It's not brain surgery.....well ok, maybe it is.
Pricing a home to get to the closing table in this market is no easy task. It requires putting your emotion aside and simply analyzing the market if you want to sell a home in the Indianapolis area. Here are a few blunt thoughts on how to approach and survive the process....




This week for no extra charge, I've offered a couple of points on staging your home as you prepare to put it on the market. Believe it or not, buyers actually frown on homes that have the life size snow globe still out front in February.



Interest rates have been down, up and then down again over the past couple of weeks. Inflation fears sparked the upward trend while the pressure of the reduction of the prime rate by the Federal reserve has worked to hold rates in check. Current 30 year fixed rates sit at 5.74% for a 30 year loan. Please contact your lending institution for rates based on the program that is appropriate for you.

On Monday, February 11th we'll take an in depth look at the sales numbers for the first month of 2008 and see where we're headed as we begin the new year. It's getting better, right? It has to be getting better.....I'm sure it's getting better....no doubt the numbers have risen and we are starting to see an up turn in the market! Right. We'll see on Monday.

Comments....questions....contact.....Greg@GregCooper.com or 317.848.GREG(4734)

Art in the streets....
Scenes from the Carmel, Indiana International Arts Festival 9.22.07.

The festival started Saturday morning with a Chinese Dragon Dance and parade. Over 200 vendors exhibited and sold their art from paintings to sculpture. There were musical stages and great food served througout the weekend. This was the festival's 10th year and 2nd since moving back into Carmel's Arts and Design District.














Random thoughts for the week actually related to the real estate business....

The Interest Rate cut has NOT yet helped everyday mortgage rates to a significant degree. The short explanation is that there are far too many other factors pushing rates up right now for it to help. If inflation stays in check, look for another potential 1/4 point rate cut next month when the Fed meets again.

Indianapolis August Home Sales stats are in.....and it's not good news. The 11 county metropolitan area sales were down over 18% with Hamilton County getting hit the hardest with a 21% drop from a year ago. Prices have moderated and it is a great time for someone looking in the long term to make a tremendous purchase.

Nationally the numbers aren't as statistically bleak but still very disconcerting. New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump. Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. That was the lowest level since June 2000, when sales clocked in at a pace of 793,000.

Covering old ground but....IF YOU ARE A HOME SELLER you must ask yourself two critical questions:

1) Do I have the motivation to sell? Are you willing to moderate your price to meet the demand of the market?

2) Am I willing to recognize the equity I'll be building on my new home as a result of the slow market? Those moving up now should see great value growth in their new purchase as a result of buying in a challenged market.


As always you can email me with questions at GREG@GREGCOOPER.COM or call me @ 317-848-GREG (4734).

You just never know who you'll run into at the Starbucks in Carmel, Indiana.

As I walked across the parking lot to my car, I vaguely recognized the figure standing about 20 feet away. While he was slouched and shaking a bit from his illness, Muhammed Ali was as pleasant and approachable as any public person could be. Having no shame about interrupting his day, I walked up and introduced myself. He smiled and graciously agreed to a picture. His wife was inside getting coffee as they traveled from their home in Michigan to Lousiville on a family matter. We took several photos of which this is the only one that I actually look reasonable enough to post (scary thought). Muhammed playfully put his fist to my chin and smiled for the first one, then realizing I had the 'you've just met an international icon' stupid grin on my face, I retreated to a very basic side by side. As we did this a bus load of High School students stopped nearby and began to pile out. Several of the teen agers recongized him and came over as to visit. As he began the first of numerous new photo ops while being hugged by the cute 17 year old females, he looked at me and in a whisper said "Can't disappoint my fans." His huge grin told the rest of the story. I laughed out loud, thanked him again, and backed away. Even though his body is failing him...his mind is still there in full force.

Random thoughts actually pertaining to the real estate business......

1) Interest rates are coming down. Look for the Fed Chief Bernacke to lower rates at least a quarter discount point next week and maybe as much as a half to combat the national housing market problems. Between the rates falling and the lower demand/increasing inventory, there are great buys to be made in the housing market right now.

2) Two critical questions every home seller must ask themselves in order to successfully navigate the market. First do you NEED to sell? If you don't have the stomach the adjust your price to meet the sliding market, you should give serious thought to postponing your move. Having said that, if you're a move up buyer, the timing is still good. If your current home is worth 3% less than a year ago but you'll buy something else up the price ladder at a less value also, you will still be pleased with your decision over the long haul. That's what real estate is now....a long term investment. Flippers had best be following the CYA strategy in this market because it's tricky.

Secondly, as a seller do you have the equity to sell? If you bought a home a year ago with little down, you probably don't have the position to sell in this market. Reconsider your timing or the possibility of leasing the home if the risk is acceptable.

We have acutally had to decline certain potential homes to sell with people who wanted to list with us because they were simply not in a postion to recognize a sale in our current market. If someone bought two years ago at the peak of the market and has their home mortgaged above what they actually paid for it, we probably can't help them and yes, you cannot believe how often this occurs.

On that note, a recent title company survey on the closings they conducted across the USA in 2006 revealed some startling data. Of all of the closings, over 38% were done with ZERO money down by the purchasers. That means that most of those buyers were upside down in the equity in their homes from the day they closed. Is there any wonder why we have the delinquency rates we do right now relative to mortagages? Is it any surprise that lending criteria will get tighter as the next 12 to 18 months rolls by?

What you see is not always what you get. Online home shopping presents its own unique set of challenges.

It's so easy to shop online for just about anything these days. You can use Google, Froogle, Yahoo, or any of the shopping search engines to find everything from recliners to shoes, airlines tickets to t-shirts. More than 85 percent of home buyers start their search for a house online as well. The only problem is that things on the Internet are not always what they seem.

That's not such a big deal when it comes to a $60 pair of shoes. But it can be quite problematic when you're talking about a house priced at $350,000. Based on the e-mail I've received over the last couple of years, I've come up with a list of six mistakes home buyers make when shopping online for real estate, and the mortgage they need to pay for it:

Mistake #1: The house you see online is the house you get.If you saw a house advertised on television, you'd wonder exactly what you were buying for your money. But find a house online and that skepticism goes away. Some buyers feel confident enough to make an offer for a home they've seen only online.
What's that about? If I was writing the description for a property I was trying to sell, I'd make sure it sounded as fabulous as possible. The only point of writing that description would be to get a prospective buyer through the door. So when you see a photo of a house online that looks interesting make an appointment to see the property in person. That way, you'll know what you're buying is real.

Mistake #2: A beautiful photo, virtual tour or video means the house is in perfect condition.There are things you can see in a photo, virtual tour or video -- and then there's everything you can't see. Clearly visible is the décor. But the structural and overall physical condition of the property may not be as apparent. Don't assume that a fresh coat of paint is simply covering a dingier coat of paint. Instead, when you walk through the property, keep your eye out for red flags, such as water stains, bad smells, a freshly painted basement (which could be hiding mold or moisture stains), doors that don't shut, and cracks bigger than 1/8 inch wide.

Mistake #3: Assuming the neighborhood is as nice as the video tour.If a seller has created a video or taken a series of snapshots of the exterior of the home, it's possible you'll get a feel for what the neighborhood is like. Again, don't assume that what you're seeing is real. Savvy buyers will spend time walking the streets of a neighborhood, getting to know the housing stock, local store owners, recreational opportunities and schools. There's no substitute for using a little shoe leather.

Mistake #4: Believing that a fabulous Web site means you're dealing with reputable professionals (agent, title company, lawyer, home inspector, etc.).
It takes about $50 and a few hours to put up a fairly impressive-looking Web site. Maybe the company behind that Web site is reputable -- and maybe it isn't. But if you just go by the graphics and design of the Web site without checking to see who the folks are behind the beautiful pictures, you won't know who you're dealing with.
Whether you're looking for a real estate agent, title company, real estate attorney, home inspector or other player in the real estate industry, you should take the time to do your due diligence and find out everything you can about the individual and the company he or she works for. Real estate agents, brokers, attorneys and title agents are all licensed by the state. You can start with the agency or department that licenses these professionals in your state, and then use an Internet search engine to dig up more information, such as complaints or lawsuits that have been filed against the company or individual. Don't forget to pay a visit to the professional's office. You can tell a lot about someone depending on where they work, and how long they've been in business.

Mistake #5: Believing a written description of a property or neighborhood is accurate if you read the same thing in enough places.
It doesn't matter how many times you read the same description of a property, you won't know it's real until you've been there and seen it in person. Remember, just because an agent says the condo has a "lake view" doesn't mean you'll have a full water view. It might mean that if you stick your neck out the window and turn, you'll see a sliver of water.

Mistake #6: Believing the interest rate you'll get at the closing is the same that you've seen online.
One of the most popular mortgage scams is the "bait and switch," and it's even easier to get away with it on the Internet. Here's how it works: You'll see a great interest rate online and when you call to follow up, you'll be told either that the rate has expired (at which point the lender will try to sell you on a more expensive loan) or that you've qualified for it. If you've "qualified" for the rate, you'd better check your mortgage documents thoroughly at the closing to make sure the rate you thought you were offered is actually the rate that is on the papers you're signing. Once you sign the papers, it's a lot harder to get the lender to live up to his or her initial mortgage commitment. (Of course, you'll have a stronger case if you have that rate quote in writing.)

The hits just keep on coming. A tight market still means incredible opportunity in Indiana.....

While the foreclosure rate has edged up, what it really translates into is great values that will pay off significantly in years ahead.


From the Indianapolis Star August 21, 2007:

Manufacturing-related job losses are playing a big role fueling Indiana's foreclosure rate, which now ranks among the highest in the nation, experts say.

Indiana, Ohio and Michigan have all been hit hard by cutbacks and plant closings, and together the three states account for 20 percent of the nation's home foreclosures. Many of those workers affected were homeowners.
"If you have economic problems and little equity to fall back on, it all feeds on itself," Tom Dinwiddie, a spokesman for the Indiana Bankers Association, told The Times of Munster.
Peter Novak of the Greater Northwest Indiana Association of Realtors said the fallout of yearslong subprime lending is being felt both locally and nationally. Analysts estimate nearly 2 million adjustable rate mortgages will reset to higher rates nationwide in the next year or so.
Indiana has one of the highest homeownership rates -- about 75 percent -- but it also has the second-highest foreclosure inventory rate.
Novak said some home buyers think they will be able to afford a house through an adjustable rate mortgage, but when the rates increase some are unprepared for the larger bills.
"An adjustable rate is cheaper the first years so homeowners hope their personal outlook will be better in the future and unfortunately that's hardly true. Lots of time they're in the same situation and probably worse," he said.
Low rates of appreciation on real estate values coupled with affordable housing and high loan-to-value loan ratios also are major factors in Indiana's high foreclosure rate, Novak said.
Indiana ranked 44th in the most recent measure of one-year price growth by the Office of Federal Housing Enterprise Oversight. Hoosiers also use more down payment assistance programs, which reduce or eliminate cash down payments.
Home buyers need to be smart about what they can afford, Pamela Stalling, executive director of the Consumer Credit Counseling Service of Northwest Indiana.
"The reality is we need jobs to keep people in these homes," Stalling said. "And they need to be educated on making wise decisions about if they can afford it now or years down the line."

Real Estate and the dog days of summer. Let's face it...the real estate market is a tough place right now. For those of us who love what we do, we're in it for the long haul. It just doesn't change the reality that nationally and locally we're in a very difficult time. That translates several ways. First, nearing the bottom of the trough, it is a good time to buy. There are exceptional opportunities out there that will pay huge dividends down the road as an investment but you must have vision. Selling right now takes backbone and the courage to make smart, strategic decisions. There is no logic to the market. Some homes that are not, at first glance, competitive sell quickly. Good homes that should sell, sit. Should one attempt to market their home at this point in time? First and beyond that always translates into personal need. If your circumstances dictate a move, then do so in an intelligent, aggressive way. This is no time for greed so if you need to sell, be practical.

Long term rates edge down. For a change last week, long term rates came down to more attractive levels. Long-term mortgage interest rates were down Friday, and the benchmark 10-year Treasury bond yield slipped to 4.68%. The 30-year fixed-rate average fell to 6.23 percent, and the 15-year fixed rate sank to 5.91 percent. The 1-year adjustable held steady at 5.51 percent. The 30-year Treasury bond yield was down at 4.87 percent.

Is the stock market surge over the last 9 months really that surprising? Face it, with real estate numbers slumping all over the U.S., it's not rocket science that since last fall the markets have set record highs. Investors wanted a place to put their money and it wasn't going to be in the real estate market. Watch this carefully over the long haul. When we see a trend that has money consistency leaving the markets for real estate, we may be on our way back up in property value and demand. The last few weeks have demonstrated volatility in the stock market based on one major issue: credit. From the sub prime mortgage problem which is now in the 2nd inning of a 9 inning game to the more recent "A minus" lending downturn, there is a significant credit issue with our housing market that will affect us into 2008.

Property tax issues will remain for a number of Indiana counties through the early part of 2008. Most people think that as Governor Mitch Daniels suspended property taxes to the 2006 level, we were out of the tax nightmare. Wrong. We've suspended our problems, not fixed them. Those reassessments will be back in early 2008 shortly before the 2007 taxes kick in. This whole thing is still very much in flux. From the inside we're hearing that Marion County's problems may be solved by a 1/3, 1/3, 1/3 solution. That is a 1/3 higher residential tax than '06, some form of a consumption tax that will cover 1/3 of the previous tax increase and finally 1/3 higher assessments on business locations that saw virtually NO increase in valuation in the previous numbers. Stay tuned......

National Housing Numbers eyeing the future?
According to First American's CoreLogic which tracks national real estate trends,

"House-price acceleration -- the rate of change in home prices, whether up or down -- is also moderating after 18 months of decline, evidence that downward price trends at the national level are nearing bottom.

Further, prices were still rising in eight of the 10 markets identified by CoreLogic as the highest risk. The highest-risk markets were: Detroit-Livonia-Dearborn, Mich. (-.46 percent appreciation); Warren-Troy-Farmington Hills, Mich. (1.21 percent); Memphis, Tenn. (6.63 percent); Youngstown-Warren Boardman, Ohio-Penn. (4.8 percent); Dayton, Ohio (4.42 percent); Grand Rapids-Wyoming, Mich. (1.55 percent); Toledo, Ohio (1.66 percent); Cleveland-Elyria-Mentor, Ohio (4.89 percent); Indianapolis-Carmel, Ind. (-3.5 percent); and Akron, Ohio (6.14 percent).

Prices continued to rise in all 10 markets identified by CoreLogic as those with the lowest risk: Sarasota-Bradenton-Venice, Fla. (2.51 percent appreciation); Orlando-Kissimmee, Fla. (4.19 percent); West Palm Beach-Boca Raton-Boynton, Fla. (3.97 percent); Ft. Lauderdale-Pompano-Deerfield Fla. (5.57 percent); Washington, D.C.-Arlington-Alexandria, Va. (3.51 percent); Virginia Beach-Norfolk-Newport News, Va. (9.18 percent); Richmond, Va. (7.12 percent); Bethesda-Gaithersburg-Fredericksburg, Md. (2.45 percent); Salt Lake City, Utah (12.96 percent); and Honolulu, Hawaii (7.87 percent)."

PLEASE PASS THIS ON. This is a redundant note that I'm sending to every member of the Indiana General Assembly including the Governor. This would be the perfect place for the "can you hear me now?" cliche...if it weren't so painful. This is an open letter from the CEO of the Indiana Association of Realtors with a rather stunning admission in paragraph four.

"In some (Indiana) counties over 40% of closed transactions are foreclosed properties."

Let's hope someone is listening.

July 13, 2007
Dear IAR Member:
As more counties have completed the property assessment process and mailed tax bills, the flaws in the current property tax system have once again been brought to light. I wanted to take a minute and update you on my perspective on the situation, as well as what your Association is doing to address it.
Some of the tax increases were expected due to the elimination of the inventory tax, the implementation of the assessment process known as trending and other factors, but the magnitude of the increases has been higher than anticipated. Urban areas have been particularly hard hit.
IAR has been in daily contact with the Governor, his staff and leadership in both the House and Senate for the past several weeks, urging immediate action. Our two-part message has been to convey the seriousness of the situation for our markets statewide and to reinforce our long-standing policy goals found in this Property Tax Reform Guiding Principles document.
I don’t need to tell you all the tenuous nature of the residential market. Many counties continue to report declining market activity, and perhaps more distressing, foreclosure rates of an extreme level. In some counties, over 40% of transactions are foreclosed properties. Instead, I would like to spend the rest of the letter outlining our goals in order to help prepare you for conversations with your clients and elected officials.
Short term, we have advocated a restructuring of the rebate that is now in place. Rather than spread those dollars over all taxpayers, it makes more sense to target them to those seeing the largest increases. We think the State could offset increases in excess of 20-25 percent with the dollars currently set aside for the circuit breaker. Local government has a role to play in the short term, as well. The State has given local government the ability to adopt an income tax, a tool that could provide substantial, lasting relief. Urge your local unit of government to use that tool.
Long term, meaningful and lasting reform MUST happen. It also must be rational. One of the most frustrating aspects of our property tax system is its complexity. Discussions of levies, rates, circuit breakers, assessed value, trending, homestead credits, homestead deductions, gross this and net that can make one’s head spin.
The media is often unable to cover the debate in a meaningful way, and elected officials at all levels use the complexity to avoid blame and confuse the issue.
Here are my thoughts on how to ensure the viability of our markets and ensure economic opportunity for homeowners, investors and businesses alike:

1. Eliminate township level assessments, move to county assessment
The wild and inequitable inconsistencies in assessments, documented by the Indiana Fiscal Policy Institute study supported by your Association, remain part of the problem and are a contributing factor to the unacceptable increases we are seeing now. Assessment responsibility should fall on the County Assessor.

2. Update technology and adopt a uniform data system statewide
The State must enforce 21st century data and appraisal practices in assessment offices statewide, as well as effectively monitor and evaluate results. Should the State find the standards and/or results lacking, they should act to correct practices and equalize assessments where necessary.

3. Modernize the local government structure
Indiana has the third most units of local government in the nation. We have the third most townships at 1,008, the third most sub-county governments at 1,575 and the fourth most municipalities at 567. Many of these elected officials effectively answer to no one and spend taxpayers’ money with little or no oversight. Eliminating them will simplify local government and provide a much clearer picture to taxpayers as to who exactly is spending their property taxes and what they are buying.

4. Reduce reliance on property tax
This is perhaps the most difficult piece of the reform puzzle. There are two choices. Since about 75% of the property tax dollar goes to education and public safety, dramatic cuts would need to be made in those services to achieve substantial savings. Such dramatic cuts are not generally supported, as they would have an adverse affect on the quality of life and economic development potential of the state. The second choice is to provide local governments with alternative sources of funding. This is the more viable long term solution, and IAR will continue to advocate for broad based taxes such as sales and income as a substitution for property taxes.

We also need to understand that the call to reduce reliance on property taxes carries risk for our industry. Two specific examples come to mind. Some legislators have mentioned a real estate transfer tax as a substitution for property taxes. Others have mentioned broadening the sales tax base to tax services, including real estate services. In both cases, the housing market would be harmed, and IAR will remain vigilant on your behalf to insure that these ideas do not gain traction.
In closing, feel free to share these thoughts with your local and state elected officials. It is crucial, after more than three decades of trying and failing, to finally reform Indiana ’s property tax system. Homeowners and all other property owners are counting on it.

Sincerely,
Karl F. Berron
CEO
Indiana Association of REALTORS®

Of Vanishing Neighborhoods and Growing Opportunities.

"Let me tell you how it will be
There's one for you, nineteen for me
'cause I'm the taxman,
yeah, I'm the taxman

Should five percent appear too small
Be thankful I don't take it all
'cause I'm the taxman,
yeah, I'm the taxman"

--George Harrison

Marion County's tax nightmare may be Hamilton County's boom. That's right....Washington Township - Marion County's massive tax woes may end up becoming a benefit for Hamilton County. After a short time of having the full impact of the new propety taxes in place, the calls are already coming in from individuals who are seeking relief. There are many areas of Indianapolis affected but one that seems to have been hit especially hard is the Meridian Kessler/Broad Ripple area. More precisely, the Washington Township geography that sits in the Indianapolis Public Schools district. Since school taxes account for 55% of the property tax total, IPS revenue requirements are significant to those who live in its jurisdiction. Now, many of these homeowners are contemplating moving north of the Marion County line.

In looking at just a few examples, it's easy to see why people are fed up. In Carmel's burgeoning Arts and Design District, a $150,000 home recently sold will pay $1680 total in property taxes in 2007 for the tax year 2006. A similarly priced home at 5600 north in Marion County's Washington Township will now pay $3940 for essentially the same square footage. While no one seems to have been fully aware of the consequences of last year's legislative actions regarding taxes, the results will end up being devastating. In shifting a portion of the tax burden from business to residential, the goal was to be pro business and encourage future growth. The timing was not well thought out. I suspect it will end up being a moment that haunts us for years to come.

For starters, the psychological impact of the tax increases is already in the minds of the consumers. You can't close that Pandora's box. Then you move on to the practical side where prospective purchasers can no longer qualify for homes based on how much higher the monthly tax bills will be. Finally, there's the burden to the sellers who must credit back all taxes due to purchasers at a potential closing on the sale of their home, possibly in the thousands of dollars.

We must also look into the crystal ball. Taxes this much higher will decrease demand and subsequently reduce value. As this occurs, homeowners will be petitioning tax authorities for lower assessments based on comparable sales, thus reducing revenues even further. Then the cycle starts all over again with a need to raise rates to make up for the decreasing total revenus based on a lower overall tax base. It's an ugly prospect that will take years to resolve, if at all.

To conclude, a word about relevance. If I hear one more person tell me we pay so much less in taxes compared to our neighboring states, I may commit a felony. While that may be factual, it is a TERRIBLE argument for our current state for this reason: You cannot raise taxes on a given area/property 60-80-100% or more in such a short time and not destroy their value. Raise any property's taxes by 100% in one year and then tell a prospective purchaser that it's still much lower than what Illinois pays and watch their response. Watch it as they turn and walk away from buying because of the radical change from a few short years ago. This is a mess not soon solved. In every mess there's opportunity....and Hamilton County may just be positioned to take advantage of the brewing storm to the south.

Here Comes The Other Shoe.......

It's been several years since the Indiana State Supreme Court ruled on behalf of a small number of Lake County Indiana tax payers that the previous system of assessed valuation was unfair. As thousands of Hoosiers pay their tax bills over the coming weeks, we will all be asking how the system can STILL be this off base.

First, virtually none of the hundreds of homes that have sold in the last year that I have reviewed are being taxed at their recent sale value under the new bills (which is the actual point of having the state assess by MARKET VALUE). While not all counties have a defined example, it appears the new distribution of tax burden is going to become a major pressure on those who pay property taxes in Indiana. We have heard examples through our partners in the lending and title business that a number of real estate transactions have fallen apart at the closing table as the new tax burdens became clear to prospective buyers. Many municipalities in Hendricks County have had 50% increases in taxes from the last tax year. For many home owners, that is a painful increase. For some, it is a catastrophic one.

Here are a couple of examples from Hamilton County that have come to light. A $325,000 home previously taxed at $2410 for the entire year will be paying just over $3000 per year due on July 1 of 2007. Remember the headlines about a 'rebate check' we were supposed to receive to blunt the extreme shift in residential taxes? From the tax bills we have seen there is no mention of a rebate, only that the credit passed by the legislature has been assigned half to the Spring and half to the Fall of each tax bill. Think there may be some confusion on this issue?

The result of all of this could be a new round of foreclosures in the state of Indiana. People who were close to the edge before are going to get unceremoniously shoved over the cliff if their taxes increase 40-50%. The last thing Indiana's economy needs right now is a hammer to the value of it's home owners. This scenario, if it plays out as it seems, will be a nightmare for Indiana tax payers and real estate owners. It will blunt the first time home buyer market with higher payments, it will suppress most potential equity growth and essentially send the overall real estate market into dormancy. It would ensure that the current slow market we are in would last well beyond 2008.

I hope we're all wrong about these bills....that there's something more to them that will change their net affect both this year in years ahead. The message to our legislators should be loud and clear: Fix this mess NOW! If not that boot may be coming down hard on all of us who have believed in the American dream in the Hoosier State.

Denny Crane says
'Who wants to be a Travel Agent?'

Welcome to my metaphor. Inspired by nearly a week of reading my new favorite blogger, Rich From Copywrite, Inc. (linked on the left side of the page), this piece is motivated by change. For my purposes, I'm speaking to the change in doing business or owning real estate. The manner of conducting a real estate sale is about to be swept away into an entirely new paradigm like a number of businesses have been in the recent past.


On ABC's Boston Legal, William Shatner, aka Denny Crane, constantly pops into scenes tossing out the painfully embarrassing, yet somewhat obvious line. In the real estate business, Denny would again be loudly asking the obvious of those of us helping to orchestrate real estate transactions and those who own real estate as an investment.

"C'mon.....who wants to be a travel agent?"

Why? Because those who conduct the business of Real Estate and those who own real estate are in the midst of a titanic shift in the process, much like the travel industry saw several years ago. For my skewed context here, there is no irony lost on the character of Crane, played by Shatner in his commercial endorsement role to PRICELINE.com . 10 years ago, the travel industry was respected, successful and storming ahead with it's service to people in every form of travel based need. America was increasingly affluent, mobile and loved to be on the move. That year, 1997, Priceline.com introduced itself to the traveling public in the form of William Shatner through a stream of wacky commercials that pushed us to point and click to find the cheapest air fares (and later in classic brand extension hotel rooms and rental cars). A decade later the travel industry has laid off thousands of workers. Essentially it's become a shadow of it's former self. Many other service industries are experiencing that as well along with the products they represent, like real estate.

Old school agencies who broker travel have basically been redefined to an Internet based business that fills a niche of customer service. The difference is there is no need to have legions of people seated at a desk to actually place the orders. There are some direct service agencies, but they are a small minority serving certain business and other pigeonhole clientele. To be fair, the change wasn't necessarily any fault of the travel industry and the huge numbers of it's successful representatives other than they never saw it coming. Who did? Can any of say we knew how the Internet was going to absolutely flatten so many businesses by the immediate accessibility it provides?

Well it's coming again to the business of real estate...this time precipitated by the current down turn in the Real Estate market. Anthony Robbins, motivational speaker and infomercial guru has written that 'things don't change when conditions are comfortable....change occurs when pain is present.' If that's the case, change is a full blown tidal wave heading directly for us. Dropping values due to foreclosures, excessive new homes supply, a sub prime mortgage fallout and other secondary factors are the norm today and it will affect most all of us. Falling equity in homes has driven the discount service brokerage movement in the past year and they will continue to gain strength (much to the chagrin of many of my colleagues). They will not, however, replace the affect of the most successful brokers but rather will feed upon those individuals who continue to try and charge a premium fee for less than top shelf service. It's the classic Wal Mart - Nordstrom example. The middle is disappearing to be replaced by the most cost effective (discount) and the very high end.

Real Estate brokers and their companies must learn to do things differently. The effect of the current market downturn will demand that. Watch the numbers in the winter of '07-'08. The quantity of Realtors in this country is going to take a major nose dive (not all would think that's bad, I know). Likewise, the manner in which we all make investment decisions about real estate is also going to change. Dwindling demand for 'vinyl village' types of homes and increasing demands for prime locations will be highlighted. In our area, lots and neighborhoods with character (water front, heavily wooded, golf course) will be the most coveted for more than aesthetic reasons. At this moment they are the only locations selling at a premium and as the public becomes more and more aware of this as a business issue, their demand will rise even faster. The days of buying something slick, shiny and new just for those reasons will soon be a secondary decision. Consumers will be forced to look at the investment first which is not how many decisions have been made in the past. Consumers who blindly buy property for any reasons other than investment first will quickly become the 'travel agents' of the real estate marketplace. I can almost hear Denny Crane's thoughts on that......as painful as they may be.......

Waiting to exhale....have we seen the last breath of the down market?

Both the local and national media have spent the last seven or eight months beating up on the real estate market (with some correctness) and now seem to be debating where it's all headed. The Indianapolis Star on Friday May 11 boldly predicted from two different sources that April Real Estate sales numbers rose and that we were literally coming out of the cold. It's always interesting to me when multiple sources draw from the same data and get different numbers to support a theory, which happened in this case. Company A said sales rose 7 percent from the 11 county metro and Company B said 9 percent. What it really tells you is that data can be viewed many ways by different sources especially if it's in their self interest to do so. I've always believed we just tell people the truth, no matter if it's good news or bad and let the market work itself out. In our experience in having over 75 properties listed, there was a brief pulse of sales in April but it has retreated and now is grinding along at a Jan/Feb/Mar pace. Are we going down again? Hard to tell but at the very least we do seem to be bumping along the bottom of the market trough without any clear direction.

Surprisingly, May is typically a slow month in the Indianapolis area with more of a focus on the 500, graduations and such and less concern about home buying. We have companies that don't want to fight trying to find hotel rooms for their potential incoming employees on a weekend in May and choose to just wait until June to bring them in for a visit. This has actually been a trend we've seen for years. The question is this year will things perk up in June or will we continue to trudge forward at a 'snail like' pace.

Several things are more certain in this economic climate that all of us can relate to. Gas prices have shot up and consumer spending has sagged with Wal Mart posting it's biggest drop in sales in the history of the company. Real estate inventories are still very high with a minimum absorbtion rate taking place on those homes for sale. For home sellers, it's a time to be realistic and not greedy. I'm amazed when I go out on market studies, present the data and watch homeowners still virtually ignore the raw numbers to pick a valuation of their home out of thin air. I was on such an appointment several weeks ago where a home had a number of similar comps that had sold in the low $300,000's along with having over 80 homes for sale in it's close geography/price. Two were selling per week from that price range and location. 8 sales per month with 80 for sale....a 10 month inventory assuming NO other homes coming on the market, all of which is a big hurdle to overcome. I explained it thoroughly, talked about the importance of marketing quality to maximize their home's value and they promptly listed it at $337,000 (at no surprise with another agent). Their agent has since posted poorly chosen pictures with no descriptions that make their home look half the size it really is. The agent either doesn't understand what good presentation is or simply chose to implement the marketing on the cheap. Either way, the price and presentation are going to cost the sellers big money before it's over.

What many sellers don't realize is that the responsibility of the Realtor has changed. Being a Realtor is no long just about supplying information than it is the actual use of that information to strategically position a home to sell. It's also about psychological presentation. Now more than ever how you present your home on the Internet will absolutely affect value. If your pictures are shot without a wide angle and chosen improperly you will make your home look small and you will lose potential buyers. If you lack the proper descriptions of the available spaces in your home you will lose potential buyers who may have a need for what your home offers but not the vision to recognize the potential your home has from a poor photo.

Timing is also a major part of the equation. It is such a strong buyer's market that pricing relating to time for sale will affect a seller's bottom line. A seller will never have more leverage than they do at the start of the marketing process. They will never have the leverage to negotiate price, inspection items, closing dates, timing, or ANY of the essential terms if they incorrectly price their homes. Incorrect pricing means longer time to procure a buyer, the more cynical the buyers will be about their absolute value and the less balance there will be for sellers to have their fair say in getting the transaction to closing. Longer time on the market from incorrect pricing usually means a price reduction which leads to even more indecision in the minds of the buying public. Sometimes quality homes who over price at the outset get into a pricing 'free fall' where interested parties become so cynical they simply choose to watch the price go down rather than jump in for fear of overpaying for a property.

In short it's not a time for the faint of heart. Savy buyers have learned their money is worth more than ever with the supply outpacing demand. Does it mean that every closed sale is a steal for the buyer? No....but it does mean that purchases made now based on good information and guidance will bear strong investment returns over the long haul. We've all heard the phrase, 'it's good to be king.' Buyers are the kings of the market right now so breath deep and plan accordingly if you're active in the real estate market. If you're selling don't get greedy. If you're buying recognize that values have been deflated and you're likely making a profitable investment. Either way, only time will tell if the down market has exhaled it's last breath.....




If you dislike change, you're going to like irrelevance even less. - Anonymous