Real Estate Marketing Forum

How Fannie / Freddie Reform Will Affect You (Soon)

This interesting article from Wise Bread's Janey Osterlind concerning the status of the goverment reform of lending giants Fannie and Freddie is telling me something:  It's time to act  if you're thinking of buying anytime soon!

Taxes on Home Sales

Many of you have been emailing me articles about dumped concerning being charged tax when you sell your home. This article from the MetroTex Association of Realtors should assuage those worries:  Home Sale Tax Truth

Solid Advice for Fighting Low Appraisals

Sara Benson provides Solid Advice on Fighting Low Appraisals: http://bit.ly/9tjq3a

Seth and the Art of Buying Real Estate

Seth Godin is one of my favorite bloggers, as I have said many, many times over the last several years.  I'm beginning to think that Seth has had one or more bad experiences with real estate brokers over the years, because it seems to me that each post he writes about real estate has a little bit of an edge to it.  But, Seth's crafty.  I can't really point to anything directly.  He's built in plausible deniability.

In his latest real estate article, there are some truths, some half-truths, and some, shall we say, misinterpretations.  First, let me deal with the obvious point that I, as a real estate broker, would differ with: number nine.  Seth, I can't really speak to the laws of agency in New York, but in Texas, the first piece of paper an agent has to get signed, at the first substantive conversation about real estate, is a document called:  Information about Brokerage Services.  This document spells out clearly that a broker (all listings are considered to belong to the sponsoring broker here, as opposed to a particular agent) can represent the seller or the buyer, or can represent both in house through a process called intermediary.  Intermediary would mean that both sides of a deal is being handled in-house.  Intermediary requires the broker to appoint two agents - one to represent the interests of the buyer, and one to represent the interests of the seller, with the broker becoming the intermediary.  Personally, I'm not a fan of intermediary, but it does happen.

Seth, I agree that no man can serve two masters, however, in our agency we clearly tell everyone involved who we represent, up front.  When an agent walks into my office to ask me a question about a particular deal, the first question I ask is, "Who are we representing?"  This clears up a lot, because we are legally bound to represent the interests of our client, just like an attorney.  (Seth, why don't you pick on attorneys more often?) 

Bottom line on number nine:  you can't pretend that our "marketing" leads innocent lambs to slaughter.  We are doing our job, and buyers buy houses because they want them, and agree to pay the price because that's what they have to pay to get the seller to agree to sell the house to them!  We can talk all day about why people buy houses, but very little of it has to do with merely obtaining shelter from the cold, wind and rain.  (See Seth's point number five.)

Now, I believe a lot of his other points are good ones, and deserve thoughtful reflection, except number eight.  Nobody has a guarantee of being able to make a big house payment, even one with a "steady job."  Boy, didn't this last recession prove that?  What's the solution?:  put more money down, and keep the payments low enough that you can survive any lull in income.  Or, pay 100% down.  But then that puts you in a neighborhood where you may not want to live, and that brings us back to...number five!

Seth, you of all people should understand that we all buy emotionally and justify rationally.  The idea that a home is a great investment is how we as buyers rationalize the purchase we are making and that rationale applies not only to homes, but everything else we buy, like books on marketing, which could actually be more entertaining than factual, but we rationalize that the purchase is really an investment for our business. 

 

 

Shadow Inventory: What Is It?

Not Yet on the Market

There has been a lot of talk lately about "shadow inventory" in the financial community.  This is the term applied to the current supply of homes held by banks and other lending institutions where the homeowners are behind on their mortgages, or that have been foreclosed on, but are not yet on the market.  There are a lot of fears surrounding "shadow inventories" and the perceived potential for a "flood" of foreclosure inventory being brought to market, creating a dampening effect on the housing recovery.  

I found three articles which debate the point, but I must admit I'm more personally aligned with this one by Larry Nusbaum, a resolution assistance contractor for the FDIC.  More pessimistic views can be found in these two articles found in the Wall Street Journal and iStockAnalyst.com.  Admittedly, my optimism may have a lot to do with where I live.

"The problem is largely concentrated in Arizona, California, Florida and Nevada", WSJ.com

If you are in one of these states, the shadow inventory threat would certainly seem far more credible than for other major markets around the country.  In Texas, for instance, we are seeing inexpensive inventory snapped up in a matter of days by investors.  I even saw one last week where the investor buyer wrote a full price offer for a property that had only been on the market two hours, and delivered his offer with a 100% earnest money check.  He got the property, but it turns out there were eight other offers written and delivered to the selling agent within a 24 hour period from the time it went on the market.  

What does that mean to me, today?

If you currently have your home for sale, you still need to be aggressive in getting it sold.  While we are seeing improvements in most price ranges over the first two months of 2010, there is still a surplus of inventory, and a smaller pool of buyers due to increased lending restrictions and continued unemployment.  Bearing all that in mind, my goal is to be the next home that sells in my subdivision.

 

Home Buyer Tax Credit Extended / Expanded

Legislation to extend the Home Buyer Tax Credit has been adopted and sent to President Obama for approval, who is expected to sign it into law.  The extension was part of legislation to extend unemployment benefits.  The bill extends the current first time home buyer tax credit and expands to current homeowners who have been in their current residence for at least five years.

Click here for a summary of the extension and expansion of the Home Buyer Tax Credit:  Download Homebuyer Tax Credit

Be Aware of Financing Limits When Pricing Your Home

In North Texas, we have been affected by housing inventories just like the rest of the country, only not as severe as many areas.  When counseling our sellers as to setting price, we've found it very important to price in as close a proximity to loan limits as possible.  What do I mean by that?  Well, in North Texas, the current loan limit for FHA is $271,000. 

Why is that important today?  First off, FHA offers very low interest rates with minimum down payment(3.5%), and credit scores can generally be lower than that required for most conventional loan products today.  In fact, we are seeing a 6X growth in the number of FHA loans this year versus last.  So, the highest you can price a home that would require no more than the minimum down payment would be right at $280,800.  Any prices higher than that are going to require more than the minimum down payment.  The farther you get away from FHA loan limits, the smaller the potential pool of buyers.  It has more impact than you think... And, oh by the way, the $8000 first time home buyer tax credit goes away November 30th!

Overpricing Your Home for Sale: Another Opinion

In our business, there's a saying that all the exposure (meaning marketing) in the world won't sell an overpriced home.  People are savvy today, it's a buyer's market, etc., etc., etc.  You've heard it all, recently.  One of the best articles I've read to illustrate this point lately was written by Elizabeth Weintraub, a contributor to About.com.  Her article, entitled "The Worst Home Selling Mistake" are words that are echoed in the halls of real estate brokerages everywhere - in the best and worst of times, by the way.

I met with a builder recently to ask him to reduce the price of his listing with us.  His response was about par with most home sellers when confronted with this request:  "If selling my home is just about price, why do I need you?!"  Good point.  My first response to him was, "Maybe you need me to tell you the truth."  Sounds bold, perhaps, but I stuck by that answer because I believed it.  Home builders, and home owners everywhere are proud of their homes and very, very attached to them and the value they perceive that home to have.  Therefore, by human nature, it makes it almost impossible for them to see market value clearly in my opinion. It's their home, for goodness sake!  They should be proud of it.  And, oh by the way, they need the money! 

So, where do good agents make a difference?  First off, and most importantly, they tell you the truth when setting price.  (Mary makes a great point about who really sets the price - the market.)  When properly priced, a good marketing plan works well.  Why?  Because people are looking for homes in that price range!  If improperly priced, you might as well be invisible.  Believe it or not, this can be by as little as one dollar!  It is far better in my opinion to not put your home on the market at all, than to put it out there and "just try for a while" to get an unrealistic price.  Now, not every seller has a choice in whether to sell or not, and that's when choices get hard.  By the way, that's why so many foreclosures are happening right now.  They can't sell.  Or, can they?  Many, many lenders are accepting short sales as opposed to outright foreclosures.  Make sure your agent can help you if you are in this position.  It's not easy, but it's worth the effort. 

Home staging, advertising, broker opens, open houses, internet marketing - all of these are important and do make a difference in eventual sales price, and should be carefully orchestrated by your agent.  But, there is a magic point in home pricing that will allow you to truly know the market value of your home, and that has to do with showings.  Realtor driven showings tell the real story.  I want to leave you with a rule of thumb we use here - first showings are function of price and second showings are an indicator of your home versus the competition.  We evaluate weekly the number and types of showings going on in our listings.  We're looking for 15 realtor driven showings in a given 30 day period, with 2-4 of those being second showings.  If we get that, we're looking for at least one or two offers, soon.  For more in-depth questions about this formula, and what it indicates, email me, or give me a call.

Calm Your Real Estate Panic!

Visit msnbc.com for Breaking News, World News, and News about the Economy

Great advice from Barbara Corcoran to calm your real estate nerves in this market!

5 Biggest Real Estate Myths

Visit msnbc.com for Breaking News, World News, and News about the Economy

The 5 Biggest Real Estate Myths (thank you Barbara Corcoran!):

1.  Sellers are desperate

2.  Don't buy before prices have bottomed

3.  You can't buy a home unless you have 20% down

4.  Now is the worst time to sell

5.  Before you refinance, shop around