People talk. Right now, people like to talk about the economy and this whole “recession” thing that was supposedly set off by defaulted loans within the housing market. People are still talking.
In a recent press release from reuters.com, Mark Zandi, a chief economist at Moody’s Economy is quoted in saying that the housing crash “is not over”. In a projection by the S&P Home Price Index, the housing market will hit a 38% decline in the third quarter of 2010. It previous worst was seen early last year, dropping a hefty 32%. This decline essentially means that home prices will drop and foreclosures will be up on the rise once again—another buyer’s market with no available buyers.
Home prices have been rising recently, leading many to think that the housing market was back on the up and up. In fact, the rise in price is due to the subsiding of foreclosure sales. Government programs, such as the Home Affordable Modification Program, have helped to quell such home sales therefore driving up the average price of home sales—the desired reaction on behalf of the housing market, but one that will not last perpetually.
A particular indication pointed out by real estate expert blogger, David Curry, is the continual rise in delinquency rates on mortgage loans. In a market that is supposedly gaining strength, our delinquency rates continue to rise which means that more and more homeowners are unable to afford their mortgage loans in the current economy. Mr. Curry had this to say:
“The delinquency rate for Freddie Mac’s loan portfolio increased in September to 3.33%. The August number was 3.13% and here’s the real kicker—one year ago the rate was a mere 1.22%.”
So it appears as though the economists are not merely being preemptive in their pessimistic view about this current (albeit momentary) market upswing. According to Mr. Curry, the market still has a ways to go for recovery if you run it by the numbers and not the estimations of easily excitable realtors. Although, it’s not all bad. We’re only looking at six percents worse than we were before, so we know what to expect. And as trends tend to indicate, once something bottoms out, the only way it can go from there is up. So there’s something to look forward to.
I write this update to make sure FSBO’s are prepared. The ability to sell your home very much relies on current market conditions and right now, home sales are up and buyers are looking. Unfortunately, economists are predicting that this will not last and the housing market will once again see a decline come 2010. Talk of recovery may spur a little market activity, but it won’t bring the dog back to life. Sorry to rain on the proverbial parade, but in the end, it’s better to be prepared for the worst and hope for the best than be caught out in the rain in your skivvies.
Archive for December, 2009
Market Update: December 2, 2009
Thursday, December 3rd, 2009Marketing Your Home
Wednesday, December 2nd, 2009Let’s say, hypothetically, that you’ve got the house looking great. You’ve priced it just right. But nobody shows up at the open house. No offers roll in. Why? Because, like many For Sale by Owners, you have underestimated the importance of marketing your home.
First and foremost, different states have different types of legal restrictions on what you can and can’t advertise as far as marketing your home, so make sure you do a little research to ensure that your home listing is in the clear. “CC&R’s”, short for covenants, conditions, and restrictions that apply to the particular uses of zoned real estate, are something to consider when listing your property.
Listings
CC&R’s aside, the last thing that a For Sale by Owner wants to do is bring any negative attention to his/her property, so it’s important to create a listing that points out all of the great things about a residence. Essentially, your home listing is your advertisement of your home. When compiling your listing, think about a few key points to really highlight the positives of your home:
• What did you, as homeowner, really like about your home?
• Why would the home appeal to potential buyers?
Take stock of the amenities your home has to offer and really try to make those points stand out in an organized manner.
Below is a real listing for a home listed in Austin, TX:
Really Nice Home, Great Investment in Austin, Texas.
Very sturdy brick ranch-style home. Single story. Four-year old roof. Recent plumbing work done.
Built in 1959 with strong concrete slab foundation. Termite inspected annually. Smoke alarms installed.
Home size: Under 1000 sq. ft. Built for cozy comfort. Nice kitchen and dining area with ceiling fan.
Lot size: Appx 7200 sq. ft. Plenty of room for an above or in-ground swimming pool.
A most comfortable living room including three bedrooms and 1.5 bath. Nice covered patio with storage area. May be used as a carport.
New utility shed (10 x 12) with plumbing and electricity. Built to last many years.
Safe neighborhood. Friendly neighbors and friends. Sit out on the front porch and enjoy tranquility.
BEST YET…
Home value will rise rapidly in a few years.
Located in Austin’s hottest real estate area (10N).
Similar houses just a few miles north (Area
South Central) are selling for $ 250,000 plus.
No Homeowner’s Association commitments or fees.
Huge grassy back lawn with privacy provided by natural lush gardens. Let your imagination run wild as you plan fun-filled backyard gatherings.
Just 2 to 5 minutes from the following: Interstate 35, Hwy 183, 360 and 71. St. Elmo Elementary & South Austin Hospital.
Super Wal-Mart, HEB, Randall’s Fiesta, Walgreen’s and CVS within the area.
Short drives to many major employers in central and south Austin, Bergstrom International Airport, Barton Creek Mall, University of Texas and Downtown Sixth Street area.
Capital Metro bus stops just walking distance.
This is a descent home listing. It lists many pluses to the property, noting a few particulars that are special to the home, such as the grassy backyard. They also create interest by noting that this home would be a good investment, one that will mature.
But where this listing really suffers it the overall organization. Read this listing and see if you can tell how it not only points out the great aspects to the home but also puts the information in a more organized and professional manner:
This lovely Texas ranch-style, brick home was built in 1959 and made for cozy comfort. With a strong concrete slab foundation, this single story was built to last. Home amenities include:
• Nice kitchen with dining area attached—perfect for hosting
• A very comfortable living room setting
• Three bedrooms and 1.5 baths for families
• A beautiful porch setting that allows you to sit out and enjoy your 7200 sq. feet of land
• Covered patio area that can be used as storage, car port, or entertaining
• Recently-added utility shed with electricity and plumbing
• Recent plumbing work done, roof is less than five years old
All of this, nestled into one of Austin’s friendliest, safest, and most popular neighborhoods with a location close to everything. No more than 5 minutes to major highways, elementary schools, and hospitals. This charming single story residence is also within close proximity to major Austin businesses, employers, and cultural centers: Austin Bergstrom, University of Texas, Barton Creek Mall, Downtown, Convention Center, Palmer Events Center, and much more.
PLUS…home value in this particular region (10N) is expected to rise in the near future. Homes in the South Central region are selling for $250,000+, making this home a great investment for any buyer!
This second example contains the same information but just organizes it and puts it into a much more cohesive, readable format. Just for your consideration…
Now the thing about a good listing is…it doesn’t advertise itself! So, as the For Sale by Owner, you have the responsibility of promoting your own property. This includes putting together elementary items such as photos to accompany your listings to posting yard signs. Although it sounds easy, having flattering photos of your house will make a great impression, especially when buyers see your MLS—but we’ll get to that in a bit. Take time and make sure your photos really accent the great things about your home. If you have to, get a professional photographer, or a shutterbug friend to come out and do your house justice!
Yard sings and flyers are a tried and true way of getting your home out in the market. Often times, it is just as effective as any online marketing you can do. Classifieds also work, as our friend from yesterday’s blog, Mr. Scott Wengren, noted. But recently, homebuyers have begun to search the online market as a primary means to locating a great home. You can find more homes for sale all from your Mac or PC instead of driving around neighborhoods looking for signs or sniffing out your friends’ suggestions.
Online Resources
When dealing with listing your home online your best bet will be to put your house on a Flat Fee MLS (Multiple Listing Service). An MLS, such as Yigdigs.com is the easiest and most effective way to get buying eyes looking at your home. Currently 95% of homes for sale are listed and found on an MLS. For a “flat fee”, anywhere from $200-$800, your home can be placed into an online database of homes for sale so that potential buyers can peruse. Although the fee isn’t necessarily cheap, it’s a considerable deduction from the commission costs you would pay a realtor. Plus, an MLS just looks professional. Many buyers’ agents won’t even consider a property if it doesn’t have an up-to-date and professional listing. Again, a good photo is your best friend. You want your home to look good on a first impression. Compound a good listing on an MLS with social media sites, like Facebook, MySpace, Twitter, and Linked-In, and you’ve got a nationwide community of home buyers, sellers, and real estate professionals at your fingertips.
A lot goes into properly listing a home. The best thing to do is get feedback from people so that you have an idea of how people are receiving your home. Ask friends and family what they think. You can also use online features like Yigdig It!, Yigdigs.com’s MLS rating and review page and get feedback from a vast community of online real estate connoisseurs and professionals. No expense should be spared with your listing. The better a listing looks, the more it will pay off in the end.
For Sale by Owner: A Case Study
Tuesday, December 1st, 2009I came across another juicy nugget of a For Sale by Owner vouching blog. This particular scenario took place in 2005. New York Daily News Deputy Editor, Scott Wenger, set out to sell his Upper West End apartment by himself, feeling soured from past experiences in dealing with brokers when buying a home.
Not only did he stage the home himself and put it up on the market, he closed the sale by himself to a broker-less buyer, completely cutting out any real estate professionals in the deal. He even resisted countless bids by brokers to let them take control of the sale of his apartment. Although, the article has been archived somewhere on the NY Daily Press Archives, you can read the short and sweet of Mr. Wenger’s FSBO adventure on the Property Grunt blog.
Scott managed to dig up yet another aspect of home brokers that might give an incentive to homeowners to do it your self. While he was asking bidders to finalize offers, he found that, from a real estate broker’s perspective, it would be much more financially sound to take commission on a current offer without asking to raise the price and move on to another property. This would incite the brokers to take offers that might not be as high as they could be, to avoid the risk of losing a sale.
“At this point, it became clear to me there’s another way brokers can shortchange sellers. If bidders have made offers, the incentive for a broker to push for an extra $10,000 doesn’t seem very strong. Their commission would only go up several hundred bucks – breadcrumbs if existing offers put them on the verge of collecting tens of thousands of dollars. Their time logically would be better spent on the next deal.”
An interesting point Mr. Wenger. Not only does the account show you how rewarding of an experience selling you home For Sale by Owner can be, it also shows the preparation involved—and from the sound of it, Scott was very prepared.
