September 2016 Newsletter
In this issue…
- CALLING ALL FIRST TIME HOME SELLERS……
- A FEW GENERAL FINANCING TIPS…
- SUMMARY OF RECENT PINELLAS COUNTY MARKET STATISTICS….
Even in a “sellers’ market,” the home seller must keep certain tips and possible pitfalls in mind to stay the course. I’ve read several notable articles in recent weeks that discuss practical home selling ideas, which, hopefully, even seasoned home sellers appreciate my collecting and repeating. I know some of my peers do! This month’s just-past-Labor Day newsletter is a collection of A,B,C steps and tips that are dedicated to the new seller…
CALLING ALL FIRST TIME HOME SELLERS…
If you look around your neighborhood you’ll probably notice most seasoned sellers list their property with a Realtor. Even in a “Sellers’ Market.” Pricing, predicting, presentation, problem solving, processing…peace of mind. It takes a professional.
A. HIRE A REALTOR. You won’t be sorry.
As a prospective seller, it’s wise to interview a number of real estate professionals in your market to determine your best “fit.” You are choosing your available point person, who is going to be with you beginning to end. Consider references, overall reputation, expertise, connections, community and global engagement. Be sure to discuss the hands-on management and services you expect. It’s important you participate in this groundwork, review the professional’s networks, her proposals for exposure and her/his marketing plan offered, and discuss the program best suited to your specific needs and goals.
And meanwhile, keep in mind one very basic key to success…Share with your agent all the things you love most about your home, details and insight you’d like her/him to share with consumers. Then from that very moment on, think of your property as a product instead of your home.
This is the art of selling.
Don’t put your property on the market until you’re ready to sell. Then be educated to sell. Selling property properly means get professional, non-subjective advice, especially if it’s your home. If the owner isn’t ready to let go, buyers will know and the house will likely sit. And don’t “test” the market. You will fail.
B. PRICE PROPERLY. Your key to success.
A seasoned Realtor can help you target the perfect pricing position for your property in any current marketplace. Pricing a property for the most successful sale is not only a science, based on what actual statistics tell you, it is also an art, a perception that the professional Realtor develops over years of experience, added to the intimate study of your home real estate market, its histories and the relative sales climate at any given point in time.
There is often a spread between the original offering/list price and the price where the property actually sells… Alert!: the narrower this spread, the more successful your sale. Be sure to analyze, and disregard fabricated or manipulated data.
Time on the market must be factored into your pricing decision. It’s proven today, just as it was before we had computers and fax machines and cell phones, the longer a property sits, the lower the sales price.
Also a proven statistic, no matter the market trends, up or down, the further above the actual market activity your initial list price, the longer it will sit. That’s the basis for the advice given by Bryan Robertson, co-founder and managing broker of Catarra Real Estate, Inman.com 8/2/2016…”6 Things That Help A Home Sell Faster.”…who says
“in most markets, the best strategy to attract the most buyers is to price just a bit low. “ In my experience, you will lose nothing by determining the savvy pricing position…Before you begin.
Today’s buyer has all manner of access to statistics and histories and trends, viable or not, and while of course, buyers seek to pay as little as possible, they essentially want a fair deal. When it comes to buying their first, or their fifth, home, they are largely willing to step up to the price that can be supported by professional and reasonable analysis of what the market will, or should bear. In other words, be prepared, and demand your agent be prepared to provide this in writing to a prospective buyer and/or his agent.
In addition to these guldelines, I’ll repeat a segment of my previous discussion referencing a 5/1/2016 article that appeared in Inman.com, professional on-line real estate journal…by Joseph A. Rand, a managing partner of Better Homes and Gardens Real Estate…
6 BIG MISTAKES sellers make in pricing their property.
1. Biggest mistake, pricing to what has not sold rather than what WAS sold.
When I was a new Realtor the saying went like this, “Price a little high, and a little low…” given a stable market, you can successfully price a little higher than what just sold, but also price it lower than what is currently offered for sale, i.e. the competition. Don’t worry that a neighbor might sell for more than you. If he is priced way higher, focus on your goal. That competitor will not likely sell sooner, certainly not for more..
2. Overvaluing the amenities.
What is important to one owner may not be important to another, or even preferred, such as granite countertops and high end fixtures and appliances. No two women like the same kitchen. Even a pool may be a drawback, perhaps for an out-of-town owner who doesn’t prefer the added maintenance and liability, or a family with an infant who are concerned about family safety.
3. Reflecting improvements you’ve made dollar for dollar in the list price for your home.
Buyers may not appreciate the improvements you’ve made along the way as much as you did when you paid for them. It’s often difficult for a home seller to recognize when his cherished improvements and decor seem out-dated, even ill-advised, to the prospective buyer. In any event, we all know a car or a couch never brings the same price 5 minutes off the lot or the showroom floor. A buyer will not, cannot sincerely appreciate your personal clutter, nor even perhaps your financial investment. None of this will weigh so much as your clean, manicured, professional presentation.
4. Pricing with your next home purchase needs in mind.
Buyers won’t care what you need to net for your next purchase.
5. Pricing according to on line computer estimates, Zestimates, automated valuation models.
These sites are available everywhere, even on some agents’ websites (!), fun tools to “see where you are today”… But these are macro-level, at-a-glance unwarrantable valuations that no one, even the people who create them, believes to be accurate enough or substantive enough to be dependable indicators of where a property is properly placed on the market. A good buyer, one who will pay the price, will seek professional guidance and expertise. You as a Seller, should, too.
An example given by Mr. Rand: “For homes with Zestimates of , say, $400K, only half those homes are going to sell inside a range of about $368K to $432K. The other half is worth more or less than that range.” What if an agent knocks on your door and suggests you list your home in a range of $368k to $432K, then adds he’s confident you have a 50% chance of selling it in that range…?
That’s essentially what you get with these valuation models.
6. Ignoring feedback and traffic indicators.
Really look at the actual, not manipulated, listing to selling to time ratios when you price your property. AND once you have listed your property on the active market, stay engaged. Listen to what the market is telling you: listen to what buyers are saying and feedback from showing agents, watch the traffic patterns, on-site and on-line, keep up with what your neighboring competitors are doing, and find out what your prospective buyers bought instead of buying your property.
Your agent should be prepared, in writing, to help you make an informed decision about pricing your property. Then your agent will be kind, your agent will be understanding, and ultimately your agent will do his or her best job to continuously counsel you and to ensure you’re not still sitting in your home six months later, along with the other Un Solds. There are Un-Solds in any market..
C. PREPARE AND PRESENT your property for sale…Ready, Set, Go…
Again, think of this property as a product to sell, not your home. You won’t live there any more, someone else will. And the best odds of finding your buyer sooner rather than later is to de-personalize it, and show your buyer a palette (s)he can use to imagine himself living there, not you.
- Curb appeal…first impressions, the initial determination of what your home is like inside…yes? Clean the yard, manicure, get rid of obstacles that detract from this in any way. Re-mulching, new grass, new plants can add color and appeal without costing a fortune. Keep a realistic budget, don’t replace the driveway unless it’s a major irreparable detraction. You’re providing a snapshot, a first impression to bring that buyer back, or to stay with him while he visits inside.
- ‘Clean clean clean,’ says Bryan Robertson, and I can’t agree more. Be very sensitive to this, it’s above all the major feeling that will weigh in with prospective buyers. Not only clean, make it sparkling…which of course denotes attention to that sort of detail, and gives a prospective buyer peace of mind. You want the buyer to know you think well of your home, not just what you have in it. This can surpass the countertop upgrade you couldn’t afford, and it costs the seller virtually nothing beyond time and detergent and polish.
- Repair/remodel. Small improvements go a long way… details such as fresh trim at doors, baseboard, crown molding, cabinet handles, fresh paint (neutral shades only!…such as warm white), and get rid of the wall paper… Cleaning and making sure all lighting fixtures are in working order is a big plus.
You can step up another level…to new or continuous (all rooms matching) flooring, new windows…all of these items can significantly brighten and improve the look of your home and help your home sell faster, thus for more. Attention to such items can also likely increase the return on dollar spent.
The next step might be appliance upgrades, but basic attention to major mechanical items, indicating your home is well maintained, will likely win you more points with a buyer.
Substantial interior upgrades such as bathrooms and kitchens, for the purpose of selling faster or for more, are ill-advised, not only for potential dollar return on your investment, but also for the time, not to mention unexpected hurdles, it will likely take to complete. And after all, second-guessing what your buyer will prefer is very risky…especially with kitchen and master bath arrangements.
4. De-cluttering and staging.
You don’t need to have a huge budget to be staging savvy. Staging can mean professional, really upscale designers, or it can translate to de-cluttering, de-personalizing, and/or “styling” a house.
Less is more. De-cluttering is top of the list…which may mean renting a pod or storeroom, removing a couple pieces of furniture from each room. Whether you hire someone, or you and friends and your agent are the staging sages, do it before you put your property up for sale. It will sell faster, for more.
It may take a trained “third” eye to transform a space to suit the latest trend in home buyer wants and needs, but often someone besides the owner, a friend perhaps, can help pin-point where attention is most warranted. Re-styling a home may be as simple as neutralizing, reorganizing and redistributing some pieces you already own, with the idea of drawing attention away from what detracts…or screams… and putting focus on what is spatially positive, what has general appeal. Perhaps you might create a focal point in a room with a piece of furniture that suggests how the buyer might use the room. But then give your buyer prospects the space they need to visualize and to engage.
D. KEY IN TO PROFESSIONAL MARKETING … get the word out.
Proper pricing is crucial, but the price a buyer offers is driven by cleaning, preparing, presentation (staging/styling)… and of course, bringing your public in. Traffic is generated by professional marketing and proper market exposure..
Once your home is ready to go on the active market, your Realtor can assure your photography, your brochures/ flyers, are attractive, and your marketing material is thoughtful, relevant, informative, and demonstrates pride of ownership for a new owner. The expert marketing representative has not only the resources, but all so the resourcefulness, the know-how to focus attention aggressively while in good taste, with the most beneficial and effective results.
A savvy real estate agent is equipped to hook you into all manner of networks, local and global, to expansively and properly expose your property for sale. All of us who are MLS and PRO members are syndicated on nearly a thousand on-line websites, and many of us are professionally linked through our certifications and designations and associated with countless other professional networks to assure you enjoy maximum exposure for your product, both in your own backyard, and across the globe.
A Few Financing Tips….
FloridaRealtors.org announced September 2 that the U.S. will extend the HARP home loan program for another year, through September 2017, which was set to expire this month. It has been seven years since the government first launched the HARP program, Home Affordable Refinance Program. It was first designed and since evolved to help an estimated 3.4 million homeowners stay in their homes during the housing crisis, by refinancing into more affordable mortgages even when the homewner had little or no equity, or was even under water. Most recently programs were offered on loans that were 80% or more the value of the home, or great than 80% LTV…or to 125% or in some cases, higher..
HARP loans may refinance loans that are owned or guaranteed by either Fannie Mae or Freddie Mac. The most recent requirements to qualify for a HARP loan have been as follows: The loans had to be originated before May 31, 2009. The borrower had to be current on mortgage payments with no late payments in the previous six months, and no more than one late payment in the previous year.
These loans are ultra streamlined, often not requiring an appraisal. About 18,000 borrowers refinanced under HARP in the second quarter of this year, down from about 20,000 the first quarter, but it’s estimated more than 323,000 loans are out there that are still eligible for this refinance program. It’s possible a homeowner might qualify now who was turned down in the past. The application process for any loan can seem tedious for sure, but this is a relatively streamlined application process for the homeowner, well worth taking the time to investigate.
Details are to be announced in November. There are expected to be changes with the new HARP…for instance, the focus may be restricted to mortgages over 95% loan-to-value or higher. But there will likely be no cut-off date, meaning loans originated after 5/31/2009 might be eligible. And unlike the current HARP, borrowers will possibly be allowed to use the new refinancing option more than once. This program should be available through your mortgage servicing company, but also through other participating lenders and mortgage companies in the area. Don’t hesitate to ask about it even if a bank loan officer does not offer it to you.
Summary of Pinellas County Real Estate Statistics for July, 2016.
David Bennett, President and CEO of the Pinellas Realtor Organization has posted the most recent statistics for Pinellas County Real Estate, July 2016. In our markets especially, where seasonal cycles affect sales in different locations and sizes, comparison is most valid if done in percent changes in sales rather than number of sales, and comparison is month over month and year over year rather than straight line.
There was a slight cool off in July…closed sales for single family in July, 2016, were 1,236, a drop of 10% over July, 2015. Closed Sales for Townhome/Condo segment were down 8.2%. But every indication from a sizzling 2016 summer trend is our market continues to be quite strong.
Months Supply of Inventory for Single Family continues to reflect this Seller’s Market, with inventory down 10.8% year-over-year, with a 3.3 month supply this July, as compared to a 3.7 month supply in July 2015. Months Supply of Inventory for Townhome/Condo was down only 2.5% year-over-year, with 3.9 months in July 2016 compared to 4.0 months in July 2015. Active listings for July 2016 Single Family and Townhome/Condo combined were 6,601, down 5.1% from 6,954 in July 2015.
Representing nearly 7,000 members, the Pinellas Realtor® Organization is one of the Tampa Bay area’s largest professional trade associations. The organization advances and promotes the real estate profession through professional development programs, government affairs, and political advocacy, and maintains a high standard of conduct by real estate professionals through professional standards training and administration.
Here is a do-it-yourself market analysis… Click On This Link… . You will land on a designated page on my website which allows you to search homes in your neighborhood that are for sale, under contract, and closed/sold over recent months. Real time. Linked directly into our Multiple Listing Service. Now you’ve taken the first basic step toward determining what is actually going on in the real estate market in your neighborhood..
Then call me. You’ll be glad you did.
In this issue…
• BUYING HERE AND ABROAD: INTERNATIONAL ACTIVITY IN REAL ESTATE……
• VACATION/SECOND HOME/INVESTMENT/RETIREMENT ………
• A FEW FINANCING TIPS….
• RECENT MARKET STATISTICS…..
• WHY YOU SHOULD NEVER BUY OR SELL WITHOUT AN AGENT…
The PROFILE OF INTERNATIONAL ACTIVITY IN U.S. RESIDENTIAL REAL ESTATE is out, published by the National Association of Realtors on 7/6/2016. The report finds the increase in price of U.S. real estate together with the depreciation of foreign currencies against the U.S. dollar has made foreign investment in U.S real estate quite a bit more expensive than during the previous survey period. The median sale price of an existing home became 45% pricier for Venezuelans, 24% pricier for Brazilians, and at least eight other countries including China and Canada saw a double- digit increase measured in their country’s currency.
Yet foreign buyers purchased 214,885 residential properties, approximately 3 % more than in the previous 12 month period.
Foreign buyers typically purchase more expensive properties. The median purchase price this period slipped to $277,380, from a year ago, $284,900, due to a lower number of non-resident foreign buyers. But overall foreign buyers most commonly purchased a home priced between $250,000 and $500,000 while 10 percent paid over $1 Million or more.
Exactly half of all international transactions were all cash purchases, slightly down from the 55% a year ago, but still roughly double the overall share of existing sales. Predominantly all cash purchases were made by non-resident foreign buyers, 73%, and by those from Canada, China and the United Kingdom. Five states accounted for over half, 51 percent, of the total residential property purchases made by foreign nationals: Florida, 22%, California, 15%, Texas, 10%, Arizona, 4%, New York, 4%.
According to this survey, the National Association of Realtors also notes a 50% increase in the number of Realtors who report working with U.S citizens to purchase property outside of our country….. topped by Mexico, then Costa Rica, Philippines, Colombia and Canada. The majority, 87% of these, planned to use the property as a vacation home or residential rental unit.
The 2016 NAR INVESTMENT AND VACATION HOME BUYERS SURVEY is highly significant for local markets. The report states U.S. vacation home sales are at a high level propelled by baby boomers’ demand for vacation homes. Down slightly from the 2014 peak, 2015 was still the second highest level since 2006. Furthermore, according to NAR chief economist Lawrence Yun, “the expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales, causing the price of the vacation home to rise.” The median vacation home price nationwide was $192,000, an increase of 28% in 2015 over 2014.
RSPS, Resort and Second Home Property Specialist, is a designation of expertise in the vacation and second home marketplace, especially effective training where vacation and second home purchases represent a high percentage of market activity. We stay abreast of issues that can specifically affect the buying decisions of these buyers, while helping them attain and balance vacation, short term and long term investment goals.
For over 100 years Florida has been a top vacation market in our nation. Today visitors come from around the nation and around the world, to enjoy the natural beauty, recreation, many amenities and lifestyle our State offers. And every year a significant number of those visitors decide to buy a vacation home, to invest in property in our communities.
Are you looking for your own vacation home?… there’s no better place than the Tampa Bay area.
How about a second home or vacation retreat along our Gulf Beaches or beautiful downtown St. Petersburg? The market is tight, search here in real time:
CLICK THE LINKS BELOW FOR A LIST OF
ALL CONDOS, GULF BEACHES, PRICED UNDER US$300K
SF HOMES ON BEACHES PRICED UNDER US$500K
ALL BEACH WATERFRONT HOMES UNDER US$800K
ALL LUXURY NEW CONSTRUCTION CONDOS, (Beaches, Tierra Verde, St. Petersburg)
BEACH-FRONT SF HOMES ON THE GULF
IN REAL TIME!
Today U.S citizens and foreign nationals alike search the globe for retirement destinations, vacation/second homes, and investment properties.
Here is a fun article describing 25 different retirement destinations across the globe……. including Ottawa, CA; Aurora, Colorado; Portland, Oregon; Panama City, Panama; Cascais, Portugal; Kilarny, Ireland; Valencia, Spain; Managua, Nicaragua; Bordeaux, France….. Charlene Oldham, March 25, 2016, writes, “retirement means more than golf and gardening for an increasing number of Americans looking for fun outdoor activities, international adventures and cutting-edge cuisine later in life. And while there are countries, cities and states that offer more affordability for retirees, the best place to retire really depends on what you’re seeking.”
….Check it out! “25 Coolest Places To Retire In The World,” by Charlene Oldham.
Real Estate Professionals who have attained the Certified International Property Specialist (CIPS) Certification and are Trans National Certified (TRC) are adept at guiding global real estate investors, either foreign nationals entering our country to purchase a property, or U.S. citizens wishing to buy property abroad. We are part of a unique global network of real estate professionals who share resources and business ethics, who achieve specialized training on critical aspects of the international transaction, including regional market and cultural differences, differences in business practice and types of ownership, closing procedures, exchange rates, tax issues, title issues…
A FEW FINANCING TIPS I’VE FOUND USEFUL IN MY BUSINESS….
3% Down Loans!… Lenders are now offering 3% down conventional fixed rate loans up to $417,000… Minimum credit scores range 620 or better, down payment assistance may be available through gifts or community assistance programs and may require borrowers to complete homebuyer education courses. Banks are offering these loans as they cut back on their origination of Federal Housing Administration loans (FHA) , federally insured loans which they consider more costly and riskier, and penalty- laden if mistakes are made in the origination.
A note on the FHA front… NAR’s recent Call To Action campaign and Realtors who responded helped push HR 3700, the “Housing Opportunity Through Modernization Act,” through the U. S. Senate unanimously, already passed by the House. This bill when signed by the President, will roll back FHA restrictions on condominium financing, among other provisions, specifically lowering the owner-occupancy requirement. This move will help first-time home buyers and lot-to-moderate buyers enter the condo market, surely, but it will also boost the ability of retirees to attain FHA insured Reverse Mortgages and stay in their homes with more comfort.
Jumbo loans, which were once considered riskier loans and carried higher interest rates, now carry lower interest rates than conventional, conforming, loans. Over the past couple years the spread in annual interest rate between the jumbo loan and the conventional home loan has narrowed. Formerly around 1.5 %, this spread narrowed to around 1% difference a year ago, and recently has flipped. Smaller loans, conventional loans, are backed by Fannie Mae and Freddie Mac, Jumbos are not, which made them inherently riskier. But conventional loans are now more
expensive for lenders to offer, and so the thinking goes, the well heeled borrower presents less risk of default, thus a better bet overall.
With the uncertainty that followed the Brexit vote and the strong dollar, U.S. interest rates receded, and it is generally expected the Federal Reserve won’t raise our interest rates anytime soon, at least not until next year. This will likely entice new buyers and investors to enter our real estate markets. Not being a financial analyst or economist or any sort, I advise everyone to consult your financial advisor. But several rules of falling mortgage rates seem especially prudent to me now, as described by Lou Barnes, Inman.com, June 21, 2016. Written before the Brexit vote, he states odds may favor slightly lower rates. But it’s likely most prudent to think the downtrend is past, don’t expect or even hope it will continue. The time is Now. Don’t consider an ARM unless the spread between fixed and adjustable is wide, i.e. Not Now. Why buy with a 15 year loan when you can take advantage of these low rates for 30 years? Why be in a hurry to pay back a loan at these historically low rates? Build equity, enjoy your retirement, diversify investments….
RECENT MARKET STATISTICS BEGINNING WITH NATIONAL REAL ESTATE TRENDS: Florida Realtors News and Events, 6/29, article picked up a CNBC 6/23/16 source, “New Warning Lights for Rising Home Prices.” This article reflected a report by the National Association of Realtors (NAR) that the national median price of an existing home reached a new record in May, $239,700, a price primarily driven upward by repeat buyers trading up or downsizing from current homes. Opportunities for first-time home buyers continue to dwindle, however, due to affordability issues. According to NAR’s chief economist Lawrence Yun “We’re seeing flashing yellow lights on affordability,” where home prices are rising way too fast compared to people’s income and wage growth. Even with historically low mortgage rates we are facing housing affordability challenges. Rental demand has been fueling construction activity, but multi-family housing starts are beginning to slow as most of this activity was centered in higher-priced urban rentals where supply is now high, points out Diana Olick, CNBC Research analyst. While low mortgage rates and job growth create healthy demand, the tight supply of homes on the market continues to constrain sales….’a pressure cooker effect,’ says Andrew LePage of CoreLogic…where the
traditional pressure release valve, new home construction, isn’t helping much, given new home sales are running over 40 percent below historically normal levels.
A global client asked me last week about buying existing multi-family housing. Current trends indicate this could be a valid investment opportunity, there is housing demand especially in areas of economic growth and availability of entry/mid level jobs, or where single family home inventory is limited, or where millennials and young families are often priced out of owning their own home. ( On real estate as an investment vehicle, a good read, Real Estate Investing by Amelia Josephson, March 29, 2016, https://SmartAsset.com/investing/real-estateinvesting.)
…Continuing to the PRO (Pinellas Realtor Organization) Statistics Report for June, 2016 for our County:
As reported by PRO, compliments of David Bennett President and CEO: Pinellas County Real Estate Statistics for June 2016 show an Absorption Rate for Single Family homes has risen steadily this year to an all-time high which dates back as far as January 2012. The Absorption Rate is the rate at which homes are selling in a given timeframe.
- The number of Closed Sales for Single Family homes for June 2016 was up 0.3% over June 2015, while Closed Sales for Townhome/condos was up 3.6% over June 2015.
- Median Sale Price for Single Family was $220,000 this June, versus $185,000 last June, a huge increase of 18.9%. Median Sale Price for the Townhome/Condo segment was also way up from last June at 16.7%, or $140,000 for June 2016 versus $120,000 for June 2015.
- New Listings for Single Family for June 2016 were 1,493, up 5.2% from last June, when they were 1,419. New Listings for Townhome/Condo for June 2016 were 761, up 1.3% from 751 in June 2015.
- While New Listings for single family and Townhome/Condo were up slightly from last June, Total Active Listings for June 2016 Single Family and Townhome/Condo combined were down 6.9% from June 2015.
Thus Months Supply of Inventory continues to reflect a seller’s market when priced astutely. Single Family inventory is down 13.2% year-over-year, with a 3.3 month supply this June, as compared to a 3.8 month supply in June 2015. Months Supply of Inventory for Townhome/Condo was down 9.1% year-over-year, with 4.0 months in June 2016 compared to 4.4 months in June 2015. Active listings for June 2016 Single Family and Townhome/Condo combined were 6,707, down 6.9% from 7,207 in June 2015.
(Representing nearly 7,000 members, the Pinellas Realtor® Organization is one of Tampa Bay area’s largest professional trade associations. The organization advances and promotes the real estate profession through professional development programs, government affairs, and political advocacy and maintains a high standard of conduct by real estate professionals through professional standards training and administration.)
THE HOME SEARCH AND HOMEBUYING TRENDS ARE SHIFTING with the rise of digital technology, and it appears today’s consumer may be searching for the next best thing sooner rather than later. More frequent moves might be the norm rather than the traditional 5 to 7 years, given how everything has sped up in recent years.
But industry specialists find roughly three quarters of Americans who are looking to buy a home want to work with… have in their pocket… at their back side…both a mortgage professional and a real estate professional. If they’re serious. Especially seasoned buyers. And most sellers don’t try to sell without a Realtor, whether first time sellers or seasoned sellers.They want expertise in Pricing, Positioning, Predicting, Presentation/Staging, Marketing, Negotiating, Problem Solving, Market Knowledge, Exposure, Community Involvement, Professional Networks, Inspections, Repairs, Service Contractors, Connections, The Closing Process….
And if you’re also going for Experience, Trusted Advisor, Available Point Person… Call me.
Surprise is never a good thing when it comes to buying or selling a property.
Topics for June
- GLOBAL TRENDS HIT HOME
- THE DYNAMICS OF HOME FLIPPING
- A FEW FINANCING TIPS
- RECENT MARKET STATISTICS
TAMPA BAY is in the TOP 10 U.S. CITIES SEARCHED BY INTERNATIONAL CONSUMERS
Realtor.com has released data from a recent analysis of global consumer searches: 1st place was Miami, 5th was Orlando, and TAMPA BAY is 7th!… exceeding even the most enthusiastic expectations of real estate professionals in the global arena.
One such group is the Pinellas International Council, which operates under the umbrella of the Pinellas Realtor Organization. The PIC mission is to promote our area to other global real estate organizations so that we generate worldwide recognition of our beautiful Gulf Coast of Florida, our unmatched location and access, our opportunities for living, vacation, retirement, investment, business growth, recreation, sports, beaches, our vibrant cultural community…. PIC promotes education and understanding to encourage investment in our home communities. These goals are being achieved, as confirmed by this recent Realtor.com survey, through educational programs, conventions, cultural exchange events, and professional interaction and cooperation with and among real estate professionals around the world. At any point in time PIC consists of approximately 12 volunteer and nominated directors and chair persons, PRO staff, and several hundred Realtor members and Affiliates who expand our own business opportunities and resources globally to benefit our consumers as well as our Realtor association, while exhibiting high professional standards and generating positive economic and cultural impact for the communities we serve.
Many accomplished Realtor members build on this focus by pursuing NAR’s (National Association of Realtors) CIPS Certification. Through this program a Realtor is awarded the Certified International Property Specialist certification, joining an inspiring network of professionals around the world who take extended courses, train and partner with associated global professionals, to provide an exclusive level of service, knowledge, resources and expertise to all our consumers, sellers and buyers …whether it’s our next door neighbor Harry, looking for a vacation home in Costa Rica, or Antoine over in France who wants a condo on St. Pete Beach. The recent count of CIPS designated real estate professionals totals about 2,804 worldwide, in 40 different countries including the USA. It is an elite group.
Home Flipping Trends
The Florida Realtor Association published an article in their Florida Realtors News on-line edition of 5/9/2016 containing the following statistics and sourcing about home flipping: RealtyTrac is a real estate information company, also an online marketplace for foreclosed and defaulted properties in the United States. It was founded in 1993 and is based in Irvine, California. First Quarter 2016 RealtyTrac reports Home Flipping at 6.6 % of single-family and condo sales nationwide, a 20% increase quarter-over-quarter and a 3% increase year-over-year…still 26% below the peak of home flipping activity, which was 9% of home sales in the first quarter of 2006…still impressive. A Home Flip, for this article, is a property that is sold in an arms-length transaction for a second time within one year of the most recent sale.
Home flipping can be positive for a housing market especially when it is responsible, but when it becomes too aggressive or careless financially, it can contribute to an unbalanced market or produce unrealistic pressure on the market. Controlling factors can include investors who use their own money, as a healthy degree of caution is built in. Also a controlling factor is the availability of third party financing for such transactions. Realty Trac reports 71% of home flippers currently pay cash while only 37% paid cash at the height of the flipping boom prefacing the recession..
RealtyTrac further reports that Florida metro areas have hit a new high, 1 in 10 homes are sales involving a flip. The Tampa Bay area exceeded the national average by 10.8%. Obviously there is profit to be had for the savvy real estate investor. I am working with a gentleman who currently owns about 250 properties which he is in some stage of flipping.
In short, responsible flipping activity can be a management-intensive and lucrative operation as well as a beneficial impetus to markets. Of course, like anything else, there can also be too much of a good thing.
Some market effects related to home flipping may prove unsettling…… Home shopping has turned out to be a frustrating operation for several Realtor friends and would-be home owners. Home flipping surely could contribute to this in some arenas, magnified by an already low inventory market. This includes all price ranges, but it seems most frequently to affect homes priced in lower to median price ranges and even up to around $300k or $350k, depending on the local market pricing parameters. It is a range where first time home buyers/owners and young families moving up might expect to purchase a home.
I understand some of my fellow agents are carrying a standard ‘as is ‘ purchase contract form for every home they arrange to show a buyer in some of our extreme low-inventory areas. They have learned if their buyer decides he wants to buy one of the properties they see that day, they should present a purchase offer then and there. If it is a particularly good or suitable property or reasonable buy, the property is likely to have another offer before the agent can return to her office to write one up.
Any buyer who needs a mortgage to finance his purchase faces competition from all-cash buyers. Cash is king for most home sellers, especially including REO bank owned situations, and the home flipper is most likely ready with his own cash funds available to make his offer appealing…. which leaves a lot of folks shut out of these “deals”, including first time home buyers and, young families. For them, home shopping becomes an ORdeal and sometimes a heart breaking one. That is why it is important buyers work with a professional, take the right steps in the right order, work closely with their agents to be ready to move quickly, and to obtain proper written proof of pre qualifying for their purchase through a mortgage originator or financial institution prior to the first shopping trip. That is why it is important that these buyers be able to find appropriate financing in the first place, which they can afford, so their offer to a seller to purchase his property is as strong as possible.
Cause and effect, opportunity or not, metro areas change. Only seasoned economists would try to predict how close we might come to some home flip pressure cooker effect. How will our communities and metro areas and demographics transform or evolve in years to come? What I can say for sure is the movement of real estate is a fascinating study and will always play a dominant role.
A few financing tips I have found useful in my business…..
VA Mortgage Guarantee Financing is available in our area for up to $750K for owner-occupied single family home purchase.
Conventional mortgages, both fixed and adjustable programs, may be re-negotiated once in their lifetime, generally for a fee somewhere around $350. For example, I have a conventional fixed rate mortgage for $400K at 4% annual fixed interest rate for 30 years, my principal and interest payment is $1908.66. Say I inherit some cash, or sell another property I own 3 years later and I am able to make a lump sum payment to principal in the amount of $200K. That leaves me with a $200K mortgage balance. I would be able that one time, to request my mortgage be re- amortized at the lowered principal amount of $200K. I pay my mortgage down to $200K principal balance and re amortize it over the remaining 27 years at 4% even if the market interest rates had increased since my original purchase….thus my new payment, over the remaining 27 years, would be $1010.42.
…Great Information….for example, for the buyer who wants to buy a retirement home, but for whatever reason he has not yet sold his home up north. He doesn’t want to be strapped with a big mortgage for life, and refinancing is expensive with additional risk that rates may be higher a year or so down the road.. This plan allows the buyer the flexibility to buy the retirement home now and substantially lower the mortgage payments once he retires or sells his other property without refinancing
Real Estate Statistics Summary
Now for a summary of recent Pinellas County Real Estate Statistics for April 2016, taken from information published monthly to Realtor members of our Pinellas Realtor Organization by CEO David Bennett.
Single Family Inventory is down 9.6% from April 2015 and Single Family property inventory is sitting at a 3.4 month supply for April 2016, the same as March 2016. Townhome/condo supply sits at a 4.3 months in April 2016 compared to 4.9 months in April 2015. Markets are moving across the board and buyers can continue to expect a very competitive Single Family market in Pinellas County for well priced listings. Comparisons are made on a year-over-year model so that seasonal fluctuations are not a factor of the analysis.
The number of closed sales for Single Family and Townhome/Condo combined for April 2016 was 2,202, up 4.8% from 2,102 in April 2015. Year-over-year, the Single Family closed sale segment was up 0.9% and the Townhome/Condo segment was up considerably more, 10.6%. County-wide Median Sale Price for Single Family was $200,000 this April, versus $180,000 last April, a substantial increase of 11.1%. Median Sale Price for the Townhome/Condo segment was up 9.1% from last April, at $138,000 for April 2016 versus $126,500 for April 2015.
New Listings for Single Family for April 2016 were 1,512, up 3.9% from last April, when they were 1,455. New Listings for Townhome/Condo for April 2016 were 952, up 3.9% from 916 in April 2015. Months Supply of Inventory for Single Family was way down again, 17.1% lower than last April. Months Supply of Inventory for Townhome/Condo was down 12.2% year-over-year. Active listings for April 2016 Single Family and Townhome/Condo combined were 7,035, down 7.0% from 7,562 in April 2015.
- Closed Sales April 2016, 2202/ April 2015, 2102, +4.8%
- Paid in Cash, April 2016,974/April 2015, 989, -1.5%
- New Listings, April 2016, 2464/April 2015, 2371, +3.9%
- Inventory (Active), April 2016, 7035/ April 2015,7562, -7.0%
(Representing nearly 7,000 members, the PINELLAS REALTOR® ORGANIZATION is one of the Tampa Bay area’s largest professional trade associations. The organization advances and promotes the real estate profession through professional development programs, government affairs, and political advocacy and maintains a high standard of conduct by real estate professionals through professional standards training and administration.)
BE SMART WHEN LISTING YOUR REAL ESTATE FOR SALE
Statistics are out for Pinellas County Real Estate Activity, March 2016, thanks to the Pinellas Realtor Organization* and CEO David Bennett. This is a county-wide report; there will be individual communities that experience somewhat different models. Generally speaking the best news for a healthy real estate market, properly priced properties sell.
For Pinellas County as a whole, homes went under contract more quickly and closed faster for more money year-over-year for March. Closed sales for Single Family and Townhome/Condo combined for March 2016 was 2,069, up 1.9% from 2,030 in March 2015. Broken down, Single Family sales were up 18.7% and Townhome/Condo sales were down 2.2% year-over-year. The median sales price for March 2016 was $200K whereas March 2015 it was $175K. Active listings (inventory) are down all around from last year this time.
Last month Florida Realtors® added the Median Percent of Original List Price Received statistic… For Single Family, it was 95.9% in March 2016, up 1.8% from 94.2% in March 2015. Townhome/Condo was 94.5% in March 2016, up .07% from 93.8% in March 2015. Reminder, this is County-wide.
Summary Statistics March 2016 compared to March 2015:
- Closed Sales… Up 1.9%
- Paid in Cash… Down 10.4%
- New Pending Sales… Down 7.9%
- New Listings… Up 1.7%
- Pending Inventory… Up 1.8%
- Inventory (Active Listings) Combined Single Family Homes & Townhomes/Condos… Down 7.9%.
*Representing more than 6,000 members, the PINELLAS REALTOR® ORGANIZATION is one of the Tampa Bay area’s largest professional trade associations. The organization advances and promotes the real estate profession through professional development programs, government affairs, and political advocacy and maintains a high standard of conduct by real estate professionals through professional standards training and administration.
If you are a prospective seller you’ll likely interview a number of real estate professionals in your market to determine your best “fit”… i.e. the overall reputation, the expertise, the networks and marketing plan offered, the references, the service you expect and the hands on management of the program best suited to your specific goals.
You next major decision will be PRICING.
The following graphic was generated directly off our MLS Matrix system for St. Pete Beach, 33706. It shows the spread between the median ORIGINAL offering/list price and the median price where these properties actually sold. What must be factored into your pricing decision is time on the market, because it is proven today just as it was before we had computers, the longer a property sits the lower the sales price.
The take away is this, pricing a property for the most successful sale is not only a science, based on what actual statistics tell you, it is also an art that the professional Realtor develops over years of experience and intimate study of your home real estate market and the relative sales climate at any given time.
I just read a great article written by Joseph A. Rand, a managing partner of Better Homes and Gardens Real Estate, which was published in an on-line newsletter dated 5/1/2016 in the professional real estate journal, Inman.com . Here I’ve paraphrased and commented on his valuable discussion about the 6 BIG MISTAKES sellers make in pricing their property.
1. Biggest mistake, pricing to what has not sold rather than what WAS sold.
When I was a new Realtor the saying went like this, “Price a little high, and a little low…” given a stable market, you can successfully price a little higher than what just sold, but also price it lower than what is currently offered for sale, i.e. the competition.
In today’s world, the real estate market is quite transparent, and consumers have many sources available at their fingertips to educate themselves about current and historic market trends locally as well as globally, along with all specific sales data.
2. Overvaluing the amenities.
What is important to one owner may not be important to another, or even preferred, such as granite countertops and high end fixtures and appliances. Even a pool may be a drawback, perhaps for an out -of -town owner who doesn’t prefer the added maintenance and liability, or a family with an infant who are concerned about family safety.
3. Reflecting improvements you’ve made dollar for dollar in the list price for your home.
Although not a set rule, buyers may not appreciate the improvements you’ve made along the way as much as you did when you paid for them, especially if they’re a bit out-dated or used up. A car never brings the same price 5 minutes off the lot. I believe it’s safe to say, dollar for dollar return, a fresh coat of paint and/or colorful or pleasant manicured curb appeal is your best investment…after de-cluttering, de-personalizing the home as much as possible so that it appeals to the widest range of prospective buyers. They are not buying you along with the house.
4. Pricing with your next home purchase needs in mind.
Buyers won’t care what you need to net for your next purchase.
5. Pricing according to on line computer estimates, Zestimates, automated valuation models.
These sites are available everywhere, even on some agents’ websites (!), fun tools to “see where you are today”… But these are macro-level, at-a-glance unwarrantable valuations that no one, even the people who create them, believes to be accurate enough or substantive enough to be dependable indicators of where a property is properly placed on the market. A good buyer, one who will pay the price, will also seek professional guidance and expertise.
An example given by Mr. Rand:
“For homes with Zestimates of , say, $400K, only half those homes are going to sell inside a range of about $368K to $432K. The other half is worth more or less than that range.” What if an agent knocks on your door and suggests you list your home in a range of $368k to $432K, then adds he’s confident you have a 50% chance of selling it in that range….? That’s essentially what you get with an AVM.
6. Ignoring feedback and traffic indicators.
Really look at the listing to selling to time ratios when you price your property. AND once you have listed your property on the active market, stay engaged. Listen to what the market is telling you: listen to what buyers are saying and feedback from showing agents, watch the traffic patterns, on-site and on-line, keep up with what your neighboring competitors are doing, and find out what your prospective buyers bought instead of buying your property.
Your agent should be prepared, in writing, to help you make an informed decision about pricing your property. Then your agent will be kind, your agent will be understanding, and ultimately your agent will do his or her best job to continuously counsel you and to ensure you’re not still sitting in your home six months later, along with the other Un Solds.
I’m happy to provide any reader a 3 month snapshot, real time, of market statistics in our community. I’ll also provide a more detailed report containing a wealth of information on your community, current and recent statistics as well as real estate market trends in your area.
Further, I can provide an analysis of a specific property in relation to these statistics and trends, valuable information for assessing the proper market position of any residential property in the area…and for establishing the proper marketing plan if you’re ready to sell.
TIME IS MONEY. BE SMART, INTERVIEW, ASK QUESTIONS AND DISCUSS VIABLE GOALS. A REAL ESTATE AGENT’S PRIMARY GOAL IS HELPING YOU REACH YOURS.
If you’d like to receive a comprehensive, professional report to help you assess the viability of your goals in investing, selling, buying or remodeling a property, please contact me today.