Northern Delaware Real Estate

Get ready, be prepared, time is running out, look out here they come, there will be mad crazy traffic, be ready for massive numbers of showings… umm wait, where are they all?  I don’t see them, I am not seeing them, at least in the market I expected.

104 Edgewood - Wilmington DE

For the last 5 months of 2009 I was seeing an incredible rush to buy real estate at what I consider my markets first time Buyer price point (between $175-325,000), but as of January 1, 2010 I noticed something different… the properties with the higher number of showings seem to be the move-up properties ($350,000+), especially in the $400,000 price range.   We have discussed the mythical rush at my office in our sales meetings, with my regional VP and with my GM, I have been advising my clients to get their properties on the market, to not miss the current market - the three-feet of snow may have put a kaboosh on the activities of late but that should resolve by March 1.

Watching the sales board at my office, and from conversations with a few of my friends, we have one question… where is the First Time Buyer Rush? My listings in the $200,000 price point are getting few to no showings, and low ball offers, or no offers.  My listings in the $400,000+ range are flying off the market.  So I guess I am seeing the move-up Buyers. Great for them. Maybe I will take a peek at market stats this week. Pendings were up in the Q4 of 2009, but I have a feeling the same won’t be true in Q1 2010.

So what are you seeing in your market? Love to hear your comments!

As a new year dawns people are apt to make predictions, so I have decided I would write what I have been thinking and voicing to clients over the last year.  My personal predictions for the Northern Delaware Real Estate market.

I believe that Real Estate has an 11/12 year cycle, as we note when looking at the market in the late 1990’s we were coming out of cycle then, I think we will see an increase in values in Northern New Castle County (North of the Canal, I won’t make predictions about the MOTS – Middletown, Odessa, Townsend and Smyrna for those not initiated, area).  The increase for 2010 will be gradual and small, considering that some areas have seen 20% declines in value since 2006 (peak feeding frenzy market), I expect to see between 5-7% increase in value, depending on where in the market you are.  I think that higher priced properties will be the slowest to recover due to the difficulty in obtaining Jumbo loans, but a great opportunity for move-up Buyers coming out of the $275-400,000 price point who have equity from purchases prior to 2004.  That in turn will also make available more great deals on properties for prepared First-time purchasers, as I have not seen a lot of nice property options in the low $200,000 price point in this marketplace since 2003, this is certainly a great opportunity.  

Homes that in 1999 were selling for $150,000 are selling in today’s market at $225,000-275,000, when in the 2006 market some of these homes were $275,000-325,000.  Please note that that still is an increase in value and helps demonstrate my theory of the 11/12 year cycle.  This is certainly the time to buy, and I am not sure why any interested and qualified Buyer would not be considering it, or a Seller.  My advice to my clients is consistently that if you have the equity and the desire, and a realistic expectation, the market is good – it is not a Buyers or Sellers market, it is a balanced market, and a normal market, so make that move.  Rates are predicted to be rising in the near future, and with an increase in value coming, there really is no time like the present.  Another strong factor is the First-Time Buyer and Move-Up tax credit, which will be expiring soon, so to take advantage you want to be under contract by April 30, or even sooner, as the back-log in refunds builds.

Buying at the low end of the cycle affords you the ROI in the long run.  Real Estate is NOT a short term investment, and proves decade after decade that it is the surest way to build wealth, through real estate ownership, and investment in properties, and good timing (as well as advice from a qualified Real Estate Professional) anyone can grow their own empire.  Carpe Real Property today!

And for 2011, I think we will see a 5% growth, followed by 2012 with a 7% growth in value. (Assuming no drastic changes to the economy and no major natural disasters).

As originally publised on REALTOR.com on December 2, 2009

We listed our house with a REALTOR® on August 20th, 2009. She still has yet to show our house and attributes that to the slow market even though there are other houses selling in our area.  I was wondering if it is possible to take our house off the market even though we have a six month contract with our Realtor?

-Sandra

Interesting question Sandra. There are a few things to consider when attempting to give you an answer, so please bear with me while I go through those things.

• When you compare your home to the others in your area that are selling, how is your home priced, and how do the condition, amenities and upgrades compare?
• Are other agents showing your home? Do you have it listed in your local Multiple Listing Service?
• Are you paying a competitive commission?

All of these factors, and many more, truly help determine why a home is, or is not, selling in the market. Despite the media hype, most of our country is in what is termed a “normal” market. We are not seeing the high demand and, therefore, the inflated prices many parts of our country were seeing four or five years ago. But property values have corrected themselves into a more normal range, rather than inflated.

Due to the credit crisis, there are far fewer mortgage products available to today’s buyers, and this makes your possible buyer pool significantly smaller. So before I answer the question of whether you can, or should, remove your house from the market, you need to look at the above reasons, and also look at your own motivation for selling. Most people buy or sell real estate at major life events or marks; are you at one of those points, or are you just looking to take the opportunity to “move-up” and gain an edge on the market while the higher price points are affected a little more drastically?

 
As for your Listing Agreement: In most markets, that agreement is a binding legal document, and although I am not an attorney (and I would recommend you have one review it for you), typically they have very specific terms and protection periods. In looking to take your house off the market, are you planning to re-list with another broker, or are you just planning to remain where you are?

Many brokers I am familiar with are much more interested in customer service and will usually easily release you from a Listing Agreement, especially if you wish to remain in the house, or are unable to sell. A Realtor gains no benefit from marketing a property for a seller who does not wish to sell. I would suggest a frank and open conversation with your Realtor and/or broker and try to determine why you are not getting showings. Then, determine your motivation for selling. Maybe it is not the right time, or maybe your home is not priced properly.

You need to forget that this is your home and consider it a house you wish to sell. Sometimes we become too emotionally invested in our homes and that can make it nearly impossible to be objective. Try discussing this with a trusted friend, family member, or advisor- they may be able to help you better than I can. You must be honest with yourself in answering all of the above questions. Once you determine what you truly want to do, then move forward with that plan of action.

 
I hope that helps! And thanks for taking the time to Ask a Realtor!

As published on REALTOR.com on December 4, 2009

According to a national survey commissioned by Move.com, one in six (15.4 percent) home buyers are considering saving up to buy a new home within the coming year. The Ask a REALTOR® team shines a light on what new buyers can expect.

What extreme measures should a buyer be willing to take in order to buy a home in 2010?

David Kres: “Many real estate practitioners expect the market to heat up in 2010. I would advise buyers to really know their market. All seasoned property investors have a razor sharp focus on what they are looking for and are always in a position to seize on a property right away. This goes for experienced homebuyers as well. So if the market really takes off, I would advise all buyers to know exactly what they want and be ready to move on in when they see it.”

Maya Paveza: “Price your house properly and aggressively! It doesn’t sound extreme, but it is for most sellers. Price is the key, and be prepared to offer a sellers assistance. Distance yourself emotionally from your house. Being attached won’t help you sell it, only keep it.”

15.7 percent of buyers are looking for investment properties. What advice do you have for these buyers?

Tim McBrayer: “It depends on the type of investment property you are talking about. If investors are looking for positive cash flows from rental properties, then unless you have enough funds to be able to pay cash for the property, you probably are not going to find yourself in a positive cash flow situation. So,  just be careful about figuring out what all of your costs are and what your net revenue really is. Keep in mind that you have principle, interest, insurance, taxes, upkeep and possibly HOA dues that your rental income should cover as much as possible.

It will ultimately come down to what risk tolerance the investor has and the funds available to reduce the carrying costs to a minimum so that a net positive cash flow can be achieved. If you are talking about investing for resale, then it comes down to doing your research to see if you can invest in repairs and upgrades and still make a reasonable profit in today’s market against today’s competition.”

45.1 percent say starting a home improvement is a number one New Year’s resolution in 2010. What home improvements do you think will bring the best value?

 Hank Miller: “I consider the best value to be quality basement finishing. If it adds appeal, utility and flexibility then it’s a good value. In our area I also see outdoor living areas (nice hardscapes, BBQ’s) as attracting buyers. Of course kitchens remain popular.”

 9.1 percent say fixing their credit so they can buy a home next year is their number one New Year’s Resolution related to real estate in 2010. What other real estate resolutions have you heard for the New Year?

 Maya Paveza: “To refinance their homes, to catch up on bills, to move-up and take advantage of the tax credit and the high-end market conditions being a little weaker.”

Ian MacMillan: “The resolution that I hear from homebuyers most often is: ‘I’m going to wait for the bottom of the market and then buy a home in 2010.’  When I hear this, I offer the same advice I’ve always given: the right time to buy is when you can comfortably and sustainably afford the monthly payments for a home that meets the needs of this particular phase of your life. Period. If this is possible in the current market, why wait for some mythical event in the future? I think if we’ve learned anything from this real estate downturn, it is that people who try to time their real estate purchases based on the state of the market instead of the state of their finances always lose in the long run.”

I have been doing short sales for just over three years. The evolution of the short sale in that relatively short period of time, has been dramatic.  The dramatic change has come at a rapid-fire rate in the last five months.  In April, a property went under contract as a short sale, with two loans (same lender), and closed within ten weeks.  In May a property went under contract, with two different lenders (primary was the same as the previously mentioned sale), it didn’t close until early September, and even then with much drama, stress, chaos, threats from Buyer to walk, inappropriate emails from Buyer, Sellers under great stress and financially crushed – but it CLOSED.  What used to seem to be a logical conclusion – sell the property to someone and cut your losses lender, it is the market after all… is now changing.

Over the last month I have spoken to a number of local Real Estate Attorneys in my market, and what I am being told by them is – the short sale is dead. Why? Because the lenders want the debt reaffirmed, the lenders don’t want to pay any closing costs, assists, or commissions. They will not pay the Attorneys fees, or negotiator fees.  This is not for ALL lenders, but it seems to be sweeping through many. 

Why do the lenders suddenly feel this way?  I have been told there are two reasons…

1.       Insurance.  The lenders have   insurance against default on the loans, which often pays more than then the short sale may, so rather than take $.10 on the dollar, they are rolling the dice and collecting their insurance.

2.       Market recovery. The lenders believe that by the time they take a property into Foreclosure/REO the market will have recovered a little, allowing the lender to make more money. So to wait 3-6 months and make $50,000 more on a property seems to be worth it, despite the fact that as I understand it the cost to foreclose is between $20-50,000.

I won’t list another Short Sale.  It is not that I don’t want to help people, I definitely do, but the lenders don’t want to help people. The last one I did was for a wonderful family with seven children, the Father lost his job, and the Mother did not work, they found a job out of state and moved, leaving the home well cared for and in good condition.  The lender would not negotiate, would not consider their hardship, would not put a human face on it, and it is a lender I had respected.  The pain and anguish I watched this family go through was heartbreaking.  Never again.

I will not list a short sale, too much work, too much time, too much drama, and too much heartbreak.  But will I sell one? That depends.  Lenders are not paying commission, we as Real Estate agents are at the mercy of the bank and have no idea what we are working for in the end, and if you are an agent like me you work just as hard for any client, on any property, regardless of financial circumstances. Was it worth all my work on the last few to have my commission cut at the last moment? Not at all.

So what have I started doing? I tell my Buyers to pay me. If the commission is listed at 3% I will ask them to sign a legally binding document stating that they will personally pay the difference between the final bank paid commission and the agreed upon amount, so if a lender pays 2.5%, then my Buyer agrees to pay the difference of .5%.  Do I think it is fair? Absolutely. No one works for free except a Real Estate Agent and that expectation needs to change. I am an expert, I bring my experience, knowledge and skills to the table to serve your needs, and get you the home and deal you want.

While I am working so hard to fight for you to get that house, and while the lender wants every possible deal brought to them, until the last possible moment, you are going to sit and wait for months, waiting for nothing, waiting for something… or just waiting.  It is not worth it, there are no guarantees, the lenders are changing the game on a daily basis. If it says Short Sale, I do the following before I even show it:

1.       Call the listing agent to find out how many offers are in, and what the Lender has instructed them to do.

2.       Find out which Attorney (Delaware is a Lawyer State) is representing the Seller so as to determine where in the process they are.

3.       Read the fine print – make sure it is not one of the recent growth in predatory individuals who is “helping” the homeowner “sell” their house, taking a commission, bumping costs up, and requiring a 3% Buyers fee be paid to them (big problem here).

If the answer to #1 is none, great lets go… If the answer to #2 is a positive, even better! And #3. I know who they are and I know to avoid them, but others don’t.

So, if you are my client and want to Buy a short sale, know the terms up front, because when I explain it may take 3-4 months, I don’t want to hear you whining at 10 weeks, and wondering at 16 weeks, and moaning at 24 weeks… oh look, that is more than four months… guess what? No guarantees, no promises. You want to play in the pool, then be ready to tread water, and if you want me as your lifeguard, you might have to guarantee your own life preserver.