Matt Gierden

Great Article By Denny Grimes with Denny Grimes & Company Fort Myers Florida

www.leecountyswfloridahomes.com

However, unrealistic optimism can be costly for buyers and sellers

Psychologists may have a clinical name for the mental condition characterized by people believing that everything in their lives will be hunky dory as soon as some anticipated event happens in the future. Whatever it's called, it is becoming a pandemic in Lee County because thousands of property and business owners have been looking forward to such an event, one they believe will revitalize their economic life. That anticipated event is the bottoming of the real estate market.

A common misconception exists that as soon as the market bottoms, prices will head north faster than snowbirds on Easter weekend. And rising prices will usher in a new wave of economic growth.

Guess what, after forty-two months of waiting and about the same number of pundits prematurely announcing the bottom, sales data suggests that this long awaited day may finally be here. Does anyone feel richer yet?

If you bought into that theory, then your bank statements should have reflected a positive change in August of this year, because the median sales price of an existing home in Lee County hit bottom in July. Since then, the median price has inched higher and a simple graph of these data points would clearly show that the freefall in the median sales price has ended, at least for now.

Is this significant? Yes, but it doesn't mean what sellers hope it means, nor does it mean what buyers fear it means. A rising median price can suggest many things, but the only meaning that is totally accurate is that in each of the last three months, at least one additional property sold above the previous month's median sales price. That's all it takes to raise the median.

I believe the reversal in the pricing trend has more significance than that, but not as much as some try to equate to it. You can hear some singing "ding-dong the witch is dead" because they associate the market's bottom with the return of the good old days. In other words, some will mistakenly assume the worst is over, when in fact, for many market segments, it isn't.

Unrealistic optimism can be a costly error for sellers in price ranges and segments that have excessive inventory, which happens to be almost everything listed over $250,000. Sellers in these categories may falsely assume that the arrival of the market's bottom signals that the balance of negotiating power has finally shifted back to them. This will cause sellers to negotiate less or worse yet, raise their asking price. This reaction will backfire because it will lengthen the sale process, which in a falling market means the seller will end up selling at a lower price.

A buyer's misunderstanding of the market hitting bottom can be costly as well. In spite of the record sales we have seen this year, there are many more fence-sitting buyers huddled around a Ouija board, trying to predict the bottom of the market. They got snookered into

believing that would be the optimum time to buy. Will someone please tell them to put the game away because they've already missed what they were hoping to predict.

Buyers shouldn't let one small mistake turn into a colossal one, because it would be a shame to ignore the opportunities that still exist. Some have called our market a "buyer's market", but that's an understatement. We are in an irrational market, which means you can purchase property well below the cost of replacement. An irrational market comes along less frequent than Haley's Comet and it is irrational because an economy cannot survive long-term when the market value is below its cost. The point is that tremendous buying opportunities exist, in spite of an upward moving median sales price.

If in fact the bottom is behind us, it does not signal the beginning or the end of anything. The only message it conveys is that the real estate market is ever changing and it rewards those that acknowledge and react to those changes and it punishes those that don't. It has no mercy on the indecisive.

It was hard to realize at the time, but looking back, sellers can clearly see they waited too long to sell. But do they realize that in spite of the market hitting bottom, selling now may still be better than waiting even longer? Likewise, it may be difficult for buyers to see the outstanding values that are before them today. They shouldn't worry because the opportunities they missed will become crystal clear once it's too late to take advantage of them.

I wonder if psychologists have a name for this behavior? If they don't a good one may be "hindsightitis".

Keep the Faith

If short sale inevitable then decide sooner verses later!

This is a Great Article that I wanted to share by Denny Grimes from Denny Grimes & Company Fort Myers Florida

Property owners should consider alternatives before draining savings

In the olden days, both buyers and sellers left the closing table with smiles and a warm feeling about the decision they just made. However, for the better part of this decade, there have been about fifty percent fewer smiles exchanged during this once happy occasion. Back when property values were climbing faster than Miley Cyrus' empire, buyers may have shared a polite grin at closing, but they weren't happy with the fact that they had to outbid thirty other buyers and pay a premium price to be even be at the closing table. Buyers are sharing some bigtime smiles today. The sellers sit across the table, sharing only a box of tissues. It may be a good time to buy stock in Kleenex because more tears are going to be shed as an increasing number of property owners realize that their savings won't be around long enough to see the market recover. On a daily basis, property owners with no equity and even less hope, meet with their real estate agent, searching for a solution that they already know doesn't exit. Before you classify these people as deadbeats, realize that these homeowners are not the ones that decided to buy a couple of pre-construction homes instead of buying lottery tickets. These are the people who may only own the home they live in. They are the ones we do business with, the ones who probably live across the street from us, the ones who have (or had) good jobs, the ones who believe in paying their bills on time and maybe, the one we see in the mirror each morning. For the last several years, these people have pulled their kids from private schools, sold their wave runners, developed a taste for baloney sandwiches and drained their savings account in order to honor their mortgage commitments. They believe in paying their bills and they take pride in having good credit, but now they realize that they are faced with a difficult decision. Do they sacrifice their family's financial security in order to maintain a clear conscience and good credit score? They can't afford to keep the property and they owe more than the property's worth, so they can't afford to sell it either. To say they were between a rock and a hard place would paint too optimistic a picture. The essence of their decision is, do they stop paying their mortgage while they still have some money in the bank or do they wait until their savings are exhausted? In spite of adjusting their living and spending habits, they still have more money going out than they have coming in. There's a name for this condition and it's called going broke. Lenders, trying to show their sensitive, caring side, use the term "monthly shortfall," which is a politically correct way of saying the same thing.

My advice to anyone who has a monthly shortfall and owns real estate is to seriously evaluate your financial position to determine how long your savings can support your mortgage obligations. The adage of having six months of emergency reserves is as outdated as leisure suits and white belts. For most property owners, it will take years, not months for real estate prices to increase enough to make selling an option. So, unless there is a way to increase income or further reduce debts, you will be wondering where that the whistling sound is coming from. Let me solve that mystery for you. What you are hearing is the rushing wind as you freefall further in the financial hole each month. Many have already maxed out their credit cards, trying to stay current with their mortgage payments. Others are already dipping into their retirement funds. Neither action will slow the fall; it will only delay the thud. I am not encouraging anyone to walk away from their mortgage obligations or fail to pay their other creditors. For those who have a monthly shortfall, that outcome is already guaranteed because you can only fall until you hit the ground. I am suggesting that if that outcome is inevitable, then you should address it before you drain your savings. To slow your fall, you can ask for a loan modification from your lender or take the short sale route. The foreclosure option is available for those that enjoy freefalling, but you know what they say about the sudden stop. Since getting back in the plane isn't an option, the best you can hope for is a controlled crash landing. You and your credit will be bruised, but at least you will fly another day.

Keep the faith.

Matt Gierden
Denny Grimes & Company
www.mattgierden.com

26.584315 -81.874461

Real Estate Matters: Great buys vs Best deal

By WINK News

Story Updated: Nov 20, 2009 at 8:37 AM EST

Buyers from around the world are watching our real estate market, wanting a good deal. Who would blame them? But many of these potential buyers are setting themselves up for disappointment because they get caught up believing that a good deal has to be the BEST deal.

What can buyers do to make sure they don't miss out on a GREAT buy, while searching for the BEST deal?

WINK'S real estate contributor Denny Grimes of Denny Grimes & Company will offer some tips to help buyers manage their expectations.

Point 1: Buyers need to realize that anything selling below replacement cost is a good deal

Just because there is a "For Sale" sign in the yard doesn't mean it a good deal, because many sellers are unrealistic.

But, the heavy inventory we have today has driven prices so far down that most properties are selling BELOW the cost of reproduction.

Buying something for less than it cost to construct is irrational and common sense tells us that that cannot go on forever.

So, anytime you have the opportunity to purchase a property below replacement cost, rest assured, you are looking at a good deal.



Point 2: A good deal is not measured by how much below the asking price you buy something


This is where most buyers get tripped up because if they don't beat the seller up on his price, then it must not be a good deal.

I believe if we found a seller offering his home for a dollar, some buyers wouldn't be able to sleep at night unless they offered that seller 50 cents.

In today's market, most bank owned homes are selling over the asking price and most short sales are selling very close to asking price.

So, my recommendation to buyers is to take the emotion out of the buying process and study the market.

Then work to find a property that can be purchased within an acceptable range of market value, which may have nothing to do with the asking price.


Point 3: Buyers waiting for the best deals may get a lower price on a property they really don't love

Could a better one come along, sure, but the buyer will be running the risk of getting a better price on a property or a location they do not like as well.

There will always be a better deal out there, so be satisfied with the deal in hand.

In the end, the only buyers who will be sorry several years from now will be the ones who did not buy.

Watch full interview at: http://www.winknews.com/features/70611897.html

Great Article by Denny Grimes with Denny Grimes & Company, Fort Myers FL

Rules about the home inspection process can make transaction less stressful

As the ink dries on the sales contract, buyers develop a sudden case of heartburn as scenes from the vintage movie The Money Pit mysteriously begin playing in their minds. They are plagued with visions of termites swarming or the property developing a myriad of mechanical and structural problems, ones that won't become evident until the day after they move in They have shopped hard to find a good deal. How can they know they bought a good home?

There's no need for them to stock up on Alka-Seltzer because the majority of the buyer's concern can be eliminated by following a few simple steps. Step one is to make sure they have access to the property's most current information. Home inspections and Seller's Disclosures are a snapshot of the property's condition at a point in time, thus they do not necessarily reflect the condition of the property the day they decide to buy it. Sellers may have a "recent" home inspection report from a previous deal that failed to close and they may offer it to the new buyer as a way of streamlining the transaction. There is nothing wrong with using it as long as the buyer weighs the risks, because Murphy's Law says that if something in the home has gone kaput, it did so after the first home inspection was completed. A new home inspection may be the safest route.

Another document that the buyer should request in the sales contract is a copy of a current Seller's Disclosure. The key word is "current." It is standard practice for a seller to fill out this document when the property is listed and then it usually gets stuffed in the listing file until a contract is submitted. The problem is that some properties are on the market for months, if not years, during which time the condition of the property can change. Sellers may have made the proper corrections, but they generally forget to update their Seller's Disclosure. Everyone wins when there is full disclosure, so it is a good practice for all concerned to have a clause similar to the following added to the sales contract: "Seller to provide a Seller's Disclosure that reflects the condition of the property as of the effective date and this contract is contingent upon buyer's acceptance within X days."

Prudence is wise as long as it doesn't lead to paralysis. Some agents or their buyers will request a copy of the Seller's Disclosure prior to making an offer. Learning as much about a property before you decide to buy it isn't a bad idea, but one should do so realizing the risks of slow decision making. Buyers have missed great deals because they performed their due diligence before they had the property under contract. If a buyer wants to make sure each 2 x 4 is plumb or they want an exact count of cracked roof tiles, great, but do this research during the inspection period, after the property is under contract.

Step two is to understand what a home inspection is and what it is not. A home inspection is like an annual physical. During a physical your doctor gives you a general exam of your major systems. You may pass the physical, but that does not necessarily mean you're 100% healthy, because something may be going on in your body that could only be determined by performing more specific and invasive tests. If the doctor felt something didn't look right, he would ask you to see a specialist for a closer look.

Likewise, a home inspection is a general examination of the property's health. The inspector will visually check the major systems of the property and if they pass his inspection, chances are the home is in good shape. Keep in mind that a home inspection is not equivalent to a MRI or a CAT scan, because latent issues could still lurk beyond the eyesight of he inspector. The buyer has the option to hire a specialist to analyze every system in the property, but spending more on inspections than he did on the property sounds ridiculous. Normally, if the home inspector finds something suspicious he will recommend a specialist be called for a more in depth examination.

The third and most important step is to understand that inspection issues will fall into one of three categories. The first category includes issues that the contract specifically requires the seller to correct. The second category would be issues that the contract specifically states that the seller is not required to fix and the final category deals with issues that are not specifically mentioned in the contract. Most inspection anxieties revolve around misunderstanding what issues are legitimate seller's responsibilities, so it's a good idea to read the inspection paragraph carefully. A clear understanding of this step will keep countless deals together and maybe prevent a black eye or two.

Two out of three categories are no-brainers because the buyers and sellers simply have to abide by the contract. End of discussion. However, the third category is a potential mine field because the contract does not specifically list the thousands of doodads that could potentially need a minor adjustment. Sellers usually feel they gave the home away and have little tolerance for being nitpicked to death. The buyers feel they did the seller a favor, thus the home should be delivered in like new condition.

Too many deals die right here because ego wins over rational behavior. That's sad, because a handyman can usually correct these minor issues in less time than it takes for everyone to get worked up over it. So, apply a little common sense along with an application of the Golden Rule and chances are that the good deal you're looking at will become a good home for many years to come.

Keep the Faith

Great Article by Denny Grimes with Denny Grimes & Company, Fort Myers FL

If you get hungry enough, you will eat anything - or so the saying goes.

I can remember my grandmother making me sit at the table until I finished a larger than normal helping of baked eggplant that had found its way to my plate, in spite of my youthful protests. Starvation was a better alternative than eating that awful stuff. Fortunately, the intro music of "Hawaii Five-0," my grandmother's favorite TV show, distracted her just long enough for me to flip that mess into the garbage.

Sellers in our market are pretty hungry, but that doesn't mean they have to eat whatever the buyer puts on their plate. Sellers should beware that buyers have a file box full of recipes, some palatable, but many concocted with ingredients that will leave them with a bitter aftertaste.

One recipe that will certainly lead to indigestion is to accept an offer "contingent upon the buyers selling one of their properties." On the surface it may sound good, particularly to a seller who hasn't had an offer since gasoline was $1 a gallon. After all, isn't any offer with an acceptable price better than no offer at all? In a word, no.

When a smidgen of common sense is applied to this recipe, you will quickly see eating a bowl of habanera chili peppers followed by a milk chaser would sit with you better than tying your future to someone else's motivation and property. In essence, what you would be doing is taking your property off the market and placing your fate in the hands of another seller. That seller may be unrealistic with his asking price and his idea of cleaning house may be a quick once-over with a leaf blower.

If sellers choose this dish, they should set aside time to drop by their buyer's home each morning to make sure those beds are made and the dishes are packed in the dishwasher. While they're cleaning a home they don't own, they should throw an open house sign in the yard, just in case a buyer happens to be driving by. In fact, they should insist that all marketing efforts focus on selling the buyer's home, because they are dead in the water until that happens.

What if the buyers sweeten the deal by asking for a "right of first refusal?" Although the seller now has two homes to keep clean, this is less constraining because it allows the seller to entertain other offers while the buyer tries to sell his property. However, before the seller can accept another offer, he must give the first buyer a right of first refusal. In other words, the first buyer can still decide to proceed with the sale at the agreed price, even if the second offer is for more money, or cancel the contract and have all of the deposit money retuned.

Right of refusal offers usually require the first buyer to respond within 24 or 48 hours. That may seem like a harmless amount of time, but it isn't. If a seller is going to consider accepting a right of first refusal offer, the deadline for the buyer's response should be 24 to 48 minutes, not hours, and even that may be too much. In this inventory-rich environment, qualified buyers can be selective about what homes to look at and which ones to make offers on. They know the best values sell fast, so they will not waste time on homes that are already "pending."

Finally, the Blue Plate Special - a lease option. A lease option can be a viable alternative to a sale if the seller and the potential buyer can each add ingredients to make it a win-win. What usually happens is that the buyer whips up what he calls a lease option, but in reality, it's just a lease. The only "option" associated with it is that the buyers have the option to buy the home. However, if they don't, it won't cost them anything. The seller has the option to like it or lump it.

For a lease option to be a win-win, it should include a sales price and a monthly rental amount that is commensurate with the market and option money that the buyer would forfeit if he failed to exercise the option. There are many other issues to consider, but suffice it to say, if the buyer doesn't include option money, the seller is renting his home, not selling it.

When I was a kid, I had to sit at the dinner table against my will and look at something that I didn't find very appetizing. I didn't like what was in front of me, so when the opportunity presented itself, I took matters into my hands and dealt with the problem. I may have left the dinner table a little hungrier than I would have liked, but I was on my way.

Sellers, you are in the same situation, because you may find yourself selling in this market against your will. You have the option of ordering from your menu or letting the buyer order for you, the least appetizing alternative. Ordering from your menu will require you to be diligent about finding today's market value. You will be served cash, although the portion won't be as big as you'd like. You may leave the market a little hungry, but at least you will be on your way.

Keep the faith.