Should I list my house in the fall or winter?

As we step firming into fall, in that space between Halloween and Thanksgiving, many sellers ask the questions does it make sense to try to market a home this time of year. It classic ambiguity, that depends: There are buyers who purchase year around. Rhode Island knows that reality, but we are more seasonal than many other areas. The majority of sales occur between 1 March and October 31st of every year. That is always prime season. But there are in fact a good number of buyers who engage in the pursuit between 1 November and 28 February. What is encouraging is that most of the buyers who are looking in the less active time of the year, and in fact much more serious. The majority have an immediate NEED, not a desire to purchase. For a seller this means that there are likely to be fewer showings and interested parties, but the ones that do happen will have a greater chance of leading to a sale. So it if you are serious about selling, it makes sense to engage.

HOWEVER, the market is driven my one primary element and that is price. Regardless of the time of year that you place your home on the market, it is very important that you price well. Do not price where you want it to be price it just below where market really is. You will sell more quickly.

A real life question for August 2010: Should I refinance or should I move?

30 year conventional mortgage rates are now in low 4 percent range. That really requires repeating: 30 year conventional mortgage rates are now in the low 4 percent range. When I first started in real estate full time in 1980 conventional 30 year mortgage rates were at 18.5% or HIGHER. No that was not the credit card rate it was the interest rate for mortgages. What was amazing is that people actually purchased homes and took out mortgages. It is also true that they refinanced to lower the rate and the month payment. (Generally when they refinanced they did not take any additional equity.

While we are engaged in a debate about renting versus owning, that debate is really in response to people who purchased homes who cannot afford them. People who should not have been approved for mortgages. People who could not afford to stay in the homes. People purchased on one of three assumptions: prices would go up, the property could be easily flipped, or that payments would go down. Notice that none of the assumptions assumed that they would keep the property long term. Now we are back to the world of conservative lending and common sense. In real estate jargon: we are in a market of 'sustainable ownership.' Very simply, people should purchase what they can afford to maintain over time. It is the prudent approach to home ownership. It is great advice.

For many people that raises a really good question. If you currently own a home that has an interest rate in the 5 or 6% range it probably makes sense to refinance. There are lots of important factors to consider: Is your employment situation strong? Do you plan to be in the area longer term? What is my equity situation? Do I owe more that the property is worth? What is my overall financial health like?

What is encouraging is that lower cost mortgage money is available even if you are in a negative equity situation. There are programs available that will allow you to refinance up to 125% of your homes equity. One critical note, you will need to pay back the mortgage.

Many people have real equity in their home, but have seen that amount reduced. The market has corrected so they have less equity than when they paid for the house. For some people this fact causes them to ignore a great question: Should I buy another home rather than refinance? The answer to question is family specific, that is what is 'right' for your family? If your housing needs have changed, you need a larger house, you need a smaller house, you want a lower mortgage payment, you want more land, you want a newer home, you want a townhouse, etc; then you should engage in the conversation. It may make sense, with interest rates at the lowest level in the past 50 years to make the change.

Some of my clients are concluding that the lower prices of homes, the large number of choices and the interest rates are compelling. They are making the decision to sell and purchase another home. In some instances, they are doing that although they are coming up with cash to pay off their existing mortgages. What they are doing is looking at their financial situation and the family shelter needs and making a measured, strategic decision. Yes they are selling their existing home and yes they are getting financial advice and real estate advice. They looking at the big picture and making prudent decisions.

If you are in the same place, do not hesitate to call your neighborhood Realtor for some real estate advice. I am available at 401 640 7097.

Real Estate Summer 2010: The New Normal

It has been a bizarre summer in real estate. We have seen very good activity as we complete the sales of the early summer. The median price in Rhode Island has moved up to $220,000. Closed sales are in fact also up, but there is a new normal. It is much more difficult to obtain mortgage money. The lenders have over reacted to the experience of the time of 'easy money.' The new reality is that virtually all of the commitment letters being issued to buyers are to extremely well qualified people. In an absolute way this is appropriate. The real estate market and the country need a housing market of 'sustainable home ownership.' Sustainable home ownership is a concept in which people are qualified and purchase properties that they can afford to own for the long term. We used to call this 'common sense.' It is the way it should be: People should only purchase what they can afford to own.
The challenge is in the details. The lenders have increased the standards from rigorous to highly rigorous. Some of the requirements are over the top. It is fair that the 'chain of flow' of the deposit should be documented. Where is the money for the down payment coming from? A friend of mine in Maine shared with me a story about that concept applied to the ridiculous. A young couple, with whom she was working, had received $8000 in wedding gifts from about 80 quests. The originator wanted gift letters from each of the guests indicating how much they had given. To my Realtor friend's credit, she had the young couple give the money to each of their parents and then provide two gift letters and two checks, each in the amount of $4000. When I share this story with other Realtors....no one is surprised.

This is the new normal.

When I started working in real estate 30 years ago, once a sales agreement was signed, it was likely to close in 99% of the time. Now we are seeing between 10 and 15% falling apart because of inspection issues, appraisal issues, or underwriting issues. It means that sellers are waiting until contingencies are satisfied before making other commitments. This is appropriate. As we are having 'issues' at all price points.

This is the new normal.

One of the hardest things to get used to in the market now is in negotiation. Historically a buyer would make an offer expecting a counter. It would be normal to have a couple of 'back and forth.' In this market the buyer will make an initial offer. If the counter is not compelling, and sometimes even if it is they step away. Negotiations are over, and buyer moves to another house. This can be extremely frustrating for sellers. How do you negotiate strategically in this market? Knowing as much as you can about the buyer and how she, he or they think is important. Having an advocate, a Realtor, is becoming more important not less.

This is the new normal.

Finally, the reduction in the number or real estate licensees in amazing. Every two years. holders of real estate licenses, salespersons and brokers, must complete 24 hours of continuing education to obtain 'the state authority' to sell real estate. This year the number of sales person dropped from just over 7000 to approximately 3500. It is a drop of half. Brokers licenses dropped as well, but not as much. Most sales people work on a contingent fee. It is a difficult way to make a living in a soft real estate market. It also means that lots of new Realtors have moved into other fields. This is unfortunate. What is true is that this will pass . A different market will find us.

This is the new normal.

The Realtor Future: Authors or Objects

In early June I traveled for the Leadership Team out West, first to California’s Legislative meetings and then to the Resort and Second Homes Meeting at Lake Tahoe, Nevada. It was a special trip and very inspiring.

In each of my public presentations, one message was central: The future will be written, and we REALTORS® have a choice: We can be authors of our future, or the object of the future. In other words, we can engage and write our future or we can be spectators.

For the past several years, we have “involved” ourselves by providing solutions to the housing crisis. However, now, there is a new approach REALTORS® across the country are embracing: action and engagement.

Maybe it was wishful thinking (or blind optimism) that led us to believe that the market would self correct and mortgage money would be available to credit worthy consumers. After the bailout of the “Too Big to Fail” banks, REALTORS® assumed that these companies would step up and begin to provide the life blood to our market – mortgage money. We also assumed that the government would step in and solve the problems. I’m not sure why we believed that everyone else would step up and make it right, but we did. And, to be fair, steps were taken, but it has not been enough and it is not right.

The change for us to be more active is a good one. We are relying upon ourselves – our hands and our ingenuity – to figure out the solution AND take control, rather than allowing some else to resolve the problems.

Your NAR leadership team is working within this new understanding and focus. We are no longer stepping. We are marching and running.

Specifically, we are working to create channels of communication between REALTORS® and the big banks. Right now the five largest banks are responsible for 73 percent of all of the mortgages written in the United States. While that fact may be disturbing, particularly considering that 30 years ago the top five banks were responsible for 25 percent of mortgage lending, it does have value. We only need to communicate with those five to resolve many issues in the market.

We have decided we need to be authors of our relationship with these banks. It is easy to blame, but creative problem solving requires focus and discipline. These are skills, traits that REALTORS® know well. We are working to write and define the “new normal.”

Some people suggest that leadership should not tell you what we are attempting to do, but rather tell you after the success has happened. I disagree. By sharing our agenda, we make sure that we are representing you. It is also a way to make leadership accountable. Most importantly, sharing gives you the responsibility and the opportunity to work together to come up with effective solutions.

After all, who has a better vantage point than you, the neighborhood REALTOR®? So, please, share your thoughts and ideas with us.

This initiative is a reach. We are looking to redefine the flow and availability of mortgage money. But our industry cannot operate without it. We need to ensure that the global financial system has a steady, competitive, reliable, and available source of mortgage money.

The American Dream, when realized, is a great thing for American families. While re-thinking what people can afford is appropriate, re-thinking cannot be allowed to eliminate homeownership entirely from the national consciousness.

As authors of our future, we must insure that the American dream is the right size, but still very much a real part of the American experience.

For Whom the Bell Tolls: The Tax Credit

The Federal Government extended and expanded the first time home buyer tax credit last fall. The National Association of Realtors was very aggressive in its effort to forward tax credit. The main reason was that the credit is one of the few ‘stimulus programs that directly benefits the average American Family. One of the intended consequences is that the tax credit has helped to stabilize markets, meaning average price, as we work through a huge inventory. For the average American, most of his or her wealth is ‘stored’ within the value of their home. The market correction has seen a significant reduction in that value. It is true that the value is only really ‘set or calibrated’ when one sells or refinances. Otherwise the value is a rough metric. It is also helpful to remember that the metric ebbs and flows just life the tide. It may be worth less today than yesterday, but will probably be worth more next year, etc.
The tax credit has been most effective and many new buyers have entered the market. In the first phase of the program, last year approximately 350,000 ADDITIONAL buyers made purchases. The second phase has produced similar numbers so far.
The second phase of the tax credit has a much broader reach. First time home buyers who are in sales agreements by 30 April 2010 and close by 30 June 2010 can receive a credit of $8000 for the purchase of a primary residence. There are family income limits; $125000 for individuals and $225,000 for married couples. The tax credit also has a repeat buyer provision which allow people who have owned a primary residence for three of the past five years to qualify for a $6500 credit. The income limits are the same and both credits have reduced benefits for individuals up to $145,000 and families to $245,000 of annual income.
Condominiums and single family both qualify, but second homes and non owner occupied investment properties typically do not. There is also a maximum purchase price of $800,000.
The important message now is that we have a month and a half to complete the search. That is you must find, negotiate, and have signed sales agreements by 30 April 2010 to qualify. You do have until 30 June to close, so you can move you family at the end of the school year if that is optimum for you and your family. It is very rare that the federal government gives its citizens money or land. This may be the first time since the land grants out West in the 19th century that the government is ‘giving away’ such value. Incidentally, granting land for compensation in lieu of cash is not new. In 1735, the King of England ‘paid’ many of colonial soldiers with land grants in East Greenwich. Do you notice a pattern, every hundred years, or so, there is a real gift from the government. This gift is significant, but the hour glass is almost out of time. Do not let the bell toll for thee or thee’s tax credit!

Make It So: Star Date 16 March 2010

Here is my NAR Officers Blog entry:


Growing up Star Trek was one of my favorite television shows. Although I never caught the Trekee virus, the story line and the characters were imprinted in my mind and most of 1960’s America. If you watched television as a kid, you watched Star Trek. Each program had a message: courage, team work, trust, the need of the whole versus the individual, and more.

Among the lines that developed in later Star Trek episodes, was the line from Captain Jean Luc Picard: “Make it so.” It is such a direct phrase that carried so much weight. It is a simple, clear command.

As of this Star Date, I am almost half way through the thirty-six month leadership cycle. Specifically, this is month seventeen. It is actually helpful that you have two years of internship, to prepare to be president of the association, because the National Association of REALTORS® is a large, multi-faceted, complicated organization. There is much to learn and understand. To be honest, it is overwhelming at times.

What is clear for me today is the mission of the organization: Serve the member.

For many organizations the customer is the focus. What truly distinguishes NAR is that the REALTOR® is not simply a customer, rather he or she is the ‘purpose’ of the organization. As decisions are made, the leadership team, and our professional staff, led by CEO Dale Stinton, consistently ask one question: “What is in it for the member?”

The Second Century Initiatives are a bold direct answer to that question: It is all about the member. From Right Tools Right Now to REALTORS® Property Resource, from Game Changers to House Logic, from the REALTOR® Federal Credit Union to the next series of programs to be introduced, one universal truth is present: it is for the member. Think about the fact that 800,000 of our members used ‘tools’ from the Right Tools Right Now initiative. Think about the fact that RPR is going to have 147 million records and analysis for REALTORS® to better serve customers and clients, at NO cost. Being about the member actually is more than just member focused. It is about providing the members with resources and tools to make more money. It is about business.

When Dale Stinton talks about competencies of NAR, he identifies a pyramid of skills: scale, leadership, and brand. NAR is ‘large’ enough to be effective, which is the scale side of the pyramid. NAR is courageous, industrious, disciplined, creative, forward thinking, outcome driven and bold. This answers the leadership side. The third side of the triangle is the REALTOR® brand. It is recognized, understood, and respected. Our association has mastered these competencies.

Now it’s our turn to do so in our own businesses.

What NAR does is make it possible for us to reach to the stars. It makes it possible for us to dream, think and realize BIG things. It makes it possible for us to say “Make it so,” and know that we will. – Posted by Ron Phipps, 2010 NAR President-Elect

Cold Winter, But Hints of Spring!

Cold Winter Winds, but hints of a Warm Spring

The swamp Yankees among us do not put much faith in predictions unless they are in farmer’s almanac, and even then they are suspicious. Truth be told, there is wisdom in their cynicism. It is a product of generations of experience in dealing with harsh elements of New England weather. (Good preparation for the Patriots implosion on January 10th). So with that appropriate ‘disclaimer, it is appropriate that we talk about the real estate market in Rhode Island.

“Average price showed an increase in December 2009, the first increase since mid 2006.
That has been three and half years since the average increased in a single month. Over 40 months of reduction has finally ended. Secondly, the number of sales increased by 17% in December 2009 over December 2008. It is true that it was helped by extension/ expansion of the tax credit. Low interest rates and good housing choices are other enabling factors. But there was one macro economic fact: housing prices, or rather housing values, reach equilibrium. In other words, housing prices become so competitive, that they became compelling. To quote. Business Week, if you do not buy a house now,” You are either broke or stupid.”

Much has been made about the importance of the high Rhode Island unemployment rate and the significant number of short sales and foreclosures. But we are seeing real estate fundaments more clearly: Prices and supply are coming into a balance.

So what does this mean for the up coming spring market. It is encouraging.

The goal of the extension of the $8000 tax credit and its $6500 expansion for repeat buyers is to prime the spring market and stabilize values. The important note is that the credit ends with sales agreements signed after 30 April. You have until 30 June to close the transaction and qualify, but you must have the agreement signed, valid prior to 30 April 2010. So as a buyer it is important to start searching soon to benefit from the credit. For sellers it makes sense to put your house on BEFORE the spring market. We are recommending you do it now. There are fewer houses on the market so competition among houses is less intense. Furthermore, the buyers who are out looking now tend to be very serious. That means that you will not necessarily have a lot of showings, but those that you will have, will tend to be serious.

Additionally, buyers are the most researched and informed that we have ever seen.
They know the comparables, market conditions, and the ‘nuances’ of the market.
They are, generally looking for homes in superior condition, at below market prices.
As sellers, there is no patience within the market for poorly priced houses. It you are priced over the market, you are wasting your time. This market is all about price. (Sound familiar). What is making the price issue even more important is the difficulty with appraisals. Anyone who is getting a mortgage will need an appraisal as part of the approval process. If the appraiser values the house at less than sales price, which has happened a lot this year, then the transaction can fall apart. In order to keep the transaction together, the seller may have to adjust their price. It is a real challenge.

One other observation, we are moving back to a normal market. That is prices are now compelling and seller and buyers, particularly in the market below 350k, are in what most Realtors would describe as normal. Neither really has the advantage.

Finally, pre qualification of buyers is critical for buyers and sellers. Most sellers will not negotiate unless they ‘KNOW’ the buyer is qualified. Buyers should be qualified for financing BEFORE they start to look at housing. There is little value is looking at houses that you cannot afford.

Let us know if we can help you sell your property or purchase a new one.

It's Not Kansas Anymore!

We are not Kansas anymore! Or better yet maybe it is back to the future. Two weeks ago, just over 20,000 Realtors met in San Diego at the 2009 National Convention. It had all of the elements of a regular convention: a trade show, governance meetings, entertainment, and recognitions. It is the event for the orderly transfer of leadership. The 2009 President, Charles McMillan to 2010 President, Vicki Cox Golder. Among the highlights of the meeting was the General Session: It is the main event. All of the State Realtors of the Year, including Rhode Island’s Alice Kleczek, were honored. Additionally, five Realtors who do great charity work receive awards. Every year, their stories bring tears to my eyes.

This meeting was unique as it marked a new beginning. Real Estate is changing in a revolutionary way, and November 2009 is the turning point. It is not just a change of date, of time or a place. It is a change of understanding and essence. In many ways it was a commencement. The implosion of real estate over the past several years was a catalyst for the change. As an industry, we have been forced to look at ourselves objectively and critically. That self analysis led to major changes in the real estate business and our association. You can see the industry changes: More reliance on the web, less reliance on print media; consolation and streamlining; additionally, strategic alliances and surrender.

The Realtor Association responded in bold ways. We rolled out the ‘right tools right now’ program to provide our members with ‘tools’ to make them more productive and profitable. We delivered over 11 million dollars of product to our members at limited or no cost. We worked legislatively to get the first time home buyer credit expanded and extended. We worked to get banks out or real estate permanently. We were able to get the higher loan limits extended for another year, ending December 2010.

But where the real revolution is occurring is in the web/technology area. We rolled out www.houselogic.com. It is a consumer resource website. It will not be selling the consumer; rather it will be informing and educating the consumer. Topics include everything from home improvement values, to neighborhood crime watches, to property right issues. It is just starting, but the content is amazing. We are building an online community for these country’s 75 million home owning families.

The second major announcement was RPR: Realtor Property Resource. The Association is setting us an online data base for all 147 million parcels of real estate in the United States. Access will be limited to Realtors, but it will be revolutionary tool that will enable Realtors to provide phenomenal information to their customers and clients. It will have property histories as well as price trends. Its information will include zoning, utilities, title, ownership, mapping, legal disputes, etc. It will ultimately have psycho graphics, the new marketing term for the behavior profiles of the residents. In short, it will be an amazing tool. Incidentally it will have privacy policies.

These are part of the revolution occurring in the Real Estate Industry. Their impact will be similar to that of the founding of Multiple Listing Services 100 years ago. MLS’s purpose, to provide for the cooperation and compensation among brokers, was a radical, revolutionary concept. One hundred years later, we are opening our second century, with equally important news. Your Realtor has brought great value to you in the past; you will be amazed what they will be able to do for you in the immediate future.

Realty Bytes October 2009

The “Truth” about Listings:

Recently a Realtor shared a silly saying with me: “It is best to be, the First Born, the Second Wife, or the Third Realtor.” The third Realtor is listing Realtor. The third usually has the advantage of getting the property at the best price and with the most motivated seller. There is some truth in the observation.

For more than 30 years I have made my living representing buyers and sellers in real estate transactions. There are many compensation alternatives in the real estate market. In my experience, compensation has almost always been as the result of a success fee, a contingent fee. If one identifies a ready, willing and able buyer and they are able to close, the listing agent has earned his or her fee.

Most people do not understand the process involved in ‘getting the listing, in the marketing process, and in the challenges of getting the property closed. In other words, earning a fee,

Let’s preface the entire conversation with the absolute truth, that all real estate fees are independently negotiated between the client and the brokerage firm, the real estate company. Each company determines it own fee schedule. Part of that structure is what they will pay cooperating companies if they are the listing company.

First truth: There is competition to obtain the listing. Agents and their companies compete to have sellers list with them. This competition is very intense. There is also competition within offices among agents to get the listings. While many teams work on a cooperative basis that is misleading. Within the Multiple Listing Service there is an agreement by the listing broker to agree to cooperate and compensate other brokers.
Generally listing brokers prefer to sell in their own office, because they would earn both pieces of the brokerage. (There are alternative compensation structures), Sometimes a potential listing agent may say the other agent can always sell it. While that is true it ignores reality. Listing agents try to sell the listings of the owners who have hired them, not their competitors’ listings. When I am hired those sellers can reasonable expect that
I will give them my primary focus.

Second truth: if the fee structure is on a success fee, there is no value in making the process long. Sometimes it takes a long time to sell the home. Since a success fee is outcome driven, then it is best if it is sold quickly. Most listing agreements do not charge on fee basis, i.e. charge for each showing or telephone call. They charge only if they are effective in getting seller, buyer, lender, attorney, to the closing table.

Third truth, the price matters. The best agent, with the most effective marketing strategy, will not be successful if the price is not reasonable. In this market it is more important than a ‘normal market’ Prices need to be compelling, not competitive. Also, price needs to be compelling the first day of the listing. If you continue to drop price by small amounts, rather than listing competitively upfront you are following the market. It will take longer and will likely result in a lower price.

Fourth truth, house must be available for showing. Buyers will not buy a house if they do not see it. Some sellers, and frankly some agents, make it very difficult to set up showing appointments. This is stupid. There are so many houses on the market, the buyer will move on if they do not obtain an appointment. Make your home available for showing, and make certain your agent or their team member is equally available.

Fifth truth: all transactions in this market are tentative. Between inspection issues, buyer’s remorse flu, appraisal issues, and closing logistics, it is not done until it is closed, recorded, and funds dispersed. In other words, it is not sold until you have the money in hand.

Sixth truth: the agent matters. Some agents are better than others. You should compare and evaluate. Experience, designations, marketing strategy, and chemistry are all important. It is fair to ask for a list of sales and clients. Some of my future clients interview past clients. At minimum, you should have confidence that the agent will be effective. In my opinion it would be unwise to hire anyone who is not a Realtor, particularly given the Code of Ethics.

These are challenging times. Choosing an effective agent is important. It can be the difference between a sale and no sal

The Picture of Health (Reform) NAR's Officer's Blog

It is the 13th of October and I am writing from the 13th State. Yesterday, the Senate Finance Committee voted to forward a health care plan. The vote was 14 to 9 with Olympia Snow, Republican from Maine, voting with the Democratic majority.

The self-employed and small employers, such as REALTORS® and realty firms, would benefit from the significant changes that the amended Finance bill makes to traditional insurance underwriting and rating practices, including bans on the use of pre-existing conditions, health status and a number of other rating factors that have made coverage costly or unavailable. Self-employed individuals would be given an added advantage in that they could choose to purchase private health insurance as an individual or as a small business through the new health insurance exchanges.

Before the Finance measure goes to the Senate floor, it will be melded with the Senate Heath, Education, Labor and Pensions Committee bill, which passed earlier this year. The melding will be done by the Senate and committee leadership. Once melded, the combined bill will go to the Senate for a vote. Then, the House has three committee versions of its bill, HR 3200, that are also going through the melding process so that a single House bill will emerge for approval by the entire House.

In short, the legislation is moving forward, but has many steep hurdles to clear before it becomes law. It is important to remember that we are still in the early innings of health reform, which means the actual language that will be in any final bill is very fluid right now. Because of this, your National Association has not taken a position on the bill.

What your Leadership Team and staff have done is to work through the entire process, without a respite, to make sure that any legislative proposal includes provisions that take into account the unique challenges of the self-employed and independent contractors. Moreover, NAR has also been both visible and vocal about its opposition to any proposal that would limit the mortgage interest deduction (MID) as a means of "paying for" health reforms. You can be sure that we continue to be vigilant in that commitment.

We understand how important this issue is to the members. Last week, I traveled to the Maine Annual Convention in Rockport. Much of the conversation focused on health care. What was striking is the calmness of the conversation and the desire to understand and be understood. Over 20,000 people in Maine have lost their jobs over the past year. Its economy is a mirror of much of the country. Generally, the perspective was one of value. If we are going to have a national health insurance program it should have cost controls, be portable, be available to people with pre-existing conditions, and provide quality care. It should have ‘common sense.’ Does this sound familiar? It should. These are the National Association of REALTORS® priorities on health care reform.

All of this was in contrast to my personal experience in Rhode Island. Our small office obtains health insurance through Blue Cross/Blue Shield of Rhode Island. This month’s premium is $3,600. Over the past two years we have cut our overhead by 50 percent, but our costs of health care have increased by 25 percent. This has been necessary and I am confident you have been engaged in the same process. It is frustrating to see my premiums increase in part to fund a beautiful new glass skyscraper in Providence.

Nevertheless, please know that NAR is actively engaged in bringing common sense to the conversation. As Brokers, agents, support staff and Americans, this is a critical debate. -- Ron Phipps, 2009 NAR First Vice President

It's A Small World

We have spent the past week here in Greece attending the CEREAN (Central European Real Estate Association Network) annual conference, held is Thessaloniki. It has been a most educational and productive trip.

First, people are people. Regardless of language, race, color, heritage, baseball teaming branding, people are people. We were warmly received by our Eastern European hosts. It seems that a smile needs no translation. It was surprising to hear many of the attendees
tell us that they were impressed that we were so human, open, and engaged. (We are REALTORS®…that is what we are.) Dale Stinton and I both did formal presentations. As we talked translators simultaneously spoke in Greek and Russian. At first it was distracting, as you wondered how precisely your words were communicated. After listening to English translations of other presenters’ Greek and Russian presentations, it becomes ‘normal.’

Secondly, the importance of engaging international partners became so obvious. The earth may not be getting smaller, but the globe is. The Ukrainians were expressing frustration about buyer’s agents being able to collect a fee. The Romanians were complaining about government interference in real estate transactions. The Bulgarians were frustrated about the lack of mortgage money and credit. Does it sound familiar? One of the best parts of the conversation is it reminds one of how great our ‘system’ of real estate works.

In many parts of the world, there is no MLS system. There is no system of ‘cooperation and compensation.’ The lack of licensing, training, code of ethics, are challenging in the ‘emerging profession.’ It is to our advantage to share our systems and experience to benefit our members. It would be great to know that a referral to Greece would result in a referral fee. It would great to know that the investment our buyers are making in other markets would be with reliable professional advice. The international market is a huge market with exceptional opportunities for our members.

Finally, the international interchange of our organization leads to trust and understanding beyond real estate. It leads to understanding among different people. Its advantage goes way beyond real estate. – Ron Phipps, 2009 NAR First Vice President

To Loud to be Heard: The Health Care Debate

On Wednesday night, my Congressman Jim Langevin, held a constituents’ meeting on health care reform at the Warwick City Hall. The City Council chambers hold 475 people. Every spot was filled and more than 100 people assembled outside. In an effort to educate the public, Congressman Langevin presented a power point presentation. To his credit, he remained civil, patient and attentive. It is not easy to stay on message when people are yelling and screaming at you. It is also not easy to engage in real discussion when people come with an agenda of disruption and distraction.

Obviously, health insurance reform is a major issue for this country. It requires serious, open discussion. For REALTORS®, health insurance reform is about having access to affordable health insurance policies. Our status as independent contractors or self employed limits many agents to purchasing individual policies with high out of pocket costs, or simply to have no health insurance at all. Our membership survey found more than 300,000 REALTORS® have no health insurance at all, countless more have less than comprehensive policies and are at risk of losing coverage due to increased costs. It is a real challenge, in fact, a hardship for many of our members.

As a result, the National Association of REALTORS® is actively engaged in the conversation. We are working toward prudent, effective health care reform that recognizes our unique income situation as independent contractors or being self-employed. Also, we have been arguing for insurance reform and cost control. As Americans, we are involved in the conversation. As an Association, we seek a dialogue that addresses the needs of our members and staff. Know that we are doing that. I should also mention that NAR hasn’t endorsed ANY of the health care proposals floating around on Capitol Hill. And we won’t until a clearer picture of the final package emerges. That is why we are listening, learning and discussing. The issue and our membership require it.

You should expect that there will be more loud public forums. That is the way of public discourse now. It is a way for people to share the intensity of their position, but it would be very helpful to listen and learn before reacting. The majority of sound bites shared by the media demonstrated a total lack of understanding of the proposals. Ideology is important, but it should be argued with accurate information, not innuendo and propaganda. This applies to all sides of the issue. While it would be naïve to expect a change in process, it would be encouraging to work toward resolution of the issue with information and common sense. It is too important an issue to ignore or minimize. – Ron Phipps, 2009 NAR First Vice President

Realty Bytes August 2009

Realty Bytes August 2009:

Why is the bottom of the market so elusive?


The Rhode Island Real Estate market turned down in late 2005. Yes we have been in this market correction for almost four years. The rest of the country has been in this cycle since late 2006 early 2007. Obviously, all markets are local and there are exceptions to these general observations. Some markets like Detroit have been weak for a longer time, and other markets like North Dakota have not seen any down turn at all. Unfortunately, that is not the case in Rhode Island. From the market price peak of over $275,000 to a mean value below $200,000, the change in the market has been huge. Many people have no equity, or ‘negative equity.’ They owe more than the property is worth.

The most common question that we as Realtors are asked: “Are we at the bottom?” In all candor, we really do not know. We would like to think we are, or are on either side of it. The recent numbers of sales activity suggest that the market is improving with more sales, although the prices have continued to lower. Additionally, we will not know that we have hit bottom until we are beyond it. It is a rear view mirror event. Only after you have passed through it do you really know that you have reached it.

The challenging question is not whether we have seen bottom, but rather why is it so elusive? Why has this cycle been so long and the distance between peak and trough been so great?

The answers to both questions are intertwined. Because we had gone so high, as the result of inexpensive and easy credit, the correction is greater than it might have otherwise been. Anyone could get a mortgage and credit was so free flowing that you really did not need to be able to afford the mortgage. The assumption was that prices would continue to escalate, or your income would go up, or your lender would reduce payments. Rarely was there a conversation of ‘ability to afford to pay for the property long term. If you could not afford the month payment, you would just flip it. Obviously those assumptions were and are not sustainable.

With that as a backdrop, we had market and value exuberance that resulted in very high average sales prices. The peak was really high. When we began correcting the lenders process for underwriting mortgages became so rigorous, the majority of people would not qualify to refinance. Then we have the new appraisal rules, requiring direct comparables within 90 days. Mortgage denials became the norm, not the exceptions.

In Rhode Island almost 40 percent of our sales currently are distressed sales, either foreclosures are short sales. This has further reduced average price. Also short sale is an oxymoron. It should be called a LFS; Long Frustrating Sale. The average conventional transaction closes in 45 to 60 days. It takes, on average 9 and half weeks, to get a simple response to a short sale offer. That response could be a rejection or a counter instead of an acceptance. It takes months longer to close.

If is difficult to have price stabilization with so many short sales in the market that are never resolved. There is conversation within the industry that prices would stabilize more quickly if we have a 7 day response time for all offers. Cut the buyers loose and let them purchase something else. It is a total lack of common sense.

Appraisal issues continue to retard any stabilization. Many transactions are falling apart because the underwriters and credit managers are questioning the appraisals. It is difficult to find perfect matches that are only 90 days old. Then when the transaction falls apart, there is one less closed sale to use in other appraisals. It is a downward spiral.
Another lack of common sense.

Many potential buyers are also on the sidelines, wanting to make sure we hit bottom before they purchase. This is understandable and difficult to accomplish. Where is the bottom? Is this the time to buy? Historically low interests, low prices, huge inventory and the $8000 first time home buyer tax credit are all strong incentives. With all of those elements, some buyers are still waiting.

So far we have discussed the challenges in the real estate market. We cannot ignore the larger economic climate. The unemployment rate is a huge challenge. Over 70000 Rhode Islanders are looking for work. Those people need jobs to stay in their homes, much less buy other homes. Job creation is key to recovery.

It is our observation that MBTA rail service to Green Airport, (and Wickford later), will do a lot to stabilize price. Average price in Boston is approximately $373,000, in Rhode Island it is approximately $200,000. That is a huge difference between markets an hour apart. We are confident the rail service will go a long way to stabilize price.

So there you have it. It is elusive, but on the horizon. We are just not sure how far the horizon actually is.

Home Staging Video

New Fox Providence "House Talk" segment on staging

The Grand Canyon between Sellers and Buyers.

As a student of real estate markets and trends, one cannot help but see a growing delta between buyers and sellers in their perspectives on the market. The average buyer has become a critical shopper. He, she, or they spend much time looking at sold comparables, websites like Zillow and Trulia, BEFORE they actually start to look at specific properties. It maybe simply a characteristic of the latest generation of homebuyers… Yet as a group they are extremely analytical. Furthermore, they are surgical in their approach to home acquisition. They learn, and know value. They purchase based on value. The best measure of value is price, or more precisely initially ‘list price,’ but ultimately ‘sale price.’ The current home buyer is looking for great value. The list price must be compelling not competing. Many of the buyers I am working with now spread sheet their search. It is empirical. It is not emotional. It is also based on closed sales, not based on the list prices of competing properties. Buyers know and understand absorption rates… (The number of months, it will take to sell all of the listings on the market, at the current rate of sales.) Also, the ‘average buyer’ is in his. her, or their mid thirties. (The average seller is significantly older). The National Association of Realtors just released a new statistic that 94% of buyers between 25 and 40 use the web as their first and primary source in the home finding/acquiring process. This is amazing. ‘Pretty pictures’ in magazines or newspapers are not as effective as online photos, floor plans, videos, etc. The typical buyer speaks a different language and engages the process in a totally different way than the typical seller. The generation difference is amplifying the void between sellers and buyers. For buyers, this is a ‘strategy’ to find a great value. Sellers are trying to sell their ‘home.’ Most buyers are simply more objective.


The sellers are as a group, well intentioned but somewhat misinformed. The sellers are in most cases genuinely committed to selling. They firmly believe that their house or their neighborhood is better than the recent comparables and competing properties. In many instances they never view any of the competing properties. How do you make an informed decision without ever looking at the competition, (at least online)? Often sellers have only one or two Realtors give them a marketing presentation. The single largest mistake that they make is that they hire the Realtor with the highest recommended list price. What about record of sales, experience, and understanding of the market. I recommend that my potential sellers look at their home’s assessment, Zestimate, and Trulia value before we meet and discuss price. Many sellers are unwilling to discuss the absorption rate. As an example: in East Greenwich, for example, there are 14 houses on the market over 1000000. One is pending above a million and 2 have sold in the first half of the year. 3 total in six months is an absorption rate of 1 house very two months. With 14 listed it will take 28 months to sell the existing inventory. North Kingstown is more challenged. 1 sale, nothing pending and 20 properties above $1,000,000. A normal market would be 6 to 7 months of supply. The buyers know this: many sellers simply ignore this. The pattern and trend is the same in the lower price points, but fortunately not as severe. One of the contributing factors is that competition among listing agents to get the properties listed overwhelms the need for realistic price setting.

I have been speaking of buyers and sellers as universally the same. In fairness, they are not. The effective buyers are buying value and quality, not necessarily luxury. The effective sellers are learning the language of the buyer: it’s called value. With a significant oversupply price will come down. In Rhode Island, there is a herd mentality among sellers. One bases price on the other competing listings that are NOT selling. The price needs to be based on closed sales. This is a very difficult market. Prices continue to adjust downward. If you do not need to sell and want premium value, take your house off the market, and try again in a few years. If you need to sell, price it to be competitive. You should be one of the best two or three ‘values’ in the price point. Do not follow the sellers’ herd blindly over the cliff.

If you do this well as a seller, you will be able to be a BUYER.

Fixing Health Care for REALTORS®

NAR Officers' Blog Entry:

Last Thursday, July 9th, Senator Mary Landrieu, chair of the Senate Small Business Committee held a roundtable on health reform and its impact on Small Businesses. Senators Olympia Snowe, Chris Bond, Ron Wyden, Jeanne Sheehan, and Kay Hagan attendaned for a conversation with 9 ‘stakeholders.’ I was honored to represent REALTOR® stakeholders. This was my second visit in the past two weeks to Washington, DC to meet with health reform decision makers. The process of government is very ‘deliberate.' Two general observations, first, people in Washington are generally well intentioned and are trying to do right by their constituents and the country. Second, it is amazing that anything gets done given the first observation.

In real estate, we have an industry specific vocabulary: PITI, FISBO, HUD-1s, CMAs, BPOs, etc. Washington also has its own vocabulary and the health reform conversation its own vocabulary. (Our Washington Staff does an exceptional job with preparation for each of the meetings. Jerry, Jamie, Marcia, and Ken all met with me to review our policies and to teach me the ‘nuances.’ There is a lot to absorb. In my case they give me a list of vocabulary words to use AND a list of words to avoid). Among the recommendations that I shared with the Senators is the need to use plain speak, understandable language, in the deliberations on health reform, but more importantly with the actual program. It is important for Americans to be able to understand the choices they have in language that they can understand. When I am involved in the conversation, I find it necessary to listen with a very precise ear to actually understand what is being said.

The main message I delivered was the nature of REALTORS® and our business models. The demographics are telling: The average REALTOR® is 54 years old, up 2 years over the past two years, 60 percent of REALTORS® are female. The average REALTOR® earned just over $36,000 before $5,800 of business expenses. More than 300,000 of our 1.2 million members have NO insurance. A significant portion of the remainder have limited, non-comprehensive insurance. Over lay the fact that most REALTORS® are independent contractors. As REALTORS®, we have a need for affordable, portable, comprehensive insurance. You can review the balance of our ‘principles in the health care reform conversation at www.realtors.org/healthreform.

One of the other messages that we have delivered is that health care reform should be funded and paid for from insurance reforms, and cost savings. It should not be funded from any housing related taxes. Our comments are clear: “Do not ask us to choose between health care and home ownership.”

I concluded my comments with the observation that REALTORS® are making economic ‘triage’ decisions right now. Many REALTORS® are forced to make choices between paying their mortgages or health insurance. Obviously, many forgo comprehensive health insurance and rely on the HOPE Insurance program: Hope I do not get sick.”

Among the industrialized countries, the United States spends more of its Gross Domestic Product on health care than any other country, and yet the outcome of that investment is an inferior medical delivery system. REALTORS® want what is good for Americans, but they are pragmatic. Make sure that what is spent has value. Make sure that the costs reflect rather than belie the value. -- Ron Phipps, 2009 NAR First Vice President

Real Estate Metrics: Numbers Sellers NEED to Know

Sellers are trying to understand the market. Buyers have figured it out. Buyers have the upper hand. In some instances, they have the only hand. Rather than expound on the obvious, (it is a buyers market), it makes sense for seller’s to learn what the fundamentals are.

For the past forty plus years, most sells relied more on competing properties to determine value. Clearly sellers needed to look at closed transactions, but the philosophy was price ‘to’ your competition. The assumption has been that there is demand and that the delta between demand and supply was always within realms of reasonable. Some markets were sellers markets and some were buyers’ markets. This market is so extreme that the approach of pricing ‘to’ your competition is now obsolete.

Sellers must price to the price that will generate a sale, not traffic (showings) or interest. In the Rhode Island market generally, distressed sales, foreclosures and short sales, make up almost half of the market. Simply stated, sellers are competing against foreclosed and short sale properties. This means that prices will be lower. In many neighborhoods prices have continued to go down. That makes pricing very difficult.

So what are the numbers that a seller needs to know to price his or her house: First, he or she needs to know about the recently (90 days) closed properties. The absorption rate, how fast are houses selling, is also important. It is usually ‘figured’ in terms of months. How many months will it take to sell all of the properties currently listed and the current rate of sales?

The interest rate is very important. The mostly buyer of your home is going to have a mortgage. Need to understand what the mostly type of buyer your home will appeal to. If it is a first time homebuyer, it is mostly that the loan will be 90 or 95%. Take the time to determine want the potential buyer need to pay on a monthly basis. Most sellers ignore this step, ‘the price is the price.’ But in a market with higher unemployment and limited wage growth, what the buyers can afford to pay will have a profound impact on the sales price. The number you need is the monthly cost of Principle, Interest, Taxes and Insurance (PITI) for a buyer with a 10% down payment. This is what it will cost the new buyer to live in your home.

Two numbers are very misleading: days on market and the list price/sales price ratio. Days on market are difficult to us as each listing agreement starts at day 1. So if a house has been listed three times, the totals days on market may be 430, but the MLS reports that days on market are at 76. You want to look at the ‘property history’ to get a true picture of the total days on market. List price sales price ratio is also difficult and distracting. First because of the multi listing agreement situation just described, but also because of the price adjustments during the listing. If a property was originally listed at 475k and was reduced to 425k and sold at 400k…Which numbers do you compare? Clearly you need to build into your price room to negotiate. You will get there much sooner if your original list price is at or below other sold properties, not other competing properties. (There are still a number of sellers who are shopping for their price. Even if you find a naïve buyer the appraisal process will prevent the buyer from being able to over pay. So as a seller you need a naïve cash buyer to have a chance of selling above the market. Those buyers are 1 in a million.)


Ultimately, you need arrive at a list price that is not competitive, but compelling. You need that price that says to a buyer, we are a great value, not simply a fair value. We have a significant oversupply; price is the only ‘cure.’

One final number you need: a phone number to your local Realtor. This market is uncharted. You need expert advice to analyze and interpret the numbers. Many Realtors, including this one, work on a contingent fee. If successful in selling the property, he, she or I am paid. That is a really pro consumer model. Get professional advice. According to the National Association of Realtors, unrepresented sellers end up netting 16% less after success fee (commission) than represented sellers. Make sure the Realtor you hire is a full time, experienced licensee with a record of sales in this market. It is also appropriate to interview more than one Realtor to represent you. Finally, ask about the success fee (commission). It may be more competitive that you expect. Ask if the Realtor has a variable rate fee, which can be other, (most often lower), if both ‘halves’ of the sale, seller half-buyer half, are completed by the listing firm. That will also involve a conversation about agency and representation. Who represents whom?

You have enjoyed the shelter that home ownership has provided. Make sure to ‘capitalize’ as much as the market will allow when you sell. But that requires that you be realistic and reasonable.


The Numbers the Sellers Need:

1. Sales Price of Comparables (90 days)
2. Absorption Rate (Months)
3. Interest Rate
4. Monthly Payment (PITI)
5. Realtor’s Phone Number

House of the Month: 259 Forge Road, North Kingstown, RI

Just over the Greene River, past the entry to Pojac Point, one will find a meandering driveway that leads into the woods: 259 Forge Road. Five acres of treed privacy ‘wrap this grand estate residence. Originally designed and built by Jim Malm and his team in 2005, this home is a fresh interpretation of the American Shingle Style exemplified by the Tennis Hall of Fame in Newport. In harmony with its setting, the generous use of cedar shingles and native stone in a dramatic, classic statement is ‘of’ its site, not on it.


One of the main design features is that of ‘purposed space.’ As a time when energy efficiency and function have become more critical, 259 Forge Road is a creative application of this philosophy. Each space is large and open without being massive. Each space is versatile and functional: Each space is ‘purposed.’ The main gathering space, the two story great room, is dominated by stone fireplace that is engineered to store heat for the home, (from the boiler). Aesthetic and function in balance. The room enjoys a wine decanting station. The formal rooms are elegantly finished with high details and exquisite craftsmanship. The floors are Brazilian cherry.

One of the most amazing spaces in the house is the kitchen. The cabinets are locally crafted in birds-eye maple. The granite countertops are expansive. The appliances are exceptional and include a GE Monogram gas stove, Advantium oven, warming drawer, two dishwashers, etc. Among the unusual features of this kitchen is the soft drink tap system. The breakfast area has a herringbone pattern in the floor as well as a huge curio buffet.

The main level includes a sumptuous master suite. From the walk closet to the Japanese ‘soaking tub’ this is truly over the top. The marble floors are heats and the shower has multiple shower heads. The sleeping chamber is generous and welcoming.

One reaches the second level via a grand stairway. Hand turned spindles and the mahogany railing are woven together in a breathtaking manner. The terminus of the stair way is a living loft, ideal for causal conversation, reading, or relaxing. Three bedroom suites on this floor are served by two marble bathrooms. The bedrooms themselves have built out closets, window seats, and high tech electronics.

The lowest level is a great surprise. The recreation room is focused on a grand fireplace with a ‘sitting hearth.’ This is one of those places to share family stories and create new memories. The floors are also heated on this level. The full gym has a full bath for showering after exercising. The office is bright and open.

For the engineer in the family, the systems are impressive. From the smart boiler to the communication systems, this is a great example of innovation and execution.

The backyard involves a swimming pool with waterfall, decks, patios, a fire pit and rock outcroppings. This is one of the rare homes that embrace its setting rather than ignoring it. The swimming pool waterfall flows from the natural stone into the man-made pond. Once again there is a balance between the natural and the human.


Now that you know that this is a special home, you are probably asking: Why would anyone leave this home? The family is looking for a new adventure. The house before this one was going to be their last. It is time ‘to do another.’ So if you are looking for spectacular, check out 259 Forge Road, North Kingstown.



Facts:

Constructed 2005
Land Area: 5.06 Acres
Above Grade Living Space: 4034 sq. ft
Total Living Space: 5200 sq. ft.
Bedrooms; 4
Bathrooms: 4 and a half
List Price: $1,750,000.

NAR Officer's Blog: Father's Day and Leadership

My father’s best leadership lesson:

It is Father’s Day 2009 and I am so aware of my great fortune. I have been blessed with an exceptional family and three awesome children. Each shared his or her best wishes, love and thoughts with me today. It was touching and heartwarming. Being a father is the best part of my life: it is the rainbow, the sun, the moon, and the breath of my being. It is who I am.

Yet, I feel hollow today because I miss my father, who passed away five years ago. In between two open houses, I visited my father’s gravesite. We talked, or rather I talked and he listened. It is really hard today to hear him. He was an exceptional father who taught each of children to be people who lived lives of service to others and to do ones absolute best. He was one of those rare people who understood that teachers are most effective when they live the lesson they teach. He did.

This past May, I was voted in as the 2010 President-Elect by the NAR Board of Directors, and I will become President the following year. People who know me well commented on how proud my father must be. I agreed with them, but I still wanted to celebrate the accomplishment with him. He was a procuring cause. He encouraged this fulfilling journey.

In leadership, you realize that you achieve as the result of great mentoring and teaching. No one gets into leadership without lots of help. In truth, my teacher and mentors are numerous. My father’s best lesson was to find the best teachers and mentors, then study them and learn from them. Give them a stake in your progress. It is a great life lesson. You cannot become a NAR national leader without lots of help.

This past week a small group of REALTOR® leaders met to make 2010 Vice Chair of Committee selections. The challenge was to choose just one person for each position when so many capable and talented people had applied. We are working to complete the process. I cannot help but think about the example of my father: pick the best person for the position. We are working hard to do that, but how do you do that when you have so many ‘bests.’

It is also a privilege working with such a talented group of people on the leadership team. They teach my father’s lesson by example: be the best. Moreover, Charles McMillan, Dale Stinton, Vicki Cox Golder and I all have sons getting married on the 25th of July. Who says that the stars do not line up? It is my prayer for each of our sons, that they know unconditional love from their wives and children. We are part of a very special, extended family, the REALTOR® family. Our family includes all of YOU.

Thanks, Dad.

Navigating Rough Seas and Fog: The Summer 2009 Real Estate Market

The most common question most Realtors are asked, particularly in the back slapping among friends: Are we at the bottom of the market, yet? Almost every Realtor wants to say it is here. In truth, we do not know. There are sign of stabilization, and signs of further price reduction. Additionally, you do not know that you have been to the true bottom until you begin to climb out of it. It can only been ‘seen’ with clarity in ‘hind sight.’ What makes it more complicated is that the market is not a single market: In real estate, we talk about all real estate being local. In the advent of a global economy, and a global recession, that seems almost counter intuitive, but it is not. The condo market in Providence is very different from the suburban real estate market in East Greenwich. Furthermore, the markets are very different in the brackets of price points. The first quarter MLS statistics showed a significant drop with the ”average” single family price for East Greenwich, from $474,000 to $323,600. The average price house did NOT drop by a third. Yes there was a significant drop in prices overall, but not as extreme as the numbers suggested. There is a reason, not a rationalization, for the change. More less expensive homes were sold. That is more homes some in the 100-400 range than sold in the upper price point, so the average was much lower than it should have been. What you really want to know is what is the true change in price for a specific property. Naples Florida is now given market information bases on price points: 100-350k, 351-500k, 500-1000k, and up. This is not a rationalization, but rather a long explanation, to the importance of looking at like kind homes to get a ‘true’ picture of the real value of the home. A four bedroom Moorehead colonial is worth more in Signal Ridge than Cindy Ann Farm, overall. All real estate is local, even by neighborhood. You need to compare like kind with like kind to determine true value.

As a seller you need to analysis the properties in your immediate neighborhood. What has sold recently, what is pending, and what is on the market? You need to look at the absorption rate, how many houses are selling each month, and how long will it take to sell the entire inventory at the current rate of sales. A healthy market is about 6 months. Right now we are at 10.2 month nationwide. We are much higher in the upper bracket, above 750k, in East Greenwich. Once you complete this analysis, you need to price in a COMPELLING way, not a competitive way. To be effective, meaning to sell quickly and close to real value, you need to price aggressively low.

As a buyer you need to do the sale process to identify the best buys in town. It is also helpful if you have two are three choices when it comes time to negotiate. The market has an oversupply, and a noteworthy oversupply of overpriced properties. Sometimes the overpricing is the result of the existing mortgage balance, sometimes the result of poor-inexperienced agent advice, and sometimes seller’s exuberance-nostalgia: “My house is the best in town.” Many buyers are attaching a list of the comparables to offer to purchase package. Some sellers are still ignoring the comparables. As a buyer, it makes sense to move on to a seller who is realistic.

What you need to know about this market, very simply is that price matters. You can have the best landscaping, the most expensive kitchen appliances, and the most awesome home theater, but your price has to be competitive to encourage a buyer to make an offer.

Now if the dynamics of the market are not enough to persuade you, be aware of the new appraisal underwriting requirements. In an effort to curb potential mortgage defaults, most lenders have adopted new appraisal guidelines. One of the most challenging elements is called ‘bracketing.’ In truth it is really not new, but now the rule is applied in all cases. Very simply, an appraisal my have comparable sold properties below and ABOVE the value of the subject property within the neighborhood. It makes it very difficult to obtain a mortgage for the most expensive sale in the neighborhood. The result has been that many transactions have been RE-negotiated after the appraisal.

To say it, yet again, price matters. Price where the market is, not where you would like it to be. Otherwise, wait until the market recovers. The cold hard truth is buyers are careful and strategic right now. They will not overpay, even if they are from New York, Boston, or Los Angles.