JUST SOLD! Cute Turn of the Century Cottage

I just closed on this listing for a seller.  This property was a non-MLS transaction.  I listed the home for sale about 18 months ago but market conditions were adverse at the time.  So, my clients rented it for a while waiting the market out.

My client called me a month ago and asked me to contact a cash buyer we have worked with in the past.  When I presented the property, they showed interest and we negotiated a purchase price of $75,000.  Due diligence went quickly and we closed on schedule.

This home was 3 beds 1 bath and had been fully rehabilitated.  It is located at 2010 Monroe Blvd. in Ogden, Utah.

If you are looking to sell your home, CONTACT ME, and lets see how quickly we can find a buyer for you.

JUST SOLD! Bargain Cashflow Fourplex

I just sold this fourplex property located at 1053 Healy St. in Ogden, Utah.  The property was listed on November 9, 2012 for $239,900.  It went under contract on December 4th with another buyer.  After their inspections the property came back on the market.  I had been searching for an income property for my client and we had terminated negotiations on another property right before this property came back on the market.  When we saw it we pounced.  We offered full price and asked the seller to contribute 3% of the purchase price toward closing costs.  The sellers accepted our offer that day.

Then we started our due diligence.  We found about $2,500 in repair items.  However, since my client was purchasing this as an owner occupant, we didn't want to throw the underwriter off with a big laundry list of repairs and complicate the transaction any more than it needed to be.  The seller agreed to a simple price reduction on these items while we waited for the appraiser to determine if there were any FHA related repairs necessary.  We anticipated that there would be.

However, rather than finding repairs, the appraiser came back with a bombshell report stating the value as $225,000.  That was a shocker. However, since the sellers were eager to close the transaction, they accepted a significant price reduction and also compensated us an additional $1,000 for the repairs.

After clearing a series of unanticipated underwriting hurdles, we finally closed on the property at $224,000 with the seller paying $6,720 in closing costs.

Congratulations to my buyer!  This property will be a cash cow.  It is close to Weber State University and the rents will cover nearly all of the mortgage payment even with my client living in one of the units.

If you are in the market for an income property CONTACT ME and let's find a cash flow property that will enhance your portfolio.

JUST SOLD! Classic Bungalow

I just closed on this home for a seller.  This property was a 3 bed 1 bath bungalow built in 1913.  It had much of the original craftsmanship from its constructions including original windows, casing, doors, hardware, and more.

My seller rehabbed the home with a more convenient and conventional kitchen and bath setup.  With the home finished and ready for the market, we listed the home in June of 2011 for $84,900.

Unfortunately, the location of this property was problematic.  We had many showings but the tight quarters of the neighborhood and some neglected road surfaces turned many buyers away at our list price.  In September 2011 we reduced our price to $79,900.  We maintained that price through August 2012.  At that time we finally reduced the price to $74,900.  Within a couple weeks we had a buyer who made us a near full price offer.  Unfortunately, he was under qualified and had to excuse himself from the contract.

Shortly after that contract failed, we received a cash offer for $69,000 from a well-funded investor from outside the Ogden area.  We countered at $73,000 and they accepted and that is the price we closed at.

This home was an example of trying to flip a property in an adverse market.  Prices dropped so quickly and significantly that our resale price was not bearable by the market for almost a year.  To bide the time, my clients rented the home while we had it for sale.  As our price dropped, the market finally began to catch up to us and we consummated the sale.  The key to this transactions' success, I believe, was accounting for the location of the home and it's impact on value.  Any home will sell if it is priced right.

If you are thinking of selling your home, CONTACT ME, and let's find out what your home is worth.  

JUST SOLD! Washington Terrace Estate Sale

I just sold this home for a client at 543 W. 5350 S. in Washington Terrace.

This 1440 SQFT 3 Bed 1 and 3/4 Bath home was held in a trust for the original occupant.  Her children were charged with liquidating the estate and asked me to market the property.

Our first challenge was finding tri-level homes in the area to compare the home to.  There were many sales but this particular floorplan was difficult to find in the database.  The condition of the home was also a mixture of old and new.  To test the market, we started our price at $119,900.  My clients were eager to move the property.  After a few showings and market feedback, we reduced our price a couple weeks later to $109,900 and then again to $100,900.  The rapid reduction in price helped stir interest and showings began in earnest.

About a week later we received an offer of $93,000 and we accepted.  Unfortunately, this buyer was woefully under-qualified.  Their loan approval was dependent on receiving an inheritance.  When it became apparent that the money wasn't coming, they cancelled the contract.

About 10 days later we received another offer at $93,000 but this time asking for about $3,000 in closing costs.  We accepted this one as well.  The buyer was using a Utah Housing loan to purchase the property.

Unlike the previous contract though, the appraiser for this loan was much more rigorous than the prior one.  We were issued a laundry list of repairs.  One of those repairs included plumbing.  I coordinated vendors to get the repairs done.  In a nightmare scenario, the city turned the water back on to the property after our repairs were made but did not watch the meter to make sure it wasn't running.  Our upstairs bathroom had the tub faucet left open and the stopper plugging the tub.  D'oh!  It took our handyman quite some time to clean up the mess. 

The appraiser also required a roof review.  Our roof inspector indicated the roof had 2 years of life left in it.  That wasn't good enough for the bank.  We were compelled to agree to escrow $4,290 for the buyer to repair the roof.  After a few more underwriting delays on the buyer's part, we closed.

Congratulations to my clients on liquidating their estate.  Because this home was older and had some deferred maintenance, this created some additional hurdles for us.  However, with a little patience and an experienced agent, we were able to jump over them.

If you are needing help with your family real estate, CONTACT ME, and lets discuss some options that will work for you.  

JUST SOLD! Frankenstein Five-Plex

I just sold this investment property for a client:

This was an 1890's Victorian era home that was subdivided back in the 1940's into multiple units.  Perhaps the idea was to provide housing for boys returning home from the war.  Whatever the original intent was, the legacy of decision to subdivide has been very interesting.

I have managed the property for the past year after my seller's decided that they were not interested earning the PhD in property management that was required for this building.  To understand why, you can read this first-hand ghoulish tale of the macabre that I experienced on Christmas.  I now have the PhD. 

Despite the challenges associated with this building, my clients fared well.  They purchased it for $70,000 a year ago back when the market was troughing and nobody wanted to touch real estate.  We sold the property this week for $92,000.  Congratulations to my sellers on making a wise investment. 

If you are thinking of selling your income property, contact me and let's see what your property is worth in today's market.   

JUST SOLD! Regal Roy Rambler

I just closed on this sale with a buyer in Roy:

This home is located at 4454 S. 2300 W.  While shopping for property, my clients and I viewed 6 homes that seemed to meet their criteria.  Closer inspection revealed that all of them were unsatisfactory in condition or floorplan...except for this one.

The home was listed for $174,900.  We placed an offer of $170K and asked for $5,000 in closing costs.  The seller countered us at $175K  while honoring our closing cost request. We accepted. 

Unfortunately, we ran into an appraisal problem.  He appraised the home at $173K which posed a dilemma for us.  Since the appraisal was short, that meant my buyers needed to cough up $2k out of pocket to close the gap.  Fortunately, their loan officer was able to work out a credit from their company to cover most of the shortfall and we made some contract adjustments so the sales price reflected the appraised value.

Once we cleared that hurdle we ran into some underwriting challenges.  Those were cleared as well until a day before closing we discovered that this home is in a flood plain.  Interestingly, because it is close to a park, it appeared in a flood zone despite the fact that it is surrounded by homes that have been previously exempted.  The sellers of the home have been paying flood insurance for years while all their neighbors exempted themselves long ago.  My buyers agreed to pay the flood insurance premium for now while they work on getting an exemption and a subsequent refund. 
 
The challenges were worth the home. Congratulations to my buyers who have purchased a beautiful home at an excellent value! 

If you are looking to move up to your next home, contact me and lets find a property that is just right for you.

Boomerang Buyers Back From Foreclosure

There has been a sense in the housing market that things are improving.  While incomes are not increasing wildly, people have been holding jobs and credit has been steadily improving.  Since the housing crash is now almost four years behind us here in Utah, it is interesting to see what time has done for folks who went through foreclosure.

In many people's minds, foreclosure was the end of the world.  It held a social stigma as well as carried a significant financial penalty for anyone who experienced it.  Making payments on your home was just something that you did as an act of decency and honor.  So, when the economy turned on it's head and forced many borrowers into the uncomfortable reality that they could no longer afford their homes, it sent a significant portion of the homeowners into the emotional and credit "penalty box".   

Well, time heals all wounds and foreclosure is not the end of the world.  So much time has passed now that borrowers who foreclosed can now qualify to buy homes again, and at today's low price and interest rate environment.  They could be termed "boomerang buyers". The Wall Street Journal has this interesting quote in a story today:

Using the three-year benchmark it takes to get an FHA-guaranteed loan, in this year's second quarter there were 729,000 households that were foreclosed upon during the bust that are now eligible to apply for an FHA mortgage, up from 285,000 in the second quarter of 2011, according to an analysis of foreclosure data by Moody's Analytics. The company projects that number will grow to 1.5 million by the first quarter of 2014.

An curious side note about this phenomena is the effect it has on the rental market.  These borrowers were all forced into rentals when they lost their homes.  As a landlord, some of my best tenants were former homeowners.  They took pride in their rental units and knew how to care for space.  If many of them return to homeownership, this will put downward pressure on the overall quality of the tenant pool and require more rigorous screening on the part of landlords.  I have already begun to see some of this in our rental market today.  The question that remains is how soon will these former homeowners return to the market to buy again.  Even though they have paid the credit penalty, the emotional penalty is one they will have to overcome at their own pace and in an unknown time frame.  Market psychology will play a big role here.     

The news is a mixed bag depending on your perspective.  It portends increasing house prices and property values which makes most property owners happy, yet it means a bit more work for them to preserve the condition and rent revenue as tenant quality weakens slightly.  Let's keep our eye on the market and see how this shift manifests itself.

JUST SOLD! Updated Turn of the Century Bungalow

I just closed on this home with some seller's in Ogden.

I originally visited with the owners of this home back in April to discuss their selling options.  In August they called me to formally list the home and we put it on the market.

After several showings we finally received an offer from a buyer relocating from northern Utah.  We negotiated a sales price of  $105,000 while paying $1,575 of the buyer's closing costs.   The appraisal and inspection processes went very smoothly and we closed about a week early. 

Congratulations to my sellers!  If you are thinking of selling your home, CONTACT ME, and lets discuss a plan that works for you. 

Real Estate Market Forecast: Winter Storm Advisory

Over the past several years, I have been watching real estate market sentiment ebb and flow.  Some seasons, my phone rings off the hook, and others, it sits there idle and I wonder why I bother paying such a large cell phone bill.  It is interesting to see how an over arching cosmic vibe affects market activity from day to day.  For instance, on days that the DOW plunges 1% or more, my phone does not ring with client calls.

One of the big events that affected call volume and market activity was the S&P debt ratings down grade of U.S. issued debt.  For two months, the market was nearly vacant of buyers.  I could hear crickets. 

Since that time, I found an index that correlates with my experience of high and low market activity.  The chart is the Gallup Economic Confidence poll.  Here is the chart (click to enlarge) going back to last summer:

 I have circled the period that occurred around the debt downgrade and the national debt ceiling debate.  As you can see, the sentiment drop was quite precipitous.  It took the market almost 6 months just to return to pre-downgrade levels of confidence.  In recent months, confidence has ebbed slightly but nothing incredibly noteworthy.

The reason I bring this up is that we may be in for some choppy consumer confidence conditions starting toward the end of this year.  There are several things that may make for an extra cold market this winter:

Debt Ceiling Debate Redux

According to the Wall Street Journal,  we should be at our maximum debt limit as a nation again by around December 20th.  What a wonderful Christmas present.  Congress will likely be contentiously debating the issue in January to pass another extension.  We can likely anticipate yet another downgrade as a result.  Consumer confidence is likely to suffer as it did last time.

Arrival at The FIscal Cliff

Due to the inability of Congress and the Executive Branch to come up with a solid budget reduction proposal last year, we have The Fiscal Cliff which we are scheduled to cascade over automatically unless Congress and the Executive branch take action to avoid it.  What is it?  It is an automatic income tax increase (cancellation of G.W. Bush's tax reductions from yesterdecade) and the simultaneous cut in Federal spending.  I am all for the spending cuts.  The tax increase will be painful.  Therefore, expect a big hit to consumer confidence in the wake of an over arching tax increase on the population.  Interestingly, economists expect the issue to be dealt with before the year is out.  Yet, the public is not likely to react well as the debate can only produce anxiety while a solution is forged. 

Geopolitical Stress

This may seem way off the radar of for local real estate issues but geopolitical stress can affect consumer confidence as well.  This is especially true when it affect prices at the gas pump.  Currently, the Middle East is a tinderbox and becoming more unstable by the month.  There may be war drums beating and military action in the Middle East after our November election that, if it occurs, will certainly affect oil and gas prices here at home.  Expect consumer confidence to react accordingly.

We live in a turbulent world.  Markets react accordingly.  I anticipate that after experiencing a pleasant chapter of moderation over the last 6 months and for still several more, we may enter a rather choppy period just as we enter the Holiday season.  It is my hope though we will be through the worst of it just in time for the Spring selling season.   

JUST SOLD! Cute Brick Cottage Rehab and Resell

I just sold this listing at 711 Darling St. in Ogden. 

We listed this property in June for $106,900 and received an about a week afterwards.  The buyer offered  $100,000 and asked for $3,500 in closing costs with an FHA loan.  We quickly sent a counteroffer to the buyer for $105,900 with the seller agreeing to pay the requested closing costs.  The buyer accepted.

Our appraisal went as planned.  The inspection revealed some repairs that the buyer asked to be completed.  After negotiating those repairs, the seller completed them and we closed on time.

What makes this transaction so interesting is that this was an investment "flip" property for my seller.  You might recall that I wrote about this home being purchased in December from HUD.

My client did very well on this transaction.  His secret?  Attention to detail.  Unlike many "flip" properties where problems are just painted over, my client took the time and effort to worry about details like landscaping and finish work as well as the basics like kitchen and baths.  That attention to detail put us at the top of the pack and the home sold quickly.

Congrats to my seller on a job well done!

If you are considering purchasing a property to fix and resell for a profit, contact me, and lets put a plan together for you.    

JUST SOLD! Historic Arts and Crafts Style Duplex

I just sold this listing at 2370 Madison Ave.

We listed this property at the end of April for $109,900.  There was immediate interest in the market but it took about four weeks to receive an offer.  In June, we received an offer for $105,000 with the buyer asking for 2% of the purchase price in closing cost concessions. 

We counter offered the buyer at a price point of $107,000 and they quickly accepted.  We placed the property under contract.  Then began our long odyssey to closing.  The appraisal went well, and the inspections went well.  However, the underwriting for the buyer was severe.  Apparently, the lenders were doing blood typing, genealogical research, and cavity searches on the buyer.

Our contract extended an additional 24 days in order to close.  That was quite surprising but we were ultimately satisfied in the end when the transaction concluded.  The best part was that were able to keep the tenants satisfied during the process so my client did not experience any vacancy or loss of rent due to the sale.  

If you are considering selling your rental property, contact me, and lets discuss some options that will help you liquidate your investment with the least disruption to your tenants and cashflow. 

Loading the Springs: Weber County's Pent-Up Demand

In understanding the housing market, it is important to understand market dynamics in light of the variables that are at play.  Fundamentally, the housing market is driven by the activities of people.  Jobs, family creation, plague, war, natural disaster, and other factors all affect how people demand housing in a particular location.  Thus, it is important to know what people are doing and why.

While thinking on this on a long drive this week, I began to wonder how our sales volume in Weber County stacked up against the population count.  How bad is the housing market?  We know it is less than what it was at the peak of the bubble.  But on a per person basis, what does that look like?

I started digging through the data and put together a chart showing "sales per person" for Weber County.  The idea would be that the sales would be adjusted to reflect the change (or in this case growth) in population.

Since people need a place to live, it is reasonable to assume that an increase in people could correspond to an increase in sales volume.  If all other things held constant, you would expect to see a per capita numbert that is consistent from year to year even as population increases.

So what does Weber County's chart look like?  Queue the chart please:

Data was pulled from the U.S. Census and from the MLS for sales to drive this graph.  As you can see, the normal estimate population growth line (in red) is very seldom followed.  Unfortunately, I didn't have enough data go back further in time.  However, the bubble is clearly apparent in the chart.  Since the bubble has burst, it appears that sales are now about 25% below where they should be based on how our population has grown.

What does this mean?  It means that for the time being, there is pent up demand in the market place. It is represented by people renting or living in their parent's basements instead of purchasing homes of their own.

At some point in the future, this gap will be made up and sales will be boosted just to return back to historical norms.  Since the market is troughing right now, look for that correction upwards to come over the next several years.  This is just one more reason that now is a great opportunity to buy a home or invest in real estate.

JUST SOLD! South Ogden HUD Home

I recently closed on a house with a buyer shopping for an affordable home.  During our shopping experience we stumbled upon this property on 39th Street in South Ogden.  

The home was a HUD property and listed at $87,200.  It had previously sold for $128,000 in September of 2008.  We placed an offer at $85,000 with $2,550 in seller concessions.  Our offer was accepted.

Then began the long winding bureaucratic road to close the transaction.  I will elaborate on my client's bewildering experience in a later post.  Let it suffice for now that HUD homes are not the wonderful thing they are touted to be.     

Anyway, congratulations to my client's for bearing through the tediousness of it all and coming out in the end with a bargain property that meets their needs.

Buyer Loyalty: Blowing In the Wind and Driven by Waves

My client loyalty rate is extremely high.  I have never had a listing client leave for another Realtor after an expiration (that was not mutually agreed upon first).  I make it a practice to leave my protection period at "0" on all my listing agreements.  I am that confident in my ability to service and provide for my clients.

With buyers, I typically spend some time getting to know them and sign the buyer-broker agreement when we write an offer.  Typically, I will invest about 8 to 10 hours of my time showing houses and answering questions before we reach that point.  In seven years in the business, I have only had one person bail and work with another real estate agent before we signed the buyer-broker agreement.

Well, today we get to increase that number to two clients in seven years.  It is certainly a bitter cup to drink from, especially in today's marketplace.  It also may be a sign that Realtors must be more diligent about getting agency agreements authorized up front before investing the time, energy, and gas money.

We all need professional sharpening from time to time and I will consider this the lesson learned from this experience:  Loyalty appears to be a scarce virtue.

Real Estate Bloodlines: Scenes from the Secret Recorder's Vault

I went to do some historical research today at the Weber County building.  I wanted to find out who has owned my home since it was built in 1908.

My quest led me to the Weber County Recorder's Vault.  Located in an inconspicuous hallway on the 2nd floor of the Weber Center, the first thing I noticed was the security coded doorknob and a handwritten note "knock to enter".

Upon knocking, a pleasant elderly woman answers and wisks me into the room.  The room smells of old books.  As I cast my eye around the room, I see rows and rows of disproportionately large books carefully organized.  Their scale is awkward and almost cartoonish.

The clerk asks what I am looking for.  When I respond,  I am handed a note with a handful of letters in the alphabet.  She pulls out a book stamped with a letter on the cover and shows me how to read the cryptic cursive handwriting from the 1800's.  Then I am on my own.

My abstract search reveals some interesting facts about the creation of our home (look for that in a later post).  When I am done, I look at the clock. What I thought was just a few minutes was actually an hour and a half.  I am late for my next appointment...  

We're On The Cusp: Charts Show Prices to Rise or Massive Overcorrection

I had a conversation on Friday with a client about house prices and how the market "feels" like such a good value.  My client remarked: "Houses are a better value than they were in 1999 when I got in the business!"

This comment caused me to reflect on market dynamics for a moment.  The housing market in Utah peaked in 1999 but the peak we experienced in 2007 was leaps and bounds better.  Time has a way of distorting perceptions because of economic changes and inflation. So, to verify if my client's gut feeling was correct, I decided to do some heavy analysis and compare sticker prices with Consumer Price Index "Inflation-Adjusted" prices.

The findings are shocking in my opinion:

First, lets review the above market history since 1979.  Let's follow the brown line for a moment. If you purchased a home in 1979 worth $100,000, that home today would be worth approximately $340,000.  Between then and now, your home would have declined in value five separate times from five separate market peaks.  However, each successive market peak exceeds the previous one which brings you to today's price point. 

Now lets look at the blue line.  In real "inflation-adjusted" terms, your home would have declined in value for 12 years even though its sticker price was increasing during that same time. Your home's value lagged abnormally behind inflation quite a bit from 1979 to 1992.  Then, in the early nineties, this distortion corrected and there was a tectonic increase (both real and nominal) in the value of your home.  After peaking in 1999, the real price plateaued and stabilized again until our most recent housing bubble . 

The lesson to take away from this is that, when adjusted for inflation, housing is a fairly stable and predictable store of value.  Is it any wonder then that it has been such an excellent tool for creating and maintaining wealth?

Now lets look at the latest housing bubble to measure the local market's progress in finding equilibrium. 

This chart is the same as the first except we zoom in on the years 1997-2011.  Again, here we are looking at inflation adjusted prices.  A quick glance at the chart confirms my client's assertion that homes today are indeed a better bargain than they were in 1999.  In fact, we are very close to the market trough of 2004.  Keep in mind that this data is six months old.  Today we may already be at parity with the previous inflation adjusted market trough.  We won't know until a few months when today's data is finally released.

Regardless, what we are seeing is that we are at or very near the natural equilibrium point for housing.  There are a couple questions now that need answering:

1.  Will the market over-correct?

If it does, that will set up the market for another scenario like the early 1990's when real and sticker price values vaulted after lagging behind inflation.  I don't know anyone who bought real estate in the early nineties who is doing poorly.  It may be wise to watch this metric.  An over-correction is a boon for investors and new home owners. 

2.  If the market does not over-correct, what's next?

Once the market hits its natural equilibrium point, which on this inflation adjusted chart is around the $100,000 mark, will it hit bottom and plod sideways again?  If it does, with inflation increasing, that means that house prices will have to increase with it to maintain that equilibrium.  This very well might be the case.    

Either way, we are at an important junction.  We will either enter a super-bargain phase of the market. Prices hold.  And it becomes nearly impossible to go wrong purchasing investment real estate because of its relative value to the dollar. Or, the market will start to see rising sticker prices as nominal values try to keep up with inflation.

Whatever happens, it appears that brighter days are just around the corner.

Weber County Housing Inventory Snapshot: October 2011

A client asked me which markets in Weber County were the "hottest" as far as sales go.  It's an interesting question.  I liken it to asking which body in the cemetery is the warmest.  I was curious myself and ran the numbers.  Here are the findings:

 
This chart measures the "Months of Inventory" available.  In other words, at sales rates over the last 12 months or at the 30-day pace, how long would it take to sell all of the homes that are on the market today. 

Anything under 6 months is considered a healthy market.  Anything over 12 months is considered extremely overstocked.  It appears that the rurul communities of Plain City, Farr West, and Slaterville are doing relatively well along with Hooper.  The upper income communities of North Ogden, Pleasant View, and the resort communites of Eden, Liberty, and Huntsville are still glutted with listings. 

But before you start a pity party, lets take a look at how far we have come from 2009.  Here is a chart I posted a couple years ago:

There was a time when inventory levels were north of 10 months for most of the county.  Check out Eden and Liberty!  Those markets have come a long way to better health today.  Nobody likes an 80 month market time.

The contrast between these two charts shows that the market today is finding an equilibrium point after the shock of the market collapse in 2008.

JUST SOLD! Bargain Cottage Starter Home

I just closed today with some buyers on this quaint starter home in Ogden.  My clients are also my existing tenants who over the past two years have been preparing themselves for home ownership. 

This home was listed in May for $57,000.  Given the price point, we thought that it might be a real fixer upper.  To our surprise, the home was in quite good condition.  Given such, I estimated that the home had been listed below fair market value.  Nevertheless, we pressed our luck and offered $54,800 while asking the seller to pay for $3,500 in closing costs.

The listing agent called me and we determined there was not enough equity room for the seller to pay closing costs even at the list price.  Knowing that we had some headroom on value, we agreed to the idea of increasing the sales price to $59,000.  The seller agreed to pay up to $3,500 in closing costs and also participate in the Own In Ogden program.  However, the seller would not agree to make any FHA or OIO required repairs.  This was a bit of a risk for my buyers because of the age of the home but we felt it was the only way to make the transaction work. 

After 75 days, and a long, precarious, and crazy journey, we finally closed.  Congrats to the buyers on their first home!

Tenacity certainly pays off!

If you are looking to buy a home, contact me.  Bargains abound.

JUST SOLD! Estate Sale Rambler

I just closed recently with a buyer who purchased this well kept rambler.  This particular home was an estate sale where the original owner-builder recently passed away and left the home to her family to liquidate.

Our negotiations were tough to make this transaction work.  The home is 3,000 SQFT and had been listed at $155,000.  However it had not been updated (except for carpet) since the home was built.  Following our 90% of list price rule, we offered $145,000 and asked for the seller to pay $5,000 in closing costs.  The listing agent felt that our offer would be well received due to his client's eagerness to sell the home.

Unfortunately, things didn't pan out that way when our offer was presented.  We received a counteroffer at significantly higher terms.  Due too the large number of decision makers involved, it was tough to get a consensus among the children of the deceased owner.  Essentially, they were making decisions by committee which makes things really tough in a real estate transaction.

They countered us at $150,000 and paying no closing costs.  We responded back with $150,000 but asking for $4,500 in closing costs.  The sellers were still unhappy.  That is when we negotiated a verbal agreement to $150,000 with the seller paying just $2,500 in closing costs.  However, when writing up the addendum, one of the sellers vetoed the agreement and they sent us an addendum where the price was $152,500.  Obviously, this was not our verbal agreement and was provocation enough for my buyer to reject the terms and scuttle the transaction.

I felt that the change in terms was an act of bad faith on the sellers part and advised my client to withdraw.  However, I told the listing agent to call me if his sellers changed their minds and could honor our verbal agreement.  A couple days later I got a call with the agent respectfully asking us to reinstate the contract under our verbal terms.  We agreed.

After inspections, we adjusted our price to $149,650.  So what does this price point buy you?

 
It gets you a well kept and nearly original 1968 rambler with new carpet.   For a home of this size, type, and condition, this turned into one of the best values of its class in Weber County.   

Congrats to my buyer on his new purchase!

Posted by Jeremy Peterson
Ogden, Utah Real Estate Broker
Mountain Real Estate Companies
801-390-1480

Illusion vs. Reality: NWAOR 80/20 Rule Proven in Charts

The Northern Wasatch Association of Realtors released their 2011 survey.  They had a total of 476 respondents.  Here are some interesting findings:

It appears that 28% of Realtors in Northern Utah work two jobs.  The question I wanted answered is how many people truly make a living doing real estate vs. supplementing their income in real estate.  I also would be interested to hear how many Realtors live with a spouse or significant other that work and contribute to the household income.  An appropriate question would have been "Does Real Estate sales provide the majority of income in your household?" Unfortunately, this survey does not completely answer that question.  However, it does give us a clue:

The Real Estate industry is highly pretentious and ego-centric to a large degree.  What you are told is not always how things actually are.  That is why I love the MLS and these kinds of surveys.  They get to the crux of what is really going on out there.   

This pie chart here shows that a whopping 61% of agents sell less than 10 homes a year!  I would say that 10 transactions is the threshold necessary to stay proficient in the industry.  Certainly, selling less that 4 homes a year does not meet this standard and with well over a third of the folks in our ranks falling into this category, it is no wonder that the industry is often given a bad name.  It's my opinion that many of these folks know just enough to be dangerous.

Meanwhile, only 20% of the agents are selling more than 20 transactions per year.  I would qualify this number of transactions (unless you are selling super expensive houses) as the number needed to be truly full-time and a serious wage earner in the business.  Perhaps I feel this way because I fall in the category of the 20-30 range each year.  I am also the sole breadwinner in my home which I know is an anomaly in the industry as well.  This chart basically proves the Pareto Principle or 80/20 rule of life.

Regardless, the next time you interview a Realtor, ask them: "Are you a full-time professional Realtor?"  See what they say.  As the top chart shows, way more than 20% will likely answer you in the affirmative.