Locally, Home Sales Continue To Fall

Dadgumit! I was hoping the St. Pete Times would ignore these latest statistics on home sales, but they published them anyway. I guess it is news. And they are a newspaper.

It just seems like every time we read news about bad activity in the local real estate market it gives buyers a reason to wait for even lower prices, and gives sellers a reason not to list until the market starts to improve. That's a vicious circle.

I've had this info in my hip pocket for a couple of days, but here's the news and it ain't happy:

• In Tampa Bay, home sales dropped 25-percent compared to October 2009.
• In Tampa Bay, the median sales price dropped another 2-percent compared to October 2009. It now stands at a lowly $137,900 -- great if you're a buyer!
• Throughout Florida, homes sales fell 21-percent compared to October 2009.
• Throughout Florida, the median price retreated another 3-percent to only $136,600.

In the thirty days from September to October 2009, home sales across Florida dropped 12-percent. Condo sales for the same thirty days fell 9-percent.

How come?

Three reasons:

1. Employment, or the lack thereof. People just don't buy real estate when they don't have a steady job, are worried that their job may disappear, or feel uncertain about the continuance of their company.
2. Tax credits. The first time home buyer tax credit program disappeared several months ago. Those credits acted as a stimulus and a lot of people bought earlier than they might have. Those credits are now gone and with them the impetus to purchase real estate.
3. Credit. Availability of credit is the life-blood of the real estate industry. Simply stated, it's hard to get a mortgage today unless the stars line-up perfectly for you. There just does not seem to be enough available credit, especially for those who may have a glitch or two in their credit history.

Here's what is really discouraging. A fellow named Sean Snaith, an economist over at the University of Central Florida, told the St. Pete Times that he did not think the real estate situation was going to improve until the employment and credit pictures improve. If he's right, this kind of real estate market could be with us for quite a long time -- even longer than previously anticiapted based on the slow pace of economic recovery and job growth in this country and Florida.

So, if I was a buyer, I'd buy now. Those median prices indicate that prices are very low, and that means there are a lot of great deals in the marketplace today if you can get the mortgage.

If is was a seller, I'd sell now. If prices continue to fall, every day that passes your house is worth less. Sell it now for what you can. The longer you wait, the less you'll probably get.

Ah well ... Happy Thanksgiving everybody!

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What Buyers Need To Do When Working With A Real Estate Agent

There are few things I like more than sitting in on a round table discussion with a bunch of wise real estate agents discussing a specific, open-ended topic. The only thing I like better is going one-on-one with a wise real estate agent regarding the same topic at some really good restaurant, like Pepin's in St. Petersburg.

Recently, I had an opportunity to sit in on both a round-table meeting and a one-on-one. The topic was what buyers need to do and not do when working with a real estate agent. I received some very interesting buyer guidelines from a group of agents at Coldwell Banker's Northeast office in St. Petersburg, and some very similar comments from Debbie Deeb, a highly experienced buyer's agent from Prudential Tropical.

Essentially, I proposed an open-ended question to these people: What is it that buyers need to do or not do to make their home hunting experience with their agent more efficient, enjoyable and effective?

Here's what came out of those discussions ...

• Buyers should never ask the agent to help them find a "bargain". Simply stated, in this market bargains are everywhere. That's because real estate prices have fallen some 46% since reaching their peak in the summer of 2006. For many years, I have felt that great deals are not made by the real estate agent finding the buyer a bargain priced property -- although that sometimes happens. More often, great deals are made when a qualified buyer and his agent take the time to research a property, make a written offer that they feel constitutes the price they are willing to pay, put some money in escrow, and negotiate logically and in good faith with the seller. In other words, the buyer has to make the first move by presenting the offer the way he wants it to be done. You can't put the entire burden on the agent to get lucky and find a great deal hidden away in the MLS files. That puts the agent in the position of having to guess at what a good deal is. What one buyer thinks is a great deal may not be such a hot deal to the next buyer.

• Debbie Deeb said that she thinks buyers -- especially buyers from the northern states -- need to be much more realistic about their price expectations in Florida. Apparently the media up north are carrying a lot of stories about how troubled the real estate market is in Florida, and that great properties are now available at a fraction of their former cost. Many buyers come to the Tampa Bay area believing that for less than $100,000 they can move into a totally updated home or condo that needs nothing. Many times these buyers are in for a rude awakening once they see the condition of the property -- especially foreclosures and short sales. "Properties are still valuable assets," said Deeb, "and sellers are not going to give them away for chicken feed." Deeb suggests that buyers look past the media hype and misinformation, look into a property's condition and location, and shop around with their agent to get a realistic idea about what their money will buy.

• Pat Lins, one of the old-pros (and I mean that in the best possible way) at Coldwell Banker, said buyers need to trust their agent more and let the agent do his or her job. In fact, several agents said essentially the same thing. Buyers need to determine what they want in a house, what it must have and what they can live without. Buyers need to determine their price range. If they can, buyers need to determine the location where they want to live. Then, Pat Lins said buyers need to communicate this information to their agent and let the agent find suitable housing that meets their needs. If the buyer does not like what the agent is showing, perhaps the buyer needs to revise the house hunting requirements. What the agents find troubling is when the buyer starts handing the agent MLS numbers on houses they found in one of the many search sites on the internet. Many times these buyer-generated MLS numbers are outdated and don't conform to what the buyer is really looking for in a home, so when the agent shows the house the buyer is further disappointed. This is a waste of time and often leads to frustration for both the buyer and the agent.

• The round table group at Coldwell Banker said buyers should make their first house hunting assignment the job of obtaining a letter of pre-approval from a mortgage lender. A letter of pre-approval is mandatory for buyers in today's topsy-turfy world of mortgage financing. Sellers want to make sure the offer for the house is being made by a buyer who can qualify for the loan and close the transaction. If the purchase will be made all-cash, the buyer needs to have a proof of funds letter available at the time the offer is made. And here's a little inside secret for all you buyers out there: If you refuse to get that letter of pre-approval or proof of funds letter, no real estate agent will take you as a serious buyer and likely will not work with you.

• All the agents I talked with said one of the most foolish things a buyer can do is try to work with several real estate agents at the same time in searching for a home. To the buyer, it may seem that having several agents trying to find a home is smart. Actually, it's not. When agents find out that the buyer is not being loyal to the agent, they often drop the buyer. Then, instead of having several agents working for you, you actually have nobody working for you. Buyers need to select one agent with whom they are comfortable and stick with that agent. If it doesn't work out, the buyer should select a new agent and start the process over.

• One of the agents in the round table at Coldwell Banker was Judy Clark, the firm's popular managing broker. Judy pointed out the problems that agents have when buyers start asking hypothetical questions -- and then worrying about the answers. Those kind of questions almost always begin with "What if ...". You know, "What if the roof has a leak?" "What if the air conditioner is broken?" "What if", well, insert the next problem. These kinds of questions make agents nervous because they aren't sure if the buyer will complete the transaction or if they will talk themselves out of buying. There is nothing wrong with buyers asking questions of their agent. But once the question has been answered or the problem solved, don't keep coming back to it and worrying about it. As Pat Lins added, buyers shouldn't dwell on problems so much. There's virtually nothing that can be corrected.

Here's one final point that Debbie Deeb and I discussed over lunch, and I think this is something to which all buyers should give consideration. Purchasing real estate should be treated as a serious business transaction involving large sums of money and to which you will make a commitment that may last a lifetime. Treat it as such. "Hire an agent who is experienced and educated in this market, not some other market," said Deeb. "Hire an agent who knows the current trends, not the way things used to be! After all, this is a big deal and needs to be treated as such."

Deeb said that buyers who hire a friend or relative as their agent may be doing themselves a dis-service from a business transaction standpoint. "That friend or relative may be doing real estate part-time or as some kind of hobby. There is so much money at stake with each transaction that buyers need to protect themselves by being represented by a full-time, qualified agent who is up to date with all their educational requirements and does real estate as a profession."

I think Debbie is spot-on with that remark.

I want to thank all the agents who helped me put this buyer's guide story together. Everybody had great insights and I appreciate their help very much. Debbie Deeb, Pat Lins, Judy Clark, Sandy Ewing, Joe Troy, Dawn Greenidge, Peter Harriss, Alan May, Bambi Cramer and Nancy O'Connell. Everybody's contribution was great. What a smart bunch of agents you guys are! If there's anybody I left out, sorry!

If you're a buyer, I hope this story helps you have a much better relationship with your agent while searching for your new home -- that was my intention in writing it.

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Something Remarkable Happened In October!

Every month, the Pinellas Multiple Listing Service opens it's report with two charts. One is based on single family homes, the other on condos. They chart the difference between the median list price and the median sale price.

As you can imagine, the median list price is always higher than the median selling price. Always. I can't ever remember when it was the other way around. Ever.

Well, this month for single family homes, the two figures converged on the chart. Mind you, this is only for single family homes, not for condos. This month the median list price moved down a little but the median selling price moved up a good bit so the two figures met.

I don't know if this has any real significance. I don't know if this is the start of a trend. Other than being interesting, I don't know if it's even important. But it sure as heck is interesting. It tells me that during October people seemed to be willing to pay more for single family house as measured as a percentage of the asking price. If you're a seller, you might find that bit of data particularly encouraging.

Let's take a look at the absorption rate (AR) for Pinellas County. For those of you who may be new to looking at AR data, the AR is really the inventory turn. It is calculated by dividing the number of units sold in a month by the total number of listings in the Pinellas Multiple Listing Service.

For single family homes, the AR for October was 7.9%. That's a decrease from September's 9.3% AR and from August's 9.0%. So, we're selling fewer houses as a percentage of total listings. It also means that it will take longer for single family homes to be sold. I think it shows a cooling market.

For condominiums, the AR during October was 6.6%. That is a slight decrease from September's 7.0% but it's a slight uptick from August's 6.5%. Essentially, these statistics are so close that you can almost say the condo market has been pretty close to flat for the last few months.

Single Family Sales Info

During October there were 528 single family home sales according to the MLS in Pinellas County. That's down from September's 567 sales and down from August's 611 sales. So, it appears as though the single family home market is slowing.

Single family listings are about the same as usual. In October there were 6,666 single family homes on the market throughout Pinellas County according to MLS data. In September there were 6,882 and in August 6,770. That's really pretty flat.

The median sale price for single family homes in Pinellas during October was $156,000. That's up quite a bit and may explain why the single family home charts mentioned earlier in this report are about equal. In September the median was $130,000 and in August it was $135,000. A year ago in October of 2009 the median was at $146,300.

Condo Info

Condos just seem to move along at the same speed month after month. In October there were 5,484 condos for sale in Pinellas County. In September there were 5,511 and in August there were 5,446. Statistically, that's pretty darn flat.

Sales seem flat too! In October there were 362 condo sales. In September the sales were at 387 and in August it stood at 360. Not much change month to month. Perhaps that is because demand for condos has not been going upward in Pinellas County for several years.

The median sales price for condos took a bit of a nosedive during October. The median fell to $104,000. That's the lowest median price for condos I can remember in the last few years. During September the median sale price was at $113,500 and in August it was $115,000. If we go back a year to October 2009, the median sale price was $113,000; that's a drop of 8% for condos year over year.

So it looks like a bit of good news but overall things seem about like they have been for quite a long time -- let's call it lackluster. Let's hope things pick up this fall.

Happy Selling Everybody ... and Happy Thanksgiving!

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So, Who's Buying Real Estate Now?

I talk to a lot of people about selling their real estate. Of course, most if not all these sellers feel like nobody is buying any real estate right now, so why even bother to put the property on the market.

Well, the fact is that there are a lot of buyers in the market right now. To prove that point and define who these people are, the National Association of Realtors (NAR) publishes an annual "Profile of Home Buyers and Sellers". The 2010 version of this research report has just come out and I thought you might like to know who is buying, what they are buying, how they decide what to buy, how they finance their new property, and why trying to sell without a real estate agent is a much more difficult and unsuccessful task than it was five years ago.

The answer to all these questions are in the new NAR report. To get the answers, all you have to do is wade through the entire 124 page research report. I started to read it. I like reading marketing data. But the NAR report is a lot like reading the white pages of the phone book. A real snoozer.

So, to save you all that time and eye-strain, I'll just pass along the info from the executive summary that NAR is smart enough to include on the first few pages of the full report. Now, remember this, the data in this report is for the country as a whole. Statistics for the area where you live may be quite different from what NAR is showing in this report.

Home Buyers

• Fifty percent of home buyers were first-time buyers.
• The typical first time home buyer was 30 years of age. The typical repeat buyer was 49 years old.
• The median household income was $72,200. The median income for first time buyers was $59,900, and the median income for repeat buyers was $87,000.
• 20 percent of buyers were single females; twelve percent were males.

The Homes

• New home purchases were down to 15 percent of all home purchased -- the lowest level in years.
• The typical home purchased was 1,780 square feet, built in 1990, and had three bedrooms and two baths.
• Seventy-eight percent of home buyers purchased a single family detached home.
• Only eleven percent of buyers over 50 purchased senior-related housing or in an active adult community.

Searching For A Home

• For more than one-third of home buyers, the first step was in the process was to look on-line for properties.
• 90 percent of home buyers used the internet to search for a property.
• Real estate agents were used by 81 percent of buyers.
• The typical home buyer searched for 12 weeks and inspected 12 properties.

Home Buying

• Eighty-three percent of buyers used a real estate agent to arrange the purchase.
• Only four percent of buyers purchased a home in foreclosure.
• Only six percent of buyers purchased a short sale.
• Seventy-one percent of all home buyers and ninety-three percent of first-time home buyers used the home buyer tax credit during their purchase.

Home Sellers

• The typical seller lived in the house for eight years before selling
• Eighty-eight percent of sellers used a real estate agent when selling.
• Recent sellers typically sold for ninety-six percent of the listing price, and fifty-seven percent reported that they reduced the asking price at least once.
• The typical home was on the market for eight weeks.
• To get the house sold, forty-four percent of sellers offered incentives to attract buyers -- the most often mentioned incentives were home warranties, policies and help with closing costs.

For Sale By Owner Results

• Only nine percent of sellers were able to sell their home without the assistance of a real estate agent. Half the FSBO sales were made to a buyer with whom the seller was already acquainted.
• The primary reason FSBO sellers sold without using a real estate agent was to try to avoid paying the real estate commission.
• Twenty-eight percent of FSBO sellers used no marketing techniques to try to sell their house. Fifty-six percent of FSBO sellers offered no incentives to attract buyers.
• Twenty-three percent of FSBO sellers reported getting the price right was their most difficult task.

So, is this data important or merely informative?

Frankly, that depends on whether you are actively selling, actively buying, or none of the above.

If you are actively buying or selling, I'd say this kind of information is important to being a successful buyer or seller. If you are neither a buyer nor a seller, then at best this info is only informative. Still in all, it will make for good conversation around the water cooler.

Happy Selling!

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How To Sell Your Property In 90 Days Or Less

I've written about this matter in past years, but what I'm about to say is just as true today as it was then. Maybe more so!

Real estate agents want to sell each listing in 90 days or less. If you want to sell in 90 days or less in this depressed market, there are three (3) tactical steps to which you must conform:
1. Availability
2. Marketing
3. Price

Availability

Availability means your property is available to be seen whenever a buyer wants to see it. That usually means that you or your real estate agent must be willing to show the property when most buyers are off work and able to look.

So, you must be willing to show the house on weekends. You must be willing to show the house on weekdays after 5:00 PM when people get off work. You must be willing to show the house on holidays. In other words, you have to be willing to show it when a prospective buyer wants to see it. This may be inconvenient sometimes, but you have to do it if you want to sell.

Marketing

Marketing is a big fancy word that sounds complicated. So, let's reduce it to one component: advertising.

If you are going to sell your house in 90 days or less, you have to advertise it heavily. If your real estate agent is not willing to advertise your property, fire him and hire somebody who will. Simple as that.

The reason to advertise? Advertising is the tool that creates interest in your house and drives people to inquire about your property. The more who inquire, the better your chances of selling.

Here's a special hint to all those people who are trying to sell a condo in a 55+ or 62+ retirement community. Don't put all your eggs in the on-line advertising basket. While it may be true that some 85% of buyers search for their home using an internet search of some kind, elderly people are probably not so internet savvy. They probably still rely on such quaint media as newspapers, real estate magazines, mailers and other forms of print media. So use 'em!

Price

Okay, here's the hard thing. Here in Tampa Bay and in many other markets across the country, real estate prices are still falling. Repeat: prices are still falling. The St. Pete Times just published an article about these falling prices today (November 10, 2010). Among other things, the paper said prices here are at about the same level as they were in 2002. So, determine your property's value in 2002 and you have a pretty good idea about its value today.

What does this mean to you as a seller?

Simply this: IN A FALLING MARKET, THE LONGER YOUR PROPERTY IS ON THE MARKET THE LESS IT WILL SELL FOR!

So, to overcome this problem you have give your property a bargain price right from the beginning. Otherwise, it is not going to sell.

Remember this as well. If you overprice your house and get lucky and find a buyer, the chances are that the overpriced house will not pass the appraisal. If the house does not appraise for the contract amount, your deal falls apart. So what good did it do you to put the high price on it?

Overpricing a home in a falling market means you will always be trying to lower the price in an effort to catch-up to steadily falling values. Most sellers can't -- or won't -- reduce prices fast enough to keep up with the falling market prices. So, they are constantly playing catch-up -- and that is a losing proposition.

So, give your property a bargain price right from the git-go, sell the place fast and move on. Sure, you may feel like you got a haircut when selling, but when you buy your next house you'll probably scalp that seller. After all, what goes around comes around.

Conclusion

So, if you have had your house on the market for over 90 days it is probably because you are not making it available enough ... it is under-marketed ... or it is over-priced. Any one of these is enough to keep it from selling. Do your analysis and determine which it is. Then, correct the problem or problems.

Happy Selling!

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