Thursday, November 29, 2012

Zig Ziglar and Mount Everest

Success is inconvenient. That's what I heard Zig Ziglar say when I was a young man on a mission to build a career in real estate. My car didn't have a cassette player built in, I listened to Zig on a battery powered player sitting on the front seat next to me. When I would sacrifice something important in favor of work I would repeat, success is inconvenient. When I bought my first car with money made in real estate it had to have a cassette player... achieving success. Twenty five years later I understand there is more to success than money. I don't doubt there was more to Zig's message than I gathered at the time.

Help enough other people get what they want and you will get everything you want in life. Zig said that too. There is not much I want in life anymore.

No one gets to the top of Mount Everest by wandering around. Just today I read that quote attributed to Zig in an article about his death. I believe Zig reached the top.


Monday, October 29, 2012

No Such Thing as Buyer or Seller Markets...until someone gets nervous

There are buyers and there are sellers. One has the money, one has the real estate (let's say it's a house). There may be many houses for sale and very few buyers---that's a formula for the popular buyer's market. There is one other ingredient that is not in equal measure but it makes all the difference in the world in switching a buyer or seller advantage to the other side. It's fear and it looks like nervousness.

If you've got the house I want and I fear losing it to another buyer or I fear I won't get it on my terms, I become nervous. If you remain calm, in control of your emotions, and are willing to let my money walk away with me, you have the power. As the buyer, I have a lot to fear: other buyers who materialize out of thin air, you who I don't know, you who could decide to not negotiate with me, other people who I imagine could give you advice not favorable to me, interest rates that could move up before we get an accepted offer. Everything I fear is out of my control. As long as I can live with that nervousness I can keep from paying a fair price and terms to free myself from that fear.

As the homeowner who is without fear you are not going to over pay me for peace of mind. Of course, if you fear there may not be another me in your near future, your anxiety may rise and then....you give the power to me.


Wednesday, June 27, 2012

Consumer Confidence

TradingEconomics.com has this graph to show us where United States Consumers are with our confidence in economic things that matter. We know there are upward signs in the economic indicators and consumer sentiment made a nice rally from the slide that started last summer. Because I remember clearly how the real estate market slide in 2008 mirrored the mood into 2009 and again in the summer of 2011, it's worth paying attention today and watching through July. The fourth quarter of 2011 picked up in the last 2 months, but the summer and fall were uber quiet.

When sentiment draws back, home buyers hold tight. When buyers hold tight, competition diminishes. Without competition, offers made come with few seller-favorable terms. By terms I mean, price, closing date, inspections, appraisals, and acceptance of inspection related defects. Buyer's commitments to close become as certain as a giant Maybe. As in, if you agree to my terms, maybe I will buy your house.

Maybe if buyers understood that home seller's attitudes figure into consumer confidence they might not be so confidently cautious. People not confident as consumers are rarely whole heartedly committed sellers. Their maybe translates to: Maybe this isn't a good time to sell. The confident buyer can remain a buyer for a long time if unconfident sellers leave the market and leave too few good houses to consider.


Wednesday, June 6, 2012

Not So Big Doesn't Mean Small, or Cheap

Lovely to live in. Inspirational. Balanced space. Sara Susanka may be the most well known person today promoting attention to function, style, beauty, and life in house design architecture. Architect Christopher Alexander and others published  A Pattern Language in 1977 explaining the potential of building, on any scale, with attention to the details of life. Middleton Hills is the premier community for builders, architects, designers, and home owners who embraced the concept. Their work began in the middle of the 1990's and continues with the last homes being built in the neighborhood today.

Design Shelters is one of those design-build firms with a full grasp of home, life, quality, and budget. They built 6959 Apprentice Place when few homes of modest size were available to people conservative with housing dollars. A builder of some of Madison and Middleton's most expensive and elaborate homes, Design Shelters design staff knew how to create lovely space where the owners will find inspiration, pleasure, and balance. First they created activity pockets outside: the front porch with an expansive roof is a transition space from the elements to the front door, to the living room. By detaching the garage the designer created a small courtyard for a green play space or small garden.

The kitchen is has wings of light enhanced by the corner window and nine foot ceiling. By placing a spacious center island in the kitchen the counter top space for baking, preparing meals, and lunching at the counter is maximized without closing off the area from the dining and living space. As an owner's budget permits, higher quality counters, back splash tile, and other artistic features can be added. The space is a perfect canvas for personal touch.

Upstairs is big enough for 3 bedrooms, but that would be imbalanced with the family living space; better to make the area pleasant for the people who will live here. The two generous sized bedrooms each have a private bathroom. The front bedroom is the main bedroom. Its orientation is north but with a little eastern exposure for morning sunlight.

The way to get more living space at the lowest cost is to finish the basement. A 16 x 14 family room has natural light from the window well built for egress. A full bathroom allows the area to be an ideal place for guests. A laundry room on the main floor may sound like a good idea except when the space is limited and you're left with a cluttered area in the heart of the living space. Knowing it's more appealing to have the space necessary to do the utility type jobs of life, a reasonable space was designed with terrific light.

Life in Middleton Hills is easy for walking or biking to schools (including the UW), parks, shops, restaurants, the pool, and tennis courts. Life at 6959 Apprentice Place is lovely, inspirational, and balanced.


Saturday, May 26, 2012

Precision Pricing. Getting the price right is money and time in the bank.


Every real estate broker has a graph or chart that shows prices go down as time goes up. Those visuals are based on data from somewhere. We've showed those images to owners at least as long as I've been a Realtor, back to 1989. While they may have made some impression at one time, in the run-up of prices, all those fear invoking images lost their power. Time on the market was negligible for even the people who tested the market to its max. Today time is once again money and the evidence is local.

The new economy home buyer is smart. The tools available to them to discect markets are sharp. Negotiating strategies give the buyer control, even in would-be Seller Markets. A simple tool is to offer the owner their price, with no right to cure defects, and an appraisal contingency. This approach locks out the competition, locks in the owner. Throw in a relatively quick closing and quickly the buyer has flipped a Seller's Market to THE Buyer's Market. The power of leverage is immense and price will be reduced to where the buyer wants it more likely than not.

Leverage for the Owner is in precision pricing. The ingredients of precision pricing is a market analysis which includes appraiser used adjustments to account for real differences between the most recent sale relevant houses in the neighborhood, and a realistic understanding of deficiencies in the home. A pre pricing inspection by a home inspector will reveal the nickle and dime items buyers may use to adjust price by half-dollars and thousand dollars. Fix those items and you pay fair price. Leave them for the buyer and you will pay dearly.

A price established by adjusting for differences in a home will place the house perfectly in the appraisal window. Leaving no risk of an under appraised price, there is no chance that a buyer will have a late in the game lever to force the price down when the seller is most vulnerable.

I looked at 15 sales in the near west Madison market including University Heights, Vilas, and Shorewood Hills. Homes that sold without a price reduction sold in an average of 38 days. Those that sold with at leastt one price reduction were on the market for 80% longer. The prices those owners accepted were 2% lower than the seven who sold without a price change. For what it's worth, the people who sold without a price change grossed 96% of their asking price. Those that reduced price settled for about 87% of their initial asking price! One person who expressed great confidence to me at the start gave in after a year and ended up about 28% below the price he/she was so sure of.

Almost no one is in a hurry or wants to give away their house when they start. But after some time of dissapointing results, it seems owners are giving away what they would not have had to had they pricision priced in the beginning. Pricing is essential in this economy. Accepting the reality is the difference in time and money. The view of reality is clear with precision pricing.

Sunday, May 20, 2012

University Heights, Madison's Higher Ground for Real Estate

We watched with confidence as the price of real estate rose along with the Madison skyline until a few years ago.  Confidence in our university, government, health care, and private sector professional driven economy contributed to dismissal of the warning signs of a bubble about to burst. Neighborhoods where the leaders of these industries live might just be the higher ground to stay above water.

Just before the Great Depression the area where University Heights sits was prime location for the people who built the foundation of the Madison economy. University, government, health care, and private sector professionals built the homes that make the neighborhood at a time of economic and American pride expansion. The location was a bit out of the city but it had modern access to Madison. Dependable roads were key to draw people to build in the Heights. Horse power was the primary source of transporation with few automobiles bought or sold in Madison in the first years of the '20's. In the midst of the "Great Recession" the Heights is again the destination of choice by the similarly employed. Now the area is absolutely urban, and perfectly served by the modern mode of transportation---bikers, hoofers, and commuters in autos the size of a buggy. The super highway of high speed internet, googles of electronic devices and wifi everywhere make it easy to stay connected from home or nearby shops and nearby restaurants.

In the last 12 months 20 homes have sold in University Heights, three more have offers pending, and eight are on the market today. I don't believe any neighborhood outside of the Beltline can boast the same demand today.  If there is evidence of a trend toward living simply, University Heights may be an indicator. With typical homes ranging in price from the $400,000's to the upper $600,000's, this is not the average Madison home owner's neighborhood. (It's not the most expensive either.) University Heights is a neighborhood of people who make commitments in real estate and those commitments move our market. When these homes sell, owners typically buy somewhere, and someone who sold something somewhereis a most likely buyer. I'm going to assume the average educated people moving in, out, and around University Heights could be described as "well". What a well educated person may be likely to have in addition to diplomas is a good grasp of reality.   I think it's acceptance, and a plan; acceptance of what is and a plan for what to do regardless of the economic unknowns.

University Heights was the higher ground in 1920 and it's the high ground for Madison today. Regardless of where we live, there are lessons to be learned from University Heights...location always matters, and accepting reality is the way to see what is probable.

Home featured above is 177 N Prospect Ave. offered for sale by Tom Meyer, Restaino & Associates as of May 20, 2012.




Wednesday, March 21, 2012

Middleton is Destination of Choice

Middleton, Wisconsin is a hot destination for relocating home buyers today. Part of the drive is pent up demand of persons who moved to the area 12 or more months ago and rented before buying. Their time was well spent discovering and researching the market, schools, neighborhoods, housing stock, and commuter routes. These well prepared people are making offers from a place of knowledge and their offers are getting accepted. Times they are a changing.

The consumer of real estate services is a much sharper and cautious  consumer in 2012. Home owners who know the reality of their situation (All markets are not buyer markets and home prices are not all down and out) are able to negotiate reasonable prices for their homes and purchase another home at a fair price and an unfair interest rate...if financing is even necessary. The relocating buyer comes to town well schooled in price points, but without the sharper eye of someone on the ground to guide them.  We see over and over where well qualified buyers are losing out on their first choice home because they believe they have no competition; not a correct assumption in Middleton. People who are not otherwise motivated to move off the fence stack up until somebody gives them a reason to jump in. All it takes is one person to try to acquire a property at below fair market value and other ready, willing, and able folks will make offers in line with recent sales.

In the first 10 weeks of this year 61 homes in Middleton are showing on the SCWMLS as sold or pending. Forty one of those are over $250,000. It looks like the high demand is between $275,000 and $565,000.

To get a good look at homes selling in your neighborhood and homes offered for sale, use one of these sites:
Zillow, Trulia, Homes, or even Tom Meyer.  Once you get the big picture, you are free to look to me to sharpen your view. It doesn't matter to me if you are staying, selling, or just looking to evaluate your current assessment. I'm a resource for anyone who wants to make a smart real estate related commitment.

Wednesday, March 14, 2012

Powerful Real Estate Owning or Renting Tools

Powerful tools are at your fingertips, and I don't mean the yellow pages. The revolution in empowering the American consumer of real estate and related service is picking up steam. Here are a few links to know about for getting the most value out of the building you call home:

Pillar to Post has a beautiful home tips page. Take a Saturday morning to view the room by room, item by item walk around to identify the little problems which you can fix on Saturday before they become big defects.

Use their Cost or Repair Guide to begin planning a home improvement strategy. Starting here will empower you to know the approximate costs so you won't be boondoggled by contractors who might charm  an inflated bid past you.

Using regional data is the better way to know a return on your investment (ROI) for repairs. Making improvements to better enjoy your home is good enough reason to spend a little time and money this year. But, before you commit to a project that you think is a big payoff in ROI, check your thoughts against the 2011-12 National averages at Remodeling.

I'm an ally for people who live with roofs over their heads. Go forward. Live in your home free of stress.

Thursday, March 8, 2012

Do Right By the Customer

I am in this business to give a real estate safety edge to people. Informed people make safe commitments to do what is evidently wise for them. Infused with certainty, real estate choices are easy, financially probable, and emotionally healthy. No person should ever be manipulated into making a commitment to own, sell, or rent real estate, pay property taxes, or be denied refinancing based on unverifiable data. I'm a rigorous ally for peole who live with roofs over their heads. 


Bubble? What bubble? Best time to buy. Best time to sell. Affordability index. Absorption rate. American Dream. Homeowners are more involved in community than renters. Appreciation. Investment. Cliches. The manipulation to move people to buy, sell, don't rent, is constant and dangerous to the well being of Americans; it's stressful. Consequences of real estate decisions made under stress include lack of commitment, resentment, bitterness, and fear to name a few emotional stressors. Loss of money, bankruptcy, and foreclosure are likely when unprepared people are stressed into commitments they can't keep. Divorce, failing health, and even death spawn from high stress related to loss of control. Prisoners and hostages have much in commone with people who are hostage to commitments they can't keep. They hurt from the consequences of loss of freedom. 


Freedom is the gift of knowledge and insight. The tools available to the public to rise above the barage of assertions based in opinions are incredible. Multiple dozens of practicle aps and web sites are easy to use and relatively reliable for people to know what appraisers and assessors know. Access to homes for sale right next to data on homes recently sold are at your finger tips. There is no reason the widow or widower should be assessed 120% of their verifiable fair market value while the new owner next door is assessed at 100% or less of their homes value. Never again should a person who wants to refinance be denied because an appraisal showed their home is worth slightly less than what's required for approval. Every decision that works against a property owner can be disputed...having the evidence is your power to appeal.

No renter should ever be stung into owning because they have been pushed to do what they know isn't best for them. The financial part of the equation is simple in the hands of experts. The personal part of the formula can be resolved with patience and reflection on values.

There are reasonable prices to pay or accept for home buyers and owners. Reasonably accurate data exists to determine what is probable. Freedom from clinging to what's possible, but not probable, will allow people to move forward with health, wealth, and peace of mind.

 I'm committed and free to do right by the customer.


Monday, February 27, 2012

Sentiment Trumps Interest Rates

 University of Michigan Consumer Sentiment Report

The experts do the reporting and I'm sharing their work. The data supports the evidence---regardless of the interest rates or home prices, how people feel about the present and the future have a lot to do with committing to spending commitments.

HouseHunt.com For 53562

The Middleton Zip code sales data provided by HouseHunt.com shows the average price dropping last summer as consumer sentiment declined. It takes more buyers to move the average price up above the median. As buyers moved to the sideline, regardless of cheap money and glut of houses to choose from, the average price dipped. Then as the confidence improved, people came back and the averages went up.


Thursday, February 23, 2012

Part of The Solution.

Peter Zarov, attorney with Homestead Title, presents  an excellent Distressed Sale seminar in three hours. Saw it today. His manual is valuable. Peter is part of of the solution. Education reduces uncertainty and paves the way for consumers to get offers accepted and closed.
The high rate accepted offers failing to close is related a lack of understanding. Educating the service provider and the service receiver is part of the economic recovery solution.

Thursday, February 16, 2012

Time to Buy or Sell Depends on You...not factors you can't control, such as interest rates and prices

About 1.63 million search results show up on Google for "Best time to buy a home". That is exactly the number of times real estate leaders have said, "Now is the best time EVER to buy a house" ....each year for the past 10 years.  Really, it's not much of a stretch; we Realtors have never seen an economy that wasn't "the right time" to  buy and sell real estate. We've taken optimism to a new level.

I don't have all of the answers, but I do have some questions: If "now is the time to buy", because rates are low and prices have dipped, how can can it also be the time to sell? Especially if "real estate prices are coming back", it can't possibly be time to sell. The time to sell must be coming, but how can it be today?

If I tell people to buy now because this economy is the perfect storm of low rates, lower prices, and high inventory, what should I tell the people who miss the boat when rates rise? I've seen people who missed a boat and they're kind of bummed.

Maybe another way to look at opportunity is to take factors we don't control out of the equation. Things like prices and interest rates have a way of going up, down, sideways, regardless of what I do. What I can control to some reasonable extent is my savings, my employment, my credit score, my debt, and my knowledge about housing options and housing costs. If I focus on saving $40,000, boosting my credit score over 700, and eliminating my debt, I will have 20% to put down on a $200,000 purchase, I'll qualify for the best interest rate available, and I'll still be able to save for home upgrades and improvements that keep my home's value from dropping too far south in the next economic dip. When we jump to own because we want an interest rate and what looks like a low price we over extend, waste money on worthless expenses like primary mortgage insurance, and end up with houses that own us.

Responsible people in the real estate and lending fields  may turn some business away because they know it makes a difference to be part of the economic solution. America does not need more unqualified home owners. America will benefit from a more aware real estate consumer whether they are renting or owning. A wise renter saving and building their credit score and financial position will be a powerful home owner...when they are ready.

Home owners who wait to sell when prices go up will be wise to take action on modernizing their homes today. The fixtures that were in style in 1997 can be replaced today along with the flooring, and bathroom fixtures. Who knows when or if home prices will move north? But if you are waiting for the day when your home is worth more than you owe, you might as well live in a better looking environment today.

Monday, February 13, 2012

Life Beyond Equity

Knowing what matters and preparing accordingly will change your experience from frustration to exhilaration. Recent trips into neighborhoods with buyers I found owners who bought at the peak of the market (at prices $300,000 +) selling today for 15% less. Out of a pool of nine comparable homes from Middleton to Verona we found four with fresh accepted offers. None were short sales or bank owned properties. Each has a home owner who priced wisely.

Buyers who are pre-approved and have taken time to study the market, and focus on owning a home as opposed to an investment, are coming through the experience satisfied. Sellers who focus on the big picture are equally satisfied. There is life beyond equity.

A buyer's market exists where seller's expectations do not align with reality. Within a buyer's market, one seller can change the tide to their favor by paying attention to condition and price. (Location is locked when you bought so look to price and condition to change the impact of location.) Get the price right as supported by evidence and pull the house into tip top shape and you're going to create some excitement. We are seeing seller's markets pop up all over. These markets are small and fleeting.


Saturday, January 28, 2012

Real Estate Today. Eliminate Peril, Enhance the Experience, Move the Recovery.

The classic movie Jaws, the first one not the sequels, is the story of America's real estate world. All is well in the world until disaster strikes the innocent, happy go lucky victim in the middle of the night. The grotesque remains wash up on shore and the government rallies the citizens to attack the unknown source of evil quickly to restore confidence so the economic well being of the community can be restored before the profit season begins. With all the usual suspects rounded up in the  sea and slaughtered, the Mayor declares it safe to go back in the water. Business as usual. Come on down. The water's fine. Jump in. You'll be safe... Whoa to you young fella (Chief Brody) who dares to challenge leadership and suggest caution.

Of course we know how that story goes; the threat is declared over too soon and more people suffer disaster. The town folks make a few bucks off of the tourists, but then the tourists leave but now they are not going to be so easily persuaded to come back. Fool me once, shame on me, fool me twice....I don't trust you.

The government first time homebuyer tax incentive is real estate's version of opening the beaches too soon. Many of those buyers churned our commission checks, closing fees, and mortgage origination fees to keep some businesses open, but the buyer may have had their legs chewed off by buying and overpaying in the only competitive market of the time---below $250,000.  The little equity they had in the transaction (3% down) vanished as soon as  the buyers left the scene. The serious business of recovery  began only last year.

If a Realtor has any value in the recovery, it's in the area of eliminating unreasonable risk for the consumer of our services. With a year of untampered markets behind us, the buying and selling journey has a solid base of sales. Those sales are what underwriting needs to establish values on which to approve financing applications. Appraisers have sales to use to evaluate value in the manner required by the underwriters. Realtors have data to use to inform their buying and selling clients on what might be reasonable price. Owners can make decisions to place their homes on the market or sit out knowing what is probable instead of hopeful.

Now that the underwriting process is on more solid ground, it is imperative that no government interference with incentives muddy the water.  The bankers, realtors, appraisers in the proces know what to expect. We know where the pitfalls are (unsubstantiated prices, unapproved buyers, defects in the homes, underwater mortgages). We can navigate. The waters are not treacherous. Jaws may have gone out to sea. The more consumer sentiment moves to feel safe, the more people will come back to the process of buying and selling, and moving on with their lives.  Mess with their serenity and we'll be watching a sequel... and we know the sequels suck.

Wednesday, January 11, 2012

Dane Northwest Middleton Schools Sales 2011

One area that gets an abundance of attention from relocating families is the NW corridor of Dane County, Middleton Schools. Because this area is outside of the Beltline, we should include Blackhawk Neighborhood in the discussion.

A review of sales of 19 homes for $600,000 and above over the last twelve months might reveal a trend to pay attention to in 2012. I've written about assessments in previous blog posts and hopefully I've been clear that I don't want to put too much weight on assessments when doing market analysis. Just the same, there is no way of avoiding assessment numbers when the buying side of the market is looking to the assessment number to argue for their offer positions. We can't look the other way and say it doesn't matter when it does matter to somebody in the discussion.  With that disclaimer out of the way, let's review 2011.

It was early spring and I started to hear "Your price is too high. Homes are selling for a lot less than assessment." It wasn't just bargain shopping buyers saying that, seasoned Buyer Agent Realtors were telling me I was wrong too. If I was going to enter this debate I decided to do some homework. A review of multiple neighborhoods around Dane County showed that there were pockets where the price to assessment ratio was upside down, but overall the sales prices where still far more than the majority ahead of the assessments. But the damage was done. The buyer sentiment was set. And the mode of operation was: See assessment first, then price. If price is greater than assessment, look no further, conclude price is wrong. 


My 19 sale group of homes shows this:

Sale price as a % of Assessment:                100.43%
Sale price as a % of First Asking Price:        91.54%
Sale price as a % of Last Asking Price:         94.01%

Days on the market average:                        138 days

Of the nineteen sales, 7 were in the Town of Middleton. Six of those 7 homes sold for less than the assessed value. The City of Madison (Blackhawk) recorded ten of the sales and every one of those homes sold for over the assessed value.

I read this data as a suggestion that owners will attract the attention of buyers when their price meets the buyer's expectation, and the buyers might expect the price to line up close to the assessment in the Town of Middleton.  In Blackhawk, buyers who expect to be able to buy homes below assessed value may have  no success arguing their case.

There are sixteen homes on the market today in the same area. Only 5 are priced below assessment, and the average price to assessment is 105.35%. The average price reduction already has been greater than 6.5%. Maybe those owners started with aggressive expectations. The average time on the market for these homes is 249 days. Eight months is a long time to be patient. I wonder if we might be seeing a number of these owners make price adjustments in February. The cumulative effect would be significant to owners who set their prices based on asking prices.