Benny Moo

1381 Cresson Mine: John Laing Sales Model @ Gold Hill Mesa for $359,900

This property is not one of my listings, but an interesting bang-for-the-buck opportunity in Gold Hill Mesa (by the way, the new site is quite a bit better than the old one).

The property is listed for $20K less than what the buyer paid for it in 2007. Not the usual situation where someone buys a model and then resells it for a significant increase over the initial price, however they did get almost two years of rental income (at a rate that probably surpassed the deficiency).


GHM is an interesting area. It has not been received favorably by the REALTOR population, and conventionally speaking, that is probably a bad thing. That sort of reception will influence resale rates. At the same time, the individuals who bought here bought with more prudence than standard new construction buyers. They put skin in the game with decent money down. They bought due to the location, in the foothills, a half mile from Bear Creek Park, a bike ride to America the Beautiful for summertime concerts, Pikes Peak Views, etc. It is also the kind of place that has some interesting articles posted about it, some like Rick Tosches's article using firsthand observations over actual interviews or reports,while others do some research and actually rate higher on Google.

What's a buyer to do?

Be informed.

Get facts.

Talk to people they trust.

Decide for themselves.

In a slippery real estate market such as this one, this is not the kind of place that will have people clammoring with multiple offers anytime soon. The John Laing Chapter 11 filing  is a short-term concern that may have ramifications equal to the long-term considerations of whether or not you can plant a vegetable garden. But yet another consideration, one that bucks the "environmental fear" argument is this one:

In commuter-crazy Colorado Springs, name a single new area this close to this much with new homes built the way the modern Gen X buyer or up and comming affluent buyer actually wants them? There isn't one. Now... name one where you can get a new home at $90 a square foot?

I'm usually pretty opinionated, but this is sort of like trying to figure out how to vote on 1A... the normal mortal enemies make for strange bedfellows.

5720 Bass Ct in Fairfax: Value of a Different Order

5720 Bass Ct, C/S/C Truly one of a kind in a high-demand area, this BIG 4021 square foot stucco custom ranch plan was built in 1999 by Oxbow Custom Homes. This floorplan was never duplicated, and the custom touches resonate with a feeling of openness and refinement impossible to find anywhere in the county for this price. There are features, and then there are benefits. The benefits of the home include high ceilings, eight foor doors, architectural windows that frame the view of the backyard's tranquility, and a flow between rooms that provides for either large entertaining or quiet spaciousness. The features however are too numerous to ignore! The kitchen starts the parade of quality with cherry cabinets, glass doors, crown molding, Corian counters, New Top-of-the-Line Stainless LG Appliances including a side-by-side fridge with lower chest freezer. The dishwasher has inside door-mounted controls and a stainless interior. Custom 12" tiles with mosaics color the floor. The eat-in kitchen nook is beautifully lit with natural light and easily seats 6. The main level great room has a high ceiling, coved at the top with recessed lighting and a ceiling fan operated by remote. Looking out into the backyard through architectural windows, it is a peaceful but large room to either read in quietly or host a large gathering. The fireplace is the perfect compliment for snowy afternoons, and the delightful waterful tinkling through the sun is a great sound to enjoy on summer evenings. The master is a blend of size and sophistication. Taking advantage of the front of the home's southern exposure, the bay window beautifully lights up the room large enough for a California King. The huge master bath has a giant custom-tile shower, granite double vanities, custom tile flooring and a huge walk-in closet with built-in furniture for additional storage. The dining room has engineered wood flooring and is spacious enough for an 8 person table, but open enough to prevent cramping of anyone's particular style. The laundry accomodates side by side washer and dryers, but is large enough that the present owners have chosen to stack their washer and dryer and put in a chest freezer. Additional storage and shelving is provided. The two secondary bedrooms are on the east side of the home, both with large closets and the two share a full bath. There is also a secondary bath near the entrance and great room. The lower level is fully finished. The signature attraction is a 36x20 recreation room, with recessed lighting, alcoves for exercise equipment or card tables, ceiling fans (2), and in-wall speakers. Around the corner is an additional possible office area and two positively enormous secondary bedrooms, each just shy of 250 square feet at 20x12. Both have walk-in closets over 8 feet deep. These two rooms share a secondary full bath with a double vanity sink. The mechanical room doubles as a storage room with an additional 100 square feet of possible storage space. Outside the quality continues. The exterior is stucco with a 30 year dimensional shingle roof. The front porch has a stamped concrete patio with a ramped access, and the garage is oversized, stretched longer towards the street. This accomodates an interior ramped entrance and still allows for parking a mid-size SUV. The garage is fully finished for extra insulation. The backyard is amazing. Nowhere else in Briargate is their a backyard this large and well-cared for under $600,000! From the custom waterfall and pond, to the grove of over a dozen maturing aspens, to the variety of native pines, to the concrete pathways, to the separate BBQ grilling patio, to the covered patio of 30x16 with covering, recessed lighting and ceiling fans to the storage shed big enough to park a car in, to the recessed lighting... this is the ultimate retreat for backyard enjoyment. Those long Colorado evenings are about to get a lot more enjoyable! This home has been < My Notes Click here to begin using this feature Other Details * Property Type: Residential * Annual Taxes: 2021 * Style: Ranch * Exterior: Stucco * Roof: Composite * Level(s): 1 * Floor: Ceramic Tile * Living Areas: 3 * Dining Areas: 2 * Basement: Finished * Garage: 3+ Car Attached Garage * Fireplace(s): 2 * Heating: Gas, Forced Air * Cooling: Ceiling Fan(s) * Appliances: Dishwasher, Disposal, Microwave Hood, Oven/Range Electric, Refrigerator * Lot: Cul-De-Sac * Landscaping: 0.47 acre lot that is completely and impeccably landscaped. * Fence: All * Zoning: Residential * Listing Area: BRIARGATE * Distance To Transit: 0.25 miles * Distance To School: Walking to all three * School District: Academy 20 * Elementary School: Prairie Hills * Jr High School: Timberview * High School: Liberty

Walking Tour of 1519 Happiness, Colorado Springs, CO 80909

Walking Tour of 7379 Quiet Pond Place, 80923

Reason #162 IT MATTERS who your lender is...

The Credit Stimulus might actually be working. Rates are now at their second lowest point ever at 4.96% for the week ending the 13th, and applications are rising. This is not the perfect market for everyone, but first-time buyers are truly beginning to see the value of buying into this market and the credit seems to be loosening... a little.

While it is loosening, the underwriting is getting more and more unpredictable. Even though it is loosening, more deals are falling due to loan problems than before. This property bounced back onto market today and reduced from $370,000 to $360,000. Normally a property under contract for close to a month is well past inspection issues. Normally a property that does not appraise does not rebound onto market only to have the sellers dump $10,000 in price. (appraisals may come in low, but a seller might get entrenched and fight for their price... odd that this one chose to return to market at a 2.5% lower price)

Whether you're buying or selling, it matters who the lenders are. If you think it's a great time to buy, you better make sure what you're buying: closes.

As a buyer it matters that your lender doesn’t just offer you good terms and good prices; it matters that they can close on time, won’t change terms on you halfway (or the day before) closing and that their present portfolio of loans is not compromised by existing toxic debts that prejudice their underwriting standards. Just as your agent should put you in the best negotiating position possible, so should your lender. If the lender compromises your ability to get that great house or great deal... it doesn't matter how low their rate or costs are.

As a seller, the buyer's lender is equally important. Most sellers do not care if the buyer is getting raked over the coals, but they might want to start. Ask yourself, would you care if your loan suddenly changed on you, and correspondingly, little things like, the rate; your downpayment requirements; your proof of income; documentation on that deposit in December; stuff that should have been presented at application that may be different or hard to get today, all started to move around on you? As a seller, can you see how a buyer might get, well, squirrelly? Squirrelly buyes usually don't close. Is it a problem if they don't close? Nod your head, yes. It also matters that the buyers lender can close on time because, hey, you would probably like to close on time. Finally, you’d like to know the quality of that piece of paper that says the buyer is “pre-qualified” or “pre-approved.” Sarbannes-Oxley actually can prohibit the lender from speaking with the buyer’s own agent, let alone a selling agent. This effects sellers because the pre-approval letter could be the only piece of information they receive on the loan until closing. Would you like to spend 30 to 45 days in the dark on whether or not your home is going to close?

Then there is this threshold called an appraisal...Appraisers are all over the place and I predict more deals will fall due to low or peculiar appraisals come May when the Fannie and Freddie loan systems go to a blind-rotation, and lenders can no longer determine who their appraiser is. How this can effect a transaction: if a buyer sends their loan to a lender with heavy foreclosure exposure (think most-famously Countrywide) that appraiser might not appraise the property the same as say, a lender from Wells Fargo or PHH who had far less exposure. Because some lenders have such a glut of “toxic” assets presently rotting in their portfolio, they are self-regulating with more extreme standards. If they ever want bailout money, they have to move forward with a cleaner portfolio. Correspondingly, their underwriting is more risk averse. Values are more conservative. "Defects" like drainage and roof may become required repairs. Almost certainly there is a requirement for habitability: that bank-owned home without a stove and the winterized water heater? The appraiser might come in fine on value, but you can count on him adding a return trip fee to make sure the appliances are in, the property has running water and flushing toilets and the furnace is keeping the place toasty.

This time last year we were dealing with the first wave of declining market indicators. Until late January last year, 3% got a buyer in conventionally. That went to 5% for everyone in February. But for almost everyone it was a 10% minimum downpayment. For a couple lenders, Private Mortgage Insurance didn't want any further exposure to their crumbling portfolio, and at least for a little while, wouldn't touch some lenders, so they had to go to 20% down. One would naturally assume that this would be uniform, something as simple as a minimum downpayment for a conventional loan, but it wasn’t (and still isn’t). Far from it.  I had a buyer doing a loan with First Bank (almost zero toxicity in their loan portfolio) buy on Prairie Wind in Wagon Trails with 5% down at $350,000. My colleague had a buyer with ENT on the same street two blocks away the same month who had to bag their deal due to ENT requiring 10% down.  That was at $275,000. Both buyers had credit in excess of 720 and high-paying jobs with assets. Lender A: 5%. Lender B: 10%.

Some Rules of the Game:

1.) Get a Good Faith Estimate from all the lenders you are speaking to. Get it for the same program, same rate, same day, preferably within 3 hours of one another. If a lender cannot email you a good faith estimate the same day, move on.

2.) Get a loan pre-approval letter indicating all necessary requirements for fulfillment of the loan.

3.) Get an answer to how many days before closing the lender typically has figures to the title company, how many days it takes them to close an "average" loan, and, if this loan is in fact "average." If you have a desperate seller a 15 day close is a huge advantage over a 45 day close. You don't want to get a great rate but pay a higher price because your lender is pokey. Find out BEFORE you write.

4.) Find out how they perform their appraisal system, when it must be ordered by, is a third-party involved, etc. Ask them to elaborate. You might not have any clue what you're looking for here. But boy, the lender better have a lot to talk about! If they don't, and call your bluff, ask why they're not elaborating. Let them educate you: it's your money.

5.) Ask about their previous exposure to sub-prime loans and their present portfolio of loans. Do they service them? How long have they serviced them? It's one thing if all they do is originate. It does say something in this day and age if they service them personally (ERA/PHH and Wells Fargo service almost everything and have for several years). If they're willing to live with their own product, it probably is not garbage.

6.) Get multiple opinions if you're a buyer. It won't impact your credit rating to seek advice from multiple lenders for the same intention: residential home financing. Now don't go and apply for a VISA or buy a car while you're doing this. But talk to two to four, pick the one you prefer to work with, and send them a competing Good Faith Estimate if you would like them at a lower price.

7.) If you're a seller, make sure your agent has a chance to at least speak to the buyer's lender, not just email, but a live conversation. This can usually be done by a tactful initial conversation between the agents while the deal is first consummating. It isn't perfect, but two parties are about to be financially wed for the next month or two. It's much better to know what you're in for.

 

A Problem Solver's Take on How to Get Rid of Jay Cutler (or how to negotiate when it's all about "principal")

Yes, that's what this real estate blog post is talking about. Yes, it's a cheap way to generate Google buzz, worthless Front Range Colorado Celebrity Blather implanted in my blog of professional specialty. Deal with it. And I'll just get it out of the way: Jay is dumber as a seller than he is in a December Red Zone. I doubt he's fooling anyone with a 35% mark-up on his Castle Pine Shrine to #6, a remarkable run-up considering the rest of that price point was FLAT over the last 3 years. I dunno, Recession-Denial is easy when you have all that hair to coif.

By trade, I am a problem solver. REALTOR's in 2009 are especially adroit negotiators as the entire industry fights over the lovely scraps of balloon leftover from the real estate bubble bursting. That's what we do out here in the wilds of realty... it ain't sophisticated, and it ain't just multi-part State-Approved forms we're filling out. We problem solve.

Some of us educate on negotiating your way out of the paper bag you find yourself in. Like the one Josh McDaniel probably wishes was covering his head each time he's seen in public. Guys like me actually enjoy exploring the underbelly of human emotion and finding the opportunities that lie within.

Like the opportunities within hurt feelings. Sometimes my feelings get hurt. Like when I as a selling agent wrote an offer for a buyer's agent on my own $1 million plus listing and all that other agent did was forward the email. Or when it took six days to get a counterproposal on a lowball offer the listing agent  basically encouraged my buyers to write and then claimed "insult". Or when a listing is appraised, photographed and inspected and then never comes on the market. Or when six out of seven deals in 45 days either don't come together or fall apart completely due to any number of circumstances, not the least of which were two notable incidents of bald-faced lying. There are lots of feelings being hurt out here in the real economy. Real lives actually go down in flames. But despite the scorched eyebrows and smell of singed skin, I move on. I plod on. I problem solve. This Josh and Jay problem is a piece of cake.

It's a piece of cake because there are predictable shades of hubris clashing over nothing but "principal". That's nice and centered. At least it isn't reality. Reality is messy. "Principal?" That's easy! There is the do-nothing owner, proclaiming himself in charge, but oh my, should he even need to offer his driver directions, he's gonna have to winter in Cheyenne. There's the new head coach/taskmaster/Jon-Gruden-Chucky-Face-with-Pimples who is actually younger than myself, and his Machiavellian new GM/Spreadsheet-Freak/Rutgers-Finance-Major-Right-Tackle-Walk-On buddy Brian Xanders. Can you sense the "X" Factor just begging to leap off the screen? That's XANDERS, with an X. This to go along with a disaffected youth born with a howitzer right arm and a disposition this side of Morrissey, a chucklehead born in Santa Claus, IN with a hairstyle that is Flock-of-Seagulls meets SAE.
His agent is from Harrisburg, MS and goes by the handle "Bus". C'mon, folks. And they're moaning about "principal". This is an easy fix. Even Hollywood screenwriters that got Dreamworks to bankroll Monsters versus Aliens could draft out a dozen plot-lines more real-world than this.

Here's the thing that a specialist in negotiating with human emotion like myself can glean from this situation: it's all about people. Oh yeah, sounds trite, huh? Well it sure isn't about the money. That's why the "X-Factor", Colonel Xanders has no pull. It's why "Bus" the agent is going after trades. It's why Vandy-Mop is headed for another destination within three weeks and won't wear blue and orange this season. (see, money is part of the equation only during free agency. After toiling in Detroit, you know, Real World Land, for say, three seasons, I think Jay might actually want to bankroll his next real estate investment with a winner. He could still return to the Mile High City) The Broncs have lots of cap room to fix this. They have a weak and clueless owner with billions in Canadian oil money dribbling out of his pocket. (Hey, Mike Shanahan still thinks he's the best owner in sports. This from the dude who subdivided off an acre of said owner's estate for the guest cottage on his 30,000+ acre house) There's precedent for cash. But that hasn't entered the fray, because no one seems to have asked for it. Each side just wants to win an argument. So what fixes this?

If you're the Broncos (who I advocate for in this precious little cat fight), you let the other side think they win. You move the effected party with his hand-selected choice of party guests to a new destination. That's right, you ship Jay and you send him off with his entourage. The NFL has really not done a monster trade since Herschel Walker went from Dallas to MN that bequeathed three titles in five years to Big D and a decade of frozen nihilism that I think spawned the movie Fargo out of sad-sack Vikings fans. That's called "let's let the Vikings think they won this one" and then wrecking havoc on the entire league with year's of awesome stock-piled picks. It's probably time for something approaching that order. Every team in the league will have a harder time selling tickets, and there's nothing like bringing in a young Pro Bowl Quarterback to grease the season ticket sales. The Bus is driving and he got McNair out of TN and Favre out of Green Bay. His new goal is to get Jay to a new destination where he will be embraced as the Football Throwing Messiah he was born to be. Well what could make Jay feel better than thumbing it at both Matt Leinart and Vince Young and being traded for the first overall pick in the draft? Remember, those two BCS Pretty Boys were picked ahead of Jay in 2006. How sweet would it be to be traded for the number one pick where he's the new face of a franchise, instant starter, and they're both back hugging the pine in Tempe and Nashville? Problem: Won't happen. Element of surprise (and Matt Millen) are both gone from the equation and Detroit. But it can still be done with another strategically-placed prop, so it at least "feels" like he was traded for number one. If the Broncs ship Jay along with his best buddy (and ironically, a Bus Cook client!) Tony Sheffler out of Denver, they can get first pick mileage and more out of it. God Bless the Motor City, they need something to lighten their real-world-doldrums (like 11% unemployment, a post Internatl Combustion Universe, Jay Leno doing a USO stop in your suburbs), and Rocket-Head, I mean Arm, Jay, "Sheff" and current Lion Calvin Johnson would make a helluva Trio. Can't you just see Lions fans thinking that they died and went to, well, at least Gary, IN? The Broncos get back the number one overall pick and the Lions first third round pick, the 65th in the draft. Bus looks like a hero, people start talking about a possible playoff run for Detroit, and people sit around scratching their heads about those dim bulbs in Denver. But those dim bulbs don't keep the number one, either. That gets shipped to Tampa in exchange for their first round pick (17) and a defensive end of which Tampa seems to have several, who all come out of a 3-4 and lives to blitz and create turnovers (the Tampa Way), and a later pick like fourth or fifth round. Tampa wins too! They finally can get a quarter back (Matt Stafford, the likely Number One Pick), who as a Georgia Bulldog is already painfully familiar with Florida football, and Tampa also gets buzz about maybe not this year, but soon, very soon, they will be a team to once again reckon with.

If you're the Broncos, what are you left with from this fight over "principal"? Another defensive player who can probably ball if he's from Tampa and a bunch of picks. Actually, a bunch of perfect picks to fix their many problems. The 12th overall pick, which they likely use on an LSU defensive end or one of two USC linebackers. At this point, the defense is nearly fixed. So the offense if broken without Cutler... They also have the 17th pick, a mid 2nd round pick, 2 third round picks and 2 4th round picks, two fifth round picks, a sixth and a pair of 7ths. Granted, a different brain trust drafted last year, but they got Eddie Royal and his 90+ catches out of the 2nd round. Isn't that New England system successful with self-sacrificing role players who buy in? Isn't that haul of picks the ideal way of doing it? Didn't they want to trade for a USC quarterback two weeks ago, guy named Cassel? By 17 they can get Matt Sanchez, USC's starter who was one possession in Corvallis, OR from going 13-0 last year. Pete Carroll thinks he is a better leader than Leinart. They might still get James Lauranitis in the middle 2nd round, the next Randy Gradishar right down to the likely number selection and alma mater, more defensive help in the 3rd round plus a solid running back and then draft for depth in the fourth round (that's where they mined Sheffler and Brandon Marshall in 2006).

It can no longer be a "defense away from a championship" team. It's a team in total and complete transition. Brandon Marshall is probably out until Halloween since he also likes to get into goofy arguments and fights (see a pattern here in this class of '06?). If I really wanted to get all string theory on you and  correlate strange football to weirder real estate, I might talk about the economic tipping point that was April, 2006, when the real estate market went off the cliff and what looked like the Donkey's Salvation (Cutler, Dumervil, Marshall, Sheffler and a trade for Javon Walker) was really just the Emperor prancing around in the buff. The Shanahan Way and the Fat-Bottomed American Way have numerous unsavory correlations. The Broncs won't win much more than 8 or 9 games next year, and our market is going to putter along unfriendly and kinda surly for the next 18 months. But where will they both be in 24 months? Capologists can learn much from the Buffett Mantra: Be Cautious when others are Greedy. Be Greedy when others are Cautious. When you can cloak that auction as doing a favor for another party... well, I think they call that "game on."

Apparently the Broncos new management and coaching structure isn't too suave with the Shanny-faves, doesn't mince words, doesn't have the boys over for 24 ounce porterhouses on the grill big enough to thaw Cherry Creek Reservoir. Okay. Seems kind of boorish and childish to not play nice. Afterall, the Jets were making headlines wining and dining free agents. The Seahawks flew Housh over Qwest Field with his highlights playing on the Jumbotron and had a custom made pair of his favorite receiving gloves trimmed in Seahawk colors waiting for him in a made-up locker. I don't think McDaniels and Xanders know to brush their teeth before a meeting, let alone how to flatter a person. So that's not their strength. But as all of us economic civilian survivors know, it's best to stick to playing your hand that's the strongest. Out with the old, in with the new. The dozen or so free agents brought in under cap indicate "The X Factor" is a pretty shrewd negotiator. Maybe he and Chucky Jr. are both good at ticking young untitled punks off. But if the system really works, find willing cogs who owe you. Don't try and please those who think you owe them. Let the Losers, Win. They're still Losers.

5010 Herndon: A Walking Tour

5010 Herndon in Briargate

Colorado is calling Jim Cramer: Pikes Peak Market Update, March, 2009

Jim Cramer made a wild announcement in October of 2007. Appearing on The Today Show, with the stock market roaring into record territory, he commented on something that was not his specialty - by a long shot: The Residential Real Estate Market. "Don't buy a house anywhere... especially Colorado!" He roared, repeating what he had said the night before on Mad Money.

Funny he should say this as our market was already in the 18th month of a down market and his own specialty, the stock market, was days away from beginning a 50% decline in value.

It's a great example of how difficult it is to specialize and how easy it is to sensationalize. In the same conversation, Cramer predicted a real estate market recovery in June of 2008. Wow. Which was more wrong?

So there is a certain satisfaction to be had in Jon Stewart's "evisceration" of Mr. Cramer and his CNBC colleagues on a now nightly basis on the Daily Show. (For those wondering why this link takes you to the video on the Huffington Post, the Comedy Central link has trailers for a borderline movie before hand, and well, The HuffPost link is a little more family friendly. Barely. You've been warned.)

Running numbers and predicting outcomes is stinking hard. Predicting accurately what will happen in such an inter-connected marketplace, where tiny residential real estate is effected by global trade, percentage of Treasuries held by Chinese investments, a foreclosure next door and stinky pink carpet that reeks of a cat two owners ago... that's hard. Jim has a tough job. He must be bombastic and sensational and accurate. Poor Guy. But he should also be a little smarter than to mouth off about a market 2000 miles away from this about which he knows precious little. Some smarties who run elaborate risk assessments, guys at places like PMI and The Office of Federal Housing Oversight have never placed a dagger in Colorado, and right now are as bullish on Colorado as any other state in the US, essentially saying the correction is just about done.

But there is some pride in the fact that having run numbers for close to three years on 15 MLS areas and the overall Pikes Peak Market in general, I have gained a little bit on both my credibility and my accuracy.

1.) I predicted 8200 single family sales last year. We ended up at 8339.
2.) I predicted the lowest number of listings since 2002. That was true.
3.) I did not guess that the declining market index would have such an impact on 2008 sales, but after that first started to gain traction in February, 2008, I monitored the trend and then predicted it would abate by fall. Despite a dramatic slow down in activity, PMI and www.ofheo.gov agreed in their 3rd Quarter, 2008 report.

I also knew that January, 2009 sales data would be spectacularly bad, primarily because I monitor consumer behavior. For some reason, The National Association of REALTORS seems to spend a great deal of time monitoring macro models and trends, rather than asking easier to understand micro questions, questions that organizations like REAL Trends seem to be better at asking. Case in point: if people aren't buying Christmas presents, why on earth will they buy houses? NAR essentially predicted an instant injection of buyers with the December rate plummet. Instead, the worst month in 14 years materialized, locally. Yet there was ample evidence that something was in fact starting to happen.

It showed up a little bit in February (CLICK HERE FOR THE MARCH STAT PACK OF PIKE'S PEAK REGIONAL REAL ESTATE NUMBERS). Sales increased 22% over the January freefall. Price went up $10,000, to a still extremely low $207,000, but nonetheless, recovered some of the huge January losses. What is most amazing though is how inventory continues to hover around 5000 units and not climb. For every price point below $400,000, supply actually went down at the end of February compared to the end of January. This is unheard of. The months of inventory went down (indicating demand went up in relation to supply) for every price-point under $175,000 (a range commonly associated with local first-time buyers).

Without getting too "experty" here is the real-simple on the activity that is afoot:
1.) First Time Buyers, a sustainable demographic, are out in force. By the end of this month, it will be a seller's market under $175,000 as all months of inventory will likely shrink below 6 months. It will do this with 5 prime buying months still to come.
2.) The Tax Credit is helping a little bit, but the even more sustainable force of low prices is drawing buyers into the market. This actually starts to unlock some of the puzzle: it is price, stupid. The best price, sells. I had a buyer lose out on a VA REPO last week: the original owners had paid $208,000 and it debuted at $151,900. Despite going over asking price, his offer was only one of 7 offers. What is a compelling reason to buy? $25,000 on the table. Luckily my buyer found that Sunday, strangely enough on a home that was paid off.
3.) The move-up market of $175,000 to $300,000 is still languishing. This will begin to move when the under $175,000 market either a.) chooses to buy up or b.) any relocation begins. The latter is beginning, and while the Army will be here in droves, they will only make up for the deficiencies of other industries, a slow Air Force relo season (if relocating Air Force personnel are sellers in other markets, they almost assuredly will rent that home and rent here) and the slow down among non-first-time buyers here.
4.) The move-up market accounts for 35% of the entire listed inventory. Even if the market below $175,000 is poised for "recovery" it will take at least 18 months for this next segment to reap the benefit and possibly longer.
5.) Only when the "move-up" market recovers does the high end even start to move. Stat of Stats for the month: 31 total sales over $500,000 year to date as of today. This time last year: 51. In 2006: 100.

Numbers that really matter:

• There are fewer listings now than this time TWO YEARS ago.
• Interest Rates are a full percent lower than they were this time last year.
• There are cool programs like www.HOMEPATH.com that can get primary residents into Fannie Mae Repos with only 3% down and no appraisal or MI on a 30-year fixed Conventional Mortgage. Investors can be these homes with only 10% down, and still no appraisal or MI.
• There are typically 4 to 5 dozen homes listed at www.MCBREO.com, the HUD/FHA repo site. A primary resident who pays full HUD-asking price (usually 3 to 12% below market to begin with) can utilize FHA financing with only a $100 downpayment (instead of 3.5%).

There will be no lightning bolt recovery. We are not poised to spin right out of this funk because we're so much better off than the rest of the nation. It takes longer to close a Fannie/Freddie loan than FHA in many cases. There is a multiple year supply of inventory over $400,000. This is going to take some time.

But what is promising: there is a three-year pent-up demand for housing among people shut out of the real estate boom, those who have matured into homeownership, and those that have continued to relocate to Colorado Springs (number one per capita destination for U-Haul Trailers in the US! Yippee!). First-time buyers are a sustainable demographic to build a marketplace upon. They have basic shelter needs. They enter into basic budgeting and accounting. They mature as citizens. This is not the kind of recovery where everyone wakes up and says "well thank God that's over." Instead, it will be one where someone driving to work, or home from soccer practice suddenly realizes, "hey... it's not as bad as it was." Then that person shares that thought with one or two others.

There are some signs, limited, but with some promise, that realization may be happening as soon as this calendar year.

How to Cheat as a Seller

In 2005 you could sell your home based on "comparable" sales and add 1 to 3%. If you sat, prices would come to you.

In 2006, the en vogue transition was to refer to "competition" as opposed to "comparable" values. If you were better than the competition, you could still sell. And probably at the highest value ever.

In 2007 and 2008 the market continued to erode and agents migrated to the phrase "compelling." The price now had to be so strong that it created a physical whiplash in the buying population's collective neck in order to get their attention. Because in a market as poor as this one, only the compellingly priced properties sell.

No one shows up any longer with the motivation to buy a home. They probably are looking at buying because something is "wrong" or at least not right: that could be a lengthy commute; too small of a home; not enough yard for the kids to play in; new schools for the kids; mom and dad moving in. In rare cases it is pure opportunism ($4000 tax credit for singles and $8000 for couples can do that). Yet if ask almost any buyer what they want in a house, and leave the question open-ended and nine times out of ten the first thing they'll say is "I want a good deal."

This is not a market where anyone is interested in paying market value. People may refer to their past real estate purchases like this; my friend last night was talking about the home he had built four years ago and called the transaction "fair. They obviously made money but I don't feel like I overpaid for my home." People might refer to their 2009 purchases that way... but if they do, the term "fair" is used with some disappointment.

Make no mistake, homes are selling. But what is selling is a lot easier to understand then the why. The How is almost as complicated as something Bernie Madoff contacted: Thou Must Cheat in Order to Succeed. In simple terms, that means go to lengths and do things everyone else in the marketplace is unwilling to do.

A cheater's set of rules to get-to-gone with your home:
1.) Compelling Price. If ou think this is a "duh," think again. This is the hardest and most fundamental lesson a seller must come to grips with. If what is driving their interest in buying is that they can get a great buy at a low rate, than fundamentally their buyer will be operating with the similar value-based motivation. A compelling price means that the sum of the parts instantly create recognition in the buyer of "that is remarkable, worth-seeing, and worth my time." Some markets require greater price dumping than others. There's a home on Honey Run in Flying Horse that my friend has listed for $450,000. The sellers paid $522,000 for it in 2006. One would think that in a marketplace off 7.5% from it's peak in 2007 (yes, 2007 was the NGT peak) that a 14% reduction would be sufficient. It isn't getting any showings. The reason is Reason #2...
2.) Don't plan on sitting. Get it over with. Even if there were around 500 closed transactions last month, there are 5802 buying options out there. Many buyers operating right now have seen homes that they liked, sell. Some have lost out due to higher offers. So if something has been on the market for 90 days or longer, they only want to know one thing: "what's wrong with it?" It's funny, they NEVER think "oh, they're holding out for price, and they're right to do so." Really... buyers don't care about your motivation, but they are unbelievably willing to pass judgment on someone who they think has not come to grips with market realities. For buyers, their real issue is this: "am I a moron for liking a home the rest of the market has denied?" The reality here is that as a buyer, the best buys are the long-on-market homes. These sellers are much more apt to just give up than someone who has been on the market weeks and not months. If your initial asking price does not net an offer, plan on correcting the price within two weeks and do so repeatedly until the market is found. Unfortunately, $1000 and $2000 price corrections may register on tracking sites and REALTOR hot reports, but they create very little impact in terms of increasing buyer activity. $5000 to $15,000 price reductions accomplish that. Don't believe me? From November 1, 2008 through today, homes that sold from $250,000 to $500,000 in less than 30 days sold at 97.3% of asking price. Homes that sold in the same price range during the same time but took 90 days or longer sold at 96.1%. Okay, 1.2% and $3840 doesn't amount to that much? How about this... the under 30 days properties sold at an average of $327,000. The homes that sold at 90 sold at $320,000. That's ANOTHER $7000. In short, by getting it done 60 days faster... the fast-selling sellers netted an ADDITIONAL $11,000 on average. Take that FREAKONOMICS.
3.) Out-condition Everything. This goes way beyond staging. Buyers who are buying generally are sacrificing their own houses - or  - have very little downpayment. Just because they're broke but somehow qualify for a loan DOES NOT MEAN that they are "settling" for anything or have reduced their expectations at all. I openly wonder if tax credits for granite counters and soaking tubs would get people buying houses faster. The iPod-loving generation buying homes these days is used to getting it their way in every other transaction. When spending six digits, they expect no less. So while staging and decluttering sets the rooms into more logical traffic patterns, they don't correct old worn-out carpet. Or bad paint. Or decks needing staining. Or grout that is cracking. Or caulk that is missing. Or lawns that are dying.
4.) Eliminate the pink elephants. It's like Jeff Foxworthy-style Redneck Jokes.... if your home backs to a busy road... it probably won't sell. If your home has an out-dated floorplan (see bi-level/split)... it probably won't sell. If your dining room/master bedroom/yard is too small for space-loving Americans... it probably won't sell. If your home is next door to Fifi the Hellhound... it probably won't sell. Paint and flooring is fixable. Lot-specific, floorplan-specific or neighborhood-specific issues are almost entirely incurable. Honestly, if your neighborhood prohibits parking cars outside, and you share a flaglot driveway with your neighbor and their two grown, stay-at-home children all have a car... forget about it. No one will buy your home when the neighbor's old truck is parked in your backyard. (in other words, my own time on market would be years not months if I was one the market...but guess what has me thinking about moving?)
5.) Clean it. Not just tidy up and spruce it up. Detail it. Would you clean your car before trading it in? Detail it? Add another zero to the price tag. Don't you think a buyer would expect that? Would you expect a used car to have a motor that works? Well when was the last time you cleaned your furnace? The gutters? Your moldy shower? Finally...
6.) Prove it. Have the home inspected by a licensed (or in Colorado, ASHI/NAHI) Home Inspector and provide a detailed summary of the report with all the receipts accompanying the repair actions AND a Home Warranty. Buyers have enough reasons to keep shopping. Remember the reason they're shopping though: they want to buy. After seveal showings and picky feedback it may not seem like it, but the reason REALTORS are driving these people around is the expressed interest in purchasing. The easier you make it to buy (and the less time you spend selling andpointing out features and attributes that only matter to you) the more likely the buyer will find your property at least interesting.

The market right now is a full-speed race to get to "interesting." The more you ratchet up each of these attributes, the better your chances of getting to "worth the buyer's interest." If you can excel at all six, you are probably getting close to remarkable.

Five hundred remarkable values sold last month. There are 5800 homes for sale. This is not a marketplace for those who like level playing fields. It's more a market for... well, I can't say his name.

We live in an age of increasing transparency. There is no fooling anyone in a marketplace characterized by doubt.