Vermont Buzz

Multiple Offers Making a Comeback

In the current home sale market, it might seem ludicrous to make an offer on a listing if it means competing with another buyer. However, multiple offers are on the rise in some markets. But, it doesn't always mean that you need to pay a lot more than the asking price.

Sellers are ever hopeful of receiving multiple offers. These days, this is usually an unrealistic expectation. That is, unless the listing is a prime property in a high-demand neighborhood where few homes are being offered for sale.

Price is a critical part of the equation. Some sellers price their homes low because they need a quick sale. If the price is below market, multiple buyers could step forward with offers. Sometimes an overpriced listing is reduced to market price or below and results in offers from more than one buyer.

Most multiple offers today are on low-end foreclosure properties. Investors make up a large part of the buyers in this segment of the market. In some areas of California and Florida, prices have fallen 40 percent since the market peaked in 2006.

HOUSE HUNTING TIP: Don't shy away from making an offer just because there is more than one offer. In some cases, a dozen or more buyers make offers on foreclosure properties that are listed at bargain prices. But, the highest bidder is not always the winner.

Even in non-distressed-sale situations, multiple offers in today's market don't always result in an overinflated sale price. For instance, a charming older home on a sought-after street in the Crocker Highlands neighborhood of Oakland, Calif., sold after only two weeks on the market with multiple offers. The property was listed for $1.3 million, and sold for $5,000 above that price.

In another case, buyers from the East Coast bought a home in Marin County in the San Francisco Bay Area. Against their agent's advice, they offered less than the asking price even though they were competing against other buyers for the property. Their offer was the lowest of three offers, but it was accepted by the sellers. The reason the sellers accepted the lower offer was that the winning buyers had solid financial backing.

There are far fewer financially qualified buyers in the home-buying market today than there were two years ago due to credit tightening, more rigorous financial qualification requirements and recent stock market losses. In some areas, as many as one-third of home sale transactions fail to close, often due to the inability of buyers to obtain the financing they need.

Sellers who receive more than one offer should carefully consider all aspects of the offers, not merely the offer price. An offer from an all-cash buyer who doesn't need a mortgage to finance the purchase, and who can close quickly, should be taken seriously even if the price is lower than the other offer(s). However, some all-cash buyers -- who are fully aware of their strong position in this market -- feel they are entitled to a major price discount.

Whether or not you'll have success countering for a higher price will depend a lot on the profile of the buyer. Buyers who intend to occupy the property for the long term are more likely to pay more than will investors who base their purchase decisions on the numbers, not their emotions.

THE CLOSING: Sellers should try to keep greed out of their decision when faced with multiple offers. Today's buyers are willing to walk away from a negotiation rather than pay over market value, or it they think the sellers are unreasonable.

 

Source:               By Dian Hymer   Inman News

Dian Hymer is a nationally syndicated real estate columnist and author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

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What to Expect in 2009 - Top 10 Routes to Recovery

Following the too-good-to-be-true housing boom in the first half of this decade, 2008 was a dose of reality. The subprime mortgage crisis and the collapse of major financial institutions made this year a tough one for real estate. Expect 2009 to be filled with more change and adjustment in home values and expectations. On a positive note, help is on the way from the Feds, and some experts say a slow recovery could begin in late 2009. Prepare yourself for the challenges -- and opportunities -- of 2009 by getting familiar with what to expect in the housing market.

1.      Continued market adjustments.
With home prices in some markets having reached astronomical levels, it was inevitable a reset button be pushed. Sellers will continue to be challenged in 2009 as the inflated pricing of years past adjusts to normal levels. With banks and builders willing to slash prices to sell a backlog of foreclosures and new homes, individual sellers will have to price their homes competitively.

2.      Action from the Obama administration.
Obama's plan to help the housing sector includes a 10 percent mortgage tax credit for homeowners who don't itemize their taxes and a crackdown on abusive lending practices.

3.      More assistance programs for homeowners in danger of foreclosure.
While the federal government is attempting to reduce foreclosures, a report released by the Joint Economic Committee predicts 2 million foreclosures in 2009. Homeowners who are at risk should take steps to avoid foreclosure.

4.      Some calm to the chaos of the banks' restructuring.
This should cause loan modifications and short sales to get easier, and will also (eventually) decrease the number of bank-owned properties on the market.

5.      Thorough reviews of mortgage applications.
Before the subprime mortgage debacle, you didn't have to prove you could afford to borrow $200,000 for a home and you didn't need a down payment. Those days of sketchy lending practices are gone. Lenders now require potential borrowers to provide extensive income and expense documentation. Homebuyers with the best credit will get the lowest interest rates. Take steps now to get your finances in order and boost your credit score.

6.      Low prices and low interest rates.
2009 could be the time for reluctant homebuyers to act, as this is perhaps the last year of the best buying opportunity in recorded economic history.

7.      Cool tech tricks and tools for the real estate obsessed.
As homebuyers turn to the Web more and more for their real estate needs, video, webcasts and mobile search tools are becoming more prevalent. Sellers should consider using these cutting-edge tools to make their homes stand out.

8.      Wiser consumers.
After facing this foreclosure crisis, buyers, sellers, real estate agents and even tenants will have a deeper understanding of real estate, mortgage and credit, which they can use to make better decisions and be more self-protective in the future.

9.      Leaner, greener homebuying.
Across the board, homebuying is becoming more eco-friendly, from transactions being conducted digitally to buyers opting for smaller homes within walking distance of school and work.

10.    An increase in consumer confidence.
As the year goes on and we near the projected end of the recession, sellers can breathe a sigh of relief as buyers regain confidence in the market.

Source:  FrontDoor.com | Published: 12/03/2008

Maybe It is Time to Buy That First House

Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.

Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.

Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.

That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.

Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.

If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.

But if you are a potential first-time buyer yourself, or lending or giving the down payment to one, you are probably as frightened as you are tempted by all the “For Sale” signs that have become “On Sale” signs. So let’s quickly review some of the still-grim pricing data in certain areas — and consider the reasoning offered up by first-time buyers who have forged ahead anyhow.

As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines. The verdict was that buyers in 33 of the markets could see a decline by 2012, including potential six-figure drops on an average home in the New York City, Los Angeles, San Francisco and Seattle metropolitan areas.

This is obviously scary. (I’ve linked to the study, a joint effort of the Center for Economic and Policy Research and the National Low Income Housing Coalition, from the version of this article at nytimes.com/yourmoney.) It’s worth noting, however, that these predictions came before the government made its most recent move to reduce borrowing costs.

Also, the price projections in the study are based, in part, on the fact that the ratio of purchase prices to annual rents is still higher in many areas than the historical average, which is roughly 15 times rents. While past figures may well have some predictive value, I have never been convinced that first-time buyers compare a home that they could own and one that they would rent in purely or even primarily economic terms.

The fact is, in many parts of the country there are few if any attractive rentals for people looking to put down roots and enjoy the sort of amenities they may spot on cable television home improvement shows. Comparing a rental with a place that you may own seems almost pointless in these situations, especially for those who are now grown up enough to want to make their own decisions about décor without consulting the landlord.

Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.

You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.

John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.

One other strategy might be to buy new instead of used. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, says he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.

Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.

Finally, allow yourself to consider how it would feel if you bought and then prices dropped another 10 or 15 percent. It might not bother you if you plan to stick around. Plenty of people seem to be making a longer commitment to their homes. According to a survey that the National Association of Realtors released last month, typical first-time buyers plan to stay in their home 10 years, up from 7 last year.

Perhaps people are more aware that they will not be able to build equity as rapidly as others did in the real estate boom. Or they simply have more confidence in hard, hometown assets now than in other markets.

“We wouldn’t let another decline bother us,” said Michael Proman. “You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”

 

Source: Ron Lieber  New York Times - Your Money

Ready to buy, or waiting it out? Post a comment at nytimes.com/yourmoney or write to rlieber@nytimes.com.

 

Home Staging - 6 Steps

Faced with a massive glut of unsold homes, many would-be sellers are struggling to make their properties stand out in today's downtrodden real estate market. But while the economic head winds are beyond property owners' control, author Barb Schwarz says they can dramatically improve their chances of making a sale by devoting attention to an often-overlooked corner of real estate marketing: home staging.

Schwarz, the CEO of StagedHomes.com, was a pioneer in home staging back in the early 1970s and has used the techniques to sell properties ever since. "The goal [of home staging] is for the buyer to mentally move in," Schwarz says. "If they cannot mentally feel and see themselves living here, you've lost them." Schwarz offers six simple tips to help home sellers better position themselves in a sluggish market.

Get them inside. The first thing a prospective buyer notices about a home is not the living room but the front yard. "A lot of people think staging is the inside only," Schwarz says. "[But] we've got to stage the outside to get them inside." So cut the grass, trim the hedges, rake those leaves, sweep the sidewalks, and power-wash the driveway. And make sure you don't have too many potted plants scattered around the property. "Nothing dead," Schwarz says. "You'd be amazed how many people have dead plants in their yards."

Pretend you're camping. Schwarz says a cluttered room will appear too small to buyers. "Clutter eats equity," she says. Schwarz tells homeowners to go through each room of the house and divide their belongings into two piles: "keep" and "give up." Items in the "keep" pile will be used to stage the room, while those in the "give up" pile should be stored elsewhere. "Pretend you are camping," she says. "When you go camping, you are not taking all those books, right?"

The decluttered rooms may appear bare to the seller, but the buyer won't think so. "We are not selling your things.... We are selling the space," Schwarz says. "And buyers cannot visualize when there is too much [stuff] in the room." Decluttering a home's outdoor spaces is important, too, she says.

Balance hard and soft surfaces. When staging a particular room, it's essential to have a good balance of hard surfaces, such as a coffee-table top, and soft surfaces, like a carpet, Schwarz says. For example, a room with a cushy, 7-foot-long sofa, a love seat, and four La-Z-Boy recliners has too many soft surfaces and not enough hard surfaces. "The room is sinking," she says. "It's all too heavy." Instead, consider getting rid of the La-Z-Boys and the love seat, replacing them with two wingback chairs. "If you have hardwood floors but no rugs, it's too hard," Schwarz says. "So you want to add a rug."

Work in ones or threes. Schwarz recommends arranging items on top of hard surfaces in ones or threes.

You would place three items—say, a lamp, a plant, and a book—on top of a larger hard surface, like an end table. "You take away the plant and the book, it's too bare," she says. "[But if] you put 10 things on it, it's overdone." The three items should be closely grouped together in a triangle shape. "I draw a triangle for my clients," Schwarz says. "I say, 'Here is the end table—let's superimpose a triangle on top of it.' "For hard surfaces with less area, however, a single item will do.

Decide from the doorway. Since would-be buyers will get their first impression of each room from the doorway, homeowners should use that perspective to judge their staging work. "Do your work, go back to the doorway. Do some more, go back to the doorway," Schwarz says. That way, you'll be better able to ensure that each room appeals to buyers.

Make your place "Q-Tip clean." A properly staged home should be immaculate—"Q-Tip clean," as Schwarz puts it. "I mean Q-Tips getting dead flies out of your windowsill [and] going around the bottom of your toilet on the floor," she says. The purpose of ensuring the house is spotless is more than simply making it presentable. If a home is unkempt, a buyer will wonder what other, less visible problems may come with the property, Schwarz says. "They'll say, 'Gosh, if they live like this, what don't they take care of that I can't see?'"

Source: US News & World Report.  USNews.com

Home Staging Cheat Sheet by Luke Mullins

Burlington: A Safe Haven

With foreclosures skyrocketing and home prices plummeting, real estate has had a tough year. But in certain pockets across the country the damage has been minimal -- if nonexistent.

Six cities showed slow, steady growth, using data from Fiserv Lending Solutions, a home-price research company. These cities' local economies have kept unemployment and foreclosure rates below average. Plus, their affordability index -- a measure of home prices versus family income -- is low.

 

Source: Louis Jones, Kiplinger.com

Nov 21st, 2008

 

 

Burlington, VT

Population: 145,360
Median home price: $250,000
12-month change in home value: +1%
Affordability index: 4/10
Homes sold this year: 592
Home value vs. national average: +21%
Top employer: IBM

On the shores of Lake Champlain, Vermont's largest city focuses on retaining its high standard of living rather than growing its population. Strict zoning standards make homebuilding difficult and discourage speculators.

Burlington's small-town mentality ensures that home lenders maintain personal relationships with their clients and help them stay within their spending means. Technology, health care, and education drive the local market.

Lower Mortgage Rate is No Silver Bullet

NEW YORK (CNNMoney.com) -- Reducing mortgage rates to a historically low 4.5% may entice some home buyers out of the shadows, but it won't be enough to really spur housing sales, experts said.

Only a week after the Federal Reserve unveiled a $600 billion plan to reduce mortgage rates, the Treasury Department is considering adding to the effort to lower rates even more. Both moves are intended to get more buyers into the market in hopes of stabilizing home prices and reviving the economy.

While Treasury officials are keeping mum about the latest proposal, lobbyists said Thursday it is aimed at reducing rates to 4.5% only for people buying homes. Those looking to refinance would not qualify.

There's no doubt, experts say, that the government needs to provide incentives to home buyers.

Until now, all efforts were focused on addressing the record number of mortgage delinquencies. This should remain the priority, experts say, but it should be coupled with increasing demand for homes.

Adjusting mortgage rates, however, will only go so far in getting prospective home buyers into the market, experts said. Potential buyers remain spooked by falling home prices and rising unemployment. And even those who want to buy cannot find loans with reasonable downpayments and terms.

"The problem is not interest rates," said Kenneth Rosen, chair of the Fisher Center for Real Estate at University of California, Berkeley. "It's the availability of credit."

And, of course, there's still the issue of stemming foreclosures. The Bush administration has been loathe to mandate widespread loan modifications. Instead, it is opting to chip away at the problem by adjusting loans held by Fannie Mae and Freddie Mac and by asking banks to expand their programs.

But even federal officials acknowledge the economy won't recover until the tidal wave of foreclosures ends. Federal Reserve Chairman Ben Bernanke Thursday said the government must do more to help struggling homeowners, possibly by buying delinquent mortgages and refinancing them to more affordable terms.

By Tami Luhby, CNNMoney.com senior writer

Last Updated: December 4, 2008: 7:46 PM ET

NAR lists Vermont in top 10

NAR Chief Economist Lawrence Yun reported last week at the Annual Leadership Summit in Chicago that Vermont is in the top ten states for sales recovery.  Sales are stabilizing across the nation and he believes that the recently passed $7500 tax credit for fist time home buyers along with higher loan limits for Fannie Mae and Freddie Mac will be the trigger to unleash high pent up demand from buyers who have been sitting on the side lines, frightened by gloomy reports.  Very soon he believes that the media will be forced to report the facts of increased sales.  The recovery can be sharp or moderate depending on the job we do in getting good information out to clients and consumers.  Don’t forget that you can find all the latest commentary from NAR research at: http://www.realtor.org/research/research_commentary

Source:  Vermont Association of Realtors E-News - August 08

Now is a Great Time to Buy

Interest rates are still low. High end sales (over $1 million) are ahead of prior years.
Foreclosures for both New Hampshire and Vermont are very low (Vermont was 50th
of the 50 states!). Subprime lending is uncommon in our markets as well.

The lesson in all of this is that all markets are local. Both New Hampshire and Vermont
have economic challenges yet we are not in the same category as Nevada or Florida
where speculative purchasing was rampant.