Archive for the 'Market Trends' Category
Please Read the Real Estate Fine Print
December 13th, 2009 categories: Market Trends, Real Estate News
”IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS”
Unknown
This morning’s Boston Globe ran a story of a real estate investment venture gone bad. Sound familiar?
In this case, a young Virginia Beach couple, among others, were sold “a bill of goods”, left high and dry, broke, and are facing a lengthy legal battle to simply try and reclaim their good name. If there ever was a real estate swindle that exemplifies the worst aspects of the buying and selling of real estate, for profit or not, it’s this one. It has all the necessary elements:
1. The Promise of Easy Money
2. The Smooth Talker
3. Fraudulent Loans
4. Fabricated Appraisal Figures
5. A Gross Lack of Due Diligence
This is but one of the many tragedies left as a result of the housing market run amok. Kind of like teenage boy on steriods driving a school bus without a governor (you know, the device that restricts their speed). Before you invest your time, effort, and your money into any venture – especially one that sounds too good to be true – please take the time to do a risk analysis, and ensure that the road ahead isn’t full of quicksand!
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Are The 5 W’s Important in Real Estate?
December 4th, 2009 categories: Market Trends, Real Estate News
We’ve seen lots written about the latest “du jour” method of communication, advertising…..and marketing. It’s called Social Media. If you aren’t there yet, they say you should be, and ultimately, will be. I know, sometimes we just don’t have much choice.
Most of us have realized, usually through trial and error, that success depends a great deal upon building a firm foundation to begin with. And, in Social Media, it’s no different. It begins by understanding who you audience is and what they want. In Social Media “speak”, it starts with the 5 W’s.
1. WHO
Who is saying things about your products and service?
2. WHAT
What are they saying about you and the product you provide? Is it good? Bad?
3. WHEN
When are they talking about you? If your business is cyclical, are you only being mentioned during the busy season? If you specialize in one area of your profession, does the discussion occur only when your specialty is hot?
4. WHERE
Where are these conversations taking place? On blogs related to your business? On other popular discussion platforms?
5. WHY
Why is anyone commenting, discussing, or examining you and what you have to offer.
There are a number of variations of the 5 Ws. Many, recently, have focused on web sites and blogs. Earlier this week, Inman News’ featured an article “The 5 W’s and your Web site“, by Robert Hahn. Other informative articles on the 5 Ws include, “Knowing What’s What and What’s Not the 5 W’s (and 1 H) of Cyberspace“, and The Five W’s of Web Site Evaluation.
Social Media platforms are useful marketing tools, and today, they’re all the rage. A careful analysis of any marketing devices and means is is not only useful, but a necessary factor in identifying what works and what doesn’t. The 5 W’s is another, and value added, method way of determining what we need to pay attention to, by identifying who may be listening, and what they’re interested in. And, if that’s the case, do you think it might be helpful for Realtors to pay attention?
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Our Economic Helter Skelter
November 26th, 2009 categories: Market Trends, Real Estate News
“Sooner or later in life, we all sit down to a banquet of consequences.”
Robert Louis Stevenson
Is a Federal Housing Administration(FHA) crisis on the horizon? With FHA’s insurance reserve ratio falling to the lowest level in history, at 0.53 percent, there are some who believe the FHA is the next subprime crisis waiting to happen. One of those is homebuilder, Toll Brothers Inc., CEO, Robert Toll. Toll predicts that just like the failed bank bailouts, the FHA will be next in the handout line. And, with the reserve ratio as low as it is, he may be on to something. According to a Congressional mandate, the ratio should be no lower than 2.0
In addition to the alarming FHA news, this week’s Wall Street Journal reported that nearly 25 percent of all homeowners are upside down with their home mortgage. In other words, they owe more on the mortgage than their home is worth. Well, considering how values have fallen since ‘05, that isn’t too surprising.
While the recent encouraging national home sales figures provided us a glimmer of hope amidst the current economic downturn, today’s sobering news concerning the viability of FHA home loans, and the depressed values of properties, bring us back to reality. So, what are we to believe? Are things getting better? Is the First Time Homebuyer’s Tax Credit frenzy skewing sales numbers, or, are increased home sales “genuine”? Are these numbers more akin to a mirage? Instead, are we stuck in an economic tailspin for months, or years to come?
In the competition to provide us the latest and greatest updates on where the economy is heading, we see indications that are both promising and discouraging. Where the housing market may be going, we don’t exactly know. But, fortunately, one thing is for sure, there will be homes both bought and sold. So, perhaps we’d best stick to the present, and as they say, the future will take care of itself. After all, as someone once said, “Predicting the future is easy. It’s trying to figure out what’s going on now that’s hard.”
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Cleaning Up the Short Sale
November 5th, 2009 categories: Market Trends, Real Estate News
Have you ever been in an uncomfortable position or arrangement that you couldn’t get yourself out of? If your answer is no, then lucky you. Most of us have run into these predicaments a time or two. So, what’s the solution? What steps can you take to try and improve a difficult situation you might be stuck in. And, no, divorce is NOT an option.
Let’s be honest, the “Short Sale” isn’t going anywhere. I know what you’re thinking, “Of course it isn’t going anywhere(in other words, no action by the lender!)”, but, what I mean to say is, they’ll be here for a while. In other words, we’ll be seeing plenty more of them in the the next few years. As long as the economic downturn is with us, there will be homeowners in states of distress who are unable to pay their mortgages. So, how do we turn this lemon into lemonade? (And, believe it or not, it takes more than a lot of sugar!)
Earlier this week, a few local Brokers and Instructors had the opportunity to sit down with Lem Marshall, the Special Counsel to the Virginia Association of Realtors(VAR), to discuss ways the Realtor community can improve the short sale process. By improve, we mean, enhance the chances of a successful short sale. During his presentation, Lem volunteered some helpful hints at how Realtors can maximize their chances of succeeding in dealing with Short Sales.
He began by reminding us that on average, about one in four short sales transactions, nationwide, are successful. While the real estate community doesn’t control all the variables involved in the process, there are a couple of items we do influence. It is those items or factors, if handled and executed properly, that can sometimes mean the difference between success and failure. While Lem conceded that lenders are the main short sale players doing most of the transaction decision making, Realtor’s decisions and actions, if done incorrectly, doom the transaction.
The starting point for Realtors in any transaction, but especially in Short Sales, is competence, according to Mr. Marshall. Understanding the process involves an appreciation for all the moving parts. To begin with, the agent must know what they are doing, and what they’re dealing with. Agents will consider and interact with four main participants in this transaction; the other agent, the property, the client, and, most importantly, the third party, or lender. Let’s begin by looking at the importance of understanding the first two.
THE OTHER AGENT
Since a short sale is a special type of real estate transaction, understanding what’s required takes more than a license to sell real estate. Being aware of what the agent on the other side (especially the Listing agent) of the transaction knows about short sales is important in considering the likelihood of success. If they know what they’re doing (proper valuation of the property, good communication with the lender’s representatives, etc), then chances for success – all things being equal – are probably fairly decent. If they don’t know what they’re doing and are unfamiliar with what’s required, then watch out! You’ll be doing a lot of hand holding (with the other agent, as well as your client), but may be doomed from the beginning.
It’s unfortunate, but until specialized training in short sale procedures is mandatory for all agents handling these transactions, many agents will be unprepared to properly handle what’s necessary. The Certified Short Sale Professional (CSP) course provides agents a comprehensive examination of the requirements of the entire process, and what is required for success. Other than actually handling a short sale transaction, it’s about as good as it gets in preparing agents for dealing with the short sale of a home.
But, as mentioned earlier, if you’re dealing with an inexperienced agent, and that simply means, in this case, one that is inexperienced with short sales, that’s not been trained, then the chances of success are minimal. Why? Because, it is imperative that the Realtor is aware of the specific ins and outs of this unique process. To begin with, the listing agent must be able to properly price the property to be sold.
PROPERLY PRICING THE PROPERTY
Absent a proper valuation of the short sale property, the lender has little incentive to consider any proximate offers on the property by prospective buyers. Real property is worth what someone is willing to pay, nothing more…or less. Believe it or not, lenders are aware of this.
Determining what price a home should be marketed for, whether a regular home sale, or a short sale, depends upon the use of accurate comparables. In other words, what are like or similar properties in the area selling for? Successful Short Sale Specialists advise that these properties be priced just below ($10,000-$15,000 below) the lower price range of similar homes on the market. Remember, lenders WILL be appraising these homes, or ordering a Broker Price Opinion (BPO), at the least. Lenders aren’t going to give these homes away, they’re trying to limit their losses while getting the property out of inventory. So, accurate pricing by the listing agent is a must. Banks, like any normal home reseller, will be asking for market value, or maybe, a little less. That doesn’t mean 20-50% below market value, despite what you might hear from uninformed experts.
Improving the success rate of short sales involves an understanding of what’s required, and the successful completion of the necessary steps by all the parties involved in the operation. For Realtors, not only must they know what’s needed in order to succeed, but it also helps to know what the other side of the transaction knows, as well. With a good idea of what the other agent and their listing have to offer, agents will be better able to communicate effectively and accurately with their client(s) and the third party that’s involved. Those are just the initial steps on the path towards completion of a winning short sale.
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Dropping Into Your Lap
April 4th, 2009 categories: Market Trends, Real Estate News, Relocating
“Doubtless one man’s loss is another man’s gain.”
Walter Scott, 1821
Yesterday’s New York Times featured an article on the influx of first time homebuyer’s who’ve taken advantage of the current real estate market, which is flush with foreclosured homes for sale. Of course, “foreclosure property” normally means a home priced at a bargain.
The article highlighted a few bright spots in the evolving housing market:
1) Many families, who previously rented, are now finding bargain prices coupled with rock bottom interest rates, resulting in increased purchases.
2) The addition of the first time homebuyers tax credit of $8000.00, coupled with bank incentives (like closing cost assistance for buyers) on listed foreclosed homes has encouraged many to purchase a home for the first time.
3) Additionally, many buyers ar taking advantage of current Federal Housing Authority loan requirements which allow for lower credit scores and a down payment of 3.5 percent of the purchase price of the home.
For many of us in the real estate industry, the Times article is anything but surprising. The price depression is something you’d have to be blind to miss. Coupled with low interest rates, and now, prime buying season, those interested in purchasing a home, who may have been on the sidelines waiting for the dust to settle, have decided it’s time to get in the game. Perhaps they’ve heard the old adage; “Never look a gift horse in the mouth.”
If you’re one of those on the sidelines, don’t you think its time to get moving? Believe it or not, the great deals won’t be there forever.
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Latest Local Housing Data
March 31st, 2009 categories: Market Trends, Real Estate News, Relocating
The latest housing inventory numbers for the local area are:
FAUQUIER COUNTY and the CITY OF FREDERICKSBURG
SPOTSYLVANIA and STAFFORD COUNTIES
Days on Market (DOM) numbers have remained fairly consistent as we head into Spring. With buying season in full swing, next month’s indications should give us a better picture of what’s in store for this year.
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