January Newsletter

Year in Review

Well, we didn’t see that coming!!

“That” being the “irrational exuberance” that helped to define real estate as it was conducted in Rochester this past year. Sure, we accurately predicted that there was going to be a lot of pent-up demand in the first few months of 2017- demand that resulted from buyers and sellers delaying their activity until the conclusion of the presidential election. Remarkably, almost everything else that came to pass was, like the Bills winning five of the first seven games of the season, an enormous surprise. The lack of inventory that existed during the first quarter of the year was never resolved. Throughout the year, there were more buyers than there were sellers. As a result, bidding wars never subsided. Sure, I’ve seen bidding wars play out in my 27 years in the business but nothing approaching the excitement on exhibit during the past twelve months.  To wit…

  • Erin Lewis, from our team, wrote an offer on behalf of a client only to find out that 27 other offers were written on the same property
  • Multiple offers were actually common during the middle of snow storms last winter
  • Buyers were purchasing property without having engineer’s inspections conducted 
  • I marketed a property this past spring that sold $50,000 over list price
  • Most homes were selling within 24 hours of listing
  • A lot of real estate was purchased with cash as buyers tried to distinguish themselves from the competition by eliminating the mortgage contingency

In part, the lack of inventory has to do with the fact that consumers aren’t buying and selling as often as they used to.  A few short years ago, the average homeowner would stay in their house for seven years. Today, that figure is ten years. Rather than move to a new property, owners are staying put and emulating HGTV’s Chip and Jo by renovating their existing residence.

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As a result of the tight inventory, sales in the greater Rochester metropolitan area decreased approximately 3% from the previous year (actual numbers won’t be available until the end of December). My team and I are glad to report that we sold $64,000,000 in real estate this year- an increase of 5%! There are a lot of reasons why our sales continue to increase year over year. In 2017, two strategies readily jump to mind:

First, we were able to sell an inordinate amount of property without it ever hitting the market for sale. Because of the volume of business that we conduct, like Yente from Fiddler on the Roof, we’re able to match our buyers and our sellers and give both parties to the contract a leg up on the competition. Sellers enter into the agreement knowing that they will only sell their house if they secure both a pre-determined price and their ideal closing date. Buyers are thrilled to enter into this kind of agreement because it eliminates the headaches associated with the bidding wars that I described earlier.  

Secondly, I think that the strategy of hiring a client concierge a couple of years ago was the right one. Increasingly, clients are aware that a member of our staff is available to help them secure estimates from contractors or unlock the house for Spectrum/Time Warner- all free of charge. As a result, our referral –rate continues to hover at about 77%.

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My year in review wouldn’t be complete without some thoughts about the art of pricing. Our team oversaw approximately 225 transactions this past year. The commonality associated with each successful sale had to do with a commitment on the part of the seller to list their house for the appropriate price. If they did so, inevitably, the home would sell within 24-36 hours of listing, with multiple offers, over asking price. In many ways, my job wasn’t simply about listing homes for sale. Instead, my job transmuted to one in which I was responsible for strategically creating bidding wars and selling homes for ridiculous sums of money. Frankly, it was a lot of fun! Those few individuals who chose to list at a price of their determination often found that their house would languish on the market for several months and, if it sold, it sold at a price far below what they would have enjoyed if they had only been more realistic to begin with. I’m always glad to list at whatever price a client deems appropriate- unfortunately, an unrealistic valuation proved to be a money-losing strategy for the three or four clients who chose to pursue this particular road.

Year To Come

So, as I begin to think about the coming year’s real estate market, I’m sensing continued vitality. Both the national and the local economies are doing well. There are still a lot of buyers out there who haven’t purchased the home that they were hoping to buy in 2017. Additionally, interest rates remain low. The thirty-year rate is currently pegged at 4% while a fifteen-year mortgage can be secured for 3.5%.  The Federal Reserve has indicated that, as a result of a strengthening economy, they’re going to continue raising interest rates in the coming twelve months. However, each increase is expected to be modest. In other words, the Fed will try to combat the possibility of inflation without raising rates so dramatically that they dampen economic growth. The great and obvious unknown is the Federal Tax Bill that has just passed the US Senate. Both the House and the Senate need to resolve the differences between their respective bills and are expected to do so by the end of December. Only then will we know if or how it is that this sweeping legislation will impact our local market. My gut tells me that, because 16% of the US economy is tied to real estate sales, any potential impact will be offset by the buoyant forces that I described in the beginning of the paragraph.

Our Team

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Personally, as we gear up for the year to come, the team and I completed our annual review of our business model. We discussed, as we do every year, that which is working and that which needs to be tinkered with. We read a few business books to inspire us. (If you haven’t read Phil Knight’s Shoe Dog, do so! This story of the founding and growth of Nike is incredible. Angela Duckworth’s Grit is another great book for those looking for motivation).The takeaway is that The Mark Siwiec Team has finally gotten the formula right. It’s the reason that we’ve enjoyed an 84% increase in our sales in the past five years. Sure, a few minor processes will be tightened. However, other than the addition of a part-time assistant, everything seems to be playing out exactly as we had projected and we obviously don’t want to interfere with an already proven formula of success!

As always, thank you for your amity and your support. My life remains enriched as a result of the many friendships and, seemingly, hundreds of relationships that I enjoy throughout our community. And, as a result of your kind words and referrals, our business continues to flourish.  Enjoy the few remaining days of the holiday season and best wishes for the year to come!

Team Highlights of 2017

Mark Siwiec

  • Trip to Nicaragua! 

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Nicole Martyniuk

  • Girls trip to Newport

  • Family trip to Adirondacks

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Marissa Pixley

  • I got engaged! 

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Yvonne Lovenguth

  • I turned 40!

  • Family trip to NYC 

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Meaghan Becker

  • Became Mrs. Becker!

  • Got a new puppy, Mac

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Dana Epperson

  • Joining the Mark Siwiec Team as the new Listing Coordinator

  • Being a mom to my daughter, Addison, and a wife to my husband, Kelson

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Josh Bartolotta

  •  Getting engaged! 
  • Purchasing a home
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Mark Crandall

  • Becoming an uncle

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Erin Lewis

  • Becoming a family of four!

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Erin Duffy Kruss

  • Purchased a house!

  • Trips to Seattle, Charleston, & Chicago

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Seminar Series - Warren Engineering

It's official... winter is coming! Well, almost....

If you're still resisting the urge to bust out the holiday decorations and play your favorite Christmas tunes, don't worry. You won't have to wait much longer! The winter holidays are right around the corner and the Mark Siwiec Team is beginning to enjoy the brief respite brought on as the real estate market falls into its early winter slumber.

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It's during this time that I tell members of the team to take a longer lunch, skip out of the office a little early to finish last-minute holiday shopping, or take some extra time to spend with their family and friends. This year, we've decided to implement a new custom into our winter routine. Every Wednesday for the next several weeks, we've invited various professionals to come in and participate in an educational lecture series. These seminars will feature a wide range of topics from engineer's inspections to mortgages to the attorney approval process. We are always looking for ways to improve our customer service and better serve our clients, and, as is always the case, knowledge is power.

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Up first in this weekly series is Doug from Warren Engineering who spent some time answering our many questions about home inspections. This Q&A may help you out when it is that you decide to purchase your next home. Or, it may help you better understand certain mechanics that exist (or don't exist!) in your current home. Either way, we hope that you enjoy this lecture series and ascertain some useful information!

 

Warren Engineering Q&A

How has the home inspection process changed in recent years?

 

What is the purpose of an inspection?

 

What do you think is reasonable to ask of a seller after a home inspection?

 

Are there issues that buyers and sellers should expect to come up during an inspection?

"I think when you're listing a house, I always tell people- if you haven't had the furnace serviced, have it serviced. If you haven't had the chimney inspected and cleaned, have it done. Because it always comes up!"


What are some nit-picky things that buyers want you to point out during a home inspection?

  • GFI (ground fault interrupters) - these are the electrical outlets that are typically found in moist areas of your home (i.e. bathrooms, kitchens, etc.). Since created several decades ago, these have saved a lot of lives. Any home without them in potentially wet areas are technically not up to code. However, the purpose of a home inspection is NOT to bring your house up to code. Inspectors are not code-compliance officials and attest that most existing homes would never fully meet code.
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  • Grounding Electrical Services - look at some of the outlets in your home right now. Are some of them 2-prong? Do they look like this? If so, those are not technically grounded.
  • Hot Water Heater - all gas hot water heaters need to vent to the outside. If your H2O tank is 40,000 BTU or higher, the piping needs to be 4 inches in diameter. Many are 3 inches... Your tank would work just fine, but it is technically not up to code. There is also a pressure relief valve that needs to be 3.25 inches in diameter with piping that comes 3 inches off of the floor. When the measurements aren't "perfect", home inspectors have a duty to point this out. This does not automatically mean they are unsafe.

 

What are the biggest, most expensive issues that can come up during an inspection?

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  • Roof Issues - by far the most expensive and essential aspect of a home. 
  • Foundation Issues - hairline cracks are not usually a big deal. Larger, gaping cracks can indicate an unstable foundation. Vertical cracks are due to downward movement and settlement. Horizontal cracks, on the other hand, are indicative of a problem on the ground (i.e. water).

FAQ - Should I rent my property?

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In many ways, October is one of my favorite months of the year - crunchy, vibrant colored leaves under your feet, warm Starbucks Pumpkin Spiced Lattes, and cackling witches flying through the brisk air. (That is, however, unless it's October of 2017, in which case you may still be sporting sunglasses and a tank top...) Either way, this is the time of year when I finally get to pop my head above water, catch my breath, and begin the process of settling in for the colder weather to come. 

Unfortunately, late autumn also happens to be a month in which many sellers begin to experience the pre-holiday, winter angst (and, in some cases, desperation) about the fact that they have not yet sold their property. An incredibly common question this time of year is, "What should I do?”. The standard and traditional answer is that there are four options for homeowners who find themselves in this situation (this may look familiar if you've followed our recent blogs!!).

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1. Take the house off of the market until after the first of the year.

2. Improve or renovate the property so that it's worth what it is that buyers are saying it is currently not.

3. Lower the price.

4. Rent the property.

If you read our last blog on price reductions and felt a bit nauseous, you're probably scrambling for any other viable option. From my perspective, the least intelligent and potentially most harmful of these four options is that of leasing your property to a prospective tenant. Inevitably, the exercise of renting your residence is one of doing nothing other than putting off the inevitable. 

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As you’ve probably heard numerous times by now, homeowners need to secure an offer and sell their home before the market closes down in the middle of November. Given that this is Rochester, NY, the value of a property doesn't increase tremendously over a 6-month period of time. If one is lucky, a seller may see an increase of 2% in the value of their home. This increase needs to be weighed against the prospective damage that a less-than-fastidious tenant may inflict. Stated another way, if a $200,000 property is taken off the market in October and remains tenant-occupied until April, the house may increase in value by $4,000. However, what are the costs associated with having painters come in and touch up dirty or damaged walls? What is the cost of having the carpet steam cleaned? My experience points to the fact that newly minted landlords typically spend close to $1,500 in order to bring their house back to the condition that it was in prior to tenants taking up residence. 

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When couched in these terms, most homeowners quickly come to the realization that it’s not worth renting their home for six months for the possibility of a $2,500 gain. There’s just not enough upside but there is a lot of potential downside!! Smokers come to mind, as do pets. What about evictions? One obvious expense that we haven’t touched on is the difficulty of finding a tenant to rent your home. Experienced landlords know that it’s incredibly difficult to find a tenant to rent an apartment or home from October 1st through March 1st.

In short, even under the best of circumstances, the task of finding a tenant willing to pay enough rent to cover your monthly mortgage, and, at the same time, maintain your residence without doing a lot of neglectful damage is a tough one to expedite. It’s probably best to recognize that renting your home is doing nothing other than kicking the proverbial can down the road – a road that is fraught with real, potential danger. Do yourself a favor – consider the other three options laid out as possibilities earlier in this blog and choose one. You’ll be much better off!

Sibley Square Tour

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When you hear "Sibley's", what comes to mind? Perhaps you remember stories of your grandmother popping into the Tea Room after a long day of shopping to enjoy some cucumber sandwiches. Or maybe you think back to the elaborate Christmas displays as you hustled past on your way to work. Or, it’s possible that nothing comes to mind at all, in which case, you’re much, much too young…

Established in 1868, Sibley, Lindsay & Curr was once an iconic Rochester-based company with the largest department store between New York City and Chicago. Their flagship store was originally located in the Granite Building until a devastating fire in 1904. The company then rebuilt itself at the northeast corner of East Main Street and Clinton Avenue in the building that came to be known as the Sibley Building. After incredible success, Sibley’s sold their company to May Department Stores in 1986 and the Sibley Building closed its doors to retail. As many of you know, Wilmorite’s acquisition of the building in the late 1980's resulted in a vacant building idly collecting dust while property tax bills went unpaid. Eventually, Monroe Community College chose to establish their Damon City Campus in the Sibley Building in 1991 and continued to operate there until just recently, when they relocated to a building across from Kodak Tower.

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So what's next?

The Sibley building, now referred to as Sibley Square, was acquired by WinnDevelopment five years ago for just $5M with hopes of restoring the landmark to its former glory. Before diving into any detail, you should know that Winn has already spent upwards of $100 million on this renovation, with no intention of letting up. Their plans for the building are to re-establish it as a mixed-use centerpiece for downtown. Unlike so much of downtown revitalization, Winn has remained true to their reputation and are sparing no cost or expense in making their lofty pronouncements a reality. Ken Greene, whose company, Greene RE Solutions was just assigned as the Asset Manager for the 1.1M sq ft property, was kind enough to walk us through the plans! Ken is in the process of collaborating with the broker community and a full 6% commission is available for office and commercial space!


So what does Winn plan on doing? 

In addition to mechanical and structural renovations (roof, floors, elevators, HVAC, windows, etc.), much of the revitalization of Sibley Square will focus on how to transform this incredibly large property into a place that serves the community. To do so, Sibley Square will become home to a combination of business, retail, and residential space. 

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  • Residential - Spectra at Sibley Square will soon become one of Rochester's most beautiful luxury apartments. Floors 9-12 feature over 104 apartment units, and let me tell you... they are spectacular. No expense was spared, no detail unnoticed, and the finishes are top-of-the-line. Floor to ceiling windows allow for panoramic views of the city. There's a 24-hour fitness center, a rooftop deck, media theater, onsite daycare, attached parking garage, and even an indoor pet playground. Yes, you read that correctly. A place where your furry friend can play or even get walked by a staff member. The apartments will be officially complete by year's end and at the risk of sounding hyperbolic, they may be the nicest apartments to rent in downtown Rochester... In addition, there will also be 72 affordable apartment units for the 55+ community complete by year's end.
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  • Business - The 6th floor of Sibley Square will be home to High Tech Rochester, a nonprofit organization that acts as an incubator for innovation-based development and entrepreneurship. This is where local scientists, entrepreneurs, and high-tech businesses will be able to rent office space. This floor includes what used to be the Tea Room, so Winn has made sure to carefully preserve all of the incredible historic details that helped make Sibley's so iconic (including the egg-and-dart molding pictured below!). To give you some reference, Winn spent $100,000 just to restore the ceiling! Renters on this floor will also have access to their own rooftop garden which includes a rare glimpse of the back of the Clock Tower! 
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  • Retail - Once a booming retail-driven institution of Rochester's downtown, Winn hopes to re-establish Sibley Square as a desirable epicenter for shopping and dining. With over 50,000 surrounding residents with a median income of $67,000 and an average work commute of under a half-mile from the building, there certainly appears to be a demanding demographic. Ken described plans to welcome various local restaurants and regional markets for an indoor public-market-type feel. Trendy boutiques, local eateries/bistros and art galleries are the goal for this section of the project.

In short, my team and I were incredibly fortunate to catch a glimpse into what will surely be one of Rochester's most exciting revitalizations. I look forward to seeing what Sibley Square is able to do for our city and can't wait to revisit in the very near future!

For any further questions or details, feel free to visit sibleysquareroc.com