Lowball Offers and Negotiating

I've written before about lowball offers and how to negotiate - even in a buyer's market. Yes, common sense seems to suggest that if it already is a buyer's market, you shouldn't have to negotiate and if you are a home buyer today looking for a well priced bank-owned property, chances are there is no room. There is fierce competition among buyers for those and they sell in a matter of days for well over asking.

However, if the spirit of negotiation moves you, since ultimately in some way it's all about price, this article from MSN might interest you.

Happy Negotiating!

Another Real Estate Article Worth Reading

While I've been nesting and helping my husband get the rental ready for new tenants last weekend and doing a million other things, this article appeared under the Finance section of Yahoo which I think is pretty good reading for a balanced perspective on real estate.

Real Estate Investing Article Worth Reading

One of my favorite writers, Liz Pulliam Weston, over at MSN Money has written a new article about being a landlord. While being a landlord is an excellent way to invest in real estate and save for retirement, it is by no means easy. She discusses a few things in this article.

Looking for rentals? Why not search here?

If you're looking for advice on being a landlord, head over to Landlord Landmines.

Waiting for Prices to Drop 30%?

In recent months, I haven't spoken to too many real estate buyers who are waiting for prices to drop another 30% but there were a few last year. As it turns out, these Chicken Littles awaiting this kind of disaster are few and far between. As many numbers show, prices are heading toward stabilizing in the Sacramento market, sales are up and inventory is down, even the Sacramento Bee was surprised by the numbers and first-time buyers are entering the real estate market and Greenspan called the housing bottom nationally.

But for the rest of the doom-and-gloomers, here is a very interesting article to read about how the Case-Shiller index that the media keeps playing up as "the best gauge of home values" has a reason to be pessimistic - it has relationships with hedge funds on the side. So much for the Chicken Littles talking about Realtors with bad ethics and conflicts of interest.

Another Reason to Buy Real Estate in Sacramento

Just the other day, I spoke to a client who is getting married this weekend and will be buying a home to start their lives together in our very own Sacramento. If you're raising a family here in Sacramento, you're in good company. Best Life editors just ranked Sacramento the 29th best city to raise a child.

Read all about it here.

The results were based on the U.S. Census Bureau, National Center for Education Statistics, FBI, American Association of Museums, National Center for Health Statistics, and the American Bar Association.

Inspiration for Real Estate Investors

I came across this wonderful article while reading MSN Money. It's definitely worth a read for those of us who are invested in the market and wondering when it's going to turn around.

Although it relates to stocks, I think it is still an inspiring and uplifting read. Remember: have a plan and follow it doggedly.

Finally...

... a post on Sacramento-home after my own heart.

Go here to read what John Lockwood has to say after months of optimism about real estate thrown at him! Good job, John - and thanks for the support!

Realtor not to Blame: Jury

For those of you following the Ummel vs. Little case that some blogger had so kindly deposited into the comments section of my blog, the verdict is in.

The Realtor is not to blame. The jury's decision was unanimous. Read all about it here.

I will say however that even though a buyer's agent is not technically required to disclose the appraisal report to you, the buyer, I always get a copy of it and send it over anyway.

Does Median Income Have Anything to do with Median Home Values?

Okay, I'm really sick and tired of this argument. You know how it goes: "Median income has not kept up with median home values in Sacramento, this home prices must fall until everyone in Sacramento can afford to pay a third of their monthly budget toward their mortgage." It's a seemingly innocent calculation and very easy to remember; so simple in fact that it gets quoted again and again and unfortunately believed.

Here is a list of areas where median incomes do not - by a long shot - keep pace with median home values. Interesting, huh?

Here are a few reasons that calculation, pat and easy as it is to parrot, does not work:
1. Not everyone can afford a home. Some people rent. Sometimes all their lives.
2. Some people buy more than one house and rent it to others. They are called real estate investors and landlords.

On an individual level (and for budgeting and loan purposes) it helps to use the 30% rule. But as a large group and especially when relating to medians, that formula falls apart. To push every individual and situation into a formula is ridiculous.

The next time you come across pat formulas like these, question their basis and their source.

Home Buyers: 100% Financing Getting Harder

I had mentioned in early December that first time home buyers would have a harder time getting qualified for a loan and that there was still time to buy real estate with zero down before February. My clients at the time had excellent credit scores, great incomes and were buying a house so far below market that even when the lender asked for more comps, we were able to provide them.

That excellent purchase went through just fine, but today the Sacramento Bee reports that mortgage insurers may begin to stop issuing PMI for 0 down financing.

Unfortunately, thanks to the empty-headed bubbleheads out there, such warnings when issued by Realtors are ignored as "just a sales pitch" with the obvious remark, "Of course you're going to say that - you sell real estate!" That's like saying, borrowing a comment from John Lockwood, to a doctor, "Of course you're going to say it's a good time to get sick - you're a doctor!"

Zillow to Nationalize Real Estate Advertising

Realtors are getting luckier - now we can advertise our Open House in Sacramento, CA to someone in Houston, TX. Or so says Lloyd Frink, president of Zillow in a company-prepared press release.

Basically, this would work well for Realtors who advertise in the Sunday classifieds. Zillow has formed a partnership with about 282 newspapers (and are expecting more to join before the first half of 2008) where anyone who advertises in the classifieds will have the option to advertise online on Zillow across the nationwide alliances.

Already I find a few of my clients using Zestimates to evaluate the market for their homes and I've been known to add homes for sale to the Zillow database. While I think the Zestimates are not accurate, they're a good place to start. Then get a Realtor to tweak them.

My real problem with Zillow is that it is not regulated enough. And while I have had problems with the Metrolist MLS that keeps a very strict tab on Realtors and fines you for being late in reporting a sale or a pending sale, I must admit it has the most accurate information online. Zillow, especially because it is free, does not download directly from the MLS and often depends on people to update statuses. Which they often do not.

Sacramento Rents Inch Up

The Sacramento Bee recently reported that rents in Sacramento are more affordable than most other cities in California. The chart here shows apartments and average rents. The same may not be true for single family residences as I mentioned before in this post about Sacramento area rents.

If you are a landlord or would like to know how much you should ask for your rental, check out Rent-O-Meter.

The entire Sacramento Bee article can be found here.

Buy and Hold Will Never Go Out of Style

Most real estate investors swear by this strategy and I thought it was most eloquently written about in this article by Steven Goldberg.

Although he is more into stock investing than real estate, I think the basic strategy is the same. As he puts it in the article in Kiplinger, "bailing out of the market because you or some expert thinks it will fall is folly. What's worse, those who sell are likely to lose out on the big gains the market makes over the long haul. The key to success in long-term investing is time in the market, not timing the market."

So those of you that want to chuck your houses bcause some expert tells you it's doomsday, read the article and look at Sacramento's historical real estate values.

Sensationalism & the Housing Bubble by Rich Levin

(This article appeared in Broker Agent News and it bears reading in its entirety - Purva Brown)

This makes me mad every time I see it. Either the National Association of Business Economists is full of people with no real business experience or fools.

This is a headline from a major online Real Estate publication,

"Economists See Credit Problems as Bigger Threat than Terrorism."

I know they were all alive just seven years ago when terrorism cost the lives of three thousand American citizens. That headline goes beyond sensationalism. It is rude and insensitive.

The article goes on to say that one in three members of the NABE, "...Said the housing boom can be described as a 'serious National bubble." Then later in the article three in four said they would "buy a house today if they intended to use it as their primary residence."

Would someone please tell these academic fools that housing is local in nature? While many major markets suffered and are suffering from the over-zealousness of investors followed by the over-zealousness of foolish sub prime lenders; there are many markets that are healthy and many more that are suffering a softening but nothing close to a collapse.

These gloom and doom headlines supported by a minority of questionable economist opinions feed the problem they are describing. While the facts support the opposite conclusion. Even the economists own research supports the opposite conclusion.

In the same article, "Asked to look five years into the future, 42 percent expected US home prices to remain flat, 41 percent said prices would rise." How did 34 percent of the same group call this a bubble that is fed by a threat bigger than terrorism.

Let's give credit where it is due. "59 percent still say there is no national housing bubble, only significant local bubbles. Another 8 percent said there's no bubble at all and that the market is functioning correctly."

Hooray for those groups. They got it right. There are some local bubbles where there were hundreds and thousands of development parcels and homes developed and built in anticipation of future sales and the sales that were feeding that demand was investor speculation (Boise and Sarasota to name two).

In late 2005 and through 2006 the investors realized that the boom was being fed by their own demand so withdrew. This left a tremendous inventory in some cities or areas of cities.

Unfortunately, in 2006, the secondary market lenders realizing that they had allowed a foolish combination of underwriting standards for the previous five years or so immediately followed this. They were buying loans that allowed buyers to have both, little or no down payment and marginal credit. How this happened (and who should be prosecuted for it) is a mystery that will likely to remain such.

The result was that in some communities around the country, particularly where there were high priced homes and with less sophisticated buyers; many of these mortgages were used to purchase homes. That created additional pockets of excess inventory which stalled prices in those areas.

Now in the fall of 2007 the majority of lenders loaning jumbo loans, over $417,000 have stopped funding these high-end loans for some period. This will further increase inventory and dampen prices in some areas.

Notice the language, dampen prices in some areas. Most of the country is experiencing a normal buyer's market that normally follows a long healthy seller's market.

The latter group of economists put it perfectly. The market is functioning correctly. In 1986 after two to three years of a soft buyer's market not unlike what we are experiencing now (Although it was driven by different causes.) there was a long strong period of a healthy seller's market with steady appreciation.

There was a momentary softer buyer's market around the Gulf War in 1991 (although not caused by it) followed by over a decade of a healthy seller's market that lasted until 2006. If we learn from history strong seller's markets last longer than softer buyer's markets.

So again, the economists got this right. The same article said 58% of the economists predicted a 'meaningful' recovery in U.S. housing markets before the second half of 2008 or in the second half of 2008. The majority of the other 42% predicted the recovery in 2009.

This is completely consistent with history. This two or three years of soft buyer's market with slightly flattening prices will likely be followed by five or more years of a healthy seller's market with equally healthy price appreciation.

REALTORS® all learned in their first Real Estate class that the market is driven by supply and demand. As long as there is an increasing population of people with reasonable or better incomes, the demand will keep the market healthy.

Add to that the fact that the Federal government repeatedly states that they realize that the Real Estate market is critical to the health of the economy and they will do whatever is necessary to keep mortgage money available.

It all adds up to a principle residence continuing to be the safest and smartest investment for a person living in this fabulous nation. (Just be careful of areas that have experienced rapid appreciation for more than twenty-four months. There could be a windfall or just a fall looming.)

If you are associated with Real Estate, please separate the sensationalism from the truth. If you are in most communities in this country, everything is pretty normal. Prices are appreciating a little slower but still appreciating. Houses are on the market longer. Buyers are fussier. Yes, it is tougher to sell Real Estate. But you still have one of the best jobs in the world with more personal freedom and opportunity for success than any other business person or professional on earth.

If you are in one of those tougher markets, my heart is with you. You do have an uphill battle for another twelve to twenty four months. You have my strongest wish that you can survive and succeed through this. If not, come back to the business in a couple of years. I feel comfortable promising you that the good times will roll again in the not too distant future.

I love this business for what it provides to our society, the people in it, and the strong bright professionals that make me proud to be a part of it.

About the Author: Rich Levin is speaking at this National Association of REALTORs® convention this November in Las Vegas, at the Triple Play Convention this December in Atlantic City and many other venues large and small. Rich is a coach, trainer and speaker who specializes in raising Agent production through highly effective training programs for Real Estate Companies and Individuals. Rich Levin is President of Rich Levin's Success Corp. Contact Rich at 585-244-2700 or rich@richlevin.com or blog with him at RichLevinBlog.com.

Finally - some sane voices enter the discussion!

Yes, the news keeps churning the same stories out again and again. Sales are down. Prices are down.

If you're a buyer on the fence, you should consider reading Terri Cullen's article in the Wall Street Journal labeled Home Buyers on the Fence.

If the headlines are scaring you back into bed, you should read this excellent article by John Lockwood on the recent Sacramento Bee foreclosure numbers.