Does a home sell itself, or is smart marketing the key?  Or, is it a little of both? 

While most of us realize that targeted marketing is a sound sales strategy, it is tough to sell a lemon in any market.  But most would agree, rarely is a buyer willing to pay more than an item is worth, unless of course, there’s more to the item than meets the eye.  But, that is seldom, if ever the case.  Wouldn’t you agree?

Attempting to accurately price homes requires consideration of various factors including:

1.  Home Inventory

2.  Current Market Conditions

3.  Recent Comparable Property Sales

4.  Condition of the Property

As many who provide valuations of property will tell you, any good Comparative Market Analysis (CMA) will provide a property owner with an accurate price window for his/her property.  If we’re comparing like properties, it is hard to go wrong with a CMA.  But, if you’re expecting an apple to be the same as an orange, you could be in trouble!  So, where do those inflated listing prices come from?  The owner?  Yes, at times.  But, unfortunately, often, the blame lies with the Realtor.

An article in a recent Business Week reviewed William Poundstone’s new book, Priceless: The Myth of Fair Value (and How to Take Advantage of It).   In it, Poundstone examines both the psychology of buyers and sellers, and the logic used when placing a value on a product or service.  The author argues that pricing is anything but an exact science.  In his words, ”In the new psychology of price, values are slippery and contingent….”  According to the article, many “clueless” consumers are vulnerable to the marketing or sales practice of anchoring.  Anchoring, in its purest form, is the act of using of a high priced item that may never sell, in order to make a lesser priced similar item much more attractive.  Often, the same manufacturer may sell two like products, one tagged with a designer name and price, the other, a “great deal” at almost half price.  The “cheap” one sells like gangbusters!

Since it’s hard to ask twice as much for a similar home, overpricing occurs far too frequently.  The good news is, that high price tag makes all the rest of the homes look lots better!  The bad news is, the anchor model is probably going nowhere.  

While pricing or valuing a home isn’t quite as easy as 1-2-3, accuracy is a result of using the proper comparable properties when determining the listing price of a home.  But, if instead, you believe your property to be priceless, and list it accordingly, don’t be disappointed if you find the price you’re offered is only what the educated buyer thinks it is worth.

“The real risk to the banks and investors is that the people in those homes might just decide to walk away. And that’s what we must do. Doesn’t have to be everybody, of course; but anyone who finds themselves seriously underwater with no hope of ever recouping their investment….just walk away Renee. Morality has nothing to do with it. You are a cog in the wheel of a machine that is killing this country and if you remain a cog you enable it. Remove your cog and the machine will not keep running. Remove millions of cogs and the machine gets replaced.”

In other words, the Kos is advocating mortgage debt anarchy; a revolution of sorts.  It then cites Realtors from across the U.S. who seemingly justify the action.  Why?  In the words of one agent, since the economic and housing recovery is projected to take perhaps as long as a decade, “Isn’t it better to just cut the losses up front”? 

According to a recent report by First American CoreLogic, nearly one in four are underwater or upside down with their home mortgage.  In other words, they owe more for the property than it is worth.  According to the N.Y. Times, the housing collapse left 10.7 million families owing more than their homes are worth.  Is that a problem?  Of course it is.  Will walking away from a mortgage solve that problem?  Not hardly.  Have the Administration’s loan modification measures worked as fast or as well as hoped?  No, they haven’t.  Nonetheless, the programs were enacted for the affected homeowners to use.  I have yet to hear of a homeowner not being able to remain in their home as they attempt to modify their payments.

How about you?  If you know of a friend, relative, or client that has been forced out of their property despite the fact they’ve continued to make a payment, or partial payment, please let me know.

Is walking away from a mortgage debt justified?  While its track record isn’t perfect, the short sale is getting its act together.  Perhaps, for both the lender and the those upside down, it is a better alternative than burning the mortgage.

The change to appraisal periods involved decreasing the validity time for FHA appraisals from six to four months for both existing homes and those under construction.  Since the first of this calendar year, 2010, the new standard has been in effect.  Why does the change matter?

For those of us that have faced selling properties, only to encounter difficulties with the appraisal, this reduced turn around time, or reduction of validity time, couldn’t have come sooner.  Because, no matter the soundness of an agent’s estimation of a property’s value, it is the appraiser’s that matters most.

Did you see the news?  Yesterday’s New York Times carried an article detailing the results of recent federal mandated licensing exams for loan officers around the country.  The results thus far are anything but encouraging.  According the Times article,  ”31 percent of the roughly 10,000 people who took the national test from July 30 to Nov 30 failed it, and about 27 percent did not pass the state-specific component.” 

While there are those (you can trust that the dissenters aren’t those depending on the expertise of their lender) who question the industry’s testing, many others appreciate the attempt at accountability.  Is it odd to expect those who provide you a service, especially one you pay for, to know what they’re doing?  One would hope not.

In the effort to clean up the mortgage industry and answer critics’ claims of of its ”poorly qualified” loans officers, the testing mandate includes both a federal and state national exam that covers federal laws, general mortgage knowledge, the loan-origination process and ethics.  While I have to applaud the “after the fact” efforts to ”fix” a disfunctional mortgage loan process, why did it take a crisis to prompt such measures?

The question that leadership in any industry or profession needs to ask itself, is, what are the minimal acceptable standards required by those licensed to perform or practice?  Would I want them (the practitioner) to provide that service for me?  What if had to pay them for their service?  Would I trust them to provide me, or a relative or friend, advice?  As we’ve all heard, “many people will only do what’s required.”  Let’s hope, when it comes to your trusted advisor, you’re getting at least what you’ve paid for.  And, if not, who will pay for their neglect?

So, what is your latest Christmas wish?  Somehow, I doubt that it’s A Christmas Story’s Red Ryder BB gun.  But, who doesn’t look forward to opening what’s under the tree?  For many, Christmas is a time of celebration and renewal.  Both, spiritual and personal.  A wonderful opportunity for family to get back in touch with one another.  For cards from distant friends.   And, for others, the focus of the holiday is on giving. 

What if we all were more like George Bailey?  You know, Jimmy Stewart’s role in the Christmas favorite, It’s a Wonderful Life.  The movie’s main character, whose dream was to travel the world, but never quite got there.  Instead, he was continually helping others less fortunate than he.  With money, and time, and his tireless efforts.  He certainly gave more than he got.  Wouldn’t you agree?  Of course, George Bailey was a movie character, not a “real” person.  But, if he was, who would he be?  Do you know someone who fits his description?  What about you? 

As this year draws to a close, I’m reminded during this Christmas season of giving, that whether fulfilling our duties as professionals, as Realtors, we have a responsibility to give more than we’ll get.   And while there are those transactions that make us all wonder why we ever chose this profession, looking back, it’s easy to realize the benefits clearly outweigh the challenges faced.  Let’s hope that the case for many of us. 

Merry Christmas!     

What about you?  Any snow in your part of the country?  If not, how are the temperatures?  Years ago, while stationed in Tucson, we spent Thanksgiving evening on the community swimming pool.  That was….different, and enjoyable.

There’s certainly the Christmas spirit in the air.  And, the snow helps complete the holiday setting.  In the days leading to this special time of year, enjoy the sights and sounds, and be careful on the roads!

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.”  

It’s cool mornings and evenings, beautiful natural colors, and inkling of the coming holidays, seems to invigorate a sense of better things yet to come.  Around Stafford and Fredericksburg, for many, it’s jacket weather (for others, coats), and the stunning colors are second to none.

How about you, what is your favorite season?

“The first man gets the oyster, the second man gets the shell”

Andrew Carnegie 

Fortunately, during last weekend’s 52nd Urbanna Oyster Festival, there were plenty of oysters to be had, even for those in the back of the line.  Everyone had loads.  And, most of us, way too many!  If you’ve not had the chance to venture to Urbanna, Virginia, for the annual oyster celebration, you’re not only missing great food, but also a special glimpse of small town America. 

Urbanna is located in Virginia’s Northern Neck, which is situated North of Williamsburg, and Southeast of Fredericksburg, hugging the Chesapeake Bay. 

It’s been called a “historic town”, and, in many ways, it is.  It’s among the places you’ll see on the National Register of Historic Places.  But, each year, on November 6th & 7th, you’ll find some 75,ooo folks headed to this “sleepy” coastal town for oysters, fritters and other assorted dishes, and loads more fun.  I can tell you, it’s likely on the “must see” list for those who enjoy touring the country in their RV’s, because there were plenty of those big boys parked in and around the festival. 

The two day festival has an assortment of activities, from an oyster shucking contest to the crowning of the festival’s Oyster Queen, among others. 

Any number of booths selling food, jewelry, art work, intricate wood design (well, you get the picture, like you’d see at the County Fair), and assorted items dot the town’s landscape.  Parking is available, but plan on paying a minumum of $10 or Friday, and $20 on Saturday to park. 

And, for those visiting for the first time, it doesn’t matter where you park, the prices are the same.  So, for convenience sake upon leaving, use the lots before you come into town.  

Enjoying the sights and sounds of Urbanna, and the Oyster Festival, the kids having fun, the adults enjoying each other’s company, the interaction with the booth workers, reminded me of the abundance our Commonwealth has to offer.  While most of us relish the time away from work on the weekends, and the relaxation it provides, you might mark the calendar and set aside this early November date next year.  It is a piece of Americana that you don’t want to miss.

You’ll meet some very nice people, view a beautiful part of the state, and enjoy some appetizing food dishes.  But you might do yourself a favor.  In case your eyes are too big for your stomach, don’t forget to bring the Tums!  

The Department of Defense’s (DoD) HAP offering is designed to provide financial assistance to its personnel who have to move, and will lose money upon selling.  Due to the dramatic decrease in home values in recent years, this program was originally designed to provide financial relief to those required to move due to DoD’s Base Realignment and Closure (BRAC) initiative.  It expanded to include those DoD personnel whose reassignment or military move was further than what’s categorized as commuting distance.  A brief summary of guidelines and what HAP offers can be found here: http://hap.usace.army.mil/Eligibility.html

The original deadline for eligibility was the end of November, 2009.  As you might imagine, eligible members were scrambling to get their applications in, and to get their home on the market.  Fortunately, the deadline was extended.  

Here’s the official announcement of DoD’s Processing and Extension of the HAP Program.  It’s got the details, including an extension through Sep 2012.  You’ll find the info here, http://tinyurl.com/y8d99pv

Another piece of good news for those in the home market, was this week’s expansion of the First Time Home Buyer’s Tax Credit. 

Not only was the tax credit of up to $8000 for qualified first time home buyers extended, but the expansion also offered an additional credit for repeat home buyers.  The beauty of the original credit was their definition of a first time buyer; any prospective purchaser who has not owned a principal residence during the three year period prior to the new purchase.    

The additional, or expansion of the program included a $6500 tax credit for move-up or repeat home buyers purchasing a home.  There are specific details that you need to examine before you assume you qualify for the program’s benefits. 

While we can’t always count on the federal government to assist us, it is refreshing to discover their helping hand in times of need.  Amid the existing economic downturn, Uncle Sam not only decided to come to the aid of military home sellers whose home values have decreased, but also to help those in the market to buy a home.  Let’s hope the prospective beneficiaries of both these offerings are well aware of what’s available, and are taking advantage of them.  Who knows when we’ll see this type of assistance again.