Interest Rates on the Way Up

From Realtor(R) Magazine: 'The average rate for a 30-year fixed loan increased to 4.61 percent in the week ended Thursday, Dec. 9, from 4.46 percent the previous week. The average 15-year rate rose to 3.96 percent from 3.81 percent.' Buyers who have been waiting for 'the bottom' may have actually missed it. Realtor Magazine theorizes that this could be a stimulus to get foot-dragging buyers to pull the trigger.

For more, follow this link: REALTOR® Magazine-Daily News-Rising Rates Could Get Buyers Moving

2011 Opportunities in Cape Cod Real Estate

As we wind down a hopeful but subdued 2010, the question everyone is asking is: Is the recession over? The short answer for Cape and Islands real estate is yes. For the most part. There are some lingering symptoms and uneven progress, but there are definitely opportunities for both buyers and sellers in the coming months.

For Buyers:

• Better Selection: As happens every year, a big batch of new inventory will come on the market in January. What's projected to be different this year is an improvement in the quality of those listings.
• Entry Level Bargains with Great Financing Options: If you’re not afraid to swing a hammer, keep an eye out for HomePath properties; they represent almost guaranteed sweat equity. This is a great solution for working class Cape families and investors.
• Discounted Luxury Properties: Some high-end homeowners burned through their backup money banking on a more robust recovery and are now stuck with a property they can no longer keep. Expect to see an increase in luxury properties in the short sale/foreclosure market.

For Sellers:

• Hit the Ground Running: Gone are the days of the sleepy Cape Cod winter. It may come as a surprise, but according to Google Analytics,  January is the biggest month for online searches for Cape Cod real estate, second only to July. Six weeks to shop, six weeks to close, six weeks to fix up and furnish and you're at Memorial Day. So make sure your property is ready for this market.
• Second Homeowners: Even though discretionary spending is expected to be down, second homeowners are still shopping. The Cape properties that will fare best are near popular summer attractions, have wood floors, modern kitchens, garages and ample storage. They're even more attractive with a first floor master and laundry. 
• The Price Is Right: Today's buyers are extremely savvy and will not overpay. But even in this market, if a property presents a compelling value proposition there are bidding wars, houses selling over asking price, and some very short days on market. A good agent will tell you what number you need to be at; a great one will tell you why. Make sure you understand the market.
• Cut Your Losses: We all took a beating in the recession. If you bought or refinanced during the boom (2004-2008) and have to/want to sell now, it could be years before you see that kind of value for your property again, and longer for actual appreciation. Come to terms with the loss and move on. Talk to your accountant; there may be some small consolation for your loss in the form of tax benefits.

To Sell Is Human

Sales is a natural, organic and beneficial part of human society, and the driver behind all evolution. Humans are creative, resourceful beings. When we have a need, we seek a way to satisfy it. Necessity is the mother of invention. But we don't have the time (or frankly, the wits) to creatively solve all of our own problems/meet all of our needs. Fortunately all we humans have pretty much the same needs (food, shelter, love, etc.) so at any given moment there are a number of folks working on the same problem. At least one of us is eventually going to find a really terrific solution. If I can get access to that solution, it enables me to live a better life and go on tackling my next problem. Sales is the means by which solutions are introduced and conveyed to the folks with the problems. This is a valuable service, and depending on the perceived urgency of the problem and the degree to which it can be satisfactorily resolved, folks will pay a premium for that solution.

Shadow Inventory

Don't feel bad. I've been hearing the term for months but didn't have the guts to have it explained to me until yesterday. At our sales meeting , Ed Barrett (the unofficial King of Customer Service from Salem Five) came and gave our agents a little mortgage primer/2011 forecast. One of the opportunities he highlighted for the coming year is the shadow inventory.
Described loosely, shadow inventory refers to the properties that are not actually on the market yet, but probably will be soon. Specific to our market here on the Cape, Ed's prediction is that much of our shadow inventory is distressed property (i.e. short sales, foreclosures and other troubled mortgages). This was a little surprising to me, as Cape Cod has already started to demonstrate evidence of economic recovery. However,  as Ed pointed out, foreclosure numbers lag behind other economic indicators like unemployment, etc. According to other experts, Cape Cod's upcoming distressed sales are more specifically going to include more luxury properties than in the past.
Having familiarity with the concept of shadow inventory (or any other economic phenomenon), sellers can tune into what kind of competition they can expect, buyers can position themselves in such a way as to take advantage of unique opportunities, and Realtors can appropriately target their marketing and education efforts. Knowledge is power, and ignorance has an easy cure.

New Toys!

GOSH I really love technology. I just listened to one of the many incredible courses that I downloaded from the National Association of Realtors Conference in New Orleans. This one was called Real Estate Road Warrior, by Shannon W. King. AWESOME.
Technology is transforming the way I do business and the way I think. I notice that I've always carried the assumption that to 'take things to the next level' required a serious investment of capital, but truly, some of the most powerful tools out there are FREE or very inexpensive: Xobni, Homefinder.com, GoogleDocs, etc.

Gratitude Rocks

Recently as a way to close up 2010 and prepare for 2011 I took the advice from an article I read in Realtor Magazine and conducted a systematic polishing and organizing effort for my business. I cleaned out my database, analyzed the year's accomplishments and made plans for the next. One of the steps included in the guide was to acknowledge the people who helped make your year a good one.
I got started thinking about all of the people who helped me overcome challenges, achieve goals, and make all aspects of my life, both business and personal, generally terrific. I sent thank yous to clients, family members, my boss, the cleaning lady, my pastor, my kids' teachers, the babysitter, my workout buddy...the list goes on and on.  It cost me about $.45 per thank you, and was worth every penny. Judging by the responses I got you'd have thought I'd been sending out $100 bills. People really appreciated the acknowledgment, and I felt great to have surprised them with such a pleasant thought. I don't know or care what impact this has on my business, but I know that I will do it again.

Get Ready for a Jump in Inventory (Quantity and Quality!)

Recently Bank of America and GMAC resumed foreclosure proceedings on 100's of thousands of properties it had suspended earlier in the year. There are many implications of this move, but what the overall market will notice most is a fresh influx of new listings at bargain prices. Since the recession we've been seeing plenty of discounted properties, but mostly in the mid- to low-range. Something we haven't seen quite as much of yet is discounted luxury properties. The higher-end folks have done a decent job of keeping up appearances for the past 18 months, but for some this is the end of the line.

This is good news for buyers, not so good news for sellers. If you're already on the market, make sure you're priced competitively. This may mean putting the house at a price that is a lot lower than you had hoped to sell for. If that's too much for you to swallow, do some math. Our area (Cape Cod) is heading into a period of rational growth (as opposed to the recent irrational decline, which was preceded by irrational growth), so if you use a rate of 3-5%, figure out how long it will take until the FMV of your home matches your desired sale price. Is it worth the wait? If so, then pull your house off the market immediately and take good care of it for the next few years until you can market it again. If you're not willing or able to wait that long, get a reputable Realtor, find out what the real, live market value of your house is in today's market, and price it right there or slightly lower, and cut your losses.

If you are considering putting your house on the market in this atmosphere, you must be realistic. Look at the very recent (as in 1-3 months) comparable sales in your area (short sales count!), look at your competition, and make sure you are a couple of percentage points less expensive than your lowest-priced competition. If this process leads you to a price that breaks your heart (or your bank), get back into your head and do the math I talked about above. And consider the consequences of over-pricing your house--languishing on the market and suffering 'death by a thousand price cuts'.

We are definitely on the road to recovery, but there are still some tough times ahead for sellers. Those who will fare the best will price their houses with the market and prepare their homes for the stiff competition that is just getting stiffer.

REALTOR® Magazine-Daily News-B of A and GMAC to Resume Foreclosures