Benny Moo

Free Friday: Dear Benny, What's the Best Day of the Week to Buy a Home?

There are actually three days that are better than the rest of the week.

They are:

• Tuesday
• Wednesday
• Thursday

The reason:
They carry lower expectations.

Example:
7318 Manistique Drive, Colorado Springs, CO 80923

I listed this property on Monday the 29th. I showed it off the sign on the 30th. Then we went 10 days without a showing. I called the seller last week and we discussed strategy. We elected not to do anything and "wait and see what the weekend would bring."

What the weekend brought:
Saturday: Showing at 11. Showing at 12:30. Showing at 3:30. Call from one of the agent's saying it's a top two, we're coming back tomorrow. Sunday: Repeat Viewing at 12. Repeat Viewing at 2. Email from the other agent who scheduled a 2nd showing saying we're bringing an offer late Monday. Monday: Repeat Viewing from the 3rd showing on Saturday. So we're 3 for 3 on weekend traffic all wanting another look. Offer shows up Monday mid-day. Low. Monday a showing is scheduled for Tuesday. I call the agent and ask about the buyer's level of interest. They're asking their agent to measure the house because they want to prepare a sight-unseen bid from Japan where they're stationed.

How do you think the seller countered? Even better, with all that traffic, the home is under contract. It's a great house. But all the buying activity hit at the same time. Buyers knew they had to act.

So again, how could Friday, Saturday, Sunday or Monday be the best day of the week to buy a house?

By default, the mid-week pattern is better.

Sellers have their guard down. They expect (somewhat incorrectly) lots of weekend showings (our company has been only 15% higher on Friday through Sunday in per day showings since May 1). So they are more entrenched on the weekend. If these buyers waited (and maybe they could not) until the following week, or saw it before the weekend, how much more negotiating could they have done?

Maybe some, maybe none.

But think of this: if you're a seller and your doors just got blown off and four buyers in three days have you in their top 2... are you willing to negotiate much?

If you're a seller and you have the weekend off work, do you want to leave the couch and the game so a buyer can view your home? If you're already at work, isn't it more convenient to have buying traffic circulate through the home when you're not there?

This little set of nuances can save a buyer a few thousand dollars in a single transaction. Why? Terms enhance value. Dates enhance value. If a seller wasn't inconvenienced, and the offer process falls into their normally productive work pattern, and they're not already comfy with the chips and the remote... the pattern leaves to a more willing and able to negotiate seller.

For a buyer, that's good news.

Eureka! The Stat Pack Turns the Corner

This month marks the 2nd Birthday of The Stat Pack, my signature service to the real estate industry that I simultaneously adore as an intellectual production, and despise for the obsessive compulsiveness it creates within me. As a product, it's great. As a process, it's kind of like scabies. I can't shake it from my being.

As a manager I was frustrated to be out of the trenches and upon opening up my satellite office in May, 2006, I began researching market dynamics and broadcasting that to the three office company via email. The first month I chose, reporting on April, 2006 data, turned out to be the very moment that the market had tipped. January through March were moving at a blistering sales pace, but April saw a couple weird trends happen all at once. Our inventory had been building despite the demand, and in April, it soared. Selling a home (for a perceived profit) was now the fashionable thing to do. So April, 2006 was the biggest listing month ever. Simultaneously, a demand-side surprise unfolded: units went down and so did the average selling price. At the same time, the perceived profit motivation of sellers jacked the average asking price up substantially. April was a blip, May was a sputter, by June when interest rates soared a full-scale correction was unfolding. Most analysts point to 2006 as the year the market tipped, but because of the Stat Pack and all it's tables and graphs, you can actually see the moment when it occurred: April, 2006. In fact, the market was so far ahead to that point, that through June 2006, the market was only off 4 units in sales activity over the previous calendar year for the entire MLS. But then the year finished off 8% as the 2nd half tanked, with sales off 17%.

This was becoming fascinating stuff to me, and in October, 2006, I launched a formalized product for the company so they could be smarter than the average REALTOR on every listing appointment and with every increasingly rare buyer. I called it "The Stat Pack", because it was short and to the point (something that borders on impossible for me) and, well, it was a package of stats. I called it what it was and "white paper with words" wasn't descriptive enough.

For the first 24 issues of the Stat Pack, it has recorded a market-wide collapse that has only one historical challenger in Colorado Springs' young history, the massive recession of the late 80's. From a consumer's perspective, this one is honestly not as bad. Prices have not fallen like they did then, and unemployment, while worsening still, has not reached the horrid levels it reached then. The percentage of foreclosures is nowhere near where it was in the late 80's, even though the gross number has been up. From a REALTOR's perspective however, this has been as bad as it gets, and that has it's own damaging consequence on the market (when the advisers operate out of fear). The number of REALTORS in the PPAR membership is at 3300 right now, down from the peak of over 4000, but only off 12% from last year's renewal. Sales volume interestingly is off 21%. We have the same number of brokers practicing the business as we did in 2005, the market's peak, and sales volume is off more than 40% from that point. Additionally, margins are off. I'lla dmit, I charge more than I ever have to list a property now, at 6.5%. But I never paid for staging, pre-listing home inspections, home warranties, furnace cleanings, professional photography and unlimited double-sided color flyers. My marketing costs were maybe $500 per listing in 2005. It's over $1500 now, and my average sales price is lower. I'm having a good year, but my production will probably end up being 23% lower than 2005.

Why all the personal backstory?

Here is my internal memo to ERA Shields from 45 minutes ago when PPAR finally released September, 2008 sales data:

SUBJECT: YEAH, BABY! WHEN THE STAT PACK LOOKS BETTER THAN YOUR MUTUAL FUND
Okay, it’s not hard for the subject line above to be true these days. That would be true in many markets across America.

But our data in Colorado Springs is actually better than the data reported earlier this week by the National Association of REALTORS, which forecasted what we see today: the pending sale index was up a healthy measure in August when analysts had expected a retraction.

I’m not exaggerating when I say that this will be the most optimistic read in the Stat Pack’s history (turns 2 this month, issue 25, the previous 24 were all pretty bleak!).

• Average sales price went up.
• Median was up a skosh.
• Inventory went down.
• We out-sold September, 2007 (the first time year-over-year sales were up since March, 2006!), a healthy increase too of 5.6%
• Units sold were only off 5% from the previous month, August, which is way ahead of the seasonal average. September is usually a big dip.

Here is a really quick-read (you can guess what I’ll be doing the rest of the day):

• Inventory sits 12.2% lower than this time last year.
• Unit Sales are off 15.9% year to date (this is improving, it was off 20% over the summer)
• Average sales price for the year HAS TAKEN A BEATING, but a lot of that price beating happened before the end of April. Values have clearly stabilized over the last five months.We're off over 7%, but it was as high as 9% in the Spring.

Incremental improvement will likely be offset by incremental to larger-scale set backs over the next 6 to 8 months. Right now, we’re in the same boat the rest of the nation is:

• Jobs aren’t being created
• Assets are shrinking
• Credit is tight
• Financing is restricted, especially in the higher price ranges
• We can’t change any of that on a local level

What is truly enviable though is while the rest of the nation is still in the midst of foreclosure explosions, inventory builds and price nose-dives, Colorado Springs is:

• Seeing a slowdown in registered foreclosures
• In declining inventory
• Stabilized in price with periodic improvements
• Has stabilized sales activity

Lastly, Americans aren’t going to stop investing. Only the worst real estate markets in America are off as much in 12 months as the Dow Jones Industrials, which is now approaching a 30% decline in 18 months. We ain’t in that boat.

Mid $300K Ranchers with Views in Northeastern Colorado Springs

One of the more popular phrases you hear from buyers relocating to Colorado Springs are these seven magic words: I want a home with a Pikes Peak View.

I have a client actively looking for such a home right now and went out previewing today. A couple of the homes I went by didn't rate. For instance, 4852 Young Gulch Way
a.) advertises a view that doesn't exist and
b.) smells horribly of cats

There are homes throughout Colorado Springs that have views, and there are homes in this price range that are newer. But rarely do they have main level living, flat yards and values in line with their surroundings.

I found one today that was decent and one that was a "game-changer".

The decent property was 6554 Whistle Bay Drive in Newport Heights. The home is a 1999 built Classic Rancher, a Granby with over 3300 total square feet. The yard is not huge, but it is very usable and the main level is nice and open.
 
There are no major defects with the home, which is nice. The driveway is not too steep, the backyard goes downhill but at a slow grade and the garage is over-sized. The kitchen is tastefully updated with granite counters. The master still has the original blue formica counters in the bath, but they're not that bad and pretty easy to replace. Very clean, very tidy, it's a decent value at $347,900. And it does have a Pikes Peak view as advertised, even though it is through yard and over houses, it is a straight-on shot from the family room walkout.

The "game-changer" was 9003 Stony Creek in Wolf Ranch. As I reference in the video, I'm not often the biggest fan of Wolf Ranch. It has some good builders, but Engle and Beazer have both pulled up operations and left. Neither company is doing well right now, so a consumer must ask, "if I have a warranty issue, who is left around here to fix it?" The rate of sale in Wolf Ranch is not as strong as Cordera, the competing new D20 neighborhood to the north, and Cordera has some of the same builders plus Keller, Saddletree, Campbell and Symphony, all of these local builders who have been around to weather storms. But Wolf Ranch does have a neighborhood community center and big parks, and under the right circumstances, can offer up a nice home. This is one.

Click here for a Video Tour
The best feature of this home is that it backs to a neighborhood "Pocket Park". There are only 14 homes that back to this park, and it makes the small but unbelievably tidy backyard so much nicer and enjoyable. While you're not looking out the back side of the home immediately at Pikes Peak (it's viewable off the small deck on the right-hand, western side of the home), how you see Pikes Peak is infinitely better: it's across a protected wetland, unobstructed, and the park is off to the left. It has a nice country-feel with all the amenities of neighborhood. It's a bit more at $359,900 and it is about 400 square feet small AND it does not have a five-piece master bath (which will hurt it's ability to sell, it has double vanities but a soaking tub/shower combination), but it does have a walk-out, 42: cherry cabinets (6 inch tile but $5000 to replace it with slab granite), central air, a pretty exterior and there are few homes around it for sale. It doesn't feel like a distressed area, as many parts of the market in this price range are distressed... driving up some streets in some places is like a long sad line of for-sale signs. Due to the location along the pocket park, the builder who built this home (Vantage, and Citiline didn't do many goofy loans for them so few goofy buyers got into Vantage products) and the consistent quality exhibited in the first impressions of front yards up and down the street, it is pretty safe to assume that the owners in this area represent a different segment of the buyin gpopulation in 2004 to 2006, buyers that bought to sit tight and enjoy their home for a while, rather than buy fast and turn and burn in 24 months.

Save the Dream: 1537 Chutney Ct.

I have friends that "need to sell". They're authorizing a unique way of selling their house, namely, word of mouth.

The home is highly functional, but unique: 1537 Chutney Ct. in Chelsea Glen, Colorado Springs, CO 80907. It needs a little bit of work, but less than a few thousand dollars. The home is three bedrooms, two full baths, central air conditioning, two car attached garage, level backyard, great room, and a big kitchen with a pantry. It is small, 1242 finished square feet with no basement and a crawlspace. Values in Chelsea Glen in the last four years have been quite stable, and have ranged from $200,000 to $275,000. This home is being sold presently for $195,000.

View Larger Map

The home sits near the end of a cul-de-sac near the Intel Facility, but does not back directly to Intel. There is a trailhead at the end of the cul-de-sac that links into the westside trail system and connects to the Garden of the Gods trails. There is also a neighborhood trail that connects to the Pikes Peak Greenway, which can take a hiker, runner or biker as far north as th Air Force Academy, and to America the Beautiful Park downtown.  

 

Other unique qualities: it is ADA-compliant. One of the two sellers has advances Multiple Sclerosis and modifications have been made to the bath with a wheel-in shower and wheel-under vanity. There is a lift in the rear of the home. All the improvements have been made with high quality ceramic tile, Corian and Manstone and were done with custom craftsmanship.

No, this home is not ready for prime-time. No, this is not a "perfect" home. But it is a good deal. The sellers need to sell, and someone that is looking for a really good buy, who is handy, and has a couple thousand extra dollars after closing could go a very long way on this home. For investors, rental rates in the area are $1150 to $1200 a month. On a 30 year fixed mortgage, that cashflows.

Toonces and Tarantula

Who wants another slanted, partisan hackjob on why the current financial marketplace is so nasty and treacherous? All stand!

No one?

Who wants another sales-pitch for why it's a great time to buy? C'mon, you're out there!

No one?

Who is confused and disheartened and saddened by this October, 2008? Could an election season between polar opposites happen at a worse time for the economy?  Could the answers to why we're in the mess be any more partisan and myopic? I rarely agree with Campbell Brown on CNN, but she is 100% right in her commentary today: now is not the time to go negative on a political campaign, because all it does is erode the winner's "mandate" should they win. It further inflames the partisan bickering from side versus side when a course of action out of the pit of despair is truly what is in order.

My conclusion: it's all so big, so severe, so messy, it almost borders on total irrelevance. Of course, irrelevance is probably the furthest thing from the truth right now. The TV is not on often in our house, and when it is, the kids control it 70% of the time. But picking up on the nuances of a five-year old's brain right now are pretty telling. Andrew "I don't want to hear any more about health care." Yeah, he's five. He got to watch 15 minutes of the first debate.

So where is their relief?
In Autumn.
Colorado is a wicked-cool place to live.

Amy and I just "escaped" for two days to the San Juan Mountains. We lived in Montrose for the first two years of our marriage and I was there a year before that. It was a sort of homecoming, catching up with old friends and not missing a beat, traveling about an area that is still primitive and wild unlike the financial news... a thing of rare beauty.

I mean, this is downtown Telluride. I'm horrible with a camera, but these are decent photos. I don't think I could have taken a bad photo with the fall color.

 
 

This is the river I fished twice, The San Miguel. Over 20 plus miles of the quality water is public, fly-fishing only, catch-and-release. Yeah, those who like to kill their catch probably turn their nose up at the snobbery of this fly-fishing wonderland. But as the little size 20 BWO Comparaduns said to the wild rainbows in every lie: Bite Me.

 

This was a chance to get whole again. To get away from $700 Billion Bailouts. To get away from rancorous debate among my colleagues. To get away from the Cassandras watching the sky fall. It was a chance to enjoy autumn. My wife. Quiet. The sound of a river outside. The site of an owl landing alongside the car at night. Elk herds. Five-thousand foot granite faces yielding to a violent cheddar-cheese explosion of color and the tumbling anarchy of aspens descending down slopes. Wild trout sipping small, helpless bugs off the water's film. The San Juans are a wild place. They don't offer guardrails on a lot of the roads. My first fishing hole reminded me of Toonces the Driving Cat.

There's this weird western aesthetic about leaving car wrecks around to rot. The car on the left is in the middle of the photo on the right. Look for the scrub oak clump and the white dot. The road is a good 400 feet up. Further upstream on the San Miguel there is a graveyard of old Hudsons that were washed out in a flood 40 plus years ago. It's now a campground.

It's weird what can restore the soul. When the future hope for time on outdoors finds a present reality in the rain, it can actually make things better.

So too can an indigenous tarantula. I was climbing out that first fishing hole, literally scaling rocks in my waders with blind hand-holds, when I found this furry fella waiting at the top. Glad I climbed the rocks 15 seconds earlier before he got to them.