Monday, October 25, 2010

Fall and Winter Sellers Have the Buyer's Attention

The best time to sell a home is always when you and your house are ready. Looking at the number of homes on the market, spring appears to be the time of choice for most people to try to sell. It's also the time when the most people get out and start looking at homes. In Madison, our spring market begins on the first business day after New Years Day and if that's when it starts, November and December is when it ends. So it looks like we are coming to the end,... or maybe we can look at this another way. Let's look at what we know and decide if maybe there is opportunity right now.

I like making decisions based on what we know as opposed to what we hope for. Today I know interest rates are at 50 year lows for people with great credit--the rest of qualify for better rates than were available over the last 10 years. So, let's put interest rates in the plus column. Next, we know the appraisers have to have sales in the last six months to support a purchase price for the underwriters. Well, we can go back to April, May, June for recent sales, and since those were the days of highest demand, we can conclude there are some comparable sales to support our asking price.  That's another favorable factor. For a third, we can assume the best homes have sold, the ones still on the market have been considered and passed over, the new listings are sitting on the sidelines until spring. Competition is weak.

That's a total of 3 market forces favoring sellers in the fall and winter in Madison. Now, let's maximize our advantage. Fall in Madison makes for some beautiful photographs. Even a garden at the end of fall looks better than a blanket of snow in the eyes of a relocating person who will be seeing your house for the first time on-line. Those relocating families are the bigger fish in the pond of qualified buyers. They don't have the luxury of waiting until spring, and they will select a home from the best choices on the market in a relatively narrow window. We want to get their attention. Photos and walk-thru videos will help get their attention and keep it.

Great value always matters, so let's consider increasing our market audience by range pricing. Reach down below a price point to draw qualified buyers up and in to your home. Look at your market to determine the next lowest break point and invite those people in.

Keep in mind that the buyer of today is different than the buyer of 2004. In only six years we have gone from a broker centric business model to one where the consumer has access to information. Highly motivated buyers may be sitting on the sidelines appearing to be unmotivated but watching for the right property. The more well informed a person is, the less likely they are to display the common characteristics of fear of loss---and that's what we might mistake for motivation. The internet provides everything a person needs to stay in and on top of the real estate market 12 months a year. These people will step up and identify themselves when they see what interests them.

Wait until spring and you are competing with everyone for the attention of the home buyers. If you have a crystal ball, you may be able to jump in at the right time. Without one, you should be safe in going with what you know. Price smart, prepare your home, and yourself, then put the house  out for consideration. When offers come in, pay close attention to what works for you. It's possible the closing date and assurance of a sale could be the most valuable attributes of an offer.

Friday, October 22, 2010

Consider Your Lifestyle, and Forget About Resale...

Houses are not investments--they're homes; places we live, raise families, grow memories. How we live in our homes, how we create our home environments, is something unique and best when consideration for resale value does not drive our creating.  That idea iscontrary to the popular cliche "Think Resale". I believe thinking resale and thinking of homes as investments are two ideas which will fade away in the consumer's new attitude toward home ownership---and that will be healthy.

There are some home buying ideas which will always make sense. These are a couple: Buy within your means. Buy the best location available in the neighborhood you want. Keep your mortgage to 15 or 20 years. Compare properties to the homes that have recently sold to best determine a price to offer.

After that, doing what you want to fit your lifestyle is smart. The more you make the home what you enjoy, the more likely you are to be pleased with the home for a long time. Buying today and resisiting home improvements because you fear the impact on "resale" just means you will live in a house that is not you until something better comes along. The costs of moving up, down, or sideways once factored in more than offset home improvements which somebody might say are not condusive to resale or won't be recouped.

This property in Blackhawk is an exceptional example of what you can do when people start wtih an optimum location, don't overspend, then improve a property for their lifestyle. They took an ordinary home in a special neighborhood, on a spectacular lot, and made the house a home. The houses I like the most are the ones that are designed or renovated for the owners. Size is irrelevant.

This property in DeForest was built for the owners. They raised their children, entertained guests, and enjoyed hobbies from here. The location in the neighborhood is terrific; the yard is mature, and the tranquility is superb.  Price is irrelevant.

Next time you hear "Think About Resale" ask why you should try to design your home for somebody who you have never met, who has never seen your home, and who if they ever do see your home, may not like it anyway. Logic says don't worry about somebody who doesn't exist, and focus on your family, and your lifestyle.

Tuesday, October 5, 2010

Good Dirt on Recreation and Ag Land--Good for the Soul

Rural land experts do exist in our real estate community, and I won't pretend to be one. But what I can sort out as well as anyone, is the fact that competition for land is almost a non-factor today. Unlike a few years ago when money was available for recreation land purchase financing, cash buyers are king again...and they aren't builder/developers with deep pockets.

I reviewed the sales of 35 transactions where more than 30 acre parcels were sold in Iowa, Dane, Green, and Columbia County since January 1, 2010.  Obviously the land closest to Madison is most likely to sell as a home site and you will see greater dollars per acre spent. Move out a ways and you can find parcels of 40, 60, 80, 120, acres selling for $2400, $2900, $3,000 per acre to $5,000 per acre. These might be reasonable prices for recreation land for hunting, riding, hiking, and just getting out. Some have a building site available, some don't--but that's why God invented the camper trailer.

 Financing is hard to come by as lenders have no appetite for recreation or development land purchases, so I suppose the appraised value has little power in swaying an owner to concede on asking price. But the elimination of the leveraged buyer means little or no competition for the cash buyer.  A fair number of sales have closed this year so you have solid evidence to determine a reasonably smart price. It's possible the inventory of land will increase in the next 24 months with three and 5 year ARMS coming due on properties purchased around 2005. Just like vacation homes, recreation land will be let go before the home. If you have a connection with rural property lenders, ask to be kept informed of land which may be coming into the bank's real estate inventory.

My degree is in political science not economics. So don't ask me if recreation land is a good investment. I have no idea. I like to spend time on land for its serenity benefits. Outdoor recreation may help keep you young, or it may not; it will certainly help you enjoy life. And being a responsible land steward is good for one's soul. Let's walk some land this fall, winter, and spring.