Dreamers Dream, Martha's Vineyard Winners Act!

I realized a long time ago that I do not have the heart of a salesman.  I have the heart of a teacher, an advisor and a protector. 

I empathize with anyone who longs to make a buying decision on Martha’s Vineyard, because it is their dream and they know it will be good for them and will enhance their life in ways that almost nothing else will.  When I made the decision it was like immersing myself in the fountain of youth and from that decision many other positive life enhancing events sprung forth.

I find that many people today are scared to make that huge decision so they imagine all the reasons why they cannot or will not have what they want.  For many people that means assuming that they will not be able to qualify for a mortgage or have enough cash for a down payment.

I would like to present some graphics to enhance this conversation.

According to Freddie Mac, approximately 42% of all 30-34 year old potential buyers believe that they need a minimum of 15% to buy a home.

 

 

Relating this to Martha’s Vineyard, if you are purchasing as a first time home buyer or purchasing a residence either as a move up buyer or as a first time home buyer there are local programs allowing a down payment as little as 3% down.

 

I am not a mortgage expert but I am the source to the source.  With the disclaimer that all loans are made according to the specific profile of the applicant, Santander (Formerly Bank of Martha’s Vineyard) has given me this brief summary:

A 30-year fixed rate loan with 95% financing is available for a primary home purchase and is not restricted to first time home buyers.

The Mass Housing Program (MPH) has 97% financing available to first time homebuyers and restricted to low & moderate income families.

FHA has 96.5% financing available on qualifying purchases for both primary purchases and is not restricted to first time home buyers.

Here are a couple of charts to give you something to think about if you are unsure about waiting another year to make your life more complete, or if you are thinking the prices are going to go down significantly.

 (Please note that the interest rates were as of the time this chart was created) 

 

I do believe prices will go down more on Martha’s Vineyard but not in double digits as they have in the past. As soon as the inventory starts to get absorbed, and it will, prices will start to increase and then the path will be clear.  First we will enter a neutral market and then a seller’s market. This is the normal cycle for Real Estate and we go through it about every 15 years.

 

And where do we go from here?

If you want to do more than just dream about Martha’s Vineyard I suggest you start now by getting in touch with a lender and find out what you can comfortably afford. List your ‘wants’ and ‘needs’ and then in the fall you can get out there in the market and be clear, confident and focused.  Be a winner!

BUYER BEWARE is one thing, but in this case – OWNER BEWARE too.

An Epiphany
I had an epiphany today and my guess is that very few real estate professionals, or for that matter anyone else knows about this.  Unless you are directly involved in what I will call the electrical power supply business, the details of how you get the electricity to maintain your home or who maintains the service rarely crosses your mind.  You spend less time thinking about that than you do the water you drink or the air you breathe. But it is very important.  I am going to talk about who owns your electrical power supply equipment – the lines, transformers and poles.

My Frame of Reference
I have lived in a so-called exclusive West Tisbury community populated by more than 45 families for over 40 years.  There has always been a ROW utility easement across the property and through the woods for the utility company to supply electricity to the abutting properties.  In my experience it has been the utility company that has always maintained proper clearance by trimming the trees along the ROW.  The utility company has always maintained the power lines, transformers and poles along the private roads network within the community.  It makes perfect sense to me that if I pay for the ‘service’, part of that service should be maintaining continuity and consistent service.  Right!

It ain’t necessarily so
I learned today, this is not the necessarily the norm on Martha’s Vineyard and only a few communities have service networks providing electricity to homes that are owned and serviced by the utility company, presently known as NStar.  In most cases NStar supplies and maintains an electrical service system to a point and beyond that, the system is the responsibility of the property owners along their private roads.

So, what is the big deal? 
It’s not a big deal until the trees along the service path are overgrown and threatening the service continuity, or until the infrastructure of that service has been fully depreciated and compromised.  What I mean by ‘fully depreciated is, when the electrical wires are old, brittle and leaking, transformers are failing due to corrosion and wooden utility poles are rotten and no longer able to carry their load.  The big deal is the cost of replacing all those components that provide the infrastructure keeping your lights on.  Actually, it’s not a big deal, it will be a huge deal and will cost you dearly – unless you choose to live ‘off the grid’ and even then you may be in for a fight with your neighbors.

Take down those utility poles Mister NStar
We can all agree that above ground utility poles and wires are ugly, and my vote would be to bury all utilities.  Spring Point in Chilmark is replacing their entire service and from what I have been told they are going underground all the way.  I love Spring Point.  Did I mention that they are one of the other rare Island community cases where NStar owns the service system and has to maintain it?  It is estimated that the service replacement is going to cost well over a million dollars.

What should you do? 
For one, if you are a Buyer considering a purchase in a ‘community’ with private roads, find out who owns the utility system.  My guess is that you will not find that information in the Association Rules and Regulations. If it is privately owned and there is a home owner association, do they have a reserve to set aside to earmark funds to maintain the electrical system (tree trimming and equipment replacement)?   If you are already an owner in a private community, find out what provisions have been made to support the maintenance of the electrical system. 

Brinksmanship can cost you dearly
Do not wait for a failure or a threat from NStar that they will turn off the electrical supply service to the community until certain maintenance issues have been corrected – like trimming trees around utility lines.  This all can happen during a storm and I am sure you can imagine the difficulty factor when trying to get personal emergency help during a storm.  You are just one more name on a list of hundreds.  This is just another good reason to own a back-up generator.

Sue me, Sue you Blues
I have been told on a regular basis there are any number of litigative actions arising out of disputes between home owners as to who owns what and what the fair share of each property owner should be when a utility problem occurs. The court costs alone can exceed any amount that would be paid for being responsible and setting up preventive measure rules and funds ahead of time.

Wouldn’t it be nice?
I think it would really be a considerate ‘public service’ disclosure for NStar to notify those customers affected that maintenance and safety of their service system is the responsibility of the home owners in their community. For all I know they may be doing that but if not wouldn’t it be nice. I hate surprises – don’t you?

Chit-Chatting Around the Water Cooler

Remember the home inspection story in my last blog about the home owner who lost his lawsuit because he did not speak up when he suspected a problem at the home inspection?  Well, here is another story that could have gone to court, and maybe should have.

I was in the grocery store grabbing some Chobani Greek yogurt at the dairy case when I bumped into my home inspector.  We were standing their chit chatting when we felt the heat from someone moving around us on the perimeter.   We stopped and acknowledged this person, who immediately queried, “Are you the building inspector” he said to my friend.  Okay, we knew what he meant and after making the proper introduction this person proceeded to tell the building inspector his tale.

Remember the home you inspected for me?  I knew right away this was not going to be a happy tale.  Although he did preface what was to follow by saying he loves the house (now) and is perfectly happy with it.  The fireplace chimney had cracks everywhere and it leaked like a sieve.  It had to be torn down and rebuilt to the tune of $25,000. 

I asked this person if he noticed the problem before he bought the house. “Nope”.  Did your buyer agent ask the seller or the seller agent if they knew anything that was or would be a problem? “Nope”.  Did your buyer agent notice anything or say anything? “Nope”.

The buyer actually defended his unfortunate circumstance by explaining to ME that  Massachusetts is a ‘Buyer Beware State' and that unlike his home state seller's in Massachusetts are not required to fill out a Seller’s Description of Property form, and then admitting that no one asked the appropriate questions. 

(Side note:  Sellers on the Cape do fill out Seller's Description of  Property forms) 

At that point my question should have been, if you are so darn happy after hiring someone you expected to represent your best interests, paying for a professional home inspection, and then after you closed on the home discovering a major defect that ended up costing you $25,000, but you are telling us you happy and in love with the house, why did you interrupt our conversation?  This poor guy might have had a case against the inspector or his agent, or the seller agent if he had been an informed buyer with competent assistance.  Granted, I don’t know all the facts but if it were me I sure would be pissed and looking to see if I had recourse.

As a disclosure, I will tell my clients that Home Inspector’s cannot see every single thing there is to see.  Some inspectors will issue the same disclosure as part of their contract. It is important to remember that real estate licensees are not home inspectors, builders or engineers. However, as with the mold and rot case I reported on, where there is smoke there is fire and in cases like the fractured chimney I would bet you there was a lot of smoke.  And besides, if a buyer has concerns they can always bring a contractor or engineer to review the report, do specialized testing and look at the house they are buying.  I always say, the more the merrier and the more eyes the better – except around the water cooler, or at the dairy case.

How Good Is A Home Inspection

I was reading a legal article in one of my trade publications recently discussing ‘Caveat Emptor’ which means Buyer Beware.  Massachusetts is a caveat emptor state.  So what does that mean to you the consumer? By definition it means "The seller of a product cannot be held responsible for its quality unless it is guaranteed in a warranty."

If you have read through the “Why You Need a Home Inspection” part on my website you know how bullish I am about home inspections as a result of a mishap I had in my personal home buying experience.  I always say that I would rather lose a sale because the house did not pass muster than have a client move into an unsound home and have a bad experience. 

However, even with the best home inspector, the one the seller agents call ‘the deal breaker’ the inspector cannot see or find every single chink in the structure’s armor.  He may discover evidence of a problem but how large or small that problem may be should then be determined by an expert in the specific area of the problem.  It will be up to you, the home buyer, to act upon the evidence in a timely manner and request further exploration in order to gather more information.

Discovering a serious problem later on may leave you no recourse with the seller.  The case study that I read started with evidence of ‘rot’ found during a home inspection. The inspector, who also happened to be an engineer, stated in his report that the rot did not pose a structural problem, so the buyer went ahead and bought the home without doing any further investigation or raising the issue with the seller. 

If I were there for that diagnosis I would have been thinking that the engineer said it did not pose a structural problem -- at the present time, or from what he could see.  Have you ever had rust rot on your automobile? What does it do -- it progresses and spreads.  I would have raised a red flag and suggested further investigation or at least the notion that there was possibly more there than meets the eye.

The reason why the seller should have been questioned about their knowledge of the problem is because:
1) We do not use “Seller’s Description of Property” forms so the seller has no opportunity or reason to provide specific information as to their knowledge of the condition of the property.
2) Only if a hidden structural defect that would affect the value or the desirability of the property is disclosed by the seller to the seller’s agent is that seller’s agent morally required to reveal that fact to a buyer. That is a governing rule for REALTORS®.
 Continuing on with what ended up being a law suit, the new owners of the house where the rot was discovered started noticing “a damp smell, the presence of potato bugs, and the ceiling tiles separating.”  The new owner had “the home re-inspected and this time the inspector found serious mold, rot and pest damage. The extent of the damage hadn’t been easily discovered the first time they had the house inspected, because new siding, trim and insulation had been installed”.

Here is where the story reaches its tipping point.  “With the new inspection report in hand, the couple determined with the help of a contractor that it would cost more to repair the property than to rebuild”.  Any of us would be fighting mad to get this kind of news. Right?  Of course, the logical next step would be to go to Court and that is exactly what these folks did.  “They sued charging the sellers with fraudulent concealment and negligent misrepresentation”.

Although the court found in their favor on the first go around, they lost an appeal because even though the court found in their favor based upon “egregious nondisclosure and concealment” by the sellers, the case was dismissed based upon Caveat Emptor.  In this case the buyer was made aware of a problem but did not follow up in a timely manner. 

I believe the most important part of a home purchase is doing your homework and that includes a thorough home inspection with solid answers for any questionable problems uncovered, speaking with town officials about the current and future neighborhood plans and even going so far as to interview the neighbors who would be more than happy to spill their guts with everything they know about your home owner, the neighbors next door or the overall community. It’s up to you to get out, walk the streets and knock on doors. Caveat Emptor.

The Flood Insurance Crisis and Martha's Vineyard

It's not just Martha's Vineyard that is in crisis over the changes taking place and their resulting affect on home and business owners, it's all of Cape Cod and up along the North Shore. Okay, to be exact it is practically the whole country that is in crisis.

It was a the Biggert-Waters Flood Insurance Reform Act of 2012 that floated in on the tail of some transportation bill and was not properly vetted that started this mess. 

It was when I went to a FEMA sponsored presentation last summer that I knew we were in real trouble. I walked into the Martha's Vineyard High School one sweltering July afternoon and there in a large room were tables with maps strewn around in heaps and about four or five representatives standing around apparently telling jokes and biding their time before they could leave and go back home.  There were quite a few people from local insurance companies there but only three of us from the real estate profession and one of them was there because I invited him to come along.  My take away from that so-called presentation and Q&A was that no one knew what the heck was going on. 

Among my colleagues it seemed like no one else was concerned, and when I spoke about my concerns the response was always something like, "Oh, don't be so negative -- I don't want to hear about it".   Well, they are hearing about it now and everyone wants to know what is going on -- not that anyone still really knows. 

As a Realtor®, my organization has been lobbying to make changes and we supported a bill promoted by a small group of Senators and known as the Menendez-Isakson Homeowner Flood Insurance Affordability Act.  Last Friday I tuned into CSPAN and waited anxiously as the Bill was about to be voted on in the Senate.  The supporters of the Bill were hoping to get at least 60 votes.  At a little after 5:30pm the voting began and when it was over 86 voted for it and 13 voted against.  It passed the first hurtle which would put off any flood insurance rate increases, primarily to a select group of people, and require more study and engineering before a formal plan could be implemented. 

Menendez-Isakson does basically three things that are important because it does not change all aspects of Biggert-Waters.  

1) All homes and businesses that are currently “grandfathered” are protected. These are properties that were built to code and later remapped into a higher risk area. 

2) All properties that purchased a new policy after July 6, 2012, before they were legally required to purchase insurance. 

3) All properties sold after July 6, 2012.  New homeowners and business owners will receive the same treatment as the previous owner unless they trigger another provision in Biggert-Waters such as Severe Repetitive Loss, non-primary residence, substantial damage, etc. 

This last part is where the bad news lies for Martha's Vineyard; non-primary second home residences are not protected from the changes outlined in Biggert-Waters. 

However, as our Congressman Bill Keating said in a recent interview on WCAI, “Many of these people will just walk away from their homes, and leave the lenders with an inventory at a time when they’re just trying to clear that inventory from the 2009 mortgage collapse.”I heard this from an off-Island broker months ago after she interviewed her insurance agent on the Cape. 

So as you can see this is a very serious problem and it is not going away. Scientists have predicted that sea level will continue to rise and that by the end of this century it will stand somewhere between two to seven feet higher than it is today.  For the meantime what is going away are buyers, people who wanted to live on the water but are now thinking Martha's Vineyard is much too fragile an environment. Many of them have decided to look elsewhere. 

One of the changes that I have observed since I was a boy is that beach houses are no longer simple camps that you sweep out; they are grand luxurious homes and anyone who was paying attention to the drama on Chappy last summer knows exactly what I am talking about.  The ocean has always been in control and living on the edge will always have its risks.

The Real Estate Market is Heating Up on Martha's Vineyard -- Are you Ready?

This fall on Martha’s Vineyard is turning out to be as active as I expected it would be.  55 homes were sold in the month of September which is 19% of the total number of homes sold this year.  For homes, the median price is $660,000.  There were also 10 land sales this month with a median price of $495,000 and those sales are 21% of the total for the year.  And as you can see there are quite a number of properties in the Offer to Purchase and Purchase and Sale pipeline as of the last two weeks.

I think it is important for buyers to start thinking about what they need to do to be ready for a more active and competitive market.  Martha’s Vineyard home Buyers are fortunate right now because there is so much available inventory for them to choose from.  But this won’t last and as the inventory gets absorbed the competition will heat up.  Those properties that are competitively priced will stand out and will attract more buyers most likely competing with each other with multiple offers.

Here is what I suggest you do if you are going to enter the market at this time.  Select a REALTOR® who is an EXCLUSIVE Buyer Agent, knows the market, knows the Vineyard and knows the business --- that would be me. Put together a list of ‘Wants’ and ‘Needs’ because that exercise will help to keep you focused and decide upon a realistic price range. I will address that further in a moment.

Become familiar with the inventory by getting access to the LINK database system and not by wasting time combing through 3^rd party aggregator websites like Trulia or Zillow.  Communication with your trusted Exclusive Buyer Agent is the best way to gain an education so that when you are ready to buy, you can recognize a well-priced property.

Preview as many properties that are relevant to what you are looking for so you can get a good sense of home values. Keep in mind that your EXCLUSIVE Buyer Agent is an expert in the field of real estate; he/she is not an attorney, a licensed contractor or home inspector or an engineer. Therefore, discuss with your EXCLUSIVE Buyer Agent putting together a professional team of ‘experts’ to assist you during the home buying process.  

Knowing what is a realistic price range means knowing how much house you can really afford.  So, if getting a mortgage is a necessary part of the home buying equation for you then you need to establish a relationship early on with a mortgage professional and get yourself pre-approved with a pre-approval letter prepared.  There is a difference between a pre-approval and a pre-qualification. The pre-qualification is very superficial and will mean nothing to a Seller during a negotiation.  The pre-approval is a powerful card your EXCLUSIVE Buyer Agent can play at the appropriate time during a negotiation.

Here is a really important negotiating point to keep in mind. If you are in a competing offer situation you want to make sure your offer is as attractive as you can possibly make it. First and foremost, a negotiation will be all about the money so make sure your offer is your ‘highest and best’ offer. Next, make sure your offer is as ‘clean’ as you can make it. This means only include the contingencies that are absolutely necessary or even better submit an offer without any contingencies. Personally, I will rarely recommend that one of my clients submit an offer without an inspection contingency or a financing contingency (if they will be applying for a mortgage).  Of course the strongest offer is the one that is ‘all cash’.

If all cash is not an option then being able to provide a minimum 20% down payment is the next best thing, or as much of a down payment beyond that as possible.   Finally, you should be prepared to be as flexible as possible to accommodate the seller’s time frame and as far as your due diligence is concerned remember ‘TIME IS OF THE ESSENCE IN ALL MATTERS’.

A professional experienced EXCLUSIVE Buyer Agent will be able to make the process fun and easy and keep you on track – that EXCLUSIVE Buyer Agent should be ME!

What’s Your Hurry?

When you buy a new automobile you know better than to expect any sort of equity in that automobile. Heck, as soon as you drive it off the lot you’ve lost about $5,000.00.  Automobiles are a depreciating asset. But when you buy real estate you expect to have equity in it or at least you expect for that purchase to appreciate in a reasonable amount of time so you can build equity in it.  Up until now real estate investors did not have to wait very long before they saw their properties increase in value. That is one reason why the average investor bought and sold every five to seven years.  They could build equity and trade up. This is a new economy and a new real estate market.  It could be twice that long before you see reasonable appreciation in your real estate investment.  Of course there are exceptions like areas on the west coast of Florida and Arizona around Phoenix. That is where the fire sales were taking place.  Appreciation will be more rapid in these areas because the fires are going out due to inventories being significantly reduced. Do you really want your dream “second” home to be in one of these areas?

Actually, I am happy about this new real estate market because I think the purpose of a home is for family, not instant monetary gratification.  My opinion is directed specifically as it relates to this precious Island where lives are renewed and families are made whole and lifetime memories are made.  If you want to be here, the good news is you have time because as you can see prices are still adjusting and as is usually the case the market will cool down in about a month as we approach the end of the year. This is not a location of necessity for real estate investors; this is destination primarily for second homes. This is a unique location and the destination should be Joy and Happiness as well as a much simpler way of life.  There is an expression: Do what you love and the money will follow. On Martha’s Vineyard, buy what you love and the Joy will be in a collective family journey and a respite from your so-called normal life.  Why settle; haven’t you done enough of that in your life already?

The Price Is Right – Or Is It?

Many of us who own homes have painfully watched the equity we had in our homes dwindle and in many cases completely disappear. The WSJ reported recently “More than one-third of all homeowners have less than 25% equity, including 15% that are underwater, meaning their homes are worth less than what they owe.” Real estate professionals watched their businesses all but dry up unless they were willing to retool and start trading on other people’s misfortune during one of the longest deepest housing market declines in history. Believe it or not it has been six long years since the experts admitted that values were declining. Many of us in the business smelled the smoke in 2005.

Markets in some parts of the country started to crumble sooner than others but here on Martha’s Vineyard I would say we were about six months behind the first wave. Smart investors saw the end was coming and immediately pulled back taking a wait and see position; they knew that the Vineyard was not immune from economic fluctuations and it would be just a matter of time. Even so others kept buying at the top of the market. Sure enough, that wave finally crashed into our shores full strength and by 2007 our market practically came to a standstill.

Today we are hearing even after many false starts, unequivocally the bottom of the market has been reached with prices rolled back in line with 2002 – and adjusting for inflation as far back as 1998. Once again I think we are going to be late to the dance, but this time it will be on the upswing. I would suggest that we are about six months away from reaching our bottom on Martha’s Vineyard. I think we will still see further price reductions in some areas and classifications while in other areas and classifications prices are starting to inch up; not by much, maybe two percent over the next 12 months.

One reason we have not hit bottom here is, instead of our inventory being absorbed more properties come on the market every week. It is true that many of those new properties were on the market last year or two or three years before and they are simply being reintroduced, but the inventory is not going down, although in some cases the asking prices of those properties are going down. Even so there are still many home owners here who ‘don’t have to sell’, and they continue to resist realistically pricing their properties which leads to confusion in the market.

I was reading something the other day that was promoted as being the results of a survey asking the question ‘what does it take to get buyers to close?’ – ‘close’ meaning to buy. The list consisted of 5 concerns: Not having to do a lot of work before a new owner can move in; having a large enough outdoor space for recreation and privacy; being in a safe neighborhood environment, being comfortable with the amount of the mortgage payment and knowing they can make that mortgage payment, and last but not least, knowing they are paying the right price for the property. This was the one item of buyer concern that I took issue with. Why? Because according to the survey, the way a buyer determines that they are getting a good deal is by “looking at the percentage and actual dollar drop from the original price.” Is it really that simple? Are buyers really that naive? If that price differential was the only barometer buyers use to determine if they are getting a good price then they still haven’t figured out the seller’s game and the seller’s win.

I physically inspect many new properties every week and I follow the market here on Martha’s Vineyard like a hawk. I have developed a keen sense for value over the twenty plus years I have been in this business and I can tell when a property is overpriced. Nine out of ten times when I ask a seller agent who priced one of those properties that I consider to be overpriced, the answer is ‘the seller’. The property is reluctantly listed at that inflated price with one agreed upon caveat; if it does not sell within two weeks or thirty days the price will be reduced. It may not be reduced to the price initially recommended by the seller agent but the discounting will begin – and I will continue. We all know it.

So you tell me, if you are following a property and by doing the math you determine that the price has been reduced by 40% from its initial asking price and that initial asking price was 30% above where it should have been priced in the beginning would you still be as excited?

I know determining or understanding pricing here on Martha’s Vineyard can be very confusing. There are so many factors that figure in to valuating properties on this Island that it can make your head spin. There is the cachet associated with each town – and there are six towns. There is the cachet of the location, be it water front, water view, in-town, etc. All of these things have an effect on pricing, but what should not have an effect on pricing is the seller’s opinion; they know the least about market values.

I tell my clients that purchasing a property on Martha’s Vineyard ultimately comes down to making an emotional decision, but I believe my job is to get my clients as close as possible to a realistic number so they feel comfortable that the price is right.

Bidding Wars Are Back; Next Stop Martha's Vineyard

The headline in the Wall Street Journal reads Home Buyers Find Bidding Wars Are Back

I’ve been cautioning Buyers that this will be the natural evolution of a market reversal and now it is being reported in the Journal. Although the focus is on the states that were hit the hardest from California to Florida, and I have said that Martha’s Vineyard lagged behind when the bubble burst and it will lag behind in the recovery, bidding wars are coming.

Actually, there have already been some bidding wars for the better properties but there is still a lot of inventory to choose from. Once the inventory starts to be absorbed and prices are still at their lowest point in years there will be a whole lot of competition. Buyers who say they are not going to engage in a bidding war may not have a choice if they really want to be here and not one of the classic ‘would have, should have’ club.

To Improve or Not To Improve, That Is The Question

‘What to do’ is a question constantly bandied about by sellers and not having the right answer can cost you the seller a whole lot of money – money you will not recoup at the closing table.

I’m always telling my clients after they have made a purchase to keep whatever improvements they make in neutral colors in proportion to the quality and value of the home and with an eye for resale. However, in fairness I must say that as long as you know what improvements you will and will not get a good return on your investment you should be able to enjoy your home; it’s your castle after all. I was visiting with a former client just the other day and she showed me all the improvements and remodeling she just completed. She likes the color black and she used a lot of it throughout the house. After we had finished the tour she looked at me and said, “I know my decorating is not for everyone and it will pay for it one day when I want sell but it makes me happy now”. She was right and as long as she knew that her expensive black mica marble countertops and mirror backsplash would probably turn some buyers away and she would not get back what she paid for her kitchen remodeling, I support her decision. It’s the sellers who put disproportionate sums of money into esoteric personalized improvements and then expect a buyer to pay them back when they decide to sell that I’m concerned about.

Before any seller decides on improvements or upgrades they need to look at the other homes in the neighborhood. Are they modest simple homes or large, fancy million dollar homes? Any improvements or upgrades a seller decides to make to their home and property should be in line with the rest of the homes in the neighborhood. Buyers shop neighborhoods first, then homes in the neighborhood. Having an overbuilt more expensive home in a neighborhood is usually a challenging sell.

Selling in this market can be very frustrating for a seller so let’s talk about what to do to get ready. The first thing a buyer looks at is the condition of the home starting on the outside at the front door and then inside. Is the front door cracked, rotten or showing rust spots? Is the stoop falling apart? Is the trim rotten and the paint peeling? If the roof is fully depreciated and the siding cracked, cupping or falling off indicating it is at the end of its lifespan, replacing it is a good way to start. Cracked and missing roof shingles are an immediate turn off to buyers. If the house has dated single pane windows or double glazed windows that have lost their seal and are fogged, replacing them is a good investment. Buyers look at all these things and if the first impression is not a good one they assume it is just the tip of the iceberg. Taking care of deferred maintenance can save a seller thousands of dollars at the closing table.

When thinking about adding features to an existing home, on Martha’s Vineyard I find most buyers are looking for two things that seem to have become standard areas for most homes, a screened-in porch and an outdoor shower. Those are not expensive areas to add but once again keep the construction in proportion to the home.

One last word about outside improvements; on Martha’s Vineyard landscaping is not a priority for most seasonal visitors and hiring a service to maintain lawns and gardens can be very costly. So landscaping should be kept to a minimum going with native plants and shrubs when possible. Buyers are not going to pay extra for that ornamental Japanese Maple or that Koi pond. It’s more important to get rid of accumulated junk and debris that has piled up over the years so the yard doesn’t look unkempt.

On the inside, starting in the basement, nothing will make a buyer turn around and walk out the front door more quickly than a damp musty moldy smelling basement. Sellers need to make sure they have proper foundation drainage and landscape grading around their homes. More buyers today are converting basements to finished living space so a dry basement is very important. On Martha’s Vineyard, which is a perpetually moist climate, running a dehumidifier has become necessary for the health of most basements.

Moving into the main living areas, many sellers get overly creative with color, painting rooms bright colors like purple, pea green and Tahitian blue. Fresh paint on walls as well as over dated dark stained wood trim and doors in decorator white or a very light neutral color will make a big difference and the rooms will look larger and lighter.

What to do with the two sexiest areas in the house is question worth careful consideration. I am not talking about bedrooms; it’s the kitchen and bathrooms. According to Remodeling Magazine the return on investment when selling can well exceed 100%, but keep improvements in proportion to the value of the house.

For example, you can spend tens of thousands of dollars upgrading fixtures, cabinets and countertops, but you won’t necessarily get those dollars back when you sell. If you install a $9,000 Viking range in a house you are hoping to sell for $400,000 you can rest assured that you won’t get your money back. Re-facing or painting cabinet doors and replacing old fixtures and appliances with basic energy efficient modern appliances from Sears in neutral colors along with modern countertops will go a long way.

In the bathrooms new fixtures would be a good investment, especially if the existing ones are avocado green but keep it simple. A steam shower enclosure is a common feature in a multi-million dollar house but adding one to a $400,000 would be foolish from a standpoint of investment. You won’t get your money back when you sell. If the bathtub is in good condition, cleaning up the ceramic tile grout or caulk. If the bathtub needs to be replaced think about converting the space to a walk-in shower enclosure as they are becoming very popular these days. But overall getting rid of mold and mildew stains is most important. In humid areas like bathrooms, if you have baseboard radiant heating and the metal covers that are rusted and looking nasty, paint or replace them. It is more important for a bathroom to look neat and clean than have fancy expensive fixtures. Many older homes on Martha’s Vineyard are bathroom shy; they lack that necessary extra bathroom. In cases like that spending money on adding a bathroom instead of a $10,000 remodel of an existing bathroom is a better investment.

I haven’t mentioned flooring but if the house has wooden flooring and the finish is worn off, refinishing can do wonders for improving the appearance of the house. The same goes for bathrooms with dated vinyl floor covering. Replacing a vinyl floor covering with stone or ceramic can cost roughly $25 a square foot. Also, 1960’s vintage shag carpeting in sunflower yellow or bright green can really distract a buyer so get rid of it and replace it with neutral carpeting.

I was previewing a small ranch for sale recently located on a quaint in-town street where all the homes were pretty much the same. I had seen the home before the current owner purchased it and it was nice, but now it was so much nicer. A heavy partition wall was removed opening up the newly remodeled kitchen to the living room area and a bathroom was added to the master bedroom making it an ensuite. All these improvements are very positive and were not over the top. However, because we are in a down market I was relieved to hear the seller agent say that the seller knows he won’t get back all the money he invested. Normally, I would have to say he would get a good ROI and his chances of selling the property had greatly improved but since he bought it at the top of the market and then immediately made improvements I had to agree. Make sure before you make any improvements or upgrades you have clear expectations. If it is strictly for your own enjoyment then go ahead and have fun, but if it is with an eye toward future ROI sales potential then do your homework and consult with a real estate professional. In real estate there is wise saying: “Timing is everything”.

Is This Really The Time To Be Thinking About Your Fireplace?

Yes it is, and this is also a good time to have your chimney cleaned, but that is not what I want to talk about.

With the price of cord wood averaging $300.00 along with the mess associated with operating and maintaining a wood burning fireplace, people who still love the ambience of a fireplace maybe thinking about converting to a Propane fueled fireplace.

Did you know you have three options to choose from? Let me first explain that we do not have ‘natural gas’ on Martha’s Vineyard; we use Propane which does not burn as hot and does not create the same type of ‘big flame’ that natural gas does. To retrofit a gas fireplace to Propane is a simple matter.

The three types of Propane fireplaces are the vented Propane fireplace kit, the vent-free Propane fireplace, and the Propane fireplace insert.

The vented kit is the Propane log type we see so often that you can purchase for around $1000. If you don’t want to control the flame remotely you can safe a couple hundred dollars. The Propane log fire has a very realistic open fire look. The only disadvantage is that the damper in the chimney has to be removed because it is a state code requirement to guard against someone lighting a fire and forgetting to open the vent, which in turn could pump lethal carbon monoxide into the living area of your home. Another disadvantage is heat loss. Without the damper only about 15-20 percent of the heat is returned into the living space. This is about the same as with a wood burning fireplace, but the way to solve the problem is to install tightly fitting glass doors. Adding the doors could add as much as $1500 or more to the price of the installation.

The vent-free fireplace can be installed for under $1000. Vent free means there is no exhaust going up the chimney and therefore the chimney damper does not have to be removed. All the heat remains inside the living space. Health problems have been associated with these fireplaces among people suffering from respiratory ailments like asthma and allergies. Vent free fireplaces should not be operated for more than a few hours at one time which means they are not good sources of heat.

The logs in a vent free fireplace are more economical using less gas than those of a vented fireplace but the flame produced by vented logs looks more realistic.

Finally, we come to the Propane fireplace insert. I have a Vermont Casting wood burning fireplace insert and like the wood burning inserts, the gas insert is costly with an average price today or around $3000. As with the wood burning fireplace inserts, the look of the façade of your fireplace is retained. Inserts are meant to be airtight so you won’t be able to have an open fire. The exhaust fumes are vented outside the house which means the air inside the house remains healthy and you can run the insert indefinitely as there is Propane to fuel it.

Regardless of which option you choose don’t try to install it yourself, call a professional like the people at Vineyard Hearth Patio and Spa in Vineyard Haven. Here is a link to their website: http://www.vineyardhearthpatioandspa.com/

Home Sales On Martha's Vineyard Are Picking Up

2011 proved to be a year of reduced sales on Martha’s Vineyard with home sales totaling 319, down 9.1% from 2010 and the average price dropped to under a million, and at $939,000 was down 10.9% from the prior year. The median home price settled at $555,000 which was down 9.8% from 2010. 

 At the beginning of this 2012 I predicted sales would be ‘flat’ and pretty much a repeat of 2011.  However, if home sales numbers at the end of February are any indication I will have to agree with NAR’s chief economist that Spring Looks Bright .

 As we rolled out of February into March, home unit sales were already up by 40.8% and the average sales price was down by 11.5%.  The median sale price was up by 7.7%.

Would You Buy a Used Car Without Inspecting It and Taking It To Your Mechanic?

Maybe a better question is, would you buy a half a million dollar home on Martha’s Vineyard without taking a good hard look at it yourself, and then having a professional home and structural inspector thoroughly examine it? If the answer to both of my questions is No, then by all means read no further.

There are two kinds of house shoppers: One just likes to shop, looking at how a house is decorated and how the owners are living; they are just nosey and have nothing better to do with their time. On Martha’s Vineyard we call them rainy day house hunters – a real estate agent’s worst nightmare. The second kind of house shopper is dead serious about the task; they recognize they are contemplating making the most expensive investment that they may ever make and this is not a game. They will forego the beach on a sunny day because to them this is not a lark, a rainy day distraction.

Serious buyers are the only people I will work with and I can quickly separate the wheat from the chaff. Serious buyers need education and that is what I provide. Serious buyers are not afraid to pull up a corner of the carpeting, draw back a shower curtain, open closet and cabinet doors, climb up into attics or scrutinize basements, cellars and crawl spaces. Serious buyers are all about business and they have a nose for mold, water damage, leaks, faulty appliances and any sign of deferred maintenance. Serious buyers will ask a seller agent, if present at the showing, all kinds of probing questions even though they may think those questions approach being provocative or inappropriate. They do not have time to waste, and neither do I.

Are you thinking to yourself, I’m serious but once we agree on a purchase price I have every intension of getting a ‘home inspection’, so why do I need to be so inquisitive and investigative? Why can’t I just enjoy looking at the furniture, art work, petting the dog and admiring the gardens? Because, when you pay attention to the details you will be able to save yourself infinite time and aggravation. If you carefully walk around the inside and outside of a house you will be better able to determine if the condition of that property meets with your expectations for the condition of a property you would buy. Here is a list of just a few of things YOU are capable of observing while you are previewing a property on Martha’s Vineyard that is on your list for possible purchase.

• Wooden siding that is rotten at the edges.

• Wooden window and door trim and sills with evidence of rot and peeling paint.

• Exterior shingles both on roofs and on siding that are split or lifting up (that’s called cupping).

• Cable-vent covers that look like they have been chewed on by werewolves.

• Double glazed window glass that is fogged. Make note of who the window manufacturer is. Note: Anderson windows also have the manufacture date stamped on them.

• Gutters overflowing with leaves and grass and sometimes with small bushes growing in them.

• Mud tubes running up the sides of foundations or wood siding touching the ground, less than 6” - 8” from the earth surface.

• Oil stains under old style single wall oil tanks in the basement or evidence of rust on the belly of the tank.

• Hot water heating boilers that look like they have been hit by a train and have rust around all the fittings.

• Electrical panel boxes with covers removed and a rat’s nest of wires poking out.

• Cracked foundation blocks or wide (3/16”+) settling cracks in basement floors.

• Wooden or composition flooring that looks like it has been rough sanded.

• Ceramic floor tile that is cracked.

• Brown spots where grass won’t grow around septic system covers.

• Appliances that have scaling rust and look like they should have been taken to the dump years ago.

• Water stains and turquoise blue (copper) stains around plumbing pipe couplings for domestic and heating system plumbing.

• Black flecks of mold on the walls and ceiling in bathrooms with no exhaust fans, whether they have windows or not.

• Speaking of exhaust fans, if there is an exhaust fan in the bathroom look to see if there is an exterior exhaust hood for that fan nearby. If there is none all that moisture may be venting into the attic. The same thing applies to clothes dryers where the foundation is a crawl space and the laundry equipment is on the main level.

• On Martha’s Vineyard, if the foundation is a crawl space check to see if the foundation vents are open or closed. The foundation should be sealed and have a vapor barrier or concrete skin over the entire floor.

• Nasty black mold stains around bathroom ceramic bathtub tile grout.

• Water stains around toilet bases.

• Metal entrance way storm doors that are rusting along the bottom.

• Metal basement bulkhead covers that are rusted and open to the elements and rodents.

• Finished areas above garages or in basements where you do not see proper egress windows or doors – cook stoves are a trigger for questions about approved zoning.

By paying attention to the types of things I listed above you will be able to make a more intelligent decision on what you are willing to pay for that property. I am not saying that this means you don’t need to have a professional home inspection but this puts you further ahead of the game. Also, it is important to note that here on Martha’s Vineyard more than in most other areas ‘deferred maintenance’ is common place and that makes a home inspection even that much more important.

Once you and your exclusive buyer agent have negotiated an agreeable purchase price and there is an acceptable home inspection contingency in that agreement, you can go ahead and hire a home inspector. Make sure you tell him what your observations were when you previewed the property and what your concerns are now. If the home inspector discovers a deficiency that you determine will significantly affect your enjoyment of that property you then have the right to terminate the agreement with the seller and all monies deposited for the seller will be returned to you. Keep in mind that your home inspection is not meant to be an opportunity to renegotiate the purchase agreement; it is for your edification alone.

So as you can see, buying an older home is very much like buying a used car, first you walk around it, look under the hood, kick the tires and then you have your mechanic look at.

This Negotiation Is Not About You And Me

Helping my Buyer Clients to find the right property, and then researching and discovering the hidden secrets relative to that property are certainly important elements of what I do as an Exclusive Buyer Agent. What happens after my Buyer Client has identified the property they want to buy and are ready to make an Offer is what really matters. This is when the negotiation begins.

After we have found ‘the property’ that turns their light green, I discuss with my Clients how to proceed. First we look at all the comparable properties, such that they are. We dissect the subject property as best we can so as to get some idea of its possible market value. That does not mean looking at the Assessed Value and using that as our benchmark. Matter-of-fact, there is really nothing we can use to get a spot-on number. The Assessed Value and even an Appraised Value are merely guess-estimates used for specific purposes and guided by subjective opinions and data. Probably Comparable Sales, if there are any, are what will establish the closest value number, but no two properties are identical.

After we are done thoroughly reviewing the market data and discussing the various ways to approach negotiating an Offer, my final advice to my Client is to think about it and knowing what they know now, ‘offer what it is worth to them’. Don’t misunderstand, I am not talking about making a 'lowball offer'. What exactly is a lowball offer? I was reading an interesting interview the other day with Jeffrey Stanton who is a Negotiation trainer. For clarification sake, I will use the Martha’s Vineyard real estate market as my reference going forward. In a ‘balanced market’ the average margin price difference between the asking price and the selling price is usually around 3-5 percent. In today’s ‘buyer’s market’ the average selling price is usually 6-12 percent below the asking price. However, there are incidences where a property may sell for between 13-20 percent below the asking price, or even less. Usually properties are passed by when Buyers think they won’t stand a chance if they offer what they believe the property is worth when that number happens to be way below the asking price. Just to confuse matters even more, in any market the exceptional properties (i.e. those that stand out above the rest for one reason or another) will sell above the asking price, and where multiple buyers are engaged those properties will sell well above the asking price. I always tell my Clients if they are hesitant to make an Offer, “If you really want it what’s the worst that can happen? The Seller can say no”.

There have been occasions when I have presented a thoughtful and respectful Offer that was considerably lower than the asking price. Even before the Seller Agent presented the Offer to the Seller they would tell me that ‘they’ were personally insulted by the Offer. Oh really! This is not about You and Me! This is about my Buyer and your Seller. But of course if that is the tone the Seller Agent is going to accompany my Buyer’s Offer with there will probably not be much of a chance of success for anyone. But that is okay because I can deal with that. Stanton suggests in cases like this that the Buyer’s Agent request to present the offer to the Seller in person. That does not happen on Martha’s Vineyard mostly because the Sellers rarely live on the Island year round and are usually not here during negotiations. This is why I am always ready to present my case to the seller agent supporting my offer with the facts – as my Client and I see them.

The other mistake that Seller Agents and their Sellers make is that they do not respond when they perceive an Offer as being too low. The biggest hurtle to jump is from looking at a property to making an Offer on a property. By not responding to an Offer, that means there can be no conversation. It should not matter what the Offer is; beginning the conversation is all important. Stanton said, “A lot of times, a lowball may be all the buyers can afford.” He went on to say. "It could be an investor or a buyer looking to steal the property, or a buyer who really likes your property and is just taking a shot at it, never knowing if you're going to say, Yes or No. Just don't take it as them disrespecting you." Sellers should not be offended by a low Offer and they should realize that when they make a Counter Offer, no matter how small that Counter Offer may be, it is saying, I am willing to engage …. (Note: By law, real estate agents are required to present all offers to a seller.)

Once the conversation has begun between the Buyer and the Seller that is when the true motivations of both parties will start to appear. It is really important for both the Buyer Agent and the Seller Agent to manage expectations on both sides and control emotions --- including controlling their own emotions. And remember, this negotiation is not about you and me.

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?