: Listing Agents that share this information have good experience helping their clients and their clients understand what they are up against even if they don’t like it. The three issues for Home Sellers are: Functional Obsolescence, Economic Obsolescence and Deferred Maintenance – at the end of my article I have included examples of all three.

In the end the accuracy and success of any marketing plan depends on the agent and client allowing the reality of the situation to govern the transaction and get the listing price as accurate as possible – “denial is not just a river in Africa.”

Functional Obsolescence

Ceiling Heights <60”

Walk-through bedrooms

Bedroom without closet

Knob & tube wiring

Fuses or Pushmatic  CB

Less than 100AMP Service

Un-lined chimney

No washer & dryer hook up

Incomplete bathrooms

No heat on second floor

Two appliances on one flue

Incomplete insulation

Kitchen cabinets incomplete

Dirt floor in cellar

No bathroom on 2nd floor

Single Pane Windows

Old Linoleum

Economic Obsolescence

Store with apartment over

House with business

Business in residential area

Single family in business

Single family with small Apt

Mobile Home built <1977

Structure on Private  Road

Lead  Paint – Anywhere

Structure on Class VI  road

Any non-conforming use

Only wood or  coal heat

No insulation

Kitchen without cabinets

No Cellar or Crawl Space

Out House

Underground Tanks

Subfloors exposed

 

Deferred Maintenance

Roof shingles deteriorating

Peeling exterior paint

Leaking pipes

Broken windows

Wet basement

Chimney in need of pointing

Rotten sills

Sagging floors

Non-conforming septic

Heating system problems

Broken/inoperable doors

Exposed insulation

Broken kitchen cabinets

Sump pump or drains broken

Holes in walls & ceiling

Broken or missing screens

Damaged carpet & floors

 

 

By Dick Thackston

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Strange, but True: Your House Price Drops but REO Properties go up in Price!

May 10th, 2012 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

According to several industry sources the average value of bank owned, REO Properties, has actually increased in the last years while the value of non-bank owned real estate has dropped on average! There are several reasons in the realm of conventional wisdom as to why this is happening; the most common reason given is that REO properties are being bought up by investment groups and turned into rentals thus driving up the price of REO’s on average. While this certainly is a factor there are other factors that are probably more important to the change in real estate values that I see happening as a “boots on the ground REALTOR”.

Here’s how I see it. The initial wave of foreclosures was for the most part badly maintained and marginal properties: no real surprise that the most marginal home owners were the least able to maintain and upgrade their homes and least able to hang on through tough, tougher and tougher economic times. These homes languished off the market as so called “shadow inventory” for months and in many cases years due to a hostile regulatory and legal environment in which mortgage holders found themselves, thus slowing up the process of foreclosure, resale and return of these residential assets to productive use. No news there really. What the facts recently made public noted about rising REO prices and declining price on non-bank owned real estate indicates is not that we are “moving toward the middle” but in-fact indicate that we are continuing to crater the housing market in slow motion.

This pattern of rising REO value reflects exactly what many experienced REO REALTORS have noted over the last six to nine months: we are getting better quality inventory. The better quality inventory is the result of the economic damage moving up the food chain from the economic bottom into the middle and above. The middle class buyer that bought his house at a fair market price in 2009 is likely to find that when he goes to sell his home today it’s worth the same or a little less and that any improvements he made have added little or no value. So, if they can’t hang on and they can’t sell they let it go. Thus leading to a better class REO property and putting further and continuing pressure on the middle of the market.

What does it all mean? It means that there is no foreseeable improvement coming for non-REO properties and that REO properties will continue to dominate the residential real estate market. Warren Buffet is right: single family homes are likely to continue to be an excellent investment for those who can“buy and hold” but only for those who can buy and hold either as owner occupants or as investors looking at increasingly higher and higher rents over the foreseeable future.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Setting your list price

October 31st, 2008 | Posted by Dick Thackston in Selling Tips - (0 Comments)

Setting your list price
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, as your REALTOR®, we will help you set your list price by determining:

Pricing Considerations

In setting the list price for your home, you should be aware of a buyer’s frame of mind. Buyers will determine which houses they want to view, based on comparison with other homes that are on the market and those that have recently sold. Consider the following pricing factors:

If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than others on the buyers may be considering. You may have told your REALTOR® to “Bring me any offer, frankly, I’d take less.” But in that list of properties, yours simply looks too expensive to be considered.

If you sell the home before there has been market exposure, you may shortchange yourself by selling too low.

Comparable Sales

No matter how attractive and polished your property may be, buyers will be comparing its price with everything else on the market. Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood like yours.

Your REALTOR® can furnish data on sale figures for those “comps”, and analyze them for a suggested listing price. The decision about how much to ask, though, is always yours.

The list of comparable sales we will bring to you, along with data about other houses in your neighborhood presently on the market, is used for a “Comparative Market Analysis (CMA).” To help in estimating a possible sale price for your property, the analysis will also include data on comparable properties that failed to sell in the past few months, along with their list prices.

This CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. In addition, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale.

In the normal real estate sale, a CMA is probably enough to let you set a proper price. A formal written appraisal (which may cost a several hundred dollars) can be useful if you have unique property, if there hasn’t been much activity in your area recently, if co-owners disagree about price, and any other circumstance that makes it difficult to put a value on your home.

TIP: If you do order a market value appraisal, make it clear you don’t need an elaborate or full narrative report–the kind that’s complete with photos of the house and neighborhood, a map specifying the site, and floor plans is sufficient.

Market Conditions

A Comparative Market Analysis (CMA) often includes Days on the Market (DOM) for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.

We will tell you whether your area is currently a buyer’s market or a seller’s market. In a seller’s market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer’s market, if you really need to sell promptly, offer an attractive bargain price.

Estimating Net Proceeds

Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful as you start looking for a replacement property.

From the estimated sales price, subtract:

  • Payoff figure on your present loan(s)
  • Broker’s commission
  • Closing Costs
  • Any prepayment penalty on your mortgage
  • Attorney’s fees, if any
  • Unpaid property taxes

In addition, you’ll be informed as to whether local customs or rules expects the buyer or seller to pay for the following items:

  • Title insurance premium
  • Transfer taxes
  • Survey fees
  • Documentary Stamps on the Deed
  • Inspections and repairs for termites and the like
  • Recording fees
  • Homeowner Association transfer fees and document preparation
  • Home protection plan
  • Natural hazard disclosure report

As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be. It is difficult to predict what the exact closing costs will be when you negotiate with a particular buyer.

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