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Is it time to let go and list your home?

4/29/2018

Selling a home is a little like jumping off a high spot while clutching a rope swing. In both cases it is critical to let go at just the right time.

If you’ve been holding onto your Lakes Region property in Laconia, Gilford, Meredith or Moultonborough now might be the right time to let go and list.

Here’s why. In March 2018, home sales in 174 nationwide markets showed the highest price increase in four years, according to the real estate web portal Redfin*.

The spike in home value is predictable, not surprising. Swinging like Tarzan is the direct consequence of jumping from a high perch while gripping a knotted rope. Similarly, elevated home prices are the direct consequence of low inventory. The lower the supply of homes for sale, the higher home prices tend to swing.

The median nationwide price for homes sold in March 2018 jumped 8.9 percent compared with March 2017. That’s because the supply of homes for sale was down 11.9 percent from a year ago, and the number of new listings in March dropped 5.6 percent compared to last March.

On average across the nation, homes went under contract in 43 days in March 2018. That’s over a week faster than a year ago and a March record. Nearly a quarter of homes sold for more than their list prices.

The trends are similar here in the Lakes Region. For example, listings for single family homes and condominiums in Gilford, Laconia, Meredith and Moultonborough in March 2018 were down 11 percent from last year.

The median ‘days on market’ for listed Lakes Region homes in March, 2017 was 36. This year that number plunged to just five days on market.

As a result of low inventory, homes in these four Lakes Region towns are selling at the highest prices and fastest speeds in at least a decade (visit www.LakesRegionHomeSeller.com for details).

But with home sales as with rope swings, timing is everything because markets can swing like pendulums. Hold onto the rope for too long and you risk landing in the shallow water, or the dirt. When prospective home sellers hold on too long, home sales can plummet, which typically causes prices to drop a few months later.

Further, there’s the looming impact of rising interest rates. We’ve been blessed with a low interest rate environment during the last nine years, in which rates were under four percent. But many analysts are predicting five percent interest rates by the end of the year. According to a Redfin survey of 4,000 consumers at the end of last year, a five percent interest rate would cause more than a quarter of today’s homebuyers to slow their plans.

Lakes Region homeowners who held on too long and missed the opportunity to sell at the previous peak had to wait nearly ten years for home values to recover.

If you’ve been thinking about selling your Laconia, Gilford, Meredith or Moultonborough home, now might be the right time to let go and list. If you’re ready to take the plunge I’m here to help. Contact me to see what your property might be worth today in today’s market.

*If you'd like more information regarding Redfin's home pricing data, visit:
https://www.redfin.com/blog/2018/04/market-tracker-march-2018.html

If you'd like information on reviews of Redfin services, visit:
https://www.consumeraffairs.com/housing/redfin.html?#sort=recent&filter=1

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"Autopilot" home prices like zestimate wrong 36 to 84% of time

4/21/2018

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Remember a few years back when that plane’s autopilot algorithm made a perfect emergency landing on the Hudson River in New York City?

Me neither. That’s because an algorithm didn’t land that plane. An experienced human pilot did.

If you’re wondering what this has to do with Lakes Region real estate, bear with me and read on.

The man-made miracle
On January 15, 2009, US Airways Flight 1549 was rocked by a rapid succession of explosive bangs less than three minutes after takeoff. It was the unmelodious percussion a commercial jet makes while smashing through a large flock of Canadian geese at more than 200 miles per hour.

The plane was about 2,818 feet above New York City when its twin engines instantaneously “ingested” multiple birds roughly the size of Thanksgiving turkeys. The engines belched flame then went dead silent. The cabin flooded with the odor of fuel.

The pilot in command, Chesley "Sully" Sullenberger, issued a Mayday: “This is Cactus 1539, hit birds. We've lost thrust on both engines. We're turning back towards LaGuardia."

But Sully quickly realized they’d never make it back. He considered Teterboro Airport in New Jersey but made another snap decision based on many years of education and experience. He radioed: "We can't do it ... We're gonna be in the Hudson."

The aircraft began a 240 mile per hour “glide descent” and Sullenberger addressed passengers and crew with three little words you never want to hear from your pilot: "Brace for impact.”

Sully then “ditched” (the euphemism for crash landing a powerless plane not designed for water landings) the commercial airliner into the Hudson River at approximately 140 miles per hour.

I’m certain many of the geese involved didn’t make it, but all 155 passengers and crew aboard Flight 1549 survived. The incident became known as the “Miracle on the Hudson.” Stephen Rice, Ph.D., an aeronautics and robotic flight expert with Embry-Riddle Aeronautical University later admitted, “No autopilot today could have landed the plane on the Hudson River.”

REALTORS® are to home sales what pilots are to flying
So what does this gripping introduction have to do with Lakes Region real estate? In real estate, as with commercial aviation, technology is a useful tool. But there is simply no substitute for human experience and judgement.

Millions of home buyers and sellers have been engrossed with the home value equivalent of autopilot. Just visit a major real estate dotcom like Homes.com, Zillow or Redfin, enter an address and instantly get a free estimate (based on “proprietary algorithms”) of that home’s value.

But air passengers rely on experienced professionals (not just sophisticated technology) to get them where they want to go, and home buyers and sellers should too. Let me tell you why.

Last year an independent research firm published the results of a nationwide study of home sales and reported that the Redfin Estimate “more accurately predicted the value of thousands of homes for sale” than estimates by Zillow and Homes.com.

Of the 5,074 homes sales evaluated in the study, 64 percent sold within three percent of the price predicted by Redfin, compared to 29 percent for Zillow and 16 percent for Homes.com.

But if you analyze those numbers critically, this study really shows that Redfin offered the least inaccurate automated prediction of home value.

Redfin’s predictions were three or more percent off closing price 36 percent of the time. Zillow’s Zestimate® was outside that range with 71 percent of its predictions, and Homes.com predictions were more than three percent inaccurate a whopping 84 percent of the time.

So think of it this way… would you feel confident flying an airline with a 36 to 84 percent likelihood of missing your destination airport’s runway by at least three percent? Then how much trust can you place in algorithms scientifically proven to guess home value too high or too low 36 to 84 percent of the time?

The study also reported that the median prediction error rate (how much estimates exceeded or fell below actual sale price) for Redfin was 2.06 percent off actual sale price. Zillow had a 5.95 percent median error rate, and Homes.com’s was 10.26 percent.

If you apply those error rates to the median closed price for single family homes sold in New Hampshire in 2017, Redfin’s autopilot guess would be off by $5,479 in home value. Zillow’s would be off by $15,827, and Homes.com would be $27,291 too high or too low. (For reference, as a whole single family homes sold in New Hampshire in 2017 closed 1.46 percent below listed price.)

Don’t get me wrong, technology is a powerful tool. Real estate is a data driven career and REALTORS® depend on digital SLR cameras, drones, smart phones and mobile devices, computers, web applications, satellite imagery, databases, CRM systems and a variety of software. But we ultimately rely on human judgement and experience because we know that your home’s sales price is likely to depend upon many factors alien to algorithms, including the property’s condition, the motivation and means of buyers and sellers, the marketing skills of the agent, and the psychological impact of supply and demand levels.

Automated estimates can be useful, but I believe home valuation is more challenging in New England, where homes built and added onto since the 1700s can neighbor ones constructed in the 21st Century. The quality of land and view here can vary dramatically between the subject property and a comparable home a half mile away. Algorithms that are accurate in metropolitan markets, where builders quickly erect hundreds of standardized condominiums or single family homes based on the same materials and handful of models, can struggle with the unpredictable variables New Hampshire’s rural real estate market is full of.

The bottom line is that technology is a useful tool but in real estate as with airlines there is no substitute for human experience and judgement. That’s why Redfin’s website says its automated Estimate “is just a starting point—it is not an appraisal or a substitute for the expert pricing advice of your real estate agent.”

In other words, if an estimate with a 36 to 84 percent chance of being off the mark is good enough, trust autopilot pricing (did I mention that Lawrence Sperry, the inventor of autopilot, fatally crashed his plane into the English Channel?). If you’d like what Redfin calls “expert pricing advice,” contact me.

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Is FSBO or Pro the better way to go?

4/7/2018

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Driving past this house with a “For Sale by Owner” sign made me think about what real estate professionals call “fizbos” (the phonetic for FSBO, the abbreviation of For Sale by Owner).

The sign is on one of the busier streets in Laconia so it’s got decent drive-by visibility. But there’s no street side parking and I couldn’t catch the phone number while cruising past at 30 miles per hour.

Before you note the number of grays in my photo and assume I’m slow on the uptake, myopic or both, let’s put this in context. Imagine sprinter Usain Bolt—the eight-time Olympic gold medalist and world record holder regarded as the fastest man alive—streaking past at his top speed of 27.8 miles per hour while trying to comprehend and memorize seven digits no taller than a playing card. Now picture him trying again while sprinting the opposite direction, on the far side of the street.

I’m as obsessed with selling houses as my dog is with vanquishing the mail carrier so I tried to find the property online, the same way 51% of buyers identify the homes they ultimately purchase.

I didn’t know the street number and I couldn’t find the home using Trulia or Zillow search maps. I also couldn’t find the property on ForSalebyOwner.com, Owners.com or Craigslist (real estate – by owner). When I tried HomesbyOwner.com, the site wouldn’t even load. So I gave up.

It was only after I drove by again and noted the street number that I found information online. While the property’s got some great things going for it, it’s been on the market 23% longer than the trend for Laconia and its price was recently reduced by about six percent.

Why fizzbo?
According to the National Association of REALTORS® 2017 Profile of Home Buyers and Sellers, fizbos accounted for just eight percent of home sales in 2016. Home sellers typically try FSBO when seeking to maximize profit by avoiding the commission a brokerage would earn for successfully selling a client’s home. Commonly fizbos still pay commission to a buyer’s agent (unless the seller can procure their own buyer, one comfortable making one of life’s biggest purchases without the benefit of professional representation).

This DIY approach is arguably more common during seller’s markets, which Laconia and other Lakes Region towns are now experiencing (visit LakesRegionHomeSeller.com for details).

The fizbo seller assumes full responsibility for:

properly pricing and effectively photographing and marketing the property
staging the home’s interior and exterior for maximum appeal
addressing every call and attending every showing (no matter how inconvenient the timing)
taking time to deal with both legitimate prospects and “Lookie Lous” who have both nothing better to do and a compulsion to see the interior of a home they’re a) not truly interested in, b) not qualified/prepared to buy, or c) both
deciding to accept, reject or counter offers, which often includes navigating contingencies and concessions (e.g. arranging and paying for negotiated repairs or lowering the sale price to address the cost)
overcoming obstacles and buyer’s remorse
coordinating the appraisal process (and praying the “price is right”)
facilitating the home inspection (precarious for fizbos because they’re not insulated by representation)
the proper completion of myriad legally binding contracts and documents

The FSBO seller will also be responsible for complying with closing complexities once an offer is accepted, as well as legal liability for any errors, misrepresentations or omissions.

Fizbo marketing methods and results
According to the Profile of Home Buyers and Sellers:

28% of FSBOs did not actively market their homes at all
35% used a yard sign (only 7% of buyers found homes this way)
5% bought newspaper ads (less than 1% of buyers found homes this way)
24% promoted to friends, relatives, or neighbors (6% of buyers found homes this way)

Aside from the very real risk of mistakes leading to legal liability, FSBO sellers face three distinct challenges:

Pricing--Homeowners can find it difficult to accurately and objectively determine market value because of sentimental value influence, lack of experience, and reliance on one-size-fits-all town tax assessments or free online assessment tools dependent on algorithms that often struggle with local and rural market trends (like a “Zestimate” or Homes.com value).

Marketing--Individuals are severely disadvantaged compared to real estate brokerages with dedicated marketing teams and budgets and years of experience successfully promoting homes in the local market (for example at Roche Realty Group we promote properties on approximately 80 national and international real estate websites and that’s just one small piece of the marketing pie).

Showing--Once again, experience is a factor. There’s a difference between showing a house and selling one. Also, buyers are often uncomfortable with a seller’s presence during a showing or open house, and they’re far less likely to share brutally honest but useful feedback directly with the home’s owner. Finally, buyers who sense weakness in the selling process may aggressively take advantage of the opportunity to drive better terms and pricing because they know a commission is not part the price.

None of these observation are intended as a knock against the fine people who try to sell homes by themselves. It’s simply a matter of experience and team support. To use another sports metaphor, prior to Game 3 of the 2001 World Series, President George W. Bush threw what some considered the finest ceremonial first pitch ever.

In retrospect, he pitched way better than aspiring professional baseball player Michael “Air” Jordan, retired Hall of Famer pitcher Nolan Ryan, or even Justin Bieber. Heck, Bush had even co-owned the Texas Rangers.

Despite all that, neither the Diamondbacks nor the Yankees invited the President of the United States to stay and pitch the rest of the game because the stakes were too high and he lacked the team connection and experience needed to deliver the best result possible.

The National Association of REALTORS® reported that in 2016 the typical FSBO home sold for $190,000 compared to $249,000 for agent-assisted home sales. And leading real estate research firm Collateral Analytics studied 1.35 million 2016-17 home sales spanning 13 markets and 770 nationwide zip codes and found that fizbo sellers closed at prices 5.5 percent below those on similar properties sold by Realtors®. This suggests home sellers either net greater or roughly equivalent proceeds when they use a professional because agents tend to achieve superior sales prices that are high enough to offset commissions.

Please contact me if you’d like to have a winning pro team help you successfully sell your Lake Region home.

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(Half) million dollar listing

4/2/2018

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Perhaps, like me, you’ve been around long enough to remember when a quarter of a million dollars was a lot of money. Today it takes a lot more than that to buy a McMansion, as even the average American home costs more than $250,000.

According to the National Association of Realtors®, in February 2018 the median price for an existing home in the northeastern United States was $258,900. And the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that the median sales price for new houses sold in the U.S. last month was $326,800.

Since it costs that much to buy a fairly average home today, I thought it might be interesting to take a look at some current examples of what you could get in our region if you invested a little more, say, in the $500,000 range.
They say the three most important words in real estate are “location, location, location” (unless you sign a purchase and sales agreement without telling your spouse, in which case the three most important words would be, “You did what?!?” But that’s the subject of another article). As you’ll see, location directly impacts the value of each of the following currently-listed half million dollar homes.

Portsmouth, NH--$517,700 today will buy you in late July (when construction is complete) a two bed, one and three quarter bath garden level condominium with 1,512 square feet of livable space on a single level. This condo will offer an open concept kitchen with stainless steel appliances, granite countertops and a huge center island. The living area will be adorned with a corner gas fireplace, and the master bedroom will offer a walk-in closet and an adjoining bathroom with a step in shower.

The listing boasts that “the ‘Seavey’ home is everything you've been looking for!” I didn’t know what that meant but the exclamation point implied it was exciting, so I googled the definition. According to the top search result at Urban Dictionary, “Seavey” can be used as a noun, verb and adjective. The adjective form means “super-cool or just plain awesome.” I assume that’s what the listing agent meant, as the verb’s definition would make Stormy Daniels blush and this unit doesn’t even have a chimney.

This property’s development is located in Middle Hill, which, according to the developer’s website, is “only a 1 mile walk or bike ride to the vibrant Portsmouth downtown…” and, I presume, all the specialty salts and pet foods, raw juices and oxygen, cigars, candles, yoga, and psychic readings that a hip urbanite’s heart could desire.

Rye, NH--$525,000 will buy you a one bed, three quarter bath (with radiant floor heat), 600 square foot year-round beach cottage with 0.2 acres, steps away from Wallis Sands Beach.
According to the listing, this 1955 era “property was completely rebuilt in 2016 with finishing touches this year,” and features granite leather finished counter tops, stainless steel appliances, “wood-grain finish on tiled floor throughout,” an outdoor shower with its own hot water tank, and a large patio and yard with privacy fence.

Boston, MA--$539,000 will get you a one bed, one bath, 520 square foot parlor level (a few steps above street level) brownstone condo in the heart of Boston, “just steps to dining and cafes on Tremont and Copley Square.”
Originally built in 1860, “this unit has an open kitchen, hardwood floors, full bathroom and ample sized bedroom.” In addition to the $1,037 per square foot list price, you’d have to pay homeowners association fees of $290 per month ($3,480 per year).

Laconia, NH--$524,900 will buy you my latest listing, an adorable four-season one bed, one bath, waterfront cottage on one of the best lots in quiet, private, no-wake Pickerel Cove, which connects you to over forty-five thousand acres of beautiful Paugus Bay and Lake Winnipesaukee water.

Located on a quiet, dead-end street a quarter mile from the community's shared private sandy beach, this 674 square foot completely updated 1966 era home sits on .61 acres and features a boat slip and 125’ of waterfront, which is literally just steps away.

There are water and Belknap mountain views from the 9’ x 8’ front deck, the large paver patio, the 17’ x 8’ heated lakeside sunroom and the spacious, open concept living room. The adjoining kitchen area is adorned with exotic granite countertops, high end laminate flooring and new cabinets. The bedroom and bathroom are surprisingly roomy and the property includes a storage shed and an external, seasonal multipurpose room that could be used as a bunkhouse for guests or a workshop.

So there you have a few examples of what $500K can buy you in a prime “location, location, location” in today’s market: a “Seavey” new Portsmouth condo or a bit of Boston brownstone within walking distance to shopping, dining and entertainment, a seacoast cottage adjacent to a bustling public beach that you share with throngs of tourists, or your very own personal paradise with interior and exterior views of the Lakes Region’s water and mountains. If you’d like to learn more about the latter please visit www.87HarglenLane.com.

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