Smart Investors KNOW THEIR MARKET !!! 3 RD Quarter 2009 R.E. Sales Market Update.

Smart Investors KNOW THEIR MARKET !!!

3RD Quarter 2009R.E. Sales Market Update

WHY IS IT IMPORTANT …to Know Your Market?

• Know what to offer• Know what to sell for• Know what rent to charge• Know your cash flow• Have the proper financing available• Identify Opportunities Faster than Your

Competition! • Anticipate change – be prepared for it• Understand a winning deal vs. losing deal• Make better, faster decisions that make

you money

Steps to Knowing Your Market

• Step #1 – LOCATION• Google Maps - a snapshot view of street and

neighborhood.• Step #2 - COMPS

• MLS and begin researching comps • - compare similar homes in square footage, lot size, # of

bedrooms, style of property, distance of my subject house - a few blocks at most.

• - I select all active, pending, and sold listings that match.

• - Scrutinize all Sold listings - 6 months. (dom, s/a, etc.)• Step #3 – VIEW THE COMPETITION

• visit the properties currently on the market to gauge the competition and see with my own eyeballs (not an MLS photo) View rentals, sales or whatever your goal is

IS THIS ENOUGH? • NO - Next, I have to look at trends.

Steps to Knowing Your Market

Step # 4 Identify Trends for Your Target Market

Step # 5. Know the Good Pockets Step #6 Know How to Interpret

the Sales Data

Trends for Our Market – 2001-09

• 2001 – 2003• Normal, stable growth

• 2004 – 2006• Growth explosion - seller’s market

• Home values increased, DOM short, shortage of inventory, increased competition, more buyers than sellers, easily available financing programs

• 2006-2009• Later 2006 – decline started• DOM higher, % of homes sold lower, Avg.

Sale Price Lower – BUT….• Averaged over last 8 years in the sales cycle

– there is still healthy growth overall in avg. sale price of

• Market Correction

8 Year Sales Trends – 5 Counties

County 2001 2009 % Change

Phila 169,234 194,435 13% 1.6% Yr. Inc.Delco 189,057 215,802 12.5% 1.5% Yr. Inc.Montco 201,410 242,869 17% 1.1% Yr. Inc.Bucks 206,848 252,074 18% 2.25% Yr. Inc.Chester 221,8089 258,146 16% 2%

Yr. Inc. ____________________________________

2008-09 Market Trends – Montgomery

Year Listed Units Sold

Listed Avg

Sold Avg DOM

July ‘08 1001 629 252,059 250,905 64

Aug. ‘08 863 524 250,961 255,521 65

Sept. ‘08 925 516 256,388 245,529 69

Total 2789 1739 /62%

253,155 250,886 /99%

66

Year Listed Units Sold

Listed Avg

Sold Avg DOM

July ‘09 890 647 248,338 245,659 80

Aug. ‘09 850 642 246.829 242,519 74

Sept. ‘09 927 566 256,360 244,323 78Total 2667 1845

/69%250,645 244,174/9

7%77

SUMMARY

- 5.5% +6% -1% -3% +16%

2008-09 Market Trends – Delaware Cty

Year Listed Units Sold

Listed Avg

Sold Avg DOM

July ‘08

626 354 219,638 228,188 55

Aug. ‘08

498 366 210,677 223,354 64

Sept. ‘08

634 303 217,429 217,254 71

Total 1758 1023/ 58%

216,303 223,220/103%

63Year Listed Units

SoldListed Avg

Sold Avg DOM

July ‘09

525 394 214,233 218,603 84

Aug. ‘09

485 378 212,406 214,612 76

Sept. 09’

609 305 223,630 244,323 73

Total 1619 1092 / 67%

217,220 218,824/100.4%

78SUMMARY

- 8% +6.8% +.004% -2% +20%

2008-09 Market Trends – Philadelphia

Year Listed

Units Sold

Listed Avg

Sold Avg DOM

1550 756 197,231 202,717 63

Aug. ‘08 1333 716 192,221 198,957 69

Sept. ‘08 1495 756 206,658 188,718 66

Total 4378 2104 /48%

198,925

197,232 /99%

66

Year Listed

Units Sold

Listed Avg

Sold Avg DOM

July ‘09 1184 737 201,036 199,342 75

Aug. ‘09 1160 748 194,327 197,702 75

Sept. ‘09 1356 632 198,959 193,486 74Total 3700 2117

/57%198,172

197,014 /99.4%

75

SUMMARY - 14.5%

+.006% -.004% -.002% +13.5%

2008-09 Market Trends – Bucks Cty.

Year Listed

Units Sold

Listed Avg

Sold Avg DOM

July ‘08 689 430 270,313

266,135 60

Aug. ‘08 655 385 257,147

260,042 62

Sept. ‘08 611 333 261,764

252,842 68

Total 1955 1148 /58%

263,230

260,236 /98.8%

63

Year Listed

Units Sold Listed Avg

Sold Avg DOM

July ‘09 650 459 264,033

260,772 72

Aug. ‘09 529 433 261,799

250,140 77

Sept. ‘09 636 394 268,026

249,312 83

Total 1815

1286/70.8%

264,781

253,681 /95.8%

77SUMMARY - 8% +12% -.004% - 3% +22%

2008-09 Market Trends – Chester Cty.

Year Listed Units Sold

Listed Avg Sold Avg DOM

July ‘08 533 363 266,626 265,298 69

Aug. ‘08 435 342 263,400 269,224 75

Sept. ‘08 557 286 273,101 262,296 74

Total 1525 991 /65%

268,071 265,787 /99%

73

Year Listed Units Sold

Listed Avg

Sold Avg DOM

July ‘09 650 459 264,033 260,772 72

Aug. ‘09 529 433 261,799 250,140 77

Sept. ‘09 636 394 268,026 249,312 83Total 1815 1286

/70%264,781

253,681 /95.8%

77

SUMMARY +19% +30% -2% - 5% +5%

From the TrenchesObservations from Our Local

Experts

• Single family homes in Delco in OKschools are selling well. Not at their top $$ but 95%

• Commercial is in the tank - you need deep pockets to buy and hold today

• High end over FHA limits - hard to get buyers, $500-$800K. They need much more cash due to no PMI available

• Rentals under $60,000 in OK areas are selling slowly

• Middle-level fixers in good schools are also selling if they are discounted enough.

Local Expert: Tom Noden• Del. Cty.: Short sales are not getting shown by

regular agents because they do not want to wait for their commission and the buyers do not understand the deal.

• Chester Cty: Homes with longer commutes are slow to sell and are very off their high $$, about 35% off 

• Retail buyers are picky about the quality of homes and still offer low bids. Then wonder why they do not get accepted. Nice homes in good schools are still great flips. A nice flip is a QUALITY rehab, no shortcuts, spend extra.

• The margins are bigger in the off market as the purchase price is far lower even if the sale price is down a bit.

• This is a  great time to flip homes and to buy better quality rentals then you would normally buy.

Local Expert: Raymond LeMire

• Qualified buyers do exist. However, all (that I have seen) are FHA buyers.

• There is still lots of activity in the market – despite all the negative news, people continue to sell, buy and rent houses.

• I have rented several houses in the past couple of months. All advertised on Craig’s List. All had had multiple qualified applicants - my ads showed rehabbed houses in beautiful condition.

Local Expert: Raymond Lemire• There is a lot of inventory for

buyers to choose from. Your house needs to stand out from the crowd.

• There will continue to be a lot of foreclosure activity next year as adjustable rate loans continue to adjust. The first major wave of Alt A loan defaults will start early 2010. (no-doc loans)

Local Expert: Dennis Cline

• The single family market will tank if they do not extend the $8,000 credit. 

• We are in for another price adjustment if the government decides to get their hands out of the foreclosure market.  There are thousands of foreclosures that are sitting at banks that have not hit the sheriff sales due to government intervention.  These are going to have to go somewhere or the banks are going to go under.  Either the government is going to have to bail out the banks, again or they are going to have to let the banks foreclose on these assets and sell them.  It is going to come crashing down - the only question in my mind is when.

Local Expert: Dennis Cline

• FHA is considering a program to allow investors to buy houses that are in foreclosure, lend them the money to buy and fix up with the intent that these investors would either rent or sell the house when finished.  May be a new program or a revamp of the 203K program.

• This is the best market for the savvy real estate investor.  Great deals, great financing, motivated sellers - the best time to be a real estate investor is in a down market.  However this takes a whole new skill set to understand the market and the techniques that are going to work. 

Great Market for Flipping Retail

• 7405 Woodbine Ave• Under Contract: 2

Weeks – Mult.Offers• $164,900

Great Market for Flipping Retail

• 1262 Pierce St.• Sold 1 Month Before

Rehab Complete• Full Price:

$275,000

Great Market for Flipping Retail

• 1230 Juniper St.

• Sold in 2 Wks.• Multiple Offers• $274,900

Great Market for Flipping Retail

• 342 Tree St.• Sold in 1 week • Multiple Offers• $171,000

Current OPPORTUNITIES

• Foreclosures• Short Sales• Sheriff Sales• Subject To• GREAT time for investors to buy

bargains• GREAT time to buy and hold

• Adjust your rents/cash flow for this market

• GREAT time for buying bargains and reselling

• GREAT time for “creative financing” with motivated sellers

5 Secret Weapons to Adapt &

Prosper in this Fickle Market

1. Know your market! • DIG Article – June – Know Your Market! • Micro level & macro level

2. Adapt your marketing• Message – media – consistency • Develop your U.S.P (branding, personal,

warm)

3. Creatively develop your financial strategy• Owner financing, LOC’s, Cash, IRA’s,

private funding, work on your 5 C’s to improve your mortgage desirability, get to know your local bankers, hard money, creative financing, partnering, wholesaling, etc.

5 Secret Weapons to Adapt &

Prosper in this Fickle Market

4. Develop Your Expertise• Do what you know, learn

something new, or get a knowledge partner or team

5. Experiment• Be innovative, be willing to try

new things and perhaps discover a new niche!

Choose Your Strategy! • Asleep at the Wheel? Miss

Your Target!

Choose Your Strategy! • Expect to be Successful• Have Confidence • Believe in Yourself• Pitch ‘Till the Game is Over• Stay Focused• Trust in Your Team • Use Your Strengths, Skills &

Knowledge• Know Your Game!• Execute Like A Pro

Go Phillies!Go Investors!

Go Buy A House!Thank You DIG Members !!!!!

Kathy GilmoreInvestorRealtor

Business Coach610-212-4330

[email protected]