Vancouver Real Estate Market Cools… Inside the House

While I’m not about to equate showing houses to the physical hazards of, say, working on an oil rig or handling nuclear waste, the upcoming cold streak and the number of vacant houses without electricity are going to make for some interesting real estate showings in the Vancouver and Clark County market this next week.

One of the things I tell my home selling clients all the time is that we want the buyer to stay as long as possible during their visit. Heck, hope they pull up a chair and start redesigning the kitchen and then measure the living room to see if their sectional will fit.  All this bodes well for the seller, as the potential buyer starts to see how this house can become their home.

But, when it’s near freezing inside, well the warm and fuzzy feeling that’s hoped for fades and becomes a wanton dash for the car’s heated seats. (And, yes, that is a REAL picture I took from inside a house here in Vancouver during a showing last week…).

I understand – especially with some vacant short-sale and pre-foreclosure listings – the home may not have power. But if a seller, be it a bank with a REO property or a homeowner trying to salvage a sale before the worst-case scenario kicks in, really wants to enhance the opportunity to sell the house, spend a couple of bucks a month to at least keep the temps above the point where Jello sets.

I’m not asking for the staged smell of fresh-baked cookies, but the ability to hold an indoor conversation without the chatter of teeth and a serious concern for the onset of frostbite would be helpful.

Until then, I’ll make sure I have my new real estate agent showing toolkit – a lockbox key, my parka and a portable heater – for this weekends showings. Of course, if you’re looking for a hot deal in the Vancouver Clark County real estate market, let us know… we promise our service won’t leave you IN in the cold.

Vancouver Real Estate: Why an Offer Won’t Pay off Your Mortgage

While I “get” the concept of “limited representation” (you know, those flat fee listing options) to help sellers get some MLS exposure and find a buyer, it’s what you do AFTER you find the buyer that really matters.

I tell my selling clients all the time – finding the buyer is actually the easy part (although it has gotten to be a tad more challenging in the past year).  The hard part is keeping the deal on track and getting it to the closing table so a seller can actually maximize that equity.

Just try cashing an “offer” at the bank.

It’s that expertise in managing a deal that truly defines the value in the listing expense.  Sure, marketing costs money, nowadays lots of it.  But marketing (or MLS exposure) alone is not going to get it done.

Why this discourse?

I subscribe to a local real estate “forum” where folks post ideas, comments, deals, etc… I find it amazing that people will turn to anonymous posters – with varied agendas, experiences and perspectives – for advice on how to handle contract negotiations. Earlier this week, an email to the anonymous group was peppered with…

“Is it feasible…”
“Do any of you folks have suggestions for me…”
“I have a plan on counteroffering. Open to your ideas and experiences!”
“Any suggestions would be greatly appreciated!”

Seriously.  These are actual statements.  From a seller who had the house “listed”, but had no/limited “representation”.  And this level of uncertainty is at the offer stage… what happens going through contract negotiation of terms and conditions, disclosure, inspection, underwriting, appraisal, title, escrow, etc…

Look, don’t get me wrong, I don’t fault someone for trying to save money, especially in this economy. But the premise of penny-wise and pound… well, you know the one I’m talking about.

The offer was $70,000 below the asking price.  I’ve talked again and again about whether this List Price was even correct to start with. But regardless, with that type of discrepancy and that level of uncertainty, the money spent of securing solid, experienced representation of a seller’s best interest in a transaction of this magnitude can not be undervalued.

But hey, I’m smart enough to admit I may be a tad bit biased in my viewpoint.

Being a Real Estate Agent is Scary Enough this Halloween

Needless to say, I have been in some bizarre situations during showings in my real estate career.  You do this long enough, and you come across all kinds of, shall we say, “interesting” things.

I have to admit though, the “dead clown in the garden” problem just hasn’t happened.  I guess I should consider myself truly fortunate.

So in the spirit of Halloween (nice play on words, huh?), here’s one of my favorite real estate videos.

Honestly, if I were these buyers, I would be more terrified about how the agent continually changes the subject and ignores his concerns than I would be about the “foreboding sense of evil”.

But hey, if you are looking for a house nowadays, congratulations… you definitely don’t scare easily.  And we should talk, because I can help make sure your purchase doesn’t become a nightmare.

Is 17 Your Lucky Number…?

Not if you are a seller in today’s Clark County real estate market.

No matter how many ways I’ve looked at the recent statistics from the local MLS, well, they ain’t purdy (with apologies to all my English teachers). Average “Months of Inventory” (MOI) now stands at 17 months. OK, so that’s a tad bit different than the 1.7 Months of Inventory (MOI) in the Portland market in the summer of 2005. Amazing the difference a decimal point can make!

(A quick reminder, MOI is defined as the time it would take to sell all the houses currently up for sale, based on the number of actual sales, if no new inventory came on the market. Opinions vary, but a market with healthy balance and equilibrium will have between 6.0 and 8.5 MOI. )

As always, we see different areas of town vary in their market performance. If you are looking to sell your home in Fisher’s Landing (7.3 MOI) or Salmon Creek (10.5 MOI) you likely stand a better shot than say, Washougal (33.6 MOI). Yipes!

With the amount of competition throughout the Clark County real estate market, it behooves a seller to be properly positioned. I have talked before about the fact that only the best deals are getting done. And remember, “best” does NOT simply mean just cheapest price, but a well thought out strategy, combining price and condition that creates an unbeatable market presence compared to competing inventory.

We have recently started doing a complete staging analysis as part of some of our home-selling packages. We bring in someone to add another set of eyeballs to the evaluation of property condition and what needs to be done to facilitate a timely sale. While these detailed reports tend to be very, shall we say, well, detailed, I’ve made my sellers promise not to beat the messenger, because in this market, a smart seller will take all the help they can get.

Yes, Virginia, There are Still Buyers in the Market

As the wonder of the Christmas season comes upon us, we are reminded of the simple gifts we look for.

Peace on Earth, Goodwill toward Man (and Woman, of course) and maybe a buyer for this wonderful Greenbelt home in Lakeshore. OK, that last part might be a little selfish for the season, but you get the point.

Anyway, with 4,470 homes on the market and, lets see, count ‘em, one, two, uh, three… um, six buyers, its a far cry from the go-go days of 2004. Of course, a majority of the agents in the business here locally weren’t even licensed in 2004, but that’s a rant for another day. Nonetheless, my exaggeration(s) notwithstanding, there are Buyers out there. I know, I am fortunate enough to have a couple of them (and I am NOT telling anyone where I have them hidden).

In a recent moment of nostalgia for those gory glory days of 2004-05, I recently had a Buyer (yes, Virginia, there is a Santa Claus) sit down to write an offer on this adorable ranch home over on the east side. We are discussing comps and price points and timing and negotiation and strategy and, well, stuff. The house has been on the market a whopping 50 days or so, a proverbial New-York second in this selling season of this year. It did recently have a price reduction (now there’s something different, NOTE: sarcasm alert!), which brought it in line with my Buyers starting point for negotiation.

In an effort to extract some additional concessions clarify some basic pre-offer information, I call the listing agent. At this point. it all starts to get a little fuzzy, but here’s my take on it. First, we must have had a horrible phone connection, because I could swear he said that they had just finalized a signed-around offer. Certain that it was the call quality, not my hearing, or -gasp- the truth, I did what anybody would do in that situation… I hung up and called back. Unfortunately, the technology was fine, the house had…wait for it…patience…here it comes… an “accepted offer”. Wow.

Now I remember the multiple-offer days of lore… remember historically 71.4% of my business is on the Listing side, so I know what it’s like to be part of the “sorry, we have another offer (or two)” conversation. Many of those, in the day. Ahhh. Oh. Sorry, was getting all misty-eyed there. Must be the dust.

I actually have a point (enough with the Bronx cheer, already). Point is, there are Buyers out there. Really. I know there are sellers who doubt the validity of this theory about now, but even with the number of transactions down sharply, this house sold and had other potential buyers, because it was A) priced reasonably, (although it did need one reduction to get there), and 2) was impeccably staged. Really. The house was relatively small for the price, but the statistical analysis of those comps were ignored (at least by my Buyer) relative to the staging, the creation of the atmosphere of home, that this house had. I have talked before about pricing and staging and the fact that only the best deals are getting done. “Best” in this case, and many others, is defined in subjective terms.

I give kudos to this seller and their agent for positioning the house to sell. However, I am certain that Santa would have preferred the transaction to have included my Buyer. Now I have to figure out how to explain this to Virginia.

Pricing in Today’s Market: The $64,000 Question (recently reduced from $67,900)

I admit it, I’m a geek. Not a “got beat up in High School geek”, no those geeks are somewhere making serious coin writing code for some new fangled web 2.0 gig. No, I’m simply a stats geek. The kind of geek who crunches the OBP and OPS on my nine year-olds baseball team. The kind of geek who can figure the ERA and WHIP on my eleven year-olds baseball team. And the kind of geek who looks at real estate market data with a gleam in his eye and a skip in his step. Weird, huh?

Anyway, sometimes this numerical obsession actually comes in handy. I’m not sure if you have noticed but there have been a couple of price reductions recently in the market (sarcasm alert!). While out looking at houses the other day, a buyer client asked me the most basic, simple, yet incredibly appropriate question I had heard in a long time.

“If the sellers were going to have to eventually drop the price this much, why didn’t they start out with a more realistic price?”

Ah. The $64,000 Question (recently reduced from $67,900, by the way).

I could have waxed and waned about the seller’s unrealistic expectations, or the possibility that the agent had failed to properly advise them on the current, shall we say, pricing pressures in the market, or, who knows, maybe the agent just “bought the listing”. (Nah, that NEVER happens).

But I refrained from mounting the portable soap box (I carry one in the trunk specifically for these occasions) and instead explained to my client that these things happen. I assured her that we would unquestionably be evaluating our purchase/offer options based on our analysis of the homes value, regardless of how much of a “deal” it looked like after the serial price reductions.

While she was satisfied with the answer and my assurances, the question nonetheless remained ingrained firmly in my brain, bouncing relentlessly back and forth between my two remaining brain cells. I had to research this, because, hey, it likely included some variation of stats. Woo hoo.

So off to the database, spreadsheets and refrigerator I went. Determined to create an answer, THE answer, as to why a seller shouldn’t just start off priced high and come down “someday”.

The following chart shows the correlation between initial pricing and final sales pricing, with an analysis of corresponding time on the market. It is the product of a couple of hours of research and a few cold brews. Any inaccuracies should be addressed to the boss.

In a nutshell, these stats were based on homes that were: 1) priced within ~20% +/- of the Median Home Price; and 2) SOLD in the month of August, 2007. Obviously these numbers would be significantly skewed (and NOT positively, mind you) if we were to include all listings that didn’t sell too. But that is another post altogether.

Bottom line, if you actually want to sell your house in a timely manner, this data says it CAN happen, even in this market… but initial pricing is critical.

For those looking for the simple interpretation of the chart:

Sellers who priced their houses right to start (or close to it, as defined by a final Sales Price of at least 98% of initial List Price) sold relatively quickly, on average 39 days. Those who started high and finally sold their house on a reduced basis (defined as a Sales Price of less than 95% of initial List Price) saw the process drag out to 108 days (or almost three times longer). Again, these are successful sellers; the numbers would be waaaay (sorry for the technical jargon) worse if it included all those that failed to close.

There you have it. Now, if you’ll excuse me, all this dry reading has necessitated a thirst-quenching cold one… we’ll see what kind of chart that leads to.

Methinks thou Doth Protest too Much…

Look, I am big fan of the glass-half-full, rose-colored-glasses concept. I appreciate folks at the NAR (National Association of Realtors) are doing spending my ever increasing dues. I applaud the efforts of the local builders and their association who scream (not so subtly) that NOW is the time to buy.

But really, to paraphrase Billy Shake, “methinks thou doth protest too much”.

Sorry, but to the average Jane homebuyer out there, the Association of Realtors and the Builders sitting on loads of inventory are not the greatest, most credible source for, shall we say, unbiased information. They want houses to sell, NOW. And don’t get me wrong, so do I (and Mrs. Broker would like me to sell a house or two, as would baby, who needs a new pair of shoes.)

But you can’t push a string. You can lead a horse to water, but… Well, you know the clichés. And I think you get it. Not sure I can say the same for those with the much deeper ad pockets than me.

Candidly, it may get worse before it gets better. I don’t know for sure. Anyone who tells you they know for sure that NOW IS THE TIME to buy… well, I’d say “run Forrest, run”, away, as fast as you can. I’m not going all negative here, but call me a realist.

I will say, the one thing we know we have little (any?) control over is the future. Are interest rates going up? Will that house you absolutely love still be on the market in six months? My point is, while I don’t think you can make a blanket statement that NOW is the time to buy, if you find the right home, at the right price and you can get the right financing (read: NO teaser rate, negative amortization deals) then sure, it would be the right time to buy. But NOT because someone else told you to.

So despite my words of caution, there are deals out there. But what I am finding is that only the very best deals are getting done. Priced really right, staged right, marketed right, managed right. No room for errors. But I’m all good with that, because that’s how we’ve always done things. We just find we’re now doing more work, for a longer period of time, than we were in the heat of that unhealthy frenzy of 2003-2005.

But fortunately, since we removed those rose colored glasses, we think we can better assist those folks who need straight answers, not just a well-tuned and deep-pocketed marketing message.