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.

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.

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.

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.

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.

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.

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.