Robert Darrow, @properties

Archive for the ‘Sellers’ Category

As it has come up in several conversations with my clients over the last week or so, I thought it was worth sharing with you as well.  What can we expect during the month of August while our house or condo is on the market?

I happen to have a lot of one bedrooms in Lincoln Park and Lakeview for sale at the moment.  The remainder of my inventory is mixed between townhomes, houses, condominiums in various neighborhoods and a commercial condo.  With the one bedrooms representing a hefty chunk of my inventory, let’s take a look at what’s going on from that perspective.

Historically, the month of August is slow.  This is the month that most Chicagoans realize that  the days of summer are numbered, folks leave town for vacation, and otherwise people simply don’t pay a lot of attention to real estate.  Buyers that needed to have a home selected in time for the start of the school year did their shopping in late Spring and early Summer.  There were a lot of July closings and a few more closings to take place in August.

The economy is also dealing the real estate market a one-two punch.  Illinois’ unemployment is higher than the rest of the nation’s at 10.4%.  And the banking crisis, or the leftovers of it, make it challenging to get a mortgage even though rates today are at historic lows (Guaranteed Rate is offering a 30 year, fixed, conforming, loan at 4.375%!)

In a strong economy, studios and one bedrooms are strong sellers.  In a weak economy, demand for studios and one bedrooms falls off.  Demand for buying a studio or a one bedroom falls off even more.  This happens as fewer people can afford to live alone and start doubling up in larger units such as two and three bedroom apartments and condos.  The economy also removes a large section of people from the market as their purchasing power is diminished. 

Figures for the end of July tell a striking tale:

In Lincoln Park and Lakeview, combined, for the month of July, about twice as many two bedroom condominiums sold as one bedrooms.  The same ratio holds for properties that went under contract – or pending sales.

July 2010, one bedrooms, pending sales = 38

July 2010, one bedrooms, closed sales = 36

July 2010, two bedrooms, pending sales = 65

July 2010, two bedrooms, closed sales = 70

You can expect that traffic will be lighter than you have experienced in June and the first three weeks of July.  Traffic will stay light until the first weekend after Labor Day when buyers come back out shopping during the fall market.  This fall most Realtors are expecting a better fall market than last year’s and better than the Summer Market. 

The expiration of the buyer tax credit is far enough back in history that the “pulled forward” demand for homes should be exhausted.  And as the economy improves, though slowly here in Chicago, there are some folks relocating to Chicago, expanding their families, and needing to choose new housing.  We’re expecting demand to increase from “weak” to something even better than perhaps “tepid.”  Certainly nowhere near “blistering” by any stretch of the imagination.

During the month of August, while we have the time, it’s a good idea to have me, or your Realtor, prepare a new Market Analysis for your property.  If there are any new strategies to implement, or price changes that need to me bade, having the decision made during the slow month will allow the change to made promptly on Tuesday after Labor Day.  Expect a call from me in the coming days to set up an appointment to get together to go over the new Market Analysis.

Your Guide received this email this morning from @properties founder Thad Wong:

The worry price is the price at  which a home is offered where a potential buyer will say, " I am worried that someone else may buy this!"

This is very real, and where your listings need to be priced if the goal is to sell them. Buyers today are setting the pricing for which homes will sell.  They will also pass on a home because, in most of our neighborhoods,  there are more than a few homes available in that same price range with similar amenities.  Your listing needs to be the best priced home within the category it is competing against, or, if the home has a defect similar to backing up to the El or expressway, it needs to be priced where the competing homes are smaller and in much worse condition giving the buyer a valid reason to buy a home with a defect in today’s market.

Today’s market, by the way, is at the 35 year average with 5% of families actively in the market.  So, here we are:  in an average market with above average financing challenges that are gradually becoming easier; ever so slowly I will admit.

Great advice.  You can bet that if you invite me over for a listing presentation in the next few weeks, you’ll hear this in some form or another.

Sellers have been hearing for years that there’s a danger to overpricing.  Namely that after a few price reductions and a long time on the market that the eventual sale price will be lower than if the property was priced right from the start.  New tools allow us to examine the list price vs. sale price ratio for properties that have had no price changes against properties that have had one or more price changes.  Follow along as we look at Uptown and the entire City of Chicago.

Internet savvy consumers are always looking for the Next Best Thing that’s supposed to revolutionize the way they do business.  One such Game Changer that hit the stage a few years ago was Craigslist.  This great bulletin-board style trading post offered a way to sell anything from concert tickets, junk from your attic, all the way to real estate.

Up until Craigslist made its debut in Chicago, the most popular “Alternative Media” outlet for renting out your apartment or posting your By-Owner real estate ad was an ad in the Chicago Reader. 

And for the following years, Craigslist was, indeed, a great tool for advertising real estate, especially apartments for rent. 

Real estate agents were terrified that the Internet, and Craigslist in particular, with its free and easy platform for reaching masses of Internet Empowered Consumers, would end the world as we know it.

As any poster of ads on Craigslist has noticed, lately, the relevance of the site as an outlet for useful real estate information has plummeted.

Joe at YoChicago notes:

Craigslist has become … almost totally dysfunctional as a way to find an apartment in Chicago.

Nearly 2,800 apartments ads were posted [on a typical day in August, 2009] on Craigslist. 650 of those (round numbers) came from Homescout and another 450 (round numbers) from the scammers in this post. The great majority of the rest also came from a small number of rental “services.”

As long as I’ve been around this industry the maggots have systematically set out to destroy the utility of any site or publication that draws an audience of rental prospects. They’ve succeeded, in my take, at destroying Craigslist.

Your Guide has found it infuriatingly difficult to post property information in the past few weeks as the Craigslist interface grinds to a halt during the input process.  The site inexplicably hangs for minutes at a time, often timing out causing me to have to start the process all over again.  Most of the time, I simply give up.

This week, the bulk upload interface that Craigslist offers to heavy advertisers stopped working, halting the upload for our company listing information in its tracks.  We haven’t heard whether a fix will be offered, or if the system has finally collapsed under the weight of all the junk postings being submitted.

In Real Estate Advertising, as in Life, it seems you get what you pay for.

And another New Paradigm seems to bite the dust.

I think it’s time to have “the talk” with the sellers of this condo in Lincoln Park about the perils of overly personal paint colors.

Oh, and, just so we’re clear:  I am NOT taking my buyer to see this condo on Saturday.  There’s plenty of other stuff on the market that’s freshly painted, with marble, granite, stainless, wood floors and neutral carpet.  What color IS that carpet, anyways?

Part 1 on Corporate Relocations here

Part 2:  The Internet Empowered Consumer

More and more home buyers are starting their home searches on the Internet.  The convenience of looking at homes 24 hours a day, even in your underwear (see this article) is a powerful convenience.

Some statistics from N.A.R.

Homebuyers’ Use of the Internet

80% of home buyers used the Internet as a source.
81% of Internet home buyers also used a real estate agent.
63% of non-Internet buyers used a real estate agent.
74% of buyers who searched online drove by or looked at a home they first saw online.

To reach the Internet Empowered Consumer, you must answer the fundamental question that forms the basis for all decisions undertaken by this consumer:  What’s in it for me?

Since it stands to reason that these buyers are looking online because it is convenient, they are also going to look for the source of homes that offers the greatest convenience. 

These convenience seekers are unwilling to scour the Internet for multiple sources for homes.  They are going to Google search for “Real Estate ______” – and where the blank is located, they are going to plug in the name of the city they are interested in.

Here in Chicago, that means they are going to land on the web pages for the major brokerages, and the major real estate portals. 

Neither source caters to listings offered “By Owner.”

The number 1 source for homes on the Internet is www.realtor.com – the website that Realtors put all their listings on.  Every single Realtor who belongs to a local MLS or Realty Board sends their listings to www.realtor.com.

And by definition, none of those properties will be “By Owner.”

The source for all the real estate information on AOL’s real estate search portal is www.realtor.com.  Several others, too.

As a FSBO, you have access to several classified advertising web sites, and a handful of “By Owner” web sites.  But remember the credo of the Internet Empowered Consumer?  What’s in it for me?

The buyers that search for listings on the classified ad web sites are likely looking for something in particular:  to save a commission, too.

Buyers who search out FSBO properties often do so in order to do the same thing that the seller is trying to do.  So even if you have taken the commission savings into consideration with your list price, seekers of FSBO properties are going to try to negotiate even more off the list price of your property.  Perhaps another 2%, 3%, 5% or even 6% off since he thinks you’re trying to keep all that money for yourself!

In the immortal words of one of my esteemed competitors at another company “It ain’t all big hair and Cadillacs.”

Cook County foreclosures jumped 84% in December

Ugh.  Home foreclosures jumped 84% in December from one month earlier and up 24% from a year earlier.  One in every 300 homes in Cook County is now in foreclosure.  More sobering stats:  there were 115,063 foreclosure filings statewide, a 54% increase from 2007 and a 126% increase from 2006.

Read the article here

U.S. will aid cities in housing crisis

Chicago will receive more than $55-million from the federal government to buy and fix foreclosed homes in some neighborhoods to revitalize neighborhoods wrecked by the housing crisis.  Of the 25 neighborhoods targeted by the city, most are on the South and West sides. 

The only city to reveive more money than Chicago was Miami-Dade County, which was granted $62.2-million.

Read the article here

Repositioning is the key to securing a sale

A term once used sparingly by real estate insiders, repositioning has increasingly entered the American lexicon as the housing market captures headlines. No longer can Chicagoland sellers ignore the market’s tumult. To secure a deal, today’s home sellers must be realistic, responsive and open to repositioning.

Read the article here

Are you one of the brave souls who will be putting your home on the market in 2009?

Here’s your guide to navigating the challenging market that the coming year has in store for you.

The new realism

Prices in Chicago have settled between seven and fifteen percent. Get an up-to-the minute Market Analysis on your home with information on closed properties from within the last 60 days. Older data can mislead you into setting too high a listing price.

In Lakeview, one data provider suggests that home values fell approximately 2.5% in September alone.

The amount of price depreciation varies by neighborhood, so seek the advice of an expert in your area.

Superbowl=Spring

There is still snow on the ground, and warm weather is many weeks away. But there’s something important you need to know:

50% of the home sales in Chicago occur during the first 1/3 of the year.

Spring buying season really begins right after the Superbowl. Late January and early February. This leaves February, March and April as the biggest buying (and therefore biggest selling) months of the year.

It is important for you to get a jump on your marketing plan for 2009 in order to hit the market in a timely fashion as soon as the buying season begins.

Many of my home owners miss the Spring selling season by talking to me in “Actual Spring” – March or April. They then take several weeks preparing for the sale. Painting, cleaning, de-cluttering & curb appeal projects all take time.

By missing key deadlines, some owners fall behind, and don’t get their homes on the market until May. By then, the buying season is winding down.

Talk to your Realtor now. Yes, that’s me.

The ideal time to start preparing for the coming marketing season is in December before the Holidays. Or perhaps in the slow week before New Year’s Day.

You want to have your Market Analysis already prepared, and you want your Real Estate Pro to have already given you a TO-DO list for getting ready for market. During January, then, you can get a jump on moving stuffed closets into storage, do a thorough cleaning, start painting, and work on your other projects.

At the same time, we will be writing your ads, building the web pages for your home, scheduling the upcoming open houses, perhaps even getting the Video Tour and Photography taken care of.

Your our listing can then hit the market fully prepared early enough in the season to take advantage of every opportunity to show.

The first few sunny days of late Winter push cabin-fever suffering Chicagoans out on the weekends. You know the kind of day I mean: The temperature finally breaks out of the 30’s. The sun is out and the sky is blue. Snow is melting and you can see a few patches of grass.

Those are the kinds of days where we see hordes of shoppers crowding into open houses. You want them in your open house.

Time to get back to work after a forced Holiday due to Chicagoans’ attention on the elections and the funky economy.  But if the increasing number of phone calls and increased traffic on our websites is an indicator, business is picking up.

In anticipation of upcoming appointments, we’re inspired to provide some key questions you should ask when you’re interviewing agents for your listing:

1. Are you a full time Realtor?

This one seems like a no-brainer; doesn’t it?  But there are thousands of agents in Chicago who only work weekends.  Or have full time jobs during the day.  Or moonlight at night as bartenders or wait-staff.

You’re probably not paying a half-commission; are you?  So why should you only get half an agent?

2. How long have you been in business?

A track record of success is key indicator of future success.  In our market, any agent with the tenacity to make it ten years or longer has a solid client base, plenty of experience, and the savvy skills to get your job done.

3. What’s your production volume?

Remember the good-old days when top producers would list “Million Dollar Club” on their business cards?  A few old-timers still do!  Odds are, however, that in your neighborhood, two sales or a fraction above will push an agent’s production volume over $1-million.

Top producers in Chicago can easily crest $6-million in yearly volume.  This puts them roughly in the top 15% of Chicago Realtors.

Agents with annual sales in the $12-million range are in the top 10% or better.

As agents top $15-million in annual production, it’s likely then the agent is taking credit for the production volume of a team of agents and assistants.  There’s nothing wrong with that; it’s just that you should know what kind of agent you’re hiring.

Elite level Realtors producing over $25-million in sales often work as a company-within-a-company with a team of agents handling showings and a decent sized staff handling administration.  This brings up:

4. Do you work alone? Or with a team?

If you’re the kind of customer that would like to always be able to reach your agent directly, you might prefer an agent that works alone.  You’ll still have the resources of your agent’s company working on your behalf.  But you’ll probably have direct access to your agent via their personal email, their direct telephone number or cell phone.

If you think you’d benefit from a coordinated effort of a team lead by a local star, then the team approach might work for you.  There will be dedicated individuals who answer your calls, process paperwork on your behalf, and handle other tasks.  You’ll usually be screened by a coordinator, so you won’t get instant gratification.  Emails will be handled by someone you haven’t met.  Perhaps your agent will be able to get back to you later the same day, but most of the time, admin coordinators will be handling your transaction.

I don’t like the team approach because you never know who’s going to be doing the showings at your house.  Or working at your open house.  Usually someone with a lot less experience than the person you hired.

5. Big company?  Or small?

Is there a mom-and-pop shop that has been in business forever in your neighborhood?  Does that company dominate sales in a particular marketplace?  That kind of success is harder to find these days, but if there’s a dominant player in your area, you might consider giving them a shot.

Most sellers would benefit from the reach of a larger company in their marketplace.  Since you’re paying for it, why not hire the company with the better website, the bigger ad budget, signs all over town, and some brand recognition?

6. References?

Your agent should be able to produce some letters of reference or testimonials on the spot.  If you want to follow up with references, your agent should be able to give you names and numbers, but may wish to call the clients first before giving out their contact information.

7. Show me your marketing program?

Everything asked up to this point is to determine the level of competence of your agent, and whether they are compatible with your expectations.

The marketing program is where the rubber hits the road – so to speak.  The marketing program should include the production of marketing materials, advertising, an online presence, the use of the Multiple Listing Service, a schedule for open houses or broker tours, direct mail, and any other advertising avenues that are customary in your marketplace.

A thorough presentation of a comprehensive marketing campaign should convince you that news of your house for sale will reach buyers wherever and whenever they look for information about property.  If you get the feeling that something might be missing, it probably is.

8. How long will it take to sell my house?

This isn’t a question that necessarily implies that one agent is better than another.  You want to see detailed statistics showing the days on market of homes like yours in your neighborhood. 

If an honest estimation of market time is not accompanied by statistics from your local MLS, then it’s just a guess.

9. Show me the Market Analysis for pricing my home?

Your agent should have a detailed CMA – Comparative Market Analysis that shows what similar homes have sold for recently.  The report should be backed up with printouts from the MLS for each property used in the analysis.  It’s even possible to make fine adjustments in a CMA to account for features that your property may have that comparable homes don’t, and vice versa.  The more information you have, the greater confidence you can have in the recommendation.

10. What will all this cost?

Commissions are negotiable and vary widely – even in your marketplace.  Though I’m not quoting commissions here, you should expect your agent to be up-front about the commission charged, the split to be offered to co-operating agents, and any fees that are tacked on.

I’m not a fan of the additional transaction fees, but they seem to be a part of life in our marketplace.  They should NEVER be a surprise later in the transaction, however.

Today is National One Hit Wonder Day.  Here’s one of our favorites for your enjoyment.

What do you suppose ever happened to these guys?

Your guides are hearing a lot of talk among agents out there wondering if they are going to make it through this economic downturn.  We don’t have time to join them as we’re off to closings and managing properties for our clients.

When we joined the Chicago Association of Realtors, there were approximately 7,000 members back in 1997.  Since then, the ranks have swelled to a high point of approximately 16,000 members in 2006. 

We believe that the great market during the early 2000′s made a job in Real Estate extremely appealing.  It did seem like shooting fish in a barrel.

One question real estate advice columnists always tell you to ask your prospective real estate agent: Are you a full time agent?

Here’s a new one:  Will you be around for the long haul?

We just wanted to point out that we started out in the real estate business back in 1989 – not exactly the most desirable economy to jump into.  During the economic recovery of the early 1990′s, we worked with relocating transferees whose companies were downsizing their mid-level market offices and consolidating into Chicago.  Calling on companies and their human resource directors was 20% of our job responsibility in those days. 

It ensured that we were able to stay in business, and even grow, during a time that saw large numbers of agents decide that real estate was not for them.  That same foresight and dedication will ensure that we’re prepared to weather the coming storm.

Make sure the agent you’re interviewing isn’t the next one-hit-wonder.

I couldn’t resist one more – here’s my favorite: