Ken Montville -- the MD Suburbs of DC

Here's a little bit of a confession: my career path has led me to be mostly (not entirely) a listing agent. Don't get me wrong. I'll work with buyers in a heartbeat and I enjoy working with buyers. It's just that, for whatever reason, I work mostly with sellers. Here's another part: I don't really work with short sales and REOs.

I know. I know. This niche in the market should be an integral part of my business model with so many short sales and REOs on the market. It's just that I prefer the "other niche" -- houses being sold by sellers with equity in their home.

This brings me to my current situation. I'm currently working with a buyer who was referred to me by a wonderful past client. My new buyer client is financially qualified to purchase. They are looking for houses in a price range slightly less than they're qualified for and in a price range where they will be able to make the mortgage payments over the years.

However........most of the homes in this price range are short sales with a few REOs thrown in for good measure. My clients, God bless 'em, don't have six months to wonder and worry and wait for banks to respond to an offer on a short sale. They would like to be in their new home by the end of April.

So it seems that this short sale situation -- where "third parties" take forever to approve the sale -- are really affecting buyers, too. Not everyone is out there looking for "the deal (read: steal) of the century". They're looking for a home to live in, raise their family, get to know the neighbors, etc. Just regular folks.

So as they send me MLS #s of homes the see on the 'Net that they like, I comb through them, weeding out the short sales, leaving in the true REOs and setting appointments with the hopes that they don't fall in love with a home that the listing agent "forgot" to mention was a short sale in the MLS description (this actually happened to me yesterday).

Note to banks: if you could work out a process to move these short sales through the pipe you might be pleasantly surprised how quickly your inventory would move.

Note to agents: if you have a "plain vanilla" sale that doesn't need third party approval, say it loud and say it proud. I'll be sure to bring my financially qualified buyer by to look at your house.

I recently got a request from someone in an area I market religiously. It seems they wanted to know what the final price and concessions were for a house I sold in their neighborhood recently. They also mentioned that they has put their home on the market as a FSBO.

Now, I'm not sure whether they were really looking for pricing/comp information so they'd be in the ball park or if they thought they were just trying to get the word out that their home was on the market and would I please find them a buyer. Perhaps they're just testing the waters or they really don't care if they sell their house this year or sometime in 2011.

In any case, when they let me know their listed price I had to chuckle to myself. It was obviously a price they are fantasizing about and a price they might have gotten in 2005. However, in today's market with short sales and bank-owned properties pulling the market down, long days on market and even low prices by sellers who have equity in thier home, it doesn't seem to me that they'll get anywhere close to their price.

I was even doing some figuring with the "wiggle room" they have by not paying a Realtor. They still aren't close.

Hey, that works for me. It just means that all the homes that do have Realtor representation will sell more quickly and will seem like a huge bargain compared to the FSBO. In a way, I'm kinda sad that FSBOs doin't get more exposure so that buyers can really see the difference that Realtor representation can make.

In an interesting interview on CNBC yesterday between David Faber and Mark (Mr. Mortgage) Hanson of the Field Check Group an observation was made that the current inventory of houses is really not the total picture. Mark calls this the "Shadow Market."

It seems that a lot of the foreclosures from 2008 have not really be released from the bank's inventory yet (the"back end"). More is yet to come. The interview claims that the banks are busy getting these home priced, etc. before letting them into the open market drib by drab in order to maximize their return.

Can you believe it!?!? There is supposedly a ton of houses yet to be sprung upon a public that doesn't seem to be buying in the first place. So, be prepared to see the market inventory jump to new heights (Mark Hanson is predicting close to two years worth of inventory in California, as an example).

Additionally, defaults are continuing to increase -- not in the sub-prime market which, according to Mark Hanson, is under control -- but in the Jumbo and prime mortgage market. This means that people who bought homes over the $417,000 threshold are not making their mortgage payments anymore.

If this is true, there will be continued foreclosures well into 2010 and, possibly, 2011 with huge backlogs of homes available for sale for the long foreseeable future.

Well, that's OK, in and of itself. The question - unanswered - is: what does it take to get people to buy these homes? Certainly price will play a part. Interest rates will play a part. But neither price nor rate has seemed to be able to get buyers off the fence. Or maybe the buyers are ready to buy but just can't get a mortgage because of the strict credit standards now in place.

Now, more than ever, it's important for Sellers to realize that, if they want to sell their home, they must price their home aggressively. Trying to hang onto the last $1,000 or so because it's "needed" is not going to get the house sold. Of course, this really only applies if Sellers have enough equity in their home to be able to price aggressively.

Many of my clients get a little confused between the meaning and importance of an appraisal and an inspection.

The inspection usually comes first. In my experience, sometime within 7 - 10 days of the fully executed contract of sale. The Buyer pays for the inspection so they get to choose who the inspector will be. Sure, it would be nice if the Realtor got to choose or if the Seller got to choose but the plain fact is if the Buyer has a brother-in-law that will give the house a once over, that's the way it is.

The inspection is supposed to check out the house from top to bottom checking for defects to the various "systems" of the house including (but not limited to) the plumbing and electricity and whether the roof leaks or windows don't open and close. Of course, depending on the house, there are lots of other things to inspect -- chimneys, appliances, whirlpool tubs and on and on.

In a general way, since the inspector is being paid by the buyer and since no house is truly perfect the inspector will find something, sometimes many things, that need to be addressed -- meaning replaced or repaired.

The appraisal is altogether different. That guy (or gal) is hired by the bank even though the appraisal is paid for by the Buyer. It's someone who is supposed to be objective about the true value of the home. Not what the Seller would like to get, not what the Buyer wants to pay....what the house is actually worth in the specific market where it is being sold.

The bank will only lend up to the amount of the appraisal (and many times less) and no matter how much a Seller "needs" a certain amount from the sale, it ain't gonna happen if the house doesn't appraise.

I was recently able to convince a Seller client of mine that they really shouldn't take my word for how much their house might be worth. I recommended that they actually get a real, licensed appraiser to tell them These clients did. They weren't happy with the results but they knew that it would happen sooner or later. So they adjusted their sales price to meet the appraised value of the home. It was significant.

Now we'll see how that works out when the offer comes in.

I honestly think this FUNdraiser for the College Park Woods Swim Club was a good excuse for neighbors and friends who have known each other for years to get together and have a great meal and toss back a couple of Franklin's famous microbrews.

College Park Woods is this great community minutes from the University of MD that has this wonderful community pool. They get into water aerobics and everything. Of course, it's a Memorial Day to Labor Day kind of thing since it is, after all, an outdoor pool.

I wrote more about this with some great photos at this post.

In a plug for Franklin's -- they have these great FUNdraiser nights where they share 20% of the profits from anything your group comes in and buys. There are no restrictions on the time of day or the number in the group. They do have certain days they do it, though. You can check it out on their fund raising page.

They also have this really neat and quirky General Store attached to the restaurant that sells all the kinds of things you always wanted but could never find along with beer and wine.

It's really a great place!