Well, I’ve been putting off my “First Blog, ever”, for about the last year, after we decided, as a team, that I would write either weekly or monthly blogs on our team website. So, after much procrastination, here we go. The most popular question I get (and any real estate professional, for that matter) is “How is the market?”. So, I thought my first blog should be a “State of the Union” speech. If you are a seller, you might want to stop reading at this point and go find something enjoyable to do. If you are a buyer, then you guys are pretty much ruling the world right now, so you’re about to become educated and happy at the same time. If you are a buyer AND a seller, then the news is actually pretty favorable for you as well. The fact is, without a doubt, “IT IS A BUYERS MARKET OUT THERE”. Of course, there are some small exceptions and unusual circumstances, but for the most part, our local market here (Ozaukee County, but also including Washington, Sheboygan and Milwaukee County) has seen market values drop for each of the past 4 years (since 2006). At this very moment in time, there are simply more homes for sale than there are buyers available. To make matters worse, many of those homes are priced too high to even come close to attracting an offer. Those overpriced listings will eventually sell, but at prices far below their market value (The blog about how overpricing your home will actually net you LESS money will come at a later date!)
So, what’s going on out there? While the market has slowed, it’s not dead, at all. To the contrary, since January 1 2010, there have been 518 single family homes SOLD in Ozaukee County. And with 660 single family homes currently on the market, all of the homes out there should be sold within the next 12 months, give or take. You’ve probably heard the stories on TV about how buyers are getting accepted offers on homes at 25% less than the asking price. In my experience, that is the exception and not the norm. While I don’t really rely on statistics, the number that you will hear often is that sellers are looking for 95% of their asking price. That’s a fine number to use as an average, but again, every deal is different. We have seen some buyers write offers for $40,000 below the asking price (on a $200,000 listing) and at the same time, believe it or not, some buyers are writing offers for very close to or sometimes even over the asking price. At the end of the day, the home always sells for MARKET VALUE. I’m not even going to address what the proper definition of MARKET VALUE should be, other than to say it’s the final accepted offer price. I often tell buyers and sellers, regardless of how good of a REALTOR I am, “The market always wins”.
I guess I should talk briefly about foreclosures and short sales, since they are, without a doubt, a considerable portion of the market. Really quick definitions. A foreclosure listing is a listing that is OWNED BY THE BANK. The former owners are no longer living in the home and they no longer have any interest in the property. These listings, for the most part, are very easy to buy, assuming the condition of the home is decent. “Short Sales” are listings where the asking price is not enough money to cover the existing mortgage or mortgages. Buying a home on a short sale is completely different than buying a foreclosure. Short sales, especially for buyers, can be a very long, very frustrating experience. On a short sale, you need to get the offer accepted by the seller, BUT then you also need to get the approval of the lender, or lenders, which can be very trying. In a short sale, the ultimate goal is to get the bank to agree to NOT go the foreclosure route, and instead accept the NET PROCEEDS of the sale as payment in full. Sometimes, the bank will agree to the short sale, but still hold the seller responsible for the remaining balance. Many of the short sales we see on the market are with homeowners who bought their homes in 2005 (the height of the market) or later. For homeowners who purchased their homes with little or no down payment, they have seen their equity disappear and are now “UPSIDE DOWN”. I’m certainly not smart enough to write an entire blog about all the reasons that the market and our economy are the way they are, but I will make a comment about when I first started out in real estate, back in 1995. I remember that when I was first writing offers, my dad would always be looking over my shoulder, and reviewing the contracts. He was always troubled by the financing contingency and would say “These kids don’t even have a down payment. They are borrowing the ENTIRE purchase price?” I didn’t really know any different, and that’s the way offers went for the following 10 years. And then the market turned, and then,…………ba-da-bump. Here we are.
So, what’s my prediction? I predict that we have just experienced a correction in the market; a correction that will, hopefully, instill some basic fundamentals of investing in real estate such as……….save up and have a down payment at the closing. I don’t blame the buyers at all. Truth be told, I’ve invested in plenty of real estate during my career, and I have always borrowed as much as possible and put down as little as possible. And , truth be told, I’m probably upside myself on a couple of properties. The current market conditions provide A LOT of opportunities out there right now. If you are a client, you’ve probably heard me say “Buy as much real estate as you can right now, I really don’t think it’s going to get any cheaper”. That’s an honest statement, but I will also say, I thought the same thing last year, and it looks like market values have dropped (in our area) a couple of percentage points again, so what do I know.
Overall, the year 2010 has been a real blessing for our team. To date, we have closed over 54 transactions sides this year (that is only Ozaukee County, and by far , #1!) and our team continues to gain additional market share. This was the year that we added Carolyn Bolz Wykhuis, who brought 15 years experience, and a lot of past clients and we also moved the young college intern, Andrew Noegel, to the full time sales agent position. His knowledge of technology and use of social media has kept us on the “cutting edge” of the industry. With a team of 6 now, we have a lot of momentum and are enjoying the market challenges.
So, that’s my first blog. In the future, I’d love to hear suggestions on what people would like to hear about (That is assuming anyone is actually reading this). I assume I’ll blog about our team and certain specialties of the market such as building a new home, buying vacant land, condominiums, vacation property, commercial property and buying rental properties. I can also blog about home inspections, loan programs, remodel ideas or how a septic and well work. (If you don’t know how a septic and well work, you’re not alone, no one does!)
Tom, out.
