GET REAL....
Do I have your attention? Time to stop playing around and accept that the paradigm has shifted (and not in your favor). If you own a home that you THINK is valued over $450,000 you are going to have a hard time finding a Buyer.
Happy Valley has been wildly over-built in that price range. We had a modest amount of Speculator activity in new construction that is now crashing (read - selling for a LOSS). Massive amounts of ARM's are adjusting up and property tax bills are coming due. Pre-foreclosure activity is sky-rocketing and we are just at the beginning.
Here are two facts that the industry does not want you to know:
1) Prices in Happy Valley are FALLING (retreating to 2005 values), not increasing.
2) Time on market is closer to 180 days (and growing), not the 60 days reported.
The vast majority of Oregonians cannot afford a home over $450,000. If you live in Happy Valley could you afford your home TODAY based on current rates and what you think the house is worth? Tricky mortgages are gone and it is now time to pay the Piper.
OK...so now that we understand each other...what to do??
1) Hire an experienced LOCAL Realtor who you believe will stay in the business during this downturn. Look for real education (Bachelors and/or MBA). Don't be baffled by Industry designations like; GRI, CRS and e-PRO. Often times the underlying educational base is a GED.
* Price your house correctly
2) Forget everything you think you know about the value of your home. Take a hard look at the sales comps from the previous few months. Ask your Realtor to find out what other sales incentives had to be offered. Be prepared to list your home for MUCH less than you think. If the Realtor you are interviewing tells you that they can get your more...run...very far away. They are LYING. Your listing price must reflect market reality...or it will sit.
* Price your house correctly
3) Be prepared to offer incentives to the Realtor who represents the Buyer. These Realtors have literally hundreds of homes to chose from, and often a short period of time to show their Buyers. No realistic way to show every house on the market. Offer incentives to get them to show your home. Try a BAC of 3% or higher.
* Price your house correctly
4) Make yourself easy to do business with. Properly clean, prepare and stage your home. Take care of all the deferred maintenance. Proactively provide all pertinent info to potential Buyers.
* Price your house correctly
The big thing right now is for Realtors to scream in their listings that their Seller is "MOTIVATED!". Yet, when you look at the listing the house is priced too high, the commission offered is below industry standard and other aspects of the listing make it seem that the Seller wants it done their way. Here is my advice...do not say you are motivated...SHOW you are motivated. Price, price, price...3% BAC or more, house prepped for sale. That is how you show the market you are motivated.
Even in a down market homes sell. If you want yours to be one that does you must take some pretty basic steps.
MY OVERALL ADVICE IS TO NOT SELL FOR THE FORESEEABLE FUTURE IF YOU DO NOT HAVE TO. TOO MUCH INVENTORY CHASING TOO FEW BUYERS. IF YOU CAN WAIT OUT THE DOWNTURN, DO IT.
If you MUST sell (relocation, job loss, divorce, etc) get aggressive early. Don't trip over a dollar to pick up a dime!
Friday, September 21, 2007
What should Buyers do?
First you should know that you are in TOTAL control, but do not let it go to your head...
Before you enter the market you need two Allies: A Lender and a Realtor
Choosing a Lender:
1) Get FULLY qualified with an EXPERIENCED Lender who will explain all of your lending options. Most of the bad-apples are now out of the business, but some are hanging on. Find a Lender who understands the market, has been around a down-market and understands finance (yes, many do not know much about finance, taxes, etc.)
2) Meet with your Lender many months before you wish to buy so you can work through any credit glitches, build up proper cash reserves and ensure that your application is clean.
3) Be prepared to provide a pre-approval letter with much more detail than in the past. Sellers want to see credit scores, verify funds to close and know that your program has been approved.
4) Do NOT walk out of your Lender's office with questions. If you are not sure about something...ask!
Choosing a Realtor:
Over the next six months thousands of Realtors will be getting out of the business. I know some who went broke this Summer listing homes that did not sell. One had 10 listings and was spending over $3,000 a month in marketing (not including her time). She sold NOTHING and is now out of money and out of Real Estate.
1) Chose a Realtor who knows the area in which you wish to buy. They will normally know of transaction details of previous sales that can help you negotiate your best deal. They will also know of homes that are coming onto the market, but have not yet been listed.
2) Chose a Realtor who is committed to the business. Remember, most Realtors have had to take second jobs or are looking to. Make sure the one you chose isn't using you as one last paycheck before bailing.
3) Chose a Realtor with REAL education. Don't be fooled by the GED carrying Realtor who baffles you with Industry designations like; GRI, e-PRO or CRS. Look for a Realtor who holds a bachelors degree and/or an MBA.
4) Finally, chose a Realtor who is not afraid to tell you the truth. Don't hire a Yes-person. They are being compensated for their ability to navigate your transaction and look out for your interests. The good ones will tell you things that you may not want to hear, but NEED to hear...listen.
*One more no-no...do not hire a Realtor solely because you were 8th grade friends or its your second cousin twice removed. Hire a Realtor for their competence.
With your trusted Lender and Realtor on your team you are now ready to hit the market:
1) Take your time. There is plenty of inventory to chose from and very little competition.
2) Negotiate, but be fair. Sellers are about to take a beating...no need to rub it in.
3) Just before writing up your offer, take a breather and really think about it.
4) Once you have an accepted offer, be very thorough with your inspections and due diligence.
Go out there and find your best deal!
Before you enter the market you need two Allies: A Lender and a Realtor
Choosing a Lender:
1) Get FULLY qualified with an EXPERIENCED Lender who will explain all of your lending options. Most of the bad-apples are now out of the business, but some are hanging on. Find a Lender who understands the market, has been around a down-market and understands finance (yes, many do not know much about finance, taxes, etc.)
2) Meet with your Lender many months before you wish to buy so you can work through any credit glitches, build up proper cash reserves and ensure that your application is clean.
3) Be prepared to provide a pre-approval letter with much more detail than in the past. Sellers want to see credit scores, verify funds to close and know that your program has been approved.
4) Do NOT walk out of your Lender's office with questions. If you are not sure about something...ask!
Choosing a Realtor:
Over the next six months thousands of Realtors will be getting out of the business. I know some who went broke this Summer listing homes that did not sell. One had 10 listings and was spending over $3,000 a month in marketing (not including her time). She sold NOTHING and is now out of money and out of Real Estate.
1) Chose a Realtor who knows the area in which you wish to buy. They will normally know of transaction details of previous sales that can help you negotiate your best deal. They will also know of homes that are coming onto the market, but have not yet been listed.
2) Chose a Realtor who is committed to the business. Remember, most Realtors have had to take second jobs or are looking to. Make sure the one you chose isn't using you as one last paycheck before bailing.
3) Chose a Realtor with REAL education. Don't be fooled by the GED carrying Realtor who baffles you with Industry designations like; GRI, e-PRO or CRS. Look for a Realtor who holds a bachelors degree and/or an MBA.
4) Finally, chose a Realtor who is not afraid to tell you the truth. Don't hire a Yes-person. They are being compensated for their ability to navigate your transaction and look out for your interests. The good ones will tell you things that you may not want to hear, but NEED to hear...listen.
*One more no-no...do not hire a Realtor solely because you were 8th grade friends or its your second cousin twice removed. Hire a Realtor for their competence.
With your trusted Lender and Realtor on your team you are now ready to hit the market:
1) Take your time. There is plenty of inventory to chose from and very little competition.
2) Negotiate, but be fair. Sellers are about to take a beating...no need to rub it in.
3) Just before writing up your offer, take a breather and really think about it.
4) Once you have an accepted offer, be very thorough with your inspections and due diligence.
Go out there and find your best deal!
Summer Season Summary
Well...it was UGLY....
As expected there was too much inventory chasing too few Buyers, a couple of Builders facing defaults from their Lenders, the mortgage melt-down GREATLY reduced the available mortgage products and finally Jumbo Mortgage Rates spiked in early August making loans over $417,000 much more expensive than they had been previously.
So...what was the outcome? Only a fraction of those who wanted to sell this Summer did...and those that were lucky enough to get a Buyer had to reduce asking price and increase incentives. I won't boar you with the numbers, but there are STILL 249 homes at $450,000 or higher still listed for sale in Happy Valley (not including FSBO). The Summer selling season going back four full months only saw 58 homes transact above $450,000.
As I drilled down into the numbers it was apparent that actual sales prices were at or below 2005 prices...and with such a huge supply of homes still on the market, prices are continuing to decline.
I saw multiple homes in Eagle Landing and Kensington Heights sell for LESS than they originally did two years ago.
What do I see for the Fall/Winter Season? The next six months will be far WORSE than the Summer. Still way too much inventory, hundreds of ARM's resetting and the rate of defaults in our area is escalating. Buyers are becoming very demanding and no one is willing to pay anywhere close to full price. Hold on for a long ride down...
As expected there was too much inventory chasing too few Buyers, a couple of Builders facing defaults from their Lenders, the mortgage melt-down GREATLY reduced the available mortgage products and finally Jumbo Mortgage Rates spiked in early August making loans over $417,000 much more expensive than they had been previously.
So...what was the outcome? Only a fraction of those who wanted to sell this Summer did...and those that were lucky enough to get a Buyer had to reduce asking price and increase incentives. I won't boar you with the numbers, but there are STILL 249 homes at $450,000 or higher still listed for sale in Happy Valley (not including FSBO). The Summer selling season going back four full months only saw 58 homes transact above $450,000.
As I drilled down into the numbers it was apparent that actual sales prices were at or below 2005 prices...and with such a huge supply of homes still on the market, prices are continuing to decline.
I saw multiple homes in Eagle Landing and Kensington Heights sell for LESS than they originally did two years ago.
What do I see for the Fall/Winter Season? The next six months will be far WORSE than the Summer. Still way too much inventory, hundreds of ARM's resetting and the rate of defaults in our area is escalating. Buyers are becoming very demanding and no one is willing to pay anywhere close to full price. Hold on for a long ride down...
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