REPO WITH MULTIPLE OFFERS! WHAT SHALL I DO??

We have seen a steady supply of bank owned repo properties coming on the market and the tendency for those sellers is to price them at the low end of the range. This has definitely been an effective strategy for getting those properties sold in short market time and ahead of the competition that is less attractive on price or more attractive in other ways. Recently, inventory levels have been declining in many of the types of properties with the broadest appeal and/or that are in higher demand areas or categories.

What we are now seeing in some cases when aggressively priced bank owned (or HUD, Fannie Mae, or Freddie Mac) properties hit the market, are multiple/competing offer situations. That always brings up the interesting question; what should I do now!?

I think there are at least a couple of ways to look at the options you have:
     • One way is the philosophical “if it’s meant to be” or the “there will always be plenty of other homes/we may even find another one we like better” approach. In this case, you don’t get too worked up and stuck on the this particular house or any other home for that matter and you are more conservative and number crunching in your approach. If someone else outbids you, then so be it! There will always be some other house that you can buy at a later date; we’ve never run out yet! You make your offers at whatever figure the stats justify and/or that you feel good about and just let it go. If you get the house, great. If not, you simply move on and don’t carry any baggage.

     • Another alternative is the “offer what it takes” approach and justify or rationalize the decision that plus or minus $10k or even more is not significant in the long run 5, 10 or 15 years down the road in relation to everything else that goes into a home and goes on in a home. Some would place more value on getting the exact or particular home of their choice rather than the financial/mental value of feeling like they paid a lower price. Recognizing that there is no “exact” price for any house makes it easier to see the logic of this decision or approach. You can see from the available IMLS statistics (easily provided; call or email) that there is quite a range for houses that are actually very similar on paper. If there are plans to sell in the near or forseeable future, this is a more risky appoach, because there may not be any equity in a year or two, or there may not be enough appreciation to cover closing/selling costs. If the plan is to stay for a longer time period, then it is likely that other events over the next 5-10-20 years will likely cancel out the “may have paid a bit too much” problem.

     • When you are faced with the multiple offer or “highest and best” situation, the negotiating advantage suddenly is shifted to the seller side. This does not mean that you should do anything unwise or irrational of course, but it is best to just dismiss some of the common misconceptions such as; “you always offer less, no matter what” or “their price is too high and they are probably planning to come down”. Normally these things could very well be true, but they go away by default when a seller has two or more offers in hand at the same time on a property with only 1 day or very few days on the market. It’s probably wise to also recognize that multiple offers confirm what you concluded also; it must be a pretty good house or the other people would be making an offer somewhere else. Multiple offers generally reinforce or point to the fact that the property has a very attractive price in relation to the present inventory (or lack thereof) that is presently on market and that everyone has to choose from at this moment in time. That is not to say that things could not change in a day or a week or a month from now. There may be a whole flood of homes in the next few weeks or there may be a draught with increased buyer demand and eventually rising prices. I wish I knew the answer to that one. Most of the things you read and see in the media are pretty drama filled regarding economic conditions and uncertainty worldwide, but don’t really point to any clear trends that I would rely on personally.

What to do? Your call, because it’s your money and your home. Do what is best for you!

Inventory Down. Interest Rates Down. Prices May Go Up!

From recent personal experience in helping a number of clients looking to buy a home since the first of 2012, it is obvious that there are fewer properties to choose from and the selection is definitely “picked over”. That isn’t to say that it is suddenly a seller’s market, but seems clear that the glut of homes we saw for the past several years has declined significantly. Many of the bank repo properties are still being priced at rock bottom levels, but are now in some cases getting multiple offers. Clearly, there are more buyers jumping into the mix; probably a result of the present combination of low interest rates, an awareness that sooner or later the market will likely change, decreasing supply and the pent up demand resulting from 5 years of “postponed house hunting/buying” due to economic uncertainty and consumer fear.

The shift/increase in prices has not yet occurred, because that usually lags behind the shrinking inventory a bit. It may eventually be accelerated by increased demand as more potential buyers become aware and as they jump on the buying bandwagon. It is still an excellent time to buy a property; low rates and low prices! What could be better?

As an added FYI, according to CNN Money and Realtor.com, “the number of homes for sale during the fourth quarter fell by 40% compared with a year earlier. That shrinking inventory should help drive home prices higher. Fiserv is forecasting annual home-price appreciation averaging 6.3% over the next five years”.

MANSION MUST GO!

          MANSION MUST GO!

Here’s a solution to the vacant Simplot/Governor’s Mansion perched on the hill at public expense. For the sum of one dollar ($1.00) I hereby volunteer the services of our House of Brokers Home Team local real estate firm to sell the former Simplot mansion property that is presently sitting there on the hill unoccupied, unused, outdated, oversized and costing taxpayers a lot of money.

Why don’t we convert that dormant public asset into some cold hard cash that can be put to good use by the Idaho educational system or some other worthy public entity? Public records show that there were three parcels formerly owned by Simplot and now owned by the state; one of approximately 2 acres and containing the 7369 sqft mansion, another with 35 acres to the east and containing Simplot Drive to access the home, and the 3rd parcel with about 2 ½ acres on the west just above the El Pelar Subdivision below the mansion. The 25 acre (lawn) parcel that abuts Bogus Basin Road and Cartwright Road to the West, and which is the most visible, still appears to be privately owned under the Simplot Financial Corp. name.

The last time those three subject parcels had a county assessed value assigned to them prior to the change of ownership from private to state, their collective county assessed values were a total of $2,553,600. If one were to apply the current mil levy, the property tax bill for this year would be about $38,706! Unfortunately, no taxes are paid into the public coffers because the property is owned by the state and is therefore exempt. That is a lot of missed opportunity in terms of money that could be coming in for some productive use that would benefit the public.

The real cost, however, is an opportunity cost in having several million dollars just sitting there not working or generating some productive outcome that could benefit public education, roadways, infrastructure or some other public interest. Further, the ongoing maintenance expense on a vacant home and property of that caliber is considerable. If there were deed restrictions or other limitations that were placed at the time of the property donation being made from Simplot to State of Idaho, those can easily be modified or amended since the donor obviously had good will and benevolent intent at heart.

Why not sell the beast? Surely there is someone out there in the private sector that will have a vision for some better use. Let’s get that place on the market ASAP and convert those liabilities and non-productive taxpayer dollars into liquidity that will benefit us all. Even though the Simplot family made a very generous and positive gesture in their donation of the family estate, the time has probably come to recognize that it does not make financial sense to keep the property, nor is it in the best interest of the general public, given current economic conditions.

The House of Brokers Home Team realtors are ready to put a sign in the yard and get the wheels turning in a statewide and nationwide search for a more logical owner who can put the property to some beneficial and productive use. At the same time, it should be our goal to put a nice big lump sum in the general fund as well as continued hefty annual property tax income once again from now on. That’s a sure win win proposition. What could be better for everyone?

Christian Hansen
Licensed Idaho Real Estate Broker
House of Brokers Home Team
chris@houseofbrokers.net
208-375-3335 direct line/cell

I’m Sorry the Value of Our Houses Went Down! :(

I am sorry that the price of your house has gone down from the highpoint of the market, from what it may have sold for before, from what you may have hoped it was worth and perhaps even from what you actually paid for it some time ago. At first when the market changed, I somehow felt a sense of responsibility and guilt for the fact that house prices were going down. After helping people buy houses for 20 years and always with the net result of rising prices and higher values, I along with everyone else became accustomed to that mentality and the belief that it would always be so.

Not true today, as we all now know. I also now know and acknowledge that it was not anything that I did wrong as a real estate professional helping my clients, nor was the decline in value through some fault of our customers and clients who bought the houses, whether during the peak periods of 05’-06’ or 10-15 years ago. The simple fact is that a world wide financial catastrophe has occurred, is still occurring, and the price of your house and my house has gone down a bunch! That is a cruel, harsh and non-debatable fact. Many people are still in denial, but that does not cure nor cancel out the problem.

Depending upon the type of property and were it is located; the loss in value from our local market high point may be from 40% to 75%. It is not unusual to see properties in the Boise, Meridian, Nampa and general Treasure Valley area selling for 50% or 50 cents on the dollar from their sales prices and/or assessed values at the high points for those two respective benchmarks. We are seeing values that have returned to the levels we saw in the late and even mid 1990’s. This is not good news or happy information, but it is true and it is easy to verify. Our sales data goes back to those time periods and we have seen the same houses selling now that we sold back then. Numerous times, the same address will come up in a history search and the price now may be half or less than the prior sale in 2005, 2006, or 2007. Commonly an actual sales price from 2011 will be similar or even less than a sales price for the same property in the late 1990’s.

If you are selling a property right now, it is important to understand and acknowledge that the current value of your home or property has little to do with the past and a great deal to do with the present. At present, bank owned, short sale and otherwise distressed properties are still driving the market and like it or not, those are the ones that buyers will gravitate towards purely on the basis of price attraction. Everyone likes to get a deal and a house hunting search always starts with the least expensive home on the list and works its way up. That is not to say that buyers won’t pay more for a nice property in better condition than a bank repo or otherwise lesser sample, but they will not pay significantly more than where the predominant prices and typical cost per sqft. figures are falling for the competition and for recent comparable sales.

Anyway, the gist of this big lecture is simple; we don’t get to set the ultimate sales price. The market does that with a combination of buyer and seller forces. We get to set the asking or listing price and then do the best we can to find buyers at a price they are ultimately willing to pay after they do all of their own comparison shopping and homework. If the reason and motivation is strong enough to sell now and the decision to sell has been made, then the value of the property is simply what the market will pay today and the “monopoly money” that coulda-shoulda-woulda been there 5 years ago is just ancient history. It serves no purpose to be for sale on the market and in price denial for several months while missing out on prospective buyers, only to then finally acknowledge that price was the issue all along. It is common to start out on the high side and negotiate downward as necessary, but at the same time, being somewhat in the ballpark when first hitting the market has the distinct advantage of possibly finding a buyer in the first few days or weeks and getting the job done.

So, that said, the house can eventually sell, even in a down market. We give it our best effort and attention, regardless of price range, condition or property type. There IS a qualified and informed buyer out there somewhere and they are looking every day. Once you are on the MLS, the internet, and the related media marketing outlets, there are only two other variables; condition and location. The key issue and variable is price. It IS important to get that one right if one is to sell now.

Thanks again for letting us help you.

Chris 

IS THE MARKET PICKING UP THE PACE?

You have probably noticed the lack of a glut of “exciting new listings” or “awesome prices” that we were seeing a few months back.  I have noticed this too and have given some thought to the explanation for what we have been seeing as of lately.  This is just a guess on my part, because our business is not an exact science, and we can look at statistics at some point later for documentation, but I am logically putting 2+2 together at this time.  The following is also based upon my monitoring of the inventory for a number of clients in different categories of properties.

• ·         Fewer new listings/homes coming on the market at present and total inventory has decreased
• ·         Prices of new listings do not appear to be continuing the past trend of lower and lower list prices with each successive listing or sale
• ·         Prices of new listings seem to be increasing now in relation to similar properties/new listings of a few months back
• ·         New listings at the low end of the pricing range for their given criteria set are in many cases attracting multiple offers
• ·         The total number of listings appears to be shrinking, especially in the median price range and under, and particularly the 3BR/2Bth 2Garage segment
• ·         There are 207 active listings of 3BR/2Bth 2Garage homes on the market in Boise right now that are priced under $120k
• ·         There were 240 sales in the first 4 months of this year of 3BR/2Bth 2Garage homes priced under $120k
• ·         There were 180 sales Jan-March and 60 sales in April of 3BR/2Bth 2Garage homes priced under $120k
• ·         That means we have an approximate 3 ½ month supply/inventory of that most popular category compared to almost a full year supply/inventory in 2010.
• ·         Other categories of homes in modest price ranges and properties that are higher demand/lower supply are seeing the same trends.
• ·         The listings that we presently have on the market for our client sellers are getting much more showing activity and more offers than in the months past.
• ·         Spring and early summer has traditionally been a more active time of the year for buyer activity and sales, and that trend seems to be more evident this year.

Anyway, my conclusion after thinking on this and trying to figure out what is going on (or why I haven’t found you a house yet J) is that the market seems to be changing and the trend seems to be back toward a more normal balance of inventory and supply/demand as well.  I don’t think it is going to drastically change overnight or explode into rapidly increasing prices or anything like we had before, but it definitely seems to be changing or has already changed as of right now. 

I also think there are some things that have to be overcome or the thinking has to be adjusted for when a change like this occurs.

• Buyers should forget about the awesome deal price(s) they saw a month or 6 months ago and think in terms of what is available right now or in the near future
• It does not serve any purpose nor is it valid to compare and shop in relation to ancient history or even recent history if things have truly changed and are not going back
• If prices are starting to trend upward, the bank repos and short sales are likewise going to sell for more than they did in the months past because even distressed sellers have the natural inclination to get as much as they can while still selling their properties within the desired target time frame.
• Once the entire marketplace, and especially the media catch on to the idea of a recovering market, it tends to accelerate itself by virtue of a sudden surge of buyers and interest infused into the marketplace which further contributes to the trend toward a lower inventory and higher demand that has been lacking in the past few years
• If you are trying to find a home in your price range with the things you want and need to make you happy, it is most healthy and good business to look and compare what is available now and what is coming and going daily at this time rather than past history or something you may be wishing for, but that may not be realistic now.
• If it seems discouraging to have missed out some specific home or even the low prices you saw a few months back, think on the bright side and about the fact that prices are in most cases 30% to 50% lower than they were in 2005-2007.  Prices are still down there and there are still lots of homes to choose from! 

I guess we will see what the next few months bring to us, and in any case, I am still watching and waiting every day for that perfect dream house (or close to it) for you.  I will keep them coming to you as long as you want.  Call or email if you have any questions or if you see one you want to take a closer look at. 

Best wishes, and thanks again for letting me help you. 

Chris   375-3335 direct line/cell

Rental/Investment Property; Your Own Independent Business!

 

Thinking of buying and owning a rental investment property?  Great idea!  Your own independent little business with a minimum amount of up front capital at risk and the benefits of a good rate of return, possible appreciation in value, income tax benefits, and an income stream for retirement or sooner.

The best way to look at buying a rental is a small (or large) business of your own that will take some of your time to manage and in which you will also invest some of your capital, expertise, energy and enthusiasm.  Just as if you owned a McDonald’s, a bike shop, or an airline, you will have customers who are willing to give you their money in exchange for something that you have to offer for them.  As an added bonus with rental properties, your customers are willing to buy a building for you at no extra charge!  It doesn’t get much better than that, and the only catch is that you have to wait a while to get the free building.  No problem there, however, because in the mean time, they are going to give you a good rate of return on your investment dollars in exchange for the housing and excellent service that you are going to provide for them and their family.

Like any business, it takes hard work, commitment, and a genuine interest in providing excellent customer service when it is needed.  A landlord property owner cannot view the customers (tenants) as an annoyance or bother, but must recognize them as the valuable asset they really are, and treat them accordingly.  Customer needs should be met promptly and willingly with great service and a happy face.  It is good to approach the role of investor/landlord/property owner with a realistic outlook about the time commitment and the total costs of doing a good job.  It IS a job and like any job where you are the business owner, there is a time commitment and some risk as well.  In return, the rewards can be great.

Whether you have always or only just recently thought of buying a rental investment property, now is an excellent time.  The prices we are seeing at present in many cases are less than fifty cents on the dollar from the high point we saw a few years back, and this is resulting in positive cash flows, potentially high rates of return on investment dollars as well as the possibility of greater appreciation and gains in the years to come.

All it takes is a little money and a desire to own your own business.  Get started looking today.  There are some great buys and investments out there!

Hello world!

Welcome to the new House of Brokers Home Team blog that replaces our prior version with MSN.  We hope you will find the information informative and useful.