• Homes listed by real estate agents in the MLS (the majority)
• Homes For Sale By Owner
• Ebay
  • Don’t laugh, over 4,364 real estate properties are sold in an average month, mostly unique homes, vacation homes or properties suited for investors.  Lest you think that you can avoid a Realtor® and just list your home on Ebay, keep in mind that within the greater picture of 5.18 million units sold nationwide in September 2008, this works out to be less than 1/100^th of one percent.
• Mass Auctions
  • My company here at Keller Williams has begun sponsoring auctions of land and homes alike.  This is an up and coming segment of the current market, a great opportunity for buyers and sellers alike.  Watch for more information in future blog entries. 

But the fastest growing segment that has been shaking up the party is

• Foreclosures. 

How many of you out there think foreclosure properties present incredible opportunities for wealth building?  (Raise your hands, don’t be shy).  I thought so. 

Thus I thought it would be useful to take a closer look at them.  Are they really the scorchin’ deal everyone thinks they are?  Keep in mind, the following discussion is locally based, and other areas of the country may be experiencing completely different market activity.

Listen closely, it is the sound of bubbles bursting (and opportunity knocking!).  First of all, in my experience foreclosures are not being listed for sale at the rock bottom prices you might expect.  I believe this is because most of the foreclosed homes were purchased at the top of the market, within the last 3 years, many at 100% (or more!) mortgages.  Lenders are stuck with very high positions in homes that simply can’t command the price that will even pay off the note and additional costs incurred by the foreclosure process and holding of the property.

I’ve written offers on many foreclosed homes, and in some cases it takes weeks or months to get a response, if you get one at all.  Many lenders hold tens, if not hundreds, of these homes.  I recently wrote an offer on a foreclosure that had been sitting for over a year at 84% of the list price.  The seller did get back to me in 24 hours. Their response?  Nope. Forget it. G’bye. They didn’t even send over a counter. 

You might wonder why, I mean, this doesn’t make any sense does it?  Wouldn’t you think lenders want to divest of these properties?  Well, there are a variety of reasons why lenders might be sitting tight.

First, seven letters.  Bailout.  Many lenders who are eligible for bailout money are likely waiting to see what kind of package they are going to ultimately get from Capitol Hill. Yes, it is true that most of our local New Mexico lenders were so conservative in their policies that they aren’t even eligible for bailout money, which is one of the reasons New Mexico has so few foreclosures relative to other areas of the country.  The largest portion of New Mexico foreclosures are held by The Big Ones, the national companies such as Citibank, Bank of America, and Countrywide.  They are eligible for bailout. Until it is clear what that means, many are sitting on their properties, waiting for a buyer, but not just any buyer, one at their price.

Second, market protection.  If lenders start letting their homes go for that proverbial song buyers dream of, then it could create a downward spiral of home prices, worsening the housing market in the short term.  In short, they hope to keep the housing prices from dropping even more, further reducing their chances of getting out from under their inventory without losing their shirts. 

Third, sheer volume. In some cases, there are so many homes in the inventory, lenders don’t have enough staff to evaluate the offers they are receiving, and offers sit unanswered.  In other cases, there is plenty of entry level staff to prep the offers in-house, but they do not have sufficient access to the “decision makers”, the people who can actually authorize the sale.

So, if you buy my diatribe thus far, where ARE the scorchin’ deals?  Drum roll please..  Top ten survey says….  1) Grandma’s house and 2) Realtor® represented properties.

Grandma’s house, or more generally put, any home which has been owned by the owner for 5 years or more.  The longer, the better the potential deal.  These are homes in which the owner has equity to negotiate.  They can afford to give you the scorchin’ deal because they are still going to walk away from the table with dollars, and plenty of them.   Chances can be even better for deal-age if the home is vacant and the owner is out of state or is being relocated to another state by a company who isn’t going to give them a relocation package which would “buy” their house for them so they can buy another one in their new town.  These people are motivated.  They have equity, and strong desire (if not financial necessity) not to have two mortgage payments, and they can give their equity to you, in exchange for being the only house in the neighborhood to sell this quarter.

Why a Realtor® represented property?  Because the majority of people who list their home For Sale By Owner have an emotional idea of how much their house is worth, which is typically higher than the market value.  For Sale By Owner properties are typically overpriced, that’s partially why 88% of homes originally attempted for sale by owner ultimately end up listed with a Realtor®.  When a Realtor® is involved, he/she can help the seller evaluate the offer properly – by providing the seller with an estimated net of cash after closing costs are paid, and helping the seller to understand what is happening, truly, in the marketplace, so they have not just an emotional idea of the value of their home, but a viewpoint based on the cold hard facts, only available as sales statistics from the Multiple Listing Service (Greater Albuquerque Metropolitan Board of Realtors).  Buyer’s have an advocate in a Realtor® represented property.  The seller’s agent is, of course, looking out for the seller’s interests solely, but the seller’s interest is ultimately to sell the house for most desirable terms for the seller.  “Desirable terms” is most often interpreted by buyers to mean price, but for the seller, the more desirable terms could be a quick closing with cash or pre-approved funds.  A good seller’s agent will do his/her best to ensure that negotiations continue until either a meeting of the minds is reached, or it is absolutely clear that such a meeting is impossible.  The intent of the seller’s agent is full and complete advocacy for the seller, but it is indirectly also advocacy for a buyer who comes in with a lowball offer, trolling for the deal of the century.

The deals are always there, no matter the weather, but it takes a little research and elbow grease to find them.  Having a good Realtor® helps too.  

In case you have any doubt, this is great news for buyers and sellers alike.  Buyers, who may be waiting on the sidelines for “the bottom” may see this as one more indicator, in a long string of indicators, that Albuquerque has not seen the full boom, and may not see the full bust, aspects of this economy like many areas of the country.   This is in turn great news for sellers who may be desperate for a warm body/buyer with whom to negotiate.   It’s a great time to get in the buying game.   As my esteemed colleague and Realtor® Greg Sofio likes to say, “It’s only a Buyer’s Market IF YOU BUY!”

If you want to believe the worst you can, but in fact, they are moving along quite nicely here in Albuquerque.  Am I being a blind optimist?  Well, here’s an interesting statistic.  In the month of October, 2008, there were 406 pending sales in ABQ.  Last year, October 2007, there were 402.  FOUR HOMES DIFFERENCE in homes sales for the month of October from 2007 to 2008.   If you believe the national media, you’d think a house hadn’t sold for months, or, that we had seen a severe drop-off.  But we have not in Albuquerque. What we have seen, is a marked increase in the number of homes for sale.  The homes that do sell have sold, on average, in 72 days.  VALUE is KING in this market. Three of my last four sales were homes that sold in under 45 days for 98.9% of the list price.  It IS possible to sell your home, but you need a realtor who understands the market, with experience, integrity, honesty and a can-do attitude.  Top-notch service and excellent communication always helps.  That’s why you should be calling me right now if you have a property to sell!

Also, I would like to remind every that YES, YOU CAN GET A LOAN!!!!  If you doubt this CONTACT ME RIGHT NOW, I’m not kidding!  National news is NOT local news, our local lenders are ready, able and willing to lend you money to buy real estate– 100% financing IS still available, no down payment programs ARE still available.  When the national news starts playing on your radio, save yourself a little anxiety (because who needs more of that) and just TURN IT OFF.    Much of the national news just does not apply to our real estate and mortgage market.  Our New Mexico lenders have overall practiced very conservative and responsible lending policies, and in fact, most are not even eligible for bailout money!  I’ll say it again, YOU CAN GET A MORTGAGE TO BUY A HOME, right now, today.  Call me if you have questions.

(excerpt from www.housingpredictor.com)

In Albuquerque, the number homes for sale has leveled off, but it’s not yet time for the rampant “buy and flip” quick buck mentality of a few years back.   It’s still a super time to be a buyer, with home prices softer than your momma’s couch, but don’t expect to flip homes for a profit in the short term.

Smart Money magazine seems to think Albuquerque is going to see an increase in sales price rather than a decrease. 

For the record, Smart Money magazine is based out of New York City, not the Duke city, so lest you think there is some sort of municipal nepotism going on, odds are slim to none.

Hundreds of lots must be sold!!!

Guaranteed Marketable Titles – this is not a tax auction.

Buy land in Rio Rancho in a sealed bid no reserve auction on Saturday Nov 15, 2008.

Doors open at 6:30 am, auction begins at 8:00 am

NO RESERVES, but subject to low opening bid requirement.

Sealed Bid Auction – open to Pre-registered brokers and buyers only.

You must be registered by November 13^th in order to participate.

Out of state buyers can bid by phone.

Winning bids will be announced at 9 am on the day of the event!

For a complete list of lots for sale, or for more information on getting pre-registered for this incredible opportunity, contact Maria Pumilia now!

Why?  Many are simply feeling uneasy with the economy.  Some are “waiting for the bottom”.

But why is now a great time to move forward?  Here are just a few reasons:

The Mystical Art of Timing “The Bottom”.

Now is a great time to buy, simply because many other people are not, which is the exact condition that creates the strong “buyer’s market”.  The current market offers softer prices, increased opportunity to procure that home or investment property you’ve always wanted, favorable lending conditions, a large quantity of homes to choose from..  Consider that the moment when we start to hear the media saying rosier happier things that will provide the warm fuzzy we may feel we are missing today, by then “The Bottom” has probably already passed us by!

Our Local News is NOT the same as the national picture.

Now I’m not saying we are not part of the good ole’ US of A (although even with Governor Richardson’s attempts to put us on the map, many American’s still mistakenly think New Mexico is on the other side of the border fence), but we’ve had a fair go of it here during this rocky ride of late.  Our foreclosure rates are relatively low, mostly because New Mexico’s local banks and credit unions exercised conservative policies while many other regions did not.

Mortgages are not only available, but lenders are fighting over your business!

Everyone thinks that mortgages have “dried up”, and that it’s impossible to get a loan. But that’s not true!  Mortgages are available, and in fact, many lenders are bending over backwards to get and keep clients who can qualify by reducing rates, eliminating fees, and negotiating terms that 2 years ago they didn’t have to (just like sellers!). Now is the time to save $$ on a mortgage!

AND interest rates continue to drop!

Money is extremely cheap right now AND lenders are jockeying for our business.  A combination for Ka-ching!

The First-time Home Buyer Tax Credit worth up to $7,500.

It was passed earlier this year and targets any individual or household that hasn’t owned a home for at least three years.  Taxpayers can take the credit on their 2008 tax return if they buy their house in 2008.  More Ka-ching!

You may want to retire someday.

Ya think?  I don’t know about you, but at some point I’d like to be able to kick back, slow down and chill out, preferably on a beach somewhere with a toddy in one hand, no email access for miles and not have to worry about how I’m going to pay my mortgage that month.  Or worse yet, my rent payment.  Talk to anyone whose home is paid for (try your grandparents) and ask 1 simple question:  Knowing what you know now, would you still have bought your home then if the market was depressed?   Anyone who bought in the 80s’ probably bought in a depressed market and today, their house could be close to completely paid off!

Increase your Net Worth

If history tells us anything at all, it’s that any real estate you buy right now will be worth at least twice as much in the next 12 years.  Just research the median price in the U.S. over the last 100 years and you’ll see what I’m talking about.  Hold on to that house for 24 years and it will be worth 4 times what you pay today.  And yes, all this appreciation, despite our current market conditions!

Ease the jitters.

Many folks have seen their 401(k)s drop to alarming lows.  Nothing like going through that once or twice to remind you that stock is not even paper money, it’s hypothetical money.  Aha… stock only becomes money when you SELL it.  Now, hold on there pawdnuh, I’m not recommending you cash out all of your stock and get into real estate.  In fact, now could be a positively STELLAR time to buy stock if you don’t already have some.  My personal plan has been to sell a small portion of my stock to keep in cash for a down payment in case I find a super investment property.  But the main body of my portfolio will remain in stocks/mutual funds and will be reallocated to obtain positions in all the blue chips that recently dropped through the basement floor, but which I know will rebound with time.  The key difference to consider is that real estate is not a hypothetical investment, it is a tangible investment.  You can actually live in it or rent it.  Now, I could probably keep a few raindrops off my head with my Microsoft stock certificates..

The Country Needs You To.

You may not realize it, but you taking action does make a difference.  Now I’m not saying to go out and bite off more than you can chew, because that’s what got us in this mess in the first place.  But rather, buy a home or investment property within your means and we’ll all be glad you did.