Perrysburg Blog

It seems that every day either I or someone on my team meets a person/family/transferring couple who want to rent and not buy in Perrysburg.

And, there is, in my opinion, a substantial inventory of “hidden listings” that are not on the market but are leased by their Perrysburg owners simply because they cannot sell them in this current market.

The two sides – property owners and property renters – come together and a market is made.

Caution was advised for renters by me in a prior post – - the Craigslist Scam.

Now some advice for homeowners who can’t sell and have been pressed into the often uncomfortable roll of “landlord”:

1. Trust but ALWAYS verify.

2. Check and recheck your deed restrictions.  Some condos in Perrysburg forbid a 12 month lease.  Sometimes your nice new tenant will buy a trailer and you will get into hot water with your neighbors.

3.  Use a lawyer to approve/review/draft your lease.

4.  Never let the potential tenant bring THEIR lease to the party.  This should be a little alarm bell that rings . . . .

5. Trust but verify.  Oh, did I say this before?  Well, you cannot trust anyone anymore.   Sorry.  You have to check the veracity of the phone numbers on the application.   You have to check the ID of the tenant.  You have to check the funds behind their check.  You have to check and check and check.   And the ONE TIME you don’t do it, because you just KNOW that the family moving in, with their little girl Daisy being treated for Hypoemetholema . . . the nice family that is moving here from Heart of Gold Texas where they were pastors and choir singers . . . that family?  That’s the one that will GET YOU GOOD.

6. Lead based paint.  Know the rules.  Embrace them.  Follow them.  Or get ready to get sued into oblivion.

7.  Never, ever listen – and I mean don’t even LISTEN to the excuses and reasons and rationale from a tenant who cannot pay.  Seriously.  Can I call my tenants up and reasonably expect them to listen to me about my problems and my family issues?  At its’ base – the landlord / tenant relationship is a commercial one.  It’s a business transaction.  With multiple payment points.  And a written contract.   Homeowners of the shadow inventory of unsold homes in Perrysburg who indulge in being a professional landlord cannot then ALSO become lenders/enablers/counselors etc. for their tenants.  It does not work.

You can be a landlord.

Just think about it first.

Or, you can hire me.

Just consider my free advice.

Who sells the most homes?

In and around Toledo?

In 2009? Who wins the gold?  The silver?  The bronze?

These guys do!

Congratulations to all of them!

Top 50 Agents 2009:

Includes MLS sales in Lucas and Wood Counties from 1/1/2009 to 12/31/2010 and excludes non-commission HUD home sales, commercial sales, mobile home sales, and cemetery lot sales. So . . . it’s my take on the top agents.

Which is now a very valid and pertinent question . . . since the town’s biggest builder just recently closed up shop.

And the current level of new construction activity is, oh, about 10% of what it was a few years ago.

Suddenly, getting a nice, neat, clean, modern new(er) house is actually harder . . . but still, if you are transferring into Perrysburg/Northwest Ohio, just as important and vital.

IMO, Perrysburg continues to be the number 1 choice for incoming corporate moves – but whereas in the past I could show such a transferee 10 or 20 new homes from a diverse number of builders – that is simply not possible today.

But – do not despair Mr. and Mrs. Transferee.

We have houses like 780 Little Creek.

Subdivision still open – Forester/Wherle still building and active but only with contract in hand, no more specs/models . . .

Modern, 2 story, center hall design.

Clean.  Livable.  Not beat up.

No glaring design flaws.

Owners have upgraded with a professional build quality finished basement.  They have updated/upgraded the F/W flooring with tile/ceramic/new berber as needed.

They have upgraded the standard level F/W appliances with some new, bright stainless ones.

And, they have even fenced the yard, built a deck, and added a hot tub.

No need to write a building contract and live in a hotel for 5 months . . . this house is ready.

And it is not unique.  There are several similar like it on the market at any given time.

So the move into town from Chicago or Pittsburgh or Dayton, etc. need not be filled with disquiet at the current lack of new builds.

$189,900 as of this date – it is SHARP!

One of my favorite real estate writers posed a similar query in the Wall Street Journal’s excellent real estate blog – Developments.

James Hagerty posed the question: “Will the bank take my iPhone?”

Which is sobering – I have an iPhone.  You can’t have it.  You can’t take it.  It’s addictive and it’s mine . . . and I have a hard time imagining it being surrendered to a creditor.

Which made me do some thinking.

And then some investigation.

Since I deal with many homeowners today who owe the bank MORE than the market value – what can happen to their iPhones?

And their cars?

And their retirement savings?

And their other assets and possessions?

5 or so years ago this was a pointless, absurd question.

It just did not happen in Perrysburg.

Today – it’s a vital, important, timely question.

According to the Fed (specifically the Federal Reserve Bank of Richmond VA) in their monolithic report “Recourse and Residential Mortgage Default:  Theory and Evidence form U.S. States) Ohio is considered a “recourse” state.

That means that lenders may have MORE remedies against a defaulting homeowner than just taking the house back in a foreclosure.

(N.B. – for this entire post, please remember that I am not an attorney and you should and are highly recommended to hire your own attorney to answer your questions!  You need a good, honest attorney . . . call me, and I will recommend one to you)

If I am a defaulting homeowner, I do not like “recourse”.

What is interesting about the lenders right of recourse in our state is that only in Ohio and Iowa does the lender have a very short period to seek recourse – and in Ohio, and thus Perrysburg, it is only for 2 years after the foreclosure.

Y0u can download their 50+ page paper yourself and read the gory details.  The financial equations on page 10 caused me to have a regression attack and revisit my finance classes at Duke University.   I was so shook up by this I had to go out and sell 5 houses today – but that’s another story . . .

2 years.

That is the time frame for recourse that your bank has to get more coins from you.

Lose your house to the bank . . . and they get an automatic deficiency judgment against you.

But they only have 2 years to collect it.

And many banks are taking 12 months to return phone calls right now – so what are the odds they will get your iPhone?

This recourse is usually obviated when a short sale is negotiated – which reinforces my belief that 2010 and 2011 will be the year of the Short Sale in and around Perrysburg.

Because then you will get to keep your iPhone.

One thing to add is a clear, shoveled driveway and sidewalk.

But that will become less and less important as we hit March and April . . .

AVID Ratings does a big survey every year (LINK).  Here is what the survey said!

1. Large kitchen with an island
2. Energy efficient appliances, insulation, and windows
3. Home office / study
4. Main-floor master suite
5. Outdoor living room
6. Ceiling fans
7. Master suite soaker tubs
8. Stone and brick exteriors
9. Community landscaping, including walking paths & playgrounds
10. Two-car garages

Now – these all sound reasonable.

I would add a few Perrysburg-focused items that will BOOST your homes value:

1. A three car garage (you can’t “add” this, but you can plan it for your next house . . . )
2. Kitchens and Baths – update them!  There is nothing wrong with changing out a 20 year old microwave . . .
3. Do something to bring light into the house – glass front door, Solatubes, skylights.
4. Landscape lighting.
5. A “moderate” finished basement (carpet, black painted ceiling, painted walls, lights).

These features add “zing” and “POW!” to the buyers memory banks when they compare your home to another when it is time to sell it.

They have both a high “return” in that you can enjoy the improvements while you live there and then get some resale value out of them when it’s time to move.

ALWAYS asked at every listing appointment.

The answer is . . . “it depends”.

On your price.  Your motivation.  Your vacuuming.  Your pets.   Your kids.  Your collection of stuff.

Overall, in Perrysburg, the average DOM or “days on the market” is right about 90 as of last month.

However it changes month vs. month and week to week.

Why?  Houses are coming on the market.   They are going pending.  They are coming BACK on the market.  And with a 300 to 500 house sample population it does not take much to whipsaw the numbers for one month.

So the TREND is what I look at.

With REO sales red hot right now (so says this report from California and my own Perrysburg REO’s are pretty much all sold or under contract). . . is that activity helping move other, non REO houses?

Inquiring minds want to know:

You can too – on this chart.

And the trend is that houses are selling FASTER (fewer average days on the market) and there is less “wait” (which we call MSI or “months supply of inventory”)   The Perrysburg MSI is now 1/2 of what it was a year or two ago – down from 21 months to a more manageable 7.1 months supply of inventory.

Price still rules.

So get your house priced right, cleaned up, and then the numbers will play out good for you.

Somethings to think about if you are planning on buying in Perrysburg:

1. Buy now, not later.

The 2009 extended tax credit for buyers is going to end this Spring.  If you are definitely going to buy in 2010 you are rather foolish to NOT take the governments free $8000 or so.  (I admit that it is borrowed from China, will have to be paid back with interest by our children, and will help to further bankrupt America – but YOUR not taking it won’t help.)

2. Don’t Buy JUST Because of the Tax Credit.

Sorry – many people are buying now who should NOT be buying.   There is a TOTAL COST of owning in Perrysburg that many buyer’s gloss over with stars in their eyes as they swoon for a great listing.  Taxes.  Insurance.  Upkeep.  Please consider carefully ALL of these costs.

3.  Lock In Today’s Great Rates!

The $ multi-billion dollar mortgage buyback program that the Fed has been running will be winding down soon. When it does most experts are forecasting a .5 to 1.5% increase in nominal interest rates for all fixed rate loans.

4. Buy A Short Sale.  If You Can.

I believe that in 2011 we will look back and say that 2010 was the beginning of the short sale bloom.

Short sales are right now:  the best deals, the greatest value, the best kept property, and surprisingly hassle free if you have patience.   You can call me and I will “evaluate” you for short sale tolerance.

5. Save Your Cash.

Start saving $$$$.  You are going to need at least 10% down for an FHA loan if your credit is not spotless.   And, by the way, you ought to have at least that much down or you should not even be buying a house in this volatile market, IMHO.

6.  At Least Consider an REO Listing.

These poor lenders are trying so hard to move this inventory . . . and many of the bank owned listings I have in Perrysburg are GREAT buys.   You can usually get a great deal.  We can often find a good loan program that meets your needs.  There is no shame in buying one!  You can find ALL the active Perrysburg REO’s at my REO site - www.ToledoBankOwned.com

7.  Forget About Flipping For Fun and Profit.

Not unless you are a seasoned investor professional with experience, cash, and contacts.  You are also probably on a first name basis with me so that I can feed you the one or two deals that are “flippable”.   Otherwise do not try this – way too dangerous.  And you are competing with the banks, HUD, and the myriad of REO’s in the “shadow inventory”.

8. Get a High Deductible Insurance Policy.

I have learned a few things from my insurance selling brother www.ModeneInsurance.com.  And one is that you are not really going to use your home owners policy anyway – not for anything small.  (If you do – they are watching and will JACK YOUR RATES UP!)  You are going to use your property insurance for a really big claim.  So get a high deductible policy and save some serious money.  Those insurance guys – they make enough money anyway and will gladly sell you a cheaper, high deductible policy.  (If you talk to my brother Dave . . . ask him what lovely desk accessory I bought for him).

1. The Shadow of Strategic Default

This one I hope does not come true.   It will be bad for everyone in Perrysburg.

But there CAN come a point in a market where the asset is not worth the debt.  When that happens a smart and savvy investor will simply walk away.

Oh – the moral dimension?  The ethics?  It’s wrong?

Well, the biggest foreclosure in America happened this week – a $5 BILLION collection of apartments in New York City.  And the sophisticated, intelligent, MBA-laden owners including Tishman Speyer and Blackrock Capitol – just walked away and turned the keys in.

Think about the possibilties of dozens and then hundreds of normal home owners with underwater mortgages doing the same – especially if the “little guy” in Toledo gets a loan modification (and he doesn’t really “need” it).

This could happen – and the blood will be messy.

2. The Rise of the Rental House.

Every day I am getting calls from people who need help finding rental property.

Or from owners who want to leaser their homes.

Many home owners are considering leasing because they just can’t stomach the price today’s market will pay them.  So leasing becomes a way to ride out this market.

The tax consequences of leasing can be AMAZING (more on this soon!).

3. The Rationalization of Value.

Sellers are now coming to terms with the new values in Perrysburg.

Like the proverbial “Five Stages of Cancer” or grief . . . many are now in the last stage -acceptance.  They will soon come to the point that I have – I can now rationalize the new values and price points.  I accept that the “old market” is not coming back, but that the new, current market is wonderful.  For new owners.  For buyers.  For investors.  Even for many renters.

4. The Reaction of Corporations for their Transferees.

What is a company to do?  You want to move Joe and Sally Manager to XYZ City.  B

But their home is upside down, underwater, and not worth what they paid for it.

Should they leave it behind?

Should they turn it into a rental?

Should they lose all their savings just for a promotion?

No!  Hey!  They can ask the big giant corporation to make them whole, grossing them up after taxes 4 or more times, and reimbursing them for their loss on sale.

This will be more and more common in Perrysburg.

5. The Restrictions of the Reams of Paper.

The new loan and HUD and lending regulations have taken effect.

No changes  – or you start from square one.

A typo?  10 or 20 days in the hopper again.

Lenders will most likely find new ways to “beat” the regulators . . . but that will take time.  So in 2010 get ready for delays.

6. The Fallout of the Bailouts on Property Taxes.

This is something that I hope does NOT happen in Perrysburg.

The bloom is off the rose with bailouts and budgets and Federal help to Ohio.

No more help is coming.

Our leaders at ALL levels should have used the past three years to cut spending.

They didn’t.

Now with huge revenue hits coming they may look to the homeowner for help.

By running a stream of new levies by the homeowners in the 43551 for every little program and big program will have the effect of increasing your tax bill and decreasing your home’s value as fewer and fewer can afford the tab every 6 months.

I really could go on and on about the market stats in Perrysburg.

I love this subject.

True story:  I gave a guy some stats recently.  Real estate business stats.   He HATED them.  Didn’t like what they either said or revealed or the story that they told.   So he got mad at me.  Because of the numbers that exist.

Lesson:  The numbers are the numbers.

Especially with real estate.   They are what they are.

Let the numbers, at least some of them, thus speak:

1. Seasonality is back.  The big upward trend every month – gone.   The big downward trend every month – gone.  So looking at one month vs. another, if not adjusted for the season is not accurate, IMHO.

In December of 2008 there were 413 houses on the market with a median price of $195,000.  29 went pending that month.  27 closed.  And the median price of the pendings was only $175,000.

In December of 2009, 12months later, there were 304 houses on the market with a median price of $201,000.  21 went pending that month.  30 closed.  The median price of the pendings was $239,900.

Conclusions:

#1.  The number of houses on the market substantially declined.   Sellers either got smart (didn’t really need to sell . . . ), rented out, or took off the market.  The median price of the inventory actually INCREASED by 3% to $201,000.

#2.  The median price of homes getting an accepted offer (”HI, we are buyers and we really like you!”)  that number increased from $175k to $239k.  Hmmm.  Many possible reasons – my experience tells me that many sellers who are selling are in fact selling the best houses in the best condition.   The banks?  They are taking back some nice, large listings – which moves this number up too.

#3.  The median price of the houses that sold?  Up 8%.   Amazing.  Values are up!

Well – that’s half the story.   The median price a couple of years ago was over $200k.   Go back 4 years and it was close to $220k.   With the normal dynamics of a small sample size (and that is what the 43551 marketplace really is . . .) and the return of seasonality, and the market deforming effects of the housing bubble and the bank inventory . . . let’s just say that prices are not in free fall anymore.   But let’s be honest and not say that prices went up 8%.

There are fewer houses on the market in Perrysburg, with more serious sellers, in better condition, with fewer buyers competing for them.

The market is back in balance.

(N.B. footnote:  for this report I am using the data from the Toledo MLS, which does not have all real estate activity, for the period 12/1/2008 to 12/31/2009.)

They are all good . . . but which one is best?