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I work on a regular basis with a large volume of “expired listings.” As a matter of fact, these clients account for 25% of the Larkin Group’s total sales volume. These are Sellers who spent 3, 6, perhaps even 12 months on the market and their listing term finally “expired” without the home selling.

 

We’ve had tremendous success helping these individuals the next go-around in getting their home sold, which means that I also spend a fair amount of time communicating with potential clients from this group.

 

There are many characteristics that the expired listing sellers share, the main two being that #1 – they still own their home, and #2 – they are NOT HAPPY about still owning their home. They make lots of frustrated accusations about ‘why’ the home didn’t sell….the agent, the market, the brokerage, the weather, the neighbors, even their ex-spouse.

 

However, can I share with you the absolute #1 thing I hear from that group, bar-none? “We are just going to wait for the market to come back...and besides nothing is selling anyway!”

 

Why do they think the market will magically bounce back say, next year? Two reasons:1. Because it would financially benefit them if there were a quick recovery and… 2. because the market has never done this in Washington County before, therefore most people are in denial about the reality of the situation.

 

Homes ARE Selling

First of all, things ARE selling and the world hasn’t come to an end.  225 listings sold last month alone. Add to the fact that there are actually TWO sides to every transaction, (buyer and seller), and you are looking at 450 individuals who bought or sold on a monthly basis!  

 

But I digress…..Many Sellers are frustrated with the disparity between what they thought their home was going to be worth and what is actually is. They are concerned about a “paper” loss, if that makes sense. They want to ‘wait it out’, yet they may be waiting a LONG time. Am I saying that it is a bad time to buy? Well not necessarily at all. I’m just pointing out that statistically, Sellers may be looking for a pot of gold in terms of a short turn-around to real estate values.  Allow me to statistically prove my point.

 

If you look back over the past 10-20 years, US home appreciation has never been above around 6% on a year over year average.

                  US Home Appreciation over past 10 years

Along comes the recent housing boom and we start seeing 30%, 50% or even higher appreciation! As a matter of fact, it was 73% in Washington County over the past 5 years to be exact. The problem is that at the same time, wages were NOT increasing at those rates, and many buyers were getting into loans they could not eventually afford.

 

Fast forward to 2007/2008. Those same buyers now have their loans “resetting” to much higher interest rates, the respective profession they work in is suffering due to the housing market so their personal income is down, and the their home is now worse significantly less than what they paid for it.

 

Add that to the fact that many of the very buyers they need can’t purchase their home because they are waiting to sell their own homes, or can’t qualify for a loan in the current mortgage climate. It’s a vicious cycle, quite frankly, and one that most civilians (a.k.a “Sellers”) haven’t fully considered. Hence their (misguided) optimism.

 

And why should they have considered it? They are, of course, civilians, not real estate professionals. It’s not their job to consider it. It’s mine, and that of other real estate people who take themselves seriously.

 

Segway back to the comments about historical home appreciation. Can anyone really believe that we will EVER see that kind of appreciation again? And if so, is it really going to happen immediately following a real estate crash? No, it’s not.

 

So as Sellers consider their options and look forward to a future market recovery, they should consider the following:

  1. Home values will have to stop falling before they can rise.
  2. When they do stop falling they most likely will remain static for a period of time….could be months, could be years!
  3. Then they will start creeping back up at a conservative pace, say 3-6% annually.

That all summarized, you can clearly see that hoping for your home to be worth more, or even as much as today in the next 12 months is wishful thinking at best.

 

Prognosis:

At the end of the day Sellers may do as they see fit. They are adults and can make their own decisions. For those who don’t need to sell, please leave your home off the market! You're just clogging up the pipes so-to-speak. But my advice to those who want to “wait” for a shorter-term, miraculous turn-around to a currently frigid real estate climate would be this: pack your long-johns, it’s gonna be a cold winter.

Can Increased FHA Loan Limits Help Washington County Sellers?

by Jeremy Larkin

I've been away a few days and apologize for not getting this info up quicker.  This is fantastic news for residents of any county in the Nation, and specifically for Washington County buyers.  For a complete list of limits for all Utah counties, click here: https://entp.hud.gov/idapp/html/hicostlook.cfm

The FHA was established in 1934 to help borrowers, particularly those with low incomes, purchase homes by guaranteeing banks that those loans would be repaid should the borrower default. But the agency's loan limits have generally lagged behind those of Freddie Mac and Fannie Mae and as home prices climbed dramatically and lenders with looser underwriting standards proliferated the agency became less and less of a player in the mortgage market.

As a matter of fact, FHA insured loans have been mentioned as a possible escape hatch for borrowers who may be unable to make payments on their current adjustable rate mortgages when their interest rates reset over the next year, but that plan has its' challenges.

FHA financing is NOT the same as subprime financing.  It provides financing to borrowers with some credit issues and lower down payments, but it requires documentation of income and strives to prevent “payment shock” where a buyer jumps from a low rental payment to a high mortgage payment

This is good stuff, and in addition to the benefit of current mortgage rates (which I commented on HERE), this will allow many more buyers to realize the dream of home ownership in 2008. 

As a specialist in working with expired listings, I have been asked multiple times in recent weeks, "can this increase help sellers in Washington County?" The jury is still out. The real challenge lies in the fact that according to Lawrence Yun, chief Economist for NAR, as many of 80% of today's Buyers are also SELLERS trying to sell their current home before being able to buy. Ouch.

I better start out with the following disclaimer: I KNOW you are all thinking, "but Jeremy, of course you want us to buy now....you're a dirty Realtor!".....

And yes, you'd THINK that was the case, but I'd like to hope that I'm above car salesman-like sales tactics, and if you are thinking about buying Washington County Real Estate for investment or to live in long term, you'd better pay attention to this post, and in more detail, the Time Magazine Article titled "Ignore the Headlines...."

On one hand I can't see this market not declining further, yet John D. Rockefeller made the following logic famous when he said: "The way to make money is to buy when blood is running in the streets."  And running it is!

Allow me to share the following excerpt from the article:

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

To make matters worse, you'll have just spent 1 more year in a place you don't like! 

Here it is - read it and give me your thoughts!

http://www.time.com/time/magazine/article/0,9171,1713483,00.html 

 

 

You may remember that phenomenon as a child....the ball begins rolling down the hill, driveway, whatever....away from you. You make repeated attempts to "lunge" with your foot and catch it, but to no avail. Finally, you realize that the only way to catch that thing is to get in FRONT OF IT.

So goes the process of pricing property in today's real estate market. I am just seeing the same ugly scenario over and over again right now in the St. George / Utah's Dixie area, and it goes like this. "Help my home won't sell" is the cry of most Sellers in our area these days. Let's look at a scenario that is all too typical with this group:

You decide to list your Washington County property as you will soon be taking a job transfer to another town, (or whatever reason happens to be yours.) You sit down with your Agent who doesn't get started on the right foot by telling you that the home you thought was worth $325,000, is REALLY worth $295,000 max. Can you believe the nerve of that agent? Just trying to steal your hard-earned equity, right?

So you relent and determine that $295,000 is just too low, and besides, your house is WAY nice than those other homes your agent showed you in the comparable. You can get at least another $15k, right? You list at $310,000 against your agent's judgment.  And since your home is better, it probably won't matter that the competing homes are priced from $285 - $300k.

A month into the listing showing activity slows and your agent encourages you to just DO THE RIGHT THING and get that price amended to a competitive level, say $294,900. Sadly, a few competing home sell bringing the new "market" value to around $285k. Still reeling from the news that your home isn't worth $330k, you choose a conservative $300k even price so you don't loose any more money on the sale of your home, money that YOU EARNED, right?

Long story short, 4-5 months pass and the market continues to run away from you down the hill.  In the meantime you, or your spouse, have made the job transfer and the other 1/2 and the kids have been living without you for 3 months already! You finally relent, determine to get IN FRONT OF THE BALL, and price your home at an aggressive $269k where it closes escrow at $259,000 to a really nice family. 

That was most likely a $30k loss, and a TON of time, pain and suffering in the process. Whoops.

The summary points here are very simple, and extremely obvious. We have a TON of buyers just sitting on the fence right now, and 4x that many Sellers getting upset at the "cheeky" buyers and agents who want to "steal" their equity.  

If you don't need to sell, stay put. If you do need to however, then you've got to get in front of the ball to grab it before it runs far, far away. What these buyers need is something that EXCITES them, and that "something" is almost always a well-priced, well-prepared property.

One of the techniques that is working really well for us right now is the process of setting up a series of continual, small price reductions at the time of listing. Say $2500 per week for a $250,000 listing, and maybe 2x that for a higher-end property. It works brilliantly for many reasons.

#1 - This process puts you in constant, proactive 'motion" to stay in front of the market, rather than waiting for the neighbors to out price you months down the road. #2 - Your home is continually hitting the Washington County Board of Realtors "hot sheet", the daily list of new listings, or price reductions. This same list ends up in hundreds of inboxes of actual Buyers who have logged in to the MLS through public portals and signed up for daily email updates of the hottest listings.

Don't chase that proverbial market "ball." Get in front of it.....now.

 

BOY!....has this market taken a turn from the "good old days....."  I say that a bit tongue and cheek since those days were actually just 2 1/2 years ago.  "That long ago?" you ask....yes, it's been that long.

The real estate world is certainly not ending. It is more accurately "adjusting" for better long-term health. Yet I find that I am facing an increasing challenge with helping our Sellers see the truth on the pricing of their properties. I know how easy it can be for an agent to tell a Seller what they want to hear, but can you tell me how that actually helps them?

 OF COURSE you can trust me.......

CASE STUDY - Joe (name changed to protect the overly optimistic seller) Joe IS a real person whom I just spoke with today. He recently finished a spec home in the Hurricane Valley worth I'd guess $250k. He is trying to sell it on his own because there is just no equity there. So I can tell him 1 of 2 things.

WHAT HE MIGHT WANT TO HEAR: "Joe, we might be able to get you that $270k you want so let's put it on the market and give it a go." I tell him this because I don't want to hurt his feelings.

THE RESULT: I spend enormous amounts of time and energy trying to market the home for 6 mos,after which it doesn't sell. He spends $1200/month in interest only payments and utilities (which he doesn't really have to give anyway). 4 months into the listing he is faced with converting the construction loan to long-term with costs him a few grand, PLUS the payment now goes to $2400/month. In the meantime the home loses another 5% in value.

TOTAL LOSS TO JOE: $12,500 value drop plus $12-$15k in actual hard costs for a total of let's say $25k, not to mention that the home STILL isn't sold and now he will have to market the home at the correct price for another 3-4 mos, spend another $5k in interest, and who knows what else in utilities, etc.

BETTER ROUTE: "Joe, I can tell the truth, or I can tell you what you want to hear but I can't tell you both. "(Tell me the truth  Jeremy so I can make an informed decision). "Ok, your home is worth $250k and for all of the above reasons probably needs to be priced at  $245k to attract buyers.

Ahhhh.......that's better.

In this scenario Joe now has the opportunity to rent it, deed it back to the bank, "short sale" it, OR just lower the price, list it with an aggressive agent, take it "in the shorts" and get done with it, saving in the process his marriage, his sanity, his credit, and 6 months of pain. (not to mentioned $20k or more in real losses).

If you were my client, which would you choose?

Historic Fed Rate drop cuts both ways for Borrowers...What about you?

by Jeremy Larkin

FIrst of all, I'm NOT a mortgage specialist, so what you get here is my best summary based on personal research. (meaning you might want to stop reading now if you really appreciate authoritative mortgage commentary!) On the heels of its surprise rate cut of .75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007.  In short, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.

Who benefits from this cut?
I am LOVING this cut as a HELOC borrower! If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.

What does this mean for long-term rates?
Long-term mortgage rates could actually increase after yesterday's cut, based on historical performance and recent trends. Wierd to some, I know, but it's just the way it is.

How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates.

On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in high-cost areas across the country.

The reality is that as always, "timing the market" is next to impossible, and if you want to know a little secret - some of the most savvy investors I know are on the lookout for purchases to hold long-term RIGHT NOW. As far as economic stimulus goes, I'm not seeing immediate improvements in the local market, so the jury is still out.

I have a secret weapon that is producing miracles...

by Jeremy Larkin

Happy Thanksgiving! Why do we wait all year to feel or show some gratitude? t's silly isn't it? We wait for the media to "tell us" to be grateful to do so.  Let's all do better!

My business  coaches & mentors have really beaten this gratitude thing into me this year and the results have been amazing.

I'm now going to share with you my "secret tool" that was introduced to me last year called the "10/10 Visualization" or "10/10 Exercise." It has produced miracles for me - seriously. It goes like this:

1. Every morning (or night for those with days/nights mixed up) sit down with a piece of paper, a journal, or your computer. Think of and write down the 10 things you are most grateful for. Really think about it, emotionalize it. I promise you when you really think about it, you'll find that life is really pretty good.

2. Now, while in complete gratitude mode, think of and write down the 10 things you would most like to attract.  BE HONEST HERE! You want $1 million net worth by the end of 08? Write it down! Want a loving and passionate relationship with your spouse and kid? Write it down! Trying to kick a bad habit? Write it down!

As I've been INTENTIONALLY grateful on a daily basis, using the 10/10 visualization, I have literally seen miracles popping up around us.....professionaly, personally, for my family, etc.  I DARE YOU to try this every day for a month, or at least every week or work-day for 1 month.

You probably have it better than you think. Try this and call or email me with the results!

 

Is it time to invest in Real Estate? $50.5 Trillion says yes.

by Jeremy Larkin

 

My Dad handed me a newspaper article yesterday that he had picked up from the Denver Post while travelling across the country. He warned me that it would be upsetting. "Geesh, why would $50.5 trillion in debt be upsetting, Dad?"

$400,000 - the amount the average US household owes toward that debt.  Isn't that amazing? If you think I'm just making it up, go here http://www.denverpost.com/perspective/ci_7344870 to read the interview with David Walker who is currently on his "Fiscal Wakeup Tour" across the country, trying to "wake people up."

If you don't want to read the whole article, let me sum it up for you: Forget about your Social Security, Medicare, etc - it's all drying up in the not too distant future. Which means that we'd all better find a way to build up our own nest egg, right?

I know the whole world is concerned about real estate right now. Yet let me point out that in Washington County we have RECORD inventory, motivated sellers, and phenomenal interest rates. It could be the perfect storm for buying up investment properties, which have always been great long term investments.

Timing the market is impossible, by the way. Kind of like when you hear Jim Kramer talk about the next greatest stock pick on TV, it's too late.

Just food for thought. Pick up a good little rental, let the Tenant pay your mortgage, and hang on for the long-term cash out? It beats planning on your share of $50.5 trillion in debt doesn't it?

WHAT ARE YOUR THOUGHTS?

177 Sales.....I should have become a Fireman.

by Jeremy Larkin

It's official! The profession of real estate is now (2-years running) considered the "least prestigious" profession according to the Harris Poll survey of 23 occupations. 

Guess who was first? No, not Priests,(they were #7). Firemen!  Everybody loves those hunky guys and gals, especially since 9/11.

It is also official that the real estate market in Washington County has become extremely complicated. Check this data out:

Nov 2005

Active Listings: 2870 - New Listings: 725 - Sold Listings: 446 - # of Mos. Inventory: 6.43

Nov 2007

Active Listings: 6044 - New Listings: 1074 - Sold Listings: 177 - # of Mos. Inventory: 34.15!!

WOW! We have really outdone ourselves. The good news is that even though I am in the least prestigious profession in the world, I get to share that honor locally with nearly 1600 others! The bad news? We also get to share the 177 sales.......ouch.

You see, the real difference between Realtors and Firemen, (besides them typically being stronger and more handsome than me), is that the Fireman actually have to DO something, BE something to qualify and get hired for the good jobs. You are probably aware that getting on the Las Vegas department is a tough job in and of itself and that only a few coveted positions come available every year.

This market will weed out a large number of part-time and unqualified real estate people for sure. However, I don't think we can ever solve this prestige & perception problem with real estate professionals until the standards required to get into the business are modified, the bar "raised" so to speak.  As you can imagine, it makes it really difficult for those of us taking our job seriously to be taken seriously.

Stay tuned for more about this market.....until then, let me know when they are hiring in Vegas again!

J

 

"Giving your house away" doesn't exist...Sellers Facing Music

by Jeremy Larkin

Go to your listing agent right now and DEMAND that they take an honest look at the list price of your home.  Then hold them accountable for the marketing plan they presented to you at listing (if there was one...). It may be the single best thing you can do to get out of where you are and into where you want/need to be.

Alot has been said by the PR people at  NAR (National Assoc of Realtors), UAR (Utah Assoc) and WCBR (Wash. County Board of Realtors) to minimize the public's feelings "being hurt" about the current real estate markets. I can understand why they do this, and for some time now, it's been really tough to figure out just "how bad" it really is. 

I can't quantify how "bad" or "good" it really is. That is pretty subjective and will feel different to each buyer or seller. What I can say is this: 

#1 - there is ALOT of inventory and everyone knows it.

#2 - some people have to sell their home sooner rather than later

#3 - as long as there is air to breath condition #2 will exist.

#4 - every time a seller has to sell, even at a deep discount, it causes prices to go down, period.  

#5 - in every real estate market there are ALOT of sellers who have to sell soon.

We are working with mulitiple sellers right now who have left their residence empty as a result of a job change. There must be hundreds of spec homes sitting empty with huge monthly interest nuts. What is the best solution for most of them? Drop the price. Sounds cruel, doesn't it? Well when the fish aren't biting you've just got to lower than line to deeper water where the fish are, right?

On countless occasions I've heard "I'm not willing to GIVE my house away." Working in the trenches, I've come to learn that "giving a house away" doesn't really exist. Buyers determine value, both in hot and cold markets. Many say that sellers were "naming their price" during the boom. They were, but BUYERS were determining if that was ok, and they did.

When the price is right, they buy. When it's not, they don't.  I mean, if a gallon of gas goes down to $1.50, do you expect the Gas Stations task for $2.00? I doubt it.

Sellers- it's ok to sell right now. You can't control the market, you can only make the best decisions for your family, and if that is a decision to move, then do so. However, if you just want to "see what you can get", don't waste your time, or your agent's, or muddy the pond any more than it already is.  

Buyers - yes, you can buy now. Prices are at or BELOW 2005 levels if you can believe it. "But what if they go lower?" They might, but I suggest the prescription above - make the best decision for your family.

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Photo of Jeremy Larkin - The Larkin Group Real Estate
Jeremy Larkin - The Larkin Group
Keller Williams Realty
50 E 100 S, Suite 300
St. George UT 84770
435.767.9886
Fax: 435-359-5085

St. George Real Estate - Your premier destination for St. George,Utah Real Estate Listings, Home Values, MLS Search, REO/Foreclosure Info &  St. George Real Estate Statistics.  Serving St. George, Santa Clara, Ivins, Washington, Hurricane, LaVerkin, Toquerville & more! Specializing in REO/foreclosure properties, frustrated Sellers, First-Time home buyers, and Investors. Looking for the most LOCAL St. George, Utah real estate information available? Your search is over!