Sullivan County Real Estate

Dear Seller, Dear Buyer

Thanks to a client who sent me this link to an article in today's New York Times, Letters From the Home Front: A Real Estate Deal from Two Sides. The sample letters from a buyer to a seller, and the reply from a seller to the buyer, are interesting, because they tend to sum up the perspective of both sides. But I find one thing missing from both 'letters' — actual comp sales data that either supports the buyer's offer price or the seller's asking price. That should be the crux of any written, supporting data passing back and forth to support an offer or support the denial of an offer or lack of counteroffer. When I confront a situation where a seller refuses to consider an offer or present a counteroffer, I always ask the listing agent to give me some comps that I can present to the buyer. The proof of the pudding that the seller's price is more emotional than fundamental is when the agent really can't support the asking price. Its also curious to me, in the seller's reply letter, that the seller isn't putting a counter on the table. In most cases, the lack of a counter just stops any  negotiation in its tracks.

The Importance of Momentum

Realtors can talk endlessly about why some houses sell and others don’t. Price, slow market, and lack of curb appeal usually top the culprits for non-sellers. But there’s an important factor that we don’t often consider: momentum. When a new listing comes on the market, if its in a market segment with active customers and seems to be well priced with attractive features, it will initially be shown quite a bit. I’ve seen some particularly attractive houses lately that have been shown a half dozen or more times on their first weekend on the market. Its not just buyers forming opinions during those first showings. Agents, often from a number of different brokerages, are showing the house for the first time and forming their own opinions as well. 

Then something very interesting happens. Some houses (admittedly a small minority) gain traction and momentum. As a buyer agent working throughout the county, I probably spend more time visiting brokerage offices and talking with other Realtors than most listing agents. A common topic of conversation is “Seen anything interesting lately?” When a house is gaining momentum, agents are talking about it, e.g. “Have you seen so-and-so’s new listing up on Smith Road. Really cute with a nice piece of property.” Other comments indicating momentum are “Great house”, “Great listing” and “Its going to go quickly.”

When a house gains momentum, the number of showings increase as the weeks go by. Most importantly, agents who’ve seen the house already return with new customers. Even though it may not have been right for a previous customer they showed it to, the positives outweighed the negatives enough that it made it on to their ‘promote’ list, and they continue to show it. Other agents also start to get wind of a good listing and begin promoting it as well. 

The flip side is a house losing momentum, and that is the far more common scenario. An agent shows a house, and forms an opinion that’s more negative than positive. They might show it a few times to different buyers, but there’s no sparkle. The house doesn’t pick up word of mouth, or worse, when another agent asks about it, they might comment, “Uggh. Have you seen it? Its waaaaay overpriced.” (In my experience, only about a third of listing agents call me after a showing to get feedback or comments., and very few are good at eliciting information. I'm seldom ever asked, for example, how likely I'd be to recommend or show a house in the future, which is a key momentum factor.)

That momentum is probably the number one indicator whether a house is likely to sell quickly or not. Once a house loses momentum among agents, its very tough to regain it. Sometimes even a major price reduction can’t turn it around. The adage that you only have one chance to make a first impression is as true with houses as it is with people. Sellers and their agents should bring a property to market only when its ready to make a great first impression. The goal should be that every agent who sees or shows a new listing in the first couple of weeks comments, “Great show. Great price.” And if, after a few weeks of active showings and no sales, momentum is moving in the wrong direction, I think it would be useful to find out why.

Click here to see 2 recent listings that built momentum quickly (and now have deals). They both had buzz among agents in the first couple of weeks. Granted, both houses - an in-town charmer in Jeffersonville and a stylish contemporary lake house at Wanaksink - were particularly attractive and well priced. But hats off to both listing agents - Jay Sparr with Yeager Realty for the Jeffersonville house and Pamela Pesante Kraus with Prudential Rand for the Wanaksink house - for actively building the buzz.

Developers Cut Prices, One Tries an Auction

Last summer, Redstone Properties (out of MA) raised eyebrows with its Highlands at Bethel Woods gated development, pricing 5 to 10 acre (wooded, not lakefront) lots from $149K to $299K. They did quite a bit of high profile promotion, including having a booth at a number of concerts at Bethel Woods. (Bethel Farms came to market at about the same time, with a similar product in a similar price range.) In early May this year, Redstone slashed the starting price on 5+ acre parcels to $79,900 (with a top price of $189,900). When Kenoza Lake came to market in Summer 2005, 5+ acre lakefront lots were priced from $325,000 to $700,000. Recent price cuts have brought lakefront prices there down to a range of $250,000 to $575,000, with an average drop in the range of about 20%.

I was most surprised, though, when I went to the website for Tanzman Lake (outside of Parksville) (www.tanzmanlake.com)  this morning, and saw the headline "$5,000,000.00+ Developer Liquidation Auction." It looks like the developer is auctioning the remaining properties with minimum bids at close to fire-sale prices (the reserve price is $99,000 for lakefront lots and $49,000 for non-lakefront lots.)

And anybody know what happened to the Grande at Hurleyvillle? A couple of years ago, D.R. Horton, one of America's largest home builders, rolled out was was to be a 111 home mid-range subdivision. You probably remember the signs coming up Route 17 - "Drive 20 minutes. Save $50,000." I know a few houses were built, but haven't heard anything about it in a while. The billboards are gone, and the Grande at Hurleyville is no longer on the D.R. Horton website.

Busy Memorial Day Weekend

Pretty busy real estate shopping weekend 'round this parts. I had 4 appointments over Saturday and Sunday, and a lot of other agents I saw or talked with over the weekend were also pretty busy. More telling was that for a number of houses I showed this weekend there was almost an appointment traffic jam, especially for the limited supply of cute-charming houses in western Sullivan priced around or under $250,000 (that aren't on busier roads). By the end of the weekend, a few of my under $250,000 favorites had deals on them. A couple of other houses, though, priced closer to $300,000 that I expected to go quickly, didn't. (Or at least, as of today, they didn't have deal on them.) I'm sensing that $250,000 level is a new ceiling for a number of moderate range second home buyers, and its not quite pushing to the upper $200's. I got a couple of calls today from new buyers looking for similar properties, also with that price ceiling. Its definitely a hot price point. One agent I spoke to said she was busy but was lamenting the fact that "there's very little good to show" When I asked what her buyers were looking for, I wasn't at all surprised when she said "Something cute, with some privacy, not on a busy road, up to $250,000.".

Back on Track

Things have kind of gotten off track here. My last 2 blog posts, on the Drive by First Trip and the Highland Township reassessment, have generated a large number of comments. But on both, the comments went way off track and veered off into long back and forths about Catskill Farms houses, the guy who builds them and the people who buy them. The on-message comments in both threads were kind of lost. While I haven't deleted any of the comments, I've closed the comments on both of those threads.

I know I'm going to get a few emails or comments from people accusing me of censorship and that I shouldn't censor any blog comments. But in the past couple of weeks, I've received emails from people commenting that the blog comments lately have gotten way off track and asking that I do some editing. While I'm not editing what's already been posted, I would like to ask readers going forward to try to keep comments succinct and on track.

The Drive By First Trip

Lots of folks I've been talking to lately are just starting out shopping for a second home, and few have much knowledge of Sullivan County (or the other Catskills counties for that matter). Their wish lists are often diffuse or not really defined beyond minimum numbers of bedrooms and possibly a price range — which is both a blessing and a curse. A blessing because a long and detailed wish list can be difficult to meet, but a curse because a blank canvas opens up a huge number of possibilities. Its kind of like going to Macy's and saying, "I need a new wardrobe."

Helping clients narrow down choices and get to the essence of what they'd like is something I do very well. But it can be very time consuming, particularly because Sullivan County is so large and I can only show only a limited number of houses on a single 4 hour appointment. (I'm hesitant to have longer appointments, because in my experience, when you get up to 5 or 6 hours the houses all start merging into mush in the buyer's mind, and folks start to get a little grumpy even with granola bars.)

It can take two or three trips to hone in on the type of home, setting or location someone would like — lake community, wooded privacy, rolling farmland, area of the county, size and style of house. I do a lot of 180 degree turns with clients as they begin bringing lifestyle into the picture. Then once they have a better definition of what they'd like and where they'd like it, they want to see everything on the market that comes close, which can be another couple of trips.

Its an important process, but not necessarily a very efficient once. The initial stages, in particular, involve a lot of wheel spinning as buyers start to understand the differences between, say, Woodbourne and Narrowsburg, or the tradeoffs in various settings for privacy and seclusion versus convenience to town, the difference between rolling open farmland and more wooded settings or busier roads versus country backroads.

Recently I've had three potential clients who wanted to spend a first trip up just doing drive bys of houses to get a feel for the area and the settings of various houses. It was a great idea. They emailed me listings they'd found on internet searches. I gave them my comments on the ones they found, and suggested some others they might want to include to give them a broader range of examples to consider. Each couple ended up with a list of 15 to 20 houses. I provided them with addresses and directions and suggested a route. They came up and spent the whole day driving around.  Afterwards, they called to talk about the houses,  what they learned, what they liked and what they didn't.  All of them commented on what a great day they'd had, how much information they'd gleaned and how it helped them understand the market better.

In one case, the couple decided that Sullivan wasn't really for them. Another couple narrowed the list of 15 to 20 houses down to 5 they wanted to see on another trip. The third couple (who had very specific setting desires) actually narrowed it down to one.

For the two clients I'll continue working with, I got huge amounts of information from their feedback. Based upon their choices, I can make much more intelligent suggestions of other houses they may want to consider.

From my standpoint, of course, it was a very efficient use of my resources, because I didn't spend a lot of time and gas taking people to places they ultimately wouldn't like. But what was somewhat surprising is how all 3 commented on how much they liked the process. They were on their own schedule, could pace themselves, stop for lunch when they wanted and make detours. One couple noted roads they particularly liked, and took digi-pics of a few houses that really caught their fancy (even though they weren't on the market.)

For first-timers not familiar with Sullivan, a drive-by tour can be a great information gatherer. But its not an approach for everyone. There are some folks I talk with that I know the best first trip is to arrange a "tasting flight", showing 4 or 5 very different houses in their price range to get their reaction to the various factors and trade offs. For others who have a very specific idea in mind, it can be most useful to sample 4 or 5 of the best options within their category.

But for a lot of folks new to Sullivan County, a drive-by day can be a great introduction.

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Update on this thread May 29, 2008: If you're coming to this thread for the first time, the comments below may not make a lot of sense. This thread got totally out of control, with personal attacks. More troubling, though, is that some commenters impersonated other commenters (by using a signature just slightly different than another commenter). I've removed a number of comments on here, but tried to leave the general tone of the thread intact.

Hghland Township-wide Reassessment: My Thoughts

I've gotten about a dozen emails and phone calls from homeonwers in Highland Township freaked out about the property valuation reassessments they received recently from the Highland tax assessor. Some have seen dramatic jumps in their assessments; I've heard through the grapevine that some owners have seen their assessments more than double, while others have seen more modest hikes.

Most people I talk with are under the mis-impression that, say, a 50% hike in their assessment will translate directly to a 50% hike in their property taxes. But that isn't how the system works. Townships are supposed to periodically review all the properties in the township and adjust assessments to bring them to market value (or some agreed upon percentage of market value). That's just what Highland has done. Without a periodic township-wide reassessment, some properties have assessments that remain well below their market value, while other properties (particularly new construction) are assessed closer to market value and bear an unfair tax burden.

When the tax grievance process is complete (sometime this month), the assessor will have a final tax roll. That's the total of the assessed property in that township. Let's say, for the purposes of argument, that prior to the reassessment the total tax roll in Highland Township was $50 million and after the reassessment it is $100 million. That doesn't mean that taxes will double because the township then takes its total expenses and divides that by the tax roll to get the tax levy — effectively the tax rate. So if the township expenses were $1 million and the tax roll was $50 million, the levy rate was 2%. Now, with the tax roll doubling, that same $1 million budget would result in a levy rate of 1%. There are also other entities (county and schools) that rely on the assessment to levy taxes and there are complicated formulas to adjust for percentage of fair market value, so when a township reassesses and the total assessment say, doubles, there isn't necessarily a doubling of the school tax for owners in that township.

A reassessment will result in increased taxes for some, but not necesssarily all, homeowners, and will create some hardship. I've often thought that there should be some system where homeowners on fixed incomes or otherwise unable to pay a higher tax bill should be able to have a lien placed on their house for a portion of their taxes so when they sell their house (and benefit from the appreciation that resulted in those higher taxes) the township can get paid, but the homeowner can remain in the house.

A question I get often from buyers is whether the assessment on a house they're buying will rise to market value upon sale. The general answer to that is 'no', for reasons that are related to the principal in New York that houses that are comparable in a township must be assessed equally. But I do warn them that if a house has a particularly low assessment (and low tax bill), they should be prepared over time for the property taxes to rise into a normalized range, which for most townships in Sullivan County is about 1.8% to 2.2% of the property's actual market value. (The big exception to this is the Village of Liberty, with a much higher effective tax rate.) If you have an effective tax rate of 1% of market value, you should probably expect your taxes to rise, and if you have a much higher rate than that range, you could possibly have grounds for a grievance.

In many ways, doing a township-wide reassessment is a good thing to do. It brings fairness to the system. But its also excruciating, and not perfect. It will likely take a year or two for values to really equalize. The grievance process is particularly important to the assessors, because it provides them with a lot of information that, along with additional sales, helkps them fine tune the assessments. It is far from an easy process, and doesn't win the assessors any new friends. But ultimately its critical to insuring the fairness of the system.

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Update on this thread May 29, 2008: If you're coming to this thread for the first time, the comments below may not make a lot of sense. This thread got totally out of control, with personal attacks. More troubling, though, is that some commenters impersonated other commenters (by using a signature just slightly different than another commenter). I've removed a number of comments on here, but tried to leave the general tone of the thread intact.

Comments About Specific Properties

Over the past few months, some visitors to this blog have posted comments about specific properties, often negative, usually about the value or lack thereof. I've removed those posts. Its not because I'm a rah-rah Realtor who only wants nice things said about properties and wants to censor anything negative. Ultimately, I'm responsible for this blog, and negative comments about specific listings puts me in a difficult position.

Sullivan County is a small community. Realtors here generally have good relationships with each other. Clients who've worked with Realtors in other areas often comment on how well we seem to get along. The cut throat backstabbing that you hear about in other areas is very rare here.

Sure, the Realtor Code of Ethics prohibits making false or misleading statements about our competitors. Of course, many of us have opinions about different agents, but we don't do much badmouthing in public. By tradition, that sort of extends to trashing or flaming listings. The Code of Ethics doesn't really deal with that specifically, so I could probably get away with flaming individual listings on this website, but it just feels tawdry and a little uncouth. Even if I'm not the author of the comment, by providing a forum for that, its kind of the same thing.

I do personally believe, however, that consumers do want a way to get more opinions on properties on the market apart from the often-rosy descriptions posted by listing agents. Real estate, as marketed through multiple listing systems, remains one of the only large consumer purchase categories without a feedback loop or independent reviews. The information model is hierarchical, moving in one direction, from the seller/listing agent (who's job is to position a property in the most favorable light possible) out to the consumer, with little or no opportunity for a consumer to provide feedback on the property. A feedback loop is common in many consumer purchase systems, like product reviews on Amazon, movie ratings on Netflix or hotel reviews on Tripadvisor. Other categories, like mutual funds or automobiles, may not feature consumer reviews but do offer independent expert reviews or ratings that are helpful to consumers when shopping.

I'm a strong advocate of opening up the listing system to include some sort of review feedback loop. Its a hot topic in real estate circles. Redfin, an innovative and somewhat controversial agency primarily on the west coast, hired independent reviewers to review new listings and post them on a blog system tied into the MLS Search on their website. They were a little ahead of the game, and got into hot water with the Northwest MLS, who said that the reviews violated MLS rules. Faced with losing their MLS affiliation, they pulled the review site down.

I do think its coming. Consumers want it, and competition from non-MLS real estate marketing sites like Trulia will increase the pressure for the Realtor-owned MLSs to include it. But I'm not ready to go there right yet, and want to keep good relations with my colleagues here. So, for the time being, I'd appreciate it if visitors would refrain from making specific comments on specific listings. Thanks.

April Sullivan Sales Data Posted

Hey, everybody, my May Current Market Conditions Report is posted. Things are starting to look up. There were 36 closed single family sales in the Sullivan MLS in April, compared to a devastating 23 in March. Sales and prices both continue down from a year earlier, but remember that early to mid 2007 was the peak of the market. The median sales price for the 3 months ending April 30th, at $150,000, is statistically equal to March's $150,750, and the average actually moved slightly upwards to $207,657. Buyer interest was up in April (I had a full appointment schedule most April weekends, and yes, actually made some deals.)

I'm almost hesitant, though, to post anything here that the picture may be getting brighter, only to be slammed, beaten and clawed by the sky-is-falling pessimists. Maybe that should be a new blogging sport, "Extreme Pessimism". But I'm calling it as I'm seeing it, and right now it sure looks better than it did in January.