The foreclosures in our market…is it a good thing?

Many agents and clients ask about foreclosures in today’s market and the effect it is having on the home buying process, values, the ability to obtain loans and what the future holds.
Let’s begin with the home buying process. There are many agents who list these types of properties and they are doing their banks and/or asset managers a disservice. They aren’t familiar with the process of dealing with their clients, hindering the contract process through delays as well as not abiding by the rules of professional standards that we have in place for other transactions. The properties aren’t maintained (i.e., the grass isn’t cut, utilities aren’t turned on, water and as a result mold are evident in many homes, etc.) which are decreasing the property’s values. In some instances, they are handling too many properties and don’t get back in a timely fashion adding to the frustration of others involved. The combo lockboxes don’t always work and their signs are often times falling down giving the neighborhood and our clients a low opinion of the companies and agents involved with handling the sale. This reflects poorly on those who take pride in what we do for a living. As you can tell, in some cases, it can be a problem to deal with foreclosure listings. It requires due diligence on the part of the agent to know going into the transaction if it will be difficult or easy. On a positive note, there are agents who are handling these transactions well. It is important to know who is on the other side of the transaction to protect our client and their interests.

When considering values, it can be a mixed bag. The foreclosures do hurt the neighborhood’s values if there is a preponderance of them. Appraisers are required to use them in their analysis to depict an accurate picture of the neighborhood. If there are other comparable properties available for them to use, they will often use those in lieu of foreclosure properties so one bad egg won’t necessarily spoil the rest! Additionally, we have also noticed that a lot of banks and asset managers are pricing properties well below recommended prices from agents. This strategy is utilized to “unload” the inventory but it also solicits multiple offers in many cases raising prices above the initial list price. We have been involved in many multiple contract situations raising the price of the property tens of thousands of dollars above the list price. Therefore, the price you see might not be the price people will end up paying – be ready! As Sy Syms said, “An educated consumer is our best customer”.

The financing of homes has become increasingly difficult as a result of the “irrational exuberance” of the mortgage guidelines followed by many lenders in the early 2000’s. The loose standards created by the industry swung the pendulum from one extreme to the other. As a result, the secondary mortgage market all but evaporated, FHA financing has become in vogue again, subprime financing has virtually gone away, and programs that are offered by lenders remain in the state of constant flux so education in this arena is a must, and finally, second trust financing rates have gone through the roof making 100% a rarity. These conditions will continue to hinder the sale of houses for the foreseeable future. The good news is interest rates remain low on FHA products, the loan limit for FHA loans has been increased, and the fed appears to be stabilizing their rate as inflation remains a constant concern.

What does this all mean? First, hire the right agent. Next, have your agent educate you on the market. Third, take advantage of financing that is available today as it may be gone tomorrow. We know that all markets are cyclical and as result, prices will rebound. Always have always will. As a general rule, you can’t time the market. As noted earlier, we are seeing multiple offers on properties when priced below market and they have escalated above the list price. There are buyers and investors alike that are savvy about today’s market and are making the decision to buy. If you are a long term investor or a home buyer looking for a “home”, there is no better time to buy than now. Our area was recently recognized by Forbes as one of the best places to buy a property as it appears we have “bottomed” out. Additionally, we are bucking a lot of national trends by seeing the vacancy rate on resales decline and the affordability index is better as a result of the banks lowering prices on their REO properties and the high income level in the DC area. Therefore, I believe we have a reason to be optimistic!

An anonymous quote says “Destiny is not a matter of chance, it’s a matter of choice”. Choose to get in the real estate game!

If you are an agent, now, go sell something!

What makes your business grow?

What is important in helping yourself and your business grows in today’s market?
* Being a valuable resource (neighborhood values, rates, market updates, vendor resource, supplier of information, know your numbers)
* Become an active listener – repeat what they say so that you understand what they are saying.
* Ask more questions and write down the answers – ask if it is ok to take notes
* Become a better negotiator – look for commonality, reiterate goals, keep deal together, facilitation is the key!
* Become a better transaction manager – make the extra phone calls, do the due diligence (lender, agent, bank, hoa details ,etc)
* Have systems for follow up and follow through
* Communicate these details to your client – let them know your differentiating factor
* Stay calm
* Don’t be a commodity, be an agent of value. Know your product, price, build relationships, enhance experiences, improve your processes, upgrade technology, and exploit marketing techniques.
* Move people up the loyalty ladder! – suspects, prospects, customers, clients, advocates, confidants what are some ideas to do this – listen.

What are you going to do the next 90 days? Now is the time to separate yourself from the crowd! As I have said the last 3 or 4 months – make one more call, write one more note, go to one more networking event, do one more pop by, hold one more open house (yourself), add one more person to your database, see one more house (talk about the value) – do this everyday and you will see the results in 90 days!!
Now, go sell something...

Its getting hot in here!

As the temperatures rise, so do our sales which is great news! Vacant inventory is getting “flushed” out which means foreclosure inventories are going down. In conjunction with the increase in foreclosure sales, unfortunately, prices are declining in some areas. While enjoying the good news that as these properties get unloaded by the banks, we are perhaps seeing the bottom of those markets from a pricing perspective – we shall see. As we have mentioned before, timing the market is tough to do. By taking into consideration the trends we are following, we believe now is a great time to buy. My advice is to be persistent, wait for the right property to come on the market and hang in there on tough negotiations. Each transaction seems to involve a lot of back and forth between buyers and sellers even up to the last minute. Stay focused and diligent and you should get the home!