John Schoenherr

My market is the Wisconsin Dells area and a popular local paper is the Wisconsin Dells Events. On Saturday, January 3^rd the front page article was titled "Housing not selling like it used to". There was a large picture on the front page associated with the article of a house with a For Sale sign from my office. It was not my sign but it was one of my associates. She was not interviewed for the article. Instead the reporter chose to interview 3 other Agents. The jist of the article was that the market was in bad shape. One of the agents interviewed made a statement that 2008 has been the worst year for him in his 35 years of selling.

I just do not know what benefit statements like this have. All statistics show that 2008 was a down year, but not the worst year. The agent whose listing appeared in the article was less than pleased. The house was only on the market for 30 days and she has had good buyer interest, the listing is definitely not representative of a down housing market.

We are attempting to counter this negative article. An agent in town wrote a letter to the editor giving some local statistics that show the market is down but not in crisis. I interviewed with the reporter this week and provided her statistics from our MLS that show property values actually increased in 2008 over 2007. The number of properties sold is down about 35%, but values are holding. My opinion is that this is a great market for buyers. Inventories are up giving the buyer some great selections, values are holding giving the buyer security that their investment will be a good one and mortgage rates are really low.

I think that all REALTOR's need to be very careful of what they say to the press. These articles have an effect on buyer and seller decisions. If we are going to give opinions about the housing market make sure that the statistics support the opinion.

I find it difficult to find good information in the news media about my real estate market. The daily news is full of stories about National Housing Trends, Banking Issues and National Real Estate Trends but it just doesn't help me understand what is happening in my local Wisconsin Dells market. This misinformation is confusing local home owners and local buyers and when confused most people tend to sit still.

The problem is that I believe in Real Estate and to me the current market is offering opportunities that we may not see again in our lifetime. As a buyer, mortgage money is cheap and there is a great selection of properties to purchase. As a home owner, this may be the best time to move up to that dream home. But it is tough to feel comfortable to make a move in the market with all of the negative reports in the daily media.

As a REALTOR I have an obligation to my clients and customers to keep them informed of what is happening in the market. During my discussions I try to explain to them that it is the local market that matters. I try to monitor the pulse of the local mortgage rates and lending requirements. I find that community lenders are frustrated by the national stories because they have money to lend and not enough customers to lend it to. I track property sales by neighborhood and have found that in some areas property values have actually increased. I have also found that some properties are selling better than others. I think it is very important in today's market to prepare a full Comparative Market Analysis when evaluating a property; the market is just too complicated to take a casual approach.

Today there is definitely a gap between what the Seller thinks their property is worth and what the Buyer is willing to pay, I call this the Value Gap and it is getting in the way of successfully selling properties. It seems that in this market the gap has widened to such an extent that Buyers are not showing interest in properties that at one time they may have. In trying to figure out why so many properties are sitting without Buyer activity I did some reflection and came up with this scenario.

I believe that the Seller is looking at their property in terms of Book value, which is the price they paid plus all the improvements and appreciation. So on paper they have a price that they feel is justifiable.

From the Buyers perspective they are looking at what they can afford to pay. The Buyer looks at their monthly cash flow and calculates how much they can afford in mortgage, taxes and utilities. Then they look at the money they have available for a down payment and the results is the amount they are willing to spend on a house. Then they start looking at houses in their price range. If the Buyer is savvy they will contact a Realtor and ask them to do a Comparative Market Analysis (CMA) to identify the type of house that they should be able to afford.

The Value Gap problem arises when, based on the CMA, the Sellers Book Price is too far above Market Price. As Realtor's we know that Market Price (the price Buyers are willing to pay) is where the property should be listed at. However, the Seller is holding onto their paperwork and does not always understand why they cannot get their Book Price for their property. When the Gap between Book Value and Market Value is close, say within ten percent, Buyers might be willing to make an offer. But when the Value Gap is larger, like it seems to be today, Buyers are walking away from the property. In fact, with the search engine technology available today, the Seller's Property is probably never even seen by the Buyer.

The result is the overpriced property sits without any activity and the Seller is discouraged wondering why. Maybe this Value Gap perspective will help Seller's understand that the only price that means anything is the price a ready, willing and able Buyer will pay for the property.