Wednesday, March 24, 2010

Open Houses

As the weather improves, we are seeing more and more open houses, and more and more buyers are showing up. I guess it's not surprising that many of them are first-time homebuyers, and I guess it's not surprising that many of them are unrepresented--that is, they come to the open house without an agent or an agency agreement.

Since many of these buyers are younger, it should stand to reason that they read about the open houses on the Internet, where we can put open house notices. Interestingly, we do get a fair number of visitors from newspaper ads, which seems old-fashioned for Gen X and Gen Y buyers. Some are just driving around and come in when they see the sign.

Many of us now do a goodly portion of our shopping on the web, but there are certain things that are hard to buy that way (although I do have a friend who bought a tuxedo for his son's wedding on the web, his wife made him buy another one in person!). Houses, despite better and better virtual tours, fall into that category. You have to look in person at the place you're going to buy.

The new generation of homebuyers doesn't want to plan ahead for house shopping, any more than they want to plan Saturday night early in the week. Therefore, open houses are the most efficient way of looking at properties without having to make an appointment, and hence the high number of buyers visiting open houses these days.

What does this mean for sellers? Ironically, the oldest means of advertising--signs and open houses--are once again at the forefront of our collection of sales tools. Overlook them at your peril, and keep an open mind. And, of course, clean and de-clutter your house!

Thursday, March 18, 2010

Finally, an Upturn

I was looking at our financial results from last month recently, and I began by just checking our numbers, which didn't seem great. Then I compared them to the column from last year at this time, and I almost began dancing around the office. The numbers that I thought were mediocre (and they were) were 80% better than at this time last year!

This proves the old adage that everything is relative. If something is bad enough, anything else can be an improvement. While that may seem obvious, the effect may not be. If many people--especially buyers--start believing in this upturn, a little improvement can turn into a good market.

It did feel at the beginning of the year that there was a widespread feeling that this recession had gone on long enough. Everyone seemed to be ready to turn the page. Now we can add a little proof that this may indeed be so.

And just in time for spring!

Tuesday, March 9, 2010

Spring!

Now that the weather has finally improved, we're noticing a lot of activity with calls and open house visits. We are seeing people holding back on making decisions, however, with the idea that they will have more to choose from soon. We think that there's plenty to choose from already!

While many more houses will come onto the market in the next month or two, they will come on at the higher prices that owners think they can command in springtime. They also will move quickly if they are still considered bargains.

I guess the conclusion you would draw from this data, as a buyer, depends upon whether you believe in the "one person for each person" theory of marriage, or whether you think that a number of people could have been your ideal match, based on the circumstances. If you fall into the latter category, you would tend to support that concept in househunting as well, and feel that there might be several good choices you could make at any given time. As someone who has been married for a long time, I would also add that it's easier to change what you don't like about the house you buy than what you don't like about the spouse you pick!

In our office, whatever the view about the above questions, there's a general impatience with all the waiting around. We're ready to write those offers!

Monday, March 1, 2010

Mortgage Rates are Going Up

Newspaper articles over the weekend made it clear what we already knew--mortgage rates are going up. Policies are changing, and banks can only make money by passing some of the charges along. As their ability to make money with fees is curtailed by governmental regulations, it's inevitable that the result will be higher rates.

Banks make money in at least three ways on mortgages. First, they collect fees when the loans are made. This is where the recent oversight by the Feds has led to restrictions on fees of every kind. Secondly, they make income from the servicing of loans; i.e., fees for handling the monthly payments. When a bank sells off loans in the secondary market, either to reduce risk or to preserve capital, it loses those servicing fees. Lastly, they make money from interest on the loan itself. If the first two sources of funds are curtailed in some way, it stands to reason that the banks would need to raise interest rates.

Although we have read a great deal lately about Washington's displeasure with banks and bankers, it does't seem reasonable to expect them to make loans that don't make a profit. After all, they are for-profit entities (and we want them to be, since we don't want to have to keep bailing them out!). In addition, someone has to pay for all the oversight being done; it takes time and employees to answer all the questions and fill out all the forms required by the government. There is a great deal more of that lately, and the costs of compliance have risen.

Therefore, we should all understand that money lost from one source of income must be made up for somewhere else. If we lower credit card rates and fees, or checking account fees, or late fees, something other fee or cost will have to go up. This time, it's mortgage rates.