Dear Islander, I Envy You
January 5, 2009
2008 was a very tough year. I think we all felt, or should have
felt the pain by now. My business is real estate. Much of the focus
nationally as well as locally has been on what has happened to the real
estate market. Most of the talk is negative as are immediate future
predictions. Negative thinking is easy.
In my latest SplitRock Real Estate e-Newsletter, I directed my readers
to an article that appeared in the MV Times, “The Reality of the
Martha’s Vineyard Real Estate Market”. My clients and readers
know that I have been giving them the same information for quite some
time now, but it is nice to hear it from another real estate professional
and to look at it in terms of bar graphs. More importantly, it is important
to be reminded that this is merely a cycle we must go through, as we
have done many times before. As the author said, real estate markets
go through regular cycles of (3)5 years down and (7)10 years up. Even
the stock market goes through cycles, and theirs are usually 20 to 25
years. I’ll admit we are in a real pickle right now because it
is not just the United States that is suffering; this is a global meltdown
and the ripple effect is affecting everyone which will result in a prolonged
overall recovery. What I found most interesting about the MV Times article
was one of the reader comments. Here are some excerpts of that reader’s
rather harsh perspective:
“As tragic as this downturn is for the local economy, and
as much as it may usher in a different era ahead, I feel a bit glad
and relieved about it all.
“I have come to believe that economic progress is actually opposite
of quality of life.
“I am someone who first feel in love with the Vineyard in the
1960's. It has not improved since then. In fact, as we get richer by
material standards. It actually gets poorer. Material progress has simply
been ruining the place. We just adjust to the incremental changes and
are, therfore, less likely to notice.
“It is barely distinguishable from the places we came here to
escape.
“The growth has diminished the Vineyard's most precious jewels....what
we get for free. We have simply over-exploited it.
“Economic ruination would be the Island's salvation, in non-material
terms. Now, there's an alien concept, indeed.
“Ruin is rebirth.
“It's of little matter to me, though. I have already moved off-island
to another place that reminds me of the love I had for the Vineyard
so long ago. I come back to visit now and again, and am, frankly, quite
happy to leave.”
I remember when I first came to the Vineyard in the ‘60’s
with my parents; they no longer enjoyed summering in ‘the Hamptons’.
Martha’s Vineyard was a very quiet place and not too many people
knew about it. The ‘Natives’ were typical New Englanders,
and not very forthcoming or welcoming, but once they accepted you they
were the best. I think one of the circumstances hindering population
growth on the Vineyard was transportation, and that factor more than
anything isolated the Vineyard from America, but that is irrelevant
at this point.
I find it curious that the MV Times reader moved away from the Vineyard,
but yet he still follows Island news. His acrid comment above reminded
me of a developer who ran through the Vineyard in the ‘80’s
like a swarm of locust, and then abruptly left for greener pastures.
He was asked by a news reporter in his new location why he left. He
said, ‘The Vineyard is like an old lady who has lost her charm’.
Sure the Vineyard has become more crowded and sure we have once again
seen carpetbaggers come and go. But the Vineyard has really not changed
that much --- honest! I know people who have lived all over the world
and in crowded urban areas who swear this is where their soul is at
home, and this is where they will come to recharge themselves, bond
with family and loved ones, and where they will live out their days
when they retire --- or before.
The Martha’s Vineyard Gazette published a wonderful commentary
in their print paper, but unfortunately they did not put it on-line.
The article was written by the late CBS correspondent, Don Hollenbeck,
who sadly committed suicide in 1954, possibly caused by the effects
of Malaria. It is not clear when he wrote his article, but it was most
likely at least 50 years ago. I think the article demonstrates the colorful
fabric that those who really know and understand the Vineyard realize
is still very much in tact. The title of the Gazette commentary was
taken from the last line of Hollenbeck’s article, ‘there
are no Islands anymore’, and that line was actually the title
of a poem by Edna St. Vincent Millay, written in 1940. Keeping in mind
the time line of these writings, I want to preface Hollenbeck’s
reflection with a couple of paragraphs extracted from Millay’s
work:
Dear Islander, I envy you:
I'm very fond of islands, too;
And few the pleasures I have known
Which equalled being left alone.
Yet matters from without intrude
At times upon my solitude:
A forest fire, a dog run mad,
A neighbour stripped of all he had
By swindlers, or the shrieking plea
For help, of stabbed Democracy.
We live upon a shrinking sphere—
Like it or not, our home is here;
Brave heart, uncompromising brain
Could make it seem like home again.
(There are no islands any more.
The tide that mounts our drowsy shore
Is boats and men,—there is no place
For waves in such a crowded space.)
I hope you enjoy the warm spots in Hollenbeck’s article as much
as I did. Please rest assured, what was great about this Island 50 years
ago still exists, you just have to look for it.
There are No Islands Anymore, Only a Certain State
of Mind
MV Gazette Editor's Note: Don Hollenbeck was a CBS
correspondent and journalist who produced a radio show in the late 1940s
during the Edward R. Murrow era, titled CBS Views the Press. He was
also a summer visitor to the Vineyard and was interviewed in the Gazette
in 1949. Mr. Hollenbeck, who committed suicide in 1954, is the subject
of a recently published biography authored by Loren Ghiglione (CBS's
Don Hollenbeck, Columbia University Press). A distinguished journalist
in his own right and professor at Northwestern University's Medill School
of Journalism, Mr. Ghiglione is also a longtime Vineyard visitor. In
researching his book, Mr. Ghiglione came across this undated piece about
the Vineyard which was written by Mr. Hollenbeck. It is published here
with permission.
By Don Hollenbeck, date unknown
“This is out of the world, but this is America: This is our country.
Picture an Island of triangular shape, a hundred miles in area, lying
seven miles off the southeast coast of Massachusetts; an Island which
is all things to men. This Martha’s Vineyard described as a place
of old towns, new cottages, high cliffs, white sails, green fairway,
salt water, wildfowl, and the steady pull of an ocean breeze.
“This is a land of contrasts: from the brazen honky-tonks of
the town known as Oak Bluffs, with its jukeboxes, its gaudy post cards,
its bus drivers hawking for business and its revival season, to the
well-bred quiet of Edgartown, with a social air twice as rarefied-as
that of Newport, to the view from Indian Hill, 260 feet high.
“There one stands and views the prospect: to south and east stretches
a level plain of dwarf forest top without a sign of civilization. To
the west, there are rocky outcrops and tree-filled ravines, and to the
north, the cerulean blue of Vineyard Sound. Of this world and yet out
of it might apply of all places to Martha's Vineyard; it meets perfectly
the need so often felt for a retreat; for a quiet time of contemplation,
when, as in this springtime, one may leave the noise of the jukeboxes
at Oak Bluffs, and listen only to the sound of the frogs the Islanders
know as pinkletinks.
“This is the land Leif Ericson may have visited in the eleventh
century - on a tiny island eight miles off-shore - and island called
Noman's Land, you may view a boulder, and on if, if your imagination
is cooperative, you may see dimly scratched the numbers 1004.That date
is accepted by some devout Islanders as good enough evidence that this
is the land Leif Ericson found and named Vinland; indeed, the wild grapes
grow in profusion on the Island, which in area only may be compared
to Manhattan island, 150 miles away, and which is, in a different sense,
all things to all men . . ..But the contemplative man finds on Martha's
Vineyard other things to think about than he does on Manhattan island,
now that spring is coming.
“A pink and white mayflower is blooming h the office of Miss
Mary Nunes, the Oak Bluffs tax collector; a weather-wise Islander has
reported the arrival of the first red-winged blackbird. Islanders know
that the red-winged blackbird has advance and inside information about
the weather; spring cannot be very far behind.
“We live with the sea here on Martha's Vineyard; the sea is our
fortunes and our fate: what the sea gives us is our livelihood. We See
signs of spring on the sea, too, in a fishing boat. Now the wind breezes
from the south'ard; the sea which can be cold and hostile through the
winter seems more friendly now - it is blue under the warmer sun instead
of icy-gray: and in" the beach pools, there are flocks of ducks
and coots squawking.
“The sparrows, too, seem to have inside information on the springtimes,
and are busy picking up straws for their nests. It is impossible for
a man to get too downcast when the sun shines on the blue water around
Martha's Vineyard at this time of year when the wind has veered to the
south'ard: light airs they are indeed, fragrant with the promise of
the season.
“Soon it will be the time when a man can go out and get enough
sassafras bark to brew a pungent cup of tea: this is the decoction which
in New England seems to clear away the miasma of winter, and which gives
one the proper feeling of springtime.
“There seems to be a sort of greenish mist around the bare branches
of the trees now; at any time, the lilac hedges will burst into aromatic
color, complementing perfectly the silvery, weather-worn look of the
shingles and the wood in the sea-salt laden air of this Island so close
to, and yet so far from, the rest of the world.
“Soon the chestnut tree over the smithy in Edgartown will be
showing signs of transfiguration, and Orin Norton, the blacksmith, can
open doors of his forge, and beat up the sparks to the admiration of
the children - they would never think Longfellow's poem over-sentimental
or shopworn: the village blacksmith is a real person to the children
of Edgartown. Now, in the fire-lit gloom of the forge, Orin Norton talks
to you about the six-hundred pound anchor which he has just completed.
He says, "it's such a darned good one that I figure I ought to
charge a little less for it than usual." "Now why in the world
why?" you ask in real astonishment at this paradox. "Well,"
Orin says,"it's like this. I think the man who ordered it will
be perfectly satisfied. In that case, he won't be coming around here
finding fault, and taking up my valuable time, so I’ll be the
gainer if I knock 'something off."
“This is the-spirit you find repeated again and again on Martha's
Vineyard where the tempo of the world seems to have slowed down in the
winds that veers from the mainland to the sea and back again. You find
it in the case of Carl Reid, who runs the general store in the town
of Menemsha -this is the fishing town where the air is almost always
full of the aroma of lobster bait, drying in the sun. You may ask Mr.
Reid for fish hooks, only to be told that he isn't carrying them this
season. "People bothered me too much about 'em -had to fuss too
much," Mr. Reid says. It would please him if there were only one
brand of everything, from cigarettes to molasses, and the people couldn't
pester him, fretting about labels, and so on.. . .When you come to Martha's
Vineyard, you must note expect the usual standards to apply, to repeat,
it is of this world, and yet out of it. It has its own standards of
conduct and department, and off-Islanders, as the permanent population
calls the summer vacationers, sometimes have difficulty in understanding
this.
“The steady population of Martha's Vineyard is about six hundred;
in the summer, it is nearly seven times that figure. You may go there
year after year, and become friendly to a point with the regular inhabitants,
but if you are an off-Islander, you are never quite accepted . . . Oscar
Flanders, who drives a truck, may call you by your first name, but it
may be two years or more before you feel sufficiently at ease to call
him by his first name, and then you are self-conscious about it: there
is a delicate point of etiquette involved here which you must understand
instinctively and emotionally, rather than logically . . . . Not long
ago, a general of our Army was spending a holiday on the Vineyard, relaxing
thoroughly in civilian clothes. He was well known to the steady population;
he had been a summer person for several seasons.
“Almost anywhere in the world, a general of an Army, even in
mufti, seems to get special consideration; he is usually exempt from
small trials and tribulations which beset the rest of us. Our age-old
awe of, and respect for, the soldier, force us into a deference which
may be difficult to rationalize, but which nevertheless exists.
“One day the general, perhaps preoccupied with a matter of logistics
concerning the purchase of a pack of cigarettes, drove his automobile
through a stop light in Edgartown – a flagrant violation of a
traffic ordinance. Almost anywhere else, the traffic officer recognizing
him would probably have let him off with a courteous and deferential
reminder, but not on Martha's Vineyard.
“The general got a ticket, and as the policeman said, he considered
the general entitled to special consideration only when he - the general
- was on duty. And he wasn't on duty on Martha's Vineyard . . . .
“But there have been soldiers on duty on Martha's Vineyard in
recent years, and their presence simply emphasized the far-away-and-long-ago
quality of the Island. Although these soldiers were only seven miles
over the Sound from the Commonwealth of Massachusetts, they were considered
to be on duty outside the continental limits of the United States; they
drew correspondingly bigger pay, and they were entitled to wear the
Atlantic ribbon . . . .
“But nowhere could one find more vividly exemplified the spirit
of Martha's Vineyard than in another reference to the Flanders family
- the truck driver whom you hesitate to call by his first name. The
Flanders have a son, and some years ago, before the world was set afire,
young Flanders as a public school student, was assigned the task of
writing an essay on Mussolini. At that time, the late dictator was arousing
a certain amount of admiration for making the trains in Italy run on
time. But young Flanders saw him in a rather different light: his essay
began with these words: "Mussolini is an off-Islander . . . ."
“But there have been changes in the world, and again, the case
of young Flanders shows what they have done to Martha's Vineyard. Mussolini
became something other than an efficient administrator and train operator;
others of his sort came to power, and young Flanders growing up, found
himself a member of the United States Army Air Force in the Pacific.
“He was off-Island at last, and he gave a good account of himself:
he won the Distinguished Flying Cross. And as he moved from island to
island in the Pacific - islands like and yet unlike his own home, he
must have come to the realization that many others of his generation
have come to in the past few years: there are no islands anymore, not
even Martha's Vineyard.”
Well, that's it. Now I ask you, what's your state of mind?
What is it going to take to get the Martha’s Vineyard real
estate market rolling again?
November 29, 2008
There is one thing for sure, wishful thinking is not working.
Neither is the constant stream of anemic price reductions week after
week. How about those incentives and broker bonuses? You know what I'm
talking about; the three-year old Range Rover in the driveway, the 24'
sailboat, a 60" LCD TV, seller paid closing costs, seller paid
Land Bank fee, first payment in six months, a vacation in the Bahamas
or $50,000 to the agent that brings the buyer. None of that is working,
and any additional compensation offered to an agent that brings the
buyer should be considered a conflict of interest and bribery.
So what is working, and how is it working? Home
"Staging" is working to some degree, but once buyers wise up to the
fact that this kind of eye candy emotional sizzle is costing them thousands
of dollars more in the price for the home, they will stop falling for it and
start backing away from homes that look just too pretty. They will
wonder what lies beneath the dining room table that is set for a 5-course
formal dinner party seating twelve.
In an article written for Bloomberg News, John F. Wasik says, "Buyers just want price," he quotes
one real-estate attorney/broker/consultant based in Stuart, Fla., as saying.
"Buyers have become more educated and they can easily cut through the
fluffy incentives". Hmmm. I don't think we're there yet. Everyone
loves romance and people shopping for a home on Martha's Vineyard want to
fall in love. This market is like going to Las Vegas for the first time
and getting lost in one of the Casinos. Know the feeling?
What is the first question buyers ask? "How long has
the house been on the market?" This has almost become a joke among real
estate professionals, but buyers ask the question because it is commonly
assumed that the longer a property has been on the market the weaker the seller's
resolve to hold firm on price. You see, overpriced listings that languish on
the market reduce the seller's negotiating ability as time diminishes
their power. Once a listing has gone unsold, even if they take it off the
market for a while or remove it and relist it with another agency, the
information is in the public domain. There are definitely exceptions; EG: the
seller doesn't have to sell, or the seller just likes to see their property
advertized at some inflated price.
I think it is obvious that if a seller is serious --- I am
NOT talking about desperate; homes priced to sell will sell. That means being
ahead of the market instead of chasing the market. A good deal starts to get
noticed if it is at least 10% below its competition. But when you see a
good deal, do you think you are the only one who sees that good deal? Heck
no, and usually you end up competing with other consumers who want what you
want. What that can do is create a bidding war, and that is exactly what the
seller wants --- or should want. A bidding war is probably the best and
truest way to establish market value. I hate bidding wars, and right
now I don't have to worry about it because sellers on Martha's Vineyard are
following the same bloodletting technique; they all price high and week after
week pull a few thousand dollars out of their last price. My clients
feel like they are standing around the markdown sale table at Macy's waiting
for the 70% off sign to go up.
There is a lot of misleading statistical information out
there right now. Many agents talk about price-to-price ratio. In the recent
2007 NAR Report on Buyers and Sellers it states that "sellers sold their
homes for 97% of list price." Does this mean 97% of the original listing
price or 97% of the current listing price? The property could have been on
the market for a year and transitioned through a half-dozen price reductions
before it finally sold.
To sellers my advice is to listen to your listing broker
when they give you an 'honest' price recommendation. In this market, if you
interview several brokers, hire the broker who gives you the lowest price
recommendation because they are probably the one telling you the truth. Many
times a broker will agree to a listing contract with a seller because they
are thinking, "If I don't take it, my competitor will and I will lose
it." They know full well the property will never sell at the
listing price. They are banking on the seller eventually coming to their
senses and seeing the light. The conversation goes like this. "Mr.
Seller, it has been three weeks since we listed your property and we have had
no interest, so it is time to reduce the price." By then it is too late
and that conversation will most certainly be had again --- and again.
To my buyer clients I always say if you like a property, pay little attention
to the asking price and don't be afraid to make a "Bold
Offer". By this I mean make an intelligent well thought-out and
thoroughly researched offer.
REO’s: A Cautionary on Bank Own Property
Purchases
November 19, 2008
Properties that have been repossessed through foreclosure by a lender are
called REO’s. REO stands for Real Estate Owned. If they
are bank owned, why not call them BO’s? I suppose it is obvious why not,
although many of them stink. When buying REO properties there are some key
differences to understand, as opposed to a traditional real estate purchase.
First and foremost, you as a buyer have little or no ability to negotiate the
price or terms with the seller. REO properties are sold “AS IS” and
the seller is a financial institution with no emotional attachment to the
property for sale. Unlike a traditional homeowner, they do not have any
personal interest in who is moving into “their home”. There is a
good chance that no one from the bank has seen the property, or been inside
the house. The same holds true for the listing broker if that listing broker
is not local. The lender is only concerned with receiving the highest Offer
and best terms possible to suit themselves. Most of the negotiation process is completed
via internet e-mail. The only information the bank will receive is the terms
of the Offer. They only care
about how much you will pay for the property, and how you will pay for the
property.
Be sure you speak with your lender before submitting an
offer on an REO property. In most cases, a pre-approval letter, not a
pre-qualification letter, is required simultaneously with the Offer to
Purchase. The bank wants to be certain they are considering an Offer from a
buyer that has the credit and financial wherewithal to see the deal
through. In many cases the seller
even wants to see a bank statement showing you have enough cash in your
account to consummate the transaction.
Isn’t that an invasion of privacy?
Since you can’t rely on personal interaction with
the seller, the cleaner the Offer the better it will look. Because REO properties are sold in
“As-Is” condition, you want to look for a loan program that
applies to this type of property. The condition of the property may not
qualify you for certain types of traditional loans. If the property is in poor condition,
and most REO’s are in poor condition, you
might want to investigate a construction loan. Many lenders are now offering
programs geared specifically for distressed properties. This way, the repairs
can be completed after the buyer takes possession of the property. If your Offer is accepted, you are
entitled to have your own property Structural Inspection, but you will only
have a few days to complete the inspection. Quite often, only a dry
inspection will be possible. By that I mean the power and water will not be
turned on. Some REO clearing
houses will advance funds and take responsibility for ‘trashing out’
the property and generally cleaning it up, because it helps them market the
property. However, that is being done less and less today because listing
companies are finding it very difficult to get reimbursed for their expenses.
It’s getting ugly, and it may get worse before it gets better.
What about the closing date? Yes, that is also handled differently
from the way a traditional purchase is closed. In a traditional sale, it is
possible for the seller to be flexible about a closing date. Some contracts
use the term “on or about” a certain date. Sellers in a
traditional sale tend to be more willing to adjust plus or minus to make the
sale work, as long as the Closing takes place within a reasonable number of
days from the original date agreed upon.
However, REO contracts use the term “on or before” a certain
date, and the bank will tell you what the closing date will be. The bank will
expect the Closing to take place no later than their stipulated closing date,
and if there is a delay on the buyer’s side causing the buyer to be in
default, the bank will either terminate the contract, with the buyer
forfeiting their down payment, or the buyer will be penalized a specified
dollar amount per day for an extension. Most often that amount is $100.00 per
day. However, because of the
enormous inventory of bank owned properties today, in my experience sales
often do not close on time and the bank is responsible for the delay. A 30-day closing can end up being a
120-day closing, and that could mean the buyer will lose their loan rate
lock. Nevertheless, I cannot stress
strongly enough that the bank sets the timelines and they could care less
about what you want.
Because REO transactions are different from traditional
purchases, any buyer interested in an REO property needs a knowledgeable
support team consisting of a competent and vigilant real estate buyer agent
who knows how to look out for their buyer client’s best interest and
can interface fluidly with a good attorney. Yes, the next member of the team
needs to be a GOOD ATTORNEY, one who will take the necessary care to
investigate the property title. What you do not need is a wishy-washy,
don’t ask, don’t tell real estate agent and attorney, who just
wants to get it done, collect a fee and move on.
REO properties appear to be very attractive opportunities
on the surface, and you can save money purchasing an REO property. However,
you can also end up spending considerably more money than you would on a
traditional purchase property, not to mention all the stress and anxiety that
has become typical with this type of transaction. Many times the offering
price is set low in order to attract buyer attention with the hope that
multiple buyers bidding on the same property will drive up the final
price. Buyers are encouraged to
submit their highest and best offer without the opportunity to know what the
highest price is that they are bidding against. Since these properties are
being sold “AS IS”, and since the onus is usually on the buyer to
correct any structural deficiencies in the property, repairs can drive the final
price above the realm of what would be considered a good deal. With short
sales, foreclosures, and REO’s there are no
guarantees, and in Massachusetts, it’s Caveat Emptor. That is why you
need to hire an Exclusive Buyer Agent who deals with buyers’ needs day
in and day out. On Martha’s Vineyard you want SplitRock Real Estate, an
exclusive buyer agency specializing in careful buyer representation.
WHAT’S “WRONG” WITH THE MARTHA’S VINEYARD REAL
ESTATE MARKET
October 8, 2008
Starting with the premise that commerce is activated by supply and demand, I
want to look at what is wrong with the Martha’s Vineyard real estate
market today. What I discovered
was that, in fact, there is nothing wrong with the Martha’s
Vineyard real estate market; it is just that this market is
confusing to many people and even more confusing today given the dire
conditions in the financial market and a disparity in seller motivation
factors. But first let me
establish a few facts as guidelines:
v
This is not a place people have
to be, they want to be here. Martha’s Vineyard is a destination and
for the most part, a second home market.
v
This Island is only 20.5 miles long, 87.48
square miles in total land area --- they are not making any more of
Martha’s Vineyard.
v
With home prices averaging almost 100% higher
than the national average, ranging from $300,000 for a shabby
‘fixer-upper’ to $25,000,000 and above not everyone can afford to
swallow that pill.
v
The cost of living is about 60% above the
mean, so once again living here is surely not for everyone, but that does not
diminish its popularity.
v
There are between 775 and 850 properties on
the market, depending upon the method of tabulation used, which is about four
times as many properties as there were at the height of the market.
v
The current inventory is about one-quarter
of what we had to deal with after the market broke in 1988, and the
population density has increased significantly since 1990.
The total inventory at the time of this writing totals 777
properties. I want to break down that number, which includes all
classifications of properties so you have a better perspective:
Ø
Up to $200,000 = 7 properties (Note: This
includes a share in a fishing camp, an aircraft hanger, time shares and an
office condo.)
Ø
$201,000 - $400,000 = 86 properties
Ø
$401,000 - $600,000 = 162 properties
Ø
$601,000 - $800,000 = 140 properties
Ø
$801,000 - $1,000,000 = 85 properties
Ø
$1,100,000 - $2,000,000 = 157 properties
Ø
$2,100,000 - $3,000,000 = 51 properties
Ø
$3,100,000 - $5,000,000 = 54 properties
Ø
$5,100,000 – $30,000,000 = 35 properties
Only 18% of the inventory is above $2,000,000. That means
the so-called lower end of the market is where the fat is. However, within
that segment lies a misleading inflationary factor --- sellers who do not
have to sell.
For a few years now we have been reading about how the
real estate market has tanked in some areas of the country, falling into what
many view as a fathomless abyss. The media has us believing this was the
general condition everywhere. In an attempt to educate consumers, the
National Association of Realtors® launched an educational campaign
proclaiming ‘all real estate is local’. This is true, all real
estate is local and in many parts of the country the market has been pretty
much stable or a recovery is under way. But the message came too late, the
die was cast, and for most of the country sales activity started to stall.
Sellers started to panic and buyers delighted that the tide was turning in
their favor. No longer would the buyers be at the mercy of a seller’s
market. Even on Martha’s
Vineyard buyers believed they finally had a chance to get a foothold on their
dream Island.
Overall, however, property values still remain solid on
Martha’s Vineyard. Yes, I
am serious. If you are
interested in real estate on Martha’s Vineyard, you should be paying
attention to this local market and not be influenced by broad brush studies
that are based on limited national metropolitan samplings. I don’t deny
there are pockets across the country where prices have fallen 40% or more.
These areas are not the norm. On Martha’s Vineyard, overall, the price
drop has only gone down about 14% since 2006. For anyone who invested in
Martha’s Vineyard real estate 5, 10, or 20 years ago, the good news is
their investment has increased handsomely in value over that time period,
even with the occasional bumps in the economic highway.
Exclusive Buyer Agents, such as SplitRock Real Estate,
work very hard to educate consumers and create Power Buyers. I have a number of buyer/clients who
have been working with me for 6 months, a year, even three years or
more. They have a sincere desire
to be here if they can only find the right property at the right price
(Isn’t that typical of what motivates buying decisions?). Much to their
chagrin they are discovering that prices on the Vineyard make no sense.
Comparables are difficult to come up with, and ultimately the buying decision
has to be an emotional decision. For those who are thinking long term and
understand the fundamentals of real estate investment, the fact that prices
overall have not gone down much should be a reassuring factor that lends more
confidence to a buying decision. For others, if they cannot afford to make
the investment now they will regrettably join the ranks of the would-have,
should-have, could-have buyers.
So what is wrong with the Martha’s
Vineyard real estate market? Buyers who enter the Martha’s
Vineyard real estate market, regardless of whether it is an up or a down
market are confused and scared. They do not want to make a mistake or appear
foolish. There are many sellers who are sincerely motivated and will actively
compete, engage and negotiate with buyers to sell their properties in this
market. I am not including what we call distress sales, i.e. short sales,
foreclosures and bank owned properties (aka REO’s). The problem lies with the ‘ego
seller’ who lists their property for sale, but really does not care if
they sell now or two years from now.
They are not willing to listen to the market (IE their
seller agents), and insist on holding a hard line because they think their
properties are special, and their posture is "I don't have to
sell". I call this the ‘goose that laid the golden egg’
mentality. Sellers who are not competitive are like buyers who are not
qualified; they are wasting everyone’s time and money. If you are a serious seller, please
don’t be offended by an offer you receive. Be willing to graciously
engage with a meaningful counter offer. Properly educating buyers is a
difficult, time-consuming process.
When they get to a point where they are comfortable making a
reasonable offer, if they are coldly rejected by a seller, it sets the whole
process back considerably. If you recall the moral of Aesop’s fable, he
who wants too much loses everything. In this case it is the entire Vineyard
real estate market that is losing.
As average buyers watch the market week after week, the
inventory continues to grow. Some
buyers hold out, sitting on the sidelines, as they keep hoping those
overpriced properties will come down in price. They resist making a buying
decision waiting for sellers to cave in. The result is a slow market with
minimal inventory absorption.
When the inventory was limited, the demand was greater and the market
moved briskly. If this market is
going to get back in stride, it is my opinion that sellers, who don’t
need to sell, should remove their properties from the current inventory. If sellers don’t like where the
market is today and they are not willing to be competitive and engage in
negotiations, they should wait and relist their properties when happy days
are here again. And surely, this
too shall pass and happy days will return.
Is the Martha’s Vineyard Housing
Market really that Bad? I Don’t Think So.
Martha’s
Vineyard Real Estate – Should You Be In The Market Now?
August 14, 2008
Looking at the overall picture of the housing crisis, perspective and
understanding has been lost as a result of what is essentially a localized
crisis in 4 states: California,
Nevada, Florida, and Arizona. According to statistics from City-Data.com, 54
of the 101 cities with the largest population increase from 2000 - 2006 are
located inside California, Nevada, Florida, and Arizona - the four states
most affected by sharply decreasing home values. These four states saw the largest
population influx between 2000 and 2006 triggering the need for more housing
supply and with that demand, prices started to go up at 15% or more annually.
Anyone who
has been in the real estate investment business knows that what goes up must
come down. Many mortgage lenders bolstered by the above average appreciation
rate year after year irresponsibly let their guard down, lowering lending
standards and granting all sorts of exotic loans they should have known could
not be repaid. Opportunity and greed propelled builders, real estate
licensees, lenders and investors to push the envelope until the bubble burst.
Today there are 15 states struggling to correct themselves; that is 30% of
the country with 37% of the population and approximately 4 million problem
mortgages. That breaks down to 7
percent of all mortgages owned in the U.S. Sure, you hear numbers reported by
RealtyTrac, a foreclosure reporting service,
stating one in every 464 U.S. households were served with a foreclosure
filing in July --- 272,171 households, but the deepest concentration of those
foreclosures are in California, Nevada, Florida, and Arizona. In Cape
Coral-Fort Meyers, Florida
alone, one in every 64 households received a foreclosure notice in July. On Martha’s Vineyard, RealtyTrac is reporting only 34 properties in
Pre-foreclosure, Foreclosure or REO status. There are approximately 14,000
households on Martha’s Vineyard. The current inventory of properties
for sale is less than 800 properties. Does anyone remember the early
nineties? This is nothing compared to back then, but business is so much more
difficult today because everyone is afraid of doing the wrong thing. Most of
the public continues to believe the media, and the media continues to fuel
the fear factor because, “misery sells newspapers”.
Not having a
clear picture of the market has resulted in a lack of movement stalling the
market, except for those buyers who ignore the media negativity and know how
to read the numbers. I believe we are about to see a significant paradigm
shift being expressed in two ways.
Frustrated sellers are finally taking a hard look at their pricing
realizing that their past strategy has not worked and has done them more harm
than good. They are listening to
their seller agents and cutting prices to the bone, well below assessed value
in many cases. Sellers who have refused to price their properties
realistically for today’s market and were never really sincere about
selling, are taking their properties off the market. They think the market is
about to turn around and prices will start to inch back up within the next 4
to 9 months. They can wait. I
think this will paint a clear uncluttered picture for consumers who have been
anxiously waiting with pent-up desire to get into this market but have been
unsure and confused. They will finally realize now is the time to buy. They want to buy!
This fall,
mortgage rates are forecasted to go up as much as
a quarter percentage point according to Jim Vogel, an analyst at FTN
Financial Capital Markets. This prediction is a result of Fannie Mae
reporting a second-quarter loss of $2.3 billion and their prediction of more
heavy losses resulting from the home-mortgage defaults and price declines
centered primarily in California
(-28%), Florida
(-17%), Nevada
and Arizona.
Fannie Mae has already said they will stop buying alt-A loans by the end of
2008. Fannie Mae and Freddie Mac
are going to be limited in their ability to buy and guarantee home loans, and
they will increase fees to borrowers seeking LTVs
of 75-80 percent. Increases in the cost of
borrowing will reduce the pool of homebuyers with the expected result that
buyers with strong liquidity and solid credit will be in the catbird seat. As
of today, mortgage rates are still very attractive. Martha’s
Vineyard local Island banks
understand our market and are excellent at helping qualified buyers to create
a loan package that suits their needs. Now is the best time to buy, waiting
will only create memories of what could have been your dream come true.
Martha’s Vineyard Real Estate – Should You Be In The Market
Now?
February 3, 2008
There are too many people who should not be in the real estate market right
now, both buyers and sellers. They’re not serious, they are time
wasters, and to me real estate is not a game.
If I were a seller’s agent, and I am not, and a home owner came to me
asking me to list his property at a certain price that was out of line with
my market research, and saying “let’s just try it for a while at
this price”, I would say no thank you. Perhaps that seller is unable to
sell his property at fair market value because he owes too much, and is
upside down --- loan vs. current market. Perhaps that seller does not have to
sell, but is just testing the waters or derives some pleasure at seeing his
property advertised at a big number. It is sellers like this and the
resulting skewed values and distorted inventory that create the negative public
opinion and add to buyer’s misperceived impression of the market.
If a buyer came to me, and they do, saying they want to “steal a
property”, I say no thank you. Pricing property is analogous to water
seeking its own level. If you price a property too high, it will languish on
the market until the price comes in line with the market. Across the country,
36% of all properties sold for list price or higher. Only 12% of all
properties nationally sold for 90% or less than asking price. What this means
is buyers continue to wait until properties are priced correctly. If you
recognize that a property is priced correctly, you need to bid accordingly
because properties that are priced correctly will normally sell quickly to a
savvy buyer, and there may be more than one savvy buyer making a run on a
property at the same time. Buyers must realize right now prices are good,
interest rates are excellent and anyone with cash or excellent credit has
power if they use it wisely in their negotiation. I’ve seen this too many
times. Buyers who are eager and ready to get into the market, but continue to
sit on the sidelines waiting for the ‘go signal’ from on high
that prices have bottomed out are destined to join the ‘would have
… should have’ club. You know who I am talking about, those
people who painfully recount that they could have bought that property for
….
In the investment game, if you think you are at the bottom, or at the top, it
is too late --- you are already on the other side. Right now is a great time
to approach the market because the fruit on the tree is abundant and ripe. I
don’t blame anyone for having doubts and fears; after all, the news
these days is mostly negative and full of fear. I love what Louis Rukeyser
once said about investing, no matter what you do, it is going to be wrong so
do something, because the worst thing is to do nothing.
We need to remember real estate is cyclical and this too shall pass.
Historically, the down-markets normally last two to three years and the
up-markets last from seven to ten years. I believe we are walking in the
valley right now, but we just don’t know it. It is going to be a long
slow trek through the valley and we may not reach the mountain until the end
of 2008, or the beginning of 2009, but we are on the march. One thing is for
sure, real estate values overall continue to go up. Real estate is the one
sure investment that always appreciates over time.
Is The Real Estate Market on
Martha's Vineyard Finally A "Buyer's Market"?
August 18, 2007
In my opinion we are finally entering into an honest to goodness buyer's
market on Martha's Vineyard. However, due to the fragile and mercurial
climate in the loan market, this will be a buyer's market with few buyers
capable of performing.
The national fallout began last year in the sub-prime or what is called
the predatory lending market. Dozens of lenders closed their doors, but now
national lenders are also feeling the effects.
First Magnus Financial Corp. of Tucson, one of New England's biggest loan
brokers, said it would stop lending altogether. Then American Home Mortgage
Investment Corp., a publicly traded real estate investment trust that grew
rapidly during the housing boom to become the nation's 10th-biggest
residential mortgage lender just filed for Chapter 11 bankruptcy protection.
AHM employed about 7500 employees in more than 550 offices in 47 states and
the District of Columbia.
The list will continue to grow as companies like First Magnus Financial,
American Home Mortgage and National City Home Equity announce they are no
longer funding loans. National City Home Equity, like AHM, specializes in
so-called Alt-A lending, typically to borrowers with strong credit who, for
one of a variety of reasons, may not meet all the requirements for a prime,
conforming loan. As the ripple effect of this collapse continues to spread,
another large Alt-A lender, Houston-based Aegis Mortgage Corp. has filed for
Chapter 11 bankruptcy protection. Aegis also laid
off half of its 1,305 employee work force.
The nation's largest independent mortgage lender with over 60,000
employees, Countrywide Financial Corp. is "lying on its side" as
one financial reporter described it. While companies like CFC manipulate
billions of dollars in unsecured credit options to stay afloat, those
companies still funding loans must devise ways to protect their loan
investments.
Facing dwindling funds from jittery mortgage investors, the result is a
more stringent qualification criteria required from would-be borrowers.
Lenders are tightening requirements, increasing interest rates, demanding
larger down payments, and completely withdrawing some mortgage products.
However, New England based lenders like Sovereign Bank and Cape Cod Five
Cents Savings Bank say they are still having no problem funding loans. Sovereign
has instituted a program they call "lock and look" that comes with
a full pre-approval and allows the client to lock in a rate while they look
for their future home, for either 90 or 120 days.
Borrowers are being told to make at least a 5% down payment, put enough
money down to avoid taking out a higher-rate jumbo mortgage, and be prepared
to verify your income through tax or other documents. Borrowers may also be
required to have assets on reserve equal to six or more monthly payments.
Even borrowers with strong credit and fico scores well above 700 can not be
certain their loans will be funded.
The following comes from a major U.S. mortgage writer. It is typical of
what has been going on in the mortgage business:
"As you are probably aware, the mortgage industry is going through a
major disruption. In response to these market conditions and to enable
******* to continue to serve our customers; we have made changes to our loan
eligibility, appraisal rates and repricing of loans
in the pipeline.
- Rate exceptions by AE's will no longer be allowed
- Only full doc loans allowed
- No Non OO (Owner Occupied) and second homes allowed
- Increased disposable income requirements on D/R's > 50% from $2000 to
$3000
- No refinances of Vacant Properties
- No refinances of properties listed for sale in the last 3 months
- Limited ltv's on homes listed for sale > than
3 mos but less than 6mos for cash out refi's
- Loans in the pipeline will be repriced according
to the current rate sheet unless they are in '"docs out" status or
are Purchase transaction types in "Conditional Approval"
- All loans in the pipeline that are NOT O/O Full Doc must fund by August 17
- Appraisals must be less than 90 days old
- Appraisals must contain 1 comp sale <> Okay, so now you want to know,
what is the point? What does this have to do with Martha’s Vineyard? I
know Martha’s Vineyard is a special place, with a different home buyer
profile than hometown USA, but I can tell you the market here is no cake
walk. Here is an article that just appeared in our flagship newspaper, the
Martha’s Vineyard Gazette. Read it and --- Believe it or Not!
Click here to read article >Island Real Estate Sales See Second Quarter Gain With Few
Mortgage Ills
Living On The Edge; That's Where
The Action Is
July 25, 2007
Everyone knows that living in a coastal area, be it north south or west means
risking certain forces of nature. Floods have become an
ever increasing threats in many parts of the country, but people still
flock to river front towns even if it means living below sea level, because
that is where the action is.
Earthquakes are a threat, particularly along some of the west cost fault
lines, but that does not stop anyone from living in the fun in the sun state
of California, because that is where the action is.
Hurricanes are a huge threat and in recent years have affected the Gulf
Coast and eastern coast of Florida with devastating effects, but people still
gravitate to those areas, because that is where the action is. Living on an
Island is certainly living on the edge --- or possibly over the edge, but we
love it and many people dream of having a home on Martha’s Vineyard.
What about the possible treat from Nor-Easters and those dreaded Hurricanes?
Sure, we are always anticipating the next named storm and when it
materializes we all start thinking about how to prepare for it, not having
too many choices for where to run. But we love it here, because that is where
the action is.
Many of my clients are not only concerned about hurricanes and the
flooding associated with it, but they even have included elevation above sea
level to their shopping criteria. I suppose that has to do with Al Gore and
all that global warming stuff.
For Martha’s Vineyard, there seems to be some good news to report.
We have had an unusually cool spring and summer and not a lot of rain so far.
That means the water around us will not heat up until much later in the
season. Oh yeah, the fishing has also been really good. Hurricanes thrive in
warmer water, so I guess that means we can relax more than we usually do, at
least according to the latest Reuters news report.
Follow this link to read more > Forecaster cuts 2007 hurricane outlook
I'm A Real Estate
Buyer's Agent, And I Love What I Do.
July 23, 2007
I do not post editorials to my Blog unless I am the author, or collaborating
with a colleague. However, this account of a personal real estate interaction
written by a gentleman I know is so hilarious and poignant, I cannot resist
sharing it.
Steve and his wife, having returned from a Sunday tour of open houses,
were reflecting back on the events of the day and here is his impression of
the experience.
A Buyer's Plea for Some Respect
By Steve Burnett © 2007
Reprinted by permission
Just because I don't happen to have my agent with me on this visit,
doesn't mean I don't have one. Without an agent with me, we both know that
your first question is likely to be, "are you working with
somebody?" This really means you're trying to find out if there's any
chance you can function as a dual agent and double your percentage. Or, maybe
that same question is your way of determining if I'm really a serious buyer
or just one of the neighbors from down the block. See those MLS sheets and
Google maps in my hand? I'm not a neighbor from down the block. I'm looking
to buy something. You'll see that in my eyes once you stop worrying about
"establishing a dialog" or "getting to know your buyer"
or when you stop asking yourself, "How can I tuck in an extra 2.5 points
on this deal?"
Aside from pointing out something notable or unusual, I really don't need
you to announce, "...and this is the hall bathroom..." as we tour
the house. I know what bathrooms and bedrooms and kitchens look like already,
thank you. Perhaps you're used to dealing in twenty-room mansions where the
function or location of each room might have to be explained, but I'm just a
regular guy looking for your average 3/2 suburban rancher. It's not likely
I'm going to get lost or confused about what a particular room is, so save
your chatter until you have something really informative to tell me.
In fact, hold your chatter, period. Unbeknownst to you, my wife and I have
just flipped a coin in the car outside to determine which one of us has to take
the chore of talking to you and answering all your questions so the other one
of us actually gets to look at the place in a somewhat uninterrupted manner.
If you think you're going to entice me into making an offer by claiming
that you have other offers coming in soon, or telling me how many other folks
have seen your open house today, expect me to turn on my heel and exit your
open house. Attempting to create the appearance of scarcity is so 2004.
There's no point in me getting into a bidding war, real or imagined. If you
don't believe that, please revisit the months-of-supply and DOM numbers for
your area. Hint: I've seen those numbers!
I know what new paint looks like, and I know what old paint looks like.
It's not super important for you to point out the difference, since $50 bucks
at Home Depot, a few beers, and a few hours on a Saturday are all that are
required for me to solve any paint issues in a room. I'd rather you let me
decide what the value of such "upgrades" are. Hint: You are not
going to get a few extra grand in value just because the seller took $50
bucks, a few beers, and an afternoon to slap some trendy color on the walls.
Same story applies with crown molding and wainscoting. Forget what you and
your sellers have seen on HGTV; you are not going to get a 10X
return-on-investment for a few hundred bucks worth of DIY projects. If the
basic value of the house in not there due to the number of rooms, location,
or dollars per square foot, no amount of superficial "upgrades" are
going to change that basic value. Conversely, if the basic value is there,
I'm very prone to overlooking lime green walls, chipped tile, and a myriad of
cosmetic issues.
The whole staging thing is getting really old. Does the house you live in
have strategically placed bottle of wine with a pair of glasses on the patio
table every night of the week? My current house doesn't, I can assure you
that the only time there's a big bowl of fresh-cut flowers on the kitchen
table is on Valentine's Day, or when I've made my wife mad. Normal people
live in homes where the coffee table has a bunch of remotes, chewed-up dog
toys and six-month old magazines. A staged house always seems to have a book
of Tuscan sunsets, a bowl of teal-colored marbles, and nothing else on that
coffee table. Sure, ask the sellers to tidy up a bit. But don't stage the
place to the point where it's a cliché,
or to a point where it's not even plausible that actual people might live in
the house. Really, I'm trying to look through all the fruit bowls, cute soap
bars, and other doo-dads you've carefully placed. It insults my intelligence
that you think crap like that might make me want a particular property more
than what I would have without the staging. In spite of what you have heard,
a vacant house with no furnishings whatsoever is fine.
You know all those apple pie-scented candles in your trunk you've been
packing around for each open house you do? Dump them. Put them in your own
garage for the next power outage. Give them to some homeless. Do anything but
use them to give potential open houses that "home" feeling.
Virtually every single one of your competitors is already trying the same
idea. Unless your property has dead animals underneath the floor boards, or
had the living room used as an indoor kennel, there's really no scent that
you can add that is going to want to make me want to buy something I wouldn't
otherwise. Back to the intelligence thing: Do you honestly believe that
people make large, 30-year financial commitments because they caught a whiff
of punkin' pie? Don't even get me started on
chocolate chip cookies or popcorn. Yes, I've read the studies about how the
rational mind can be strongly influenced by scents. When you try that play,
all I really smell is your desperation.
Basic literacy: FYI, the windows that you're trying to tell me about are
spelled: "dual pane", not "duel pain" or duel pane".
I only bring this up because I've really seen these spelling variants in many
listings. Same issue with !!! $ALL CAPS DESCRIPTION$ !!!! and TXT THT LKS LK A 14YO
GRL might be sending me a text message. I expect to see that kind of writing
for Beanie Babies on eBay, not on a $500,000 home listing. Again, it's a
mistake for you to think I might be dumb enough to give your listing any more
than the usual amount of attention due to the number of exclamation points.
Fact is, I'm less likely to look at such a listing
because your writing skills look like you dropped out of high school and I'm
not likely to trust you with such an important purchase.
It's not 2005 anymore, and buyers like me are getting back to pure
fundamentals: Dollars per square foot, and location. Stuff you can't change
with new paint or by "spicing up" your
listing description. Remember, I'm looking at buying in a down market and
maybe having to sit through a few years of little or no appreciation. You can
help me by explaining how the fundamentals of your property might work for
me. You can save us both some grief if you can help your seller to understand
that it's not 2005 and that the next buyer is not likely going to enjoy a 20%
per year price appreciation and the price should be set accordingly. Sorry,
it's a new market now.
The Real Estate
Shell Game
July 18, 2007
By Peter C.
Fyler with editorial input from Jon Boyd, 2007 President, National
Association of Exclusive Buyer's Agents
© 2007 SplitRock Real Estate, LLC
I'm an exclusive buyer agent on Martha's Vineyard and my job is
representing buyers; that's it plain and simple. I have no allegiance or
responsibility to sellers beyond the rules of courtesy and common decency set
forth in my REALTOR® and NAEBA Association Code of Ethics.
You're a Buyer looking for your dream home, and if you do what most buyers
do today, you start looking for that dream home on the Internet. You may go
from one real estate company's website to another plowing through their
listings looking for that perfect property. You must be aware the listing
company and all its agents represent the seller, not you. With that said,
let's take a look at the real estate shell game.
Shell #1 - Loss Leader:
You see what you think is your dream home listed by company A. Excitedly, you
call company A and you ask the listing agent answering the phone about the
property you saw on their website. You are told apologetically, that it's
under contract to be sold or already SOLD! The agent says they were about to
change the status or remove it from the website, and then they immediately
suggest other properties in their inventory. Most likely this was not an
accident or oversight on the part of the real estate company. In general
commerce, they call this kind of advertising "loss leader" or
"bait and switch".
Our Martha's Vineyard Listing Information Network (LINK) provides a system
of codes designed to keep information current, but LINK cannot dictate
behavior to its subscribers. Not all real estate agencies ignore their
responsibility to keep information current, yet many excuse
themselves saying they will not change the status until the last contingency
is met or even until the deed is signed. Probably more than 95% of the
transactions here on Martha’s Vineyard go to record. Another excuse is
to say it's just business in a competitive market; it makes the phone ring,
and perhaps the buyer could be steered to another property. Who does that
benefit? It benefits the real estate company and the sellers of those
properties still languishing in the unsold inventory. It does not benefit
buyers like you and it frustrates buyer agents like me.
Shell #2 - Show Me the Money:
Another trick is for agents in traditional real estate companies to call
themselves buyer agents. At best, they are Designated Buyer's Agents, Dual
Agents or Transactional Agents better known as Facilitators. Look at real
estate websites and print advertising, what do you see? You see dozens of
properties advertised for sale. All of these properties are supported by
seller agency written contracts and an agency commitment to get the highest
price and best terms for the seller. Furthermore, advertising is very costly
and therefore another incentive to get as much for the seller's property as
possible. A true buyer's agent is always a buyer's agent and never switches
roles; they only represent people, not property. Only Exclusive Buyer Agents
exhibit advanced skills in property analysis, price evaluation and
negotiation. There is one more trick I want you to know about.
Shell #3 - The Meat Grinder:
While you are surfing the Internet looking for your dream home, most likely
you have come across some intriguing and very slick real estate websites
boasting to be your number one real estate resource. Many of these companies
will not let you look for an agent or review properties for sale until you
fill out a complete contact information form. Even then, you may have to wait
for a response with the promise that you will be contacted by the best real
estate agent in your area, a real estate agent that you did not personally
choose. These are not real estate companies, they are advertising companies
only interested in one thing --- making money. They may even send your
contact information to several "best" agents. They don't care who
or what they represent. If a real estate agent can pay the price, and it's a
steep price, these companies will send them "leads", or display listings
for them, even if those listings don't belong to the company advertising
them.
If you have ever inquired about listings on one of these websites, you
most likely realized the information was quite often inaccurate or obsolete.
It is all about getting the leads. As I said before, these leads are
expensive, so the agent subscriber will want to recapture their advertising
expense, and you can bet that will be at your expense --- the BUYER.
Another unfortunate aspect of these lead generation services is the agents
that buy your contact information are often the least experienced agents in
the market. Some of the companies that do this type of pay-per-lead marketing
are Connect2agent, Homegain, Neighborhoodscout,
Realtyconnect and Servicemagic.
Many of my seasoned colleagues who have tried these services will say you
gain almost nothing for the money spent. Common sense should tell you the
smartest way to find the best agent or properties in the area you are
interested in, is to look for a company in that area.
I've Seen It All
On Martha's Vineyard
July 11, 2007
For as long as I can remember it has been a mystery to me how some
home owners here on Martha's Vineyard decide to sell their family home, hire
a seller's agent, agree to pay a fee and put their home on the market but never
take the time to clean and fix up their home and property, not even just a
little.
One would think a seller would at least fix that broken staircase to the
second floor bedrooms so a prospective buyer would not have to use an outside
staircase to get to the second floor living area. One would think the two Rottweilers running loose in the house would be
sequestered outside when the seller's agent shows the property.
A prospective buyer coming into a house and contemplating living there needs
to see through the distracting maze of stuff the home owner has accumulated
over the last 30 years; they need to see themselves living in that home. They
will see nothing if they are trying to dodge the growling dogs, making sure
their child doesn't fall through a broken staircase, or navigate around dirty
laundry strewn across the living room floor.
Staging and Feng Shui
is all the buzz now, but for the most part we still
ignore it on Martha's Vineyard. I guess you might say the pervasive attitude
is “We’re Martha's Vineyard and we’re hot so deal with
it!”
I belong to the National Association of Exclusive Buyer Agents (NAEBA) and
below is an article being circulated throughout the media in this country.
You may get a chuckle out of it, but more importantly, if you are a seller,
pay attention and give your agent and my buyer clients a break. Remember,
sellers want to sell, buyers want to buy and real estate agents want to make
it happen.
Buyer Beware: Skeletons in the
Closet
(and Aliens in the Basement)
ARLINGTON, Va., June 22 /PRNewswire-USNewswire/ --
How much do you suppose a pile of crunchy dead bugs on the basement floor
will affect the selling price of a $500,000 home? How about a life-size
skeleton hanging in the closet, or an open coffin in the basement with a
dummy vampire inside? Or an overly-ripe kitty litter box under the kitchen
table?
The National Association of Exclusive Buyer Agents (NAEBA) recently
conducted an online survey of their members to rate the items they found most
annoying when searching for a new home with buyers. Since these real estate
companies are always looking out for the buyer's best interest they don't
pull any punches. The results of the survey are revealing, surprising, and
sometimes downright weird.
Here are the top five things exclusive buyer's agents find most annoying
when previewing a home:
1. Broken door locks preventing access to the house.
2. Pet deposits in the back yard or dirty cat boxes.
3. Missing light bulbs in the basement.
4. Sellers that ask you to remove shoes and then have wet carpet or dirty
floors.
5. Having loose stairs on a stairway or missing banisters.
Other reported annoyances include:
6. Low hanging dining room light fixtures in a vacant home.
7. Closet doors that fall off or are not adjusted properly.
8. Going into a vacant home and hearing animals in the walls.
9. Halloween decorations that are left out.
10. Dangerous children's toys left out.
11. Dead cars in the driveway or yard.
12. Homes on large lots without a survey or description of the lot
boundaries.
13. Political signs.
14. Graffiti on a home for sale.
15. Dead birds or animals in or around the home.
It seems that many home sellers are not overly-endowed with common sense.
Closet doors falling off? Dead animals in the front yard? The pitter-patter
of mousy feet in the walls? Scary Halloween decorations all over the house?
These should all be no-brainers. Sending buyers away disgusted or frightened
out of their wits is probably not the best of business decisions. Neither is
killing or maiming them with dangerous children's toys left as booby traps.
Jon Boyd, President of NAEBA, relates some of the unbelievable things he's
encountered over the years when going through homes for sale. "Once I
was previewing a fairly expensive home by myself. I go into the huge basement
and I can't find the light switch. As I'm reaching around a corner I catch a
light switch and turn it on. About 8 feet in front of me is a life-sized
model of the ALIEN MONSTER LOOKING RIGHT AT ME! My heart starts beating again
in a few minutes when I figure out what the stupid thing is, but whose idea
was it to leave the thing there while the home is on the market?"
At another house Boyd almost became an unwitting participant in a Chaplinesque silent comedy. "I'm stepping into the
basement the first time with buyers right behind me,
again without good lighting. My foot hits something and when the light goes
on I see I just barely missed stepping off the step onto a roller skate. I'm
serious. Can you picture me flipping over onto my back like a cartoon
character? If my foot had come down 2 inches to the left..."
Silliness aside, there is an important lesson here for home sellers.
"In all these cases the buyer's attention is diverted from evaluating
the home to something mildly disgusting or frustrating," says Boyd.
"If sellers have a dead pigeon lying on the
deck it will just help our buyers negotiate a better price because of less
competition. But let's try to leave the skeletons and coffins for the
Halloween party!"
The National Association of Exclusive Buyer Agents was founded in 1995 to
help consumers become educated homebuyers. NAEBA is a nonprofit organization
whose purpose is to be the "champions of real estate buyers' rights and
representation." It has over 500 members nationwide. Starting in the
mid- 1990s, savvy buyers wanted the benefits of a real estate representative
working for their interests exclusively. They turned to EBAs,
Exclusive Buyer Agents, to do the job. NAEBA is an industry group dedicated
to supporting EBAs in serving clients to the best
of their ability. NAEBA offers industry standard certifications, ongoing
education, client referral service, technology and information sharing. The
NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only.
More information about NAEBA can be found at http://www.naeba.org.
Web site: http://www.naeba.org/
Not All Buyer
Agents Are Created Equal
July 10, 2007
In the July 16 issue of Newsweek, there is an article outlining the benefits
of using a buyer agent.
Please remember any seller's agent can double as a buye's
agent, but if the buyer expresses an interest in a property represented by
that agent's office, the agent can no longer represent the buyer's best
interests; they become a Dual Agent and it is in their best interest to sell
in-house listings.
Exclusive Buyer Agency guarantees the buyer unconditional undivided
loyalty at all times throughout the entire home buying process. Buyer
advocacy requires enhanced negotiation and property evaluation skills.
Follow this link to read more > Real
Estate: Call Your Agent
 Cool Tool Available to Martha's Vineyard NStar Customers
June 28, 2007
I just received a gadget that is being offered through an NStar
utility partner, Blueline Innovations. It's a
wireless device that is not difficult to install or set up. Besides the
ability to intelligently monitor power usage in your home, I think it can be
a fun learning tool for children and the whole family to educate them about
energy conservation. The Power Cost Monitor is available right now for $29.95
with a promotion code for NStar customers, BUT the
price is expected to go up to $135.00US after June 30, 2007. Follow this link
to learn more about the PowerCost Monitor™.
I Love Martha's Vineyard
June
25, 2007
I have lived on Martha's Vineyard part time and full time for over 40 years,
and I have seen a lot of changes --- some good and some bad. For the most
part the Vineyard has still maintained its New England charm and tenor.
When I was a little boy my family summered in the Hampton's on Long
Island. It was a magical part of my boyhood, but when I went back a number of
years ago everything had changed.
I love these two lines from an article that appeared in The Record this
past Sunday:
"Overrun? Maybe. Devine? Definitely!"
And then there was this quote:
"Southampton, eat your heart out!"
Follow this link to read about Martha's Vineyard --- A Great
Hideaway from the Rat Race
Buying A Home On Martha's Vineyard Should Be Fun
June 15, 2007
House hunting on Martha's Vineyard can be fun, and I make sure it is fun.
However, I find many buyers new to the market get caught up in things that
are irrelevant while failing to consider what's really important. They may
base their decision on a Japanese Maple tree in the front yard, the green
granite counter tops in the kitchen, or the color of the carpeting in the
living room. I believe it is my responsibility as an exclusive buyer
representative to keep my buyer-clients focused on the big picture, even
though some of that may be more sobering than joyful. Please read this report by RealEstate.com on Four Strategies
to Make House Hunting Easier
The Housing Slump
Isn't Over Yet After All.
May 24 ,
2007
The beginning of 2007 took off with a flourish of sales activity. Shrewd
investors took advantage of market uncertainty successfully negotiating good
buys for many of the better properties here. The prediction of low and
stabile interest rates and a strong economy suggested a turn around in the
housing market was eminent. Then came the subprime
lending fiasco which had an overall negative effect on the market.
Sellers, realizing the pool of "qualified buyers" had shrunk
over night finally started making serious reductions in home prices, but
there were very few qualified buyers. Therefore, the typical spring flood of
properties back onto the market was met by buyers unable to make a purchase
or reluctant to do so believing the downturn was not over yet.
The balance of supply and demand at the lower end of market continues to
be heavily weighted toward the supply end. Here is an article that appeared in this week’s Boston
Globe that addresses the fact that the housing slump isn’t over yet
after all.
However, at the high end of the market, where the ripple effect caused
adjustments on some prime properties, well-heeled buyers fueled by generous
bonuses from the financial market are carefully picking at the prime luxury
properties.
Is Your Property
Eligible for a §1031 Tax Deferred Exchange?
May 24 ,
2007
Since Martha's Vineyard is a vacation community, many properties are
purchased for investment purposes and not as primary residences. Therefore
the Section 1031 Tax Deferred Exchange option (also called Starker exchange)
is especially intriguing and ideal for many investors.
Many media articles, dozens of websites and some real estate agents are
quick to pontificate offering themselves up as §1031experts, but not
giving a clear or complete picture of the §1031 exchange process. It
seems many taxpayers believe they can exchange a vacation home at any time
and that's just not the case" says Tom Oldfield, attorney and partner in
Olympic Exchange Accommodators based in Washington state.
I believe the process is too dicey and very complicated. It is constantly
changing and has many sensitive factors and critical pitfalls that can make
or break a deal. As a real estate broker and exclusive buyer agent, my duty
is as a facilitator to my principal; I am not an accountant or tax advisor,
attorney or qualified intermediary (QI). I have relationships with several
good QI’s and will refer and assist anyone
interested in pursuing a §1031 exchange. According to David Greenberger,
an attorney and California licensed QI, here are some questions a taxpayer
should be asked when contemplating the purchase of an investment property:
- Are you considering
selling or buying any property for investment or business purposes?
- Are you considering
putting any of your equity from one property into another?
- Are you considering
selling any property and buying any other property within 6 months of each
other?
- Can I put you in touch
with an accommodator who can give you basic information and guide you
through your particular facts and situation?
- Do you need further
advice or information from a tax advisor?
- Have you got a clear
plan for your real estate?
- Should you be
considering new categories of real estate or regions for your
replacement properties?
- Should you start
looking for replacement properties now so that you give yourself more
time than the prescribed 6 months from close of the relinquished property?
- Are you aware your
deposit for the replacement property may come from the exchange account
you set up once you have sold your first property in the exchange?
- Should I follow up
with you once you have closed on your replacement property to track performance
and help you decide whether you might want to enter into another
exchange on additional properties you may own or to discuss a reverse
exchange when new properties become available?
|
