Maybe Humor Would Help

Got a house you want to sell but not having much luck?

Isn't everybody!

Well, I've been reading some of the classified newspaper advertising for houses that real estate agents and home owners write for their property. To be honest, they all sound pretty much the same. You know, "For Sale: 3 Bedroom/2 Bath Ranch-style home in great neighborhood close to schools, shopping and bus line. Convenient to downtown and beaches. $299,900. Call today."

Yeah, that separates you from everybody else. Gives you some real identity. Makes people want to jump in the car and bring their checkbook out to put down some deposit money.

Well, my old buddy Tom Holter who now lives up north in snow country, sent me an e-mail with some classified ads that ran in the Minneapolis newspaper. These had some really funny selling descriptions. I'll give you a few examples ...

"FREE YORKSHIRE TERRIER. 8-years old. Hateful little bastard bites!"

"COWS: NEVER BRED. Also 1 gay bull for sale."

"NORDIC TRACK. $300. Hardly used. Call Chubby"

"WEDDING DRESS FOR SALE. Worn once by mistake. Call Stephanie."

Tom says all these ads really ran in the newspaper, and I don't doubt it for a moment.

I remember an ad that ran in the St. Pete Times some months ago. As I recall it said: "SMITH & WESSON .38 PISTOL. Never used. Got divorced so there's nothing left to protect. Call Killer." I'll bet that gun sold in a few hours.

So, I was thinking that maybe real estate agents and homeowners need to liven up their ads. Make them more fun. More entertaining. Put a smile on the faces of prospective buyers.

What have you got to loose? If the phone's not ringing now, what can a little humor hurt? It might get you a few calls. If not, go back to the same old way you've always written your ads.

What do you write? I haven't a clue.

It probably depends on the house and what it's features are like. Or, maybe you can find something to say about the seller's motivation in selling. Or, why the price is set where it is. You know, "Moving to upstate New York so we can watch the sun set every winter afternoon at 3:30 PM. In the dark as to why we're leaving Florida." Or, "Must Sell Fast: Next door neighbor's a creep." Or, "Leaving Area. Kids finally grew up and moved away ... but not far enough." Even, "Joining nudist colony. Need house with smaller closets."

Don't worry, you'll think of something that will separate you from the ordinary run-of-the-mill advertising.

Hey, it's just an idea!

Happy Selling!

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Improve Your Short Sale Success Ratio

In Pinellas County last month, the MLS reported that there were 12,035 properties listed for sale. Of those, 2,624 were classified as "Distressed Properties" -- that is, they are in pre-foreclosure, a short sale, bank owned, or are a foreclosed property.

Of those distressed properties, 346 managed to get sold in October.

Perhaps you were not among the lucky buyers who managed to have your offer accepted on a distressed property. Too bad. Those distressed properties generally are bargain priced right from the start.

What I'm hearing from many real estate agents is that inexperienced buyers seem to think they can get distressed properties at prices substantially lower than the asking price. So, they write up an offer for considerably less than the asking price thinking "seller desperation" will help them buy the property for an even lower price.

Many times those offers are simply not accepted because the "third party" (usually a mortgage company or bank) simply refuses to sell the property for that much of a loss or because somebody else made a higher offer that was more appealing to the bankers.

So, if buyers want to upgrade their chances of having an offer accepted on distressed property, pay careful attention to the following factoids:

• In October, 2009, pre-foreclosure and short sale properties in Pinellas County sold for an average of 94% of their asking price.
• In October, 2009, bank owned properties that were in foreclosure sold for an average of 98% of their asking price.

This info comes from the Pinellas Realtor Organization who keeps track of these kind of statistics.

So, now we know where the offer has to be if you want to be successful in buying short sales and other kinds of distressed properties. Those percentages put a little different slant on the ol' offering strategy, right?

Buyers and their agents need to realize that the discount is already in the asking price of a distressed property. Your best bet is probably to cozy-up to that asking price and make an offer that's within the success percentages described above. Most likely that $125,000 offer a buyer was planning to make on that $200,000 short sale isn't going to make the cut when the mortgage bankers sit around and decide whose offer they are going to accept -- at least, that's what the percentages seem to indicate.

Oh, here's another little tip I've heard recently about buying distress property: Make it an all-cash offer. Cash gives the mortgage bankers a warm, fuzzy feeling even if the offer is a little less than the guy who has to find a mortgage to complete the sale. The buyer with good credit can put a mortgage on it sometime after the sale is closed.

Hey, it's just a little strategy lesson.

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"Home Sales Bounce Back", Or Do They?

The main headline in the St. Petersburg Times for November 24, 2009 was "Home Sales Bounce Back", and the paper reported that the volume of home sales in Pinellas County jumped 37 percent for the twelve months ended October 31, 2009. The article was professionally written by good ol' James Thorner who did his usual excellent job.

News of a big sales increase is enough to make real estate agents and home sellers positively giddy. C'mon everybody, uncork that vintage bottle of wine you've been saving for some good news, book that passage on a cruise ship to South America, and finally set an appointment for that lipo weight reduction procedure you've been putting off because, yes, the newspaper has reported that good times have returned to real estate.

Ummmmm ... not so fast.

After you get over all those warm fuzzy feelings, you might want to look into the reasons for this increase, try to determine why the numbers jumped up so favorably, and question if this is something that will continue.

So, let's explore some of what this all means, and then you can make the call based on whether you're an eternal optimist or a dreary pessimist.

Fact: Home sales had their best October in four years. That's good.

Fact: Buyers "scooped up", as the newspaper wrote, distress properties using the $8,000 first-time home buyer tax credit. That's good, but there's a hint of dark clouds on the horizon. I mean, suppose your house is not a distress sale? Did it get "scooped up"?

Fact: Realtor sales totaled 2,758 units in October, the highest 1-month total since 3,735 units were sold in October of 2005. That's good.

Fact: Foreclosure and pre-foreclosure houses made up almost half of all sales in October. That's good, but it's telling us something about the market, who's really buying and what they are looking for.

Fact: The median home price dropped 10% over the year, from $152,300 to $137,500. Overall, prices have dropped 42% from the summer of 2006. That's good if you're a buyer, bad if you're a seller, terrible if you're a mortgage holder on a house bought in '06. Falling prices is clearly why people are buying houses now. No big marketing secret.

Fact: In Tampa Bay, there were a lot of cash buyers. That's sort-of good if you're a seller with lots of equity, but it once again tells us a lot about the market and who's really buying. "Cash buyers" quite often mean "investor buyers" and "investor buyers" generally mean "bargain hunters". Get the picture?

So, let's quickly summarize these facts which were brought up in the newspaper article: Low prices, the $8,000 tax credit, low mortgage interest rates and cash buyers combined with desperate sellers and bargain-hunters to cause a jump in home sales. That's about it, right?

Do those reasons sound like a sustainable market recovery to you? Or do they sound like a very short-term situation?

Before you answer, here are some other facts you need to consider that were brought out in the newspaper story or that we all know:

Fact: The tax credit will expire in mid-year 2010 and, according to most Washington D.C. reports, will not be extended again by Congress. So, kiss that little buying incentive good-bye.

Fact: No matter how you look at the figures, the nation and the Tampa Bay area suffers from very high unemployment -- and many of those people will remain unemployed or underemployed for the foreseeable future since many of their jobs were lost to overseas companies and are not coming back here. Re-employing the country and Tampa Bay may take years. Unemployed people don't buy houses. Underemployed people often move away in search of more gainful employment, thus putting more houses on the market.

Fact: Mortgage interest rates are very likely going to rise beginning in 2010, making it more difficult for buyers to afford homes. Adjustable rate mortgages are likely going to re-set upwards after the first of the year. Hmm, doesn't that sound like one of the things that got us into this mess in the first place?

Fact: Foreclosures will continue into 2010. This means the market will continue to be flooded with distress properties that tend to drive non-distress properties toward lower prices and hamper any kind of home appreciation and price recovery.

To make a long story short, this rise in home sales might be an artificial increase since it is supported by non-market driven factors, government-backed subsidies and fluctuating market and financial conditions.

When those things go away or change, what will happen? Well, nobody knows for sure. There are a lot of factors that have to be analyzed during the next six months or so.

I'll tell you this based on all the facts above: If I were a home seller or real estate agent, I'd delay buying that new 32-foot sailboat until I was able to determine which way the wind was blowing in 2010.

And so it goes ...

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October Sales Report: Kinda Flat

The sales figures from the Pinellas Realtor Organization for October came in a few days ago. There's nothing in them to get very excited about, so I didn't rush to the computer and write up the month's results. I had a few minutes this morning so I decided to jot them down for everybody.

October, to be frank, was kinda flat.

If you look at the Absorption Rate (AR) for Pinellas County, single family homes for October were down from September by 2/10's of a percentage point. The AR for October stood at 11.3%, but it was only at 11.5% in September, so that's a pretty meaningless difference.

By comparison, the condo AR took it on the chin. The condo AR for September stood at 7.8%, but it took a full percentage point drop in October to 6.8%. That's a pretty significant drop in a thirty day period and I think it shows some real and continuing weakness in the condominium market.

Single Family Homes

The number of single family homes listed in the MLS for October was 6,373. Showing how flat the market is, the number of listings for September was 6,382. It seems to me like this inventory is staying at about the same number month-in and month-out. The industry sells a few houses and a few more come onto the market, but we're not really putting a big dent in that inventory figure as a result of sales activity. We're probably just replacing the normal inventory turn with some new properties.

Fewer single family homes sold in October than in September, but not by much. In October, 718 houses were sold; in September, sales were 735. That's not a significant difference in raw numbers and it's probably why the inventory is remaining about the same.

Even the median price for single family homes stayed about the same year-over-year. The median price for October, 2009 was $146,300; the median for October, 2008 was $150,000. That's a drop in the median of only 2.5% and it means that buyers are making purchases in about the same price ranges and in about the same percentages within those price ranges. (Remember, median price is not the average price -- those are two different measurements.)

Condo Sales

I guess condos are going nowhere. Well, maybe the condo market is getting a bit weaker if anything.

Consider this data: For October, there were 5,619 condos listed for sale in the MLS in Pinellas County. In September, there were 5,620. A net loss of 1 unit. Yeah, that's putting a dent in the inventory!

Condo sales for October were 381 units sold. In September, there were 436 units sold. September was not a great month for condo sales, but October seems to be significantly worse, and that's why the AR dropped a full percentage point.

Condo prices are going the same way as condo sales: downward. In October of 2008 the median price for a condo in Pinellas County was $137,000. In October of 2009, the median dropped all the way down to $113,000. That's a year-over-year drop in median price of 17.5% for the condo market in Pinellas County.

So, what does all this mean?

Well, it could very well mean that the drop in prices for single family homes is slowing and you can probably say that it is now pretty flat from a value standpoint. I don't like to use the term "bottomed-out" because how long the single family market will remain flat is anyone's guess. There are a lot of market factors that could influence single family home values -- employment (which influences demand), foreclosures and short sales, mortgage rates and the availability of mortgage funds, the general economy and lots of other factors. We could see another downward spiral of pricing in 2010, and some guru's have even made predictions like that recently. For right now, however, I think single family home prices seem to be holding steady.

For Pinellas condos, I think the outlook is pretty grim. Values continue to fall and most real estate agents I know report a general lack of demand for condos except for some newer luxury communities in locations along the Gulf beaches and the downtown section of St. Petersburg. Moderately priced condos that were once so popular among retirees seem to be suffering due to a combination of factors including competition from other cities for retirement, high maintenance fees, age of the communities (many built in the 1960's), restrictive by-laws and other factors that tend to steer potential buyers out of condos and back into single family homes or other kinds of living arrangements.

We also have to recognize that St. Petersburg and Pinellas County is no longer the retirement center it once was, having lost much of that market to south Florida (Miami/Dade County) and new communities like Trinity and other places in the north-central part of Florida. And frankly, a lot of baby-boomers are choosing not to retire to Florida in favor of Arizona, New Mexico, or southern California. Other boomers are being forced to retire up north simply because they can't afford to retire to a new locale. Loss of pension plans and restrictions on other kinds of retirement income may not permit relocation to a sunbelt area for those "golden years". So, condo demand is suffering in Pinellas.

So, here's the short story. It's still a strong buyer's market and these buyers are value-oriented. If the property (condo or single family home) is not value-priced, it probably won't sell. Seller's need to analyze their motives in selling. If they really want to sell the property, the price needs to be at low market levels. Sellers who are waiting for the market to "turn" or for someone to offer "their number" may really be waiting for that proverbial snow storm in hell.

Good luck and happy selling!

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Zillow Report: Home Values Continue To Drop Locally

I've been talking to quite a few home sellers and "would-be" home sellers and "used-to-be" home sellers lately who are convinced that home prices in the Tampa Bay area are going up.

They believe that homes are actually increasing in value or are about to turn and make a big upward run like they did in 2004 - 2006. Yes, according to these people, good times are just around the corner.

I don't know where these folks are getting their information. All the figures I see show that home prices are flat if not retreating. Median prices are falling, just check the MLS research. Locally, we have unemployment of 10 to 11 percent depending on which month's figures you want to believe, and unemployed people don't buy real estate. We have low consumer confidence according to the reports coming out of the University of Florida. It's really hard to get a mortgage these days, even for people with good credit scores! We have way too much inventory to sell in the MLS system. And we have all these distress properties -- short sales, foreclosures, bank owned properties -- that drive prices down because they are being sold at fire sale prices. We even have the St. Pete Times running stories about how home prices are falling and if you want to sell your property you have to price it like it's yesterday's newspaper.

But for some reason I've been running into people who think prices are headed upward. Perhaps they are confusing real estate prices with the Dow Jones Industrial Average which is doing a lot better (for now at least).

Anyway, here's the latest bit of info on home prices in Tampa Bay: According to Zillow, home prices in the Tampa Bay area fell another 2.2 percent between June 30 and September 30 of this year.

So, if you are trying to sell a house that was legitimately priced at $300,000 in September, today it's most likely worth $293,400 according to the Zillow pricing averages. In effect, Zillow says you sustained a loss of $6,600 during the last 90 days. With each passing month that your house remains unsold, you are going to lose money in today's market. If you are a seller with an overpriced listing, time is not on your side. With each passing month the market moves farther and farther away from you and your overpriced listing becomes less and less attractive to buyers.

Now, Zillow is quick to point out that some areas did better than others. Cheval, Lutz, Odessa and Keystone in semi rural northern Hillsborough County; Indian Rocks and Feather Sound in Pinellas County; and Port Richey in Pasco County were among a few areas that saw prices go up a little.

The places with the biggest losses were Brooksville, Spring Hill, Dade City and Ruskin. Well, those areas saw huge price jumps during the boom period of 2004-2006 as I recall, so I guess turnabout is fair play.

To make a long story short, Zillow said that only 11 of Tampa Bay's 110 neighborhoods in their survey saw property value increases. The rest, I surmise, either saw property values drop or stay flat for the three months of the survey.

Here's the point of all this. If you are a seller who seriously wants to dispose of a property, you absolutely have to get out of your dream world and start pricing property the way the market is today. If you live in one of the 11 areas where Zillow says prices went up a little, well, lucky for you. But for the rest of us, keep in mind that your house probably lost value in the last three months.

If you haven't already done so, it's now time to adjust your price downward. If you've already made a price adjustment, maybe it's time to do it again. That's just the way the markets are running right now and there is no end in sight -- despite what some people are saying. Of course, these people also believe that Frank, Dino and Sammy are performing live in Las Vegas this weekend.

Happy Selling!

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Federal Housing Tax Credit: New Rules, New Opportunities

President Obama has signed the extended Federal Housing Tax Credit into law. That's good news for buyers and sellers of residential real estate. Now, first time buyers get an extension on the $8,000 tax credit, and repeat buyers can get a $6,500 credit as well.

In order to take full advantage of the program, you have to follow the rules. John Fenech of Sunbelt Lending has prepared a checklist that buyers can follow to see if they qualify for the new credits. With John's permission, I'm passing these rules along to you.

$8,000 First Time Home Buyer Tax Credit

• This credit is for first time home buyers only. The IRS has defined first time buyers as someone who has not owned a principal residence during the three year period prior to the purchase of a home.
• The tax credit DOES NOT have to be repaid!
• The tax credit is equal to 10% of the home's purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify for the credit.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Now, here's the big news for many current homeowners ...

$6,500 Move-Up/Repeat Home Buyer Tax Credit

• To claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit DOES NOT have to be repaid.
• The tax credit is equal to 10% of the home's purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

There it is. Please keep the dates in mind. From what I hear, Congress does not intend to extend this program again, so if you want to take advantage of this opportunity you need to act now. It really is a great time to buy!

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Are Short Sales All They're Hyped Up To Be?

For the last year or two, the big news in real estate has been "short sales". Real estate agents are told by various gurus that they need to learn the ins-n-outs of short sales if they are going to make any money in today's market. Agents are exposed to advertisements, e-mails, seminars, booklets and news articles all about the best way to make money on short sales.

I've been wondering who really benefits from all this short sale hype. I'm wondering if it is the real estate agent or the people who provide the short sale seminars, write the booklets, send out the e-mails, and generally hype short sales. After all, there are charges for all these seminars, booklets, classes and the like. Seems to me like short sale education is strictly a for-profit enterprise.

So, I've done a little research to see who really benefits from all this short sale hype. Not a lot of research, mind you, but a little.

Here's what I found out.

In October in southern Pinellas County, there were a total of 190 condo and single family sales that were distress sales, and 446 that were non-distress sales.

So far in November, and this is the 5th as I write this story, there have been 4 distress sales and 24 non-distress sales.

So, it appears that we are looking at about 1 sale in 5 (about 20%) that is a distress sale. It also indicates that we are looking at about 80% of the sales that are non-distress. My math could be a bit off here, but I think you get the picture.

Now, I think a professional real estate agent should know how to handle a short sale. But with about 80% of the business being non-short sale in nature, why would an agent want to specialize in distressed property sale? Seems to me like your chances are much better at selling a non-distressed property, doesn't it to you?

So, where should you put your time, effort and money? Seems pretty obvious to me.

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The Big Risk Of Overpricing

Real estate agents and buyers see this everday: Sellers who have their property overpriced and won't reduce the it. They want their "number" and are willing to wait to get it.

The risk such sellers are taking is that they will find a buyer willing to pay their inflated price.

Risk? What risk? You found a buyer for the property, right? What's the risk?

Here's the risk: The risk is that the buyer will need a mortgage. Along with that mortgage comes an appraisal of the property by a certified appraiser who represents the mortgage company. Remember, Mr. Seller, the appraiser represents the financial interests of the bank.

Banks won't lend money for more than a property is worth -- especially with today's banking rules. So, those appraisers have become very conservative in placing a value on property that will have a mortgage.

The mortgage company may not share the buyer's excitement about paying too much for your property. Who determines that the price is too much? Why, that friendly appraiser who just walked around your house taking digital pictures, that's who.

If the appraiser goes back to the mortgage company and files his report showing your house is not worth the price, well, the mortgage company simply does not issue the mortgage to the buyer. No mortgage, no closing. No closing, no sale. Simple as that.

So, even if you find a buyer for an overpriced property, most likely the sale won't go through. And you, Mr. Seller, get to start all over again looking for another buyer willing to pay your inflated price. I'd call that risky business, wouldn't you?

There are a lot of risks in overpricing a property. The appraisal is just one of them. Want to avoid this kind of problem? Simply price your property at true market value from the very beginning.

The fact is that every house will sell at market value. And not a dime more.

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Are We Forgetting The Value Of Curb Appeal?

This is just an observation, but what's happened to the concept of curb appeal when selling property these days?

I realize that times are tough, sellers are sometimes in less than ideal financial positions, and many properties are facing some kind of distress sale (foreclosure or short sale). So, taking care of the exterior of a property may not be high on a seller's agenda -- especially if the property is bank owned or if the seller is out of town and has to pay someone to look after the exterior of the property.

But let's go back to basic selling principles for a moment. A piece of real estate has to make a good first impression on a potential buyer. If it doesn't, the buyer may lose interest before they even walk through the front door.

Sellers today need to take extra effort to be sure their curb appeal is absolutely top notch-- especially if the house is vacant, bank owned or in foreclosure. This includes lawn mowing and edging, hedge and tree trimming, mulch in the flower beds, and watering as needed. If the front door needs replacing, replace it! If the mailbox is broken, get a new one. If you need new lighting fixtures on the front porch and along the walkways, install them. If you need to paint something, paint it. Your property will likely sell faster and for a higher price if it looks to be in good condition. Curb appeal is what gives buyers that "looked after" impression about your property.

No matter what the circumstances of the sale, a house only gets one chance to make a good first impression. Sellers need to make sure that impression is positive.

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