SuburbanDigs

If At First You Don't Succeed, Try, Try Again?

It's a war zone out there in local Essex County, NJ real estate, as it is almost everywhere else. Since 2008, some sellers have tried and tried again to move -- and they're still living in the same house. Rather than positioning these houses where they could really even sell, they top off pricing in a no-man's land, then endure months, even years of visits from cautious, unresponsive buyers who just aren't feelin' it, receive oodles of analytics about their market and their neighborhood sales, see all the dire headlines, all the while protesting that their agents just aren't working hard enough to make it happen. Despite relentless public feedback about what their houses DON'T have, where it AREN'T located, and what THE AREN'T priced at, our intrepid band of oblivious sellers maintain that the whole world is wrong.

Meanwhile, plenty of other homes sell, and what does that do? It reaffirms the contrarian's view that his or her house is better and deserves more -- and that next season or next year, this month's inflated price will be vindicated by that one buyer who better understands just how great the house really is.

We Realtors have been through this more times than we'll admit to counting. Just recently, I received one such seller protestation that quietly pushed me over the edge into stark, raving Realtor madness: "My objective," he announced, "continues to be to sell my home at a price consistent with my perceived value of the home and at a price that will allow me to recover the investment I have made in my home over the last several years. It is my hope that this will happen soon."

That, after six months on the market, a series of glacially arrived at price reductions totalling $80,000; about 10 showings; and another half-dozen showings rejected because the owner wouldn't accomodate less than 24 hours notice. In that time period, during which we exchanged some 75 detailed email discussions, the immediate market swelled to near 400 listings, more than 50 of them similarly priced. Meanwhile, prices of local solds that provide appraisers with tools to analyze a home's value, dropped faster than we could keep up.

Without a seller's unconditional need to sell a house today at a price consistent with the market as it is today, failure is the outcome. The seller who says he's withdrawing the listing to try again next spring or next fall at the same price, hasn't a clue about value, does not get it and doesn't feel the need to get it because - and we hear this every day - "I don't really need to sell."

If it could talk, really talk, the beleaguered real estate market itself would rise up and say it loud and clear: Then don't! Our market glut isn't exclusively from short sales and foreclosures; it's also caused by the try, try again crowd to whom every indignity associated with selling with today's real estate conditions is a badge of honor. Go figure.

Gauging The Bottom

For the last 18 months or so, gauging he bottom of the market has been a buyer's primary goal. It has been a how-low-can-I-go scenario. When I'm working for a seller who has drawn a line in the sand, below which there is no deal, I encourage the buyer's agent to be reasonable when bringing in an offer. Last week, I conveyed just that to a agent who said her clients were thrilled to find just the right house. They'd fallen in love after two mishaps -- houses that didn't pass inspection for whatever reason -- and they just couldn't wait to make this happen.

Then the offer came in -- $60,000 under asking. Now, the sellers bought it for $50,000 more than they were selling of for, so we'd done the numbers and felt sure the house wasn't overpriced. Well, maybe not THAT over priced! We negotiated. The sellers dropped another $20,000. The buyers...oh, they hardly budged at all and then, quick as a wink, disappeared. I guess they didn't love the house SO much.

And now, some other people are interested in it. We'll see what they come up with. I reviewed all the competition today in the MLS. Okay, this isn't the biggest house in the price range, but it's by far the prettiest, the most elegant, and the most updated. Time will tell.

What we're seeing this first month of a new year is promise -- for homes that are priced right. Amazing but true: Buyers are making offers. And they're not all insanely low. In Montclair and Glen Ridge, NJ. adjacent towns with enormous desirability due their access to NYC, homes are selling over-asking again. When they're "worth" it!

Which brings me to the how-low-can-I-go scenario in 2010. A client of mine made an offer last week on a very pretty, updated, centrally located home here. She came in $20,000 under asking for her Best and Final offer; the other two bidders came in at least $20,000 over asking. One of my team's listings in Maplewood last week, cute as a button, sold in just days. Just under a 10 percent adjustment in 2 years for this home, to be sure, but hardly a Humpty Dumpty real estate moment.

Sure, there are many homes out there without happy endings and there will continue to be. Once a home enters short sale status, whatever real value it has will have been compromised. Only bargain status will give it marketplace power, no matter the home's inherent value.

But for properties left untainted by misfortune, the outlook is better. The most desirable properties are being shown and embraced. A colleague of mine put a cute 100-year old home on the market yesterday. There have already been 12 showings. This one last sold in 2008, with multiple offers. Now priced $10,000 under that old sale price, it may well reflect that part of the market that retains value. It's not a bargain, never has been, and it seems, never will be. But it's a wonderful place to live, great schools, great commute, and it's going to be home sweet home, on a fair and square basis, to someone who just loves it and embraces it, price and all.

What a deal!

Upgrades, Anyone?

During the old high market, I never ceased to be in awe of buyers who closed on their new homes and then began ripping out and replacing just about everything to create the perfect environment for their lifestyle - sometimes at very great expense. They were largely undaunted by worries that the sum of these improvements might take a while to enhance the home's value in the marketplace.

Through time, not all home improvements have made sense -- we all see that now. The best upgrades had utilitarian as well as design value, the worst fulfilled that short-term desire for an icing-on-the-cake lifestyle. Like custom cabinets vs. semi-custom; whole house A/C vs. window units; finished basements vs. not-so-finished -- but still cute, still liveable.

Custom cabs make no sense if the rest of the house isn't up to custom standards -- if you're still walking on old, curled linoleum or staring up at florescent lights from 1965; A/C is a luxury in a house with an old roof and peeling shingles, for buyers will discount the aberrant upgrade and focus on the have-not part of the home in this, our new, frugal buying environment. Finished basements for more family space-- hey, who wouldn't want that? But what's so bad if it hasn't got wall-to-wall carpeting or the pipes are visible? What about just replacing that horrible commode and putting in a new one for $100? Forget the high-end tumbled marble down there.

And so here we are at the end of a brutal 2009 real estate market, faced with the official yearly cost vs. value report on home improvements -- and it's a lesson to us all. According to Realtor.com today, "the majority of the 10 remodeling projects with the best return on investment nationally are a testament to pragmatism. Six of the 10 projects, using a variety of materials, involve home maintenance that costs less than $14,000."

There will still be those who jump head first into home ownership with the dream of perfection -- and, if they have the money, who can stop them? -- but my fervent New Year's hope is that my buyers will find ways to enjoy what they have and to work toward perfection with caution and humility. For, as some have found the hard way, new kitchens and baths do not necessarily happiness -- or profit -- make.
 

Mondo Condo Crawl, Anyone?

We're going for unique next weekend in Montclair, NJ and the surrounding towns of Bloomfield, Glen Ridge and Verona, by holding the first ever Condo Crawl. In just a week, more than 30 agents signed on to represent their current condo listings at opens next Sunday, Nov. 1, from 1-4.

Okay, it was my idea. After so many months, it seemed, of just putting one foot in front of the other, I dared this idea out into the open. Seemed cute and manageable when I sent out that first email to colleagues around town. A few responded right away and I thought, great, we'll call it a success if a couple more sign on and, knowing others were out there too, it will make the lonely job of sitting watch on a Sunday afternoon in a highrise or tucked-away garden condo a bit more fun.

And then it was 20, then 30, then more. It's been a tough year for condos. I don't know who once said that at the end of a housing slump, condos slump even more, but it sure feels like that right now. The FHA's promise to scrutinize condo developments even more will likely slow that market further. So we know Mr. and Ms. Condo Owner are happy for the attention. Sarah Damaskos, my marketing guru, may not have gotten up Monday morning knowing she'd spend the week designing the logo and ads, sorting and sifting copy, and then, at the end, just keeping track of all the participants, but she jumped right in, thank heaven.

We've gotten the popular local editorial blog, Baristanet.com, to sponsor the event. They've put up a banner ad and a PDF listing addresses and descriptions of all the opens (check it out at baristanet.com/crawl) and local papers, including the Star Ledger are also featuring the event. Our cute crawl signs will be staked in front of every participating unit.

It's kind of like speed dating for condos -- efficient shopping and comparison with a blast of availability. Anyone who's been saying it's time to downsize or perhaps to make that first move into the market will be able to compare and contrast withough stretching out the activity.

Will the people come? That's the idea, but we Realtors have got to make it happen. Agents committed to participating I hope are blogging their brains out right now to each of their circles of influence. We're personally Twittering, schmoozing on Facebook, spreading the word. Who knows, maybe it will end up being a mondo condo crawl.

Managing Expectations

That's my favorite phrase these days ... managing expectations -- for my clients, buyers and sellers alike, as well as for myself.

As a Realtor who has been in the profession almost a decade and a half, it's hard not to remember the good old days, when the only expectations we had to manage were about how high a house would sell, or how many houses a buyer would have to lose before figuring out he or she had to bid way, way over asking.

Now, expectations are in miniature: How low a buyer can safely go in with an offer; how low a seller has to go to rid himself of the property. Lots of lows, lots of misery all around. And, when the parties have finally agreed on something, comes the hard part: getting a mortgage.

The other day, a very good mortgage professional we work with sent a "managing expectations" note to one of my clients who is due to close on a home any day. The process has been relentless -- documents required up the wazoo, signatures and double signatures, more proof here, much, much more proof there. Once, it was fine to for me to witness clients' signatures on a contract with my own on just one line. Now, for every signature, another line for me to sign.

I'll refrain from asking for what real purpose such diligence exists. The other day, just days from closing, one buyer was told to her loan-to-value ratio was suddenly off-balance. The bank demanded she pay off her car loan and she did. Days past, the closing date came and went. Underwriting just stood still, with only one further comment -- that there had been no point in paying down that car loan. We finally took the client to a private banker who funded the purchase in just days.

So, I was rather touched to see the following end-run email from our mortgage friend, which in a few words telegraphed that the next few days would no doubt be harrowing: "Thanks for sending the documentation and working with my associates," he wrote to my prosective buyer. "They will have the documents reviewed by the underwriter and our operations manager to have the loan cleared to closing but please be prepared to give additional documentation all the way to the closing.  That is the nature of the mortgage industry now with the large amount of documentation required by FHA, Fannie Mae and Freddie Mac.  I tell clients, and especially FHA borrowers, that we will be finished supplying the underwriter with documents when you walk out of the closing. I apologize but that is the state of our industry as we dig out of this foreclosure crisis. Please let me know if you have any questions as we are with you every step of the way."

Post-apocalyptic real estate at its best.
 

Commiseration Time

In downtown Miami, there are so many unfinished and empty high rise buildings. As soon as people I met there this week hear I’m in real estate, that’s what they mention. It’s commiseration time. We’re all in this together, whether we live in tall, communal buildings or short, single-family ones. Now, on my way home, a captive of delayed flights, I can’t escape today’s murky headline – "Improving Home Sales Belie Market Reality." The gist of the piece is that more than half of all sales are now "distressed"; only 31 percent are "unforced or optional" – meaning not tied to the far-reaching mortgage mess.

In many of these "unforced and optional" deals, you wouldn’t know they were the conventional ones, because they have become so terribly contorted. Buyers motivated enough to go on with their lives, to buy a house or condo so they can make the life they planned before all this terrible stuff took over,  now approach their experience with fear and loathing -- of the financial process which is much more convoluted than before; and of the sellers wading knee deep in the depressive market with their most valuable possession, their house.

This week, a number of my summer deals closed (or didn’t …maybe next week!) All had in common a demoralizing stand-off that began with a price tug-of-war the likes of which we haven’t seen in more than a decade – and ended in disbelief that the process could have gotten so ugly. These days, the usual miseries of the home inspection period are likely to fester right up to the end, and sometimes after. Angry sellers, even those lucky enough to make a significant profit, argue over a hundred dollars to fix something. Buyers unsatisfied by repair estimates, haul in in new ones with higher numbers. Not convinced by paperwork showing this or that has been fixed, they drop in to check for themselves.If a homeowner's fixed something himself, it's not good enough; call in an expert.

In retaliation, sellers retreat and dig in. Refrigerators and window treatments promised to buyers are suddenly withdrawn, mid-deal. Forget hiring the cleaning team before closing. Let the place shimmer with dust. Let the lawn go. It's all-out war.

I try to remember my own first-time homeowner experience, in the mid-eighties. My husband and I couldn’t have been dumber about the process. I remember a lot of nail-biting and tears as we toughed it out. We got a really cute, old house that needed everything -- and we were hardly daunted. The kitchen closets didn’t even have doors! We expected nothing from the sellers except to turn over the keys at closing. Perfection wasn’t a word that could be applied to our little place, but we worked together, over years, to bring it back. Our next house, the scenario was much the same. When we pointed out that the roof was flapping and the furnace rusted out, they shrugged. We bought it, anyway, because we loved it.

So, I just clench my teeth and smile when today’s buyers, who are getting some astoundingly good deals, don’t think it’s enough. Be happy, I think. This house experience will do you good. Make it your challenge. Don't move in with all this bad- deal karma.

When the static clears, maybe they will hear me.