Tuesday, September 13, 2011

Spring, Summer, and the Fall. Price Drop.

If hope springs eternal in April, does September bring surrender? Between September 1 and today, the Realtor Association of South Central WI MLS reports there were 1142 properties where the listing expired, and 1129 with prices changed. There are 10,723 single family homes on the market on this MLS. I don't have the numbers from 2005-06, but my sense is that we never saw this volume of price changes and expired listings.

Middleton school district recorded 22 sales above $299,000 from July 1 through August 31. Nothing surprising here, the average sale price to last asking price was 95% and compared to the originial asking price, the average was 93%. Seven percent by itseld seems tolerable, but that translates into an average sale price to original asking price of a dip of $32,552. It's that thirty thousand dollars that's so hard to surrender in the beginning of the marketing period.

DeForest residents are coming to terms with reality. Fourteen owners sold for 97% of thier final asking price and 92% of the original. I see that as an indicator of people accepting they need to make their price concessions substantial.

Fitchburg, Verona Schools registered 15 sales in the July-August period and the owners sold in an average of 103 days. Three months is tolerable and the average original asking price was $312,000. With an average minor adjustment of $2,000.00, the owners sold for a respectable $297,000.

McFarland, a move to and stay to Village, is getting along fine. Looks like expectations were a little high with original asking price of the 8 sales averaging $316,000, but a drop in price to an average below $300,000 grossed owners an average price of $285,625. That's a 10% drop from the first asking price and the fact that the time on the market averaged 131 days shows owners were reluctant to concede $30,000 in McFarland...just like anywhere else.

Other than condition and location, price and concessions are all that's left for owners to give. It's reasonable to expect that the few buyers who come into the market in September will not boost the competition for average houses to even the levels of previous falls. If buyers are reaching out to make offers, it's possible we will see owners reaching down with their prices to extend a hand to the buyers who could be pulled in.

Tuesday, September 6, 2011

Uniform Appraisal Dataset. Give 'em what they want.

Uniform Appraisal Dataset (UAD) is what Fannie Mae/Freddie Mac use to standardize appraisal data. Effective six days ago, some not so minor changes were added to the UAD.  A cynical thought comes to mind, but I'll supress it for now because, there might be some help for the process with some of the changes. Let's look at the new rules:

  1. Information that is required but not available on the local MLS will have to be gotten from Realtors and lenders who are not involved in the transaction. For example: for compiling comparable property data, the View Factor and Financial Assistance are not on the MLS. Same for Quality of Construction.  Expect this to slow the turn around time.
  2. Finished rooms below grade: This could be favorable. On the new appraisal form, the appraiser will include  BEDROOMs. On the previous form, a room in the lower level used as a bedroom was not counted as a bedroom, but as a room.
  3. Condition of the property will now be rated. A big help for homes that are in significantly great condition compared to the house thats similar in size, amenities, area, but in a sorry state. Of course that sword cuts both ways.
  4. Quality ratings are new and serve a purpose. Let's face it, some homes in subdivisions built in the the last 10 years are of incredible quality compared to others of greater size. Also, we all know great quality when we see it, but we can't always see it. Just because the brand of sink is well known, doesn't mean the windows don't leak, and the house doesn't suck energy. I'll be interested to see the disputes over this rating.
In bold letters the memo attached to Standardized Exhibits reads: The underwriter is still responsible to determine that there is an acceptable appraisal with value support.

My first impression is that we Realtors are going to want to attach documents to address these UAD changes. The better the information the appraiser has to put into the report, the better information the underwriter has to make their opinion decision. In the past a furnace was just a furnace, and a shower was just a shower. Now they may be the difference between making the value and not.