The Return Of Real Estate In Madison, WI

As I am sitting in the waiting room of my financial advisor at Merrill Lynch, I always like reading the latest news and articles of the Wall Street Journal, Harvard Business Review and Fortune Magazine.  This month I chose Fortune.  The headline of the entire magazine is where I got the title for this article.  Shawn Tully writes a very good article talking about all aspects of real estate from mortgage lending, new construction and foreclosures and what all of these pieces not only mean to us as Realtors but what they mean to this market.

Tully starts off talking with a rancher from Texas he knows.  The rancher and home builder, Mike Castleman, states “the talking heads of the world that are down on real estate will hate to hear this, but America needs to build a lot more homes.”  Castleman is the CEO and founder of Metrostudy.  His company analyzes real estate data and new home inventory over the past 30 years.  The key figures he collects are the number of homes that are vacant and for sale in each city and the number of months it takes to sell all of them.  With all of this information, his company can then tell if there is a shortage or surplus of new housing.

In the 41 cities he studies, 78,000 homes are now either vacant and for sale or under construction.   This is ¼ the number of 343,000 homes that were on the market at the peak in 2006.  If market conditions change and normal consumer spending resumes, we will have a shortage.  Castleman believes this is where we are headed and soon.

Consumers are confused due to the over whelming amount of ever contradicting news.  One day it is the best time to purchase real estate and the rates are at historic lows.  The next day, you hear that the market went down 500 points and real estate prices are falling.  What do you believe?  All of it has truth and relevance.  The market, depending on where you live, is the best time to buy to higher inventory levels and historically low prices.  Plus with the mortgage rates as low as they are now, it is cheaper to own than rent!  Karl Case from Case-Shiller Price indices agrees that the housing market is recovering and is in his words “the little engine that could.” 

To truly see where prices and real estate are headed is looking at key fundamentals.  The basic forces that govern the market are the cost of renting versus owning and the level of new construction.  With this view we are heading back to a new market view of an improving market.  Prices have come down 30% nation wide and harder hit areas saw 55% decrease in values.  The American dream declined and possibly was forgotten for many years since the 2006 bubble burst.  A return of that dream will start to decrease inventory, start new home construction and see a rise in pricing.

Mortgage money is available and credit standards are at historic levels as well.  Affordability is also a large piece of the market and confidence returning.  Mark Zandi, chief economist at Moody’s Analytics, has found that homeowners now pay 9.8% of their income in after-tax, tax and insurance payments toward the mortgage each month.  That is down from the 17.2% it was in 2007.  This is so low that he looked and found that this is as low as 1999.

Another factor to look at is renting versus owning.  In 28 of the 54 markets studied, it is now cheaper to own then rent.  Every market is different and that is why Realtors are so important to help their buyers and sellers understand what market they live in and what to expect in the current climate.  Add job growth to this equation and then confidence will start to gain.  If renting is more expensive than owning, the market will start to creep up every so slowly.  Some markets will start to see them move faster due to the shortage of existing homes and new construction.

To wrap this up, there will be return to the market and we are seeing those signs in areas around South Central WI.  Once demand starts to increase, then other sectors will need to ramp up to keep up with demand.  This will naturally drive pricing up.  In order to get a good price on a home, Castleman’s advice is to “Beat the Crowd!”

Short Sales...Why Do They Take So Long??

Is this what you feel like when trying to deal with short sales or foreclosures?  They can be frustrating but the balance of how much you can typically get off the price for a home and the amount of time you wait is worth it most of the time.

Items that can make the process seem like it is taking a long time is the submission process for the listing agent.  They have to gather a lot of information in a short period of time and submit the entire packet in full before the bank will even look at the offer that was submitted.

A buyer must understand that just because the seller of the home accepted their offer, doesn't mean the bank will accept the terms and price of the offer.  They will most likely be renegotiated.  Everything from the bank will also be verbal.  No offers are final unless they are in writing!!  Don't believe that you have an accepted offer until you have the banks signature.

There are a couple of items to consider when looking to purchase a short sale.  Here are a list of 7 questions that you should ask to your agent or the listing agent:

1. How many offers are being “pended?” Would you get the buyer involved if there were 10 offers already being “pended?” It’s up to the buyer.

2. How long has the property been on the market?

3. How many short sale transactions has the Listing Agent completed?

4. What is the average price of the last five traditional listings that have sold in the marketing area?  Why put a buyer through the process of buying a Short Sale property when you could find another property at the same relative price that is a traditional listing?  One of the main attractions of a Short Sale property is the PRICE!

5. How many payments has the seller missed? It takes time to complete these sales, and foreclosure could take place prior to a short sale transaction being settled. It’s important to know how long it takes for a property to be foreclosed on from the time of the first missed payment until the “foreclosure sale.”

6. How many second or “junior mortgages” or liens are on the property? Junior mortgages can be a real deal killer.

7. What’s the contact number for a Home Inspector who can inspect the home on a short notice?

Thank you to Leroy Houser for most of this information!  He is the leading CRS instructor on short sales and foreclosures.

Happy shopping and let me know if you have any further questions about short sales! 

The real estate consumer is not always right?

In today's market whether you are a buyer or seller, the market is ever changing. Whether you are selling your home and the agent you hired didn't give you the actual market value but instead took the price that you want to ask for the home or you are a buyer looking for a deal in this market, hire an agent that is going to not only help you every step of the way, but who will truthfully state the market value and what your options are in this market.

Every market is different and sales can vary from city to city and even neighborhood to neighborhood. Real estate professionals know this best and deal with the market everyday. In Teresa Boardman's article: " The real estate consumer is not always right", she states that "when we go along with what the customer or client wants, we are not acting in the client's best interests, or even in our own. And that rule applies to matters other than price, too."

Buyers and seller's have access to an enormous amount of information and TV shows that cover all facets of real estate. Whether it is someones first home or a renovation over haul show, most consumers take what happens on these shows as the truth in their area.

A Realtor has access to and works in the field every day and can provide you with correct data about your home or a home you are looking to purchase. The market may not be for everyone right now but you have to assess your situation and your personal economy to determine what is best for you.

I would personally enjoy working with someone who tells me what I need to hear rather than what I want to hear. It may be scary or hard to listen too, but it is more respectful if I get the truth.

What type of Realtor would you rather work with? I would love to know your thoughts!

What are QR codes?

With the explosion of smart phones and technology seeming to get faster and faster. Here comes another addition to the list of great tools and advertising techniques! QR codes are codes that look like this image to the left. This is my contact information that I have posted on my signature and can be put on anything that I do for my business.

Why use this new technology? I think it is so adaptive and can be updated anytime for any different use. I can track them with Google analytics to see what action I am getting with them, I can make it about a website, bookmark a site, send a text, send an email, make a phone call, update a vCard, send a vCard, Google maps, send coordinates, YouTube video, Android Market search, Twitter update, and so on.

I am using them in my marketing of homes to interact in a new way with home buyers and sellers. Over 90% have a smart phone and use it on a daily basis. If you are at the gas pump and are reading the ads above the pump, look closely....there will be a qr code just waiting to be scanned!

They can be used for deals or coupons or special promotions. I am think from a business side of things but there are so many uses for qr codes. I even saw a shirt that was printed with one for a charity event! How cool would it be to scan that image and get information on how to donate or come to the event...oh the possibilities!

Go to Google and search and read on qr codes and tell me your thoughts on this new technology. I would love to hear your ideas!

Fireplace Maintenance

A message from friends at Pillar to Post....

VA Loans and Tax Credit Extension

Recently the office of Veteran's Affairs announced a few updates to the VA loan program and now an extension of the tax credit is still available for active members of the armed service. This is very difficult information to find and I wanted to post this out there for all of the men and women that serve our country. They deserve our thanks and help in manners like this that can benefit them to own a home.

Here are some of the details that I was able to find:

• Tax credit is good until April 30, 2011. This means an accepted offer has to close by this time.
• $8,000
• No repayment penalty of the tax credit
• You don't have to live in the home for 3 years. This can be due to a variety of different reasons( reassignment, etc)

VA Loans are still available and are the only loans that are offering 100% financing. !00% financing still means that the veteran can have closing costs, escrow of taxes, and many other costs that will need to be brought to the closing table. A great way for these to be covered entirely or partially is asking the seller to pay up to 3% of the purchase price in closing costs and prepaid. A great resource is http://www.benefits.va.gov/homeloans/docs/2010_county_loan_limits.pdf for loan limits. Here are some other guidelines with a VA Loan:

• Loan limit of $417,000 unless you live in any of the other high cost counties see the pdf above.
• No private mortgage insurance
• 100% Financing
• No Mortgage Insurance
• No Minimum Investment or Down Payment needed from the buyer
• Lenders are limited to only charging 1% Origination Fees
• Seller must pay the entire escrow fee (Lender pays this if it’s a refinance)
• If the property does not appraiser for the sales price, the Veteran’s earnest money is protected
• No Credit Report or Appraisal needed for VA Interest Rate Reduction Refinance Loan (A VA-to-VA refinance with no cash-out. Often called VA Streamline refinances).
• Low rates
• No limit in seller’s concessions used to pay Veteran’s closing costs
• 4% Seller’s concessions for non-VA costs as well as Veteran’s debt (That’s right, the seller can pay off some of the veteran’s debt in the transaction).
• Can be used for a Stick Built House, Manufactured home (must be on land), Condo, Townhouse, and multi-family from 2-4 units
• No Funding Fee for disabled Veterans (It doesn’t matter if the veteran is 10% disbaled or 100% disabled, they won’t be charged a Funding Fee).

Here are some basic guidelines for a VA loan( check with a VA lender to get all of them):

• Most lenders will want the Veteran to have at least a 620 credit score
• You must be 3 years separated from a foreclosure
• You must be 2 years separated from a Bankruptcy
• The Veteran should have at least 3 tradelines on credit to review.
• Nobody can be on the VA Loan with the Veteran other than a Spouse
• Surviving Spouses of deceased Veterans with VA Benefits can also use a VA Loan
• VA Loans are assumable, which means you can sell the house and pass the loan to another Veteran as long as they can cover the difference between the sales price and the existing loan.
• VA Funding Fees, which is a fee that goes directly to the Department of Veterans Affairs, varies depending on whether the Veteran was full-active duty or reserve, how much the Veteran puts down, the type of transaction (Purchase, Streamline refinance or Cash-out Refinance) or if the Veteran is disabled.

Whether you are looking for a home, condo or income property, finding a local lender and local Realtor will help you in the process. Please feel free to pass this along. It is really important that veterans understand all of the benefits available to them.

You Are Not A Lead

More than ever more buyers and sellers of real estate feel like a lead. I have read a lot of articles and watched videos all over the internet where they feel like a lead.

This is disappointing! Having a connection to your clients and providing them what they are interested in is our job as their Realtor. They look to us to provide them with more than just the average agent. They want our knowledge, professionalism, negotiating skills, and marketing! This is why they pay us to help them sell a home or help them buy a home.

Separate yourself from the mass of other agents. Provide service above and beyond their expectations! Make the experience more than they could have imagined and connect with them. Having a client for life is priceless and what a better ad or marketing piece than a past buyer or seller who talks about their experience with you to others.

People talk about real estate and the economy. Know what is happening in your local area. Know the average days on market to sell a home as a whole and the area in which you either have a niche or were your clients are located. Understanding prices and market list price to sale price.

In Madison and the surrounding communities( Fitchburg, Verona, Monona, McFarland, Stoughton, Sun Prairie, Middleton, and Waunakee) the area is healthy and jobs are available. The housing market does have some REO and shortsale transactions, but the majority of sales are traditional sales between a buyer and seller.

Each market is different and each neighborhood is different but the reason we are here is to provide this to our clients and to new customers that are looking for the same level of service, knowledge and professionalism.

Make your clients feel like you are there for them and they are not just a lead! They are with you because of who you are and what you make them feel like and what you proved them. Respect them and in turn you will be successful in the long run.