It's been an interesting year and I'm looking forward to year-end real estate sales statistics this year more than any other. We keep losing agents that can no longer earn a living selling real estate. However, 2010 has been one of my best years. It hasn't been easy and I've had to make some changes, but I've done well in a challenging market.
I Moved to a New Home
I moved to the Orland Park/Homer Glen area and sold my Oak Lawn home. I'm glad I had my own home for sale as it helps me explain the market to my other sellers. I sold my Oak Lawn home for less than what we paid for it in 2003. Add the new windows, two new bathrooms, remodeled family room, new carpet, hardwood floors, interior & exterior paint, etc., and we lost a lot of money.
However, we had happy times in that home for seven years and we enjoyed the changes we made. And we made up for it since we purchased a foreclosed Homer Glen home (with an Orland Park address) and we are making it our own. So in our minds, our loss made up for the great deal we got.
Getting Used to Today's Decreasing Prices
It took me a while during the Seller's Market to get used to those ever increasing prices. It was sometimes difficult setting a price because they kept increasing and we didn't want to short change our sellers. As long as a home wasn't listed way too high over market value, the property usually sold, and quite quickly.
Now I'm amazed at how low prices are going. It's a great market for buyers since interest rates are still quite low and prices keep going down. When will we hit bottom? Click the link for predictions I've read.
The problem I'm running into is having a listing that seems priced correctly "on paper" based on a Comparative Market Analysis, but there are no offers being made. Buyers have so much to choose from, they can pick the cream of the crop. It could be the difference of one property having granite countertops compared to another that doesn't, and if the buyer wants granite, then the property without gets bypassed. Even if that property is a few thousand less, buyers want the house that has it done already. This goes with any upgrade/update that is most important to that particular buyer.
It's simple supply and demand. Mortgage changes make it ever more difficult to qualify, leaving few buyers and too much available inventory. There aren't enough buyers to go around.
Therefore, the homes that are selling are the best in their price range. They're the cleanest, have the most updates and amenities and show the best in their price range. Sellers are left with having to make updates or reducing price so their property is the best in their price range. Simple to write down, not so easy for a seller to do or even understand.
The Tax Credit Ended in 2010
At this point in time, there is nothing similar to that tax credit. No special financing that I am aware of. Just ever tightening mortgage qualifications with interest rates inching up.
I am Working with More Buyers Than Ever Before
I've always considered myself as a "listing agent." That's where I focus on listings and I don't work with many buyers. I have been working with more buyers than marketing for listings because it's been so difficult getting listings sold. It's not fun having to keep telling my sellers to reduce price, over and over.
I have sold most of my listings and the ones still on the market are where the sellers aren't understanding the current market, although I keep working on them as nicely as I can. When I do go on listing appointments, I am much more adamant about pricing the property correctly. If a seller doesn't agree then I won't take an overpriced listing, at least not unless I get some kind of automatic price reduction paperwork signed.
If a seller doesn't price their property at market value they are simply adding more market time to their listing. The longer the property sits on the market, the more stale that listing gets. Many times, the sellers end up getting less than what they could have received if they had listed at the recommended price in the beginning. I see it all the time.
Short Sales, Foreclosures and Auctions - Oh My!
A regular seller is more likely to be in competition with a distressed sale. These kinds of sales are normally priced at a discount because the seller/bank wants a quick sale. Sometimes, it is priced even lower to overcome damage. As I mentioned above, we got a great deal on our new Homer Glen home, which required mostly cosmetic updates. We were also up against 8 other buyers and we offered higher than list price to give us the best chance. It was still a good deal.
In some areas, specific subdivisions have so many distressed sales that they are bringing the value down in the area. If there is one regular sale and a handful or so of distressed sales priced much lower, it's difficult to get that regular property sold. Depending on recent past sales, the regular sale might not appraise because of recent distressed sales that have recently sold and closed.
I am seeing more and more listings going to auction. This will be a new learning curve and from what I've studied, there are different auction services with different operating methods. Some auctions need to be attended in person and some are online only.
It's Still a Good Market for Buyers - Not so Good for Sellers
If you're qualified to purchase a property, you might not want to wait for that elusive bottom. We never know we hit bottom until prices go up, so only a few lucky ones hit the timing. We do expect interest rates to go up, possibly to 6%. A higher interest rate can make a bigger difference than a lower price, so those rate hikes can make a difference in your affordability.
If you're a seller that needs to sell whether it is to upgrade or downgrade, you have a couple of choices. Make your home as appealing as possible (within reason, and I give my opinion on what will give the most bank for the buck) and price it right. Keep abreast of the changing market and be prepared to make price reductions.
Your choice is to get your house sold (and not just up for sale) or hold onto it and rent it out. Some sellers are making strategic walk-aways, letting their homes go into foreclosure with the plan to start over again whenever they can (when their credit recovers). However, in states like IL, the lien holder can come after you later on, so you have to be very careful of doing a short sale, deed in lieu or foreclosure. There could be future consequences and you might not have the chance to clean up your credit.
If you're ready to buy or sell in the southwest suburbs, give Judy Orr a call at 708-536-8200 or use the Contact Form.