Uniform Appraisal Dataset. Give 'em what they want.

Uniform Appraisal Dataset (UAD) is what Fannie Mae/Freddie Mac use to standardize appraisal data. Effective six days ago, some not so minor changes were added to the UAD.  A cynical thought comes to mind, but I'll supress it for now because, there might be some help for the process with some of the changes. Let's look at the new rules:

1. Information that is required but not available on the local MLS will have to be gotten from Realtors and lenders who are not involved in the transaction. For example: for compiling comparable property data, the View Factor and Financial Assistance are not on the MLS. Same for Quality of Construction.  Expect this to slow the turn around time.
2. Finished rooms below grade: This could be favorable. On the new appraisal form, the appraiser will include  BEDROOMs. On the previous form, a room in the lower level used as a bedroom was not counted as a bedroom, but as a room.
3. Condition of the property will now be rated. A big help for homes that are in significantly great condition compared to the house thats similar in size, amenities, area, but in a sorry state. Of course that sword cuts both ways.
4. Quality ratings are new and serve a purpose. Let's face it, some homes in subdivisions built in the the last 10 years are of incredible quality compared to others of greater size. Also, we all know great quality when we see it, but we can't always see it. Just because the brand of sink is well known, doesn't mean the windows don't leak, and the house doesn't suck energy. I'll be interested to see the disputes over this rating.

In bold letters the memo attached to Standardized Exhibits reads: The underwriter is still responsible to determine that there is an acceptable appraisal with value support.

My first impression is that we Realtors are going to want to attach documents to address these UAD changes. The better the information the appraiser has to put into the report, the better information the underwriter has to make their opinion decision. In the past a furnace was just a furnace, and a shower was just a shower. Now they may be the difference between making the value and not.

Wexford Village--A Balanced Market

A balanced market on Madison's West Side is Wexford Village. The neighborhood developed almost 40 years ago and expanded about 20 years ago is showing its ability to remain a highly attractive destination. Sale prices range from $250,000 to $328,000 with out of the ordinary sales on both ends--one at $205,000 and another at $375,000. 

The average last asking price for homes sold in Wexford is $302,150. The average sale price of the 8 sold homes is $290,000.  The 8 folks who are still looking for buyers are averaging an asking price of $322,048 and that includes two homes at $385,000.

The eight sold this year and eight for sale with homes priced from low $200's to upper $300's looks like a healthy mix of home opportunities.

Lake Mendota Drive to 1845 Baker---- 66 feet on Lake Mendota

When we open this modest home to the public on Friday I think we will find there are people who will be interested in considering making an offer. There is nothing that has to be done, but plenty of opportunity to remodel from the minor to the extensive renovation. I'm not seeing this as a "tear down", but more likely a renovation opportunity. The 1800 sq ft foot print is well suited for open space facing the lake, privacy, and spacious bedrooms. A two car garage is already in place.

We arrived at the reasonable price of $575,000 by concluding the cost of getting a lot on Lake Mendota is about $400,000. Our 66 ft wide lot is definitely more appealing than the narrower lots on Middleton Beach Road, and far superior to any lot on Spring Harbor. We estimate the land value to be about $450,000. We gave the house a value of $125,000.

I'll have a summary of the work the owners contracted for to prepare the house for showings. Let me know if you want to be one of the first to visit. We can set up a showing for Friday, Saturday, or Sunday. Open house is Sunday from 1:00 to 3:00.

Tom 332-8331

2666 Norwich St 1, Fitchburg

2666 Norwich St 1, Fitchburg: "$25,000 in improvements since 2010: Renewal by Andersen Doors & Windows. New furnace. New A/C. Tile, vanities, kitchen counters & flooring. Zero Condo fees! Spacious main bedroom with extra closets. Recreation room in lower level has a full bath. Dining Room opens to a deck & fabulous yard with room for garden and play. All appliances, even front loading wash machine & dryer & butcher's block kitchen island included. Quick closing possible."

Staying in the Verona and Fitchburg School District is affordable and easy by owning this Townhouse. Quiet location and close to the Elementary and Middle School Campus.

Middleton Schools Homes With Acres Selling This Year

A home in the country is well within the reach of Dane County home buyers again. Six years ago developer land grabs pushed the cost of dirt sky high and builder prices were at a premium. The new economy has forced developers to release their grip on land, builders have left the industry, material prices have come down, and building contract prices have adjusted to demand. On top of that, the existing homes built in the last dozen years are coming on the market and their prices are favorable.

Seven homes, priced between $599,900 and a million dollars, in rural Dane County NW,  have closed in the Middleton High School district according to the RASCW MLS. Every neighborhood I look at shows just about the same results: Owners are accepting offers in about 50 days after getting the price close to where buyer's appear to be waiting. The patience of the owners is also about the same everywhere. Six, seven, eight months pass before owners make that last necessary price change. Are owners letting go, or just losing their grip?

Maybe the reasons owners start at a price that doesn't get the attention of the buyers are diverse, but the results are consistent: When you count time on the market in terms of months, statistics are showing you may be likely to end up accepting an offer below 90% of your initial asking price. The seven homes closed this year sold at 82% of their initial asking price. 94% of their last price means the owners are down an average of over a $100,000 from their initial price.

OK, these are averages and some locations are just better than others. It's not accurate to say "You home is worth X% of this price because it has been on the market X months." Of course that's silly. Here's my suggestion as to what might make sense: If you started the process of selling 60 days ago, with a price which was supported by recent sales at that time, and you are still on the market, a price change could be in order. How much? It depends. Look at the recent sales...don't hung up on the differences in your home. Agree that the homes are different and try to focus on what people are getting in the price range. If you thought your home was worth $650,000 and other homes between $550,000 and $750,000 are selling for an average of $25,000 less than the last asking price, but $75,000 less than the first, you probably will have more activity by t moving aggressively toward that $75,000 number than you will by creeping nearer the $25,000 drop.

 My point is this: The best we can do is price according to sales at a given time. Then the buyers who are out there look at homes and judge them based on their criteria. While we are on the market, other homes are selling. If the new sales are lower than the old sales, and we are not getting an offer, it is reasonable to expect that we will not get an offer at the price we are at and we should move accordingly. The model of pricing I believe in works this way: If we are targeting the right buyer and the right buyer is not making an offer, we have to change the price to appeal to the buyer. If we are targeting the wrong, buyer we can change the marketing. Does that make sense? If not, we should talk. If yes, we should definitely talk.

If I Knew Then What I Know Now...

"If I could turn back time...You walked out that door I swore that I didn't care
But I lost everything darling then and there..."  Well like Cher, you can't turn back the hands of time, but you haven't really lost everything. Equity is only money, and if you think about it, equity isn't money either; more like ink in the shape of numbers on paper. Oh, sure we had clung to those numbers. Like a King in his counting house we counted out our money. "Saving" was easy. Just wait a few months and change the numbers on the spread sheet by a few percentage points.

Since 1989 I've talked to people who say this about real estate: "If I knew then what I know now...." Some years they'd be buyers, some years they'd be sellers, and some years were right to be a renter. We probably did know more than we admit, we just didn't believe what we were seeing and hearing. Today we have a chance to redeem ourselves using a new found trust in the evidence. Before you enter the real estate market as a home seller, know this: HOMES SELL IN LESS THAN 60 DAYS WHEN  PROPERLY PRICED.

I'm telling you today what you need to know to avoid the implications of taking an action without being aware of what's happening. You can look in any neighborhood in Dane County and find the evidence to support this statement: Price according to sales in the last six months and you will negotiate an offer in 60 days or less. Price according to what you wish for and you will stay on the market until you adjust to the price supported by recent sales. Plan on this: a home properly priced will sell for 95-97% of the asking price in less than 60 days. Miss the price and you may take more than six months to get 89-94% of your first price...after a long time trying.

Give or take a few days and percents, I will bet you a Krispy Kreme glazed doughnut that the numbers for January through June will be consistent in any market area in Dane County.

McFarland over $299,900:

• Avg First Price: $386,117
• Avg Last Price: $378,783
• Avg Sold Price: $362,083
• Sale price as Percent of last asking Price: 96%.  Sale price as percent of first price: 94%
• Cumulative days on the market on average: 163 Days.
• Average Days on the market after last price change: 53

Blackhawk Neighborhood, Middleton Schools:

• Avg First Price: $724,900
• Avg Last Price: $609,780
• Avg Sold Price: $584,374
• Sale price as Percent of last asking Price: 95%.  Sale price as percent of first price: 87%
• Cumulative days on the market on average: 289 Days.
• Average Days on the market after last price change: 50

Apparently the people in Blackhawk and McFarland who negotiate accepted offers have one difference--Blackhawk owners are more patient; they held on for nearly eight months and the McFarland owners got down to their proper price in half that time.

If you follow this concept of pricing where the evidence supports and not at what you hope for, you will get where you want to be with a lot less time invested. In fact, you will also be able to say "I'm glad I knew what I knew when I needed to know what I know now." You don't have to hire me to use this strategy, but I do like my Krispy Kreme HOT NOW.

Best wishes--no luck involved, this is just math.

By Necessity We're All Learning to Rebuild a Better Real Estate Community

"Necessity is the mother of invention." Maybe Plato said it first, but we're living it today. Difficult situations have inspired us to apply solutions which are sometimes smart, sometimes ingenious, at times unique and creative.  Usually these solutions are not all together new, and sometimes they are neither smart nor effective. But, we are living and learning and moving forward regardless of the results of the lever pulling behind the curtain of Oz.

A new consumer of real estate and real estate services is emerging. Ambiguity is flushed out by inquisitive consumers, service providers, and underwriters. Owners are demanding better evidence of a buyer's ability to consummate a purchase and buyers are taking more time to consider the implications of a contract before committing. That's wise, because the lenders and sellers are holding buyers accountable right up to closing.

The service is changing too. As Realtors and mortgage lenders who can't make a profit in their business leave the industry, they make room for enthusiastic business minded people who come in with their expectations in check. Real estate firms have adjusted their training/coaching to develop talented people to be effective Realtors in the new economy. These new licensees know no other market. They aren't burdened by the "old ideas" and start fresh learning the basic principles of highly effective business models.  Maybe by the end of this year we will see that 20+% of the licensees terminate their membership in the National Association of Realtors in the last 24 months. That's good for the consumer. No industry is capable of providing exceptional service with people who are one foot out the door.... or further. The mortgage lenders who didn't give up their day jobs are out and the skilled, responsible people are again dominating our market. These are not times for order takers. Smart people who solve challenges, without creating them, are in charge.

Everyone in the process, buyers, sellers, lenders, Realtors, title companies,.. everyone, has learned and trimmed of the fat of recklessness; and the process is healthy. Back to what it was? Definitely not. Will it get back to what it once was? Hopefully not. Those of us who have been in real estate for 15, 20 and 30 years owe it to the community to rebuild a better real estate community before we leave.