Wisconsin Real Estate Magazine - September 2010 Issue - Seller Financing and the SAFE Act

Seller financing can be the difference between a family owning a house they can afford but for which the financing is unavailable due to lender and Fannie Mae restrictions.
Wisconsin Real Estate Magazine - September 2010 Issue - Seller Financing and the SAFE Act

Wisconsin Real Estate Magazine - January 2011 Issue - 2011 Economic Outlook

Wisconsin Real Estate Magazine - January 2011 Issue - 2011 Economic Outlook

Foreclosures and What They Cost: From the Capital Times 1/5/11

A distressed sale, (Foreclosure or Short Sale), is one where the equity (balance after deducting money owed against the property) is insufficient to satisfy all of the debts. Foreclosure is a legal process where the borrower and owner of the mortgage have defined rights and responsibilities to allow the opportunity for both to protect their interest. A Short Sale is simply a term to define a real estate transaction where the borrower, a potential buyer, and the owner of the mortgage (bank, investors, loan servicer) negotiate to satisfy the debt for less than owed.

Distressed sales are being mapped to help communities secure federal funds to address social and economic consequences in high density foreclosure areas. Follow the link to read Pat Schneider's  Capital Times story.
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It's worth noting that while the appraiser must not include foreclosures in their mortgage appraisal, home buyers do consider all sales data when calculated their opinion of fair market value. Web sites such as Zillow.com do not discount foreclosures in their market trend and Zestimated Market Values. With that information in hand, the consumer is predisposed to stay away from homes that are priced comparable to relevant recent sales of non-distressed properties. The result is loss of competition. With no competition buyers negotiate in a vacuum and owners who have to sell have no options but to take what is offered. The cost of foreclosures is the burden of people who happen to live in areas of rising foreclosures.

Confidence or Patience, Virtues for the Real Estate Consumer in 2011

Plenty of ink and air time about the economy is given to consumer confidence as if confidence will come charging over the hill to save us from recession or depression. Highly skilled athletes, I think, are some of the most confident people. Still, their confidence doesn't keep them from running head first into disaster from time to time. I wonder if patience might be useful as a necessary virtue and confidence could use its help. Confidence, we could say, was driving the bus when the bubble burst.

Patience allows a home buyer to rise with the tide and roll with the flow of buying a distressed sale (short sale or foreclosure) property. Patience helps the Realtor listen and learn the deepest concerns of their selling clients. Patience keeps home sellers from quitting before the miracle.
As we end 2010, we can say confidently that patience has already served us well. We've patiently weathered the first volleys of the economic storm (their may be more to come) and we've learned and adjusted to the new normal. We let go of what was not realistic (lending practices and double digit appreciation) and accepted the more prudent conservative norms.

Confidence supported by evidence is different than the confidence of wishful or grandiose thinking. Evidence based confidence is powerful when combined with patience. We now know the fundamentals of real estate sales (recent comparable sales, documented evidence of value, top condition, documented income, pre-approval in hand) have to be adheared to in order to achieve positive results. When we employ the fundamentals, we can confidently and patiently navigate the real estate economy. Try to do it with one without the other, and the journey is vicious with uncertainty.

Leaving Some Room to Negotiate

Old habits die hard and so do old ideas about pricing. The world has changed for anyone who wants to  move fbeyond offering a house for sale to collecting a check from a buyer's mortgage lender. There is a power greater than seller expectations and buyer excitement involved and I call that power lender restraint.

In 1988 the Realtor world preached pricing according to sold comparables in order to attract interest and achieve a value supported appraisal. We kept on with that mantra while the system switched gears and appraisals became rubber stamps. Eventually pricing had nothing to do with recent sales and everything to do with pricing according to exagerated asking prices.

We've been operating under the "new" guidelines for long enough to know that correctly priced homes attract attention. Evidence in the Dane County market proves that the buyers come forward and make reasonable offers on homes priced right. . If the asking price is not supported by real good and recent comparable sales your chances of negotiating on an offer are slim to none.

So, why are we leaving room to negotiate? I don't know. There is no negotiating with people who don't submit offers. Yes there are people who, regardless of the evidence, will submit offers that are lower than evidence supported fair market values. Value will always be subjective. However, if the evidence shows that an appraisal for $465,000 is impossible but $450,000 is definite, pricing at $465,000 and leaving room to negotiate is futile. It worked in 2005 but it's as out of style as a leisure suit today.

Our best chance of getting full price is pricing exactly in line with recent sales. Expecting buyer entusiasm for our property to result in substantially more dollars is an unreasonable expectation.

What if? A business plan has a place in a Realtor's life

http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/SERV_STRATPLAN.html

Accidental success, a compelling Hollywood story ingredient, is not as likely as planned endeavors to produce satisfactory results. A story in REALTOR, issue November/December 2010, about an agent who moved from financial services to real estate caught my attention today. Although her results appear impressive, I'm not interested in money she made, what made me pause was the URL http://www.sba.gov/ under the bold paragraph lead: Have a real business plan. Imagine that, the Federal Government as a resource for planning. The irony aside, the idea that smart information could be available for free on the internet made me look.

Whether starting new, starting over, or starting to get more focused, the business plan idea strikes me as brilliant. For 20 some years I planned a little and worked a lot; going where the winds blew and doing what I liked, and sometimes what I didn't like, all in the name of business. Looking back it appears the business planned me and I was a willing servant to the master. It's November 2010, the fall of the year and probably the fall of my career. Today I know enough to know what I do well, and what does me in. I'm making my plan and sticking to it.

The Business Plan Template from the Small Business Administration is eleven pages; not long but it will inspire deep thoughts. The promise is the plan will inspire the writer to tell a compelling story of their business, telling who, what, when, where, how, and why. My guess is "Why?" is not best answered as "Because I want to." When I am finished with this plan, there should be significant logic and discipline injected into the product.

What if I started a journey of business planning? Will I uncover a passion? Will I see what I has been hidden to me? "What if" is what keeps me getting up with the sun.

Price Trends----Going Down

Middleton appears to be weathering the real estate storm as well as any of the communities and neighborhoods that make up the Dane County real estate market. Of the properties that have come on the market since January 1, of this year, 106 have SOLD and 107 are showing a status of ACTIVE. That's a balanced market as I see it. The inventory provides choices for the consumer and the rate of sales suggests a seller has reason to be hopeful. Middleton is a good barometer of the local real estate climate because it has a broad range of housing stock representative of the majority of the communities and neighborhoods in the County.

I was curious to know if prices were holding stable or trending down. Considering it's November, I could make a reasonable guess, but having decided to put numbers to my expectations, I went ahead and did some quick crunching. This is what I think I see:

• Home prices are coming down for owners who are trying to sell
• The typical home owner is going to lower the price over the course of their time on the market at least once
• Below the median price, expect to see owners more active in price reducing
• The lower half of the market changes prices downward about 2 to 1 compared to the upper half
• Owners of higher priced homes are more reluctant to make price changes

I wonder if the reason the above median priced home owners are slow to adjust price has to do with their impression of buyer tendencies? If you believe your house will get looked at regardless of price because the higher qualified buyer is more likely to cross price points in search of the right house, you might hold on to your initial price longer I suppose. The lower priced home owners do accept the price barrier concept. I'm not sure that price barriers doesn't exist in the upper ranges. Except for the super rich, I think price points are considered more than some people might admit. Just an opinion.

In a September 20th blog entry, I noted that Buyer Enticing Pricing does impact time on the market. To accomplish the goal of selling, owners had success by reducing their price after the first thirty days on the market. Each 30 days seems to be a good time to evaluate the results. Once the right price was reached, offers came within 30 days.

If statistics matter to you, keep these facts in mind as you market your house, or as you consider making an offer.






With no limitation on price or listing date, 114 single family, non-condominimium, properties are currently showing a status of ACTIVE, no offer, in the RASCWMLS for the MIddleton High School geographic area. A random selection of 42 properties out of the 114, starting from lowest prices to highest, showed 24 had made at least one price reduction. The average number of price reductions for those that had made at least one is 2.25. There were 40 price changes in the lowest 20 priced homes, and 20 price changes in the 22 highest priced homes of the survey properties. November 3, 2010