Scott Messing

There's nothing like a trip to the Bay Area of California to put things back into perspective! My family and I went to visit relatives and friends the past few days. As we drove around the crowded highways it was a challenge to remain calm. You see I tend to notice things easily and sometimes I take it to heart and it upsets me such as the overpricing of homes from the past blog entries. Well in the Bay Area there are so many people in a rush to get to who knows where. I watched many people cut each other off, zoom in and out of lanes and live what I believe to be the high stress lifestyle.

Don't get me wrong there are wonderful things about California and for me the weather usually can't be beat. But the cost of living and price for homes is still out of control! I watched the news one night and saw another negative story of the housing disaster. The news was pretty good for home buyers as they indicated that you could purchase a home for $480,000 in parts of San Jose. Amazing I thought (wink, wink). For $480,000 I could live in a 3 bedroom, 2 bath, 1500 sq ft home. Hmmmm for $200,000 I could live in a 4 bedroom, 2 bath, 1800 sq ft home in the Treasure Valley area.

I'm at the point in my life where I believe that life needs to remain relatively easy. By that I mean it's not worth the stress to be stuck in traffic each morning for 1 hour plus when the 10 miles you need to go should take 15 minutes at maximum. It's not worth the high cost of living and the wondering what will happen should the economy continue to slide. Our focus right now is on our family and providing a wonderful home for them surrounded by friends in a good, safe area. The higher the cost to have this the higher the stress.

I have friends that are paying $2800 plus monthly for their mortgage. That's not easy. They live day to day under a great deal of stress. What if one of them loses their job? How will they make their payment? These questions haunt them and they tell me so. They pay the price for the weather and life just isn't too easy.

I decided to look around for I heard that prices have decreased steadily the past year on homes in the Concord area. As I pulled up to a few homes I thought ah this one has potential in a quiet neighborhood and with a decent yard, probably .16 acres let's see the price. The sign indicated price reduced, something that you'll find just about on 90% of the signs. As I picked up the flyer I started to read the marketing points on the home. Bright and warm home with 1460 sq ft - check, larger yard - check, newer appliances - check, 3 bedrooms - check, 2 baths - check, close to everything - check and priced to go at only $500,000. Yipes! In doing some quick math even if we were able to get a FHA loan with 3% down we are looking at approximately $3000 per month and that's before the $5000 annual taxes and insurance. Woh not the lifestyle we would choose. The funny thing is that the same home would have cost $580,000 about a year ago. The stories indicate that these homes are now bargains and compared to a year ago probably but in the name of health, family and stress I still don't think so.

We love visiting with our friends and family. It's a beautiful area that's for sure and hey we used to live there. Would I trade the pretty good weather, the more relaxing lifestyle and the affordable living for it? No way! While it's true that salaries are generally 30% higher in the Bay Area the prices for homes are still 100% higher for comparables. You know I sometimes think of the Treasure Valley as a mini replica of the Bay Area but without the stress level. More on this below.

The thought of 2000 sq ft, 4 bedrooms, 3 baths, .25 acre lot for my dogs and family to enjoy for $250,000 or less is just too good to pass by. It's hard to find this for less than $800,000 and we wouldn't even qualify for the mortgage payments by today's lending standards. I'm not sure how people are getting into these homes.

Our trip is almost over and we are looking forward to returning home to a more simple, less stressful lifestyle. I suppose that's why many people do end up in the Treasure Valley area too.

Despite one of the worst winters in the past 20 years the Treasure Valley area offers families the chance of a more relaxing and affordable lifestyle. The weather by the way is pretty fantastic. Compared to Northern California it's usually just 10 degrees cooler in the winter time and it's mostly sunny and warm from May through the October months. There's so much to do and with the mountains, biking, camping, skiing all so close by that too is comparable to Northern California.

More great restaurants open weekly and for families looking to get out and meet people it's probably much easier here. Generally people are nice and approachable something that I never really felt in my years living in California. It's not that I didn't make the effort too but after saying a simple hi to hundreds of people and not getting a hi back in return I knew it just wasn't the place for us to raise our family.

Our neighbors in Meridian are great! Our kids are having so much fun meeting people and going over for play dates. There's always something going on whether in Boise, Meridian or Nampa for us to check out. There's great places to live throughout the Treasure Valley and if you are looking for a mini mansion of say 2500 sq ft the cost in Northern California of $800,000 plus will only be $300,000 in the Treasure Valley area. So click on the links such as Things To Do and let us know if you have any questions at all. We love it here and sometimes we need a little reminder in life of just how lucky we are to be here.

Does selling a home in today's market make sense? Many homeowners assume that when they need to relocate to another area or to upgrade or downgrade their housing the wise thing to do is to sell the home. This makes sense in a strong housing market when there's either a balance between supply and demand or when it's a seller's market but in today's market it may not be the best decision.

In many areas there's gluttony of homes, which will take a year if not longer to market and sell. High inventory coupled with a lower demand is generating many price reductions and the potential for a huge loss in home equity built up during the housing boom the past several years. Weighing alternatives makes sense, and then if a homeowner decides to move forward reviewing marketing strategies will help.

Alternatives:

1) Keep living in the current home: If monthly payments aren't an issue perhaps consider staying in the home for another year or two... until the market correction promotes an increase in equity and reduces the current supply. Taking on a few projects such as upgrading some flooring, fixtures, landscaping, painting and clearing clutter during this time may help to increase the value of the home. Getting prepared over the next year is advantageous to obtaining a higher price.

2) Reduce payments through refinancing: If monthly payments are too high talk with your current lender or inquire with a new lender about reducing the payments through refinancing. If the goal is to market the home in a year or two from now consider refinancing to an ARM. It's not such an ugly word depending on the situation and the type of ARM provided. Look for no penalty on prepayments and make sure there's no out of control increases over the next few years. There are many 5/1 ARMS, which means 5 years at a fixed rate and then yearly adjustments. Talk with a lender to find out more information. Contact us as we can provide you with a few lenders our client's work with as well.

3) Consider renting the home: If you must relocate now and you realize that the home may not move quickly consider renting the home for 6 months or longer. This option is a great one and often will provide you with the opportunity to purchase another home. Lenders consider a percentage of the rent collected on your current home in calculating the debt to income ratio. In cases where the rent doesn't cover the mortgage it maybe considered an operating business loss on your taxes. Consult with your tax advisor and lending institution to see how this works and to make sure it works in your favor. Homeowners can either collect rent and manage the property on their own or hire a property management company to find renters at a nominal fee ranging from 6-10% of the rent. The company will collect rent and manage the property. We work with several management companies so let us know if you'd like their names.

Marketing Tips & Strategies

After reviewing the alternatives and deciding that marketing the home would be best here are a few marketing tips and strategies to consider. Homeowners face a tough decision whether to market their home as for sale by owner or to market it with a real estate company. Motivation comes in many forms from cost to customer service, from timely results to customer service. Customer service is mentioned twice for it's probably one of the most important aspects to marketing a home. Timely results can be achieved but when coupled with poor service comes the stress and confusion often causing a greater cost than it was worth. The public is bombarded with advertisements, claims, gimmicks and strong personalities all in a hope to win business. The truth is that it's a combination of factors that help to successfully market a home. Often the fundamentals are overlooked. Here are a few to consider.

1) A well priced home (at or below comparables) #1 factor to consider

2) Exposure through cross platform marketing

a. MLS entry for potential buyers and agents to see

b. Signs, well designed flyers highlighting the excellent features

c. Internet advertising through various web sites not just one or two sources. The home must be promoted to it's full potential.

d. Pictures, pictures and more pictures

e. Visual Tours online and promoted properly

f. Print media (newspapers, magazines, etc.) comes with a word of caution as there are so many books with so many homes often the property is lost and never really seen from this format

3) A clean and attractive home. Past blog topics have covered this topic well but clearing clutter, adding flowers, new paint, updating fixtures and having the home show well is important.

4) Customer service is of utmost importance! When marketing the home please do consider many of the things that go into providing excellent customer service. Customer service items to consider include:

a. Communicating with all potential buyers, buyer's agents, other agents

b. Negotiation of contract including inspection and other contingencies

c. Active marketing as until the home is sold this never stops

d. Adjustments to price and marketing strategies

e. Keeping homeowners informed and working out plan with your input

Potential buyers need to know your home exists and to have a reason to want to view the home before they even consider purchasing your home. It's about pricing the home properly, promoting the homes features, gaining exposure from various sources and providing excellent customer service throughout the process. Remember all it takes is one good offer from one solid buyer. Consider and review all the marketing tips and strategies to provide advantages. Interview agents and see what plan works best for you. Contact us for any support and let us know how we can help you.

A very popular alternative to foreclosure is the short sale. A home is subject to a short sale when the lending institution (bank) maybe willing to accept an offer on a home that is less than what the current owner owes. On most of the newer homes built in the past 5 years or so the costs for banks on foreclosures usually runs round 30% to 40% of the current balance owed. The costs for the bank adds up as weeks become months without seeing incoming payments. If the property goes through the entire foreclosure process to auction then they are looking at more than 180 days. Factor in advertising and the risks of receiving even lower value or no offers for the home and you can see why they may take $220,000 on a balance of $240,000 to move the home quickly.

The Treasure Valley area is seeing plenty of short sales lately more so than foreclosures. As buyers continue to search for what can be a great deal in today's market they often encounter multiple offer situations. My wife's colleague had put in 2 offers on short sale homes in Tuscany Village in Meridian only to be rejected on both due to higher offers.

Here's one scenario that I think is worth reviewing. Say you find a home that you absolutely love and the asking price is $220,000 based on a short sale subject to bank approval. Have your agent run the comparables for the subdivision based on the recently sold homes to see the value. Next have your agent call and see if offers currently exist on the property. If no offers have been made and the property is already under value by 10% or greater consider offering close to if not asking price. I know it's tempting to offer an even lower amount but what usually happens is the bank will reject the offer, wait for another offer to accept or worst stall for a few weeks until other more reasonable offers arrive and accept one of those or issue multiple counter offers. The more realistic the offer the greater the chances are for success.

To further review the short sale process here are some points to consider:

• Short Sales
  • The Good
    • Could purchase a home for less than market value (possibly 10% to 20% under comparables)
  • The Bad
    • Working with banks may take long time to get back with you. It can be typical for a bank to take 2-3 weeks to respond to your offer.
    • May have multiple offers in which they counter all parties and price becomes closer to market value or possibly higher
    • Fast closes are not the norm as it usually takes 45 or 60 days so if you're in a hurry it's probably not the way to go
  • The Ugly
    • These properties are usually ‘As Is" so it's important for your agent to know the proper phrasing to use when writing the offer pertaining to inspections. Ensuring your safety and that you have a possible exit strategy goes a long way and can save you thousands of dollars and headaches.

The past 2 weeks I've made several calls on behalf of my clients on short sale homes they were considering purchasing. In all cases where these homes were under current market value by 10% or greater multiple offers were received. It's important to be ready to act fast. A few things to consider doing include receiving automatic email so that you see the property right as it becomes available. This way you can view the home with your agent quickly and make a fair offer. Also noteworthy is that with these short sales approval letters are due with the offer to purchase the home. Meeting with a lender in advance and obtaining this approval letter for your agent to present will be very important.

Let us know if you have any questions or would like to see the Treasure Valley short sale listings.

In the Treasure Valley area where it seems you can't throw a rock in a semi crowded room without hitting an agent what's really important in locating the right agent for you?

I have some thoughts on this question that I've touched on in the past but I'd like to elaborate on this a bit more. I'll also touch on 2 more topics selecting the right title company and loyalty.

Knowledge - The right agent must not only know the housing market but how to navigate through the contracts of the trade, analyze and present accurate comparables on properties and reveal hidden details usually unknown.

Intention - Agents must put their client's needs first and not their own. Doing what is right for you and your family includes: not pushing you into another price range (known as an up sell) and showing you homes in areas that meet your families needs rather than what the agent likes (commonly known as steering). An agent's intention speaks volumes.

Follow up - Making sure the lines of communication remain open and there is a clear understanding of the client's needs, whether marketing their home or finding a new home for their family.

Achieving Results - There are some agents that present gimmicks and statements in an attempt to gain business. A bit of advice -- all that matters is the end result. Meet the agent and listen to what he or she says. Rather than listening to an agents "I statements" listen for the "We statements." Achieving results are based on forming a partnership and a relationship to meet your needs. Working as a team the lending industry, the title company, you and your agent should all be on the same page to achieve the results needed in finding you the desired home and having it close properly.

We have had many clients say how fast can you get my home sold? An honest agent will tell the truth which is we don't know. We are people just like anyone else. Agents must not set the price; the comparables help set the price. Agents must not indicate a time frame for a home to be sold, especially in today's buyers market. There's simply too much inventory out there. Our efforts will only go a long way if the home is priced properly in a good location and if there's a buyer to purchase it. Finding the buyer is part of our job through actively marketing the home. If an agent says they always sell homes faster than their competition before you decide whether to use them ask to see their marketing plan.

Trustworthy - Select someone you feel comfortable with that will work hard on your behalf. Reading people is important and sometimes it can be very difficult. Remember we, as agents are not all knowing beings. We are human beings, fathers, mothers, husbands, wives, and parents just like you. We don't know it all but we work with you and for you to achieve your end results. How we carry ourselves and how we interact with you and your family helps determine whether or not we earn the much-needed trust we must have in each other.

Customer support - An agent working for you is going to be there when you need them. Taking days to return your calls is simply not acceptable. Find someone that is working for you all the time and that will appoint someone such as a partner or colleague for when they are not available. Someone that keeps you posted even if just to check in and relay information is key. Some agents just don't have the time to really give 100% to their customers. Before making a decision ask the agent what are their phone hours and how they plan on providing you with updates. Is real estate a hobby for them or a career?

Speaking of careers the Treasure Valley has a number of title companies and selecting one to handle your home purchase is of the utmost importance. Title companies often save home purchases. A home is not considered sold until the all paperwork is signed, the lending has funded and the deed has been recorded with the county assessor's office. At any point along the way hundreds of things can and do often go wrong. Having a competent agent is only half the battle. The title company can resolve many problems that are out of the lenders and agent's control. In the Treasure Valley we have several title companies available with wonderful escrow agents and all of them want your business. However, we have found that when push comes to shove there's one escrow agent that has done an outstanding job for us.

On a recently closed home transaction Anne Slayton with LandAmerica Transnation performed magic. The sale came into trouble when a Liz Pendens (Pending Litigation) was filed and did not show up in the preliminary title report. On the day the deed of the home was to record title received a call informing them of this pending litigation.

Lawyers were involved but Anne worked hard to resolve the issue by providing the proper paperwork, making the follow up calls and keeping all the agents and clients informed along the way. It was incredible for we thought for sure this particular sale would fall through leaving our homeowners back at square one. Anne's loyalty and dedication to her job and her clients, along with her expertise in handling these tricky situations came through for us all. I'm happy to say that our clients are now living in their new home.

Another topic of importance is the loyalty developed between the customer and the agent. Sometimes customers are persuaded to leave their current agent for another. (See blog post called "The Real Estate Signage Game"). Agents often encounter this after putting in many hours of research, touring, negotiating, marketing, holding open homes and more where the customer cancels the listing, changes agents or even vanishes without a trace. It's a relationship that demands patience, determination, understanding and loyalty.