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
buyer, home values, Housing, Listing agents, market data, Obsolescence, real estate, Real estate news, realtor, seller, selling
Real Estate tradition, in this part of the country says that “…there’s no point in having your house on the market in the winter between Thanksgiving and the Super Bowl…” I’ve always thought this was a silly myth and have always advised my clients – both buyers and sellers of the fallacy of this thinking. I started my real estate career on December 12th, 1982. I was offered a position with a new home builder in Glen BurnieMaryland in the winter when a really good interest rate on a home mortgage was around 13%. I’m pretty sure the real reason I was hired was not any great expectations about me doing a bang up job but, because I was “dumb enough” to take the job in mid-winter with minimal commitment from the builder, and the regular staff was all going on a company paid tour of Mexico. Being a recent college graduate and not being familiar with all the “Facts of life”, as known by the real estate industry, I did not know that no one was supposed to be out buying houses in December of 1982. I sold twelve homes that month – who knew!
They kept me on when they came back.
Anyway enough about me, here’s the point. The winter can be a truly breath taking good time for residential real estate. The transactions are typically quick, clean and fast.
Top Reason # 1 for doing real estate in the winter: Residential real estate can be a bit like driving down a turnpike for buyers, sellers and agents, because as there are more people on the road traffic tends to slow down and small bottlenecks become more pronounced. When the highway is very crowded many people make mistakes or get frustrated and everyone on the road suffers. So to buy real estate in the winter buyers have a slightly more limited pool of inventory to pick from but they have a much better pool of inventory. Typically the sellers who have their homes on the market in the winter are serious sellers, they are not putting their home on the market to “try things out and see what happens” they want or need to sell and are generally more prepared to handle issues reasonably.
Top Reason # 2 for doing real estate in the winter: Good properties just don’t sit around as long. Think of it this way: if a buyer has been thinking about looking for a home and has been scanning the web for months or has been out looking or a home with an agent or even made some offers that fell through due to any number of reasons, when a good property comes on the market these folks can see it and generally will snap it up. There’s an old saying in retail sales: an educated consumer is the best customer. These real estate consumers are self educated and well educated. Buyers at this time of year can pick out a deal and don’t wait.
Top Reason # 3 for doing real estate in the winter: There’s simply less competition. Look back at reason # 1: would you rather drive down a crowded highway in rush hour or a busy highway on a sunny day. The psychic effect of having a well negotiated clear transaction with less pressure is huge. Many times it takes home buyers and sellers years to recover emotionally from a messed up transaction. Yes there are the Holidays but you’ll also have an open road.
Remember it’s still a home, it’s not really supposed to be just an investment. You aren’t going to steal a house if you’re a buyer and you aren’t going to be the only game in town if you’re a seller – ultimately both buyers and sellers can and do wait if they don’t get what they feel is fair. All the regular rules apply to transactions, but residential real estate in the “Off Season” can be very worthwhile.
Technology is likely to have a significant impact on the structure of the real estate industry in the coming recovery for a number of reasons. Real estate transactions have basically two related and separate parts the seller side and the buyer side.
The Buyer Side will not be as greatly impacted by change as the seller side due to some factors which are basic to the process. The impact of technology on the buyer’s side will primarily be on the media not on agents and buyers. Most people who have been involved with the real estate industry over the last ten or fifteen years have known that print advertising has declined in efficacy dramatically. Virtually all buyers begin and continue their home searches on line. Broker and real estate franchise that have been tracking the source of their business for many years have seen that buyer leads that came primarily from print advertising before the internet have seen the number of viable leads from print advertising drop to a very small number of viable buyer leads. The last and most effective use of print advertising has become open house events or very short term immediate demand sort of inventory like rentals. Buyers still however require the assistance of a licensed real estate agent to help them work their way through a real estate transaction and access and view properties as well as negotiate and consummate a real estate transaction. Fees for trained and competent Buyers Agents are likely to remain in the 2.5% to 3.5% of the transaction price that they have been in for many years due to the high time consumption and relatively high failure rate that Buyer Sides of transactions experience.
The Seller’s Side of real estate is likely to see the greatest changes. For a decade or more before the Great Recession large banks had been trying to repeal laws that barred them from providing real estate services such as listing and selling homes for their customers. Now as a result of the unprecedented number of foreclosures in the hands of banks they have become The Dominant Sellers of real estate in theUnited States. Fanne Mae and Freddie Mac established 6% as the official normal commission that they would accept on both short sales and foreclosures and required that commissions be spit equally between buyer’s side and seller’s side in a real estate transaction. Every real estate agent in the United States has been trained that establishment of “Normal” or “Set Fees” has an anti Trust violation since the late 1970’s however the big banks and Fanne Mae and Freddie Mac have been seen as exempt from these laws. This has resulted in a situation where the majority of listings that sell are listed by Bank/Lenders that own them at a nominal rate of 6% with local real estate agents and agencies but using a conduit of third party companies that collect hefty referral fees on their listings leaving the selling agencies to work with 1.5% to 2% of the actual sales price rather than the 3% to 4% that they have historically have had to work with since the end of World War II. These agents and agencies have been able to do this because of the downward changes in their cost structure do to the changes in technology.
It is unlikely that as non-institutional home sellers are able to re-enter the home selling market as prices stabilize and even rise in the foreseeable future that the advantage to both consumers and Realtors of lower fees on the listings side of real estate transactions will be lost, that have been made possible by the reduced operating costs possible for Realtors due to the changes in technology.
By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT
buyer, buying, deal, home sales, off season, real estate, residential real estate, seller, selling, Winter
So, 2012 looks like maybe hone buyers will be back out seriously looking at homes which means the whole issue of buyer brokerage will soon be among us again with untrained agents trying to represent buyers again. Thinking about that, I have created a six point template that every buyer thinking about getting a buyer broker should consider. Buyer brokerage is not for every buyer and/or every agent, and I believe all of these points should be considered before any buyer agency agreement is signed. Be sure the arrangement works for you!
POINT# 1: Value: Will hiring a buyer broker actually create value for either party? Do you as the buyer actually plan to guarantee a buyer brokers compensation? Do really plan to buy a home through this buyer broker and only this buyer broker or do you plan to drift into open houses and call on ads that you see in the paper, or on line, or in homes magazines, directly to whoever ran the ad? As a buyer broker do you actually believe that this buyer will actually follow through with their obligations to you? As a buyer broker will you actually follow through with your obligations to this buyer or are you playing the game of you pretend that they will honor the contract and they pretend you’re actually doing any work for them when in reality you’re both fibbing?
POINT# 2: Effectiveness: It is very important that both the buyer and the agent view this as an effective relationship and both understand its boundaries. Do you as a buyer actually believe that you will get better representation, (any representation), by contracting with a buyer’s broker? Do you think you’d get a better price and terms than if you dealt with the listing agent directly? As a Buyer Broker do you actually think you’re going to make more money than if you just sold the house as a Facilitator/Sub-Agent/Transactional Agent? As an agent are you prepared for the long term liability and lawsuits or is that “my broker’s problem”.
POINT# 3: Contact & Skills: Do you as a buyer actually think this buyer broker knows any more than you do? Have they even looked at the listing on line? Will they put you on a search that is simply an automated feed from the MLS or will they call you and track properties that you have expressed an interest in? If they are tracking properties for you how will they do so? Will they develop a spread sheet that shows the properties you’re evaluating with notes and comparisons or will they just “remember what’s important”? When and how will you be in touch with each other?
POINT# 4: Best Properties: Will the buyer broker be committed to getting the buyer in front of the best properties? Will they put the client’s interest in front of their own? Will the buyer be prepared to act when good properties are available? Is the buyer prepared to provide confidential financial information to the buyer broker and get pre-qualified by the buyer broker’s chosen lender?
POINT# 5 Long Term Relationship: Is this relationship going any place long term? Can the buyer and the agent see themselves working together long term? Will the buyer be sending referrals to the buyer’s broker? Will the agent be following up on post closing issues, i.e. errors in the Seller’s Disclosures, Mechanic’s Liens, boundary disputes etc.?
POINT# 6 Timeliness: Is this the right time for the buyer to higher a buyer’s broker or have they already entered into an agreement to purchase and now should really be hiring a lawyer to fix it or litigate it? Does the agent really feel they are entitled to a fee or are they just “trying to make a quick buck”?
By Dick Thackston CRB, ABR, ABRM
Broker NH, MA & VT
attorney, buyer, buyer agency agreement, buyer broker, buyer brokerage, buyer brokers, buyer representative, buyer s broker, lawyer, liens, MLS, properties, property, real estate, realtor, seller, term liability, Thackston
By Dick Thackston
2012 is likely to be defined, in the real estate world, by three “E’s”: Expectations, Employment and Europe/Economy. No matter what your political belief system is, no matter how much or how little money you have, these three factors will permeate American life and the economy more than any others in the next eleven and a half months.
Expectations: In the world of sales there is an old truism, “To live with the classes sell to the masses!” those will be the watch words for real estate this year. 2012’s real estate will almost certainly only be about first time buyers and large volumes of REO properties being sold to investors. Both first time buyers and investors have some striking similarities: both groups feel they are buying at the bottom of the market and both groups have an expectation of housing prices increasing over the next three to five years and both groups have an expectation of rents remaining and going higher. (Personally, I agree with both groups.) First time buyers not only have the family formation/nesting instinct driving them into purchasing, but they have the ever increasing cost of renting versus home ownership. Most first time home buyers are renters now and are looking at homes that will have monthly mortgage payments 15-20% below their current rent. Landlords/Investors are looking at the exact same equation from the other side and seeing that almost anything they buy now will have positive cash flow of at least 10% and often up to 20%. The group that is melting away at this time is the investors looking to buy, fix and flip, the risks are too great of carrying a vacant property or over improving and taking a hit in what is in fact a flat market, and of course move-up buyer’s remain effectively locked out of the market for the foreseeable future. Until move up buyers can sell and move there is likely to be no updraft in the real estate market, but when it does begin it will be huge.
Employment: In New Hampshirefor sure, the Northeast in general and for the nation probably, employment getting better.New Hampshire has experienced job creation. Not dramatic but some. GivenNew Hampshire’s favorable tax and business environment it’s not really surprising that it would be one of the first parts of the country to recover. New England more generally seems to be getting better although not at the same rate as New Hampshireand the nation, well let’s face it would be hard to screw things up much more – which is a perverse kind of improvement actually. So as workers become more secure in their outlook on employment, they become more confident that they can cope with a mortgage payment and the other cost associated with home ownership, and are feeling much better about leaving their apartments and Mom’s basement. This is having a very noticeable effect on stabilizing the market at the bottom.
Economy: The macro-economic environment remains dicey. I almost headed this section “Europe” as my third “E” but really it’s bigger than all that. The United Sates is no longer insulated from the rest of the world economically. I doubt that this was ever really true, but we felt it was true and we certainly acted as if it was true. The United States remains the world’s largest economy however it remains subject to outside shocks: Tsunami & nuclear disaster in Japan, economic slowdown in China and most dramatically European debit crisis – country by country bad news out of Europe send shocks through our financial system and impacts our banking sector. The largest of these in public perception is Europe which is unlikely to be resolved anytime soon and will continue to drag on the world economy. China seems to have better managed its financial affairs – easier in a totalitarian state – and seems likely to have a softer economic landing than Europe.
What’s the take away from all this? Housing is stabilizing now; sales volume is likely to increase significantly; good deals from a buyer’s perspective are likely to remain the norm for the next eight to twelve months; no real appreciation in real estate as an asset class is likely and value added efforts for renovations will remain high risk till after the end of 2012.
buyer, buying, China, debt crisis, economy., Employment, Europe, Expectations, Financial, financing, First Home Buyers, first time buyer, first time buyers, first time home buyers, foreclosure, housing market, housing market recovery, housing recovery, investors, Japan, Keene, landlord, Landlords, Massachusetts, monadnock region, move up buyer, New Hampshire, northeast, Peterborough, political belief system, positive cash flow, real estate, realtor, REALTORs, recovery, REO, Sales volume, seller, selling, short sale, time home buyers, totalitarian, Tsunami, Unemployment, Vermont
By Dick Thackston
I continue to read about mortgage credit terms such as Credit Scores, Down Payment Requirements, and so forth being eased on home purchases. Federal Reserve Senior Loan Officer Survey still reports historically tight standards. Part of the problem from what I’ve seen, is values coming in low on appraisals after the buyer and seller have come to terms, which in my opinion, reflects tightened appraisal standards. (Appraisers don’t want to be held responsible for over valuing properties – as they have been in the past – even though local market conditions support values.) It’s odd because in my experience appraisers who “know local areas” almost always have a clear sense of what is going on in a market; the biggest problem is large un-named government backed lenders that bring appraisers in from 200 miles away that often do not have a sense of the nuances for local markets that even underwriters can pick up from a desk 2000 miles away. Ultimately, sloppy work is sloppy work and it creates a drag on the entire process.
If home prices are stabilizing, as many people feel they are, this will actually be a bigger problem because house prices will no longer “always be lower than last month” and buyers will be bidding up prices which won’t be adequately reflected in comparable sales from a few months earlier. Low appraisals serve to drive prices down and create a self fulfilling cycle of ever lower prices. If appraisers are better able to justify the sellers price this may in fact be a key to breaking the cycle of pain in real estate we have seen.
Lenders have clearly been working to slow the pace of REO properties coming on the market; to be sure there are plenty of lender owned homes available and they still represent the majority of sales in all market despite everyone’s desire to deny the fact; this decline in the speed at which REO properties are coming on the market is likely to be a big part of stabilization. Once there is any perception of stabilization in the market it seems likely to me that many buyers will “pile into the market” and then be confronted with the challenges of getting a new loan – back to the appraisal and underwriting issues. The entire process is likely to be painful but rewarding for those with the constitution to push through: sellers and buyers both.
Re-financing has gone nuts by all reports from our friends in the lending business with home mortgage rates at historical, probably lifetime lows, loan officers actually have trouble keeping up with the volume of business they are processing. The good news here too is that a much lower percentage of these home mortgage re-finances are taking cash out unlike the past re-financing booms, this time the home mortgage re-finances seem to be more focused on actually reducing cash flow burdens on households, where as in the last fifteen years the home mortgage re-finance booms have been more focused on stripping homes of their equity to finance current consumption.
Mortgage lending in 2012 is probably less consumer friendly than in most of the last twenty years in the sense of underwriting standards and appraisal issues, however loans are being made and the process is sufficiently painful so that borrowers seem to really be paying attention to their reasons for going through the process and is getting done in a way that will lead to a healthier housing market in the foreseeable future.
appraisal, appraisal standards, appraiser, asset management, asset manager, borrower, buyer, consumption, credit score, down payment, equity, federal reserve, financing, foreclosure, government backed loans, interest rates, lender owned homes, lenders, local market conditions, Market, Mortgage, mortgage credit, mortgage lending, mortgage rates, real estate, real estate market, realtor, refinance, refinances, REO, reo properties, seller, short sale, sloppy work, stabilization, Thackston, underwriter, underwriting
By Dick Thackston
By now if you’re in the housing market, have been in the housing market or are thinking about being in the housing market, you’ve heard about buyer brokerage. Most folks, consumers & REALTORS, have an idea about buyer brokerage but very few actually understand it or have the training and background to engage in it effectively. Most real estate consumers tend to only see the short term, regardless of the market situation rising or falling; consumers tend to not see the long term. One of the most important services a Buyer Broker can provide is a long term perspective – knowing why a property is worthy of buying selling or holding. If that sounds about right to you then read on.
Most of the information about buyer agency in particular and real estate in general is written by, well, writers – people who write blogs, newspaper & magazine articles, TV scripts etc. Unfortunately, these folks are not the best judges of what is actually happening in the real estate world; their analysis, while genuine, is not usually based in any actual experience. Higher an experienced buyer broker, like myself or the Accredited Buyer’s Agents that work with me, whose only goal is to help you make the best buying decisions, and can freely share our experience and knowledge with you, is one of the most critical services you can obtain in making your real estate profitable.
A good relationship with a buyer broker means that number one you speak the same language: you can readily and honestly communicate back and forth about the pros and cons of each possibility. Keeping thirty to forty properties under review and analysis is not unusual in this market; many times your buyer broker is studying the market changes to let you know of interest in properties, price changes, zoning changes, vacancy rates, employment and any number of other factors that are specific to your plans. Often a good buyer broker will look for the best property of the day that targets your situation; by this I don’t mean just putting you on an auto delivery from the MLS but they will actually review properties daily and let you know the best buy of the day. Conversely they should be watching the properties in your portfolio of prospective purchases that would take them off your list as well.
Most importantly of all you need to have clear commitment between each of you as to how fees will be handled between you and the extent to which you want to work with each other.
Accredited Buyer’s Representative, buyer, buyer broker, buyer brokerage, consumer, housing market, marketing, profit, properties, property, property analysis, real estate, realtor, seller
By Dick Thackston CRB, ABRM, ABR
Since the down turn started in the third quarter of 2005, (yes that’s right it’s actually been over six years if your benchmark is real estate brokerage), and the economic seizures started happening almost daily after November 2008, I’ve actually had some excellent experiences helping sellers and lenders work out a short sale.
Initially mortgage lenders were less likely to work out a short sale for a number of reasons: they didn’t believe the property was upside down, mortgage insurance would cover their losses if it went to foreclosure and/or they were simply too overwhelmed with the volume of business collapse that they couldn’t function efficiently and make decisions.
In 2007 I began the process of helping people work out a Short Sales on their homes if they were over mortgaged. One of the most successful short sales I’ve done was a house inKeene,New Hampshire. The owner had purchased the home about twenty years before he called me. He had tried selling the home himself and tried a Virtual Real Estate brokerage from outside the area with no local support. All the time he tried this, his home was sinking in value.
Why, one might wonder, if he had owned this home for over twenty years would he owe more than he paid? Well, actually what he had done was borrow money incrementally over the years to put his children through collage and purchase each of them cars when they graduated. He literally used his home as a savings account.
The biggest hurdle in the transaction was the owner, he just couldn’t believe that his home would be worth the loan balances plus and additional ten thousand dollars so that he could start his life over again someplace else. Once I was able to get him to understand that the value just wasn’t there, and he agreed to price the house to the market comparable prices in his neighborhood at the time, we got some OK sales traffic and ultimately an offer. I presented the offer to both the owner and his lender. I obtained the owners detailed financial information and the bank agreed to accept the short sale. Little or no emotion, very rational, and very efficient successful transaction.
The entire transaction from day of listing to day of closing the short sale, including negotiating with lender, was about five months or one hundred fifty days to closing.
Bellows Falls, buyer, Dick Thackston, Financial, First Home Buyers, first time buyer, foreclosure, Keene, lender, Massachusetts, Mortgage, negotiation, New Hampshire, over mortgaged, Peterborough, real estate transaction, realtor, seller, selling, short sale, transaction., Vermont, Winchester
By Dick Thackston CRB, ABRM, ABR
Short Sale Success Story:
Short sales have become a major part of my companys business.
In 2007 I realized that more and more of the owners I interviewed during listing appointments were helplessly under water on the loan on their home.
During the Savings & Loan crisis of the late 80s and early 90s I first experienced short sales. Back then, it was mostly small business owners who had second business loans against their home and as the economy slowed, their businesses slowed or failed, and the bank came after their houses. This is where I learned to do short sales. Up until then, personally, I had never even imagined not being able to sell a house and not clear the loan balances and I had been in the business over ten years at that point.
So I learned to negotiate with lenders to help them understand Fair Market Value and accept the reality of the situation – not the ideal for anyone, but half a loaf is better than none.
So when I started to see homeowners under water again four years ago I felt it would be important to start trying to negotiate short sales – again. Unfortunately both home owners and lenders were still stubbornly unrealistic about the situation at that time. Many of the homeowners I initially advised to consider a short sale ultimately lost the property singing the “I need, I own, I won’t” chorus regardless of market realities, or they spent valuable months and years following the market down. Needlessly doing needless damage to their credit by loosing their home to foreclosure, most had they followed my initial advice would have in fact walked away from a sales with some money, less than they had expected but some money – far better than a short sale or total loss through foreclosure.
Some of the short sales I initially proposed to banks wound up going to foreclosure as well. Costing the lender $50,000 to $100,000 in equity that could have preserved for their company, however banks had a problem too because many had just done refinances or made new loans they would say something like “we have an appraisal that is only six months old” not recognizing how quickly the market was changing in those days. What a tragedy! What a tragedy for all parties!
So now Short Sales are commonly accepted as better than foreclosure and few, if any, lenders are waiting for the market to recover. The biggest issue with Short Sales remains sellers that are too slow to take action. I got a call today from a seller that is schedule for foreclosure sale in ten days. He turned down a short sale about a year and a half ago and now he wants to try and find a buyer and complete a short sale negotiation in ten days? Not going to happen. I suggested that he simply needs to plan on the foreclosure and arrange to move out of the house. Banks at this point are far more realistic than sellers and far more prone to look realistically upon a short sale and work on it realistically. Bank of America and Citibank have made tremendous improvements in their systems for handling short sales. In both cases they have gotten to be the best in the business to deal with, when a few years ago I really don’t think they allocated any serious resources to the Short Sale process.
Bellows Falls, buyer, buying, Dick Thackston, Financial, First Home Buyers, foreclosure, home sales, housing market, Keene, Massachusetts, Mortgage, New Hampshire, News, Peterborough, real estate, REALTORs, REO, savings & loan crisis, seller, short sale, Thackston, Vermont, Winchester
View Original Article here: Scared of Your Shadow Inventory? Home Warranty of America.
RISMEDIA, April 14, 2011 – This big inventory of homes – 90 days or more delinquent on their mortgage payments, currently in foreclosure or now REOs – at last count was 2.1 million. It’s enough to make you plop, plop, fizz, fizz, worrying everyone from the banks to the sellers and most of the rest of us in the real estate industry. Adding the shadow inventory to the current visible inventory at about 4.2 million units, creates a 23-month supply of potential homes for sale when a 6- to 7-month supply is in the normal range.
But for all the reports of this shadow inventory in the news, none really factor in elements of our economic recovery that will effectively lower this inventory and perhaps even keep a good deal of this housing from ever coming to market.
First of all, the jobs outlook is improving, and while many are still feeling the pain of this downturn, it’s at least going in the right direction. According to a survey by the National Association for Business Economics in January 2011, “sales have strengthened and economic growth has picked up while the percentage of businesses expecting to increase payrolls during the first half of 2011 exceeded the share projecting more firings by 35 points, the most since the question was first asked in 1998. More than half of these businesses said they planned to boost spending on new equipment, up from 48% in the October survey.”
As we continue to move in a positive economic direction, the shadow inventory will shrink as the newly employed seek to keep their homes through continued modifications or take advantage of price declines and purchase homes. It has been stated that it could take as long as four years to eliminate this shadow inventory, but perhaps not if the economy stays on this track of growth.
Certainly there are parts of the country where this inventory is very high, such as Florida, California and Michigan. Recovery will be spotty, that is certain, and some areas may still see some price declines in the near future. But let’s stop with all the numbers because, in the end, we still believe in the American Dream, and at the core of this dream is owning a home. Yes, there will still be those that pick up and leave their homes for various reasons, but even as this happens and changes in the younger generations’ mindsets occur, Americans’ homes will still be where their hearts are!
Chris Kaucnik is Chief Marketing Officer for Home Warranty of America, Inc.
buyer, foreclosure, Massachusetts, New Hampshire, real estate, realtor, REO, seller, shadow inventory, Vermont
What’s a Buyer’s Agent and Why do I Care?
By Dick Thackston CRB, ABRM, ABR
Buyer’s and Seller’s both should hope that a buyer is represented by a buyer’s agent, hopefully one who’s earned the ABR designation from the National Association of REALTORS and not just any agent who hopes they can figure out what to do with a buyer.
First why would a seller want a buyer’s agent involved in a transaction? It would seem counter to his best interests but maybe it’s not, let’s see.
Buyer’s who work with a buyer’s agent are typically more committed to finding the right home and are committed to making a transaction work out – they are not “just looking”. Buyer’s with Buyers Agent want to buy something – helpful to say the least.
Buyers Agent don’t generally accept a buyer client who isn’t ready willing and able to buy. Buyer’s Agents want a well vetted out client who wants to know the details of how their transaction will work and is prepared to make it work.
So how do these things help a Seller?
It is often a tragedy for a Seller when an untrained agent tries to act as a Buyer’s agent for an inexperienced or ill qualified buyer. The Seller may feel – “they got one” – when in fact they don’t! Taking a home off the market while a buyer with limited qualifications works on getting their side of the deal together may cost a Seller valuable marketing time and immeasurable lost opportunities. Usually this occurs because the transaction wasn’t structured realistically from the start and the inexperienced agent with the buyer either didn’t verify information or didn’t ask enough questions to fully qualify a buyer before taking them on the road and writing an offer. Who ultimately takes the hit for this poorly structured transaction is nine times out of ten the seller who is boxed into making dramatic last minute concessions just to get their home sold.
If you are thinking of buying a home go to the National Association of REALTORS, REBAC website and find a buyer broker in your area that you can work with. If your thinking of selling your home make sure the agent on the other side of the transaction knows what they’re doing, after all, 99% of the time the seller is paying the buyer agent fee, so you Mr. Seller, might just as well look to get some good out of the money you’re paying!
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