I’m Not Gonna Pay A Lot For This Muffler

Remember that 1980’s Meineke Muffler commercial, ‘I’m not gonna pay a lot for this muffler’. That’s how every real estate buyer enters the market. Okay, I get that; we all want the most for the least, me included. So, when I meet with a new Buyer Client prospect and we are discussing a working relationship, one of the first things I want to know is how much do they want to spend? I already know the answer is as little as possible, but please be more specific.

After I know how much my Buyer Client prospect wants to spend, I need to know if they have it to spend. Are they pre-approved? We can’t go shopping if my new Client won’t be able to pay the bill. Once all that is out of the way and we have decided to work together we start the search process. We look at all types of properties that could fit the profile my Client has outlined for me. I never try to ‘Up Sell’, so that is why it is important for my Client to be truthful with me, as well as with themselves. This is really important.

Unilateral full disclosure and transparency is very important and I believe it is an integral part of my fiduciary commitment to my Client, even though there have been times I did not get that disclosure and transparency back in return up front. I do understand why some Buyers remain guarded at the beginning of our relationship. It is not unusual for Buyers to come to me after having a bad experience with another real estate Licensee somewhere along the line. Therefore, they are gun shy and very guarded. I know if given a chance I will quickly earn my Client’s trust. Besides, the more time we waste getting synchronized and the more time it takes for me to really understand what I need to know in order to help my Client, the longer it will take to make that dream home in their mind become a reality.

There is an old real estate expression that sometimes rings true, although I don’t like it: “Buyers are Liars and Sellers are Worse”. I know, now you are thinking not only is he insulting me, he is insulting the seller too. What the heck does this mean? Let me explain. It is a common fact that sometimes Buyers may think they know what they want, but they really don’t know. Believe me, I have seen it many times. As I go through the education and research process with a Client their awareness increases and they start to flesh out what they really want and what it is really worth to them to have it. On the other side, that Meineke guy has been saying he is not going to ‘give away’ this muffler – so to speak. The Seller may already have emphatically insisted to his Seller Agent, ‘I don’t have to sell’. Buying and selling not only requires awareness, it requires a cool head, an open mind, identifying motivations and the willingness to bend. Not everything is as it seems and as I always say, nothing is ever eaten as hot as it is cooked.

So if you’ve made a decision that it is time to go shopping, put on some comfortable shoes, get ready to enjoy the journey -- no matter how long it takes, and lets’ go for a ride. You know what they say about journeys, they begin with the first step.

Tora! Tora! Tora!

The real estate market bubble burst was somewhat like the attack on Pearl Harbor, only a few knew it was coming, but nobody paid any attention to it until it was too late.

As values began to sink, real estate practitioners and prognosticators tried to figure out how not to let the firestorm spread throughout the fleet. They came up with the all too familiar slogan, “All real estate is local”. I suppose that gave some people comfort as markets in Florida, Nevada, Arizona and Southern California were sinking with no bottom in sight.

Although all real estate is local just like we as people are all the same but different, the overall effect of the economy impacted real estate in practically every corner of America as well as overseas in Europe.

Today the economy is starting to show some glimmer of hope that we are in the beginning stages of a recovery and that recovery will be lead by the real estate market along with the job market.

One of the markets I take a personal interest in is Florida. I was reading an article about the Southwest coast of Florida housing market and a broker who was being quoted said something that I believe is beginning to ring true here on Martha’s Vineyard. She said, “Smart buyers have stopped looking for bargains”. I know, that sounds ridiculous because it is human nature to always look for a bargain. The key to being a savvy shopper is to know when the price has reached the point where it is as good as it is going to get. That is when you stop shopping and start negotiating. In other words, as it pertains to real estate, when the trend has flattened out and is on the verge of reversing itself.

The broker went on to say, speaking about her clients, “They don't even bother asking about list prices anymore; they just drive around and when they see something they like, they offer the owner what they think the property is worth.” What have I been saying for years? Offer what it is worth to you. I am not talking about throwing irresponsible uninformed numbers around. My clients know the market and what values are or should be because I concentrate on educating them about the Martha’s Vineyard market.

I know what you’re thinking, you agree that now is a good time to buy but there is one problem. I hear this quite often: “There is nothing out there that I like or think is a good opportunity.” Sure, that can be just an excuse not to buy, but I have to agree to a certain extent because there is a lot of junk on the market – overpriced junk. However, if you look through this update and at the properties that are selling, properties under contract or being negotiated you will see that the better properties are selling. I think most sellers have finally realized, in this market we are no longer the goose that laid the golden egg and more than ever before the market is very price sensitive.

When buying a property on Martha’s Vineyard you have to realize that ‘perfection’ is hard to find; it is up to you to create that perfection. Give me a chance and I will do my best to get you as close as I can to the beginning of Your Perfection.

Wake Up And Make That Dream Come True

2011 started off with a whimper, and some say it was due to the weather. Really? Then as the year was ending sales really revved up and we finished with a mild roar, the echo of which carried over into all of January 2012. Sales have slowed down now, which is customary for February, but the activity has not slowed down as there are a good number of buyers looking through the inventory for attractive opportunities.

I know this is going to sound like some kind of sales pitch, but this is a good time to buy. Rates are still low, sellers are unsure of the future economy and wondering if they should hang on or get out now, and there is very little competition in the market. Once activity ramps up, multiple offers will become common and as a result prices will go up.

I’ve always said the Vineyard is not for everyone and I believe being here has to be a passion and a dream, not just an investment opportunity. Although, buying on the Vineyard is most certainly a good investment opportunity in the long run. I’ve heard dozens of would-have should-have stories over the years. The current market is your opportunity to become a winner and not past tense. However, if you are not passionate about the Vineyard there are many other locations that are offering great opportunities right now as markets are at rock bottom and starting to turn around.

On New Years I received a correspondence from a Client I had been working with for several years gleefully announcing he had just purchased a property close to the water in Rhode Island. I knew that for him real estate was all about the price and did not involve emotion, so I was happy for him even though I had worked very hard over the years on his behalf. Then the other day I was reaching out to another Client I had not spoken with since before the new year. He responded proudly telling me that he had reversed his life plan and just purchased a property in Cape Coral, Florida on a canal with a pool. Once again, I was happy for him and I did not blame him one bit for making that decision. He still intends to purchase an Island home, it is just that now it may take him a little longer since he used up about half of his Island home budget. What I am saying here is that even though the prices are very attractive here, relatively speaking, there are many parts of the country where prices are probably even more attractive.

Martha’s Vineyard is a lifestyle decision and only if you love Martha from top to bottom, inside and out will buying a home here make any sense. Martha gave me a better life and brought me together with the love of my life. She provides shelter for one of my sons and my other sons and friends always ask to come for a visit. I love Martha’s Vineyard and if you do too, then I support your dream and want to help you make that dream come true.

Whatever Will Be Will Be Que Sera Sera

Back at the beginning of December I was asked by a local news reporter a series of questions about our real estate market. I thought I would review those questions and my answers now that we are gathering speed heading further into 2012.

Question: What do you see ahead for 2012?
Answer: I really don’t know anymore what is ahead of us but my guess would be more of the same. I think it would be foolish for anyone to prognosticate with any certainty on what the future will be. One survey I read suggested that most Americans think prices will go down 1.1% over the next year, but we just don’t know. In what has become a global economic meltdown we are constantly tinkering with possible solutions, but the uncertainty is vast and the landscape seems to change daily.

Question: Have there been any changes locally or nationally that might affect the 2012 market?
Answer: We hear about and read about changes every day as there is always something new that affects people’s thinking and confidence. There is a lack of confidence and an overall mood of uncertainty. The general consensus is that mortgage rates will remain low over the next 12 months. Financial institutions are being very stringent with their lending requirements. Corporations are playing it very close to the vest which means they are not hiring. It’s like listening to a broken record --- jobs, jobs, jobs. Until people go back to work and people start spending on a regular basis we will see little change. Island residents are affected by the poor job market and many of them are being forced to leave because they cannot find work. That means they are either putting their homes on the market, or they are unable to pay their mortgages and in some cases simply walking away. Nationally, a second wave of foreclosures is on the move and we will most likely see more foreclosures on the Island in 2012.

Question: Where are the best buys to be found on the Island? (geographically, in price segment, etc.)
Answer: Where are the best buys to be found on the Island? That is a good question. The short answer is so-called best buys can be found across the Island and in all towns. Personally, I don’t use the term best buys; I call them good opportunities. Oak Bluffs has seen a drastic decline in property values over the last few years. Tisbury, Edgartown and Chilmark have remained somewhat consistent. West Tisbury prices are softening and I think Aquinnah prices are too. Midrange higher end properties ($1.5mm - $2.5mm) have not been selling and prices have remained steadfast. However, I think we may be approaching a paradigm shift. For the last few years prices at the mid and low end (below $600K) have taken a brutal beating and that is where the majority of sales have been, although there has been a trickle of high-end and uber high-end sales, for the most part the high-end price range has languished. This year I am seeing some stunning price reductions with prices plummeting from where they were 5 and 6 years ago. I think the real opportunities are coming in 2012 with water front and water view properties priced very attractively. I also see a good opportunity to negotiate on properties in the $600K to $800K range.

Question: What's your best advice to sellers in 2012?
Answer: My best advice to sellers is to listen to the seller agent/broker they are choosing to hire, and don’t be attracted to one agent/broker just because they give you the highest price recommendation. Look at the comps and don’t chase the market – price your property sharply. Insipid little price reductions can only hurt a seller’s chances of attracting buyers. Sellers need to clean up their properties. I am not saying sellers have to rent fancy furniture (i.e.: Staging), just make it look presentable. Sellers should have a prelisting Structural Home Inspection to eliminate some of the mystery and concern for the buyer. Then they should either fix or repair what they can or be prepared to negotiate or credit the buyer on what they do not fix. It is unwise to try to hide anything. Some sellers have the attitude, ‘I don’t have to sell’. If that is the case, don’t list the property for sale. Sellers should not clutter the market with unrealistically priced properties; it only confuses the market and confuses real estate agents. Sellers will end up losing more than they gain. For all the sales that have occurred in 2011, the inventory seems to continuously replenish itself with more properties for sale. As long as we have a large inventory we will not have a balanced market.

Question: What's your best advice to buyers in 2012?
Answer: My best advice to buyers in 2012 is the same advice I have been giving my clients for the last few years. 1) If you are thinking of buying as a short term investment, this is not your market. 2) Plan on at least 7 and maybe 10 years before you will have any significant equity in your property. Buyers may also experience a slight negative equity in the short term if prices go down. One analysis I read suggests the home price appreciation rate may not exceed a 2-percent-a-year between now and 2015. That is not a very inspiring number. 3) Buy a property because you love it and it will bring joy to your life and your family. Life is short. 4) If you find a property you like but you think the price is too high, offer what it is worth to you. Nothing ventured, nothing gained.

Question: Is the demand for existing homes, condos, or buildable land similar?
Answer: I don’t think the demand for existing homes, condos, or buildable land is similar. The main attraction with condos is that the prices are lower than residential homes in most cases, and that attracts those buyers who thought they could never afford to live here. But most often when a buyer finds out the condo rules, regs and what the fees are, their interest quickly turns away from condos. Land is still very attractive but even with about 1/3 of the Island still not developed, nice pieces of land at reasonable prices are rare. I also think many buyers are dubious about the building process as a long distance absentee owner. We have many excellent contractors on the Island who are eager to work. However, pre-existing homes are still the most desirable. There are many very nice spec homes available right now, but they are mostly at the mid-higher end of the market and they are not selling. I find the problem with so many existing homes, especially those in the million dollar and below price range, is that many of them have not been properly maintained and they need a lot of work. We should no longer consider our market to be the goose that laid the golden egg and anything will sell just because this is Martha’s Vineyard. Buyers today want value and they are smarter and better informed than ever before.

It’s been almost two months and I don’t think the landscape has changed much. Que Sera Sera.

Why Not Wait?

I was going to title this writing, And the Beat Goes On, because it is going on – and on and on. With over 800 properties on the market now, depending upon who’s counting, there seems to be no end in sight.

There are not that many foreclosures for sale and most of them are overpriced junk, but the number of properties for sale in the $1.2mm to $3.7mm range is staggering. Short Sales may be on the rise and some banks are realizing it is better to be reasonable, cooperate with the mortgagor, cut their losses and not go through the costly foreclosure process. However, Short Sales still present some risk to a potential buyer.

There are some great buys out there right now in water front properties; you can even buy a Lagoon front property for $950,000 that is attractive and in good condition. But there are still too many properties that are unrealistically priced for this market and the level of competition between similar properties. I think part of the reason for overpricing is because July and August are the months of hope for sellers when the wealthier vacationers are here and emotional purchases are at their highest level. Of course there is always the ‘we don’t have to sell’ test the waters mentality that wastes everyone’s time, foolishly spends the listing broker’s ad money and confuses the market in general not to mention the real estate agents out there who do need to sell to stay in business.

Although I do not see a significant continuation in the downward spiral of prices I can see that the game plan for many sellers is to price their properties very high to start and then reduce the price giving the appearance that they are radically discounting their properties. That strategy is working when selling to the uninformed buyers. On the other hand, those properties that have been priced sharply and ahead of the market are getting an immediate response and in most cases multiple offers are being presented on those properties and they are selling quickly. You will also notice a trend for the acceptable differential between asking and selling price to be about 6%.

I think this is a great time to buy if you find your ‘dream home’, but if you have not then I say why not wait? Every week I hope and expect that the number of new properties coming on the market will slow down or abate, but they just keep coming. This week there are very view price reductions but still 28 new properties are being introduced and added to the inventory. It's been like this for many weeks now as the inventory continues to grow. This is just in time for the beginning of the two biggest months for tourists and big spenders – or so everyone hopes.

Once Labor Day has come and gone, or actually after the 3rd week of August I think sellers who have not made a deal are going to start worrying. It happens every year. Those who ‘don’t have to sell’ will probably take their properties off the market – again, around Thanksgiving and try again in 2012.

There are 568 single family homes available right now and that does not include the 36 properties that are either being negotiated or under contract to close. Perhaps I have answered my own question and maybe I should have titled this commentary, Why Wait?

Benefits of Purchasing a Vacation Home Rental

I'll admit that this is a silly lightweight video but it still emphasizes the value of owning a vacation 'income' property that could be partially or totally carrying itself and one day transition into your retirement home.

Is your dream to live on Martha's Vineyard, and were you hoping to get here sooner rather than later? If the economy has rearranged your plans extending your timetable, but has not sapped all of your financial resources, maybe now is the time to put those resources into real estate on Martha's Vineyard. Market prices have not been better in decades and interest rates while still historically low are beginning to inch up.

A recent survey by the Pew Research Center reveals that even five years after the real estate bubble burst, it has not shaken the confidence of the American public in the investment value of home ownership.

Ssshhhhhhhhh, Martha’s Only Sleeping

Please, don't wake me, no, don't shake me
Leave me where I am - I'm only sleeping

Everybody seems to think I'm lazy
I don't mind, I think they're crazy
Running everywhere at such a speed
Till they find there's no need (there's no need)

Please, don't spoil my day, I'm miles away
And after all I'm only sleeping

Keeping an eye on the world going by my window
Taking my time

(Partial Lyrics to I’m Only Sleeping by The Beatles)

I had to laugh when I saw a recent article from the WSJ selecting Martha’s Vineyard as one of the ten AMERICAN GHOST TOWNS OF THE 21ST CENTURY, ranking Dukes County at number 7.

It’s true that Martha’s Vineyard has always been like the tides that surround her, with a population that comes in and goes out on a regular basis. I think that ebb and flow is part of what makes Martha’s Vineyard so special. It is that time between the supercharged high tide that gives Martha and her permanent year round citizenship respite to recharge their batteries and enjoy all the tenderness and calm that is the essence of Martha’s Vineyard. That’s why I am here. Ssshhhhhhhhh!