In listening to Larry Kendall’s webinar yesterday he had some great insights and tools to help us as agents be a true resource for our clients. (For information about future webinars with Larry Kendall, the ultimate real estate guru, check out www.ninjaselling.com for dates and to register.)
Two websites that he mentioned provide valuable insights into the housing market for various metro areas in the United States.
The first one is: www.ofheo.gov.
OFHEO stands for Office of Federal Housing Enterprise and Oversight. It is a government agency that tracks the repeat sales index of homes in each state and breaks it down into several metro areas as well. This is a fascinating report that can show you housing sales values compared quarterly, at 1 year, and 5 year intervals and since they began tracking the information in 1980. To view the information once you are on the site click on “house price index” There are several categories in this field that will show you how your state or metro area has fared over time as well as allowing you to compare areas. It also ranks states and metro areas in order of appreciation.
The second site is: www.pmigroup.com
PMI stands for private mortgage insurance and is invoked by lenders when a loan is for more than 80% of the value of the property. PMI is a fee that is added to the monthly mortgage amount and is used to insure the loan in case of default. This website tracks 381 metro areas throughout the United States and rates them in terms of how likely they are to have a decline in property values in the next 2 years. To view this information once you get to the site click on “publications” then click on “fall 2008 report” and then appendix.
So what can you do with this information?
~ Take it on a listing appointment when you meet with a Seller so that they can more fully understand where the market is today and where it is heading. This will help you price the property, especially if you are in an area that is predicted to decline more in the next 2 years. Being that much more aggressive with price initially may save them thousands of dollars with a quicker sales versus infinite frustration from having to chase the market down because they overpriced it initially.
~ For Buyers review the information to decide on timing. If you are in an area where there is a low chance of decreasing prices they can probably feel pretty comfortable with their investment long term. If the area has a high probability of seeing further price drops how can you structure your offer and negotiating strategy so that the buyer will be comfortable with potential short term losses? (Some people may think this is overly optimistic, but the reality is that this too shall pass and real estate remains an excellent long term investment. Yes, it make take a few years for things to shake out, but long term real estate is hard to beat. so buying now with low interest rates and depressed prices is truly a good move.
~ Monthly mailer. I know that all of you are diligent about keeping in touch with your clients right?! Okay there was a bit of sarcasm in that last comment because I know that the idea of mailing to your clients puts a lot of you into overwhelm but here is a simple and easy way to communicate with your clients. On the pmigroup website there is a chart in there that color codes the areas of the country in terms of risk for declining property values. Copy and paste that into a postcard and send it out today with a note on the back that says “to find out more about our local market and how it relates to your home call me today for a private consultation.” What if it is bad news for where you live? Not sending the information will not change the reality of it. You are a professional and your job is to be the resource for your clients and help them navigate this market as it relates to their individual goals. You can not do that effectively without the right information.
~ Include relevant print outs in your clients annual property reviews. Again, it might not be exactly what they want to hear, but they will appreciate your professionalism. You can’t change the market, but you can still bring a solution to their situation.