Sullivan County Real Estate

The Upper End Bargain Business

September was a good month for me. I had closings on 3 properties that would be considered "upper end", in a market where many have sounded the death knell for that segment. While the 3 properties would be labeled in the "better" category — one at Chapin, one at Lew Beach, and the third a secluded lakefront house on 5 acres on a private lake — their prices weren't. In fact, all three sold at prices that would have been unthinkable a year or two ago.

So what motivated these 3 buyers to step up to the plate in an arguably shaky market? Super deal prices. All 3 properties had been on the market for more than two years, with the initial asking prices about double where they finally sold. They all moved through more than one broker, with periodic price reductions (but no sales). They eeked their way from high priced through "OK, but nothing to write home about" priced, and finally dropped inton "Let's Make a Deal" land — where they found buyers.

I'm not posting this to crow about selling 3 "better" houses this month, but rather because they so perfectly illustrate the point I've been making for months about the constellation of factors needed to make a deal in today's market.

Time on market appears to be a key factor, and not just for these houses. Of the 10 closed single family sales above $300,000 over the past 3 months in the Sullivan MLS, 7 were on the market for more than a year. The importance of "seller fatigue" to striking a good deal is so significant, that I sometimes wonder why bothing showing houses that haven't been on the market for a year.

All 3 houses also moved listing brokers at least once. Why could that be important? A lot of sellers initially think the reason their house isn't selling is because the listing agent isn't going their job. Rather than reduce their price substantially, they think the magic bullet is changing agents. After a couple of agent changes that don't result in a sale, sellers may be more open to listening to an agent's opinion about the price needed to move the property. A downline agent is better able to deliver a tough love message about price.

Lastly, there was a personal factor on the seller side for all 3 properties that motivated a sale now, rather than letting the properties sit on the market for another year hoping for a better price.

As primed as these 3 sellers were, every deal requires a buyer. And all 3 of these buyers were well suited to move on these properties. The buyers shared two common factors. First, they had enough experience looking to recognize a great deal when they saw it. In fact, two of the three were looking since last year and saw the houses they ended up buying when they were listed at significantly higher asking prices. Second, they weren't looking for perfection if the deal was right

The challenge for me is to continue sniffing out these bargain opportunities for my clients. There just aren't that many out there, with the constellation of factors that add up to a super deal. Right now I have about a half dozen super deal houses on my radar for second home buyers, and have shown them a few times over the past month. But the potential buyers for those houses were new to the market and not yet seasoned, so they're holding out for something more perfect.

One last thought about these sales. I often hear from other agents that these sales are somehow 'distress' sales and therefore don't define the market. I beg to differ. While there may be "super motivating" factors among sellers, the fact remains that these houses didn't sell at higher prices.

(Note: If you're reading this today and thinking "Wow, I thought I read this yesterday but it was different," you're right. I rewrote it today because I didn't like what I wrote yesterday.)

Baby Step Price Reductions Can Backfire

Our MLS (Multiple Listing System) has a number of tools to help members stay on top of what's happening in the market. One of the most useful is the "Hotsheet" that has 3 categories — new listings, price changes and recent solds. Every day I scroll through all 3, and under "Price Changes" I look for big drops that indicate seller motivation.

Yesterday, a property in Glen Spey showed up on the Hotsheet with a price reduction — to $245,000 (down from an original asking price of $249,000 when the property was listed in April.) I thought I'd seen it show up before on the Hotsheet, so curious, I pulled up the price history. Listed in April for $249,000. Since then, there have been 3 price reductions — to $247,000 in June, $246,000 in July and now to $245,000 in September. Whoopidodah. Rather than indicate that the seller is motivated and ready to deal, these baby step price reductions indicate just the opposite. That the seller is pretty unmotivated, and that the price reductions are little more than the listing agent only getting the seller to agree to token reductions to get the listing to pop up on the hotsheet to try to grab some attention.

For me, these baby step price reductions just telegraph that a seller is unmotivated and difficult, and it likely isn't possible to strike a good deal. Unless a listing agent can encourage a seller to make a meaningful price reduction, it's probably better to just leave the price where it was. Price reductions are a powerful tool that communicate seller motivation, and token reductions of a few thousand dollars just doesn't cut it.

Raw Land PIcking Up?

I don't handle much raw land, so don't follow that segment of the market closely. But in the last week, I've picked up that there has been some land moving — and for the construction of a personal residence, not for gas leasing or speculation. A beautiful 33 acre piece with big views, listed at $299K, has a deal on it, as does another 4 acre Beechwoods view parcel listed at $88K. On Lake Devenoge, a 1 acre lakefront lot listed at $249K also has a deal. And over the past month, I've gotten a number of calls from buyers looking for some nice land for personal use.

I wouldn't call it a land rush, but it's a positive sign that there is serious buyer interest in raw land. Back in the spring, nobody was looking for raw land to buy and build, and the only parcels moving were a handful of dirt cheap distress sales. By the way, I understand from the scuttle I've picked up that the 3 pieces I mentioned above are all selling at or pretty close to their asking prices.

I Want a Beautiful House

I got a very interesting call from a woman yesterday. She said she was looking for a beautiful house. Beyond that, she didn't have a whole lot of criteria in terms of price or size or style. She just asked me to send her listings of houses I considered "beautiful".

In 8 years of selling real estate here, I've never gotten that request. I get requests for big, small, private, secluded, lakefront, riverfront, farmhouses, rustic, charmers, contemporaries, estates, great deals or cheap. No one has ever asked for simply "beautiful." In our MLS, I can select from hundreds of different criteria, but "beautiful" isn't one of them. So I went through and picked out a selection of houses that I considered beautiful for one reason or another. It was a challenge. I was somewhat shocked at how short my final list was. 9 houses from the Sullivan MLS plus 3 others that aren't MLS listed. Of the 12, a couple of them are kind of stretches because the setting may not rise to the standard of the house. (One of my favorite 'beautiful houses' — the Felipe farmhouse on Obernberg Road — isn't in this group because it just went into contract.)

Beauty, of course, is in the eye of the beholder. There is another group of houses just below these that I would categorize as "very nice" but that don't quite evoke the same "this is really lovely" response.

The exercise of selecting "beautiful" houses was eye opening. I spend most of my time showing houses that don't rise to that standard. But that's a standard that many buyers — even if they don't articulate it directly — hold. We tend to ascribe the sluggishness in the market almost totally to the economic downturn, but maybe a part of it is that we don't have a lot of beautiful houses to seduce buyers. Are they just waiting for prices to come down, or are they holding out for a truly beautiful house?

Current Market Conditions Report with August Data

I just posted my latest Current Market Conditions Report with the August sales data. Both sales and prices are kind of flat, with no significant drops or leaps in either. Buyer interest has picked up, but with little pressure to buy and the "super deals" buyers are looking for few and far between, actual sales remain sluggish.

Check out the latest Sullivan County Real Estate Current Market Conditions report and drop on back here to leave your comments.

Catskill Gas Rush to be HBO Drama

Move over Fairview. Toodle-ooo Peyton Place. Bye bye Dallas. The newest television slugfest is slated for these here Catskills, and starring, well, us. HBO is planning an upcoming series about the Catskills Gas Rush, based on the 2008 New York Magazine article. And the source of the dramatic tension that will pull the story along week to week? The pull between cash poor dairy farmers struggling to raise cash to keep their family farms operating, and the New York City weekenders who have bought second homes next door. Pulitzer-prize winning writer Richard Russo, known for his penchant for writing about class conflict, has been brought on board to write the script.

There's no title yet for the series, or production date. The info I have comes from an article on THR.com (The Hollywood Reporter.)

Asking Prices Continue Fall

A frequent refrain heard from me on this blog is that sellers aren't in tune with the new reality, bringing their asking prices in line with buyer expectations. The data, however, doesn't quite support my generalized broadside. I just took a look at the average and median asking prices for single family homes available in the Sullivan MLS. The average asking price has been creeping steadily shown since July 2008, when it stood at $294,985, to $263,293 today. (The average peaked in March 2007 at $312,381.) The last time the average asking was price this low was back in November 2004. The median asking price is now $199,990, a level it touched during the first quarter this year (and then crept up a bit), but well below the spring 2007 median of $249,000.

So overall sellers have been lowering prices, but probably not enough across the board yet to entice a lot of buyers. More and more sellers are 'getting with the program', though, and there are some good values mixed in with a lot of 'not-so-great-yet' listings. As I've written in this blog over the past few months, it's that small subset of great values that are catching buyers.

Old hands in the business, who've been through previous market downturns, say that sellers lag buyers by 6 to 12 months. I've been logging the monthly average (and median) asking price since October 2004, and since then the ratio of the market basket average asking price to the average selling price has been 1.45. (Note: this is different than the bid/ask ratio I post every month on closed sales, where I calculate the ratio of the selling price to asking price for each sale, and calculate the average of those ratios.) Today the market basket average asking price to average selling price is 1.68, indicating that sellers still have quite a ways to go in getting their expectations in line with buyers.

To Bring or Not To Bring (the kids), That Is The Question

Couples with young children are the largest category of second home buyers in this region. And most city buyers I work with bring their children along when they come up home shopping, framing it as a fun family outing to the country. This summer there seemed to be even more families bringing their children. After schlepping parents with kids in tow through scores of houses over the past few months, I'm starting to think that bringing the whole family is neither much fun nor much of an outing, for either the parents or the children.

Before labeling me as a grouchy crumudgeon because I'm even broaching this subject, I want to put out here that I do like kids and get along with them quite well. But I'm not sure that house shopping and children are always the perfect mix, particularly when a house shopping trip up here can entail a long, long day for families that make it a single-day round-trip from the city.

The reality is that most kids don't like house shopping at all. It's about as appealing as going to Aunt Gertrude's family birthday party at a house without toys. Some of the more inquisitive or adventurous kids do like being in the country, and can content themselves looking for frogs and worms and spiders. But many other city kids are kind of afraid of the country. (I had one exception this summer — a pre-teen boy who just loved houses and couldn't wait to see the next one. The parents and I commented that he's an architect in the making.) More often than not, the children along for the ride don't really have a very good time.

What happens when kids (particularly more than one) come along is that the children consume the lion's share of the parents' attention. Some of it is just the logistics of traveling with children — buckling in and out of car seats, doling out snacks, diaper changing and putting on shoes. When I'm showing properties to parents with children along, I adjust for that, adding about fifteen minutes extra for each house.

The bigger attention siphon for parents is organizing and managing their children at each property stop. A lot of children aren't well versed in "Don't Touch" and can go hog wild picking stuff up in a new house. Piles of other kid's toys are particularly attractive. In some cases, a parent's energy can become so totally consumed with managing the children that they have almost no attention to devote to taking in the house. Often the parents split up, one staying with the children while the other looks at the house. That's less than ideal, because they don't have the opportunity to move through the house together and discuss it with each other. It's a lost opportunity. A huge part of house shopping for a couple is the process of melding their separate ideals and honing their wish list with each house they see.

A tried and true remedy to the 'house shopping with kids' conundrum is for the Realtor to offer to stay outside and play with the kids. But quite a few parents today won't take you up on the offer, wanting to keep their children in sight at all times.

The biggest losers after a day of house shopping with the kids are typically the parents. More often than not, they're just frazzled. Sometimes they cut the trip short, having underestimated the stamina and patience of their children, or the extra energy it takes for them. And frazzled is not the best emotional state for evaluating options and making major decisions.

There are some creative options. Of course, one option is to leave the children at home, with a relative, nanny or babysitter. But that isn't always practical.

One suggestion, if parents haven't gone on a house hunting trip with their children, is to make your first trip a short one. While you may want to see 4, 5 or 6 houses or visit 4 or 5 lakes, that may be too much until you gauge the house shopping tolerance of your children. So plan a short little trip to see just a couple of houses (preferably in the morning, before you run into nap time). Pack a picnic lunch and spend the early afternoon in a park or lake before heading back to the city.

Another solution that I've seen work very well is to have one half of a couple make the first reconnaissance trip, getting in as much as possible in a single day and then narrowing it down to a short list. Then the whole family can come back up to see the houses that made the short list.

Having one parent come on a scouting trip has another advantage. When children come, we almost always caravan (with the buyers following me in their own vehicle), because most parents don't want to hassle with shifting car seats into my vehicle. So we don't have the opportunity to chat while traveling between houses. I get much less feedback when we don't drive together, and it's that feedback that's so essential to developing a real understanding of what a buyer is looking for. When I'm showing properties to adults without children in tow, they usually ride with me in m vehicle.

One of the most ideal situations I had was this past July. A family with young children planned a week's vacation here, that included some house hunting. One parent would go out with me to scout out potential houses while the other parent took the children on an adventure. Towards the end of the week, we all went out together to look at the short listed houses. Those trips were all short, just a couple of houses each, and were mini-adventures for the children.

House hunting is hard work. It can be time consuming and exhausting, and demands attention and focus. I certainly understand the desire to spend those weekend days with your children, particularly for professional couples for whom that time is precious. Most parents in the city don't take the kids along if they have to run a full day of errands (and can make some other arrangements.) Having been out with hundreds of families over the years looking at property, I've come to realize that house shopping is more akin to a day of running errands than a day at the beach. But because the 'errand running' work of house shopping is up here in the country, where there are lakes, rivers, frogs and cows, that line between a fun family day and a work day gets blurred.