Monday, October 29, 2007

Real Estate: A Good Time To Buy?

YES! It's a great time to buy. This is probably the best, pure "Buyer's Market" since WW ll. If you are a buyer in this current "market correction," the sun and stars and planets have aligned themselves... just for you! How so? Read on...
  • You have choices. Lots and lots of inventory, from which to choose. In Flagler County, building lots shot up to the $80-90,000 range and are now available in the $30-40,000 range. Salt water canal lots peaked in the $400-500,000 range and are now in the $200-300,000 range. An "average" 3BR-2BA house was in the $250-300,000 range, but now is more like $150-200,000.
  • No competition. Remember the craziness of 2000-2005? You will likely be the only one on the seller's schedule today.
  • An "offer" is OK. Before, it was often multiple offers and the real question was "how high above the asking price will work?" Not today. Probing the seller with a low offer won't get you thrown out.
  • Time lines are more relaxed. Look at a few homes and talk about your needs and wants. Proceed at a normal pace and leave the Valium at home.
  • Due diligence is again part of the process. Get your inspections done. Get an appraisal (even if you are a cash buyer). At one point, these contingencies were sometimes ignored to get a leg up on the other bidders.
  • Builders have lots of specs... and are competing. The builders are actually the re-seller's nightmare right now. They have deeper pockets and can weather the storm longer than Joe and Mary Seller. The builder's house at $195,000 today was what the speculator bought in 2006 for $249,000... and tried (unsuccessfully) to flip for $295,000.
  • Sellers will fix stuff. Many purchasers in the crazy years would be forced to forgo repairs, in order to beat out a competitor. Even the bank-owned sales today have wiggle room. They will tell you it's an "As Is" sale, but when your inspection reveals repair issues, the bank will often come off the price a bit.
  • Few investors to compete against. And no speculators at all. Lots of mortgage fraud there. They'd sign the bank's document to say it would be "owner occupied" (to get the better interest rate)... but then it would be put on the rental market.
  • Financing is "real" again. I love what one agent, Paul Pastore from RE/MAX Achievers in Phoenix, AZ, said: "The wink, wink, zero down, no doc, adjustable, 3.5%, sub-prime, no payments first six months, hybrid" loans are gone. Fixed rates are back, as are VA/FHA and regional loans for military, police, fire, nurses, teachers, etc. Good stuff.
  • Location-Location-Location is doable again. No more living in Georgia and working in Florida. Homes are once again more affordable... where you need them to be.
  • Yeah... it's a great time to buy real estate:-)
  • (Thank you to Paul Pastore, see above reference, for his original article on this same subject)

Thursday, October 25, 2007

One Chance For A First Impression

Sellers: Assuming you have priced your property with your head, not your heart - "Image is Everything"

I had some serious buyers here in Palm Coast this week. They had sold their home in Massachusetts and had cash in hand. They took a big hit on their sale and were looking for a bargain on this end. They had done a lot of homework on the Internet and had really appreciated the website we gave them to do their searching: I'll put in a shameless plug here. When it comes to national websites, blows them all away. (A recent comparison showed that the RE/MAX sites were more productive than the sites of Century 21, Coldwell Banker, and Watson... combined!) I can only guess that comes from the brand recognition and national advertising campaign, where RE/MAX spends more than all the major brands combined - where it counts - on national prime time TV. That big red, white, and blue RE/MAX hot air balloon is powerful stuff.

  • We did a more focused search when they got here and we found a whopping 80% of what fit their criteria was up for "short sale." (That % includes all the ridiculous efforts on agent's parts to "hide" the fact that it's a short sale property). Come on - it is what it is. Short sales are fine for investor buyers... or for those who have time on their hands, but these folks were living in a motel and needed a quick sale.
  • Here was a great question they asked (pay attention, sellers): "Why are prices all over the board for basically the same type house?" (3 or 4 Bedrooms, 2 car garage, 1600-1900 sq. ft., built since 2002, no pool, no water frontage, shingle roof, no gated community... you know - just a nice, average smaller home in a nice Palm Coast area). "What does it mean to see a range of between $135,000 - $299,000 for very similar homes?" What I told them is this: There are really two MLS's... One is where sellers are living in a mid-2005 fantasy land, where they say things like, "We don't want to give our house away" and "If it's meant to be, it will happen" and "If you'd just run more ads, people would buy it" and "There's a buyer for every home" and "Our house is better than the rest because......" The other MLS is where the realists live - the ones who understand the market and have let reason replace their anger. (This MLS, by the way, is the one where homes actually sell).
  • OK, so we get out there to look. Wow... Wow... And "wow" again. Every lawn needed to be cut. All the bushes needed trimming. Every bed needed weeding and mulching. Every palm tree needed the dead, brown fronds cut. Every carpet needed shampooing. And how do you effectively show a home with no lights? And sellers ("Bank owned" property included), is it really cost-effective to leave the A/C off in Florida, so mold and mildew can have a field day?
  • Bottom line for today's Blog? As agents, we have a responsibility to our sellers. It's called "brutal honesty." If they really need to sell, tell them where to price it and how to present it to the buyer. Sellers are in shock and are looking for strong, experienced, confident agents to take them by the hand and lead them through this mess. If they don't need to sell, advise them to get off the market and wait a year or two.

Sunday, October 7, 2007

"Things I've Learned From a Ferry"

Mike Ferry - An amazing real estate trainer with a consistent message. "Regardless of market conditions, or the latest technology trend" says Mike, "you've simply got to run your business on purpose." He knows that most agents "let the business happen to them." His mantra for years has been: 1. Run it like a business. 2. Set aggressive goals and write a plan to achieve them. 3. Work your plan and seek accountability to keep you on track. "After all," he asks, "if you don't know where you're going... How will you know when you get there?"
It was 1991... and most of the country was deep into a "real estate market correction," similar to the fun we are now experiencing... Sagging prices, soaring inventory, angry sellers, predatory buyers... and befuddled real estate agents. After twenty years in the Army, I had been enjoying a successful and prosperous "second career" as a real estate sales agent, since 1986. I was an agent with a RE/MAX office in Fairfax, VA, after mourning the bankruptcy of the company I had cut my teeth on (Mount Vernon Realty). Going back to sales, after two years as an office sales manager, was a freefall experience. What had happened to the market? Why wasn't I selling "lots of houses" like I had before the dip? It seemed that my "smile and magnetic personality" were no longer enough to get signatures on dotted lines. That's when my friend, Gary, suggested that we go to Atlanta to see a West Coast real estate trainer, named Mike Ferry ( "What the heck", I thought, "Atlanta has some great restaurants..."
So we get there - and on Day One - I get my mind expanded. Now I thought I was pretty good. I had sold fifty-two houses the year before... that's "one a week," for goodness sake. My income was quadruple what I had earned as an Army Major at the Pentagon. I thought I'd done OK. Then this fellow, Mike Ferry, in his irreverently humorous style... starts to unpeel the onion. There were about 150 of us there and most were "devotees" of Mike's training methods. A good percentage of the folks there had accomplished more sales than me. Way more. It was humbling... and energizing.
I've tried a lot of real estate ideas through the past 22 years. Gone to see a lot of trainers, too. Many of them are worth listening to and all have at least one "nugget" worth hanging on to. BUT, when things get tough and the market has me in a headlock, I always go back to Mike. Admittedly, he says nearly none of his ideas are original. His forte - his genious, really - is researching, reading, interviewing, testing, compiling, and sorting - the ideas of other successful people. His delivery is unique. Sort of a combination of Billy Graham and Don Rickles. Irreverent and unapologetic... yet truthful and uplifting. If you have thin skin, you'll not do well at one of his Superstar Retreats or Productivity Workshops. If, however, you can "stand the heat," you'll find yourself "in the right kitchen" ... with an Emeril-esque chef.
Here are some of the "things I've learned from a Ferry." 1. When market downturns happen, be glad. We can’t control the market, but we can control how we react to it. It’s a really skillful agent’s time to shine. Take advantage of the market chaos, by: · Sharpening your skills> These tough times require tough agents, who really know what they are doing. Polish your presentation and negotiation abilities. Take classes. Read… a lot! · Stick to a plan> “A sign, a lockbox, and an ad” simply won’t work. Be specific with customers and tell them how you work. Take them on a backstage tour of your business plan. · Help clients remain level-headed> (My motto from the start has been: “Be the calm… in the midst of the chaos.”)… Mike said this—and I have used it often—”Sellers and buyers… even the tough ones… really want a strong, experienced agent to take them by the hand and lead them through the minefield of the transaction.” · Adapt quickly> Stay ahead of the curve. Devour your market statistics and observe trends. Help customers make decisions before they get caught in an untenable situation. · Be flexible> Make sure to see the transaction through the eyes of all the principles and participants. Be adaptable to changing requirements. · Keep an open mind> The “hot technique” of today may evaporate tomorrow. Selling when the market is brisk is easy. But try satisfying a seller while a million foreclosures are flooding the market and driving prices down. Now that’s a challenge! 2. Work from a Business Plan. Realtors, as self-employed “independent contractors,” must embrace this discipline. Oh, and on that "independent contractor thing?" Fughedaboudit... Set quotas for yourself and enjoy the benefits of accountability. (Mike's organization, by the way, provides top-notch business coaching services.) 3. Establish Goals. Without them, everything else reduces to confusion. Ask critical questions: · What do I really want? · How badly do I want it? · What price am I willing to pay to get it?
4. Look for the benefits which emerge, as markets change. In this current dynamic, for example, builders want agents back... commissions are challenged less... unskilled agents leave the industry... AND seller's really need good agents to get them sold.
5. And last, but certainly not least, don't neglect the mental side of the business. A wise man wrote that "we become what we think about." Mike, in his glib way, will look at his audience and say, "Whether you think you can... or you can't... you're probably right." "So... what will you choose?" Good stuff, yes?

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