State of the Real Estate Market - 2007 Part 3

Part 3 of 4

Hello Traverse City real estate fans,

Anyone who is trying to market and sell a home virtually anywhere in the United States today knows the Fourth Significant Factor well.

There are a LOT of homes for sale.

The real estate market is over-saturated. It is sometimes referred to as being ìsoft.î (Actually it is ìsoftî for sellers, but ìrock hardî for buyers, as you are learning!)
There were 2,413 single-family residences actively listed during the 2006 calendar year with asking prices between $200,000 - $400,000 in the Traverse Area Association of Realtors (TAAR) Multiple Listing Service (MLS) alone; 586 of those properties SOLD during that same period. Thatís just over 24 percent of listed homes, or about a quarter of them, which SOLD.

There have been 2,083 homes for sale with asking prices between $200,00 - $400,000 in the TAAR MLS to date in 2007; 424 have SOLD this year to date, or about 20 percent. So statistics suggest there is more than four yearsí worth of inventory currently listed on the TAAR MLS, and thatís if not another single home is listed in that price range in that time.

When only one-in-four or one-in-five actively listed homes sell in an annual period, the sellerís market is ìsoft.î You need to make sure you have everything in your favor when trying to sell your home to ensure that youíre not caught in the 75 - 80 percent of sellers who cannot sell their properties. (More on that below in Significant Factor Six, and in an upcoming Ask the Realtors blogs: ìHow to Maximize Your Real Estate Investment / Property Preparation Primerî and ìFor-Sale-By-Owner (F.S.B.O) vs. Listing with a Realtorî).

Remember, the sellerís market is ìsoft,î but only for sellers, becauseÖ

Itís a buyerís market.

Residential real estate becomes more of a commodity in this kind of market ñ- a buyerís dollar goes a long way. Again, there are a LOT of homes for sale. Imagine shopping for a white refrigerator, and having $350 to spend. With literally hundreds for sale just in Traverse City alone, you are going to get the absolutely nicest white refrigerator available for your $350.

If you are trying to sell your home, and there is currently as much as five years of inventory for sale just in your area, you are going to need to be the nicest home for your asking dollar around. There are so many homes available at every price point for buyers to choose from, and they can review literally dozens daily, anywhere in the country for that matter, on-line.

So if you are searching for that unsuspecting, uneducated buyer who just might ìfall in loveî with your home, and pay absolutely top dollar for it, we have just one word for you: Internet.

Or ìsoft,î but that would be two words for you.

There is no longer such a thing as an uneducated buyer when it comes to property values (at least there shouldnít be ñ- See Significant Factor Seven, below). Todayís buyers are educated, savvy, swimming in a sea of properties for sale, and enjoying an outstanding borrowing environment.

The value of top Realtors to home sellers in the Grand Traverse area is on the rise, expectedly. As homes take on a commodity aspect, and the market continues to change, savvy Realtors can help sellers ascertain the true market value of their property, ascertain the net equity sellers can expect after the sale of that property, develop, implement, and monitor a successful marketing plan, identify capable buyers, navigate the legal responsibilities of sellers, negotiate in the sellersí best interests, and generally ensure that the sale of a property benefits the sellers as much as possible, as quickly and cleanly as possible. Hey, thatís our job!

Is your home in the top 20 percent of properties listed in its price point? How was the asking price derived? What type of marketing plan has been developed? What type of buyer or buyers are you targeting? How are you trying to reach them? Is the effort proving effective? What is Plan B?

In a roarings sellerís market, the benefits top Realtors can provide may seem less valuable, but in a buyerís market they become inherently more valuable -ñ even crucial -ñ for the successful sale of homes.

We have not even broached the subject of the growing flow of foreclosure properties into real estate markets nationwide (but we will in an upcoming installment). Suffice it to say, the market will continue to grow softer before it turns around for the foreseeable future.

Corporate institutions commonly seek little more than what is owed on foreclosed-upon properties, and almost always less than what the true market value is of any specific home. Added to the already ìsoftî sellerís market conditions, the drastic increase in foreclosures is still in the early stages of what many industry experts feel will be a two- or three-year cycle (at best).

If you are already getting into trouble trying to make your house payments, contact your lender and your Realtor as soon as possible. Just like serious physical ailments and physicians, ignoring the problem rarely cures it. Early detection and action maximizes your options and happy outcomes.

Thank you for your time and attention.

Have a good afternoon,


TEAM MIKE

Last Updated: October 20, 2007