Perrysburg Blog

The sky is a little brighter this week.

The sun has been shining more in Perrysburg.

And there are lots more accepted offers and buyer offer writing action in play.

Even though things could change.

And even though national indices are split – with sales down and values up.

It’s a confusing market.

But . . . “all real estate is local”.

So here is my take on the recent spate of action in the 43551:

Affordability

• Affordability is at its highest level in the past several decades.
• Many Perrysburg homes now cost 30-40% less than they did 6 or 7 years ago.

Pent-Up Demand

• Many of today’s buyers need to buy because their families have grown, they just moved here, they got a promotion or a raise, and other valid reasons.
• Sellers who hung on during our real estate decline have paid down debt (including mortgage debt), saved their money, and are now ready to move up.

Low Interest Rates

• Interest rates for 30-year fixed-rate mortgages remain below 4% and rates for 15-year mortgages are even less.
• Buyers are realizing that these rates are certain to rise if our national economy regains it footing.

Buyers Believe There’s Little Downside

• Buyers who were previously afraid they would lose money if they bought a home are now realizing that the risk is reduced and that they have waited long enough.
• Prices in the Perrysburg real estate market have stabilized in most segments of the market.
• The grim bloodletting in the suburbs is almost over – with values rationalized and the flight to safety of steadier values in the periphery of Toledo increasing values.

Cheaper To Own Than Rent

• It used to be cheaper to rent than own a home, but that has changed.
• Rents are soaring and now exceed the cost of home ownership in many instances.
• Given a choice, most renters would rather own their own home than pay off their landlord’s mortgage with their rent payments.

According to this report . . . YES.

That will be great news.

I am however reminded of Mr. Reality.   Standing right there, outside my office here in Perrysburg.

And that was Mr. Reality slapping me and my clients in the face with . . . reality.

For I am getting ready to close a short sale here in Perrysburg next week.

A FIVE YEAR short sale.

Five years on the market, in default, rented, managed, negotiated, appraised, inspected – then repeat over and over again.

And I am not complaining.

I am happy to be able to close it.   It is very satisfying.  The clients are thrilled.   The customers are thrilled.   The neighbors will be thrilled.   The banks involved are acting in their own best interest.

But . . . I feel the sting of reality.

Banks are not going to make short sales easy.

Or fast.

Or painless.

If they do the whole mortgage market will implode.

Short sales are an excellent idea.   When the house is no longer needed or wanted by the owner a short sale helps the neighbors.   It stabilizes the subdivision.   It’s a great idea and it works.

But please, don’t believe that it’s going to be fast.   Don’t be a Real Estate Pollyanna.

Why? What?

“REO” is of course banked owned foreclosed property.

And it’s strange how things sometimes run in streaks.

Today – I wrote an offer on very sharp 43551 REO listing.

Showed one.

Listed one.

That’s all normal . . . here is what is interesting:

1. A new RIVER ROAD REO property (30571 East River Rd.)  On the water.  That does not happen every day – in fact it’s incredibly rare.  $175k.  2500 sq. feet.  Township with Rossford Schools.  Last sold for $100k more . . .

2. A “builder’s own home” type REO listing.  We are putting new carpeting in it as I write this – with a 3 car garage, finished basement, and all the bling/bling you would expect.  $180s’ with close to 3000 sq. feet – and I think it’s worth LOTS more . . .it’s open this Sunday from 1 to 3.  507 Harrison Dr. in Shawnee Trace.  It just might be underpriced by $30k . . . at least!

The walkaway.

The “strategic default”.

The “jingle mail”.

You can look up the term on line.

But it happens when your personal life and your financial life have collided with your real estate life and the value of your real estate is smaller than the amount owed the bank.

The process is painful.  Traumatic. And fraught with risk.

Earlier today I went to a house, which shall remain hidden from identity for now (see description above . . . ), which was very nice.

Whose professional, educated owner had walked away from.

Gone.

Vanished.

Spurned our offer of “cash for keys”.

Turned off the water and the gas and the power – and vanished in the night.

Some thoughts:

1. Talk to your lawyer before you do this.  Seriously.  Just get a lawyer and get their opinion on what to do next.

2. Get help from ANYONE.  Family.  Friends. Charity.  Even the Federal Government has lots of programs.  And as worthless as HAMP or HEH! or HUH!? have been in the past 2 years – at least they often slow down the foreclosure train a little bit and give you time to recover.

3. Do not stop paying your food/gas/electricity/heat in order to make one more interest payment to the bank.  Sit down and think about what you have to have to live and survive.  Get some counsel.  Get some special help – but don’t lose everything in order to save an upside down, underwater house.

4. Get another legal opinion – lawyers are just like every other profession.  There are good ones, bad ones, and ones that do not know what they are talking about.   Get 2 opinions when you need brain surgery.  And 2 legal opinions when you are thinking about walking away.

5. At least call the broker/agent who was trying to talk to you.   This vanished owner lost $3000 simply by not calling me.  I bet he might have needed that money . . .

6. Put your families finances first – see #3 above.  I cannot stress this enough!

Many homeowners are being forced into this hard, cold calculus.  Banks might want to consider some very aggressive modifications to principal and not just kick the can down the road.   When upscale neighborhoods in Wood County are being hit and ravaged by strategic defaulters – it’s time to change the game plan.

Disclaimer:  no snarky comments or inferences in this post should be construed as anything but an endorsement for my Dentist – Dr. Christopher Clark.  I like him.  He is incredibly talented.  He knows the ins/outs and tools/tactics to do any dental procedure with elan and skill and care.

But . . . sometimes selling a house in Perrysburg today IS like going to your dentist and getting root canal.  Which I just did with Dr. Clark.

It takes time.

It takes multiple appointments.

It takes effort.

It takes reasonable skill and training.

The dentist has to have the right tools and facilities.

The dentist has to have the right support staff.

You want your dentist to be . . . actually working full time in and on dentistry.  

All of these things are similar in my pursuit of helping clients sell their real estate and my dentists skill and care at removing dental problems.

(But . . . I sadly note . . . that I cannot give you laughing gas or an anesthetic shot to make your pain fade for a couple of hours).

As with the average root canal . . . in selling a home today there is perhaps going to be some pain involved.

Some emotional conflict.

Some stress and or trepidation.

But . . . if it has to be done and needs to be done and the situation and circumstances tell you to get it done . . .  what else can you do?

You get it done.

Practice.

Preparation.

Organization.

Research.

All equal to success in lots of endeavors.   Like in baseball.   And in real estate.

Do it . . . and your ducks are in a row.

Fail?  You will whiff.  You will miss.  You will not win.

If you strike out in baseball . . . you get another at bat . . . usually.

In real estate?  You may lose the home you HAD to have.  The “perfect house”.

And, not surprisingly, real estate agent batting averages, proficiency, and skill set strength might seem to matter.

Especially in light of the new NAR report on recent sales.

If you peel away the data . . . you will find that the percentage of pending sales that blew up – busted out – failed to close . . . has DOUBLED.

That’s a HUGE increase.

I believe there are a couple of reasons:

1. More and more appraisal problems with pending sales.

2. More REO transactions which are very hard to get closed.

3. More part time / old timey real estate agents who don’t sell anymore and don’t swim in these treacherous waters anymore.

4. Short sales – the modern bane of buyers, sellers, and agents.

Add them all up . . . . and it’s a miracle MORE deals than the 18% reported are not blowing up!

(by the way – it was 9% of all pending deals blowing up just a year ago . . . )

What to do?

Get accurate market data.

Thinking about buying a short sale?  Open your eyes, get the facts, and get some help.

Only hire an experienced, competent, skilled agent.

The market is cloudy.

Like our local weather.

It seems like just yesterday it was sunny and bright and warm.   Then . . . BOOM . . .  Fall arrived.

What clouds do I see in the local market?

1. Fixed mortgage rates are low.   And addictive.  I wonder what will happen if rates return to a more “normal” 6 or 7%?   Low rates are a boon to buyers today.   Addictive.  Great tasting.  And will be a curse to sellers in the future.

2. FHA problems.   Loan limits are moving down tomorrow.  And that’s not a big deal here – but the future of the FHA program is now suddenly important to Perrysburg.   A majority of deals in and around Toledo are now FHA funded.   Take FHA away and the bottom will fall out of the market.

3. Appraisal problems.   One of my jobs now is managing appraisal issues.  Up front.  And after the debris of a wrecked deal.   The mortgage implosion has caused the REO explosion.   The shrapnel?   It flies over at supersonic speed and hurts your sale or purchase.

4. The Bifurcated Market.   There are really two markets now.  One for the wealthy.  One for everyone else.   I am certainly not interested in “social justice”.  But a healthy market has movement.  People moving up.  People moving laterally.  People aspiring to invest and save and gain.   Somehow in a diminished, “soft” America with an increasing stratification of incomes and assets we are losing that.

5. More delinquent mortgages in the 43551.   Big news – more and more nice houses in Perrysburg are going to be foreclosed.    I have never in my 23 year career been working on more distressed, big, nice houses in Perrysburg than right now.   And – it’s happening all over America.

6. Rentals.   There is a shortage of them right now in Perrysburg.  Markets hate imbalances.  So – if this continues you may see more rentals being developed here.  More houses being converted to rentals.  And higher rents (good if you are a landlord, bad if you are a renter).

7. Falling incomes.   Which is not something we are used to here.   We are used to wage increases.   Inflation.  Increasing prices. But wage drops?   Effects here are hard to predict.  This could, if it continues, lead to lower property values.  Lower prices for all assets.   And downward pressure on rents and taxes.  More market uncertainty.

8. Boomerang Kids.   What?  What is that??  Kids, done with college *(hopefully not with a degree in Ancient English Poetry or Integrative Social Work for Aleutians!) who are bereft of job opportunities.   Lots of my clients in Perrysburg have had to welcome their progeny back.   So if they are selling or need to sell or buying and need to buy – those extra bedrooms that were empty and contained old PHS trophies and Saturday Night Fever posters . . . are being used again.

These are some clouds on the real estate horizon in Perrysburg.   What clouds do you see?

1. Have a finished basement without a back up plan for the sump pump.   The power does go out . . . and if your plan is to call Toledo Edison and beg for faster service . . . .

2. Get your home/budget/mortgage in trouble and not talk to people.   It’s public knowledge.  Some people are going to charge you by the hour and do nothing – some are going to pester you on the phone and do nothing.   Get some special help.

3. Buy an extra house.   Not now.  Not in this market.   Sell your current one first please.

4. Buy REO property to “flip”.  You are not going to do it.  You are not going to make money.   There are lots of good reasons to buy REO as an investment – flipping is not one of them.

5. Pay someone upfront to sell/market/advertise your house.  Just plain bad business.

6. Hire a real estate agent without asking a page or two of questions about them and for them to cogently answer.  Many agents are abandoning the business right now (that’s a good thing!).  Some are carrying on to clients like they are full time producers while they have other jobs and even live in another state!

7. Fail to understand that the first showing of your house for sale in Perrysburg will occur ON THE COMPUTER.  Via the photos that your marketing agent has taken.   Failure to understand this costs you time, money, and sales power.

8. Don’t be pressured into buying right now.   Not by anyone.   There are good deals.   There are smart buys.  There are great personal business cases to be made for purchasing a home for many families.   There are also a lot of fear-based sales tactics that can lead you into a terrible decision.

The owner lost his job.

The mortgage went unpaid.

Everything started being delayed – repairs, etc.

The bank foreclosed.

The house went for sale.

I sold it.

A local family bought it  . . . because they cared about the street/neighborhood/city.

They have repaired and renovated it . . .

Here is the “before and after” shot . . .

Do you think that the neighbors are happy?

I recently sent an email out about a new listing.  I used the hook “everybody asks me when are going to hit the bottom of the market”?

I don’t know.

2012?  2011?  2021?

No one does.

We are in need of a new model now.

A new model of buyer behavior.  Lender response to buyer default.  And seller behavior.   The old models are no longer working.  The chart has flaws.  Case-Shiller numbers are the best we have, but still flawed.  The new model of tactical defaults, bank “unforeclosures” to get TARP rebates, buyers who are REO’d or BK’d and have huge monthly incomes – they are all helping to rewrite the rule book.