The Blog is Coming to Amazon's "Kindle" Platform

The blog is expanding! Amazon is trying to expand content for it's wireless reading tablet, "Kindle", so I decided to join their beta program and publish the blog on it.

I've received so much positive feedback from you on the blog, that I want to do everything I can to expand readership. I think that Terra Firma is somewhat unique in it's approach, and that there's something in it for everyone.

Real estate transactions are almost certainly the largest financial transactions that you will ever be a party to, and while there is a plethora of "how-to" fodder available, I've always felt that the vast majority of it was sorely lacking in practical advice, and more importantly, a thorough analysis of how all the relevant parties interact, what their strengths and weaknesses are, and most importantly of all; what their true motivations and agendas are. (Whew, that was one long sentence)

So whether you're a faithful reader, or a new visitor, I urge you to take a peak back at previous posts for a refresher, and stay tuned for even more juicy tidbits of insight. Keep sending me those e-mails, and I'll do my best to reach out to all of you.

Reach me at: michael.sussilleaux@gmail.com

Bottoms Up!

How do you determine when the real estate market in your area hits bottom? Or, for that matter, how do you tell when it hits the top of the market?

(The Million Dollar Question)
How do I accurately determine what the best time is for me to either buy or sell so that I get the very best deal possible?

Newspapers, magazines and television all report on the state of the real estate market, but there are two important limitations. First, they tend to deal with national data, which doesn't necessarily do you a lot of good. (Remember that real estate is a local phenomenon. If you didn't know that, or don't know why that's true, read this)

Second, sales statistics invariably report on the number of houses sold. On the face of it, it makes obvious and perfect sense, because what else can they report on? I am going to challenge this assumption, but first let's dig a little deeper in to this metric of "properties sold" and apply some common sense analysis.

The actual sale of a property is the last step of a long sales process. What are the components of this long process or "sales cycle"? (Specifically the time that transpires from the moment a sales agreement is reached to the actual closing and recording of the sale at the county clerk's office)

In my market, New York City, things probably work a bit differently than where you live simply because the overwhelming number of home sales represent condominiums and cooperative apartments and not stand alone houses. Condos and co-ops require lengthy submissions of personal and financial information followed by a review and approval process conducted by either the condo association or co-op board prior to the actual closing on the property.

Irrespective of the specific procedures applicable in your local market, most of the components of the sales cycle are the same. Typically, once an agreement is reached there is some form of down payment, an inspection, a mountain of paperwork, obtaining financing, submitting government filings, obtaining approvals, and finally scheduling a closing.

My experience is that the time from agreement on terms and conditions to closing is typically three to four months. At last! The transaction is complete.

Let's apply this three to four month time line to a hypothetical situation. You fall in love with a beautiful co-op apartment in the sweltering heat of late August and quickly reach an agreement with the seller of the property. The clock on the closing process starts ticking, and because from Thanksgiving through New Year's things slow to a crawl, the anticipated three to four months stretches to just over four, and you close the first week in January. Congratulations! You've just purchased a home in the first quarter of the next year!

Now let's get back to the media, and the sales figures they report to gauge where the market is. Where do they get the statistics? The answer is that they are either compiled by major real estate corporations or real estate data firms every quarter and published in "market reports". Your January sale will be bundled in the first quarter statistics that are released to the media in the beginning of April.

You may be thinking: "Whoa! Did he just say 'April'? I 'bought' that property in August the year before!"

And you would be correct.

Do you see the flaw in market news you get from the media? It's old. Very old.  Too old.

SUMMARY
The message is that it's important to understand that the data used to report the direction the real estate market is moving is at best several months old, and isn't necessarily reflective of what's happening now in your local market. If you were to quantitatively know where the market is today, you would have a serious advantage over everyone else.  

Many of the "best" brokers don't have the foggiest idea of how to collect and interpret the necessary data to determine where the market is now; and I mean "now" as in today.  If you want to learn more, let me know.  

Reach me at: michael.sussilleaux@gmail.com