I committed to an occasional communication with you to keep you abreast of current market conditions.  To those of you who are still waiting for buyers, and are asking me, “What are the market conditions, how long are homes sitting on the market, and when will I get a buyer?” all I can do is report to you on what is actually, factually, statistically happening in our area.  To that end, the information below has been condensed from a quarterly brokers’ report that I receive from the Birmingham Association of Realtors® and I invite you to look at the information, particularly the stats at the end.

 

FIRST QUARTER 2008 HOME SALES REPORT  

Excerpts from A Message from Hal Tillman, President of the Birmingham Association of Realtors®.

 

 You’ve most likely heard the expression “when the going gets tough, the tough get going.” But do you know who first said it? It was Joseph P. Kennedy, the father of President John F. Kennedy. Since the day he uttered those words decades ago, they have come to represent a universal motivational statement, or even a call to action.

BAR leadership is working to assist you during the “tough going” we are all experiencing right now. And we’re “getting going” on new ways to help BAR membership continue to be successful in our industry.

 

 Perhaps you’ve noticed the new addition of full page articles in recent editions in the Sunday Section of The Birmingham News. Interviews with REALTORS®, mortgage professionals, appraisers, and other BAR Affiliate Members have enlightened readers on today’s market. To further bring the real estate experience into full view for readers, interviews with “real life” buyers and sellers have also been included. This residential section …gives us an opportunity to share ideas and information with potential buyers and sellers.

 

The National Association of Realtors® is spending millions of dollars on a nationwide ad campaign. Maybe you’ve seen and heard some of these ads. The Birmingham Association of Realtors® has designed a local ad campaign for the Birmingham market that is airing now and in the upcoming weeks on Fox 6 and NBC13.

 

 The first Brokers Meeting of 2008 is set for May 1st. Planned is a panel discussion among representatives from different areas from our industry including brokers, appraisers, loan agencies, and others. Our goal is to help the various areas of real estate understand how changing factors in their businesses affect change in real estate sales. By giving all these professionals a chance to connect, we can then share what is learned with residential sellers. Ultimately we hope sellers will begin to estimate the value of their homes based on the changing pre-qualifications and expectations of today’s potential buyers.

 

During this meeting we’ll also discuss the benefits of our ever-changing MLS technology, and how it can work for you to bring the buyer and seller together in today’s challenging market.

 

 Now more than ever, when the going gets tough is when the public needs a REALTOR® to guide them through the buying or selling process – or both! We’re dedicated to our customers and to our industry. We’re a cut above the rest because we adhere to a strict Code of Ethics. In fact, this is the year that all REALTORS® must complete Mandatory Quadrennial REALTORS® Code of Ethics training.

 

 - Hal Tillman, President

 

 

FIRST QUARTER 2008 HOME SALES REPORT (Continued)

 

Home sales are down compared to a year ago. Consumer confidence has waned. Buyers are sitting on the fence, taking a “wait and see” attitude. Sellers are frustrated that they don’t see more showings, much less more offers, and they are looking to their REALTOR® for answers.

 

How are you responding to this challenge? Are you moping; are you coping; or are you hard at work at finding ways to succeed in today’s real estate market?

 

BAR President Hal Tillman has outlined, above, the many ways the Birmingham Association is working to assist each member to stay connected with information, tools and resources available

to us through our Association.

 

In addition, the NATIONAL ASSOCIATION OF REALTORS® has produced a public relations campaign…to help REALTORS® change public perceptions about the vitality of the real estate market, and to reach out to those homebuyers who are on the fence. The campaign provides tools and resources to influence buyers who have been discouraged by pessimistic messages in the media, and it offers guidelines for reaching out to the local media, to friends,

neighbors and to community groups.

 

 Here are some of the key themes in the campaign:

1. Current conditions are ideal for buyers. Prices have moderated. Interest rates are approaching 40-year lows, remaining nearly 1.5% lower than they were in 2000.
2. Mortgage loans are available. Contrary to perceptions, conventional mortgages are widely available for the majority of today’s homebuyers.
3. Inventory is wide-ranging with many choices in prices and architectural styles.
4. Home ownership is the best investment. Home ownership has been – and continues to be – one of the best investments. Nine out of ten consumers consider it to be a sound financial decision. Given the leverage in purchasing a home, the average return on a 5% down payment over 10 years is usually three to five times greater than stock market returns. Real estate has delivered the most consistent positive return over any other investment over the last 40 years.
5. Current market conditions won’t last. Price declines will eventually come to an end. Research shows that prices are beginning to stabilize. We must be conservative however in our estimates about 2008. This is going to be an unusually difficult sales season. A modest increase in values is expected but not until in 2009.

 

The statistics below are a compilation of all areas and price ranges.  Depending on where your home is located and the price range into which it falls, the statistics could vary greatly, but these will give you an overall idea of how our market is faring:

 

MARCH Statistics:

 

2008 Total Sales: 1162

2007 Total Sales: 1647

Difference of 485 sales or a 29% decline

 

2008 Average Price: $195,950

2007 Average Price: $193,800

Difference represents a 1% increase

 

2008 Median Price: $159,900

2007 Median Price: $158,000

Difference represents a 1% increase

 

2008 Average Days on Market: 104

2007 Average Days on Market: 111

 

RESIDENTIAL INVENTORY IN MLS:

 

YEAR/MONTH: TOTALS FOR SALE:

 

2008:

March 12,121

February 11,919

January 11,757

 

2007:

December 12,642

November 12,979

October 13,438

September 13,560

August 13,582* highest recorded

July 13,477

June 13,294

May 13,183

April 12,895

March 12,524

February 10,840

January 10,330

 

 2006:

December 10,755

November 10,687

October 10,974

September 11,079

August 10,747

July 10,504

June 10,355

May 9,771

April 9,741

March 8,307

February 7,982

January 7,661

 

FIRST QUARTER Statistics:

 

2008 Total Sales: 3018

2007 Total Sales: 3971

Difference represents a 24% decline

 

2008 Average Price: $188,900

2007 Average Price: $195,183

First Quarter comparison shows a 3.2% decline in average price

 

2008 Median Price: $155,000

2007 Median Price: $156,700

First Quarter comparison shows a 1% decline in median price

 

2008 Average Days on Market: 109

2007 Average Days on Market: 110

 

REGIONAL STATS:

 

NORTH

2008 Total Sales: 235

2007 Total Sales: 239

Difference represents a 1.6% decline

 

SOUTH

 

2008 Total Sales: 1370

2007 Total Sales: 1938

Difference represents a 29% decline

 

EAST

2008 Total Sales: 839

2007 Total Sales: 1117

Difference represents a 25% decline

 

 WEST

2008 Total Sales: 574

2007 Total Sales: 672

Difference represents a 15% decline

 

These statistics compare total residential sales for March 2008 vs. March 2007 as well as Year-to-Date statistics as compiled by the

Birmingham Area Multiple Listing Service, Inc. of the Birmingham Association of REALTORS®.

 

Neither the Birmingham Association of REALTORS® nor its MLS guarantees or is in any way responsible for its accuracy. Any market

data maintained by the Association or its MLS does not necessarily include information on listings not published at the request of

the seller, listings of brokers who are not members of the Association or MLS, unlisted properties, rental properties, etc.

From “Realtor.org”

You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:

• Down payment
• Loan origination
• Points, or loan discount fees, which you pay to receive a lower interest rate
• Home inspection
• Appraisal
• Credit report
• Private mortgage insurance premium
• Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
• Deed recording
• Title insurance policy premiums
• Land survey
• Notary fees
• Prorations for your share of costs, such as utility bills and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6^th of the month. You would owe the gas company for only the days from the 6^th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

From “Realtor.org”

1. Trim bushes so they don’t block windows or architectural details.
2. Mow your lawn, and turn on the sprinklers for 30 minutes before the showing to make the lawn sparkle.
3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.
4. Install new doorknobs on your front door.
5. Repair any cracks in the driveway.
6. Edge the grass around walkways and trees.
7. Keep your garden tools and hoses out of sight.
8. Clear toys from the lawn.
9. Buy a new mailbox.
10. Upgrade your outside lighting.
11. Buy a new doormat for the outside of your front door.
12. Clean your windows, inside and outside.
13. Polish or replace your house numbers.
14. Place a seasonal wreath on your door

What’s In, What’s Out

Each year, Mark Nash of Coldwell Banker Residential Real Estate in Chicago asks subscribers to his e-zine what buyers want most. His most recent poll shows:

IN

• A reduced carbon footprint: How your home and you impact the earth matters to more buyers who want a home that lets them save energy and lessen their contribution to global warming.

• Outdoor living: Massive fireplaces, outdoor kitchens, and under-patio heating to extend the season are not just for the Sun Belt anymore.

• Fully concealed appliances: That wood-printed cover for the fridge is not enough any longer; now appliances are hidden behind hinged doors.

• Floating homes: Not your father’s houseboat, these nonmobile homes are basically ranch houses sitting on stationary barges in a lake or river.

• Home elevators: Even builders of mid-priced homes are adding this essential for boomers wanting to age in place.

• Pet showers: Clean pets mean clean homes, and who wants to mess up the bathtub when this feature can be a part of the garage or mudroom?

• Freestanding bathtubs: These oversized soaker tubs, or “bath thrones,” have supplanted whirlpool baths as the must-have bathroom centerpiece.

• Bathroom suites: Whether it’s multiple flat-screen TVs or a mini fridge and cappuccino maker, you’ll soon have a whole home inside this one room.

(This information was re-printed from realtor.org)

Here is a brief article that appeared in the Friday, 3/21 issue of the Birmingham Business Journal:

There is good news and bad news in the current real estate market.  February numbers are in for the Birmingham market, and the average sales price, compared to a year ago, has dropped from $186,311 to $178,600, although “DOM” (days on market) has also dropped from 113 to 90, indicating brisker sales, according to Dave Mace, at the Birmingham Association of Realtors.  He also said that total sales in the Birmingham MLS in February were 979, compared to 1,250 in February, 2007.  The median home price has stayed the same.  Homes in lower price brackets tend to turn over faster than the $300+ price points, in my experience.

NOW IS A GREAT TIME TO BUY.  The selection is amazing, in both new homes and re-sales.  Interest rates remain low.  The limit on FHA loans has increased to just over  $178,000, and, while subprime loans and other risky mortgage products have all but disappeared, more buyers will have access to these safer FHA loans and other lower-interest rate loans in high-cost areas, according to Mace.  On the other hand, by the end of March, 100% financing will virtually disappear.  We have heard the new max will be 97%.

Yet many buyers seem to be holding out.  For what?  Are they expecting further dramatic decreases in home prices?…more desperate sellers trying to dump their homes at any cost  hoping to avoid foreclosure?  (well, yes, there’s always some of that going on…)  Wayne’s personal experience has been that buyers have so much to choose from right now that they are looking…looking…looking…for exactly what they want (or for a fire sale on something close) but remain very slow to make offers.  Frequently the offers they do make are so low that sellers, realistically, can’t even consider them, so they are, essentially, a waste of everybody’s time, and never result in a binding contract.  Other Realtors® have said to me that they think buyers’ expectations may be somewhat unrealistic, in terms of what they can get for the money.  Sellers who are anywhere short of facing impending foreclosure may be willing to reduce their profit, but are not going to suffer a loss on their property.  While it may be that sellers don’t really expect full price offers in this market, it is so competitive that many have cut their asking price to very near their bare bones minimum.  To take much less could mean a loss, and if they DO have to take a loss, it won’t be a very big one. 

Bottom line?  There will probably not be, in the foreseeable future, a better time to buy than now.  Inflation, rising costs of construction, and the state of the economy (are we in a recession?) are all still pushing up the cost of housing over time.  Who knows where interest rates will go, but they probably won’t go a whole lot lower.  Good, safe loans are out there for those who qualify.  The selection is way more than adequate.  So IF you are serious buyer, now is the time.  But be realistic when you make an offer, whether to a re-seller or a builder.  The myth that you’re going to get something for half of what it’s worth is…at least 98% of the time…just a myth.  The standard for sellers a few years ago was to seriously consider an offer down to 97% of asking price.  It may be lower than that now, maybe 94-95%.  But sellers have already come way off the price they want, and have less room to dicker.  Birmingham is NOT Detroit, South Florida, Las Vegas or Silicone Valley.  We never really had a real estate bubble, and the bubble has not burst.  Our home  price appreciation over the years has remained realistic, at an average 3-5% per year, not 3-040%; so housing here is not dramatically overpriced, even for today’s market.  So buyers AND sellers have to use reason in cutting deals that can actually work. 

Come “off the sidelines” and Buy something.  You’ll be glad you did.  So will I.!  And, by the way, one way to get an even BETTER deal on the home your buying is to take advantage of the unique Buyer’s incentive program that we offer our buyers.  Check it out on our website.  We can, literally, put THOUSANDS of dollars back in your pocket when you close on your next home.

An open house might give your home the exposure it needs to find your buyer.  It’s easy to hold open houses, and I highly encourage you to do them often.  Now, I don’t want to alarm you, but there are some common-sense precautions you can and should take to protect yourself and your property and to be prepared for your open house.  Below are things that agents know and do to minimize the threat of a “crime of opportunity” against themselves when holding an open house.  These are important things to think about, because, after all, when you hold an open house, you are inviting absolute strangers into your home to wander around and see everything you have.  If you plan to hold your own open house, please be sure to follow these guidelines:

 

1. Never do it alone.  Have a friend or family member with you at your home at all times during the open house. 
2. Set up a call schedule with a friend or neighbor (one calls the other every 30 minutes) and a coded distress signal, so that you can call with a message that would appear harmless to a prospect but would alert others to potential danger.
3. Prepare ahead.  Remove from view any object that could be used as a weapon (i.e.; stow knife blocks inside cabinets, make sure guns are secured in a gun safe, scissors are not left out on the desk, etc.)
4. Do not wear expensive jewelry or carry large amounts of money.  Do not have valuables (coin jars, jewelry boxes, silver settings, pocket-sized pieces of crystal or valuable knick-knacks, car keys) in view.  Safely stow credit cards & cash.
5. When prospects arrive at your home, ask them to register on a sign-in sheet (or in a guest book.)  Get their name, address, telephone, car make & model, tag number, and driver’s license number.  It sounds like a lot to ask, but legitimate prospects will not mind, and remember…you are giving an unknown person complete access to your home.  You need to know some information about them first.
6. Keep groups of lookers together.  Do not let anyone wander around the house unattended.  Stay with them and carry your cell phone or a cordless phone with you in case you need to make an emergency call.  Don’t hesitate to call your friend, neighbor, or 911 if you become suspicious of a prospect’s behavior.
7. Always let a prospect enter a room first and follow them in.  Stay between them and the door.  Never let them get between you and the doorway.  If you need to get out of the room, don’t let them block your exit. 
8. Finish the open house while it’s still light out.  Do not hold an open house after dark. 

3/4/08

You want to sell.  You must try EVERYTHING.  Here are some more tactics that are worth considering.  Be prepared…you might need to spend some money to sell, and you might need to invest some time and effort.  You can’t just turn it over to a Realtor® who is going to get it sold for you, it honestly just doesn’t happen that way.  YOU and YOUR HOUSE are going to sell your house.  A Realtor® is an expert with ideas and marketing access; an invaluable asset in the process.  But unless you get intimately involved in the details, it is going to be difficult to find your buyer.  You don’t want to waste your marketing opportunities by being less than completely prepared when timing and exposure bring your buyer your way.

Re-think open houses: 

The most serious buyers are looking in the evenings and off-times like Saturday mornings.  Hold an open house THEN instead of the usual Sunday afternoons, when you will be attracted more “lookie-lu’s” than serious buyer prospects.  Make sure you get everyone’s name and number who looks at your house, and call them back within 24 hours for feedback.  Ask them what it would take to get an offer from them.  What can you lose?  Whenever you have an open house, stick out a fish bowl with a note that says “Drop your business card here for a chance to win a free lunch.”  You’ll get an email, a work number, a name…every opportunity to connect with a possible buyer.  All for the cost of one lunch…payable when you get a binding contract or actually close!  (And you really should follow through, draw a card and buy lunch…it’s great PR.)

Organize a neighborhood open house day: 

Ever notice how car dealerships are bunched together in the same area…or the bars & restaurants…or those big neighborhood yard sales?  Why?  Because that attracts bigger crowds, and everyone benefits.  You can do the same thing with an open house.  Why not go around the neighborhood and talk to the other sellers…they have the same problem you do…they haven’t sold yet, and they need a buyer.  Get all your neighbors with homes for sale together and organize a neighborhood open house day that will attract volumes of potential buyers, and split the cost of the ad.  Offer some food or drink or door prizes or drawings at each house.  (That’s how they get agents to attend those agent open houses.)  The great thing is that, as we learned in Real Estate School, ALL real estate is “non-homogeneous,” which means that no two properties are exactly alike. Real Estate is always local, and unique.  And that means that the buyer who would buy your neighbor’s house probably wouldn’t buy yours anyway, whether it’s the number of bedrooms, shape of the back yard, or any of a hundred other things.  By making it a neighborhood event you can buy a bigger ad, share the cost, and attract buyers and agents who know they can see a variety of options in one trip. 

Google “St. Joseph statue:”

You’ll find lots of places you can buy one for just a few bucks, with instructions on what to do with it.  Many sellers swear that they’ve sold their property in the past by burying the statue for good luck.  Maybe it works, probably does if you believe it, and it certainly can’t do any harm!

Participate in an agent open house:

They are usually held on Tuesdays, from 10AM – 2PM.  We don’t do them, but you can let your selling neighbors know that if their agent will set one up, you would like to participate.  Agents will “caravan” through 4 or 5 homes.  Each home provides something; first, soup and/or salad, second, lunch entrée, third, dessert & coffee, last, a drawing for a gift or gift certificate or cash.  I’m not sure this sells houses, but it does expose them to agents who might influence a buyer and, after all, you only need ONE buyer.  At any rate, if you’re going to try EVERYTHING, this is included!

Post notes:

I love this idea!  Make signs on neon-colored 3×5 cards, and post them (with removable tape) throughout your house to point out details that prospects might otherwise miss.  Is the refrigerator or washer/dryer included?  Put a note on them saying so.  New carpet?  Custom draperies?  Italian light fixtures?  Home Warranty included?  Electric pet fence?  Gas fireplace starter?  Make sure visitors are aware of everything that adds value to your home.  Are notes tacky?  Absolutely.  Do buyers mind?  They LOVE them, and will walk around looking for every one to find and read.  And here’s the BEST one:  Right inside the front door, put one that says “KINDLY REMOVE YOUR SHOES.”  Some people will, some won’t, but they will all get the impression that it’s a well maintained home that the owners have really cared about.  I’ve known sellers who have put out a basket of those blue shoe booties at the front door.  I know having those signs around will annoy you, but they work.  Remember, you don’t sell a house the way you live in it.  Buyers have no emotional attachment to your home, and you are selling a product.  They need information, so give it to them.

Get Feng Shui Savvy:

Get a book or research it online, and then arrange your furniture and accessories by the principles you’ve learned.  Your house will look better, you might sell faster, and you’ll feel more peaceful about the whole process.

Hire a home stager:

For $150-200, they will honestly and objectively tell you what you need to do.  It will probably include de-personalizing (removing an abundance of family photos, etc., religious wall hangings that could possibly eliminate someone who might otherwise have made you an offer but was offended.)  It will include “editing” or removal of a lot of stuff.  I know you don’t want to spend money on the house now that you plan to leave, but you might have to.  You might need to rent a storage unit to put stuff in for awhile.  (The garage might hold some stuff, but if you fill it up more than it already is buyers will get uncomfortable.  You probably should “edit” the garage, too.)  It could include re-arrangement of furniture, artwork and accessories.  This can make rooms feel larger, traffic flow work better, and it can help people to imagine their own stuff in your space, if it’s done right.  Another recommendation might be re-painting.  Sure, you love your chartreuse hall bath, and the jelly-bean purple master bedroom is your childhood dream.  But as easy as it is for them to re-paint, most buyers can’t see beyond what they are actually looking at to the potential of a room.  Not only that, they want the house to be move-in ready so they don’t have to launch right into renovations.  They can usually live with neutrals or earth tones, where pastels or extreme hues might rule you out.  Couldn’t you live with new bland paint for just a little while if it will help market your product…you house…to a wider audience?  So, invest in a home stager, and follow the recommendations you get.  Remember, you need to turn your house into a product. (Think of model homes you might have been in…lovely, well decorated, yet impersonal and with as broad an appeal as possible.)   You could hardly spend more than the cost of another month or two’s mortgage payments, and, in the long run, a quicker sale could save you more than you spend.

Stand out front and check the curb appeal, and hang out awhile at the front door:

Take action.  Buyers have so many choices these days that if the picture they see on the internet…or the house they see driving by…doesn’t really grab their attention, you will never get to show them the spectacular floor plan and interior drama.  WhatEVER it takes, it must look good outside.  This means new mulch or pine straw, new flowering annuals, trimmed and pruned shrubs (if they’ve overgrown the house, you MUST cut them back, unless you are trying to appeal to the curator of the botanical gardens,) lawns, sidewalks and curbs mowed and edged, mailbox painted, gutters and trim paint clean and fresh.  The single place that buyers spend most of their time is on your front porch waiting for their agent to finish fumbling around to get the key out of the lockbox.  And they are looking around.  They see everything from old rusty front door hardware (lets face it, you never even look at this…you come in through the garage), cobwebs in the corners to sickly plants in the urn to cracked mortar on the brick steps, peeling paint on the wrought iron, and faded shutters and window trim.  You know what they say about first impressions, so what will they be saying about yours?  Make sure you make this a fun, beautiful, spotlessly clean, well-maintained place.  Investing a few…or a few hundred…dollars on a new front doorknob, updated light fixture, and necessary upkeep can not only pay off…it will bite you badly, if you don’t do it.

Bake a pie.  Or a chicken.  And turn on the lights.  Oh, you’ve heard this before:

When you list, get your carpets cleaned. 

Sniff your closets…pare down the Imelda Marcus shoe wardrobe, and keep a mild deodorizer in each closet.  Put a bounce sheet in every shoe. 

When you have a showing, go all out with the good smells.  Bake something that smells great (leave out the curry, don’t bake a fish, and don’t cook cauliflower or broccoli for a day or two before the showing.)

Remove litter boxes to a faraway place outside during the showing, and clean their usual area well.  Pet odors = bad.

A mild potpourri or Aroma candles - good ones – are okay in small doses, but be sure not to leave candles burning after the showing.  You want to have something left to sell at the end of the day, and it’s easy to forget they’re lit in the daytime.

Bright idea:  Turn on Every light in the house.  Saying this goes against my inclination to be “green.”  But bright rooms appear larger and happier, so turn them ALL on, then just turn them off after the showing.  Of course, they shed light on dirt too, so be sure you have cleaned, cleaned and cleaned again.