If you've been around a Realtor lately, you may notice that they're "clanking" more than usual.
Thanks(??) to a recent security upgrade, all Realtors must now carry around a small plastic fob that generates random codes. To access the MLS ("Multiple Listing Service") database, Realtors must enter the random code in addition to their User ID and Password.
Practically, the best way to have the fob accessible is to add it to your key chain (news flash: many Realtors' key chains already resemble mini-boat anchors, at least by weight).
So, whenever you log on to MLS now, your key chain must be handy.
Thanks, MLS.
Saturday, May 2, 2009
Sellers Offer Goodies in lieu of Price Cuts
A Price Cut By Any Other Name
When is a home price cut not a price cut?
When it's billed as "Seller financing" (or other creative Buyer inducements).
In a soft rental market, landlords will do practically anything to entice prospective renters without actually lowering their nominal rental rates.
By far the most popular gambit is free rent (typically, one or even two months). Next most popular are "freebies": free plasma TV, free tickets to Hawaii, etc.
Similarly, home owners who are loathe to take (more) price reductions are starting to offer other Buyer incentives.
Anecdotally, I'm seeing more instances of Sellers who are trying to move upper-bracket homes dangle attractive financing terms: second mortgages on attractive terms; contracts for deed (essentially, a Seller-provided mortgage, but one where title doesn't transfer until the last payment is made); etc.
Which makes sense: one of the big impediments to selling an expensive home today is the premium attached to jumbo loans.
I've yet to see the "Buy this house, get the [collector sports car in the garage free] pitch," but it may very well be coming . . .
When is a home price cut not a price cut?
When it's billed as "Seller financing" (or other creative Buyer inducements).
In a soft rental market, landlords will do practically anything to entice prospective renters without actually lowering their nominal rental rates.
By far the most popular gambit is free rent (typically, one or even two months). Next most popular are "freebies": free plasma TV, free tickets to Hawaii, etc.
Similarly, home owners who are loathe to take (more) price reductions are starting to offer other Buyer incentives.
Anecdotally, I'm seeing more instances of Sellers who are trying to move upper-bracket homes dangle attractive financing terms: second mortgages on attractive terms; contracts for deed (essentially, a Seller-provided mortgage, but one where title doesn't transfer until the last payment is made); etc.
Which makes sense: one of the big impediments to selling an expensive home today is the premium attached to jumbo loans.
I've yet to see the "Buy this house, get the [collector sports car in the garage free] pitch," but it may very well be coming . . .
Friday, May 1, 2009
Hot Listing . . or Hot Potato?
Be Careful What You Wish For -- RE Version
I got a courtesy call from an acquaintance the other week to let me know that they were "going to go with another Realtor" (yes, it happens -- even to me!).
I knew the owner was contemplating selling, but didn't know when, and also knew that one of their neighbors and close friends was a Realtor.
So it wasn't exactly a shock.
And believe it or not, I do appreciate such calls, because: 1) you like to know where you stand; and 2) it gives me a heads up on an upcoming property that one of my Buyers may be interested in.
Whatever disappointment I was harboring quickly turned to relief when I saw the home's listing price today.
In a word, "Yoww!"
The price is easily 25% over market, and going toe-to-toe with at least 3 other, similar properties literally priced $100k-$200k lower.
The homeowner's chances of selling for anything close to their asking price, in this lifetime: zero. At least IMHO, as they say ("in my humble opinion").
In the meantime, you can speculate that a couple things will happen.
The owner will get increasingly annoyed that "nothing's happening," and suspect that the Realtor "isn't doing enough" (on this second score, they may even be right -- see below).
The Realtor will get increasingly annoyed with the Seller, whose inflated expectations defy all manner of negative feedback.
The Realtor's time and marketing dollars -- assuming they intend to commit any -- will be wasted, because the property is unsaleable.
And the home's time on the market will steadily mount, making prospective Buyers even more critical -- and aggressive on their offer price (assuming they offer).
As Realtors like to say, "if I can't be your first Realtor . . . maybe I can be your last."
I got a courtesy call from an acquaintance the other week to let me know that they were "going to go with another Realtor" (yes, it happens -- even to me!).
I knew the owner was contemplating selling, but didn't know when, and also knew that one of their neighbors and close friends was a Realtor.
So it wasn't exactly a shock.
And believe it or not, I do appreciate such calls, because: 1) you like to know where you stand; and 2) it gives me a heads up on an upcoming property that one of my Buyers may be interested in.
Whatever disappointment I was harboring quickly turned to relief when I saw the home's listing price today.
In a word, "Yoww!"
The price is easily 25% over market, and going toe-to-toe with at least 3 other, similar properties literally priced $100k-$200k lower.
The homeowner's chances of selling for anything close to their asking price, in this lifetime: zero. At least IMHO, as they say ("in my humble opinion").
In the meantime, you can speculate that a couple things will happen.
The owner will get increasingly annoyed that "nothing's happening," and suspect that the Realtor "isn't doing enough" (on this second score, they may even be right -- see below).
The Realtor will get increasingly annoyed with the Seller, whose inflated expectations defy all manner of negative feedback.
The Realtor's time and marketing dollars -- assuming they intend to commit any -- will be wasted, because the property is unsaleable.
And the home's time on the market will steadily mount, making prospective Buyers even more critical -- and aggressive on their offer price (assuming they offer).
As Realtors like to say, "if I can't be your first Realtor . . . maybe I can be your last."
"Rehab Glass" Half Empty
In Buyer's Market, Rehab Discount Widens
Less than three years ago, the discount on a solid-but-dated home was quite small -- maybe 10%.
Today, at least anecdotally, it seems to me that the corresponding discount has widened considerably, to perhaps double that. (Note: at any given time, there are two kinds of Buyers for rehab properties: owner-occupants, and resellers -- "flip" refers to something illegal).
What explains the change?
Reasons #1, #2, and #3 all have to do with the economy: it stinks. Unemployment is up, confidence is down, and the supply of homes needing rehab is much greater. Meanwhile, mortgages may be cheap, but they're only available to borrowers with strong credit.
Related to all the foregoing is a palpable change in psychology.
When the market's going up, contemplating a rehab is exciting. It's easy to see potential everywhere you look -- and imagine the pay-off waiting for you when it comes time to sell.
In a soft market, however, prospective Buyers focus more on risk.
Will the market drop before I'm ready to sell? Is my budget and timetable for doing the work realistic? What if subsequent Buyers don't like the finished product?
And certainly this question: will I have an even better opportunity if I wait?
Needless to say, such psychology puts a damper on Buyers' enthusiasm -- and consequently, what they're willing to pay for homes needing substantial updating.
Of course, the flip side is this: precisely because of the foregoing mindset . . . there's a lot less competition for the multiple opportunities out there now.
Less than three years ago, the discount on a solid-but-dated home was quite small -- maybe 10%.
Today, at least anecdotally, it seems to me that the corresponding discount has widened considerably, to perhaps double that. (Note: at any given time, there are two kinds of Buyers for rehab properties: owner-occupants, and resellers -- "flip" refers to something illegal).
What explains the change?
Reasons #1, #2, and #3 all have to do with the economy: it stinks. Unemployment is up, confidence is down, and the supply of homes needing rehab is much greater. Meanwhile, mortgages may be cheap, but they're only available to borrowers with strong credit.
Related to all the foregoing is a palpable change in psychology.
When the market's going up, contemplating a rehab is exciting. It's easy to see potential everywhere you look -- and imagine the pay-off waiting for you when it comes time to sell.
In a soft market, however, prospective Buyers focus more on risk.
Will the market drop before I'm ready to sell? Is my budget and timetable for doing the work realistic? What if subsequent Buyers don't like the finished product?
And certainly this question: will I have an even better opportunity if I wait?
Needless to say, such psychology puts a damper on Buyers' enthusiasm -- and consequently, what they're willing to pay for homes needing substantial updating.
Of course, the flip side is this: precisely because of the foregoing mindset . . . there's a lot less competition for the multiple opportunities out there now.
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