coeurdalene

President Ronald Reagan called this quote, “the nine most terrifying words in the English language.”
Last week the Obama administration agreed to a $25 billion settlement with the country’s largest banks over improper foreclosure processes. Much of the complaint results from large banks use and ownership of the MERS system – an electronic recording of liens and mortgage data. This Mortgage Electronic Registration System has dodged legal transaction recordings and accompanying fees charged by counties and has resulted in untraceable chains of title and a lack of revenue, in the millions of dollars, that would ordinarily be paid to record the changes of ownership or lien holders in County records.

One argument, successfully presented in court, is that no-one can prove who holds the mortgage because the liens were never properly recorded. That means that the lien holders have a difficult time proving their right to bring foreclosure action against the property’s owner of record. The settlement then, is an admission of poor record keeping at best, and may allow many homeowners to negotiate a reduction of the amount they owe on their property while avoiding foreclosure.

Those homeowners that borrowed through Fannie Mae and Freddie Mac, however, are not covered under the settlement. It’s unclear how many loans backed by Fannie and Freddie are active, but nearly 60 percent of mortgages nationwide are held by the two agencies. So private banks are held accountable but GSEs (Government Sponsored Enterprises) are not. That seems fair?

FHFA (Federal Housing and Finance Agency) has the authority and the tools to change current loan modification programs to allow for principal forgiveness in addition to principal forbearance. More loan modifications will be achieved if FHFA would allow principal forgiveness, which in turn would work to stabilize our housing market and the economy. Or, let the banks take a hit on the amount you agreed to pay to prevent kicking you out which, on average, will cost them another $60,000.

But wait a minute! Aren’t the same banks who were pressured to give loans to the unqualified now being asked to forgive, or reduce, those loans? Sure, we gave them a ton of money to bail them out of financial distress brought about by those bad mortgages and now we (the government) is demanding they reduce the amounts of those mortgages to give the same, unqualified people a break.

Most of the money, $17 billion, is earmarked for people who are struggling to make their payments, in part by reducing the amount of principal on their mortgages. An additional $3 billion will be spent by the banks to refinance mortgages of homeowners who are current on their payments but owe more than their homes are worth.
“This isn’t just about punishing banks for their irresponsible behavior,” said Housing and Urban Development Secretary Shaun Donovan, “It’s also about requiring them to help the people they harmed by funding efforts to help homeowners stay in their homes.”
People they harmed? Does he mean people that were not able to afford the homes that the Government forced the banks to loan on?
What about the thousands of folks who bought homes at inflated prices that are now biting the bullet, at seven or eight percent interest and still maintaining their payments? Where is their relief? Most likely their relief will come from maintaining their health and living long enough to gain appreciation of their property that has traditionally made real estate a sound investment.
I am sorry, but I resent government interference in free market trade. I believe that leaving the market alone to correct itself is the best course to recovery. Already we have seen an adjustment of real estate prices so that people are beginning to buy these now, more affordable properties, and I think that government intervention interferes with the “supply and demand” economic process. Government intervention will distort property values keeping buyers out of the market by keeping debtors in possession of their homes at the expense of the lenders, pressured into loaning them the money they are unable to repay, regardless whether the loans were properly recorded. I also seriously doubt that the estimated $2,000 reimbursement to those who were “improperly” foreclosed upon will be of much benefit to them.
I do hate to see people foreclosed upon, just like I would hate to see General Motors fail. But isn’t that a basic tenant of “free market”? Survival of the fittest where no-one is too big, or too small to fail? Frankly, I don’t get the welfare mentality of our current environment. Yes, I am compassionate and it breaks my heart to meet with a family who cannot sell their property for what they owe while they are unable to make the payments themselves. But it’s not my fault. I don’t believe that being irresponsible or losing your job gives you the right to “stick it to the man” or to the lender who trusted you to repay what you signed on for, no matter what economy the government has created for you. Like I ask my kids when they complain about how tough life is, “How do you like being a grown up?”

Sure, if the banks are involved in improperly foreclosing, which they are in many cases, then they should be held accountable. This agreement does that, although it doesn’t change much. If you are a homeowner who wishes they hadn’t committed to a mortgage you can’t pay due to your own lack of judgment, then you should be held accountable too and not look to the government (the taxpayers) to undo your error. Remember, the money the government spends is your money first. It only becomes theirs when they tax you (us).

Several weeks ago we suggested, when looking for real estate, you begin with your local Multiple Listing Service instead of the well advertised third party sites. The top reason for our recommendation was accuracy. Often the third party aggregators will have the same address listed more than once with different prices, or different status than is factual.

Now, a San Diego broker, has stopped providing information to these sites. According to the Union Tribune; “A San Diego real estate brokerage has shut off access to its listings to aggregation websites like Zillow and Trulia, igniting a debate over piracy claims, questionable data and open information to potential homebuyers.”

Jim Abbott, Managing Broker and President of Abbott Realty group stated his reasoning: “All listing syndicators have one thing in common.They act as a middleman and put our valuable listing data alongside the contact information of other agents and brokers who rent ad space on their sites … Usually they do this without our permission.”

Abbott’s main argument is that third-party websites (he calls them all syndicators) take what he calls intellectual property such as photos and home details from companies without compensating the sources, comparing Trulia and Zillow to the original file-sharing service Napster. He also takes issue with inaccurate and unreliable information displayed on the sites, from wrong square footage to incorrect pricing. Third-party sites also tend to show listings that are actually no longer active. “This is about the long-term survival for all brokers,” Abbott told the U-T San Diego on Monday. “You cannot keep giving away what amounts to be your future business.”

This move follows a similar move by Edina real estate of Maine who announced last year that they would be pulling all their listings from these sites and Realtor.com as well. These actions have sparked debate among real estate agents, many who argue that. “more exposure is good exposure, even if it’s inaccurate.”

Certainly, as your listing agent, our job is to expose your listing to as many prospective buyers as possible. No-one can argue that the third party sites mentioned have tremendous traffic nationally and may indeed reach buyers from outside the area. So too, do most local brokers have websites that reach out of market buyers, but their information is provided directly by a feed from the local MLS.

As mentioned in an earlier article, buyers can become frustrated with these national sites who rely on agents to update their data. If an agent is using three, thirty, or three hundred websites to advertise your property, it becomes quite likely that they will neglect to mark a listing as “sold” on a particular site. Sellers however are usually grateful for, in fact they expect, maximum internet exposure for their listings.

Abbott’s contention with these sites, more than inaccuracy, seems to be the lack of control. He observes that buyers responding to a listing may contact the agent paying to be featured on the site rather than the listing agent. Rather than controlling listing data then, it appears he wants to control both the buyers and the sellers of the listings at his brokerage.

Yes, there is something irritating about buying an agent listing on a site that is selling your own information. Consumers drive the market no matter what the product and real estate is no different. If consumers have chosen Zillow, Trulia and Realtor.com as their “go to” sites for real esate searches, do you really not want your property listed there?

A good strategy, it seems, if you are one using the aforementioned sites, is to double check the listing with the local MLS. This can be done through the MLS’s own website or by way of access to any local broker’s site. Although not immune to error, the data at the local MLS is more likely to be up to date so you will not waste time fantasizing about owning a property that is already sold, or dismissing a property as out of your price range, when in fact the price has recently been reduced.

We all know that there are many distressed properties available at discounts in today’s real estate market. Yet, even though these properties are usually offered at bargain prices in hopes they will move quickly, many prospective buyers have a mis-conception about their true market value.

I don’t know if it’s the late night infomercials, the headlines from other markets, or just a garage sale mentality that prompts some shoppers to expect to buy property for pennies on the dollar, but this rarely happens. If you are intersted in buying at a discount, then foreclosures and short sales are likely places to look. The perception is that these properties will sell for far less than similar properties which are not distressed. That may be the case, but because there are other likely other costs involved.

Many times, when people are unable to make their mortgage payments, they are also unable to afford common maintenance or minor repairs. Depending on how long an owner has been in financial distress, these deferred maintenance items can add up quickly, which ultimately drives up the cost of the property. Most creditors consider these repairs when adjusting the prices to put these properties on the market.

When a piece of real estate goes into foreclosure the creditor who owns the lien wants to know the true vaue of the property before going to market. These creditors understand, as do most prospective buyers, that the real estate market values are not what they were just a few years ago. In order to determine a fair market value, these creditors will usually order an appraisal. The appraiser then, will look for similar properties that have recently sold and base their appraisal on comparable sales.

Depending on the creditor, they will usually list the property with a real estate broker at something less than the appraised price to compel a faster sale. Although it is in the creditor’s interest – since they make money loaning money, not by holding real estate – to move the property quickly, most are not willing to accept forty or sixty percent of the asking price. Yet, I have seen recently offers at those levels.

I can only surmise that the people who are making these offers stay up too late watching foreclosure infomercials that tout their “Buy Foreclosures” courses. These infomercials make it sound easy – and cheap – to find your fortune in real estate. I am sure many people only watch the infomercials, never buying the books or CD programs to learn the entire process, relying instead on the sales pitch to educate them.

It is true, that in other markets, harder hit than ours, people have found tremendous bargains on distressed properties. Who hasn’t heard of someone buying a large house in Phoenix for half what it was worth five years age? The untold factors in these sales though, require some intelligent thought.
First to consider is how many other distressed properties are creditors competing with? If there are thousands of foreclosed properties sitting vacant, rather than a couple of hundred, the prices are going to have to be lower than the competition to attract a buyer. And more competition means lower starting prices. An appraiser will let them know what that price is.

In many cases in some larger, harder hit markets, those prices are forty cents on the dollar – compared to what the home cost five years ago, not forty percent of the current market value. Common sense would indicate that no lender would be foolish enough to overprice a property by pricing it at sixty percent more than its current value and hope to compete. Remember, banks particularly are expected to have cash reserves as mandated by the Feds and holding overpriced real estate is not a good way to accomplish that.

In most cases you should treat a foreclosed property much as you would any other property when making an offer. It is human nature to offer less and that is acceptable to test the waters. Just understand that the property is probably already priced below market if it’s a foreclosure and that offering too low a price is more likely to get your offer rejected than it is to get you a bargain. It’s OK to start low and then negotiate a reasonable discount on the asking price of anything, but if your offer is insulting, or even ridiculous, you are wasting your time and the time of everyone involved. To believe differently is setting yourself up for a big letdown.

After Tuesday’s State of the Union speech by President Obama, National Association of Realtors® President Moe Veissi provided some commentary:

“The National Association of Realtors® commends President Obama for his remarks in support of homeowners and the struggling housing market during tonight’s State of the Union address. As leading advocates for home ownership, Realtors® know that restoring the health of the housing market is the only way to achieve a broader economic recovery.

“Realtors® stand ready to help Congress and the administration implement Obama’s proposal to significantly reduce monthly mortgage payments by streamlining the refinancing process.

But beyond that, we must make housing a national public policy priority. Realtors® believe that more must be done to stem the rising inventory of foreclosed homes and address the lack of available and affordable mortgage financing, which is inhibiting a meaningful housing market recovery.

“Our families, communities, the housing market and economy all suffer when people lose their home to foreclosure. Realtors® are calling upon the Obama administration, Congress and lenders to help keep more people in their homes by taking more aggressive steps to modify loans and help homeowners significantly reduce their monthly mortgage payments.

“Realtors® also urge the government and lenders to streamline the often time-consuming and inefficient short sales process and to quickly approve reasonable offers when a family is absolutely unable keep their home. Keeping people in their homes and reducing foreclosures will help minimize the negative impact of distressed properties on home values and neighborhoods.

“Expanding financing opportunities could also help reduce excess inventories of distressed properties. Increased fees and higher down payments are making it harder for many creditworthy home buyers and investors to obtain financing, thwarting the sale of distressed properties and prolonging the impact those homes have on local markets.”

“While we are beginning to see early signs of stabilization in the housing market, NAR calls on Congress and the Obama administration to come together and make housing a priority issue. In this vein, we urge the White House to host a national housing summit to encourage a broad discussion among stakeholders to help formulate and advance policies that move the country toward a real housing and economic recovery.”

Signs of stabilization were reinforced by the Department of Housing and Urban Development (HUD) who determined that homes are now more affordable than at any time since 1971. Although it is true that prices and interest rates are significantly lower than during the run-up in the heart of the last decade, many are finding it difficult to meet stricter lending requirements. Veissi’s offer of the NAR’s assistance should include an examination of lender’s practices in addressing refinancing those mortgages written at much higher rates than today’s. Many homeowners whose loans were not sold to Fannie or Freddie, both Government Sponsored Enterprises, still find it difficult, if not impossible to re-finance their homes that may have declined in value. Even though many have demonstrated reliability by making regular payments at a higher rate of interest, there is an argument that relief, in the form of lower interest and a lower monthly payment, would free up some capital to stimulate the economy, albeit at the cost of narrower profits on those loans.

Even those with Freddie and Fannie loans are facing challenges with refinancing. To date, only 910,000 homeowners have received permanent loan modification through the Home Affordable Modification Program (HAMP). This number is significantly lower than the administration’s stated goal of five million. Recently, perhaps because we are nearing an election, more applicants for assistance under this program are receiving help with eighty three percent of qualified applicants receiving some form of modification since June. The average wait for approval is about three and a half months for those who qualify.

For those who do not qualify for HAMP, there may still be help, or HOPE as it is called. This program is offered by The Homeownership Preservation Foundation, a group of not for profits that works with challenged homeowners to negotiate with their lien holder, provide budget counseling, and guidance for sustainable home ownership – for free. If you need help you can reach them by calling 888-995-HOPE.

If you do not own a home and would like to, according to HUD there’s not been a better time since 1971. Even though lending requirements are stringent, people are qualifying every day.

Home Affordability Reaches 1971 Level.

A lady called last week and wondered if it might be time to move up into a larger, nicer home. Of course the answer is not one that can be shot from the hip. Rather it takes a great deal of analysis of the person’s current situation before giving an intelligent answer. If you are pondering a similar shift, moving up, moving down or moving on, here are some things for you to consider.

What do you want different about your home? The lady who called was considering a larger home. Many think that more square footage will answer their flow problems but often, a larger home may not be the right answer. When looking for the perfect abode, take some time to study your family’s lifestyle. When is the most competition for the bathroom? Will adding another bathroom be the answer, even if it is on another floor? It could be that the extra bathroom will not be used as much as you think, especially if it requires a long commute too far away from the fresh towels and the change of clothes one wants to slip into after their shower. A poor floor plan in a large house is still a poor floor plan. If it doesn’t flow to fit you, size doesn’t matter.

How about that extra room for guests? Ask yourself how often you get visitors to determine if it’s worth the extra expense – not just in the price of the home, but the additional furniture, linens and decor. Don’t forget to factor in the extra cleaning and dusting that will still need to be done, whether someone uses the room or not. Maybe, instead of an extra room, you can kick one of the kids out onto the couch for a couple of nights a few times a year.

On the other hand, if the extra room is for a more permanent guest, like a family member in need of assistance, then the extra room isn’t really extra, but a necessity as is another bathroom and maybe a kitchen.

What about your mortgage? Will moving into another house raise or lower your monthly payment? If you move down to a smaller house that is much newer and better appointed than your old house, you might increase your payment. On the other hand, if you have significant equity in your existing house that you want to use for the new house, your payment could be very affordable, even significantly lower than your current payment at today’s low interest rates.

Even if you are moving into a much larger home your payments could be less than your are paying now. Homes are more affordable now than in recent years and with interest rates at less than four percent, your payment could shrink quickly. For example, if you bought your home in 2000 and paid $200,000 for it, your payment at the going rate of eight percent with twenty percent down would be $1,174/month before taxes and insurance. That $200,000 might well buy you a newer, larger house today, but your payment would only be $745/month before taxes and insurance at the low rate of 3.8 percent on a thirty year note. At these low rates, with the same twenty percent down payment you could actually buy a $300,000 home and pay less than your $200,000 loan in 2000 by about sixty bucks a month.

The point is that, if you can pay off an eight percent mortgage by selling your house now and buy another home at half the interest rate, you could increase the cost of the home you are buying by roughly a third without raising your payment. So, in that event at least, it makes a heck of a lot of sense to move up now.

Many people are likely to benefit from changing homes in the current market. Not just because of the lowest interest rates in history, but because prices are down now too. This is not only true for homes, but for investment properties, commercial buildings and even bare land. Interest rates are lower than ever and although financing is admittedly more challenging to get, it may well be worth the time and effort to lock in a low interest rate to buy a bargain priced property. You will enjoy the low interst rate long after others have forgotten.

Once again, the Idaho Legislature is considering adding a tax to real estate transactions in the state. The bill, sponsored by Democrat Shirley Ringo of Moscow and supported by Thomas Trail a Republican from the same city will add a tax to many services, including the sales commission paid to Realtors.

The bill recommends that a sales tax be levied on services, excepting medical or healthcare as follows: “In determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling. The term “services” also includes the constructing, repairing, decorating or improving of new or existing buildings or other structures under, upon or above real property, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the clearing of land and the moving of earth.” So for builders at least, this means paying a sales tax for the lot preparation needed to start building and on everything that goes into the building process.

These new taxes are touted as a way to reduce the overall sales tax rate in Idaho to five percent. By lowering the tax on normal retail purchases the sponsor hopes to raise additional revenue, almost $400,000,000, by taxing non-traditional services. As with any tax, this will be passed along to consumers.

Imagine listing your property at a higher rate because the real estate broker has increased their cost of doing business by five percent. You may have to ask for a higher price to cover this new fee which will either price you above the market or cause you to net less at closing. Since it will affect all properties alike, it stands to reason that buyers will ultimately bear the increase.

This isn’t the first time we have seen such attempts by State legislators to seek filling the coffers with taxes on services. Historically though, the legislation has been defeated due in no small part to the Realtor members of our state. Our Realtor Action Committee collects voluntary contributions from our members just for occasions like this.

On a local level, a mere thirty dollars is requested from each Realtor member as a part of their annual dues. Those funds are then used to fight issues that infringe upon private property rights, including the right to freely exchange real property. Other services are also covered under this bill but the brunt of the language seems to address real estate. Our Idaho Association of Realtors has made the following observations about this tax as it affects our industry:

• Closing costs would increase to an average of $2,257.
• The Attorney General has issued an opinion that the proposal may require the tax to be charged on the selling price of a newly constructed home ($150,00 + 5% = $157,500)
• The real estate economy is slowly improving.
• The Idaho Legislature can help by providing incentives for job creation and avoiding pitfalls of a sales tax on services.

Our Idaho Association of Realtors has already sprung into action to protest this bill. Last year’s contributions to our PAC were less than normal, reflecting a more difficult real estate market. Those funds are needed to fight this battle and other threats to our industry and your free trade rights to your property.

Be sure to ask your Realtor if they have contributed to RPAC. If they haven’t, ask them why.

It was a sunny day in July, 2008. The young lady popped into my office to grab some area info. I approached her and asked if she was planning to move to the area. “Oh, I grew up here.” she stated. When I asked if she was inclined to return she explained she would love to, but had just lost a half million dollars. Wow, a half million dollars. How did she lose it, I inquired. “Well, my husband and I had a home with over that much in equity but the market in California has dropped so badly, that we have lost all that money.”

I always find it interesting that people lose what they don’t have. Sure, the inflated prices of the mid decade were romantic. People made plans, some executed, to add on to their homes, buy a vacation home, send the kids to college or pursue some other costly endeavor. Unlike this lady though – lucky the equity evaporated before she could spend it – many borrowed heavily against equity that was merely a pipe dream, fueled by the insanity that prevailed in the real estate market during that period.
I remember telling my charming wife (she has a much more endearing personality than I) that we should sell. That was the summer of 2006 and we could have doubled what we paid in 2003 for our house. But she, the sensible one, explained that this was our home and that at least, until our kids were gone, this is where we would stay put. Good advice. Selling would have put us into competition that may have caused us to overpay for a replacement home, which may not have been as comfortable as we are here.

Fast forward now to harder times. Real estate prices are down from their peaks and now in a valley. Although most people have not lost money – although they certainly are unable to attract a price the may have in 2007 – many are upside down. Upside down because the home equity line of credit loans they took were unsustainable in an inflated market, leaving many with homes that are not underwater in the typical sense, but over-leveraged for current market conditions. Unless their loans were sold to Fannie or Freddie – forty percent were not – they cannot refinance at today’s great rates because of their debt to equity ratio.

It’s a hard pill to swallow for some. I often meet with folks who got aggressive about selling their property during the boom. Often too aggressive. One family I met with had been advised to list their home for over a million dollars, when its true value was probably more like eight hundred thousand. Of course it didn’t sell, but in their minds, they were sitting on a million dollar home. Now, with a large number of foreclosed properties on the market, prices are seeing downward pressure and although market activity is up, that greater volume of sales is at significantly lower prices than just a few years ago. The homeowners in question decided against listing their home right now. They’d rather wait for a market recovery. I hope they stay healthy, because for their home to be worth a million dollars will require another boom, greater than the one that compelled them to ask such an ungodly amount in the first place. It will be a long time coming.

I do not blame them though. They were advised by someone with a real estate license. Yes, even real estate agents got caught up in the frenzy. Some buying properties right alongside their “investor” clients, sometimes competing with them for the same properties. It seemed back then that the sky was the limit. No matter what price was attached to any type of property, it seemed as though someone, somewhere, would fire the first offer in a sure to be bidding war. But in this case, that first shot was never fired. The asking price was lowered, but still no buyers came. They lowered their price again. These folks were chasing the market down, still too far out of practical pricing to make the sale.

Now that they have a half-million dollar home, they have decided it is comfortable enough. Really, for that kind of money, they couldn’t replace it where they want to live. Such is the case for many who dreamed of loftier goals in what may someday be known as “the good ole days.” Try calling them that to the folks who bought at the peak or who maxed out their equity line.

As for your vanishing equity? It only existed for about eighteen months. If you didn’t sell then, what have you really lost? If you bought your home before 2004, you probably still have equity and just maybe, you still have a home. Be careful how you treat it.

It may be more, or less, than you think. There are a variety of ways to assess your real estate’s or business’s value, some of which are free; others require the paid services of a professional.

If it is a home your seeking value for, many people size up the competition based on classifieds, on Craigslist, Zillow, Trulia, Realtor.com, Oodle and myriad other websites. All these places will give you a good idea of what other hopeful sellers are asking, but the problem with these websites is the accuracy of their information. I recently did a search on Zillow only to find the same property, listed by two different agents at two different prices.

As for what is currently listed for sale, these places can all provide listing data, but what about the selling price of these properties or businesses? With states like Idaho, a non-disclosure state, it is next to impossible to find the sold price of a home without having a real estate agent who subscribes to your local Multiple Listing Service to help you.

Whether you own land, a home, an investment property like an apartment building or a more traditional commercial property, like an office or storefront building, asking prices aren’t nearly as good an indicator of fair market value as “sold for” prices are.

So how do you go about determining how to price your property? There are several ways:

- The County Assessor. Each county has its own assessor who determines fair market value, for tax purposes, within their county’s borders. In some counties at least, county appraisers examine properties on an annual basis. Therein lays the problem for the do-it-yourselfer trying to value their own property.

Certainly, the assessor’s office employs qualified appraisers to determine these values, but tax bills have to get out on time, so the assessed value represents the property’s value at a certain point, often the beginning of the year and has no reflection of the property’s value as the market adjusts throughout the year.

Here then, are some other options to establish true market value of your property:

- Hire an appraiser. Make sure, in addition to being licensed, your appraiser is an accredited member of an industry association like the American Society of Appraisers that has its own codes of conduct to guarantee their professional performance. To get a fair market value estimate from a licensed appraisal firm you will expect to pay several hundred to several thousand dollars depending on the size and type of your property.

An appraisal will give you current market value based on similar properties sold within a defined radius of your own, or by other accepted valuation methods, such as replacement cost. Caution though – an appraisal is likely to be conducted by the buyer of your property too, so if the market has changed, due to a foreclosure or other distressed type of sale in your radius, the buyer’s appraisal may be lower than yours which may require you to lower your price to enable the buyer to gain financing.

- Get a Comparable Market Analysis. Any agent who is a member of a Multiple Listing Service has the tools to provide you with a comparison of your property to other, similar properties that have sold in your area. This can also be a problem. Any agent, with a membership, can push buttons to generate the CMA, but have they adjusted that CMA to differentiate your property from others that are not truly representative of your own?

Another problem with CMAs is that they only give you a historical perspective of value. That is to say, they will show you what someone paid, on average, for a property like yours but do little to predict what someone will pay in a declining or rising market.

Many real estate agents offer CMAs for free, but make sure they have the experience and acumen to project your properties future value, going forward from the time it is placed on the market. If it takes four months for a property to sell in your market and the market is in decline, you may be overpriced and interest may wane as other, more affordable properties become available.

If, on the other hand, you are in a market that is experiencing exponential growth, as we saw in northern Idaho in the middle of the last decade, you may leave behind some money as market values surpass your asking price. Granted, this is an unlikely scenario in today’s economic climate.

- Hire an evaluator to value your business or investment property. Many commercial real estate practitioners are competent at valuing commercial real estate through a variety of investment formulas. If you are selling a business though, you may entertain hiring a business valuation expert to show you what to expect from a person who is, in effect, buying themselves a job.

These experts will evaluate the history of your business, its profitability and cash flow and value the good will of your business as perceived by the community. Then, you and they will determine a fair market value for your business, separate from its real estate value. As with other types of transactions, business opportunities values are subject to their area’s economic climate.

Of course, no-one will discourage you from going it on your own when selling your real estate or business opportunity. That is what causes hundreds of sell-it-yourself websites to flourish and proliferate. These sites will allow you to post your offering without asking for justification although a buyer wants nothing less than a fair market price.

When it comes to affecting a sale, fair market value is the driving force, so do your homework, gather all the data you can so you reach the market with an attractive price initially. A certain stigma seems to haunt those over-priced properties and that stigma continues through every price reduction.

On Friday we got a preview of the real estate activity from the Coeur d’Alene Multiple Listing Service that supports our prediction – 2011 outperformed 2010. Although we had been tracking a four percent increase in number of units sold, the actual ending number of sales puts us at five percent over the previous year.

Although we are encouraged by the increase in the number of sales – an indication that prices are more in line with buyers – we would like to see some more areas posting increases in average sale price. As inventory is sold off those prices will increase however long that may take.

As we continue to iterate, market statistics are specific to areas, so some areas fared better than others. Although our average price for a single family home in most areas was lower than last year, Bonner and Boundary Counties eked out an average price that is three percent above their 2010 average with a 14 percent increase in total numbers sold.

Most of our areas had better sales numbers with the exception of Coeur d’Alene/Dalton and Post Falls which together dragged the Kootenai County total down one percent from last year even though the other areas of the County posted gains.

When we factor in all types of residences our gain in unit volume is 4.9 percent with a total dollar volume loss of 1.1 percent from the total dollars generated in 2010. Overall, our average price is off 5.7 percent from last year. Again, this includes the manufactured homes on rented lots as well as the luxury waterfront homes. In 2010 those sales ranged from $4,000 to $3,050,000 while last year the range was from $5,500 to $2,500,000.

Our average number of days on the market from listing to selling remained fairly consistent with the 2010 average at 130 days compared to 132 days in 2011. If you are contemplating selling a home, that is how long you should expect to wait to move out, provided your home is competitively priced.

Here is how the year played out when compared to last year, keeping in mind that these figures are subject to change as the analysis continues:
Percentage of Sales Average Price Difference
Cd’A/Dalton -6% $169,619 -6%
Post Falls -9% $152,923 -11%
Hayden +13% $200,045 -12%
Rathdrum/Twin/Hauser +25% $151,352 -1%
North Kootenai County +11% $128,098 -18%
South Kootenai County +58% $588,687 +30%
Kootenai County Total -1% $175,473 -6%

Silver Valley +42% $78,111 -21%
Bonner/Boundary +14% $183,176 +3%
Benewah/South +90% $104,432 -15%
West/WA Counties +127% $155,787 -28%

This is even more evidence of how markets vary from locale to locale. In areas where fewer numbers of sales drive the statistics it takes fewer sales to dramatically impact the statistical analysis.

I have the tools to help you evaluate your neighborhood. When you are thinking about selling, or buying, I will help you determine the best price based on market activity in your specific location.