Traditional Real Estate Agencies Rarely Sell Their Own Listings!

Did you know most listings are not sold by the agency representing the seller? The national average a number of years ago was around 13%. However, I was speaking to the principal broker of a large real estate agency not too long ago and she told me her company probably sells only about 5%-10% of their listings in-house. Isn’t that interesting?

I think this is actually a good thing for consumers and real estate professionals alike; it avoids a very precarious situation known as Dual Agency which means neither the buyer nor the seller are represented. The listing agency always represents the seller’s best interest and cannot assist a buyer unless unilateral consent to Dual Agency is given. Therefore, for those who think they can get a better deal by going directly to the listing agency, that is generally a false assumption. Undisclosed Dual Agency would be breaking the law. That is why buyers should find a buyer agent who knows what they are doing, has good relationships with seller agents and is a good negotiator.

Here on Martha's Vineyard, most seller agents realize their listings are overpriced, but they have to appease their seller clients who think they know better. The good-guy, bad-guy dynamic created by the separation between seller agent and exclusive buyer agent usually produces a much more advantageous outcome for all concerned. To be safe and have full access to all properties for sale, I suggest you always hire an EXCLUSIVE Buyer Agent. That way there can be no necessity for creating a Dual Agency relationship and the possible conflict of interest. To be blunt, you want SplitRock Real Estate on your side, and if you need representation in another part of Massachusetts or another part of the country, I will help you get the best exclusive buyer representation.

HouseLogic.com - A Great New Educational Web Site

I am a REALTOR® which means I belong to the world’s largest professional association with 1.1 million members. The National Association of REALTORS® or NAR has become one of the most powerful lobbying groups in the nation since its inception in 1908.

Most consumers do not understand what NAR does and probably think it is self-serving and has no relevance for them. NAR cares about the homeowner as well as those dreaming of becoming homeowners. That is why it enforces a strict Code of Ethics for its members. However, that is not all.

In an effort to bring better understanding for the real estate profession NAR has launched a new educational website, currently in beta format, that is aimed at engaging as many of the 75 million homeowner households as possible even if they are not currently in the market. HouseLogic.com is not merely another marketing channel for REALTORS®; it is focused on becoming an informational mecca for consumers providing useful tips, hints and articles, aimed at motivating homeowners to take more interest in their homes, more interest in maintaining and improving the value of their homes, and ultimately more interest in taking political action that supports home valuations, home sales and homeownership. If successful, with the voice and concern of the nation’s homeowners behind it, NAR would become an invincible force at practically all levels of government advocating for homeowners and the REALTORS® serving them.

Take a cruise through www.HouseLogic.com and see what you think. Knowledge is Power and SplitRock Real Estate creates Power Buyers.

Happy Days Are Here Again, but For Whom?

I take my responsibility as an EXCLUSIVE buyer’s advocate very seriously. I have been saying for many months, now is the time to get into the market, but very few people listened.

The recover in the housing market, not only in Massachusetts, in many parts of the country has occurred faster than we thought it would. My concern is that the market does not understand the new dynamic and that will create discontent and an unreasoned lack of agreement between buyers and sellers.

Now that the summer season has officially ended we are seeing a deluge of properties coming onto the market For those sellers who wanted to spend one more season in their Island homes before they put them on the market, the time has come and that is why we are seeing the appearance of some really nice properties.

And for some who have been suffering the discomfort of their evaporated portfolios, their hope for the kind of seasonal rental income that would support their vacation homes until next summer, that income may not have materialized due to the soft summer rental market, so those properties are now for sale.

For property owners who were smart enough to refrain from cluttering the inventory until the market showed signs of recovery because they were not distressed and did not have to sell; they are being induced to test the waters again. Their reemergence is fueled by a pervasive attitude that the economy appears to be improving, along with statistics to support the fact that the bottom has generally come and gone.

“The percentage of listings with price reductions declined slightly from July to August, and when sellers did slash their asking price they made smaller reductions”, according to a national study by Zip Realty.

In another study done by Zillow.com comparing listing prices to selling prices during July, “U.S. homebuyers paid 3.3 percent less than list price on average, down from 3.5 percent in June and 4.6 percent in January”.

Although we are seeing an apparent rush to market on both sides, the fact is buyers can no longer assume owners with properties for sale are highly motivated, In fact, we have been at the bottom of the market for a while now and the horizon is clearly brighter for sellers than it has been in the last 5 years. I received this email from a local bank the other day:

“Our mortgage staff reports that there are a lot of inquiries, a lot of requests for prequalifications, and applications have begun to pick up…all of this is certainly a good sign that the market is a "happening" place. People are obviously past the point where they are just perusing the real estate guide and trying to figure out just how low they can convince a seller to go…..this rate reduction should be a further spur to deals being made. We all wish you the best of luck this fall…to paraphrase my favorite Irish saying, ‘May the wind always be at your backs from now on!!’"

Here is positive spin demonstrating that the region shows signs of rebound.

The real estate market cannot be rated as a good or a bad market because what is good for one can be bad for another. For the last 3 years it has been considered bad for sellers because no one was buying, yet if a buyer decided to make a purchase, the market was good for them. I think we can all agree the recession has bottomed out and with interest rates still historically low --- under 5%, and with no immediate signs of inflation; this is still an excellent time for buyers to take advantage of once in a lifetime opportunities. But it is also good for sellers. Sellers are no longer feeling as though they are being thrown to the wolves. The market is starting to balance out and sellers are feeling more hopeful and empowered.

In order for you as a buyer to be successful you need to adjust your thinking a little bit and keep your eye on the prize --- a home on Martha’s Vineyard.

1) You are no longer in total control so your expectations of ‘take no prisoners’ will no longer work.

2) You will no longer be able to present a litany of demands to sellers and expect them to acquiesce. You need to be reasonable and willing to leave something on the table --- choose your fights.

3) You have to look at your investment opportunity from the standpoint that the market has gone down anywhere from 10 to as much as 30 percent in some areas and in some price lines. So no matter what, you have to realize you are making a much better purchase than you would have within the last 4-5 years.

4) You have to be willing to negotiate, be patient, be flexible and in the end remember that Martha’s Vineyard is a lifestyle, an emotional decision as well as one of the better long term investments you will make. This Island is a finite commodity and it is not growing any larger.

For buyers today what is most important is to have good representation by a skilled negotiator. Someone who is knowledgeable about the entire market, someone who will thoroughly investigate all details of the property you select so you are fully informed and not surprised later on by things you did not know about. You want someone who will represent you 100% throughout the process and be there for you afterward. You want an exclusive buyer agent. You want SplitRock Real Estate, LLC.

Entering into the home buying process is like wandering through a corn maze, you can make a lot of wrong turns if you are without a knowledgeable guide who knows the way.

Is it Time To Go Real Estate Shopping on Martha's Vineyard?

During the last week I have been talking to other real estate agents and professionals in ancillary services about their market observations and workloads. The general consensus is clear; the Vineyard real estate market is rounding the corner, at least in the lower to mid-range.

Personally, I am seeing a lot more serious interest from consumers and clients. When I go to property showings with a client, the seller agents we meet say the same words right up front. “The seller is very motivated”. Normally, I think that is a silly thing to say because why else would anyone put their property on the market, and especially in a market like this. However, the truth is they are more than motivated; they are nervous as hell, and this is when deals are made.

I was looking at ‘Off Market’ low-end properties removed from the inventory around the first of the year and there really isn’t anything worth talking about that is not back on the market today. What is for sale is on the market and even though it may not be priced right, the sellers are ready to listen and work something out with buyers who are willing to put an offer on the table. The property inventory is saturated, rentals are soft and interest rates remain low. I think this is a perfect time to get into the market and see if you can get that dream home you have been wanting at a price that makes sense to you.

Everything is Coming Up Roses, Or Are They Tea Bags?

Rick Santelli was reporting from the pit at the Chicago stock exchange the other day and got everyone stirred up with his suggestion of a Chicago Tea Party . I thought it was marvelous and right on.

Here we are now with a $787 billion stimulus package that includes anemic elements like an $8000.00 tax credit for taxpayers buying a primary residence between Jan. 1 and Dec. 1, 2009. Single taxpayers making less than $75,000 are eligible. That tax credit doubles for married couples. Think about it, an 8k credit is just a drop in the bucket for a buyer in areas like Martha’s Vineyard, and no not everyone who lives here is rich. It’s just not enough. And what about the $75 billion mortgage relief plan the President announced. It’s not right. The Wall Street Journal says, "By investing in failure, the Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers." The New York Times says it is "a good start, but given the dire state of the economy, we fear it still may not be enough."

But what is enough and actually too much is the idea that people who did nothing wrong, the 92 percentile, are being asked to help the 8% that either had no business getting a loan in the first place or defrauded the banks intentionally out of sheer avarice. It’s the hard working people who are continuing to pay their bills even though they are suffering like everyone else today; they are really going to suffer.

Here’s a quick story I heard yesterday from a broker in Florida about one of those people you will be suffering for. This ‘investor’ accumulated no less than 20 properties through no-money down financing during the high time of the market. They did not and have not paid one cent toward an equity share on those properties; they had every intention of not owning the properties long term. The lenders began the foreclosure process about three years ago, but it takes time. In the meantime, this person is consistently making about $20,000 a month in rental income. There are hundreds of scenarios like this one. Why should we suffer for this kind of behavior? They should lose everything and go to jail. But if they go to jail, shouldn’t the enablers go with them? Yes, and that is why nothing will happen to them.

If you are wondering why the foreclosure machine is moving so slowly, let me give you a brief idea by way of another true story. This person is a first time home buyer who will most likely lose their home when their Alt-A loan resets. Mind you this is also in one of the areas where values have dropped by 50%. This person went through foreclosure prevention counseling and as instructed began the bureaucratic procedure with the lender for a loan modification. They spoke to a loss mitigation representative and complied with the instructions they were given. They supplied all the necessary documentation, both on line and via certified mail. They had the person’s name and extension number, but when they called to get a progress report after about two weeks, that person did not exist and both their cyber and paper trail no longer existed. They tried again filling out all the same information, etc. Again after a couple of weeks they contacted the LM department and that person did not exist. However, somehow they were finally able to track down the person that helped them. The representative told them, “You can jump up and down, get nasty and impatient but it will not do you any good. I have over 100 case files on my desk and you are just one of them in the pile. You’ll hear from us when we get to your case.” End of discussion. That’s just one person who has to deal with this enormous mess the government wants everyone to be responsible for.

Bringing it back home to the Cape and Martha’s Vineyard, here in Massachusetts the Warren Group reported the number of homes on Cape Cod that were actually foreclosed on last month was down 8.9 percent. This number is compared to January 2008. In exact numbers, there were 41 foreclosure deeds filed in January 2009 compared to 45 last year. In Dukes County, which is Martha’s Vineyard, the number of foreclosure deeds filed fell to 9 last month compared to 13 in January 2008. That is a difference of 30.8 percent. The experts are not sure what is causing this reduction in foreclosures, but it is a good sign as are the more realistic price reductions posted by the Martha’s Vineyard Information Network database. There are 467 single family homes currently on the market with a total inventory of 680 properties in all classifications. There are 72 single family homes that have been removed from the market since the first of the year. I can assure you everything is for sale, so if you want one of those properties just ask.

Another Huge Opportunity for Home Buyers

As part of the new Economic Stimulus Bill being thrashed around in the senate, and on top of the Tax Credit proposed for all home buyers allowing them a tax credit at the rate of 10% of the sales price up to a limit of $15,000, there now is Amendment 353.

Amendment 353, proposed by Senator John Ensign, Republican Senator from Nevada, would provide 30 year fixed rate financing at about 4%, for anyone purchasing a primary residence. If this passes the House and if there is more sensitivity by lenders in handling those threatened by foreclosure, we could really be on our way to recovery in the housing market.

You Want a Great Deal, But Do You Really Want a Foreclosure?

Foreclosures represent a mammoth portion of today’s housing inventory. In RealtyTrac’s recently released 2008 Foreclosure Market Report, they showed a total of 3,157,806 foreclosure filings. The number of default notices, auction sale notices and bank repossessions reached 2,330,483 properties.

Up until now most people were of the opinion they could save huge sums of money buying a foreclosure property. However, more people are shying away from that process, and if they are willing to engage at all, they are demanding steep discounts averaging 25% from the listing price, and many are expecting to pay 50% less than for a non-foreclosed home. According to a recent Moody's Economy.com report, since the peak of the market several years ago home prices fell in 70% of all metro areas. Although the decline in most metro areas was modest, prices did decline by 5% in 116 metro areas and more than 20% in about 50 metro areas. In the most depressed markets, a buyer insisting upon a 25% discount doesn’t seem like that much for a distressed property. But this all depends upon how realistic the listing price is.

Banks are still requiring BPO’s as part of their preparation for marketing foreclosures, but the problem with that approach is they are looking back at the market for values, and in declining markets they need to look forward when pricing properties. The result in most cases is banks overestimate the listing price. All they know is what they are owed and that is all they care about. So what happens is properties sit on the market for long periods of time suffering from accelerated deterioration or vandalism. Someone will have to pay for the repairs and the bank does not want to assume any responsibility.

In December, Trulia and RealtyTrac published a survey indicating that in the seven months prior to the study the number of people interested in foreclosures dropped by seven percent to 47%. The first study reported in April 2008 by these market tracking companies recorded 69% of the buyers polled had a negative opinion of foreclosures. Since then the number has risen to 80%. On Martha’s Vineyard there are very few foreclosures and I continue to maintain that buyers can do better negotiating on a non-foreclosure property.

Senate Moves to Expand Tax Credit as High as $15,000

This could be an excellent incentive for some home buyers on Martha’s Vineyard who can qualify. Currently, the maximum tax credit is $7500 and that is only for first time home buyers, but if this new amendment approved by the Democratic Senate passes the House and goes into effect, buyers who are purchasing a home as their primary residence, regardless of whether they are first time buyers or not, will receive a $15000 tax credit or 10% of the home purchase price, depending upon whichever is less. The tax credit will be in effect for one year.

All Real Estate Is Local?

The National Association of Realtors has been working diligently through national ads for several years to educate consumers that all real estate is local. They don’t think what is happening in one area of the country is happening everywhere. I absolutely agree but it is like second hand smoke, everyone is affected to one degree or another.

With the ever deepening economic crisis crawling into every aspect of our lives and the reality that this is a global crisis of unprecedented proportion, I would rephrase the slogan and say all real estate is the same, but different.

I was reading an article about the effects of what is now an epidemic real estate crisis in the UK, effecting one of the wealthiest resort areas in the world. Fortunes have been lost and high rollers living in $7,000,000 homes are now living in apartments above retail shops. Playgrounds around the world are all affected by the hubris that brought the market down, from Hollywood to Dubai and Monte Carlo.

I am going to paraphrase part of a commentary that expresses a sentiment that rang a bell for me with regard to Martha’s Vineyard. However, it was written about a seaside luxury resort area in the UK. I will leave out the location specific parts so you can fill in the blanks.

“I’M not surprised the credit crunch has hit (blank). … Why should it be immune?”

“(Blank) is a very, very beautiful place. If prices coming down makes it more accessible to ordinary people, that is a good thing.”

“Locals were becoming very concerned about the way the place was changing.”

“(Blank) is a quintessentially English place and should remain so.”

“Prices … were way too high. The fact they are coming down is good.”

“It makes (blank) more affordable and attracts the right kind of person for the area.”

“Hopefully more local people will be able to afford to move there and it will remain as beautiful as it is.”

All those who feel this way about Martha’s Vineyard raise your hands.