Which seller are you?

Getting your home sold in SE-WI right now, is not as tough as you might think despite the market. The key is understanding a few things about yourself and how you approach the market that determines if and how quickly you sell.

What Home Buyers Want

Right now, there are roughly half the number of buyers in the market as we would normally see. As a general rule, they are conservative and concerned due to the state of the economy and tough lending requirements. They are looking for value. Ultimately, they are going to buy the home that is the best value on the day they make their purchase decision… Wouldn’t you if you were buying today?

Understanding The Housing Competition

Knowing that buyers are looking for value, another key factor if you want to sell a home is knowing who your true competition really is. For you to determine “good value,” you have to know what to compare with. This takes working with a real estate agent that understands the market better than the others. Choosing your initial market position is perhaps the most important factor when deciding to put your home on the market.

Your Motivation To Sell A Home.

So you know what buyers want and you understand your competition and how to value your home, the next and final step is to understand your current situation. Are you motivated enough to sell your home? Here’s a simple test:

Pick which of the below choices best describes you. Think seriously before you decide, as this will help you greatly.

1. The Casual Seller - The casual seller says things like “We are not in a hurry,” or “We don’t want to give it away.” You can expect this person to say “We will sell if we can get $X ….”
2. The Serious Seller - The serious seller says things like “I understand the market and I’m willing to sell my home for what I’m seeing out there.” This seller is ready to sell at “perceived market value” and they expect to price their home with the competition to get it sold.
3. The Very Serious Seller - The very serious seller must sell now. They are willing to create a perception of value and entice buyers to select their home before all others.

Who will sell their home in the next few months?

So, what kind of a seller are you?

If you answered the above question as honestly as you could, you need to know that the casual seller is not going to sell their home in today’s market. There are just way too many homes for sale and the casual sellers are doing themselves and the very serious sellers a dis-service by adding to the inventory.

The market will eventually recover and there will again be great times to sell, but today’s buyer pool is looking for value. Even the serious seller is most likely not going to sell their home. With over 11 months of supply in SE-WI plus new short sales and foreclosures entering the market, only the very serious sellers have the best chance of being successful over the next 12 months. Luckily with our very low commission of 1.5% a seller listing with Homeowners Concept has quite a few thousands of dollars in savings to play with. A serious seller can take the savings and deduct it from the list price making their home much more attractive to buyers.

THE SAVINGS IN COMMISSIONS IS YOUR BONUS

25 years ago Homeowners Concept started as a real estate office to save sellers the huge 5, 6 or 7% commission. Today Homeowners Concept has evolved into a company where sellers can turn to for great service, top notch real estate expertise and great marketing. The savings in commissions is really a bonus.

Over the years we have developed a program that we can guarantee as the most efficient and effective way for selling homes. We have done this by providing more in marketing properties (having the most widely distributed homes magazine and a great website, among others) and having highly skilled, full time, long term agents who are truly dedicated to real estate. You see, the traditional high commission model of just hiring agents regardless whether the business is there or not saddles the system with mediocre agents who spend most of their time competing with each other offering the same thing and charging 5-6% commissions (see post of 8/26/09). There are way too many agents for the amount of sales and one can understand why the average agent does only a few deals a year and has just a few years in business. We on the other hand, limit the hiring to just the best in the business so our Realtors do a lot of sales saving you money from excessive commissions.

When you work with Homeowners Concept, you work with some of the most successful and most active agents in the area. Our Realtors know what’s going on in the market right now because they spend all of their time serving clients: touring homes, writing offers and closing deals. The savings in commissions again is your bonus.

The futile way of selling FSBO

The very reason we exist is a result of For Sale By Owners (FSBO). It was early 1984 when our founder walked away from buying a For Sale By Owner (FSBO) after he realized the legal cost involved and time away from work necessary to meet with a lawyer during business hours. He wondered how many other buyers walk away from buying a FSBO if Realtor assisted homes are easier to get. A little research at the central library consisted of calling 100 FSBOs from the newspaper ads of 3-5 months before, showed that very few sellers were successful (at that time only 12% of FSBOs were able to sell without any Realtor help - most recent national survey shows that only 9% are successful). Either way these numbers are dismally low. It was then that he realized that there has to be a better way for real estate to be sold and our Concept was born as the "missing link" for FSBOs to achieve the Realtor advantages without the hefty commissions.

This year alone we have tracked FSBOs in Wauwatosa (one of the healthiest in sales in the metro area). So far only one home out of 14 has sold this way. All others have turned to Realtors and 2 w/Homeowners Concept - one of which has sold, the other is pending.

Ordinarily, FSBO is the cheapest way to sell most of the time BUT that is only if you sell (although there have been cases where FSBOs have spent far more than our fee, mainly on attorney costs). Factoring in the extremely low probability of selling as a FSBO the cost of selling is substantially higher. It is the time one loses trying as a FSBO (usually 8-9 weeks) that damages the home's chance of getting sold at its highest price plus the money a FSBO spends on marketing. It is the buyers' reluctance to enter negotiations with the seller directly and spend hundreds if not thousands of dollars in legal fees plus maneuver through the transaction on their own that dooms the FSBOs. One of the fallacies sellers have is that a buyer will use "their" lawyer to do the buyer contract, counters, amendments, etc. That is extremely rare and besides, attorneys list their homes with Realtors at the same rate as any other profession (they know better). Over the years we have had hundreds of sellers who were trying completely on their own, then turn to our company and within a number of days to a few weeks got an accepted offer as a result of having someone the buyers could turn to.

Every year, $100s of millions of dollars are wasted by sellers trying to sell as a FSBO before they turn their home over to a Realtor to eventually sell it. If sellers knew all the facts, they would never resort to sell a property as a FSBO not as long as companies like ours are around.

Mortgage information you should be aware of.

More than ever we are finding that a mortgage banker has many more options to finance a purchase than a direct lender such as a bank, mortgage company or credit union. Just in the past few days we had 2 loans approved that had been rejected at a local direct lender.

The first was an FHA loan for a Wauwatosa home that Bank of America will not approve due to issues on the condition report which the buyer was accepting. Our preferred mortgage Banker Netcentral Mortgage placed the loan with a lender that does not require the condition report.

The second buyer was not getting approved for a Waukesha condo at Westbury Bank due to an association assessment. Again Netcentral Mortgage was able to place the loan with an underwriter that accepted the assessment restriction.

We suggest to buyers to avoid hassles, delays and even rejection of their loan by using a reputable mortgage banker. Mortgage bankers work with multiple lenders and know which underwriter will approve what. Furthermore, a mortgage bankers oftentimes have better rates or closings costs as different banks compete for loans. Netcentral Mortgage has beat or reduced closing costs for many buyers over the years.

A recent testimonial letter says it all

When we decided to sell our house in this current uncertain housing market we knew we were taking a risk, however, after our first meeting with Mary Skanavis from Homeowners Concept we knew we were going to have a knowledgeable and experienced professional by our side.

From the beginning Mary gave us straight-forward facts about our home sale.  Unlike some of her competitors, she wasn’t telling us what we wanted to hear; she gave us a clear understanding of what our house was worth and what we could get for it.  Together we came up with a “game plan” for how we were going to tackle our home sale.  We really appreciated this type of approach because it left no mystery to how we were going to handle things going forward. 

Like a good coach, Mary had almost daily correspondence with us informing us how showings went, how other houses in the market were doing and advice on how we could improve the success of selling our own home.  Through that dedication we were able to sell our house remarkably fast and we sacrificed very little in the process.  I cannot stress enough how thorough and involved Mary was, especially with answering all of our questions.

When it came time to buying our new house the decision to use Mary as our buying agent was an easy one.  We ended up buying the house of our dreams and she negotiated the price saving us a substantial amount of money. 

Working with Mary goes way beyond her expertise in the real estate industry.  You can easily tell she enjoys her job and the challenges that come with it.  She is very encouraging and charismatic and I would encourage anyone to work with her for buying or selling a home and the savings in commissions is a bonus.

Lisa and Mike G.

Sold in Wauwatosa/Bought in Pewaukee Using Homeowners Concept

Tax Credit Deadline is Approaching

First-time home buyers have just 10 weeks left to find and close on a home to qualify for the $8,000 Federal tax credit before the November 30th deadline. 

The Federal tax credit has proved to be extremely popular already, since taking advantage of it is cited by 10.8% of the buyers as the most important reason for purchasing a home, according to a recent study. In fact, approximately 1.14 million buyers have already filed for the credit. Many more are expected to file for the credit when income taxes are due in April 2010. 

On average, first-time buyers search for 12 weeks to find a home, while closing can take between 30 to 60 days depending on the lender or issues with the property, appraisal, etc. So, it is going to be a challenge for the buyers who are just beginning the process. Smart buyers though, can make extensive use of our website to narrow down their choices, work with one of our extremely experienced real estate Professionals and use our preferred lender Netcentral Mortgage so that they can make sure the purchase closes on time. 

The Rent to Own program.

Recently we closed on another home that was under Rent to Own for a little over year. During that time the seller was able to cover the  mortgage while the buyer worked on getting the downpayment and bringing the credit score to a level that they could qualify.  Increasingly this is an option that sellers turn to to sell their property, especially if the property is vacant.

The way the Rent to Own program works is as follows: Buyer agrees to rent the property until such time (usually a year - but can be extended) that the buyer can get a loan. The buyer cannot qualify for a mortgage upfront due to credit, length of time on the job, sufficient downpayment or other reasons. Buyer would pay an upfront "option premium" which would not be refundable (usually around 2% of sales price). In addition any amount above and beyond an average rent for a similar property can be credited toward the downpayment of the buyer. 

From the standpoint of the seller, the Rent to Own provides a temporary tenant that could look after the property and help with the mortgage. The buyer on the other hand gets into a property they can call their future home. As a result they can make improvements with the blessing of the seller. Most times the sellers agree to the improvements/updates since it makes their property more valuable. At the point in time that the buyer can get a mortgage the property can go to closing and seller can transfer title. Homeowners Concept has done hundreds of Rent to Own contracts since 1984, as a result we are very familiar on how to negotiate and structure the contract so that the property does eventually close.

What's keeping a lid on real estate prices?

Part of the reason prices have dropped and continue to stay low is due to a very high number of foreclosures. What is interesting though, according to a report led by economists from Northwestern University and University of Chicago confirming that people are walking away from their homes even if they can afford the monthly payments and it's happening on a grand scale.

In a study of more than 1,000 American households, the report concludes that more than a quarter of existing mortgage defaults are "strategic" -- done by those who can afford their monthly mortgage payments, but choose to default anyway.

A main factor in strategic defaulting is the extent a home is underwater, or worth less than what's owed on the mortgage. Have a look:

Amount Underwater	Percentage of Sample Declaring Intention to Default
$50,000	9.38%
$100,000	25.81%
$200,000	41.23%
$300,000	44.65%

The report also found the propensity to walk away within a specific ZIP code fed on itself, which the researchers attributed to "a contagion effect that reduces the social stigma associated with default as defaults become more common." In other words, "Hey, if my neighbor's doing it, I might as well, too". This is happening far more in CA, NV, FL, AZ than in WI but it is happening nevertheless. As long as this phenomenon is going on and the high inventory of homes for sale, it is difficult to imagine a return to the bubble prices (years 2003-2005) any time soon.

Proper Pricing is Key to Selling.

Anybody who has ever found themselves trying to sell a home invariably struggles with the question “What price should I set on my home?” While normally this is an important decision for a homeowner to make, today it is one of the most critical decisions in order to sell a home. The Metro Milwaukee real estate market appears to be similar to most real estate markets around the country. There is a huge inventory of homes and buyer activity has dropped off from years past.

Supply And Demand Dictate Home Values
We must never forget that real estate is a commodity and as such the laws of economics apply. Many of us think of our home as a unique place on this world, and while we are living there, it really is. But once we decide to sell it, our home becomes a house, a commodity that must be sold or traded in a market filled with competition. When supply outpaces demand, values fall. When demand exceeds supply, prices rise. We typically see a balanced market when inventory is 5-6 months. Anything less than that is a sellers’ market, and of course greater is a buyers’ market.

With about 11 months of supply of homes (was 3-4 months in 2004), we are clearly in a buyers’ market. The inventory has been very slowly coming down in the last few months with some sellers taking their home off the market until conditions improve and the $8,000 buyer credit contributing to the small decline.

Avoid The Biggest Mistake That Home Sellers Make
The biggest mistake I see from people who want to sell a home comes in both good and bad markets. They price their home too high (because they do not want to “leave anything on the table”). While this appears to make sense, it actually works against them as studies have found that the “freshest” homes on the market sell for a higher amount.

In an upwards moving market, a home that is priced too high will eventually sell when the market “catches up” with the higher value the seller demands. On the other hand in a declining market of the past couple of years, a higher price makes the home completely unsaleable as prices for comparable homes keep dropping.

Chasing The Market Is The Biggest Mistake A Seller Can Make
We refer to the actions of a seller who prices the home too high in a declining market as “chasing the market.” In this type of market as prices erode this seller has to keep reducing but never enough to undercut the competition (similarly priced homes which are SELLING) are bigger or nicer. What is truly tragic for this seller is that the home, in order to sell, has to get to a price much lower than it would have sold for, at the start of the marketing period.

How To Price A Home To Sell
This is a tough real estate market and roughly only half the homes that are offered for sale are going to sell over the next 12 months (based on data from the last 12 months)! If you do not need to sell your home, help everybody out (including yourself) and take your home off the market. But if you do need to sell, work with a real estate company such as Homeowners Concept that has real estate Professionals with vast knowledge in proper pricing, staging, negotiations, closing and offers extensive marketing. This is critical. Pricing your home correctly at the start, plus marketing it in key distribution channels will allow you to be part of the 1 in 2 happy home sellers that actually sell their home. Of course saving thousands off a 6% commission is nice too.