Indy Home Book » Real Estate Perspective

Opening Doors

Richard — Thu, 27 May 2010 13:10:40 +0000

Later today, a customer will be closing on the sale of their home. So this is on my mind right now. They call it a final closing because all facets of the transaction come together and the transfer of title and sale is completed. But if you see the faces of the Buyer and Seller, and get a sense of what is really going on, the true impact of this event is anything but a closing. It’s more of an opening. You can see and feel the pages turning in their lives to the next chapter, and a doorway opening to their future.

I coined a phrase a long time ago that I still use when talking about the importance of one’s home. “A home is where lives are shaped and memories are made.” Helping to effect and being a part of that momentous change in someones life when they move to their new home. This is what continues to drive and inspire me as a real estate agent.

I can hardly wait till the closing later on today. It’s so much fun. Knowing what happens after that, to the lives of the buyer and seller, is the most rewarding thing I do as a real estate agent.

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Indianapolis Home Values

Richard — Sun, 21 Mar 2010 00:40:11 +0000

I saw a presentation locally earlier this year by a well-meaning and experienced real estate professional, who was summing up the residential market for last year to a large audience of people. Among other things, they presented facts about the number of homes that sold and explained how the average price of a home that sold in Indianapolis declined somewhat. Since I follow these numbers myself, it wasn’t a surprise. But what did surprised me was the leap in logic when they equated the drop in average price as a decline in the average value of homes. Average sale price and average value are two different things altogether. Average price is figured by adding up the sale price of all homes that sold and dividing by the total number of sales. And yes, that did go down. But it doesn’t logically mean that the average value went down. It just means the mix of homes that sold changed with more lower price homes selling which brought down the average. If a larger number of expensive homes had sold, the average sale price would have been higher.

I really don’t think anyone really knows if home values went up, down or stayed the same here in central Indiana. On a case by case basis, some did and some didn’t. Truthfully, the market was definitely slower the last couple years with less homes sales, but that’s because a lot of people stayed on the sidelines to ride out the uncertainty and the media frenzy surrounding the “recession”. I frankly don’t think the downturn in the economy would have been half as bad if the media had just been more even in their reporting.

And now, here they go again. I was amused today by a report on the radio reporting now about a new wave of buyers now going after too few properties on the market…with offers from multiple parties bidding up the sale price over asking price. Where do they dig up these stories? I just know it’s not like that for most buyers or sellers. The truth is, even in the worst of times the last couple years, the market was still a good market. But lately, it’s improving. Even more expensive homes are selling more often than before. I’m looking forward to seeing what happens next.

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Garage Evolution

Richard — Tue, 09 Mar 2010 13:44:46 +0000

A garage is something that most of us probably take for granted. But if our cars had to stay outside during weather extremes, we’d appreciate them more. A customer of mine has been looking for a home in an area where most of the homes have garages, but maybe a fifth of the homes do not. Of the ones that do, most of them are detached garages that stand alone from the home. That’s just the way they built them back then in this neighborhood which was developed between 1925 to about 1945. I was thinking that the detached garage was probably a carry-over from earlier days when carriage houses and stables were located separate from the house. When the horseless carriage came along, it went in it’s barn too. The car evolved then into such an integral part of our culture and daily life…and the convenient access and use of them made way for attached garages, which are here to stay.

If a home does not have a garage, it is definitely harder to sell. Not that it won’t sell without a garage, but a lot of people will pass on it to find one that does. So it reduces the chances of a sale. If you look at an old home built before 1950, chances are the garage is not visible from the front…just the lines of the home itself. Now it’s not uncommon to see a home design where the garage door is probably the most prominent feature of the front facade. Most of that is because the architect or builder has to figure out how to fit both home and garage on a lot that’s not real wide. The garage door can take up a third or more of the front elevation. A side-load or rear-load garage solves that design issue, but a larger lot that accommodates the driveway and turning area costs more, raising the overall price of the home.

I was driving around recently, saw this garage and had to snap a photo. As garages go, I really like the look of this one. What car wouldn’t want to call this home?

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Market Activity

Richard — Thu, 04 Mar 2010 13:52:05 +0000

Here’s a graphic representation showing the number of homes on the market in the nine county greater Indianapolis metro area vs. the number of sales there over the last 13 months. The numbers add some general perspective. Comparatively, the market now is slow in relation to earlier months or prior years with record number of transactions…and terrific if you compare to certain months or earlier years with low activity. If you are thinking about selling your home or buying another one, does it really matter how the market as a whole compares to another one? Well, an overall view of the market has it’s place I suppose. But each county, city, neighborhood and home itself is unique…and every Buyer and Seller has a unique set of circumstances that motivate them. Sales happen one at a time. Some homes still command top dollar and others do not.

I guess what I would take away from this graph though is…the market is not red hot like earlier periods…but still, it’s a good market, with lots of homes being bought and sold. Generally speaking, maybe it’s not the best time for someone to ask as much as possible for their home. But the flip side is, they can probably buy one for less now too. So the net effect is about the same as always, and maybe even better if they are moving up in price range. The only thing that will change that though is interest rates. I wondering what a graph like this will look like later when the low interest rates we’ve been accustomed to for a while begin to climb…which they will at some point. Higher interest rate translates into less affordability. Lots of people will wish that they had made their move earlier.

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Brokers Open

Richard — Wed, 24 Feb 2010 01:22:26 +0000

I hosted a Brokers Open today at a home I have listed. A Brokers Open is an Open House except only agents are invited. The idea is to have other agents see your listing, gather their ideas on marketing, improve their awareness of it and possibly match the home with one of their buyers either now or the near future. The unusual part for me is that I rarely go to them when other agents have them, let alone host one. If I have a possible buyer, I can tell a lot about a home by looking at the info available to me online as a Realtor, and food doesn’t work as an inducement to get me to go anywhere. But two other agents I know and like have listings in the same neighborhood, and so we all hosted ours at the same time to increase the possible turnout. We are all from different offices and areas of town and know different agents to invite. Because of that it was fun as it was a different kind of Brokers Open than you normally see. It was scheduled from 11:30 to 1:30. One home had the appetisers, the other the main course, and I had desserts, which to me was the best of the three to do. If you’ve read earlier posts or the ‘About Me’ page, you know that I like creating things in the kitchen, so the fun part was getting to bake things. I couldn’t decide what to make and I wanted it to be classy, so I called a good friend of mine who is a caterer for ideas. They ended up walking me through the whole thing: possibilities on what to make, how to prepare, serve and present. I can hold my own in my own kitchen, but all the aspects of planning and carrying out an event like this was new to me.

I ended up meeting some other agents I didn’t know which was enjoyable. And I heard some different perspectives on marketing the home which can’t hurt. I’m not confident it will actually produce a buyer. It might…we’ll see. But I have a whole lot of extra chocolate cheesecake and chocolate-pecan crunch bars left over!

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Driving the Business

Richard — Sun, 07 Feb 2010 01:22:01 +0000

Sometimes you drive the business…and other times it drives you. That’s just the way it seems that the real estate business works, at least for me. Probably much like any business, the object is to get the phone to ring. I can visit, call, write or email people to contact them or stay in touch. I can host Open Houses, advertise in magazines or on websites, send out mass-mailing campaigns or walk around and pass out business cards all day long. All of that is what I call “Driving the Business”. But the only thing that really counts is when someone calls me. That’s when I know they are truly interested in something. Sign of the times though…sometimes now instead of calling, I’ll get an email or a text message!

Some days the phone will be dead…and I mean D-E-A-D. And then other days…it’s a good idea to have extra batteries charged and ready to swap-out. Today was one of those days when the business decided to drive me. You just have to hang on. But I’m not complaining. Being busy is a good problem to have. Either way though, busy or slow, I’ve learned to keep my emotions right in the middle. I just work…without expectations. I guess that comes with doing this 27 years.

The funny thing is though, today should have been slow. Didn’t people look out the window and see all the snow and ice everywhere? Instead agents were scheduling showings to look at listings. Sellers wanted to talk about selling. And Buyers wanted to look at homes. It’s not a coincidence that this all happened though. I can feel the market heating up. Despite it being the beginning of February with ice and snow…it’s heating up. Despite all the Gloom-and-Doomers, and Glass-Half-Emptys best efforts…it’s heating up.

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Absorbtion Rate

Richard — Thu, 07 Jan 2010 11:00:49 +0000

Here’s a graphic representation of recent market activity in the central Indiana, nine-county, Indianapolis Metro area as complied by the F. C. Tucker Company using figures from all member companies of our local real estate board MIBOR. It shows the number of homes on the market vs. homes sold over the last thirteen months. An absorption rate is one way to quantify how strong the market is and also tends to show if it is a Sellers or a Buyers market. Another name for an absorption rate is called a monthly supply of homes. It is calculated by taking the total number of homes for sale in any given month, and dividing by the number of homes that were sold. For instance, in November ’08, there was a 11.64 month supply. A year later in November ’09, there was a 10.94 month supply which shows improvement compared to activity in that same month a year earlier. November supply ratios are usually higher than warm weather months in Indiana as sales slow down that time of year. In contrast in June ’09, the monthly supply was 6.73 which shows a lot more active market. Analysts typically agree that a Sellers Market is considered to be when the supply of homes for sale in a given price range is less than a 4-month supply. A Neutral Market is considered to be when there is a 4 to 7-month supply. A Buyers Market is considered to be when there is a 7-month supply or greater. The numbers used here are taken from all price ranges of homes and would be different for certain specific price ranges. Or you can further define and change it by using only homes in a certain area. Generally, homes in upper price ranges have had a much lower absorption rate recently than those priced in lower price ranges. Some analysts think that sales in higher price ranges should start to improve the first half of this year.

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Off and Running

Richard — Mon, 04 Jan 2010 01:35:19 +0000

Having a new year has some great benefits. The best one might be that you can leave last year’s baggage behind and start off with a clean slate. A lot of people would probably like to do that with last year. It’s going to be interesting to see how 2010 unfolds. Each one seems to have a distinct personality. It feels like there is even more of a change because it’s a new decade as well. No more single digits finally. I’m feeling very positive about the possibilities that 2010 has in store for all of us.

The holidays have come and gone and for just about everyone, the work week, month and year is off and running beginning tomorrow…me included. Since my focus is on residential real estate I wanted to see where the market is at the start of 2010. I took a look at the statistics from our local real estate board MIBOR using my Realtor search tools. As of this date a search of all residential properties says that there are 13,554 active residential listings for sale right now in the nine county greater metropolitan Indianapolis area. The average listed price of these properties is $208, 189. To me that average list price number sounded kind of high vs. what I thought the average sale price has been running. So I searched for year 2009 and it says that the average sale price actually was $120,811 last year for this same area. Average sale price is always lower than average list price…but that’s a huge difference from the average listed price of properties for sale now. I have a feeling the average sale price will rise this year with the sale prices of some more expensive homes being figured into the average…and fewer inexpensive homes selling than in 2009. Last year, there were an unusual amount of financially distressed properties sold that brought the average sale price down. Just about everyone I’ve talked to says that the economy feels much stronger to them than it did a year ago at this time. Some real estate professionals are predicting that median priced home sales will be better than last year, and upper price range home sales, which were especially slow, should heat up. So it will be interesting to see how things play out. Looking forward to it.

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Smart Improvements

Richard — Thu, 17 Dec 2009 12:00:44 +0000

I once was provided a report that ranked home improvements comparing the return that one would get back comparing dollar spent to dollar received if someone were to do the improvement and then sell the home afterwards. Different areas of the country and different cities had different results. Some areas had higher returns for certain improvements while other areas had lower numbers than ours. Here’s what it said about the Indianapolis market. If one were to do a bathroom remodel, they could expect to get back 82.2 percent of that money upon resale. For a minor kitchen remodel, one could expect 81.7 percent of that. For siding replacement 82.5 percent. For converting an unfinished attic into a bedroom, 70.3 percent. For a deck addition, 70.3 percent. For a basement remodel, 76.2 percent. For window replacement, 70.4 percent. For roof replacement, 70.0 percent. Family Room addition, 70.7 percent. Home office remodel, 67.8 percent. Wow…that kind of makes you not want to do anything at all if it means loosing money? Possibly, but it’s not as simple as that.

It’s entertaining to see numbers like this published because it looks so official, but honestly my confidence level in studies like these are pretty low. There are so many variables and each home is a unique situation. For instance, I’ve seen many homes that would never sell because the roof was so bad that no one would buy it unless it were replaced first. In that case, the return would be 20 to 30 times the cost of the roof. I’ve also seen homes that an addition was thought out and built so poorly that it hurt the functionality of the home, making the home extremely difficult to sell. How would they affix a value to that? Also, I’ve seen homes where the kitchen remodel was such a beautiful change that it brought the owners several times their investment had they not done the remodel.

It’s been proven that the best improvement someone could do to get the most bang for the buck if you were thinking about selling, would be to just clean and paint to brighten and freshen up the interior and exterior. Also, removing clutter and depersonalizing doesn’t cost anything but has a huge impact on resale and the bottom line. There is some truth to this study though, in that in most cases, people should not enter in to doing home improvements expecting them to increase the value to your home. Instead, do the improvements for your own enjoyment and to get some use out of them. That’s the real value. Over time, in this market, most home values rise slow but steady, but along the way it’s a nicer place to live too.

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Mistaken Identity

Richard — Thu, 27 Aug 2009 21:10:20 +0000

I’ve been showing homes to a buyer-client lately. We looked at about everything available now on the market through the BLC (Broker Listing Cooperative) that was a close match to what they were looking for. And still they just can’t find the right home yet. So I suggested that if there were any homes For Sale By Owner in the area they were interested in, we shouldn’t overlook those as possibilities. I’ve found that most of the time sellers who don’t have their home listed will be happy to cooperate on a sale if you just ask them. My buyer-clients offered to drive around and see if they saw any they liked. I also talked to a few Broker friends to see if they might know of anything coming on the market soon. One Realtor gave me the address of a home that was For Sale by Owner that they knew of. They said they heard the owner might be listing soon anyway.

So I called the number on the sellers sign and left a message stating briefly what I wanted and asked them to return my call if interested. I got a call back the next day from a man. They said that they were selling the home for their girlfriend and were experienced with selling homes having sold their own home before. They didn’t think it would be a problem selling the home but still they would be willing to pay me 2% of the sale price as long as the sale price was 2% above what they were asking. What that meant to me was they really weren’t paying me anything if I had to add my fee on top of what they were asking for the home. Plus the 2% amout is extremely low and really didn’t value my services or compensate me for my time, expertise, energy and overhead that I have. So essentially…there wasn’t any incentive for me to help them. I can’t imagine another Realtor accepting those terms either but who knows, someone might. It’s a free market. People have a right to do what they want.

The thing that got me though was the price they said they wanted. The price was 15-20% above what I knew the top amount to be for that area for a home like theirs. They said that another home nearby sold for that and they thought their home was even nicer. I certainly didn’t try to debate about values…especially on the phone with someone I just talked with for a couple minutes. I wished them good luck and thanked them for their time.

Just for kicks I looked up the other home later that they had used as a comparable. The first difference I saw was the other home was 30% larger than their home. It was true that the original asking price was what they had quoted me, but the house had two price reductions before it finally sold. The final selling price was much lower than the For Sale By Owner seller nearby had thought.

Sometimes I’m tempted to argue about prices I hear in situations like this, or call them back and give them the facts. I don’t blame people for trying to get as much for their home as possible, but the effect of pricing the home that way is counterproductive to what they are trying to accomplish. The market is an amazing place though. It will tell you if you have your home priced right or not. So they will know sooner or later anyway.

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