Why Chasing Down The Market is A Risky Real Estate Gamble!

Audu Real EstateIn Grand Rapids, Michigan it’s an argument that every real estate agent has heard at least once.  In the opinion of most…one time too many.  It goes something like this.  I’d like to sell my home, but I need (X) amount from it.  I know that you are recommending I list my home for 10 ~15 % Less than (X) but I figure that if buyers are interested, they will make an offer.  I refer to this argument as the decision to Chase Down the Market.

Chasing Down the Market has become a real estate consumer sport.  Homeowners gambling with the odds of Selling their home before the market swings further south usually have several options up their sleeves.  These include:  Lowering the Price of the home, offering incentives to buyers such as 3 months of FREE Mortgage Payments or providing decorating allowances. These are held out like chips to bait potential home buyers.

Sometimes, these gambits work and attract an offer.  But, it’s usually not the offer that was anticipated or expected.  What we are seeing in Grand Rapids, Michigan and across the country is that buyers for homes are remarkably well informed.  Incentives are no longer viewed as reasons to purchase.  Instead, savvy buyers dig deeper to try to determine WHY Incentives are necessary. 

Savvy buyers understand that irregardless of the market, Accurately Priced Homes will Sell even within a challenged market like Grand Rapids, Michigan within 3-4 months. 

It’s particularly instructive to note that Banks who own a number of Foreclosed homes in the Grand Rapids area right now also understand this.  In fact, these banks will often lower their prices several times within a relatively short period of time simply to ensure a quick sale. This tactic has led to an increase in the sales of Bank Owned Homes to a level which is almost 50% of ALL Current Sales in the Grand Rapids area.

The implications of so many foreclosed and short sale homes on the market has had a devastating effect on homeowners who are Chasing the Market Down.  Last year, the Grand Rapids Association of Realtors statistics indicated that homeowners who did not sell their homes during the first 5-6 months eventually Sold their homes for an average of 25% Less than the Listing Price.  This was in stark contrast to those who through pricing their home properly to reflect the current market usually Sold within 3-5% of the Listing Price

Thus the Penalty for Chasing the Market Down and Loosing in 2007 was about a 20% Reduction in Net Proceeds.  This did not take into account the investment of additional time on the market or the inconvenience of two mortgage payments in some cases. Unfortunately for home owners, playing this game in 2008 will be even more risky. 

With foreclosures and short sales on the rise, and a large influx of homes anticipated for Spring Market of 2008, the Grand Rapids real estate market simply does NOT have the elasticity to absorb all these homes for a couple of MAJOR REASONS.  The most significant issue is the Lending Crisis which has dried up funds for a large number of potential buyers.  Secondly, since many areas of West Michigan have now been designated as Declining Markets, potential buyers are being asked to come up with larger down-payments and sometimes having to pay higher interest rates unless they qualify for a government funded program.

In my view, Chasing Down the Market is a risky gambit. The twists and turns of gambling in this market require a pretty strong constitution…one which many home owners are ill equipped to maintain.  The closer your initial asking price is to the Bullseye, the better your chance of obtaining a fair price and the pre-requisite mortgage for a buyer which allows you to move on with your life.  Less exciting perhaps…but certainly easier on the stomach wouldn’t you say?

Copyright 2008  Audu Real Estate  All Rights Reserved

How To Sell Your Home In Black & White…

Sometimes, we need to shut off the noise.  This video, created by the Real Estate Zebra puts things Simply…In Black & White.   

If you’d like to talk to someone about simple, yet successful ways to sell your Grand Rapids, Michigan home.  Contact Audu Real Estate.

What It Means to Truly Listen…

a flowerThere’s a reason why we have two ears and just one mouth.

A single mouth can easily over-power two perfectly good ears.

It’s always easier to talk than to listen.

To listen we must be quiet…with our mouth

And dull the roar from within the heart.

Listening is hard work…

Voices in the mind shout and clamor for attention.

Listening means that I accept that what you are saying right now is more important than…

What I need to say right now,

What I need to say next and…

What I really wish I could say.

Listening helps me to see with my understanding what I cannot observe with my eyes.

When I listen…I don’t interrupt

When I listen…I seek to understand

When I listen…I relinquish the right to judge

When I listen…I feel what you say even if you can’t express it.

When I listen….I hear

When I listen…I offer you my unique gift.

5 Important Grand Rapids Real Estate Trends to Watch in 2008!

a real daisyThe past 24 months have witnessed some of the most significant Trend Shifts in the real estate marketplace in Grand Rapids, Michigan. These shifts have occurred because of a variety of factors which have ranged from economic issues to emerging new technology. Here’s a list of Five Important Real Estate Trends to watch.

1.  Absorption Rates

There has been a significant increase in homes for sale in the Grand Rapids area.  Today, there are almost twice as many homes on the market as there were 4 years ago.  What’s most important about this trend is the Absorption Rate. This rate is calculated by determining how many months it would take to sell ALL the current homes at the Current Rate of Sales. 

For instance if there are 12,000 homes For Sale and 1,000 Homes Sell in January of 2008, the Absorption Rate is 12 or 12 months. Watch to see if this rate increases.  If the Absorption Rate for homes in Grand Rapids, Michigan increases inspite of tremendous mortgage incentives, this indicates further weakening in the real estate market. 

2.  Increase in On-Line Activity!

Grand Rapids, Michigan mirrored the rest of the country in shifting towards the Internet for information about housing trends and statistics. Home searches through the Grand Rapids real estate board continued to rise and the Board also launched a new website through which real estate agents will be able to do very detailed statistical analysis for their clients. 

Blogging about real estate took off in it’s initial stages and many agents started detailing their expertise through a variety of blogging platforms.  About 240 Grand Rapids real estate agents established profiles on the Active Rain networking platform alone. This trend will continue in 2008. 

Keep watch on several players who are in the marketplace to determine who has the most comprehensive real estate database for Grand Rapids, Michigan. Those which are currently in the forefront include the Grand Rapids Real Estate Board MLS, Zillow.com, Trulia.com and Google

2.   Monitor the Foreclosures Rate

In recent history, few can remember any time in which there have been so many homes foreclosed on in the Grand Rapids, Michigan area. Last year, the real estate board tasked an advisory panel with taking a critical look at the situation and making recommendations.  As a result, Grand Rapids real estate agents had the opportunity to receive additional training about the foreclosure and short sale process. 

In addition the real estate board linked homeowners to resources to prevent foreclosures and made an addendum available to homebuyers regarding what to expect when purchasing a home in a short sale or foreclosure situation.

The numbers to watch in this category is a Report which details the percentage of Sales on the Grand Rapids Real Estate Multiple Listing Service that are Foreclosure or Real Estate related.  As of last year December 2007 and January 2008, those percentages are 40% and over 50% in January 2008.  Another number to watch which is not yet being formally tracked is the number of Vacant Homes which are For Sale or Abandoned.  An increase in these numbers will further dampen home prices.

4.  Rental of Homes.

Five years ago, home rentals of single family homes were almost non-existent on the Grand Rapids multiple listing service. in 2007, hundreds of home owners offered lease with option to purchase or a land contract to help shore up funds while waiting for a home to sell or the housing market in Grand Rapids to turn around.

Watch the rental rates of homes with respect to both the number of homes for rent and the type of home. For instance, a significant increase in rental options for homes in the mid to upper price ranges would indicate further weakness in the market. However, if home rentals decrease, this would be a very good sign.

5.  The Disappearing Real Estate Agent…

If you cannot find your real estate agent, this may indicate that they have left the industry.  The first place to look is on-line.  If your real estate agent cannot be located on the Internet, it is unlikely that their home listings can either.  A profound shift is occurring in how real estate is acquired and the Internet is at the forefront of this revolution. 

Watch to see how technology is adapted by individual agents and companies with regards to presentation of homes, providing service options to clients, responding to inquires and facilitating transaction management online.

Copyright 2008  Audu Real Estate  All Rights Reserved 

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Brrrr…..Winter’s Here With a Vengeance…

winter in grand rapids, michiganI love to look at the cool white stuff while I’m snuggled up within the warmth of my own home.  But driving through it…well, that’s another matter entirely. 

Left for a meeting this afternoon & there was NO SNOW.  Two plus hours later…it’s a totally different story!

I had a couple of inches on the hood of my car and the roads had been transformed into white tarmac with black track marks where the cars had travelled.  Visibility was about 100 yards in some spots.

Traffic on the expressway was FAST when speeds reached 45 mph!  Getting off the highway, it slowed down to between 15-20 mph.  This is one of the those nights where it’s wise to stay put…unless you can’t resist the lure of the ski trail & snowmobile machine. 

Stay safe out there.

What It Means To Live Within Peace…

You don’t know you’ve lost Peace until you can’t find it.  Sometimes you don’t know you’ve lost Peace because you’ve never had it. What is means to live within peacePeace is not an absence of challenge or trial.  It is not a promise or guarantee of the avoidance of hardship.  Rather it is the stillness which draws from a deep well spring the knowledge that all that really matters…is well.

Peace is not about being popular or well-liked.  In fact maintaining it will sometimes require doing things which are deemed disagreeable and opposed.  However, Peace cannot be divorced from Truth and the Integrity to live a life which is free of duplicity.

Peace does not guarantee that you will never have aught with your fellow man.  However, it will provide the pre-requisite humility and wisdom to understand how to surrender in love knowing that the personal battles we fight are ultimately temporary in nature. Peace knows that real victory lies in understanding the profound and empowering universal truth of the power of Love. That is eternal.

Peace means you can look your enemy in the eye without malice in your heart because you know that the lessons he was sent to teach could never have been learned without the  pain of the gift of his strike.  Peace allows you to laugh again…It’s not about forgetting about the wound, but being confident that the healing of the scar has made you stronger than you were before.

Peace is being able to leave it alone…lay it down.  It is the strength to walk away and be free from the temptation to look back. Peace is a good night’s sleep & a refreshing wake-up in the morning.

How Smart Government is Revitalizing Downtown Grand Rapids, Michigan

Van Andel ArenaWhether you’re driving or walking through downtown Grand Rapids, Mi…you can’t help but feel it. 

It ‘s the New Energy which is palpable in heart of the city.  You can witness the resurgence of life in the numerous buildings which have been built or re-furbished in recent years. 

The new energy can be observed in a tangible way through an activity which had  diminished and has now returned…the burgeoning expression of “street life”.  Witness people walking to various places of business and recreation or streaming from a show at one of the many venues for entertainment.  Grand Rapids is experiencing a rebirth…a renaissance of sorts.

The creation of the Renaissance Tax Free Zone in Grand Rapids, Michigan for eligible businesses and residential homes has been one of the smartest moves the city has made in recent years to boost investment in the downtown Grand Rapids area.

Within the last three years, over 300 Million dollars has flowed down river to what was once an ailing and increasingly deserted section of the community.  The creation of Renaissance Zones is a tactic which is being copied in cities across the nation.

Originally established in 1997, the Renaissance Zone program exempts eligible participants from the following taxes until benefits begin to expire in 2009 within the Original zone:

Grand Rapids City income tax

Michigan income tax

 Michigan SBT tax exemptions

Property tax exemptions (except for public school bonded debt mileages)

In 2009, residents will begin to pay 25% of their tax burden, in 2010 they will pay 50% and in 2011 the amount will increase to 75% and be 100% thereafter.

The Act was amended and expanded to include certain properties in the following areas.  The areas incorporated within the expansion will have benefits extended until 2015 so that property owners will not pay full taxes until 2018!

One of the elements which makes this innovative program a powerful economic stimulus is that it is available to rental properties  and condominium developments as well.  This has been a great incentive to developers of mutli-unit properties in the downtown Grand Rapids area.

It’s  easy to figure out how you can take advantage of these substantial savings.  To determine if a property you are interested in is in the tax free Renaissance Zone,  go to the Grand Rapids City Website and click on the Property Tax info page and review the property parcel information.  You can also review the eligibility requirements.

As a result of this bold move by the city, many exceptional properties are being developed and are attracting homeowners across the spectrum to enjoy the great variety of attractions that are within easy walking distance. 

Here’s a list of some of the Condominium developments in downtown Grand Rapids, Mi which qualify for benefits under the Renaissance program.

1.  Union Square Condos ~ 600 Broadway, Grand Rapids MI  49503

2.  Icon on Bond ~ 538 Bond Avenue, Grand Rapids MI  49503

Prices start at $185,000+

3.  Monroe Terrace ~ 600 Monroe, Grand Rapids MI  49503

4.  City View Condos ~ 60 Monroe Center, Grand Rapids MI  49503

located in the Select Building.  Prices start at approximately $224,000+

5.  Front Row Condos ~ 51 Monroe Center, Grand Rapids MI  49503

Prices start from approximately $285,000+

*City View Condos & Front Row Condos qualify for the expanded Renaissance Zone provision until 2018.

If you’d like more information about properties currently listed For Sale in downtown Grand Rapids, Mi…please contact us.  You may also View this property listed by Audu Real Estate in the River House….377 Bridge St. NW  Unit #105.