FORECAST: Are rising fuel costs hurting the Connecticut housing market?

The short answer is yes, and no- largely depending on your price bracket. There are more than a few issues with rising fuel costs. The cost of gas  to get to work, and the costs to heat your home (that going to work pays for). Luckily, the heating season is pretty much over until late  September, but that doesn't diminish the fact that the cost to fill up even a 250 gallon oil tank for your home is now about a whopping $1000 when it was 30% lower just a few months ago.  

We all feel the pain at the gas station. It seems like the gasoline  dispenses even slower than it used to just to remind us how much we are paying! Most cars come equipped with a 16 gallon tank, and you can expect to pay anywhere from $65 for regular gas to $80.00 for premium just to fill your tank.  Since the start of 2011, the average price for gasoline is higher by 54 cents per gallon. Now, assuming an average of 22 miles per gallon on a passenger car, that’s an increase of 2.5 cents of gasoline per mile driven in the last 90 days alone. It’s a cost that adds up quickly, and can affect a household budget.  Plan for higher pump prices moving forward, too. Historically, gas prices surge between April and June.To put it in perspective,  just last year at this time,  gasoline was $1.00 cheaper per gallon!

That all affects the economy, and when the economy is affected, home prices are bound to follow suit. Over the past few months, buyers have become  increasingly aware of escalating fuel costs, and that affects the local housing market in a few ways.

First, the lower price ranges here will be more affected negatively than the medium to high price ranges, which may see little or no difference in seasonal real estate sales activity, if at all. The reason why is that
the rising fuel costs would only make an unnoticeable dent in the middle and upper price bracket.

If the prices continue to escalate  at a higher rate than normal during the seasonal fuel price surge, and/or last longer than it has historically, THEN the upper price ranges will feel the pinch in real estate sales, and that is due to to less buyers entering the market in the lower ranges, which will impede the mid-priced housing market, which in turn hinders the higher ranges. That would take some time to occur,
and coninued rising fuel costs would play a major factor.

The lower priced inventory in each town suffers immediately, but not overwhelmingly so-unless fuel prices skyrocket quickly. The reason for the sluggish starter homemarket  is that the first time buyer pool is concerned about affordability. If the first time buyers don't purchase those starter homes, those homeowners in turn  can't move in to the mid range homes, and the mid range homes would not be moving to the higher priced homes. A note- the cost of gasoline  plays a major role in where the buyers migrate to, since "closest to work" will seem to make the best sense.

ADVICE: If you are looking to make a move sometime soon, and you have a starter home, now is the time. If you just made it into the mid-range in your town or city, now is also good.  The upper ranges are currently unaffected and are still good and should be for at least the remainder of the summer. Call me, or send me an email and we'll review your particular situation and see exactly what the best plan of action is for you.

What are the three most important factors when selling a home?

When you decide it's time to sell your home, pay special attention to three very important factors. These weigh heavily in any type of market and  can make or break the sale of your home.

• PRICE: The first  and foremost prerequisite to selling your home is pricing it correctly.  That doesn't mean adding extra room for negotiations. That only puts you into a price category that you can't easily compete with other homes. Remember, buying a home is truly an emotional purchase for a buyer. They always seem to come up to your price if they really want your home. In our area, The sales price to list price ratio is around 95% and that is already factored into the list price. Your agent (that would be me!) will conduct thorough market analyses to ensure that you know what the proper list price for your home should be. If you are thinking of selling your home now, contact me for your detailed market analyses.

•  CONDITION: Second, go through the house  with your agent and fix any obvious issues. I will conduct a walk -through with you when we place yourhome n the market, not only to see all of its features, but to consult with you about any problems that you may be aware of, and  make suggestions to if I find any areas of concern. Cosmetics and interior neutralization to enable your home to appeal to the most buyers is  of the utmost importance. This is one of the first step of staging your home for sale. Utilize my 26+ years in the industry to advise you as to what makes the most sense before you make any changes.

• EXPOSURE:  Exposure is important, but at the same time, it is also important that your agent does not over-expose your home. Your home should be advertised in the places that make the best sense. Make sure that your home is getting the proper exposure it deserves through appropriate advertising, broker and public open houses, Marketing materials for your home that are placed at your home, and an accurate listing on the local multiple listing service or online listings providers.

When you are ready to sell your home, contact me. I will make sure that youunderstand  all of these very important components of selling your home, and more importantly, I will implement them on your behalf.

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How to steer clear of costly seller mistakes.

Everyone wants to get the most money out of the sale of their home, but sometimes in an effort to do just that, you can sabotage yourself without even knowing it.  Here are a few common mistakes that sellers make, so you'll  know what NOT to do when selling your home.

• 1. Basing your asking price solely on the listing price of other properties.  If you see one, or any number of homes on the market for a particular price, don't assume that your home is worth that price as well, even if your home has more to offer. If those homes are on the market, then they haven't sold- and anyone can list their home for sale at any price if an agent is willing to list it for that price. It does not necessarily mean that the home is worth it. See my post on "Street Phenomena"

• 2. Overestimating the value of  upgrades or improvements, and adding the full value on to the asking price.  You may have just remodeled your bathroom and /or kitchen or refinished your basement . Unfortunately, you do not recoup all of the costs in these improvements, and if your home is over-improved for yoru area, you will recoup even less. See my prior post on Home Improvement Return On Investment.

• 3. Listing your home to the agent that gives you the highest price. Some agents deliberately over-value your  home just to get you to sign a 6 month listing agreement. This is truly frowned uponin our industry by professionals, and we have a term for it- it's called "buying the listing"-. Agents that practice  this deceptive tactic assume that once you are under contract, they can always reduce the price to get your home sold. If they come in with a higher price than other agents do, they are more likely to obtain the listing- so the agent that tells you your home is worth the most may be trying to do ust that, or they may be too inexperienced to know better. Either way, you lose.

• 4. Overpricing your home to leave room for negotiating. We all know most people want to try and negotiate. So that being the case, we should a cushion to the asking price so we will get more, right? WRONG. Typically homes in our area are selling for about 95% of the asking price. When you get your market analysis from yoru agent, this infrmation should be included. Adding more to your asking price only puts your home in the next price bracket, where your home will not be able to compete with the other that are fairly priced. Your home just appears overpriced, and you lose valuable market time, and the ability to get even market price for your home by doing this. Even if a buyer does come to see your overpriced home, they   will not place an offer on a home that is priced too high, because contrary to what you might think , they really don't want to submit a lowball offer.

• 5. Basing your asking price on what you need out of the sale in order to purchase your next home. Buyers determine market value. Just because you need "X" amount to putchase your next home, or to walk away from your home without owing the bank anything unfortunately  has no bearing on the price that a buyer will pay for it.  

• 6. Choosing the wrong agent to sell your home. There are many reasons that your agent could not be the best agent to sell your home.  First and foremost, make sure you hire a Realtor and not just a real estate agent. A Realtor subscribes to a strict code of ethics. There are plenty to choose from, so that make that a requirement right from the get-go. You should have the authority to approve the marketing materials that your agent creates on your behalf. If you are not happy with something, it should be addressed with your agent so that it can be fixed. I cannot tell you how many times that I have been to a sellers home after theior listing expired and they never saw what theit actal MLS printout looked like, much less given the ability to okay it. That includes pictures, too. One of these days, agent siwll realize that photgraphng the corner of a room, is just really a picture of the cornetr of a room. Also focusing on the furnishing rather than the house itself is a no- no. Taking the time to move items as necessary for a photo shoot on teh house, and returning the items to where they were shoudl not ever be a big deal to anyone. When I see a picture of a kitchen that has too much on the counter, or magnets and papers all over the fridge, it spells laziness on the agent's part. The internet is powerful, the pictures must be as photogenic of your home as possible, to put it in the best light.

• 7. "Hard selling" to your buyer as they are looking at your home. When an agent is showing your home to their buyer, resist "helping" that agent, and/or following them around your home. When you, as a seller,  point out all of your home improvements, and all of the features of your home, it makes you look desperate to sell. It's a majotr turn-off to buyers, and agents for that matter.  Buying a home can be very emotional for a buyer. They really need the time alone without you breathing down their neck at every move- whether you think you are doing that or not. Everyone has their own privacy limits. It's really best for you to be out of the house, or out of the way during home showings.

Every dollar counts when selling your home. Make your decisions wisely- the right agent make sall the difference for each of these common seller mistakes. and I just happen to know someone :)

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Are Fairfield County home prices stabilizing?

Is it possible to gauge whether home prices in our area are beginning to stabilize, or is it just wishful thinking? The answer is yes, it is possible to gauge market stabilization, however there has to be enough sales to make an accurate judgement- right now, there are not enough sales to back up the rosy outlook that we all want. BUT that does not mean  that the market is all gloom and doom- it's not.

I have always been  fascinated by statistics, and have kept lots of market data throughout the years, and reported market data for various publications. I am not new to this- I have been actively engaged in real estate for 27 years including  selling through  a similar market. Like so many others at that time, we  didn't see it coming. One thing for sure though, I made sure that I paid special attention to what happened as we were getting out of that horrible market.

I won't beat up on the first quarters sales statistics too much. We had  the worst winter on record, here, and buyers and sellers alike waited just for that alone- so the quarterly stats may not look fantastic, but they must be seasonally adjusted, so if  you hear the media speaking somewhat pessimistically about this first quarter sales in the Northeast, I am asking you to remember that they are reporting  news as they see it from a  multi-state region- and honestly, you know as well as I do that even if you hear a report on Hartford CT real estate, it doesn't really have too much of a bearing on where we are in Fairfield County, now does it?  

The first thing that happens in a market rebound is that certain "price pockets" begin to sell in each town. What I mean by a price pocket is (for example)- a range from $500-600K will start to  move more quickly than it has, and at the same time, another price pocket of maybe 1mil- 1.2 mil will start to move. The overall market may not seem to be moving in general- (if you look at that way)  but if you pay attention to certain price points, it is.  What I see right now, is a beginning indicator of better things to come.

One thing that's always very important to remember - Pricing is all relative. If your home is worth less than it was 1 year ago, remember that the house you are buying is also worth less than it was a year ago, too. If you are purchasing a higher priced home, that seller has more to lose than you do- couple that with low interest rates, and you make out pretty good!

I would be happy to analyze your current situation with your home, and give you an honest opinion as to whether it's better for you to move now, or wait a few months, or wait a year. It will not always be the same answer- everyone's situation is different. So feel free to contact me, I love sharing my knowledge and expertise when someone can benefit.

What happens if the house you want to buy does not "appraise", and you can't get a loan because of it?

The bank sends an appraiser out to a property to ensure it is worth the amount you are willing to pay. Consider it an additional unbiased  check on the value. If you require a $500,000 mortgage on a property that is deemed to only be worth $500,000, the bank may  not give you a loan (It would be considered 100% financing) The bank looks at lending  money that is secured on a property as an investment. There would be no equity in the house on that particular scenario, and in case of a default, the bank would have a hard time recouping its investment.

Three  things can happen in this instance. The seller can reduce his price to what the bank feels that its worth. The buyer can put more of a deposit down, or the buyer can walk away from the transaction, with no penalties. Incidentally, there would be no penalty for the seller, either.

Sometimes, if and when an instance like this occurs, the seller may opt to hire an independent appraiser (that is certified through the buyers bank) for another opinion. Appaisers sometimes make mistakes, too- but don't worry too much about this- it's a rare occurrence these days. Years ago, buyers were not represented by agents. All realtors worked for the seller, even if they wrote an offer for the buyer. With buyer representation, the contracted agent holds a fiduciary relationship with the buyer. Justr another good reason to hire an agent to represent you in yuor purchase