Smoking Hot Seller's Market, The Near Westside of Madison

A lawyer was giving his client some negotiating advice regarding a near west side property the other day. He said, "It's a buyer's market. Come in low with your offer and see what the seller does." What the seller did was they took another offer.... and the lawyer's client is still looking. Time to get out and take a walk around the block. It's a new day out there.  OK, there are buyer's markets but not in the near west side of Madison. Those tried and true neighborhoods located close to everything, with well built older homes are selling like it's 1999...or 2005.   You know the neighborhoods, Westlawn, Nakoma, University Heights, Sunset Village, Westmoreland, Midvale Heights, University Hill Farms to name a few.

Forty eight out of ninety six homes listed on the South Central WI MLS have accepted offers. * That's an incredible number... and not just because the sold homes are exactly one-half of the total. If you own a near west home you can make an offer on another house without selling your house first and know you're moving.  Your house is probably money in the bank. Be careful when you put that sign in the front yard; the couple driving by are probably going to run you over to get inside before the next couple comes down the road and beats them to the door.

Hey, what about the 48 that aren't sold? To live like the other half, the lower 48 need to look close at Price, Condition, and Location. If the condition isn't GREAT, fix it. Smart buyers today are not settling for work you should have done. If the location in the neighborhood isn't ideal....well, you can't move off of an unattractive street, but you can move off of an unattractive price.   There are buyers in the near west neighborhoods for every house. There will be a buyer for the less attractive neighborhood locations--like busy streets, or crummy lots on corners of two streets with double sidewalks to shovel. They maybe can't afford the better locations but they want the neighborhoods and the quality of the house. Check your price if your home isn't sold and you've been on the  market 21 days.



*Data is based on active and pending listings of single family homes in areas w11, w12, w13, w14 of the RASCWMLS at 3:30 PM 3/13/13.

Zillow Zestimates, A Good Starting Point

Informed people are happy people...provided the information is accurate. Real estate buyers have loads more information to process today and the value of that info is directly related to how much effort is put into the processing. Zillow.com is one source of the new information home owners and buyers are looking to for real estate values. I'm a fan of Zillow for it's value as a starting point in the real estate pricing conversation.

Zillow calls their value estimate a Zestimate. It's  a number arrived at using automated software designed to be neutral and unbiased. The Zestimate may factor in too much information, such as too broad of an area crossing neighborhood and school district boundaries. On the other side Zillow may have considered too little information, such as overlooking location in a neighborhood, or improvements.

Zillow does a terrific job of cautioning the user of their site and disclosing their limitations on accuracy. For example, go to Zillow.com and scroll down to the bottom of the page and click on: Zestimate. Selecting Wisconsin, and then Dane County, I see they disclose that their data includes 165,400 property sales. They claim their Zestimate is within 5% of the sale price for 42.5% of the properties. However, they are within 20% on 84% of the properties. If your goal is to not overpay for a property or to not leave too much on the table when pricing to sell, you will want to fine tune that 20% in Dane County where ten and twenty percent can mean twenty and forty thousand dollars.

Realtors  and appraisers who know the market area and know how to make adjustments for the differences of value between neighborhoods, streets, homes, and amenities can get the price zeroed in the way a telescope brings into focus the fine details.



This is Zillow's explanation (copied from their web site) of a Zestimate:

The Zestimate® (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.  We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as:

• Getting a comparative market analysis (CMA) from a real estate agent
• Getting an appraisal from a professional appraiser
• Visiting the house (whenever possible)

Spring Market 2013 is Underway and It's Still Deep Winter

I've always known the spring real estate market to start in Madison on the first day of business after New Year's Day. That's when people who are thinking of selling start to ask about making plans to be on the market in March and when people who want to buy start planning to look at homes in February. The eagerness of people this year is surprising---buyers are fast out of the gate and way ahead of the sellers.

A recent report on homes for sale showed the inventory of available homes is down all over Dane County and December sales were higher than previous years. I know that's carrying over into January. Buyers I'm working with are having a tough time finding homes in some of the historically higher demand neighborhoods. The homes that have lingered on the market are getting offers finally--not close to the original asking price, but with price reductions and some concessions, there are buyers who don't want to wait for the higher priced spring market homes to come on.

The best prepared buyers will have the best chance of getting their offers accepted this year. Sellers want security and price in the hot markets. For security give the seller an offer with a rock solid pre-approval letter. No wishy washy language such as "appear to be qualified" or "information not yet verified" will cut it.  If the owner is asking $200,000 and you are approved to buy up to $250,000 tell the owner. Hold nothing back. Let them know you are WELL qualified, not just getting by. If you are in competition, be aggressive with giving the owner what they want--peace of mind. Sure they want price too. But there you are wise to be careful. Make sure that the price you are willing to pay is verifiable. If there is no evidence to support the asking price and you have to offer that price to get your offer accepted, make sure to include an appraisal contingency. That might give you the ability to open up negotiations on price.

Owners might be smart to move up their time frame this year. March is typically a key date for placing homes on the market. With as much demand as we are seeing this spring (winter) I think February could give you an advantage. Buyer numbers are up, inventory is down, and inventory will rise in March---looks like February is a gap month favoring owners of well priced, well conditioned homes.

Where The Mad Men Grandchildren Want to Live

Don and Betty Draper, married in 1953, divorced in season three, lived in Ossining, NY a city comparable to Madison, WI in its housing stock; modest to luxurious. The Draper home is a style common to Nakoma, Maple Bluff, Shorewood Hills, University Heights, Vilas, and University Hill Farms.

The attraction of these neighborhoods is the same today as when the Drapers were raising their 3 children...proximity to quality schools, shopping, work, and parks. With modern updates like thermopane windows, high efficiency furnaces, central air conditioning, and added insulation, to complement the plaster walls, wood floors, and large yards, a 1950's house may be as wonderful to own as any home built in the last 10 years. 

With an eye on family life, ease of getting to work and children's schools, without long commutes, we're seeing young people (30 somethings) looking close at the classic Madison neighborhoods where their grandparents lived. The move to inside of the Beltline is good news for home sellers who may have taken a beating on their retirement funds. Competition is good for prices and it certainly will make it easier to make that commitment to get on with downsizing when you can see that some of your lost equity in your home is back. 

After a string of maddening years of down markets and slow activity, 2013 may be the year to cash out on the recovered equity and take advantage of still low interest rates. 

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.