CAAR 2011 Mid Year Report

Great insight into what’s happening, and has happened, in the last 3 months.

Nest Report for Q2 Charlottesville

For all you out there who are convinced that you need a bigger house!

Inventory levels are down, which means fewer listings; for sellers that may mean slightly less competition in some price brackets; for buyers, that can present challenges as there are (slightly) fewer listings to chose from in some price ranges.

Nest Realty Charlottesville’s February 2011 Market Report

We’re not your typical real estate brokerage. And we’re proud of it. In fact, we’ve earned our success by being different and standing out in an industry that tends to lack innovation.

Founded in 2008, Nest Realty has quickly established itself as one of the region’s most trusted and recognized real estate brands.

How are we doing that? By holding true to our beliefs, embracing technology and innovation, raising the bar on what it means to be a real estate professional, and listening to our clients.

We’re never going to be the area’s biggest firm…and that’s fine by us. So if you’re looking for a company that measures its success by shear size, we may not be the right fit. But if you’re interested in working with a firm that holds it’s agents to the highest of standards and is on the industry’s leading edge, you’ve come to the right place.

It was easy to tell the ones who’d gotten good advice from their agents.  They were cleaned (in look and smell), staged well (no nick-knacks, family pictures everywhere) and prepared for showings versus those who are going for the hope-it-sells approach.  You can tell way before you get into the house who falls in which category.

Real estate is always being judged

All of us make snap judgments.  When you meet someone for the first time, what they wear, what they drive, where they work, went to school, their accent and mannerisms…it all provides a mental picture that, right or wrong, creates a story that we back-fill with other details we make up in our heads that may or may not be accurate about who they are. 

When I see a well-staged, well-priced house, I think:  the agent has a clue and is working to earn their commission by providing compelling advice; the sellers want to sell and understand that this is a price-war and beauty contest and are prepared for both; that agent and seller will probably be professional and timely if I bring a buyer, and that the negotiations will be in  everyone’s best interest.  I might be completely wrong, but that’s the snap-judgment part.  Making assumptions based on a few clues.

Most of the time I am right…clues are everywhere when you’re looking.  When I am wrong or get a surprise from left field, it’s disappointing, for sure, and I have had my share of completely false assumptions.  But I know that the advice and information I give my buyers and sellers has an affect on the way they negotiate and prepare, handle disappointments and surprises, and enter into deals (or not).

So judge away.  Everyone does it, and no one can help it.  When it comes to real estate, it’s a WYSIWIG world…what you see is (usually), what you get.  That’s what the inspection is for.

I am no luddite…I had a first-generation Palm Pilot, got a ‘smart phone’ right away when they came out, have invested in Blackberry’s, social media and wired my home entertainment system all by myself.  I love technology.  I have 2 laptops, use a spreadsheet to track home finances, bank online…

So why no GPS?

There is something intimate about pulling out a map and plotting out a day of showings.  I don’t forget it, it can’t run out of juice or batteries or break down.  If I drop it, it’s no big deal…and it won’t run me into a lake (I can do that myself).

When I am in a car with someone driving who has a GPS, I am agog…the flashy screen, the large, confident blue arrow signaling an upcoming turn, announcing a stop, counting down miles to our destination.  It’s all very comforting.

But I have yet to drive with anyone who hasn’t at some point said, “oh, I know a (better/faster/easier) way than this,”  or, “why is it telling me to go THAT way?”  Isn’t that what a GPS is for?  To show you those things?  And what about a growing area that doesn’t have the new roads uploaded?  Granted, that’s a problem for my paper maps, too.

Reading a map before showings prevents me from blindly driving around…I have to focus on driving, remember street names and turns, and pay attention. My job is to know my area, and while I don’t know every street in Albemarle County from memory, I have a great sense of direction and can recover quickly if I take a wrong turn or we decide to go a different route to check something out.  Most of my buyers love technology, too, but more than that, they want to know that I know where I am going.

I want a GPS.  Someday.  One of the $800 versions from 3 years ago that’s now $200 bucks that talks to me when I drive, tells me what to and when to do it.  I love the idea of bringing it with me on a vacation, or giving it to an out-of-town guest to help them out…but knowing how to read a map and follow directions is right up there with being able to sew a button, change a flat tire or balance a checkbook.  A life-skill that’s easy to dismiss until you really need it.  And then there’s no substitute.

Some pretty sweeping legislation about lead paint is coming from the EPA…that’s great.  It means that more people will need to be more responsible, under more conditions.  Everyone wins, we hope.

Here are the new rules:  Title 40, Part 745 of the Code of Federal Regulations.  Dry reading, for sure, but it now requires area >6 feet that are disturbed to fall under these new regs; says that lead-removed providers must now be certified, and a myriad of new work-practice standards.

Here’s an overview of the myriad of resources available from the Feds, et.al.:

WEBSITES

Lead:  (National Institute of Environmental Health Sciences - National Institutes of Health). – Information on environmental health effects of lead.

CDC Lead Poisoning Prevention:  (U.S. Centers for Disease Control). – Includes lead FAQs, publications on health effects of lead, and a section of lead-related data & statistics.

EPA Lead Awareness Program:  (U.S. Environmental Protection Agency). – Website provides basic information for consumers on lead and its hazards, plus ways to protect children and families.

Office of healthy Homes and Lead Hazard Control:  (U.S. Department of Housing & Urban Development). – Features information on lead paint disclosure, a list of insurers offering lead liability coverage, technical studies, information and outreach materials, an extensive collection of articles, and more.

Lead Hotline:  National Lead Info Center:  (EPA/CDC/HUD). – Provides the general public and professionals with information about lead hazards and their prevention.

DISCLOSURE REQUIREMENTS

Lead-Based Paint Disclosure Rule:  (U.S. Department of Housing & Urban Development, Mar. 4, 2008). – HUD’s website includes information on disclosure requirements under the Residential Lead-Based Paint Hazard Reduction Act of 1992, with a summary of the rules, interpretive guidelines, and pamphlets and forms in English, Spanish, Vietnamese, Russian, Arabic and Somali.

EPA and HUD Move to Protect Children from Lead-Based Paint Poisoning; Disclosure of Lead-Based Paint Hazards in Housing:  (HUD/EPA, Mar. 1996)

LIABILITY

Sellers And Landlords Could Face Penalties For Not Disclosing Lead-Based Paint:  (Realty Times, Mar. 18, 2004).

LEAD PAINT & HOUSING

Lead Paint Safety: A Field Guide for Painting, Home Maintenance, and Renovation Work, (HUD/EPA/CDC, Mar. 2001).

Lead paint still haunts older homes, (Realty Times, Feb. 14, 2002).

The prevalence of lead-based paint hazards in US housing, (Environmental Health Perspectives, Oct. 2002).

Study Shows Professional Remodeling Cuts Lead Levels, (Realty Times, Nov. 29, 2006).

Renovate Right: Important Lead Hazard Information for Families, Child Care Providers and Schools, (U.S. Environmental Protection Agency, Mar. 31, 2008).

With the old rules, new regs, the mandatory disclosures that have been around for years…there’s no reason to be uninformed, to skirt the law or ignore the requirements.  Lead poisoning is serious and it’s too easy to avoid the problems…

Overheard by me from a seller:

“Well, we’re not going to GIVE it away…If we can’t get what we want, we’ll take it off the market.”

Their home went on the market in fall of 2009 and is now >33% below the original asking price. Everyone has their definition of a giveaway, I guess.

But the message here is that sellers NEVER determine the price of a commodity, whether it’s pork, orange juice, or houses...buyers do.  Whether the market is hot and buyers compete to out-bid one another, or the market is slow and buyers low-ball, wait forever and negotiate, buyers always decide what a home is worth.  That’s the nature of a commodity and a function of inventory levels.  If the above seller’s home was the only one in the county, they could probably get whatever they wanted…it’d be an all-out bidding war.

Every seller believes their home is unique, but buyers see them as interchangeable commodities, where lots of factors are a play and a final decision is an amalgamation of inputs. Your fancy granite counter tops mean little to a buyer who doesn’t cook, doesn’t care, or if you’ve priced your home as a result of a kitchen make-over that’s out-priced you from your neighbors.

But for every buyer, price is key.  Start too high, drop too fast, or drop the price too many times by too little, and you’ve lost the attention of that buyer until they’ve exhausted everything else on the market first.

There’s no excuse for poorly priced homes, but there are three main reasons:

1) Weak agents who can’t provide sellers with data and/or experience to show market trends, tendencies and patterns and provide solid fiscal advice.

2) Lazy agents who will take any listing at any price, and hope it sells after getting price cuts (if they even ask) rather than refuse the listing.

3) Sellers who refuse the advice of a knowledgeable agent in hopes that the, “let’s just try it for a few weeks,” approach will work.  It doesn’t.  You can’t fake, fudge or hope accurate, market-based pricing.

In 2008 and 2009 I told several sellers, both new and past clients NOT to sell. It didn’t make sense, and they didn’t have to.  Your home is likely worth less now that it was, but if you’ve been in it for awhile more now than you perhaps bought it for.  Your home in California would probably be worth more no matter what, and probably less in Iowa.  Pricing is location-based and market-based.  While you do have some influence, it’s a bit limited compared to other factors.

If you’re thinking about selling, getting on the market with the right price the day it goes on the market is essential.  It’s not rocket science, but guessing doesn’t work either, nor does a pile of tiny little price cuts.  You’ll always be behind the market curve.

A great agent prices to sell–any agent can price to sit.  Be choosy.