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The Froth Is Off
By Paul Harsch On: 10:44AM / Wednesday July 16, 2014
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The economy is slowly regaining some strength as the unemployment rate continues to drop back (6.3 percent as of May) and factory production improves and consumer spending increases but while this is a good sign for the overall economy, housing itself has not and is not likely to "bounce back" as it has in previous recessionary times.

The froth is off the housing market and that is a very good thing. For now, the cycle of boom, bubble, bust seems to be broken for housing while massive money follows other avenues of making outsized profits.

In the case of housing, investors can only move the market so much and they did influence the moderate recovery in the last few years when major investment portfolios purchased thousands of foreclosed homes with the purpose of renting them out in the short term for investment returns and selling when the values rose once more.

What really moves the housing market broadly however is not Wall Street money but every day singles and families wanting their own homes. This part of the market was hit badly during the recession with thousands upon thousands of homeowners losing their homes due to job losses. That trend appears largely behind us and now as employment improves so too should the housing market.

There is one huge change however, that in effect, will prevent a return of the bubble days of the mid-2000s and that is demographics. Berkshire County is experiencing this trend in a significant manner and so too the rest of the nation with few exceptions. There are and always will be outlier markets where even demographics seem to be irrelevant such as New York City, San Francisco, Miami where foreign influx of high wealth individuals and scarcity of housing options will maintain exceptionally high prices. Aside from these however, in places like Williamstown, Lenox, Great Barrington and Stockbridge demographic trends have a significant impact on the overall market for real estate.

Changes in human behavior and production are also playing a significant role in patterns of preference. Americans appear eager, particularly the younger generations, to gravitate to the cities for the life style they offer, particularly as the cities have become more appealing with better transportation, lower crime, more attention given to quality of life, and diversity and quantity of job opportunities.

As for production, we are all too familiar with outsourcing overseas of our once robust manufacturing base in the US and here in Berkshire County in particular. With the departure of so many jobs, those needing employment who haven’t been able to convert to some sort of internet based career or to one of the remaining stable employers in the area have had little choice but to relocate to find employment.

The demographic trends are just as powerful if not more so, in their impact. The well documented aging of the baby boomer generation that is seeking to downsize if not to relocate altogether, is having a substantial effect on the housing market. Fewer new homes are being built and home prices are settling back to much more affordable levels. Of course there are always exceptions such as those occasional high end sales to second home buyers but those do not constitute the bread and butter of the market.

So the froth is off and now those of us fortunate enough to call the Berkshires home or who plan on doing so can count on much more affordable housing options which means the younger buyers entering the market for the first time have very affordable options now to look forward to and those wanting to trade up also have very realistic and manageable affordability to look forward to.

With the exception of the relatively small number of sellers who managed to sell at or around the peak in '07, the fact that things have returned to a more modest pace and much more affordable prices is good news for everyone else.  A good property presented effectively will still command a good price but with those few exceptions not counted, the rest will trade at sensible and "froth free" prices.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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Do You Want to List Your property or Sell it?
By Paul Harsch On: 03:45PM / Wednesday July 02, 2014
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If a seller places their property for sale on the market they absolutely want to sell.

Right?

Maybe.

Hiring a realtor, putting out the "for sale" sign, placing a "multiple listing service" entry, requesting that the agent do serious advertising and expecting the agent to schedule open houses all are part of placing a home on the market.   

Right?

Absolutely.

All of the above activities indicate the owner wants to sell the property. Now comes the Catch 22.  The seller "must" have a certain price for their property. The individual reasons for selling a property are as diverse as the number of fish in the sea. A few of the more common reasons properties come to the market are downsizing, rightsizing, upgrading, moving to a new location, job transfer, inheriting an estate property, death of a spouse, birth of children, new job, retirement and moving a parent to assisted living.

A leading national real estate site also has a "make me move" section of properties where the owner can place any value on the property and wait to see if a buyer will pay that price.  Needless to say this section of properties remains the same year in and year out as the owner waits to win the lottery of real estate.  

Motivation to sell a property can range from the "lottery" example above to the urgent need to decrease the cost of living related to loss of a job. The most important factor that isn't represented in any of the information above is the buyer.

A buyer is interested in paying a fair price in a market where the choices are many. Buyers also are looking for value. Value is both objective and subjective at the same time. A good comparative market analysis can give the seller the objective value of a property. A realtor is not needed to obtain the subjective value of a property. A friend or family member can give the seller their opinion of the subjective value of the property (of course the friend or family member will not be buying the property).

Bankers who provide loans to buyers do so based solely on objective value. Apart from flippers and investors, approximately 90 percent of home buyers will obtain a mortgage and the property they make an offer on will be subject to an appraisal by a licensed appraiser. So a buyer may feel that the property is worth the price they offer (subjective) while the bank could still decline the loan based on appraised value (objective).

Properties can become "holding listings" when this happens. The seller ends up "holding" the property because the reality of appraised value does not match the need for obtaining the subjective value the seller desires. No amount of subjective need for a "price" will overcome the objective market value of a property.

When the seller's genuine goal is to sell the property the key is knowing what the objective value is.  Your realtor should always provide you with a printed Competitive Market Analysis showing all homes listed, sold, cancelled or expired unsold in your local area. Pay particular attention to the "sold" homes to find a range that will sell your property in a reasonable amount of time.

If your desire is to list your property and you don't care what the objective market value is or whether or not your property actually sells then you owe it to your realtor to share this fact. Your realtor will spend their time, their money and effort on the marketing your property. Enter into the relationship with your realtor trusting that if you price your home based on a subjective value the realtor, even with a valiant effort, cannot overcome the objective market value and your property will probably not sell if the difference between objective and subjective value is too great.

Ask yourself "do I want to list this property or do I want to SELL it?"

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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The Home-Buying Process in 12 Easy (?) Steps
By Paul Harsch On: 05:45PM / Wednesday June 11, 2014
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This blog will cover the basic home-purchasing process, start to finish, in very simple terms but don't be fooled. Purchasing a home requires your time and attention, care, diligence, thoroughness, seeking out the best professionals to work with and proper preparation. The basic steps are laid out below but be sure to consult with a professional working on your behalf and ask questions, plenty of questions all along the way.

Think carefully about your options.

Typically this is the rent vs. own analysis. Consider your other obligations, the time it can take to properly care for a home of your own vs. letting the landlord do all the work. Review your basic finances and whether owning is in your budget. Consider how long you intend to remain in the area; if short term, buying is probably not a good idea due to the costs of purchasing the later selling but if you expect to remain in the area for at least the next five years or longer, owning makes more and more sense.

Get prequalified by a local lender.

We do not recommend online financing ventures – far too many surprises and frustrations in many cases. Work with a local bank with a strong reputation. In the prequalification process, the bank will determine on the basis of your income and credit history how much loan you can manage. Some people find they may have to clean up some credit issues before they can qualify. Better to learn this right from the start.
    
Link up with an experienced and dedicated realtor.

A realtor is a member of the professional association of the National Association of Realtors. Commit to working with a licensee who has a proven track record of success and commitment to the business. As with anything in life, some licensees simply do a better job. The entire purchase process has many hurdles and challenges so working with the best you can find will absolutely make a substantial difference in the outcome of the entire transaction.

Now the house hunting begins in earnest.

You and your real estate professional, whether an agent or a facilitator, will begin the process of sifting and sorting through all the properties that fit your criteria from price range to size, location, lot size, school district, distance to employment, age, condition, amenities etc. etc. There may be only a handful at first or there may be a dozen or more and you will want to take the time to look first at all the information available through your realtor through the Multiple Listing Service and do some drive-bys as well. An experienced realtor member of MLS can present to you any property listing so no need to go bouncing around from one firm to another. Find that good agent and stick with them. That way they will commit to you just as you commit to them.

After making your initial selection, head out on the road and see the properties. At this stage it's time to check out the houses you have narrowed down in your initial search. You're going to get emotional impressions of homes, pro and con, so pay attention to that. Let's face it, for 90 percent of all purchasers, the emotions rule and take precedence. Pay attention to those feelings. However, be sure to be practical as well. Maybe you fell in love with the view but the house is way too small or needs too much work. Pass that one up unless you can spend the added money to fix it the way you need it to be.

Do your due diligence once you narrow the options to a few top choices.

Besides the home itself and property, it is almost as important to investigate the surrounding area checking to see if you would feel comfortable with neighbors, the general area, highways, sources of noise or any negatives that might impact the property from your perspective. One couple purchased a home they fell in love with only to discover to their alarm on moving in that there was a model airplane club nearby and the sound was very disturbing to them. Neither of the agents, theirs or the sellers had mentioned this and neither did the seller.

Once you've settled on the house now put your realtor to work on value.

Every property has an asking price but how that price relates to value is a whole other topic. Your representative needs to do his/her homework including checking the deed, gathering the information available from the town or city, checking the public record for debts and liens as well as preparing a thorough comparative market analysis of comparable properties that have sold in order to provide you with a sound basis for making a judgment about value. In the end, however, value really is "in the eye of the beholder" and that's you.

The negotiating process. 

Some licensees are better at this than others, that is for certain and the difference can mean thousands of dollars to you. Here again, experience and ability really make a big difference. Your representative, be they an agent or facilitator will do the talking back and forth with the other side but you will need to make the crucial decisions. Here's also where one other element comes into play and also makes a potentially HUGE difference. As a buyer, ideally you will need and want a realtor who is independent of the seller. This means you need to either find a buyer's agent or a neutral facilitator who can work independently for both buyer and seller. This subject is covered in more detail in other blog posts.

The contract to purchase.

This is the very important document that spells out all the vital terms and conditions of the purchase including price of course, down payment, financing details, closing date and any conditions or "contingencies" to your purchase such as inspection and financing, plus personal property that may be included. You'll definitely want and need your agent, facilitator or attorney to prepare this. In most areas, realtors have forms approved by the bar association that are in common use.

Inspections, appraisal, financing, contingencies.

Now you're under contract on the house and property you want to purchase and this is time within which the property is poked and prodded, inspected inside and out, appraised and everything checked to insure the property is what you expect and there are no problems you either can't get resolved or repaired and the property value is confirmed by the appraisal. Assuming this part of the process works out successfully … .

This is the interim period while the property is firmly under contract. Now is the time to make those final preparations for the move, contacting and establishing accounts with the various utilities for the day you take ownership. This period of time may be as brief as a few weeks or as long as a month. Longer times may require a larger deposit to reassure the seller.

THE CLOSING!

The big day has finally arrived. First you need to meet at the bank or your attorney's or broker's office, wherever the parties all agreed to conduct the closing and handle all the paperwork. This typically will take about an hour if there is a lender. If by chance you're paying cash the closing might be a mere half hour. At the closing, you'll be signing lots of papers and the sellers will sign a few documents. Finally, when all the paperwork is completed, forms passed around, last-minute details settled, the funds will be distributed to the sellers, the brokers and smaller checks written to cover recording costs etc. Now you'll receive the keys to the property and it's yours!  

Of course it isn't quite official until the deed is recorded so one of the attorneys heads off to handle that detail. You meanwhile, having shaken hands and gotten over your jitters at realizing that yes, you really did it, you have actually made the commitment to purchase a house which soon becomes your HOME.

Congratulations!
 

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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Selling or Buying Real Estate Is Just Like Buying a Loaf of Bread
By Paul Harsch On: 02:53PM / Wednesday May 21, 2014
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Did I get your attention? I hope so because nothing could be further from the truth. Unfortunately some people make their decisions on who to list with or which real estate licensee to use to assist them in purchasing with about as much thought and care as buying a loaf of bread.

The purchase of a home for example, we are often reminded, is the single largest purchase in most people's lives ranging anywhere from tens of thousands of dollars to hundreds or even occasionally millions of dollars.

Why is it then that some people give about as much thought into which real estate licensee to use as they do which brand of milk to purchase?  After all, they may reason, milk is milk and one real estate licensee is the same as the next.  Right?  Not so.

As with any skill set, there can be enormous differences in the level of training, years of experience, people skills, technique, style, success, dedication, commitment, and knowledge all of which go into making some far better than others at achieving the best outcomes for their clients.

It is frequently cited that 80 percent of all transactions are handled by just 20 percent of the licensees. In other words there really is a top 20 percent. Would you be better off, on average, working through one of the 20 percent? On average most definitely and in fact in 80 percent of the cases, the answer is a resounding YES.

Experienced, trustworthy, hard working, skillful licensees help their clients attain their results faster, with fewer difficulties or "surprises," and generally better outcomes than the other 80 percent. After all, how is it possible for someone relatively new in the business to achieve the same level of outcome as someone with 10 years, 20 years, longer in the business? It just isn't possible.

It's not just years or numbers of transactions however but people skills, negotiating skills that can and usually do make a big difference in outcomes. Does anyone doubt the guilt of OJ Simpson? I don't think so but he still was acquitted because of the superior skill of his defense team. Or what about Capt. C.B. Sullenberger, who successfully landed his crippled jet in the Hudson River without loss of life? I'll bet that every passenger on that flight was exceedingly glad they had someone of his skill and experience at the controls that day.

Next time you decide to list your property for sale or are in the market to purchase, take the time to do your research and think through the most important decision which is who you're going to place your purchase or sale in the hands of.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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Who Will Be Showing Your House or Property?
By Paul Harsch On: 01:48PM / Wednesday May 07, 2014
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You listed with someone for a particular reason but then you discover that individual may frequently not even show your property and sometimes never. Hmmmmm. Make a difference? You bet it can.

If you chose your real estate sales person for a reason such as you trust them implicitly or you know they have a great many years of experience, or you learned from a trusted friend or business associate that the real estate person demonstrated unusual dedication, skill or problem-solving ability, then wouldn't it make sense that you'd want to know if they were going to be personally engaged in the process of selling your property, too?

How do you feel when you have planned on dealing with one individual, say your doctor, only to be shunted to someone else because your doctor was too busy that day? Or how about that lawn person who has done your lawn for years and knows all the quirks of the yard and how you like it done and then one day someone totally new shows up saying they replaced your regular person?

Anytime you place your trust and confidence — whether it's your health, property or car — in someone's hands you will feel uncertain if someone else steps in. And so you should, but in real estate it happens all the time.

Take for example a firm that hires new people. You listed with one person because of a strong preference but the company's policy is to allow anyone in the firm to show your property. Now you may have a perfectly good buyer looking at your property with someone brand new to the business, or someone who doesn't like your house for some reason, or someone who is unavailable much of the time dues to other interests. The point is that your property is now being "represented" by people you don't know or who don't have the skills or dedication you expected when you signed with the listing salesperson.

There are skills, dos and don'ts in showing, there is skill and sophistication when it comes to negotiating, there are levels of dedication and commitment that vary considerably among licensees. Make sure you understand what you're getting when you commit to an individual.

Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years.



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Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years. He has achieved personal career sales exceeding $131 million and company sales from 1979 will top $500 million in 2014. Harsch is a member of the Berkshire, Massachusetts, Southwestern Vermont and National associations of realtors, is a licensed Massachusetts real estate instructor and earned the CRB, CRS, GRI and CBI designations. Harsch is a 1969 graduate of Williams College.

To submit comments, questions or requests for future blog topics write him at paul@harschrealestate.com.



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The Froth Is Off
Do You Want to List Your property or Sell it?
The Home-Buying Process in 12 Easy (?) Steps
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