While experts run the gamut in their outlook for real estate, sound business practices supercede futile attempts to time the market.

Are we there yet?

With the summer vacation season in full swing, most of us in real estate are asking our own version of this signature refrain of the family road trip. In our case, it’s a question of, ‘Have we hit the floor?’

When can we start looking forward to shrinking inventories, stable prices and an upward trend in the number of transactions?

While much of the media is still charging ahead with dire forecasts for real estate, a recent spate of experts are claiming that a housing-market recovery is imminent. Even though this is the news that we’ve been waiting to hear, we need to take it with a grain of salt. As always, the real story is much more complicated and  lies somewhere within the spectrum of the doom and gloom and the upbeat projections.

Many of you have recently asked me for my thoughts on a recent Wall Street Journal commentary entitled, “The Housing Crisis is Over” by Cyril Moulle-Berteaux, managing partner of Traxis Partners LP, a hedge fund firm based in New York. When I read the claim in the article that, “It is very likely that April 2008 will mark the bottom of  the U.S. housing market. Yes, the housing market is bottoming right now,” I suspected

that there might be a need to look beneath the surface of his claims. Noting that new home sales are down 63 percent and housing starts have fallen by more than 50 percent from their July 2005 peak; and that housing starts in 2008 will hit their lowest level ever, Moulle-Berteaux emphasized that the same factor that sparked the housing decline is soon to reverse it: affordability.

He explained that “by 2005 and 2006, the average monthly income required to service a conforming mortgage on the average home purchased had reached 25 percent. For first-time homebuyers that figure had climbed to 37 percent.”

But since then, according to Moulle-Berteaux, “home prices have fallen 10 percent to 15 percent, while incomes have kept growing (albeit more slowly recently) and interest rates have come down 70 basis points from their highs.” Moulle-Berteaux’s conclusion: “… homes on average are back to being as affordable as during the best of times in the 1990s – down to 19 percent of income for the average home buyer and 31 percent of income for the first-time home buyer.”

Affordability in March 2008, is actually at 19 percent, back to where it was in early 2004, but one of the key factors affecting affordability in the current market is low interest rates. If inflation increases, in the near future, interest rates could likely go up, which could counter the current direction in affordability.

Another factor that Moulle-Berteaux points to as a sign of recovery is the recent decline in new home inventories – from a high of 598,000 in July 2006, to 482,000 at the end of March 2008. Conceding that the current new- home inventory is still at a 25-year high, and equivalent to an 11- month supply, he argues that current levels are similar to those seen at the end of previous housing market downturns in 1974, 1982 and 1991, which in all three instances were followed by a slowing in home-price declines within the next six months. As new home construction begins to undershoot new home sales, which Moulle-Berteaux anticipates is soon to occur at a rate of 50,000 to 100,000 annually, he contends that inventories will drop to 400,000 – or a seven month’s supply – by the end of 2008.

While he makes a seemingly compelling argument, we should be careful not to accept such analyses at face value. Moulle-Berteaux does not always paint the entire picture and omits critical information, such as the fact that existing home inventories – which account for a far greater portion of the housing market – are at their highest levels since September 1981.

That being said, Moulle-Berteaux is clearly not alone in his assertions that the housing market is showing signs of a rebound. Among those noting positive trends is Professor Karl Case of Wellesley College in Wellesley, Mass. Case looked at the past three housing downturns in 1991, 1982 and 1975, and noticed that the market started to clear when housing starts dropped below the 1 million mark – as they did in March of 2008.

At the same time, the National Association of REALTORS® sees signs of

recovery for reasons that include:

•  Fannie Mae and Freddie Mac have announced plans to increase funds available   for home loans.
• The use of FHA loans is on the rise.
• Pending home sales are on the rise in areas where affordability has increased.

In a further effort to stimulate the housing market, Fannie Mae announced that starting June 1, 2008, it will accept down payments as low as 3 percent for single-family, primary residences on loans it purchases.

But despite its initiatives to jumpstart real estate, Fannie Mae is not anticipating a housing recovery to take hold until 2010. Addressing business journalists this Spring, Daniel Mudd, president and chief executive of Fannie May said, “Forecasting the bottom of the housing slump is a tricky business, with the many conflicting redictions by economists as proof.”

We couldn’t agree more.

Clearly, the housing market is a complicated business that does not rise and fall based on one or two factors. And even though real estate is cyclical, we need to avoid the expectation that prescribed patterns or trends are necessarily at play. The current downturn is quite different from the housing recessions of 1991, 1982 and 1975 –due

primarily to the tightening of the credit markets following the fallout of the sub-prime loan market, as well as the historically high rates of foreclosures. A striking similarity, however, between the current housing market and previous downturns in the housing cycle is the dramatic increase in oil prices.

It’s perfectly understandable to want to find the definitive forecast for residential real estate and to seek a return to the heydays of housing, but we have little to gain in latching on to any particular forecast or trying to time the market. We have everything to gain, however, by managing expenses in order to survive, doing whatever it takes to generate the leads that we need to thrive, seizing opportunities to build our share of the current market, and emphasizing to clients who are trying to sort through many conflicting messages that real estate is essentially a local business.

What’s happening within your local markets is all that’s relevant. You are our

local market’s real estate expert.

Written by Gary Keller and Posted on Agent Mountain.

Agents at Keller Williams Realty Madison West and Madison Crossroads were beaming with pride when Real Estate Magazine released its 20^th Annual Power Broker Report in its April issue.

The Madison offices, along with its sister office in Wausau, made the list of the Top 500 real estate offices in the United States. The three offices were ranked 316th for transactions and 361st in the sales rankings out of 887 companies who were participated in the survey. 

“We are extremely excited to make the list,” said Darren Kittleson, Operating Principal of the three offices. “Those rankings may not seem like much at first glance but when you take into account how many thousands of real estate offices there are in the United States, this is quite an honor for us.

“Although we one of the youngest companies to come into the market, our sales volume and sold units has climbed steadily over the past 6 years” states Kittleson.

“We always tell people we are one of the best companies in the local area and this helps to validate what we tell everyone,” said Brett Boettge, Team Leader at the Madison Crossroads office. “Our education, training, KW Systems and culture have helped our agents stay productive even with the recent downturn in the market.” 

“Our agents work hard for their clients and have embraced the tools that the office has to offer,” adds Jessica Fox, Team Leader at the Madison West office. “That is why we continue to stay highly profitable when other offices are merging with each other or closing down.” 

“We are also excited that they picked us one of the companies to watch,” said Fox. “Keller Williams has always been one of the most innovative national real estate companies and has been called the “Microsoft of Real Estate” because of its unique model. We follow the model and that has helped us stay competitive in this market.” 

The annual rankings are based on results garnered from a survey by RISMedia, publisher of Real Estate Magazine.  Based on these results, Kittleson has been invited to speak at the RISMedia Annual Power Broker Forum in Colorado this July.

“They’ve asked me to speak on the topic of maintaining profitability in a downturn market” states Kittleson.  “Our rise in the rankings from 499 in 2006 to 316 in 2007 without any company mergers or acquisitions has been an indicator that what we are doing is working.  I’m excited about the opportunity to share this with top industry leaders in July.”

The magazine ranks residential brokerage firms according to closed transaction numbers and closed sales volume. All sales and transaction volume comes directly from brokerages, and is verified and substantiated by external sources-in most cases, accounting firms-prior to publication. 

Keller Williams has an entire support staff tracking the fast paced technology industry  and updating their market centers with the latest technology so that their agents can focus on what they do best, service their clients. 

Keller Williams has been created for top agents, by top agents. The Keller Williams model is dedicated to creating careers worth having, businesses worth owning and lives worth living. 

For more information on Keller Williams Realty, please call Darren Kittleson 608-662-9501

Another blog by Brett Boettge…. Short and Sweet for a change…

I have lived in a great condo on Madison’s East side for roughly 3 years now. Every single day whether I was coming to, or leaving my condo the front door gave this evil, haunted house like creak. I put up with this creak for three years, it was shrill, annoying and most of all the easiest fix in the world.

About three weeks ago while visiting my SUPER BIG BOX store, I grabbed a bottle of WD-40 in a very purposeful, almost proud manner. I raced home and sprayed the lubricant generously over all three hinges, half of my wall, and a good portion on the floor. After swinging the door back and forth just twice the creak was gone. At that point I didn’t know how great of an impact that creak had on my life. It constantly taunted me every time I went through the door FOR THREE YEARS.

So this morning, three weeks later I left for my morning coffee and smiled as I exited my condo in peace & quiet. It wasn’t until this morning I realized just how important it is to take care of the little things in life. As insignificant as it seems, once taken care of it can make all of the difference in your day. What is your creaky door? What are you going to do about it TODAY?

Yours in success….

Brett Boettge

Another real estate blog by Brett Boettge

Are you having the year of your dreams? Buyers calling your mobile phone every hour saying, “Hi, I’m Mr. Buyer, I’d like to write an offer on 123 Spring Street! Let’s cut to the chase, I’m pre-approved with a 780 credit score and 19% debt to income. I don’t have a house to sell, I’d like to close in two weeks, and I’ve researched buyer representation and I would like you to be agent.” Probably not! The phone rings again.. “Hi, I’m Mr. Seller, would you list my house? We’ll increase your normal commission by 2% and I know times are tough so I’ll pay for marketing up front. Also, I need to move in 30 days so let’s make sure we are the lowest priced property in the neighborhood by 10%. Oh and by the way here is the name of someone I talked to at a PTA meeting that seemed very interested in our property.” Again probably not…..

The truth is the market is tough which is why we need to be doing more of what’s important than ever before. What am I talking about? LEAD GENERATION! Yes those dreaded words, it is so scary to have to talk to people I know. The bottom line is you need to talk to twice the people you did last year to have the same results you had last year. So do it, put your head down, and just DO IT!

I found myself kayaking the mighty Wisconsin River on Memorial Day, and had a blast coasting downstream without a care and moving at a great pace, hardly paddling a bit. It was time to turn around and what did I find? It was TOUGH! I was putting so much effort forth, and as I looked from the middle of the river to shore, it appeared as if I was standing still. I paddled harder, and harder, still when I looked at the shore in the distance I wasn’t getting anywhere. It didn’t make sense, I knew if I was paddling I would be moving but I was mentally beat. I stuck with the paddling and noticed that when I focused on things closer to me than shore, I could tell I was moving forward. That was the turning point for me, on the verge of letting the current flush me downstream, I focused on a series of short term goals to keep me focused and in less than 1 hour I was home.

Why is this story relevant? LEAD GENERATION is your paddling, CLOSING is your HOME! When it feels like you are not getting anywhere, focus on a series of small goals. Downstream was our phenomenal market of the previous ten years, now we are all fighting the current to get back where we were before. Have faith in your paddling, it will get you to the closing table in the end…. What small goals can you focus on when lead generating? Maybe it is the call itself….. Maybe an appointment with a long time friend to ask for a referral… Maybe it is an appointment…. Regardless, my point in this market, is to stay the course, and celebrate even the smallest successes along the way.

Sincerely,

Brett Boettge

Team Leader – KW Madison Crossroads

Thanks to a newly formed business relationship between eAgentC, the technology arm of Keller Williams Realty, and Zillow, all Keller Williams Realty listings are now searchable on the popular search engine, increasing our agents’ and home sellers’ exposure to potential buyers.

Each listing Keller Williams Realty feeds to Zillow includes a description of the property with multiple photos and contact information for the listing agent. Also included are links back to the Keller Williams Website where Zillow users can find more information and connect with a Keller Williams associate to guide them through the home buying and selling process. 

“We know that over 80% of all homebuyer’s use the internet for their real estate searches” states Keller Williams Realty Madison West Team Leader, Jessica Fox.  “This increased exposure only means our home seller’s are increasing their chances of getting their home sold in a challenging market.”

Keller Williams Madison’s offices increased online exposure seems to be working.  The company is posting a 13% increase in sales through April 2008 vs. the same period of time in 2007.  According to South Central Wisconsin Multiple Listing Service (SCWMLS) the overall real estate market is down nearly 30% in sold units.

“The constant training of our agents as well as keeping on the cutting edge of all the technology tools is truly driving our success in early 2008” states Madison Crossroads Team Leader, Brett Boettge. 

Keller Williams Realty Madison has 2 locations with over 200 real estate agents.  The company started operations in the greater Madison area in January 2003. 

Earlier this week I was in Austin, TX attending a Keller Williams Realty Mastermind Event.  On Monday night I made a reservation at one of my favorite sushi restaurants in the country which is located in Austin.  This restaurant is called “Kenichi“.

When I called for the reservation they person on the phone asked for a contact number for me.  I gave her my cell phone number.  In the back of my mind I was thinking they would be calling me if I didn’t show for the reservation.

We got there on time, had an awesome meal, paid the check and walked back to my hotel.

The next day I received a phone call from Kenichi.  The call thanked me for dining with them and asked that I call them with any comments or suggestions on how to make the dining experience even better.   When the call came in I was in a meeting so it went to voicemail.  It was nice to listen to this message and then I realized I had received the same call from Kenichi last summer when I was in Austin and hosted a large group at their restaurant.  I thought, at the time, the call was made because we spent over $1000 with the restaurant that night.  Now I realize they call every diner they have. 

What awesome customer service.

So if you ever find yourself in Austin, TX and you love great sushi, make Kenichi a dinner spot.  It’s located in the Warehouse District in downtown Austin and is definitely worth the trip.

Think about the power of this simple phone call in your business as well.  Do you call your buyer a few days after closing to see how everything is going or are you afraid of what you might hear?  Think of how that simple call can truly build your business and your brand.

Many of you have ventured into the world of blogging.  Welcome!

Blogging can create many different outcomes.  It can be fun.  It can be an outlet for a frustrated writer.  It can be a business building tool.  The reasons for blogging are virtually endless.

Today I want to talk about your blog as a business building tool.  Much like your website, your blog isn’t any good unless people not only find it, but come back to read your posts on a regular basis.  Here are some thoughts on how to accomplish that:

1)  Promote your blog on all of your printed material.  Everything from you business cards, to your stationary to your e-mail signature should include a link and directions to find your blog.

2)  Be conversational.  Part of the fun of blogging is that you can write as if you were speaking to your readers directly.  One way to think of this is the write as if you’re talking directly to a client or a friend.

3)  Pick a specialty.  Focus your blog on a narrower area of interest not the larger market in general.  Many of you have heard me say, narrow your focus.  This is true in blogs as well as your real estate practice in general.  Pick a specific demographic to write to or a geographic area. 

4)  Allow Syndication.  Synda what?  Through RSS or “really simple syndication” you can distribute content across the web and to individuals who subscribe to receive it.  I use Google Reader to capture all syndicated blog post I have interest in.  It’s free and easy to use.  Try it out at www.google.com/reader.  Within most blog formats you can set up syndication with just a few simple steps.  Make sure you take the steps to complete this.

5)  Be Opinionated.  OK for some of you that might be really simple, for others not so simple.  Don’t be afraid to share your thoughts and opinion on your sight.  Your opinions get word of mouth going, thus increasing your blog visitors.

6)  Don’t talk about your listings.  This is a tough one.  I’ve actually created a seperate blogsite to post our listings (http://danecountyrealestate.blogspot.com/) vs. incorporating them into my regular blog (www.centralmadisonliving.com) Consumers have many places to go to get listing information.  They want to learn about YOU on your blogsite.

7)  Post Regularly. OK we all struggle with that four letter work T I M E.  If you’re committing to make this a part of your business development, time block it into you schedule just like you time-block your lead generation, customer follow up, etc.. Some suggest posting daily to keep interest high.  The good news, short posts can be very effective.  No need to write a novel each time.

8)  Comment on other blogs.  Read other real estate blogs and leave comments on their postings.  Blogging is a dialogue not a monologue.  The value is the conversation.  In addition, most blog platforms allow the comment poster to leave a link to their blogsite as well.  Another chance to bring a reader to you.

9)  Register with Blog directories.  That way people searching for real estate blogs can find you.  Technorati is perhaps the best known.

Have fun!

Another blog for Real Estate Professionals by Brett Boettge (Greater Madison, WI & Dane County)…

If I had a home to sell, I would list it TODAY! Is that the advice that most are giving? Probably not! It is my advice to Mr. and Mrs. Seller after scrutinizing pages and pages of market data for our market in the first quarter of 2008.

Here it is “Madison’s Bottom Line” Market Watch 1st Quarter 2008 v.s. 2007
MADISON MARKET
2007 1st quarter = 538 Sales
2008 1st quarter = 335 Sales
-37.73%
City of Sun Prairie (D45)
2007 1st quarter = 87 Sales
2008 1st quarter = 50 Sales
-46.25%
Madison East
2007 1st quarter = 234 Sales
2008 1st quarter = 143 Sales
-38.89%

Now why would I share this with you? More negative chatter about the real estate market is the last thing that we need! Well let me tell you, there is a huge positive to this data and its all about the buyers! See we know for a fact that we won’t finish 2008 down by 40%. A more realistic number would be similar to 2007, roughly 7.2% down overall. What does that mean to sellers?

It’s time to play catch up with our local market! Seriously, consumer confidence, the tightening of the mortgage industry, foreclosures, and even more detrimental to our first quarter was our 100″+ record snowfall this winter. There is so much buyer demand that is sitting behind this dam of unique circumstances, I believe that phenomenal days are ahead. Based on what I have observed in recent showing activity, phenomenal weather, loosened Government loan limits, and increasing consumer confidence, as well as National Association of REALTORS predictions, May, June and July will be some of the strongest months we have seen since the market shift.

As a consumer, now is the time to get you property listed with a Real Estate Professional, and anyone on my team would be happy to serve you. As a real estate professional, if you are waiting for the market to get better, the market will pass you by. Get out there today, be a professional, and help your prospects make an informed decision.

Let me know your thoughts on this, I would love to discuss this MINI-BOOM for the Greater Madison, WI Real Estate Market in greater detail with you.

Sincerely,
Brett Boettge
Team Leader | CEO
Keller Williams Realty Madison Crossroads

As those of us who live here already know, Madison is a great place to live.  In spite of having a brutal winter from time to time (100+” of snow this season) there are many attributes of Madison that continue to get us on “Top Places to Live” lists.

The latest is from CNN Money naming Madison #46 in the “Top 100 Places to Live and Launch”.

Check out the accolades here.

Another late night real estate blog by Brett Boettge….

To truly understand Value Range Pricing (VRP) we first need to understand list price. What do you think list price is? I’m sure if you are an agent reading this, list price in your mind means NOTHING. What does list price mean to your sellers? Try to tell them that list price means nothing…. that’s like telling George W. there are no WMD’s in Iraq.. clearly not convinced. This is the first challenge, and the most difficult.

You list a property and an offer comes in at list price or even above…. does your client have to accept the offer? NO NO NO NO!!! DRILL THIS INTO THEIR HEAD. “I would rather see you reject 10 offers than not receive any.” Analogy is the MOST powerful way to make a point, and let’s face it, Value Range Pricing is marketing tool to open up your sellers, and attract more buyers.  Ask your seller which store they would visit based on the following ad’s….”Brand X 42 inch flat panel television $799.00+” or “Brand X 42 inch flat panel television $1299.00″. This is marketing guys.. COME ON!!! This is why clients pay you thousands of dollars to MARKET a home. Seriously, do you think that your local Super Big Box Store would market items in the Sunday ads in a value range if they could? Imagine if they could….. “Brand X 42 inch flat panel television $799.00+” (once you get here, we will let you know what is the acceptable price between $799.00 and $1299.00). YOU are the store, and your listings are your products, and you CAN market this way so do it!

 Another great analogy is cars….. Cars can’t be advertised in a Value Range, so what do they do to compensate…. “2006 Pontiac Grand Prix, starting at $9,999″ What they did was discount one of the 2006 Grand Prix’s to $9,999 to draw in the most possible buyers…. by the time you get there, the advertised car is conveniently sold. At that point you are already on the lot, and I can show some similar models and more than likely close you on a $16,999 Grand Prix. Now think about this…… had I advertised at $16,999 right out of the gate, would you have showed up? How is this any different than your clients home?? Get the buyers on the lot, get them sold, or get them into a similar model!

If your client still is not convinced….. What is list price? Have you ever purchased anything on Ebay, or in an auction setting? Most have, and if not this analogy still works well by printing the screens, or taking a client to Ebay. Search for a specific item, look at the items that started at $1.00, and compare that to the items listed at “Retail” or “Market Value”. They are the same products however those that started at $1.00 have 16 Bids and are in the last 20 minutes…. last ten minutes…. last 52 seconds and for no other reason than human nature, buyers bid over the “Retail” or “Market Value”. Now the item that started out at “Retail” is still sitting there.. Have you ever payed more for an item on Ebay or in a bidding war? That is the kind of activity you want for your clients, and you get it with Value Range Pricing.

Now you have done it, your client wants to list, but they wonder why every property doesn’t start at $1.00. GREAT JOB! At this point you explain to them, that you don’t just want a buyer, you want buyers that can afford the property. You don’t want them to go through the hassle of leaving their home for a showing for a buyer that can’t even afford their home. We know that if we take “Market Value” and create a value range of 10% below that, we encompass the majority of buyers that are ready, willing, and able to purchase their home.

If you master this concept, you have mastered Real Estate marketing. The MLS is still the best tool out there, and amongst the seemingly endless inventory, a well priced property stands out far better than an overpriced property with dancing bears in front of it. If you are tired of LISTING, and not SELLING, this is the way! Look at your store, examine your products, talk to your clients and the money will come. Have a terrific evening!

Brett Boettge
TL-CEO
Keller Williams Realty Madison Crossroads
608.661.7000