Round Rio Rancho

Recovery in the  Albuquerque / Rio Rancho Metro area residential real estate market continued during April. The 678 sales of single family detached homes closed during the month were a seven percent increase from March. The April sales performance represented a 25% jump from April 2009 and the best April sales figure since 2007. The number of pending sales was 1,271 during April. This was an 18% improvement from March and a 52% increase from April 2009. The 1st Time Buyer Tax Credit expired April 30, providing an incentive for buyers to get offers in place by that date. We believe that the tax credit may have increased April sales by as much as 30% over where it might have been without it. 

 During April, 1,869 single family homes were newly listed for sale, a 10% increase from March and up 28% from April 2009. The total number of single family homes listed for sale was 5,069 during April, down 6.1% from a year ago. Even as the number of new listings has increased, the total number of Albuquerque / Rio Rancho area homes offered for sale has declined during each month of 2010. For townhouses and condominiums, the number of new listings, pending sales and closed sales increased over April 2009. The increases were by greater percentages than for detached homes. A home sold during April was on the market an average of 74 days. That was two days less than during March and 11 days less than April 2009. Average and median sales prices for detached homes held steady as compared to April 2009. For April the absorption rate was 7.9 months, the lowest of the year. This means that at the present sales pace, it would take 7.9 months to sell all the homes currently offered for sale. The April 2009 absorption rate was 9.3 months.  The West Side of Albuquerque and Rio Rancho still have the most inventory.

So you’re a 1^st Time Homebuyer who has played by all the rules, made sure you were under contract before April 30^th, and you’re scheduled to close before June 30^th of this year. By following the rules, you’ll be receiving the $8000 1^st Time Homebuyers’ Tax Credit. Everything should be perfect, right????  Not necessarily…

 A client of mine in the Albuquerque area went under contract March 3^rd to buy a Menaul Villas condo.  This condo is currently being built and is on track to be completed in time to close before June 30^th.  So what’s the problem?

 The Listing Broker for the Condo Development informed me yesterday about a potential glitch that has come up.  Sometime after our contract was written (around the April 30^th deadline for being under contract), the federal government changed the rules for condo phase approvals for FHA Mortgages.  This approval process used to take 2-3 weeks through FHA, but now they have decided this approval process will be handled by HUD (the Housing and Urban Development Dept.).  Now for the glitch…. The new process will take 4-6 weeks! How does this affect my client?  By doubling the approval time, my Client will most likely not close by June 30^th, losing the $8000 Tax Credit.

 I’ve decided to write NM Sen. Tom Udall to explain our dilemma. I am asking him to look in to this situation to see what can be done. My client has played by the rules, but the rules were changed in the middle of the game!  This doesn’t quite seem fair to me.  Interestingly enough, this only affects Buyers of condos.  If you were purchasing a Single Family Home, this change has no effect whatsoever.

 Why would I go to these lengths to help my Client?  As a Realtor who works specifically with Buyers in the Albuquerque/Rio Rancho area, I am an advocate for my Buyers.  I am looking out for their best interests. Many times potential Buyers will walk into a new Home Builder’s Model and write an offer with the person behind the desk  – who works for the Builder! So if you’re looking for a new home, take your Realtor with you.  That way you’ll have someone there on your side!

 I’ll keep you posted about my progress on this situation in my next blog!

    We came across this video today and just had to share… In May of 2007, Sony opened its Imageworks Animation Studio in Albuquerque to take advantage of state offered tax incentives and to participate in the burgeoning local film production industry. (Probably as a recruiting tool), this video was created to tell the story of the first 40 employees, who for the most part were moving to an unknown community.  The sentiments shared by the relocated animators, production staff and technicians mirror those of most people I meet who have moved here from out of state – they are pleasantly surprised and newly enthusiastic about their new home once they experience it. 

The film is 25 minutes long, but if you are considering relocating to the Albuquerque area, what’s 25 minutes of research vs the good information to be received?

(To play the clip full screen, click on the icon just to the right of the volume control.)

#2 in a Multi-Part Series…

When I first walk into a home that a client is thinking about selling, the previously listed items are just some of the first things I look at. The reason is that all of these things make a big impression on potential buyers when they walk through, and they are all cosmetic items. Without exception, if the condition of any of these items is not good to excellent, they should be brought up to that standard prior to the home being put on the market.

Let’s say that the carpet is in poor shape. Very often I get asked by the Seller if they shouldn’t just offer a carpet allowance, rather than pick the color and the type of new carpet for the potential Buyers. The answer is NO! If the carpet (and therefore the home) looks shabby, that assessment is applied by visitors to the entire home. Who wants to buy a shabby home? The result is that very few Buyers will consider buying that home. They cannot imagine what the home would be like with new carpet, so they just move on to the next one. If they DO make an offer, they reduce it by $10,000 AND take the $3,000 carpet allowance you offered. This is rarely a good thing for the Seller, who could have installed an inexpensive grade of new carpet (with good padding) for about $14/sq yd or about $2200 for an average 2000 sq ft home, saved the difference of $10,800, AND probably gotten their home sold a LOT faster.

After working in the Albuquerque / Rio Rancho area for over 12 years, we have developed a list of vendors that are well priced and provide quality products and services. They also show up (unlike a lot of contractors). Our wholesale flooring products supplier usually beats Home Depot or Lowes by 25-35% on identical products.  Putting the carpet on a credit card and paying $75/month until the house sells is a great way to cash flow getting the work done, and make another $10,000 on the home sale. 

The above scenario pretty much applies to anything cosmetic that might need doing in the home. $1000 spent making cosmetic repairs or improvements will usually return a $5000 increase in the sale price, and will DECREASE the time on market. When I advise a client about things to be done, that’s my goal – to get them a 5-to-1 return on any investment. Rarely is it to Seller’s advantage to offer their home “as is”, because they don’t want to deal with its flaws. The result of that decision is that the Buyer makes the 5-to-1 return on their improvements after buying the home at a heavily discounted price.

Occasionally I receive pushback from a Seller who doesn’t want to spend the money on a home they are leaving, or does not have the money to spend until the house sells. They may have also received advice from friends, relatives or even from other Realtors to the contrary of what I advise, but my advice is based upon the examination of hundreds of past home sales, and it works.

Next:  Examples of the effect of Preparing a Home For Sale…

#1 in a Multi-Part Series…

There are 3 pieces to the puzzle of consistently getting a home sold. Although our team works in the Greater Albuquerque / Rio Rancho NM Metro Area, I don’t believe that things are significantly different in any other market…

The first step is to Prepare the Home for Sale:

Almost every home I visit needs some kind of attention. Sellers need to take a look at their home with fresh eyes, as if they were a potential buyer making a ten minute visit to the home during a day of visits to a dozen similar homes with their Realtor. Look for the following items:

1. Examine the paint in every room: Are there scuffs on the walls from pets or children doing what they do? Are there areas where the paint is thin? Are there some dings at the corners which need patching and paint? Are there dents in the walls from a door knob where the doorstop fell off last year? Did someone touchup a wall with semi-gloss paint where the rest of the wall was flat? Are there splotches of colored wall paint on the white ceiling where the paint roller strayed too close? How carefully was the cut-in work done near the ceiling or at a corner where there’s a change of color? Do the baseboards need a fresh coat of paint to cover dings from vacuuming? What’s the condition of the trim paint around all exterior doors, especially the garage door?
2. Is there a clean bead of caulk around every sink, bathtub and shower pan in the house? What’s the condition of the counter grout or tub surround grout?
3. Has the backing on a bathroom mirror started to break down near the bottom edge? 
4. Does the carpet look clean and new throughout, or has it seen better days?
5.  Are the kitchen and bath cabinets dry and pasty-looking, or have they been recently cleaned and oiled to rejuvenate them?
6. How does the house smell when you first walk in? Has the family pet been marking territory in a corner of the living room?
7. If there is vinyl flooring in the kitchen and baths, are there cuts, stains, or dull areas in the flooring? If you have tile, what’s the condition of the grout?
8. Is the yard neat and trimmed? Is it landscaped at all?

Next:  What to do when you’ve answered the above questions …

On April 8, 2010, the Federal Housing and Urban Development Department (HUD) published a decision in the form of Mortgagee Letter 2010-14, wherein they are now accepting digital signatures (e-signatures) on real estate documents, including contracts. DocuSign Inc., a leader in the e-signature field has been leading the charge to get e-signatures accepted by more agencies and for more purposes, including broad usage by real estate brokers.

E-signatures have been legal in the U.S. for over 10 years now, but only recently have they become more commonly used for real estate sales.  The Mark and Sheila Team has been using the DocuSign e-signing system for just under 2 years now. (We were one of the first brokers in the Albuquerque / Rio Rancho Metro Area to adopt it.) Now, getting signatures on time-sensitive real estate sale contracts, disclosures and other contractual agreements is quick, easy and convenient for our clients – especially since about 40% of our clients are living out of the area while they are buying or selling a home with us.

The e-signing process is so quick and simple, anyone with an internet connection and an email account can affix their initials, signatures and dates to a document electronically in about half the time it takes to do so with a pen. A client of ours who used the system for the first time today to sign all the documents needed to list her home, actually said it was “fun” to use. I’ll take that reaction to one of our systems anytime….

Although about 98% of all mortgage lenders, banks, brokerages, title and relocation companies accept e-signatures on real estate sale documents, most lenders still want wet-ink signatures on paper forms to create notes and mortgages. Once they have them, what do most of these companies do with the signed paper documents? They scan them to electronic form. (Insert scratching of head here.) Then they file (lose) the papers in warehouses.

Several companies, including Stewart Title, offer a complete E-Signing Room system for closing of real estate transactions and paperless signing of notes and mortgages. Only a few mortgage lenders, and even fewer New Mexico County Recording offices are prepared to accept electronic filings at this time, but within a couple years we may be able to sell a house without cutting down 3 trees for each transaction.

Mortgage interest rates have been at historic lows for years now…. Well, prepare for them to climb for a while. Most consumers are not aware of it, but as part of the economic recovery in the financial market, the Federal Reserve has been purchasing mortgage-backed securities for about a year.  The sub 5% rates we have enjoyed for the past year have been artificially held down by this $1.25 Trillion investment. If market forces had been at work, rates would have been much higher. That program by the Fed has now ended, and every indication points to a steady, protracted rise in mortgage rates.

30 year fixed rates have climbed almost a half point in just over 4 months, and are currently about 5.3%. Projections for the next couple years by the Mortgage Bankers Association predict rates at 5.8% by the end of 2010, 6.3% by the end of 2011, and 6.6% by late 2012.  Other financial authorities are proffering slightly different estimates, but pretty much all of them see significant increases coming.

The moderate recovery in the real estate market may stall or possibly even reverse somewhat as rates increase. By one estimate, for every 1 point increase in  mortgage rates, 1 Million potential Buyers are priced out of the market. This could mean higher inventories, longer time on market, and additional downward pressure on prices.  For those thinking that they should wait to buy until prices decline further (unless they are paying cash), the increase in interest rates will more than offset any savings in purchase price.  If you’re thinking about a home purchase in the Albuquerque / Rio Rancho Metro area and want to know the specific numbers, give us a call and we’ll do the math for you.