Prepare your home for a sale

by Dan Krell
DanKrell.com
© 2013

It may be an exciting year, especially if you’re planning to sell your home. If you’re like most home sellers, you’ve got some work to do to prepare your home before it goes on the market. So, let’s get to it…

One of the most important things to do before you list your home is to declutter. Decluttering can be an overwhelming endeavor because of a commonly held misconception that the goal is to make your home immaculate. Rather, the underlying principle to decluttering is to remove items from rooms to give a more spacious feel; you decide what items get thrown out, donated, or kept in storage. So as not to get overwhelmed, plan the decluttering; rather than trying to complete the activity in one weekend, try decluttering one room (or even one part of a room) per day.

After the decluttering, you’re often left with items that need to be thrown out. However, some items require precautions and/or special disposal: some items may need to be recycled; some may need special handling; while some may need to be hauled to a processing facility. The county or municipality may offer special pick up for some items that cannot be disposed of by the regular trash collection. If you’re unsure about the disposal of certain items, call your local “Department of Waste Services,” (like my local Montgomery County Division of Solid Waste Services) which can offer guidance and information for local disposal/recycle procedures, facility locations and hours.

“Neutralize” your home to provide a vision to home buyers how they can live in the home. Although you’ve spent years giving your home a personal touch; items such as trophies, awards, diplomas, family and personal photos should be removed because they can distract home buyers’ attention from the home itself.

Home buyers should feel at ease when viewing your home. Having too much and/or over-sized furniture can make an otherwise large room feel cramped. Eclectic furniture collections and furniture that is wrongly placed can not only make a room look awkward, but can also give people an unsettling feeling.

Does your home need staging? Home staging is a way to create a “vision” for home buyers by adding a modern flair. Some home sellers stage every room, while some only stage featured rooms to be focal points of the home. Although home staging can be expensive, it doesn’t have to be. Sometimes having an extra lamp or removing a painting from a wall can make the difference between shabby and chic. If your furniture is out of date or in poor condition, consider a short term furniture rental for that featured room.

Although we’ve talked about your home’s interior – don’t neglect the exterior of your home. Home buyers’ initial opinions are created as they approach your home; no matter how nice your home looks on the inside, it may not matter if home buyers never make it inside. Simple landscaping can make a lawn appear “manicured.” Make sure that the home’s siding is clean and in good condition.

Your real estate agent should be able to provide guidance to prepare your home for sale. If home staging is a goal, many agents either work with a home stager or have been certified for home staging. You can also research home staging by visiting The International Association of Home Staging Professionals website (IAHSP.com).

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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

January 9, 2013December 2, 2020

Stories behind home sales tell of a meaningful history

by Dan Krell
DanKrell.com
© 2013

It’s entertaining and interesting to take a look at the unusual and extremes of the housing market during the year that just ended. Besides some of the notable sales of this past year, consider the least and most expensive single family homes that sold during 2012. The stories of these two homes go beyond recent sales and economic conditions; they tell a story of suburbanization and the growth Montgomery County.

One of the lowest priced single family homes that sold in Montgomery County during 2012 was a home located on Sigsbee Road in Silver Spring. The home, located in Veirs Mill Village, was listed in the MLS (Metropolitan Regional Information Systems, Inc) by Real Home Services and Solutions, Inc. as a foreclosure and sold for $86,199. Veirs Mill Village, a community that seemed to have its share of foreclosures in recent years, was built as part of the post World War II housing boom.

According to the Maryland Department of Transportation State Highway Administration’s “Suburbanization Historic Context and Survey Methodology” (roads.maryland.gov), Veirs Mill Village was one of the largest post war housing developments built in Maryland. There was a housing shortage immediately after World War II, and a scramble ensued to build homes to accommodate returning veterans as well as the quickly growing Federal workforce. Because of the speediness of the construction, neighborhood aesthetics was not a priority; initially, there was little thought to community, commerce, or municipal services. Built to be affordable housing, the community initially attracted young families; the average age was stated to be 21. The completed development consisted of 1,105 four room bungalows, each with a 1948 price of $8,700.

Consider that at the height of the housing market in 2006, the average home sale price in Veirs Mill Village was $390,337 and ranged from $325,000 to $485,000. The average sale price during 2012 was $218,950. And although this home on Sigsbee Road was not expanded from its original 648 sf, it is not uncommon for neighborhood home owners to have expanded these homes over the years.

In contrast, one of the most expensive homes that sold in Montgomery County during 2012 is located on West Lenox Street in Chevy Chase. The 100 year old home sold for $7,050,000. The MLS listing stated that the home, listed by Long & Foster Real Estate, Inc., was built in 1913 and was expanded and renovated in 2006.

According to the “Suburbanization Historic Context and Survey Methodology,” the development of Chevy Chase began as part of the suburbanization of Montgomery County of the 1880’s. Although other Montgomery County developments at that time were priced for middle class civil servants (due in part to the Civil Service Act 1883) , Chevy Chase was developed to attract affluent home buyers. Chevy Chase expanded in the 1890’s when a rail line was built to encourage growth in a suburb that was considered inaccessible; and became an established affluent neighborhood when the economy flourished during the 1920’s housing boom.

The MLS listing and sale and sale price information is compiled from Metropolitan Regional Information Systems, Inc. (MRIS.com); the information is not an opinion of value, nor should the information be misconstrued as an appraisal. Additional neighborhood suburbanization and historical information can be found on the Maryland Department of Transportation State Highway Administration’s website (roads.maryland.gov).

January 3, 2013December 2, 2020

Bold predictions for real estate and housing

by Dan Krell
DanKrell.com
© 2012

We survived the “Mayan Apocalypse” of 2012, so what’s in store for the housing market and the real estate industry in 2013?

The “Long Slog:” Although analysts disagree about the date of the housing market bottom, most agree that the national housing market bottomed out sometime time in 2009-2010. Many looked forward toward 2012 to be a phenomenal year for housing and a return to normalcy. Certainly 2012 housing figures were better than those of 2011, but in many areas of the country (including locally), the market fell short of outperforming 2010.

Unlike the occasional Pollyanna story about the local housing market, analysts expect “the long slog” or “the long grind” that will take years (emphasis on the plural) to get back to normalcy. No matter how you articulate it, and barring future economic setbacks, experts describe the climb out from the bottom as a long, slow trudge that will have high and low points along the journey.

Home sale prices: When real estate fell into a seemingly endless downward spiral in 2008, some sectors continued to do well. Homes priced at and above one million dollars continued to outperform other sectors of the housing market through 2011. The “upper bracket” sector began to show weaknesses in the early part of 2012; as luxury home sales slowed, mid-range home sales picked up momentum. However, activity flipped toward the end of 2012; as upper bracket activity increased significantly, while activity in other price sectors decreased. Until fiscal cliff, debt ceiling, and other government budget debates are resolved; local upper bracket home sales will be inconsistent during 2013. This market bifurcation can skew local monthly average home sales figures, as well as possibly distorting monthly marketplace snapshots.

Hyper-local real estate: Regional and local variances in home sale prices will require home buyers and sellers to continue to focus on hyper-local data to determine selling prices. One of the best ways for you to clarify neighborhood sales trends is to consult a local real estate agent for recent neighborhood comparables.

Mortgages & Appraisals: Getting a mortgage may become be increasing difficult in 2013. Recent reports of FHA losses and a possible bailout could force new guideline changes to help the venerable mortgage program. Because of increased foreclosures and delinquencies, there is talk about FHA becoming increasingly credit score reliant, and increasing mortgage insurance premiums for riskier borrowers.

Appraisals will continue to be a lightening rod of criticism and a source frustration. Since its inception, the Home Valuation Code of Conduct was confusing to everyone, and eventually became a scapegoat for many seemingly inconsistent valuations. However, a low sales volume due to lack of resale inventory will also create issues with appraisals.

Pent-up demand: No need to worry about interest rates – yet. Keeping mortgage interest rates low, the Federal Reserve has commented on continued purchases of mortgage backed securities as part of a larger stimulus program. However, continued low mortgage interest rates may not be the reason for home buyer activity as much as pent up demand. However, home buyers waiting on the sidelines to purchase a home have been met with low resale inventories during 2012. For many home owners, the general lack of home equity remains the major reason to not sell a home; and it’s also a reason for low resale inventories to continue through 2013. Continued low inventory environment will create a competitive environment for home buyers.

December 26, 2012December 2, 2020

Don’t buy into a false economy

by Dan Krell
DanKrell.com
© 2012

Stories about housing and real estate often reported in local media are entertaining and sometimes informative. However, some stories can create an erroneous impression about what’s happening in the marketplace. If you are not careful, you may be lead to buy into a false economy; using a Realtor® in today’s market is vital to get real time neighborhood information to make the best decisions.

A recent story highlighted a DC foreclosure that reportedly received over one hundred offers, and the accepted offer was more than double the list price. The story appeared to use this home sale as an example of a hot DC market. And make no mistake – that neighborhood is a hot market for various reasons (including the limited number of active homes for sale); but there’s missing information that could distort your perspective.

First, understand that the story referred to the sale of a HUD owned property, which was most likely a FHA foreclosure. The fact that there were reportedly 168 offers on the property is not unusual for a HUD owned property located in a neighborhood with very active buyers; although some HUD properties don’t get much attention, it is not unusual for many such homes to attract a lot of attention, as well as many offers.

Most offers on HUD homes are usually at list price or below, not only because savvy buyers are seeking a foreclosure bargain; but because of financing limitations. HUD appraises these properties so as to know the market value, and usually lists the home at that price. HUD foreclosures that are eligible for FHA financing use that appraisal, and are therefore limited to that price.

The MLS listing for this home indicated that it was listed “Insured with Escrow,” which means that the home was eligible for FHA financing. And looking at recent neighborhood comps, it looks as if the home was priced competitively. Additionally, the repair escrow indicates that the home requires repairs to meet FHA guidelines.

Although there are some buyers who pay over list price for an “Insured” HUD foreclosure, they know they need to pay cash or find alternate financing; so unless the buyer of this home has cash, the buyer could encounter issues obtaining alternate financing. Furthermore, although the story reported that the home sold, the MLS listing indicates that the home is under contract with contingencies (home inspection). So, the home is far from settled, and it remains to be seen if this contract falls through (or remains owner-occupied as required for this sale).

Although the story about this home sale was interesting, it is not typical for the housing market. The story does not indicate that the reported 14% DC median home sale price increase compares November 2012 sales to November 2011. There is also no mention that “luxury” home sales could have impacted November’s home sale price figures; GCAAR (gcaar.com) reported that DC single family home sales priced at $1.5M and above increased about 111%! Also, according Realestate Business Intelligence (rbintel.com), the November 2012 average DC sale price is about 97% of list; the average sale price is not over list.

Don’t get me wrong, this was a good story. But the story may be about buying into a false economy and buyer’s remorse; the real story may ultimately be how you should consult with your Realtor® before making a purchase or sale.

December 19, 2012December 2, 2020

This is Chaos – anything can happen

by Dan Krell
DanKrell.com
© 2012

There has been a lot that has been written about chaos theory, and some have even tried to apply it to real estate. More specifically, many have discussed the application of chaos theory to real estate investing. And even more recently there have been attempts to applying chaos theory in figuring out where housing is headed; or to be succinct – when will housing once again begin to realize consistent appreciation?

I’m not one to disappoint, but I can’t predict the future. However, my attempt to explain chaos theory may reveal how its application to the housing market is difficult at best (at least in today’s environment), yet while simultaneously is an exceptional exercise in understanding the underlying dynamics.

Chaos theory is somewhat of a misnomer; a more apt name might have been “pattern to equilibrium theory” as it’s not so much about chaos as it is about predicting natural patterns that seek equilibrium; or put another way – predicting results by looking at dynamic patterns. Equilibrium could be what we typically think it is – a pattern of a self sustaining system; or it could also mean a pattern of inertia to the system’s inevitable demise.

Simplified, chaos theory investigates the relationships and patterns of a system’s trend toward stability. The theory delves into the natural patterns of subsystems so as to predict how patterns develop and unfold to manifest themselves.

Although mathematicians have been investigating the precursors for chaos theory for many years, one of its first practical applications was in trying to predict the natural patterns of the weather. So it makes sense that you might want to apply the theory to the housing market so you could figure out the best time to buy and sell. The problem in the theory’s application to the housing market is that unlike the weather, housing is not an “organic” system; housing does not follow the natural unfettered patterns of market forces. Rather, decades of intervention and policy have influenced the expressed patterns of the housing market.

But don’t get discouraged, an aspect of chaos theory termed “the butterfly effect” explains that any action, no matter how small and insignificant, can influence a larger system. So, although the housing market is not an organic system, you could theoretically investigate its related influences to work out a market trajectory. So, rather than solely considering supply and demand, you might take into account more wide ranging and complex influences, such as Greek economic policies, German parliamentary elections, EU monetary policy, etc.

By looking at observable influences on the housing market, housing contrarians have been muttering their mantra of “the sky is falling” for years. And when the housing bubble burst, they of course claimed they had it right all along, and many are still waiting for the worst. Was it a coincidence? Of course, in the early 2000’s there were influences on housing and the economy that were inconceivable (such as mortgage CDO schemes).

Chaos theory is as complex as the systems involved. We can also apply it to come up with alternate trajectories and think about what could have been. If for not some small event, someone’s seemingly insignificant decision in the past, there might not have been a housing bubble burst or great recession. But as they say hindsight is 20/20 – but that’s an entirely different theory.

by Dan Krell DanKrell.com © 2013

by Dan Krell DanKrell.com © 2013

by Dan Krell DanKrell.com © 2012

We survived the “Mayan Apocalypse” of 2012, so what’s in store for the housing market and the real estate industry in 2013?

by Dan Krell DanKrell.com © 2012

by Dan Krell DanKrell.com © 2012

Simplified, chaos theory investigates the relationships and patterns of a system’s trend toward stability. The theory delves into the natural patterns of subsystems so as to predict how patterns develop and unfold to manifest themselves.

by Dan Krell
DanKrell.com
© 2013

by Dan Krell
DanKrell.com
© 2013

by Dan Krell
DanKrell.com
© 2012

by Dan Krell
DanKrell.com
© 2012

by Dan Krell
DanKrell.com
© 2012