More Browsers Leads to More Buyers

 As we have all adjusted to this most unusual year, several trends have begun to appear.  First of all, people have more time to search on the internet for just about everything.  I've read that they don't buy clothing, but they do seem to want to buy real estate.  And that isn't limited just to residential property for themselves.  We are seeing more hits to our website, more web leads, and more inquiries from outside sites like LoopNet.

That's good news for sellers.  With so many people looking, there will turn out to be more sales.  In fact, one of the ways that we can tell how motivated they are to buy is that they may put in several requests in a row on different types of property, not just on different listings of the same type.  That suggests investment buyers are seriously searching.  With the stock market so volatile, and interest rates so low, that isn't surprising.  

Connecticut is perfectly situated for those kinds of buyers.  Actually, they come from other states as well as our own.  They are looking for places that should do well in any future phases of this pandemics, or other such events.  We are finally getting good press for the way our State behaves, and it's reflected in our area's appeal to out-of-state real estate buyers.  In addition, our positioning for warehouse and distribution is well known, particularly now that Amazon has gotten so big here.

Remember that there are fewer than four months left of this calendar year, and that it's never too early to start a transaction that needs to close before December 31st for tax reasons.  Whether you are a buyer or a seller, it's best to hustle now, and enjoy the fruits of your labor in appreciating property, now or in the future. 

We're at the Witching Season

It's not only Halloween next week, it's the best time to buy property.  Sellers who are ready to move on, and who may have maintenance costs on empty buildings, or tax consequences if they don't close by the end of the year, are at their most reasonable.  Buyers may have their own deadlines, and the end of the calendar year provides a natural one for most.  With motivated parties on both sides, we often find that sales come together more quickly at this time of year.  Even bankers and other professionals have reasons to want to move the process along without delays. 

Buyers should use this scenario to push for a good result, especially by offering to close quickly.  If you haven't bought or sold real estate recently, you may find the experience more like waterboarding than like waterskiing, so be sure to answer all calls and requests for documents right away.  Don't think that people will back down on requirements--many times they have no control over certain items. 

Sellers need to heed the same advice--you are not in control here, and that may be hard to stomach.  Just gird yourself for some bumps in the road, and think forward to the holiday season, and the nice vacation you'll be able to take when you've gotten through the closing.  Remember that the buyer may not be driving the bus, either, and don't assume that s/he is trying to take advantage of you.  See the above comments and think about your own buying history, especially if you have borrowed money in the past ten years or so. 

I'm presenting the worst case here, and often it can be much smoother.  Whether it is or it isn't, almost everyone is happy in the end that they got through it, and that the property changed hands.  Keep that end goal in mind, and get serious about property transfer in the last quarter of the year.  You'll be glad that you did.

What Will 2018 Bring?

The latest Federal tax bill is only hours old, but pundits have been debating various proposals and exclusions for months.  People are frantically trying to figure out what it means for real estate, and what to do before the end of the year.  Unlike making a charitable contribution, it isn't quite so easy to implement changes in the next ten days.  However, we can see that some are trying.

It's unusual for us to still be getting offers and selling at this season, when thoughts often turn to shopping and partying.  This year, the phones are ringing more, and more transactions are coming together.  There aren't too many of those buyers and sellers who expect to close instantly, so it's a sign of something else, and we hope that it's a sign that people are moving on with their lives.

They hesitated during the presidential election, they hesitated during the first few months of Trump's term, but they finally seem to be inclined toward action.  Whether that's just life, or it's in reaction to the various proposals is hard to know, but I'd bet on the former.  I think we all know that mortgage rates are heading up, and that, in the end, that makes more difference to buyers than almost anything else in a purchase.

There hasn't been enough time for digestion of all of the parts of the tax bill, so we aren't even sure what 2018 will bring.  However, it is the time of the year for predictions, so here goes:  Connecticut is going to be hurt under the bill, and more people will leave the State in 2018.  Since not all of them will be able to sell their houses, they will reduce prices on big, expensive homes.  At some point, those properties will seem like a bargain to those who have lived elsewhere, or in times past, and they will start to move.  Some of them will be sold as second homes, since those mortgage deductions were preserved in the final bill.  Buying real estate will seem prudent compared to betting that the stock market will keep going up.

Millennials will be a major force.  They may need help, and we may see more sellers taking back money, as used to happen in different cycles of the market.  Big employers may turn to housing allowances, in order to attract employees from out of the area.

On the commercial side, we will see more and more 1031 tax-deferred exchanges, as those were preserved as well.  Investment real estate will be strong in Greater New Haven, where properties seem inexpensive compared to Boston and New York.  The State Legislature may actually listen to the new commission on fiscal health, and make changes that will cause business to expand or relocate here.

And our New Year's resolution here in Connecticut?  We will continue to do our best to sell our beautiful State and region, in little pieces.  Happy New Year to all!

Appraisals

We are starting to see properties "not appraising out" lately.  That's an early indicator that prices may be increasing, at least in submarkets or areas where supply is limited.  What we mean by that term is that the appraisal number is lower than the amount on the sales contract.  If the buyer needs a mortgage, it's an issue, because he/she may not be able to borrow the full amount that they expected.  In other cases, where the buyer is paying cash, it is not uncommon for the buyer to put in a clause that the sales price cannot exceed the appraised value. 

There are two ways to look at this issue, as with so many things.  One is that the buyer should be willing to pay what a property is worth to him/her, regardless of the appraisal.  The other side of the coin is that the practical value of a property--what it would resell for, and what you could borrow against it--is dependent upon the appraisals.

Appraisals tend to lag the market, because an appraiser can only use comps from within a narrow range of closing dates, and within a very small area around the subject property.  It can be very hard sometimes to find good comps, and adjustments must be made from properties that might not be exactly the same in quality or type.  Since the comps come from recent sales, those prices could be lower, in an increasing market, than the sales prices on contracts that haven't yet closed. 

What advice do I have after all of this discussion?  Appraisal is as much an art as it is a science, and both buyers and sellers should be reasonably skeptical about exactitude.  Given the restrictions on bank lending these days, it is harder for a bank to take the same attitude, so just be prepared to make an independent decision in any given instance.

Lenders More Bullish on Commercial Real Estate

We have clearly seen recently that there is much stronger demand by users for real estate of all types. What's been holding people back, in many cases, is the feeling--or reality--that they cannot get financing.  That was driven in part by the huge amounts of capital tied up in notes of various types that came due in the last couple of years.  For whatever reason, or a combination of reasons, that seems to be changing.

Reports in all kinds of publications have been saying that lenders have a greater appetite for commercial real estate loans.  That would make sense, since we all think that the market, and the values, are improving. What that means is that prices will soon start to rise, as activity climbs and users look for product.

What does that mean for buyers?  Buy now, before supply dries up and prices increase.  What does that mean for sellers?  Good news.  Your properties just got a whole lot easier to sell!

It's Getting Better!

We've all been looking at each other in the commercial group lately, and remarking on how busy we are.  What a change!  It certainly means that people are out looking for space, particularly in sectors that are seeing more current activity, like restaurants and luxury goods. 

What does that mean for sellers and buyers?  If you are a seller, you are probably wondering whether you should hang on and wait for prices to rise.  If you do, you will be competing with a lot of other people who've been waiting for the same thing, so you had better compare favorably.  That means, if your property wouldn't sell if a better one like it were on the market, it would make more sense to list now, when there is less competition. 

If you are a buyer, you are still in a buyer's market, so this is a great time.  Don't wait too long, or prices will start to go up, and you will end up paying more. 

Bottom line:  I think we've passed the bottom.

Puppet Theater Mania

Today's New Haven Register has a front-page article about our new listing of the Stony Creek Puppet House. It's an old property, beloved by many, that has produced different types of theater on and off over the years.  It needs a lot of loving care to be restored, but there are many people who hope that that will happen.

The attention that led to its being on the front page shows that there is still interest in real estate of various types, and the secret is in connecting the buyers and sellers of such property.  Obviously, we don't always get a spot on the front page of the paper to help us along, but the puppet theater is an investment property, and those have proven to be popular in any kind of market.

We've gotten calls already on the puppet theater from the sign, which means that local people are seeing it as something worth checking on.  Now that it's been more broadly advertised, we should receive even more calls.   If you have an investment property of any type, now is the time to expose it to the market.  There are buyers out there, looking for alternatives to stocks and bonds.

It's the Buying Time of the Year

If you are interested in acquiring investment or commercial property, and you have any hope of doing so by the end of the year, you need to be acting right now.  We just had a wonderful investment property close in 58 days from the day of listing to the day of closing.  That's about the number of days left in 2011.  It will most likely only work if you will be closing with cash, but almost 40% of all properties that have sold this year in Connecticut have sold for cash. 

Many people like to try to put whatever expenses they can into the year just ending.  Others have let the end of the year sneak up on them.  Still others may have begun their tax planning, and may just have realized that they have real estate transactions that they should be completing.  Whatever the reason, we see more rushing at the end of the year than at any other time.  Both buyers and sellers are often motivated to move quickly, for personal, tax, or business reasons, and there's always a push to get things completed before the holidays simply sweep most work aside.

Don't get caught--act now.  Call your Pearce Commercial agent today!