Mary Beth Loves Denver

It’s getting more and more important to prep a house before putting it on the market. There’s a LOT of competition out there. The buyers who are looking at your listing are looking at a bunch of other listings in the same area. Yours has to stand out. What’s worse, some of that competition is bound to come from foreclosures. And they’re going to stand out because they’re priced 5% to 10% lower than yours. (I know that doesn’t seem like a lot as a percentage, but 10% of $200,000 is $20,000. That’s a lot of competition!)

So if you want to sell your listing without letting it go at a foreclosure price, it’s got to be in better shape than a foreclosure. Buyers might overlook bent screens, dinged woodwork and broken shingles if they think they’re getting a great deal. But at market price, they don’t like to see that stuff.

I saw a great article on MSN a while back on the top ten repairs to make before selling a home. It’s here.

My favorite part of this has to do with smells. I’m a freak about this. When I’m with buyers, we usually give nicknames to each house we see. It’s easier and more fun to remember a home as “Big Plaid Wallpaper House” than as “You know, the one on Vance Court. Two story, blue trim, 2000 square feet . . .”

And when a house smells, guess what name it gets. “Smelly Cat House.” Or “Weird Cologne Trying To Cover Up Smelly Cat House.” A bad smell will drive buyers away. So will a weird smell that’s clearly an attempt to cover up a bad smell.

If you’re selling a house that contains smelly pets, a smoker, weird or aromatic foods, or anything else with an overwhelming olifactory presence, you need to do some work. Get rid of the source of the smell. (Seriously, it’s best if Kitty lives elsewhere for a while.) And then clean or get rid of everything that harbors the smell.

I know it’s hard to for sellers  to notice what their own house smells like. So tell them. Tactfully.

And hope they take the answer very, very seriously.

The other day, I ran into someone I hadn’t seen in a while. She had just moved back into town, so I asked here where she was living. She looked at me sheepishly and said “I bought a house. I was going to call you but it was new construction and I didn’t think I needed to and the whole experience was awful and I really wish I’d called you first.”

A lot of people think they don’t need a real estate agent when they’re buying a new home from a builder. After all, they don’t need help finding a new house. The builders advertise all over the internet and the newspapers, and they have those nice models with the helpful salespeople who walk buyers through the whole process. What’s left for a real estate agent to do?

Plenty. First of all, those nice helpful sales people work for the builder, not for you. They’re not looking out for your best interest. They’re looking out for the employer’s best interest. If you don’t have representation, then there’s nobody in the transaction looking out for your interests.

Buying new construction from a builder is a lot different than buying an existing home from an individual seller. First of all, when you buy a home from a homeowner who is working with a real estate agent, the contract guiding the transaction must be the official Colorado Contract To Buy and Sell Real Estate. That contract was drafted by the Colorado Real Estate Commission, and is amended every year, to make sure that buyers and sellers are protected.

But not new construction. If you buy a house from a builder, you use the builder’s contract. The contract drafted by the builder’s lawyers, to protect the builder’s interests. Do you think those lawyers sit around trying to think of ways to look out for your best interests as a buyer? Don’t bet on it.

Second, you have those on-site sales people who, if you have no representation, will be instructing you and guiding you through the whole process. They’re often very nice people. I’ve worked with several of them whom I liked very much. But don’t forget who’s signing their paycheck. It’s not their job to see that your interests are protected.

How often, in this market, do you think unrepresented buyers pay too much for new construction? It’s easy for a buyer to assume that a builder knows the market, and that their homes are priced accordingly. But that’s not always the case, especially in a stale market. There are times when new homes are priced too high. When builders first set prices for a new development, there’s a little bit of guesswork involved. They don’t necessarily know that those initial prices will hold. That can be a big bummer for the first people to waltz in during the initial excitement period and pay the asking price. Because if the homes are overpriced, sales will usually peter out fairly quickly, and the builder winds up dropping the price. And that leaves the initial buyers in the position of having paid more for their homes than everyone else who moves in later. Guess what happens when it’s time to sell?

A good real estate agent will tell buyers when a new home is overpriced, and attempt to negotiate a better deal. If the builder isn’t dealing, he or she will advise the buyers to move on.

Sometimes, buyers attempt to purchase new construction without representation because they think they can get a better deal if the builder doesn’t have to pay an agent’s commission. That isn’t going to happen. Builders know that charging less to buyers without representation means charging more for buyers with representation, which amounts to penalizing buyers for having representation. That doesn’t make them look so good. It also hurts their relationships with local real estate professionals, and they really don’t want that. They need buyer’s agents to show their product to their clients. So they won’t stab us in the back by penalizing our buyers.

The cost of paying a buyer’s agent commission is built into the price of a house. The buyer is going to pay it whether or not any commission is paid. If the buyer is unrepresented, that money just goes back into the builder’s pocket.

The thing is, most builders expect Realtors to accompany clients on their first visit to a community in order to allow that agent to represent the clients. So call your Realtor before you start wandering through open houses. (Not working with a Realtor yet? Call me!) Personally, I’m happy to go wandering with my clients, even if they’re not sure they’re serious yet. And keep a stack of your agent’s cards with you. That way if you happen to pass by a model home and justhave to go in, you can hand the card to the onsite person, tell him or her upfront that you’re already working with an agent, and make sure the builder will honor your relationship before you go traipsing through the model.

Pick up the phone before you start looking. Call a Realtor. You’ve got everything to gain and nothing to lose.

I grew up in a Hutchinson.

Many of you who grew up in Denver are nodding. For the rest of you, I’ll explain.

Hutchinson Homes built houses here in the Metro Denver area from the 1950’s until the early ‘80’s. They built a lot of houses. If you’ve spent any time in Denver at all, you’ve seen a Hutchinson. They all look alike. Two bedroom windows, front door, picture window, garage. Mostly brick. Garage may be one or two car. Kind of like this:

Or this:

Or this:

Wherever you see blocks and blocks of essentially identical houses like this, you’re in a Hutchinson neighborhood. Some of the houses will have two car garages, some will only have single car. Some have the garage on the left, some on the right. Occasionally you’ll see one with no garage at all, or with only one bedroom window in the front. But mostly they look a lot like 85 Cody Street, where I grew up.

In the 1970’s they branched out and built some trendy bi-levels and tri-levels. But throughout the ‘50’s and ‘60’s they built these little brick forts. A lot of them.

And they were forts. They were small. They were simple. But they were built incredibly well — built to last. And they have.

One of my buyers recently bought a Hutchinson. I was having a lot of fun when we were shopping, because walking into a Hutchinson reminds me of my childhood. The one he bought reminded me of my friend Lisa who lived down the street. We played Barbies in her basement a lot.

The inspector I generally work with is wonderful. Most thorough inspector I’ve ever seen. If there’s a problem in a house, he finds it. Takes three to four hours on the average inspection. He grew up in a Hutchinson, too. Inspecting this Hutchinson for my buyer, he kept walking around saying “This is a joy.” Not just because it reminded him of his childhood, but because the house – which was built in 1961 – was in such amazingly good shape.

We wound up asking the sellers for no repairs. Zip. Zilch. Nada.

Of course, not every Hutchinson is in such pristine condition. This one has had the same owners since 1975, and they’ve taken very good care of it. But even a Hutchinson in rough condition is, at its core, a well-built house.

My parents owned their Hutchinson for 40 years. It was small. (1100 square feet and six people – you do the math.) It didn’t have a lot of closet space. But it was sturdy. It sat on a big lot. And by the time my parents sold it, it had been very personalized. They finished the full basement in 1968, doubling their finished square footage. In the ‘70’s they added a beautiful family room to the back of the house. Later they tore up the carpet and refinished the beautiful hardwood floors underneath. Every pre-1970’s Hutchinson has gorgeous #1 red oak hardwood floors, often buried beneath dated shag carpeting. It cleans up nicely!

That house was lovely – and sold very quickly – when my parents finally moved out in 2004.

Starter home? Investment property? Check out a Hutchinson!

I have super, super good news. I have inherited 2.5 million dollars!

I know what you’re thinking. she probably just got one of those random email from somebody in Ghana telling her she’s inherited money from the late somebody or other. But no, I’m not that gullible. I didn’t just get a random email from somebody in Ghana. I got a phone call from somebody in Ghana. Several phone calls, actually. And then a few emails, but they referenced our phone conversations.

So that’s way more legitimate, right?

Here’s what happened. This guy died. I didn’t know the deceased, I’ve never heard of the deceased, but apparently he died in a car accident along with his wife and daughter, who were his beneficiaries. He had no relatives, as he was an orphan who made his way to Ghana in 1975. Therefore, they have concluded that I am his next of kin, since we share the same nationality and the same last name. His name was Steven Beth’s Corner.

Huh?

I have to admit, this last part confused me a little bit. My last name isn’t “Corner” or “Beth’s Corner.” If it were, my name would be “Mary Beth’s Corner.”

Then I remembered. On my speaking web site (www.reallove.net), there is a section on the home page called “Mary Beth’s Corner,” where I post random tidbits that I think might be interesting to readers. Either by some massive coincidence an orphan named Steven Beth’s Corner has died with his family and my unfortunately worded home page has hampered their search for the legitimate heir (perhaps the elderly Mrs. Edna Beth’s Corner in central Ohio), or somebody with a particularly low IQ is attempting to scam me.

Do you think this means I don’t get the money?

Everywhere I turn, I hear that the Denver market has turned and is poised for a rebound. Great news. But I wanted to see exactly where all of this optimism was coming from. So I started digging into the numbers.

The numbers look very, very good.

From September 2007 to September 2008, inventory (the number of homes on the market), dropped nearly 20%. The number of houses sold increased 15%. The average days a home is on the market before it sells dropped 5%. And – get this – the “months’ supply” of homes on the market dropped a whopping 30%.

Why does this signal a rebound? Because the problem in our market (and in any difficult real estate market) has been that we’ve had a lot more sellers than buyers. And — thanks to the law of supply and demand – when you have less demand for a product, the price tends to drop. How do we know we have more sellers than buyers? Inventory. When a lot of houses build up on the market, we know we have more people trying to sell their houses than we have people willing to buy those houses. So, with all of the competition for fewer buyers, houses sit on the market longer, reflected in the average days on market statistic. All of this leads to the “months of inventory”, which is what you get when you take the number of houses on the market divided by how many are selling every month. That tells us how long it would take to sell all of those houses if no new houses were to come onto the market.

When more houses are selling and less houses are sitting in inventory, that tells us that the market is becoming more balanced. It tells us we have more buyers in the market, buying houses and reducing inventory.

Why has this happened? Well, the average sales price might give us a hint. It has dropped 14.8% in the past year. Median sales price dropped 11.8%. Apparently prices have dropped to a level where homes are attractive to buyers. It’s the law of supply and demand again. When the price drops, demand increases. As demand continues to increase, prices rise to meet the demand.

At any rate, it’s very good news for Denver real estate.

In a word, “yes.” Now is most definitely a good time to buy real estate in Denver.

I remember Denver’s real estate bust in the 1980’s. I wasn’t living here at the time, but I’d come home to visit and see that I could buy a condo in Denver for less than I paid for my car. (Well, less than the average person paid for the average car. I don’t think my ride at the time was worth a whole lot.) I, of course, had no interest in buying any of these bargain-basement condos because a) I didn’t live here, b) I had no money, and c) I naively assumed that their value would always remain low.

If I’d only known then what I know now. If I had scraped together every dime I had, bought one of those condos and rented it out, I’d be thanking my young self for it today.

Unfortunately, my crystal ball is in the shop, so I don’t know at the moment when housing values in Denver will start to climb. The market indicators show that we’ve reached the bottom. So it should happen sooner rather than later. I don’t know if the wider economic crisis will delay it. I do know that Denver’s economy frequently runs counter to the national economy. Given that interest rates are likely to remain low, and that Denver’s employment situation looks "relatively" good, I have every reason to be optimistic about the Denver market.

So yes, I believe that this is an incredible time to buy. Market conditions have driven prices down in many areas. Housing is “on sale.”

Get in on the sale while you can.