Blog : Sellers

Aged Lakefront Inventory

Aged Lakefront Inventory

So much excitement, so early on. New pictures, new mulch, new signs. This is going to be it, this is going to be the year. The month. No, the day. Will it be today? It might be tomorrow. Certainly by Saturday. Sunday, well that’s a day off for many. Monday? Could it be? No, it’s not. A few days later nothing. Weeks, nothing. Months, nothing. A showing next Friday! That’ll be the one. What took so long? The showing is a bust. The buyer’s daughter had the sniffles and so they decided against the arduous trip up paved roads from so far away as Barrington.   There was once so much optimism, so much hope. So much blind faith. And now, nothing. Days to months and months to years.

To be a seller today is to be confident. The markets are hot, mostly hot anyway, or so the newspaper says. Certain markets are slowing, the Hamptons, Manhattan, Beverly Hills. But are they slowing because they were recently too active? Are they only slowing now relative to the torrid pace of the last half decade? Are they slow, or just less magma than we’ve recently been accustomed? Even so, those are those markets and this is this market. Sellers at Lake Geneva are, for the most part, bursting with enthusiasm.

And that’s fine, for a while. Initial enthusiasm is life affirming, and it’s important. Sellers should be proud of their house, proud of their mulch, proud of the photos. Proud of that real estate description (see my prior post). Lake Geneva is a market filled with nuance and irregularity, and for those reasons alone, every seller has hope. That house sold for that much, so my house HAS to be worth at least this much. Oh how much fun it would be to sell in a market that makes complete sense. A ranch on a street is worth the same as the ranch on the same street. Here, the ranch can be worth more or less depending on so many factors, all of which are not entirely clear.

This is the new seller situation, but what of the aged seller? What of the property that hit the market with speed and has since, over time, dulled to a fruitless crawl? How does that seller feel bout so many mentions of a “hot” market? The initial emotion is anger, not at the market or at the house, but at the broker. This is the problem during times of these active markets. If a house isn’t selling while everything else is, then the blame must lie solely on the shoulders of the guy or gal whose name is on the sign. It’s their fault. And often it might be, but let’s assume you didn’t hire a bad agent, because you’re smarter than that. Then whose fault is this delay?

It’s the price, silly. Hot markets can only overcome so much. An active market might allow a seller a 10% premium over a calculated value, but 20%? 30%?  Where does it end?  The low inventory condition at the lake is one reason lakefront sellers are so confident.  If I have a 1960 Corvette fuelie and I live in BumbleTown, Wisconsin, population 184, do I get to ask  $150k for a car that’s only worth $90k?  But I’m the only 1960 Corvette in town! The absurdity here is the same as a seller who thinks any price is attainable simply because the competition is nonexistent, or slight at best.

That brings us to the market today, and the confident seller of last year. Last year’s confident seller is this year’s weary seller, and those weary sellers are just who aggressive buyers should be targeting.  New sellers are too optimistic. Old sellers are growing tired, and an ambivalent seller who has let their hope diminish is the best sort of seller for a value minded buyer. Let’s get out soon and find a few of these sellers. Let’s find properties that have been overpriced for so long the seller has no choice but to accept the reality of our lower offer.  Sure the market is hot. Sure new inventory won’t be easy to buy without paying a market rate. But in spite of this, there is opportunity if only you’ll throw your attention towards the sellers that the market has forgotten.

Lake Geneva Market Conditions

Lake Geneva Market Conditions

I had a dream last night. In the dream I was just myself, no one else. I wasn’t able to fly, or able to breath under water; nothing terrific like that. I was just a Realtor in this dream, going about my Realtor business. I was in a living room, someone else’s living room, not a room I had been in before. It wasn’t a very nice living room, but it was okay, I guess. In dreams, decor rarely matters.

The seller was someone I knew. A kid I knew a few years ago, he couldn’t be more than 22 now, as he was in the dream. He was sitting in his house, except in real life it is his parent’s house, but not in dreams. It was his house and he wanted to know how much it was worth.  He kept repeating three million dollars. He was intent. Three million dollars. Maybe three million five hundred thousand dollars. He wasn’t sure.

I was uncomfortable in the dream. I wanted to hear him out, to listen to the myriad reasons his house was worth this much money, and so I sat on the couch as he pointed to comps. The comparables were indeed nice homes, lakefront homes, big ones and fancy ones and I had sold many of them. I nodded along with his charismatic plea. Three million dollars.

When it was my turn I explained that those homes were large lakefront homes, and that his home was a small A-frame located two blocks from the lake. He sat back in his chair, feigning disgust at my lack of enthusiasm. I used the example of the Knollwood house that sold two years ago for $2.2MM, and said that the only reason that home sold for such an incredible number was because the home was so amazing. It was perfect, I said. Luxe Magazine, I said. Three million dollars, he said.

When I sensed I was making some progress with him, I asked what he had into the house. He said $300k. I said, “you mean your parents had $300k into it”. He smiled and acknowledged that yes, it was his parents’ money and their investment, not his. I told him he’d be lucky to get $400k for the house, but that he shouldn’t be so upset because that’s a lot of money for a kid his age. The dream ended without any further commentary. I’m uncertain if I got the listing, but it didn’t matter because I didn’t want it anyway.

This was a dream, but this is my life today. The market at Lake Geneva is filling with competition, I should say, with other agents whom, no matter their lack of knowledge or prior success, are intent on telling the world of their proficiency. The competition isn’t that, but it looks like it when you drive around and see names on signs that you’ve never seen before. It’s a market chock full of agents, of open houses, or letters and websites and Instagram hashtags. Experts are everywhere. Things are changing, and it’s the competition in the business of real estate that’s often bad for the consumer.

And that comes back to my dream. Sellers know the market is hot. They know it because all 500 some agents in Walworth County are telling them. Hot. Hot. Hot. And so agents are bidding up the listing prices of houses, especially lakefront houses on Geneva Lake, and sellers are feeling flattered by all the attention. The dream I had was just that, a dream, but it’s based on the reality of this season. Sellers, a note of caution. A hot market means there are market buyers for your house. Someone might even pay 5-10% more than the market value if they love it enough. But if we take the bait and price homes too high just because there’s a slight chance we’ll get away with it, we’re going to damage the market by filling it with overpriced homes that will, ultimately, drag on the market and put downward pressure on the unrealistic listing prices.

Buyers, work with an agent who knows the market because they’ve proven that they sell the market. Sellers, work with an agent who knows the market because they’ve proven that they sell the market. This isn’t really that hard.

Ready For Sale

Ready For Sale

I’d like to think, after twenty years in this chair, that I’ve seen it all. I’ve seen sellers and buyers of all makes and models, the good, the bad, and the ugly. I’ve seen outliers and trends, typical things and odd things. I’ve seen mostly all of it and at this time I think it’s easy to group sellers into two different categories. Those who view the transaction as a game, and those who view the transaction as a personal matter.  Neither of these viewpoints is correct, neither is wrong, both considerations are present during any transaction.

That didn’t clear anything up, I’m aware.  The thing is, once the game is over and the transaction is readied for closing, there is something that I wish all sellers would do. There is one way for a seller to make every transaction close without ill will, because there is almost always some level of ill will involved in a transaction.  Sellers are under contractual obligation to deliver their property to the buyer in “broom swept” condition.  This statement is intentionally vague, because a broom in my hand will yield a slightly more thorough outcome than a broom in the hand of my 10 year old daughter. Broom Swept. Sounds nice, sounds sort of clean. But that’s really all it is.

I have sold several of my own, personal homes. Each time I sell a home, I move my family out of the house a week or more before closing. I do this because I know I need time. I need time to fix everything that I know ails the house. At the last house, I had a burned spot not the size of a nickel on my basement carpet. A burn that was the result of an overambitious fireplace ember. The buyer had certainly noticed that burn when he was touring the house. If he hadn’t, would he care? Probably not. But I found a carpet repair man in Clinton who came out to patch that small blemish. After he patched the blemish, I had the carpets cleaned, but only after I touched up every paint nick and every bent or dinged piece of that house. Did I have to do these things? Did these things fall under my “broom swept” requirement? No, but I wanted the buyer to be happy with his purchase.

This isn’t to say I’m the worlds greatest homeseller, because once a buyer of one of my homes told me after the fact that he had to clean up some broken glass that he found under the oven. Obviously, in my focus on the obvious I neglected to properly clean under the oven.  My selling behavior isn’t unique to me, but sadly it is unique in the world of real estate. Sellers tend to feel rushed at the end of a contracted closing, and when they feel rushed they tend to feel frustrated and when they feel frustrated they tend to feel that the buyer is getting a terrific deal on their home.  They tend to feel that they’re “giving their house away”, and if you feel that way then you tend to leave the burned mark in the carpet and the broken glass under the range. You tend to walk from your house and leave the problems to the buyer.

This, as you’ve now suspected, is terrible behavior. Yet it’s common. Sellers leave a house at the minimum, and buyers walk in to a house that’s less than clean.  This, dear sellers, is a mistake. A buyer who hates you because you left a trillion nail holes in the drywall is a buyer who’s more likely to get seriously mad when a pipe breaks one month after closing. A buyer who feels slighted is a buyer who’s more likely to walk through the house they just bought and pick apart all of the deficiencies of that house. A buyer who doesn’t feel valued is a buyer who is more likely to cause the seller trouble post closing. And for what? Because the seller was too lazy to properly clean the house and do a few hundred dollars worth of unexpected, but appreciated, repairs?

Today isn’t about Lake Geneva, necessarily. Today is about being a seller of any house or condo anywhere.  Be a good seller. Value your buyer. Take some pride in what you’re selling. Make the buyer feel good about their decision to pay you the money that they’ve worked hard to earn.  Odds are, if that buyer finds something later that they don’t like, they’ll cut you some slack because you had the carpets cleaned and left that bottle of champagne in the fridge.

Regrets

Regrets

I like to brag about certain things. For instance, I have a black SuperJet and there’s very little chance that you do as well. I have one, you don’t. It’s not that I’m better than you, but my SuperJet is better than yours, because you don’t even have one, which is embarrassing. For you, not for me, because my SuperJet is black and it’s custom, because it has an Uff Da sticker on it, which is something that only makes sense if your grandmother spoke some gibberish that she insisted was Norwegian. See, I’m bragging now, and there’s very little you can do about it.  Ah, but you say that it’s October and what good does a SuperJet do a Wisconsin boy in October?  Even that statement proves your SuperJet inferiority, because October is to SuperJetting what April is to showers. See? Bragging.

But I don’t intend to brag when I speak of my past personal real estate dealings. I don’t brag about profit or of market beating performance, though it has dawned on me that some of my anecdotal housing stories might be construed as less than humble tales. If you went to a foot doctor because you had something wrong with your foot, would you prefer the doctor tell you about what he learned in books, or would you prefer he tell you that last week he handled this same condition and fixed it? In fact, he saw the same condition three months ago and three years ago and he fixed those, too. Personal experience should lend some credibility to the expected outcome.

Back to those personal dealings of mine, they all have one common theme. No matter the house, no matter the price, no matter my personal confidence of lack thereof in the housing market, I have always left the closing table feeling as though I sold for too little. Buyers regret is a common affliction, in fact I also suffer from that each time I buy something, but that’s not specific to housing- I feel regret when I buy anything, including when I order a chicken wrap and everyone knows I should have ordered the brisket. But seller regret is just as real, and I’ve felt it each and every time I’ve been the one signing the deed. I left money on the table, I sold too cheap, I blew it. That’s how I feel  after every personal sale. Deflated, poor, taken.

The thing is, each personal deal I’ve closed is just a distant memory. They mean nothing to my life today. I look back at the progression of housing, to the first purchase and to the last one, and I think of how I caved in one way or another. I caved on the buy, and then I caved on the sale, I’m a professional caver, the farthest thing from shrewd, a sucker, really. But that’s how people who like to over think real estate might feel, that’s not how I feel. Because today I’m not holding any house that I no longer wish to own. I’m not stuck with a property that doesn’t serve a purpose in my life. I’m not beholden to something that erodes my personal finances just because I was unwilling to give in to a buyer’s last minute demands of a $1000 credit. I’m not stuck at my station because I couldn’t get that last 3% that I desperately wanted out of the buyer. I’m here now because I let the 3% go, because I know that moving forward is far more valuable than getting stuck.

Stop getting stuck. If you’re a seller, and a buyer won’t pay your “bottom” number, don’t be so stubborn. Meet the bid and move on. Often times a seller here is selling because she’s buying more house, or he’s buying less house, but he’s not removing himself from the market entirely. It’s just movement, up or down, but still here. And so owners buyer something new, hanging on to what they already own, because they don’t need to sell it. I can hold this forever, they say.  Never mind the financial bleed of an unnecessary, uninterested carry,  consider instead the emotional drain that accompanies this sort of prolonged ownership. When you wake up, do you think only about your new house and your job and your spouse and your children and that achy left hip, or do you think also of that house that you used to live in that you still own? It’s there, decaying, eating away at your finances and your mental-health. It’s there with you at all times,  serving no purpose, stuck in your thoughts.

This is why there is regret in real estate. Regret on the buy side, regret on the sale side. Did you sell your last home for too little? Did you end up taking the first offer and later beat yourself up for selling too quickly, for too little? Good, because I probably did the same, but here we both are, worrying about today and thinking about tomorrow, forgetting about yesterday and the houses we used to own.

Market Timing

Market Timing

Earlier this year, I wrote an email to an owner of vacant lot. I told him should be be interested in selling, there was a likely premium awaiting him. He hadn’t bought the property too long ago, but the market had been looking for what he owned, and it was obvious to me at that time that some pent up demand had to exist. He emailed me back and said he wasn’t interested. This was earlier this year. Recently, he emailed me asking for a price for his property. I told him a number that was indeed a premium, but not as significant of a premium as I had mentioned earlier this year. He was angered by my number, and suggested that I must have forgotten what I told him only a few short months prior. In fact, I hadn’t forgotten that lofty number at all, but in the time since that quote the market had added inventory in this specific segment, and that inventory had failed to sell. The market momentum that I sensed earlier this year had been squashed under the weight of competing inventory. The time to sell was last spring, the momentum was there, the market ripe, the window missed. This is not my fault.

Sellers have a hard time with this discovery. When it comes to real estate, you can either sell when the market wants you to sell, or sell when you want to sell. There’s no other choice. If you sell when the market wants you to sell, you behave like I do- you lock a gain when you see one, and you move on to the next project. When you sell when you want to sell, you assume the market will respond kindly, because after all, you’re a seller and your house has that sweet gold faucet in the master bathroom. But the market doesn’t care about you, it doesn’t care about your faucet, and if you decide to sell when the market isn’t primed for your specific offering, you’ll flutter in the wind as you await the whim of the market to turn your way. This concept isn’t that hard: Sell when the market is good, hold when it’s bad, but don’t sell into a bad market and expect to overcome it just because your house is special. Yes, I know that in that line of ranch homes your home has an outdoor kitchen that consists of some stacked concrete blocks with a grill precariously perched in the middle.

If you’re a long term holder of real estate, then you needn’t worry about the right time or the wrong time, you just live and you enjoy the seasons and you replace the roof when the time comes. This is how most of us tend to view real estate. We view it as though we’re there forever, or for long enough that market peaks and valleys matter little to us because after a long time of ownership we’ll have enjoyed some appreciation no matter the immediate mood of the market. But this self considering view is incorrect, because most of us move every 5-7 years and if we’re timing those moves at the peak of a cycle then we’re selling high and buying high, and if we miss the peak then we’re buying low and selling low, the net gains are the same.  So if we’re going to buy and sell, shouldn’t we do so in an opportunistic manner?

The time is now to be an opportunistic seller if you’re an owner of a lakefront home with a market value in excess of $3MM. Never before has there been so much liquidity in the upper bracket of this market, and I do mean never. Sellers of homes in $3-4MM range have always enjoyed some level of active market, so their inclusion in this segment isn’t unexpected. What it unexpected is the demand over $4MM, and that demand continues with pace all the way through $8MM. Without exaggeration, several of the homes I’ve sold this year are homes that I could have sold twice. The market needn’t  have one hundred buyers in this segment to thrive, it just needs a handful and that’s exactly what it has right now.

And that brings us back to the timing of it all. Yes, conventional wisdom says to list in the spring. But conventional wisdom is wrong in this case. If you’re a lakefront owner with a property in this discussed segment, now is the time to sell. You don’t need to sell now, obviously, instead you could wait until next year when you’re more ready. But next year has its own set of unknowns and the only thing known is what the market is doing today, and today it wants to buy your expensive lakefront home. This year, three lakefront properties have closed over $3.9MM. I’ve been involved in all three of those sales. Two more sales over $5MM are pending sale right now, and those are both my listings as well. It shouldn’t need to be repeated but if you’re a lakefront seller looking to capitalize on this market, I’m your guy.

 

For Sale Lake Geneva

For Sale Lake Geneva

When you sell a car, you can sell it one of two ways. You can either sell it because you’ve already bought another car, one that you now love very much. When you have a new car, the old car is no longer important. Who could want two cars unless one is a truck and another is a go-fast sports car? Or perhaps if one is a bumbling SUV and the other a sedan, that might be okay. But for this purpose we have one car that’s older and another one that’s newer, and they’re the same sort of car. No one needs two Dodge Intrepids. No one.

And so one is sold. It’s put out at the road with a sign in the window, or it’s put online, with some pictures and a short description:  I bought a new Intrepid. This is the old Intrepid. No further explanation would be needed. Everyone would understand. And so, because you have tow Intrepids and one is new, you sell the old one. $4200. You let it sit at the road or online for a few weeks. Someone who doesn’t even own one Intrepid offers you $3500. It’s less than you want, but you sell it because you have two and one is old.  This is one of the ways to sell a car.

The other way is to sell a car that you don’t really want to sell. It seems odd, but this sort of sale happens all the time. The car is worth $4500, but you list it for $5900 thinking that if someone is silly enough to buy it, you’ll sell it. And so that car sits and sits but your price stays firm. $5900 OBO. The OBO is only out of habit, because only serial killers write FIRM next on a car window sign. No one bites. No one looks. Your car sits at the road and it rots online, but it doesn’t matter anyway, because you like that car and you’ve decided that it might be nice to have two Intrepids, in case one is in the shop and you have to go out to dinner.

People sell houses in the same manner. They set imagined targets based on once believed values, or based on nothing at all. They wait for someone to call, to drive by, to look in the windows and like what they see.  These are the sellers that we’ve become accustomed to, but these are not the sellers that we wish to find. We want to find the seller who has two of the same thing, the seller who genuinely wishes to no longer own one of them. As the market improves and inventory dwindles, this is our charge. We must find the seller who has what we want, yes, but we must find the seller who has decided to sell because she has to, not just because she sort of wants to.

 

Have a wonderful Easter Weekend.

Winter Selling Strategies

Winter Selling Strategies

I’ve driven to Marco Island at least twice. I don’t think I’ve driven there more than that, so it must be at least and at most, twice. The days were those days before kids, or before they were in school, back when my schedule had nothing to do with basketball practice and swim meets, back when there was little that I absolutely had to do. Back then, my wife and I would leave for Florida just after Thanksgiving, and we’d stay there for three weeks. What a luxurious thing that was, and what a strange thing it was. There we were, young and lacking money, and we drove to Florida like some septuagenarians to spend some of the winter. The market afforded that opportunity then, because it used to be painfully quiet in the days that fell between Thanksgiving and New Years. The market wasn’t active, at least not for me, and so I’d spend some time hurling fresh caught mullet into the surf, and at least once I caught a giant Snook that my wife caught only glimpses of on video. She didn’t know how to zoom out.

But that was then and this is now, and our market doesn’t sleep. It doesn’t make allowances for three week winter vacations, nor does it particularly care if you’re not paying attention because you’re busy shopping and baking. The market churns, and it churns in July as it does on the last day of November, as it will on the 20th of December. Now, it does slow on Christmas Day, and on New Years Day, because only the very difficult or the exceedingly lonely would wish to talk real estate on those days. But the rest of this next month, the market will be moving. Last weekend, after the rain of Thanksgiving, there were showings on Friday and on Saturday and on Sunday. There was activity in a market that the casual observer would assume is on hold.  I’ve always said that the best time to secure value at Lake Geneva is late November through mid December. That’s still true, but that’s direction for the buyers out there. I generally ignore the sellers, except for today.

It’s a terrific time of year to be a buyer, but it’s not such a fun season to be a seller. Sellers know it’s not fun to be available during the season when every active buyer wants a deal, which is why they’ve taken their properties off market en masse long before the last day of November. This has been the conventional wisdom for quite some time,  but it’s the wrong way to handle the winter. If it were still 1998, I’d have time to go to law school to avoid selling real estate, but more importantly, we could take our properties off the market and sit around to pass some of the winter before re-listing the homes. This isn’t 1998, sadly. It’s very late 2015 and the market doesn’t stop, which means inventory shouldn’t be pulled. If you’re a seller and you’ve been floundering on the open market all year, there’s no particular reason to let your home sit out the next 8 weeks.

There are exceptions to this new rule. If, for instance, your home has been for sale for all of 2015 and it’s grossly and disgustingly overpriced, then pull it. But only pull it if you’re intent on letting the property rest before bringing it back to market in the spring (Late January) at a much reduced list price. If the goal is to let a property rest, then reposition it in the market for the new selling season, the most important part of that playbook is the repositioning. A property cannot be repositioned to appeal to a new group of buyers if the property is the same old crappy house at the same elevated asking price. If you’ve been for sale all year and everyone loves your house but hates your kitchen counter tops, then pull the property, install some new counter tops, and re-list in spring, no price adjustment needed. However, if your house is listed at $2.5MM and everyone knows it’s worth $1.8MM, then pull it from the market, let it rest, and bring it back at $1.99MM in late January. These are two scenarios where it makes sense to pull and then re-list, but for everyone else? Leave the property on the market.

Last Friday, I had two showings at a condo on the lake that hadn’t been shown since the first weekend in November. If that condo hadn’t been on the market and had, instead, been pulled as is the old-timey conventional wisdom, it would have never had two different buyers take a look at it. It would have been sitting with its head in the sand, hoping no one paid it any mind until it came back to market, triumphantly (boringly) in late January.  Sellers, heed this advice. Leave your properties alone. There’s very little more appealing than walking a lake property in the still of winter, just after a fresh snow, and if your property isn’t on the open market, it’ll just be you walking the property, and you’re not a buyer.