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This Man’s To Blame For Slow Lake Martin Market

The Lake Martin real estate market has slowed way down – it’s no longer a sellers’ market.  Who is responsible?

lake martin real estate property supply demandOne man – Adam Smith.

In 1776 Smith established himself as one of the most influential economic philosophers when he penned Wealth Of Nations.  He described the natural economic forces that have existed since the caveman wanted to trade his neighbor one rock for two bones.  OK, so maybe he’s not responsible for the slowdown, but he was the man who so eloquently described what is  – Supply and Demand.

That’s right – the Lake Martin real estate market has slowed down because of simple supply and demand.  Not because of the drought.  Not because of the Army Corps of Engineers, not Alabama Power, not Russell Lands.  Mr. Smith’s omnipresent Invisible Hand has suppressed the number of waterfront closings.  In the 12 months before August 1, 2005, there were 386 waterfront closings.  In the 12 months before August 1, 2006, there were 346.  In the last 12 months, that number is down to 226.  Looking back, the summer of ‘05 was the peak.  Face it.  There are fewer waterfront closings this summer.  But why?  In a free market, the more accurate question to ask is always ..

 

What has affected supply and demand?

 

 SUPPLY:

Easy explanation here.  Waterfront property has been on an unprecedented run since 1999.  Prices have skyrocketed.  Whether we’re talking waterfront property or widgets, more people are willing to sell at higher prices.  While supply will always be fixed (Lake Martin ain’t gettin no bigger), the quantity supplied this summer is higher than in 2005.  At the peak of the sellers’ market in 2005, there were only 126 waterfront properties for sale.  Right now we have 603. Per se, that might not contribute to a slowdown, but when taken in conjunction with…..


DEMAND:

As inseparable as yin and yang, you must consider both supply and demand in any free market evaluation.  lake martin real estate waterfront So where are all the Lake Martin buyers?  Anyone could tell you that they must be scared away by the increase in prices since 1999, but is it a true downward demand shift?  Are fewer buyers interested in Lake martin waterfront property now?  Or is it simply a decrease in quantity demanded

Has the drought, low lake levels, and high prices removed buyers from the market?  Is that why there is a surplus?  I think not.  Anecdotally, I am talking to more buyers now than I was in 2005.  Buyers that I talk to are not phased by the low lake level.  They understand that it is a 50 year anomaly.  Sure, I think that the drought has affected it some, by removing potential buyers out of the pipeline before they ever talk to realtors.  But I don’t think it has affected demand that much.  So I don’t think we’re experiencing a demand shift.

I think the Lake Martin buyers are still out there.  There are still plenty of folks who want waterfront real estate, but they want it at lower prices.  Case in point: the condo auction at Harbor Pointe.  20 waterfront condos were sold in three hours, when in the previous 12 months, only 34 had sold on all of Lake Martin.  Why?  Price.  The exact same condos that were listed on the mls at $420,000 sold at the auction for about $250,000.  This jives with my anecdotal evidence – from talking with buyers.  Plenty of people want to own Lake Martin real estate, but not at a crazy price.  This extends across all market segments – lots, condos, deeded lot homes, and leased lot homes. 

 

SO WHAT?

 

lake martin real estate lisiting agentSo what does this mean?  It means that buyers can exert their influence more strongly, by seeking out better values with research.  Don’t expect prices to return to the 1990s.  But buyers can find decent buys if they know how to research and if they let a good realtor help themClick here if you need help.

Lake Martin waterfront sellers need to get realistic.  Don’t price things based on what you wish you could get – check the numbers on sold comparables.  Hire a good realtor (read: me) that will aggressively market your property – and it will still sell, trust me

 

Related Posts:
Proof Of End Of Selllers’ Market On Lake Martin

Proof Of End Of Sellers’ Market On Lake Martin

lake martin property sellers What is the real estate market like on Lake Martin right now?  I own waterfront property, should I sell?  I want to buy Lake Martin waterfront property, but is it still a crazy market?

These are questions I hear constantly.  Both potential buyers and sellers of Lake Martin real estate want to know if changing conditions will benefit them.  To be sure, the water is way down, and so are the numbers of real estate transactions.  I will cover cause and effect in a later post.  But for now, let’s just focus on one question:

 

Is Lake Martin still a sellers’ market?

If you talk to 10 people, you get 10 different answers, ranging from Pollyanna agents who still think it’s a sellers’ market to Chicken Little bubble barkers who act like property owners are literally throwing money into Lake Martin each time the water drops an inch.  What’s the truth?  When I approach the question, I treat it like every other issue about Lake Martin real estate:

1.   Break it down by market segments.  What are you talking about, here?  Waterfront or non-waterfront?  Condos? Lots? Leased lot homes or deeded homes?  Homes above a million?  What?  (Below I will only talk about waterfront property.)

2.  Look at the numbers.  As I have said before, you have to be careful when interpreting statistics in our market.  It is relatively small in transaction number (when comparing to large cities like Atlanta).  But, to make a market opinion, you must look at market statistics, so I try to consider a year of data at a time.  The goal is to take emotion – and agenda – out of the equation.  Just the facts, ma’am.

3.  Apply Common Sense. Just as you don’t want to be ruled by emotion or anecdotal lake martin real estate Horse senseevidence, you also don’t want to let the misapplication of statistics throw you off course.  There is no magic statistic or rule of thumb to proclaim a market a buyers’ or sellers’ market.  You have to use your common sense to test the statistics versus your everyday observations.

 

MY TAKE ON THE DIFFERENT TYPES OF LAKE MARTIN WATERFRONT PROPERTY:

 

1.  LOTS – Right now on Lake Martin there are 113 waterfront lots for sale.  13 have sold in the past 12 months.  That means we have about 113 months of inventory, or it would take almost 10 years to sell at this pace.  On its face, that figure suggests an extreme buyer’s market.  I do think this is a buyer’s market, but, like condos, I think that if sellers were more realistic on price, most of these would get snapped up pretty quickly.  Everyone wants a lot.  But, I think many sellers have incorrectly priced assuming the market rose by 35% over 2006.  My call – Buyers’ Market.

2. CONDOS – There are 112 waterfront condos for sale and only 34 have sold in the past twelve months.  That’s 38 months’ worth of inventory – i.e. at this current buying rate, it would take over three years to sell all of the condos currently for sale.  That doesn’t count any that are under construction or might come on the market in the future.  The recent condo auction at Harbor Pointe taught us – there are buyers out there, but they are at lower prices.  This segment was by far the easiest to judge. My call – Buyers’ Market.

3. DEEDED LOT HOMES UNDER $1 Million –  In rural Alabama, it’s hard to call a $400,000 home a “starter home” with a straight face.  But that is about the price point of the lower end of the deeded lot single family home on Lake Martin right now.  In the deeded lot homes priced under $1 million, in the last 12 months, 120 have sold, or 10 a month.  249 are for sale now.  So we have about 25 months’ inventory.  But looking at this inventory, if a few sellers got realistic and dropped their prices, I think they would sell pretty well.  If homes in this segment are priced right, and are “good ones,” they sell in 45 days.  But because there are many that are overpriced and have been sitting on the market, I really can’t say that it is still a sellers’ market.  My call – Balanced.

lake martin homes ridge4. DEEDED LOT HOMES OVER $1 Million  – This segment is harder to compare with prior years, because the rate of increase on investment has meant that many homes are now worth $1 million whereas in prior years they would be at $750k.  To be fair, you really would need to compare homes over $1 mill today with homes over $750k in 2005.  Right now, there are 66 for sale.  17 have closed in the past year, or about 1.5 a month. So we have about 44 months, or almost 4 years’ worth of inventory.  Most of these are new construction spec houses being sold by builders.  They are getting aggressive – dropping prices and adding incentives.   My call – Buyers’ Market

5.  LEASED LOT HOMES – 15 have sold in the past year, and right now there are 15 for sale. So there are 12 months’ inventory.  I had one listed, we priced it aggressively, and it sold in 81 days, which is about the average time in a balanced market. Looking at the inventory, I think some are better values than others, so if they adjusted prices they might sell more rapidly.  My call – Balanced.

Are you considering buying Lake Martin waterfront property right now?  Why don’t you let me help you find what you need?  I can help you sort through the above 5 segments FOR FREE.  Sellers pay the real estate commission.  I can help you with any Lake Martin waterfront property, regardless of who has it listed.  An average real estate agent won’t help you much.  A good realtor will save you money and time.

Results Of Waterfront Condo Auction – Harbor Pointe – Lake Martin

Lake Martin waterfront condo buyers flock to the condo auction at Harbor Pointe in Stillwaters.

Roebuck Auctions held an auction at Harbor Pointe Marina in Stillwaters last Saturday, July 7, 2007.  The bidding started at 11:07 AM, selling 20 units in the Harbor Pointe Condo development.  Chris Boden, representative of Roebuck Auctions, stated he thought the auction went very well.  He estimated that there were about 500 people in attendance and about half were registered bidders.  Boden confirmed that all 20 condos were sold and are under contract to close in thirty days.

Boden went on to say that the boat slips were not auctioned that morning.  They were pulled from the auction due to a “legal snafu” that the sellers were currently working out.  He said that 24 slips are still available, and they would be offered for sale first to the auction high bidders, then to existing Harbor Pointe owners.  Boden also said that some boats were sold, but since he worked on the real estate side, he didn’t really know the details on how that all turned out.

Lake Martin Voice roving correspondent Kirk Wascom had this report:

“I went to the Harbor Pointe Auction at Harbor Pointe Marina this past Saturday.  There was obviously a lot of interest given there were 300 other folks in attendance as well. 


The first condo sold for $385,000 and the last one went for $235,000, not including the 10% fee to be added.  They auctioned the condos on a buyer’s choice.  The first condo sold allowed the buyer to choose his/her choice of the 20 available waterfront condos.  The first one sold and chosen by the buyer would have been the one I would have chosen.


Although I attended the auction more out of curiosity and genuine interest, I did take my checkbook and a letter of guarantee from bank.  During my registration they asked me for my letter of bank guarantee.  However, a buddy of mine who also attended the auction was not asked to present one.  We registered at different times.  I guess it’s like buying alcohol; sometimes you’re carded and other times you’re not. 


In my opinion, I think those who were the high bidders and who got their choice of a condo got a good deal at a fair value.  It was all a win-win position for both sides.  Due to the number of buyers at the auction there was no way anybody was going to get a condo for some low bid price of $75,000 – $100,000.”

 

Thanks Kirk, for that report, and for the inspiration for this series of posts.

Does anyone else out there have a subject they would like to see covered by the Lake Martin Voice?  Speak up!  And watch out, you may be drafted into action like Kirk…..

 

 

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More Info – Harbor Pointe Condo Auction – Lake Martin
Lake Martin Voice Auction Post Linked By The Wall Street Journal
6 Questions To Ask At A Lake Martin Auction

6 Questions To Ask At An Auction On Lake Martin

Lake Martin Auction property home25 waterfront condos are being auctioned at Harbor Pointe in Stillwaters on July 7th.  Five of those will be absolute.  This auction follows on the heels of one earlier this spring.  Is this a sign of the times on Lake Martin?  Does this signal an end to the seller’s market? Are auctions a way to get a good deal on Lake Martin property?

Like any real estate transaction, every auction is uniqueThe person that does the homework will either come out of it with a fair price or avoid paying too much.

What questions should buyers ask before attending an auction at Lake Martin?

1.  Is this an absolute auction?  Always clarify this, but usually an absolute auction means that they must sell on that day, regardless of price.  Even if someone bids $1 for a Lake Martin condo, they must sell.  If it is not absolute, then ask what the reserve price is.  I’m sure they won’t tell you that, but no harm in asking.
2.  How many / which parcels are absolute? The Harbor Pointe auction will have 5 out of 25 absolute.  But,  if you see an ad for a different auction that says “40 condos for sale, absolute auction” maybe only 2 will be absolute. You want to be clear as to which are absolute and you want to make sure that you’re under the tent when they’re selling the absolute ones.
3.  Have these properties been for sale before?  The auction company may or may not know the answer, or they may or may not be obliged to tell you.  Here’s where your Lake martin real estate property auctionresearch comes in the picture.  How well do you know the Lake Martin market?  Or Stillwaters? Or Harbor Pointe? If the lake properties have been for sale recently, the listing prices can give you an idea of the seller’s expectations.
4.  What do you have to do to be a qualified bidder?  Usually you can give them a check for like $5,000 or something or a letter from the bank, usually it is better to set this up ahead of time, the week before the auction.
5.  What are the fees to the buyer?  Usually the buyer pays a fee above and on top of the bid amount  – this could be 5% to 10% – to cover the cost of the auction and the auctioneer fees.  This is sometimes a big part of their pitch to sellers.  They say, why pay realtor fees of 6% when you can make the buyer pay 10%?  Sellers think they are saving money but it all comes down to what is net to them anyway, and buyers figure that in when they bid and reduce their top number by, say, 10%.  Whatever.
6.  Will you send me the rules of the auction ahead of time? I ask for those.  I read everything.  Every auction is a bit different.  Maybe I will spot something that I didn’t think to ask about originally.
Sometimes I have Lake Martin buyers ask me about things like this, where I am neither the listing agent nor involved in any way. If they are interested, I can call the auction company for the buyer and register them as a potential bidder.  The auction company usually pays an extremely small “referral fee” to realtors like me when they register a buyer that is a high bidder.  This doesn’t cost the buyer a penny more because the buyer’s fee will be the same whether I call them or the buyer calls them directly.  But if I do call, I can ask them all of the above questions and give my analysis.
Lake Martin home auctionIn the case of the Harbor Pointe auction, I would run a buyer a report of all of the sales in Harbor Pointe in the last 2 years, and give a bidder an idea of what the exact market price should be on a condo there.  This gives you a pretty precise point to bid up to without getting hurt too bad.  Again, it won’t cost a dime more, and could arm you with a lot of information for the auction.  If my registered buyer is not a high bidder, they don’t owe me a penny.
I will definitely be watching the auction at Harbor Pointe to see what happens. (Thanks, Kirk, for the idea for this post!)

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Why I Give Away The Milk For Free

Lake Martin real estate changesThe Lake Martin Real estate market, like every other one in the country, has changed irreversibly. 

When my father Walter started in the business in 1973, the process was pretty much the same as when my grandfather Temple founded Coley Real Estate in 1953.  If you were a seller in the Lake Martin Area, and wanted to know what your home or lot was worth, you had to call an agent.  In 1953, in what is now the Lake Martin Area, there were two agents.  In 1973 I think there were three.  The process was – you called an agent, made an appointment, and physically came into the office.  Then you two would discuss your home.  He would tell you what home sales trends were.  There was no Lake Martin Multiple Listings Service.  No Lake Martin Homes Magazine.  Certainly no Internet.  You were totally dependent on the keepers of the information, the real estate agent.

Now, obviously, it is all different.  A Realtor’s office is no longer a thickly lake martin real estate agents guardwalled, heavily guarded fortress of information.  The web has enabled (almost) perfect information about sales prices and trends.  The MLS (Multiple Listings Service) web site is open to the public and easy to search.

So why do you still need a realtor now?  Especially if you’re a seller – you don’t need an agent if Lake Martin is still such a seller’s market, right? 

Wrong- the value of a great agent lies not so much in the mere possession of the data (MLS #s), but in how you interpret it, and what you do with it.   

It’s kind of like stock quotes.  Closing sale prices of stocks and mutual funds are free and public information.  When you pay a financial counselor to help you with your retirement savings, you are paying them to give you advice on how to interpret the data.  The value isn’t the knowledge of what XYZ Company’s stock closed for on a given day.  The value lies in knowing when and for how much to sell or buy and why.  Could you imagine picking a financial counselor based solely on the fact that he has access to stock quotes?  No, because a small mistake in interpretation can cost you lots of money.

The value of a great realtor lies not so much in telling you what the lake home on 123 Easy Street sold for, but how that relates to your lake home, or the waterfront lot / home that you want to buy.  Next, a great realtor executes a marketing plan to go out and sell your property instead of merely sticking a sign in the yard.

So, when looking for a realtor to help you value your Lake Martin property, don’t pick one that guards information like the sacred scrolls.  Pick one that is focused on you, that asks you questions about your want and your needs.  The more questions a realtor asks you, the better chance that he can get a feel of how to best serve you.

I work extremely hard to help people get what they want, but I don’t work for free.  I give away my advice and information on Lake Martin real estate because I want my clients to be a part of the sales process, not feel like I am posing as the wizard behind the curtain.  After I give them the information for free, then I can focus on marketing their home uniquely or finding them the home that matches their exact tastes. 

Lake Martin Sellers – Don’t Pick This Realtor

Lake Martin real estate agentsLet’s say you own waterfront property on Lake Martin, and want to sell it.  Let’s also say that you have the good sense to hire a Realtor to help you list and sell it.  What are your choices?  Whom should you pick?

Selecting an average agent instead of a great one could end up costing you major dollars.  You need to make sure to partner with one that fits you best.

Here are 5 Realtors that Lake Martin sellers should not pick:

1.  Don’t pick The Part Timer.  Would you let a part time financial guy manage your retirement account?  Okay then.  It may be easy to be average, but being great at selling real estate is tough work (even on Lake Martin).  It is more than a 40 hour a week job to do things like talk to buyers, show properties, scout new listings, scour FSBOs, research property sales, and stay educated on licensing, contracts, housing laws, etc.  The Part Timer has other priorities.  You deserve better.

2.  Don’t pick The Suck Up.  Given the high value of Lake Martin real estate, a small mistake in selling your property can cost you thousands.  Do you want your listing agent to tell you what they think you want to hear, or to tell you the truth?  The Suck Up:  “Sure, Mrs. Seller, I think it’s a great idea to have a palm reader on site to give mystical advice to buyers when they visit!”  Puh-leez.

3.  Don’t pick The Talker.  Like any successful partnership, sellers and their Lake martin realtorlisting agents must have great communication.  Good communicators listen more than they talk.  They ask a lot of questions, and then listen some more.  Some agents think that everyone loves to hear them spout off about themselves.  I happen to think that sellers want to hear about their own home, their own lot, and how their own problems will be solved.

4.  Don’t pick The High Bidder.  Most sellers only talk to one agent about listing Lake Martin home Sellerstheir home.  Be different.  Talk to several, and pick the one that fits you best.  Ask each Realtor to tell you what your property will bring on the market.  Wise sellers don’t always go with the one who gives the highest number.  Go with the one that backs up his / her number with solid, well thought out research.  Like #2 above, The High Bidder will tell you what he/she thinks you want to hear – a possibly unattainable high price.  After your home languishes unsold for months, The High Bidder might try and talk you down to a sensible number.

5.  Don’t pick The Lowballer.  Real Estate commissions are totally negotiable, no matter what conspiracy theorists tell you.  When you hire a Realtor to sell your Lake Martin home, you two can agree to a commission of a penny or 300% of the sales price, whatever.  The Lowballer will tell you he will charge you something less than 6% and give you the same service.  Hey – maybe it will work out fine.  But I am here to tell you that it takes money to properly sell a Lake Martin listing.  Do you want someone who will simply stick a sign on the dock and hope someone else will sell it?  During the listing interview, quiz The Lowballer on the marketing plan.  Ask follow up questions.  It’s the only way to separate the lazy or the cocky from those Realtors with A Real Plan.

Curious about what your Lake Martin property be worth, and how I would tailor a plan to sell it?  Holler at me.

Lake Martin Named Top Real Estate Market In AL

Lake martin real estate winnerHere we go again – Lake Martin was described as the top real estate market in the entire state of Alabama

The Central Alabama Business Journal – a sister publication of the Montgomery Advertiser recently interviewed J. Danny Cooper, the Executive Vice President of the Alabama Association of Realtors.  The article covered various topics from the condition of Alabama’s real estate market overall to the performance of specific areas.  Cooper singled out Lake Martin as the top market in the state.  In his words, “Lake Martin has surpassed any other market in the state in terms of appreciation and home value.”

I know what you’re thinking – this is just another propaganda puff piece from aLake Martin Cupcake rah-rah realtors’ rep.  I might be inclined to agree, on some points.  Anybody can have an opinion on what is a “good” or “bad” market.  What sets apart Cooper’s statement? It’s a fact, not an opinion.  The numbers have been crunched – and Lake Martin came out on top.

Not that the rest of Alabama is so much chopped liver.  This state is blessed with many great second home or vacation home markets – Orange Beach, Gulf Shores, Lake Eufaula, Lake Guntersville, Weiss Lake, Lake Logan – Martin, just to name a few.  Maybe you and I think none of them are better than Lake Martin.  Maybe someone else thinks that another lake or beach is prettier, or cooler, or whatever.  Everybody’s entitled to an opinion.  But here’s a fact – recently, none of them have appreciated in value like Lake Martin.

Even if you own a home or lot on Lake Martin and never intend to sell it, isn’t it nice to know – that if you did – it is in the top market in the state?  Wonder what it’s worth?  Drop me a line, I’ll run you a Comparable Market Analysis, no strings attached. 

And if you don’t own any property on Lake Martin yet?  I can help you with that, too.

 

Related Articles:
Lake Martin A Top 12 US Vacation Home Market

 

Lake Martin Home Prices Not Affected By Sales Drop?

Lake Martin Alabama real estate Bull and bear argueRest easy.  Alabama home sales have dropped, but not on Lake Martin.  Or should you be alarmed that the average sales price of a home in Lake Martin plummeted 15% in one month?  Which is it?

On March 12, 2007, Patrick McCreless wrote an article in the Alex City Outlook entitled, “Home sales still strong on Lake Martin.”  The information he quoted was from the Alabama Real Estate Research and Education Center, which (I assume) got its data from our Lake Martin Area Multiple Listings Service.  While I do not disagree with any of the data in the article, I do think it presents an interesting look at analyzing statistics of our market.

Two main stats stuck out to me:

1.     Statewide, Alabama saw the number of homes sold drop 20.4% from December 06 to January 07.  The Lake Martin Area increased its number sold to 29 from 25 in December, for a gain of 16%.  Hence the analysis that we were unaffected by the State’s slump.  I agree.

2.     At the end of the article, it sneaks in that the Lake Martin Area’s average home sales price dropped in January to $181,310 from $213,716 in December.  Again, agreed.  But – couldn’t the headline easily have been “Lake Martin Home Prices Drop 15% in One Month?”

This same article could be used both by doomsdayers to prove evidence of a dreaded “bubble” in our market and by bullish folk saying that the market is still hot.  The seeming contradiction in interpreting the data is a classic case of trying to draw too many conclusions from too small a sample.  Any professor of Statistics will tell you that the smaller the sample, the greater margin of error.  In other words, if you poll the five people you play poker with on the question of who will be the next President, the chances of them being wrong are a lot bigger than if you selected five million registered voters, randomly distributed across geographic, economic, and political lines.

The point is – be careful when you try to interpret the data of a market like Lake Martin.  We have a broad mixture of Lake Martin Real estate Bulls and bears coexisttypes of properties – on / off the water, single / multi family, modern / rural, etc. – that are spread across a relatively small number of listings.  One big sale here or there can really affect the numbers, so watch out.  Try to gather as much information as you can.  Talk to many people in the business.  Are you confused about what your property is worth, or what you should pay for a place on the Lake?  I am always willing to give my honest two cents and would be glad to help! The only way I know to do it to tell it like I see it.  See the “comments” section on this post for my email to Patrick McCreless where I provide an opinion on the contradictory stats.

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