Here is an article I saw on NYTimes.com today, discussing how over-demanding buyers are contributing to the slow down of the housing market by taking advantage of some sellers' very difficult situations. Are buyers simply being smart, and leveraging this market to get the best deal they can, or are they exploiting sellers in unfortunate positions? Are you seeing deals dying because sellers decide that buyers are just asking for too much? I'd love to hear your thoughts!

Housing Market Slows as Buyers Get Picky

By DAVID STREITFELD

Published: June 16, 2010

Before the recession, people simply looked for a house to buy. Later they got squeamish just thinking about buying. Now they are on a quest for perfection at the perfect price.

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Still Depressed

Exacting buyers are upending the battered real estate market, agents and other experts say, leading to last-minute demands for multiple concessions, bruised feelings on all sides and many more collapsed deals than usual.

It is a reversal of roles from the boom, when competing buyers were sometimes reduced to writing heartfelt letters saying how much they loved the house and how they promised to eternally worship the memory of the previous owners. These days, it is the buyers who are coldly seeking the absolute best deal while the sellers are left in emotional turmoil.

"We see buyers who must have learned their moves from the World Wrestling Federation," said Glenn Kelman, chief executive of the online broker Redfin. "They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods."

Everyone expected the housing market to suffer at least a temporary hangover after the government's $8,000 tax credit expired, but not necessarily this much. Preliminary data from around the country indicates that the housing market began swooning last month immediately after the credit was no longer available. In some places, sales dropped more than 20 percent from May 2009, when the worst of the financial crisis had subsided.

Builders have been affected too. Construction of new homes in May dropped 17.2 percent from April, the Commerce Department said Wednesday, significantly lower than forecast. Permits for future construction dropped 10 percent, suggesting a cruel summer.

Even the lowest home mortgage rates in decades are not doing much to invite deals. The Mortgage Bankers Association said Wednesday that applications for loans to buy houses were down by a third compared with last year. Applications are back to the level of the mid-1990s, when the country's housing market was smaller.

Against such a backdrop of misery, buyers are empowered - and are taking full advantage.

John Porter Simons, a Seattle software engineer, thought he had a couple willing to pay $340,000 for his house. But they asked for $24,000 worth of work, most of which involved waterproofing the basement. "It was totally irrational," said Mr. Simons. "My basement has never flooded. I live on a hill."

He made a counteroffer to their offer, and the buyers walked. The house is now under contract to a new set of buyers, who got a cut in price and $2,500 in electrical work thrown in.

Buyers, of course, say they are merely being smart.

Chris Dunn, an economic consultant in Chicago, saw a house he liked last month for $539,000. He offered $500,000, but then his inspector told him that he would eventually have to replace the windows. The sellers were persuaded to kick in $10,000 more to pay for the work.

"We didn't feel we were being that aggressive," said Mr. Dunn. "We had the position, ‘If the seller is willing to come down enough, we will buy this home.' If they weren't willing, we would have just moved on. In this market, you have a lot of options."

In some cases, agents say, sellers literally cannot afford to make concessions. Another $10,000 will push them underwater, which means they will have to arrange the sale through the bank.

"People cashed in on their houses to get money to go on vacation, for a new roof, to send the kids to college," said Roberta Baldwin, an agent in Montclair, N.J. "They thought it was always going to be worth more."

Even when a sale can be worked out, it is not uncommon for everyone to walk away feeling more aggrieved than celebratory.

"Buyers feel they're not appreciated for simply making an offer," Ms. Baldwin said. "And sellers feel humiliated and even angry. They expected to do better."

Information about scuttled deals tends to be anecdotal, but Mike Lyon of Lyon Real Estate in Sacramento estimates that 15 to 17 percent of sales in his area are falling apart at the last minute as sellers prove unable or unwilling to give buyers what they want. In a normal market, he said, the figure is about 5 percent.

"This is the fallout from all the foreclosures: Buyers think that anyone who is selling must be desperate," said Mr. Lyon, who employs about a thousand agents. "They walk in with the bravado of, ‘The world's coming to an end, and I want a perfect place.' "

The tax credit, for all its flaws, may have helped avert financial Armageddon, but the final effect is still being tallied. In Indianapolis, the number of contracts signed in May was down 32 percent compared with May 2009. They dropped nearly 25 percent in Minneapolis/St. Paul, 20 percent in Seattle, 10 percent in Sacramento and 42 percent in Hartford. (A few areas, including Miami, showed improvements instead of declines.)

Pending contracts, if they are not canceled at the last minute, become official in six to eight weeks. Many deals done in April, when the credit was in effect, are still being completed and will be counted in May or June sales reports. So the severity and extent of the current slump will not become clear until fall.

The optimists, and real estate remains full of them, say the trough is temporary. The stimulus might have stolen sales from May but by July, they argue, people will need to buy again.

Indeed, the Mortgage Bankers Association's purchase application index ticked up slightly this week after five weeks of decline, although the association declined to say the index had bottomed out.

John P. Johnson of Des Moines will continue to hope, as he has for more than two years now, for a market that is healthy enough to supply him with a buyer. His house, built in 1981, is too recent to be charming and too old to be new.

"When we upgraded the kitchen, we put in Corian countertops, which were fashionable at the time, but now they all want granite," he said.

He had one offer in the fall, which fell apart when the buyer made too many demands (a shaved sales price plus paying the closing costs and all their other fees). Despite another price cut to $204,000, only one couple showed up at the last open house. His agent tells him the market is dead. The number of contracts signed in Des Moines in May was down 47 percent from last year.

"Keeping this house ready to sell is a full-time job," said Mr. Johnson. "I never thought I'd be spending my retirement doing this."

This entry was posted on Friday, June 18th, 2010 at 4:49 pm and is filed under Buyers, Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Edit this entry.

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• Stephanie Hofman, Coldwell Banker Residential Real Estate, Highland Park, IL

  

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5 Presidential Homes Hit By Housing Crash

As reported by Stephanie Fitch of Forbes.com

1. Kennedy compound in Hyannisport, Mass.
Details: Three key homes on six acres of land on or adjacent to the water
Current value: $11.2 million
Change from peak: Down 20%

2. Ronald Reagan's home in Bel Air, Los Angeles
Details: 7,200 square feet, three bedrooms
Current value: $7.1 million
Change from peak: Down 40%

3. The Clintons' home in Washington, D.C.
Details: 5,100 square feet, four bedrooms
Current value: $4.5 million
Change from peak: Down 20%

4. Barack and Michelle Obama's residence in Chicago
Details: 6,500 square feet in Kenwood near the University of Chicago.
Current value: $1.65 million
Change from peak: Down 5% to 20%

5. Bill and Hillary Clinton's home in Chappaqua, N.Y.
Details: 5,200 square feet, five bedrooms
Current value: $1.33 million
Change from peak: Down 48%

Click here to see the full list of Presidential Homes Hit By Housing Crash

Many sellers are under the assumption that their agent will be present at their home's showings. However, this is not common practice everywhere. In the northern suburbs of Chicago, where I live and sell real estate, agents that accompany their listings' showings are more the exception than the rule - infact, when I show a listing to an agent from the city, they are always pleasantly surprised and note that it's a rare occurence among suburban agents (at least in my geographical area).

Perhaps some agents are so busy they don't have the time to do it, or maybe they just feel it's not necessary.

When I started as a new agent last year, this wasn't something I thought twice about. I made the committment to accompany my listings' showings - at least as often as possible. I mean, isn't that my job-to SELL my homes? How do you do that if you're not there when the prospective buyer is present?

When I take a new listing, my promise to my sellers is that I will be present at as many showings as humanly possible. I'd say I make it to about 95% of them. If I can't be there, I make it a point to have a detailed discussion with the buyer's agent so that I can point out the most important features and let them know what to look for.

So, here's why I do it:

1) Expertise: Next to you, the homeowner, I am the foremost expert on your home. There are too many wonderful details about your home to fit on a listing sheet or in the MLS description, so my presence allows me to point out all of these things.

Most of the time, the buyers' agent has never crossed the threshold of your home until they show it - their clients' first showing is their first showing, too. Simply viewing the home online doesn't tell them everything they need to know. When I am present at the showings, I can make sure to cover all of the details that aren't readily available.

2) Entry and exit: I've seen, on more than one occasion, a snafu occur, such as a malfunctioning lock box, and the showing doesn't happen. Buyers' agents do not want to be running around picking up keys from different offices-they don't have the time and they need the showing to be as easy and convenient as possible. Trust me, there is nothing more frustrating for a seller than to have channeled Cinderella and busted their a** preparing their home for a showing only to have it cancelled at the last minute for a reason that could have been prevented. If I am there, with my own set of keys, there's no risk of this happening.

At the end of the showing, I'll turn off all of the lights, make sure the home is left exactly the way I found it, and lock up.

3) Security purposes: I am there to keep an eye on my sellers' belongings and make sure that no damage is done to the property during the showing.

4) Presentation: I always arrive a good 15 minutes before the buyers to turn on all of the lights and do whatever little things the homeowner may have inadvertantly missed - my sellers do amazing jobs of preparing their homes for a showing, but another set of eyes can catch one or two little details. (Note: put those toilet seat lids down. Really, it makes a difference.)

5) And, most importantly, feedback : As I tour the home with the prospective buyer, I can take note of their reactions to the home - both spoken and unspoken. I can glean a lot of insight into the mind of the buyer by simply observing them as they tour the home. There is still feedback to be had later from the agent, but I am able to learn more than s/he will probably ever tell me simply by being observant during the showing.

I know many sellers' agents will excuse themselves from the responsibility of accompanying showings by saying, "Well , the buyers' agents don't like it when I'm there." My response, "So?"

Now, I understand that some buyers' agents are uncomfortable with the thought of having the sellers' agent present - some even think I'm out to steal their client (honestly, if they're worried about that, they should focus that energy on doing their job better, and not worrying about me doing my job!) - but that's their problem, not mine, and it won't interfere with my responsibility to my sellers. Now, don't get me wrong, I am totally respectful of the buyers and their agents - I read the situation and make sure to hang back when necessary and give everyone their privacy - I don't want to be in their way, and I certainly want them to feel that they can take their time and not feel pressured in any way.

My committment is do the best job possible selling my clients' homes, and being present to at showings is a key component. So, when you are ready to sell and start interviewing agents (yes, you should be interviewing!), don't take it for granted that they will all provide this essential service - make sure to ask!

Best,

Stephanie

Stephanie Hofman, SFR (that is, certified in short sales and foreclosures!) and Rookie of the Year, 2009

Coldwell Banker Residential Real Estate, Highland Park, IL

Cell: 847-652-1902

Email: Stephanie.Hofman@cbexchange.com

Website: www.StephanieHofmanHomes.com

Blog: www.HofmanOnHomes.com

This entry was posted on Monday, June 7th, 2010 at 7:25 am and is filed under A Point of Differentiation, General Thoughts, Marketing, Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Edit this entry.

Part of my job as a real estate agent is to always be thinking about HOW I am going to market my clients' properties-this is on my mind first thing every morning, and all day long I am looking for unique opportunities to get the word out.

Ofcourse, each listing I take its put into the local MLS (multiple listing service) so that all of the area's realtors can find it. Once you are in the MLS with Coldwell Banker, your listing is distributed to numerous real estate websites like Realtor.com, Trulia.com, Roost.com, and so many others.

But there are countless other ways to publicize listings today- it's overwhelming. And you never know when or in what way your message will reach the right eyes and ears. So you do the best you can, casting a wide net yet focusing on the right audience. You have to think out of the box, keep up with social media and technology, and always be attuned to finding the next opportunity. My goal is to keep my clients happy and show them that I am always working for them. So I'm always on the lookout for another, newer, more exciting and interesting way to market their homes.

One such opportunity presented itself, and this week one of my listings is highlighted on my favorite new website, MakeItBetter.net.

It's the companion website to a newer magazine targeting the women of Chicago's North Shore, also called "Make It Better." I absolutely love this magazine/website! It stresses the idea of community, even while technology is enabling us to communicate in a split second with someone halfway around the world, and the importance of doing something you love, not just for your own fulfillment but to benefit others as well.

Here is how they describe themselves:

"The Mission of Make It Better.net is to be the community network that helps North Shore women make our lives and the lives of others better. We do this by creating the most trusted and easiest to use resource and magazine to find and share information and connect with the remarkable people, businesses and non-profits in our community."

The website and magazine are divided up into different sections, and one section is devoted to the home and real estate - after all, what's more local than real estate? This week my listing at 1660 Mill Trail, Highland Park, is their featured home, their "Hot House of the Week."

Who knows how many new people will be exposed to my listing through this venue? I have no idea, I just know that it's one more small way to get my information out there infront of prospective buyers. And that's my goal - to keep working for my clients, marketing their homes, one idea at a time.

For more information about buying or selling a home on Chicago's North Shore, contact me at 847-652-1902 or Stephanie.Hofman@cbexchange.com.

"Stephanie should be YOUR Realtor!"