A casual summer walk through many Wisconsin neighborhoods in 2005 would have revealed For Sale signs rotating like seasonal lawn ornaments, a tribute to a booming real estate market.
Take that same stroll this year and those signs may remain posted from the first pool party until pumpkin carving thanks to rising interest rates.
According to 2006 second-quarter figures released by the Wisconsin Realtors Association (WRA), sales of existing homes in the state fell 3.8 percent as compared to the second quarter of 2005. The Midwest saw a 4.7 percent decrease and sales across the nation slipped 7 percent over the same span.
Its very hard to compare the numbers to 2005 because it was a record-setting year, said Kevin King, General Counsel for the WRA. Some areas of the state are behind, while others are ahead, but by no means is the sky falling.
In fact, several law firms around the state that deal partially or solely in real estate law have reported consistent or even increased business during the national dip in sales.
Busy Despite Slow-Down
I read the newspapers and hear from people that there are more sellers than buyers, that transactions are down, said attorney Luke Chiarelli of Mawicke & Goisman, S.C., in Milwaukee. I havent even been able to take a vacation this year because of how busy we are.
Mawicke & Goisman has a dozen attorneys who deal in real estate law, handling everything from multimillion-dollar estates to mom-and-pop, two-children homes in the $120,000 range, and according to Chiarelli, business has been steady on all fronts.
Ive talked with friends at similar sized firms like Mallery & Zimmerman and Godfrey & Kahn and they have said the same thing, their business has not been affected by the slowing market, said Chiarelli. In fact, rather than competing, weve been referring clients to each other because of the volume.
Attorney Jason A. Greller of Knoll Greller, SC, in Madison agreed with the steady sales assessment, noting that his firm dedicates 95 percent of its time to residential real estate.
Greller employs a trio of law clerks to support his practice that has seen transactions escalate from 20-30 five years ago to an estimated excess of 200 this year.
I deal in standard transactions like for-sale-by-owner and flat-fee Multiple Listing Service (MLS), said Greller. The market in Madison has been incredibly strong.
Reasons for Prosperous Season
|“I haven’t even been able to take a vacation this year because of how busy we are.”
Why the continued success?
Chiarelli suggested an influx of new residents from Illinois has aided his firms business, especially in the southeastern part of the state despite overall figures from the WRA that indicate a 4-percent decline in the second quarter.
Ive been down to Chicago and its suburbs and seen people buy million-dollar houses which would go for $250,000 in Wisconsin, said Chiarelli, a native of the Windy City. Clients of mine are buying homes in Racine, Kenosha, Oak Creek and Paddock Lake. Making the commute is not that uncommon these days.
WRA statistics indicated Kenosha saw a 6.5-percent drop and Racine sales slid 11.6 percent in the second quarter, so the notion that the Illinois folks are bringing their housing dollars to Wisconsin is debatable, but what buyers and sellers do with that money still determines the success of a transaction.
Online sites have surfaced in recent years and made the buying and selling process cheaper for people who want to sell their houses themselves and boosted clientele for attorneys like Greller.
Sites such as FSBOMadison.com and madcityhomes.com are designed to provide for-sale-by-owner listings which buyers can directly access without involving brokerage firms.
Attorneys typically wear the real estate agent hat in those cases and charge a flat fee rather than the usual 6-percent commission an agent may require, said Greller.
|“Balance is a key, especially for the smaller firms because sometimes they don’t practice in other areas like civil or family law, like larger firms do.”
Its really re-introduced attorneys to the process.
Greller also noted that because of a limited number of firms in Madison that currently specialize in for-sale-by-owner transactions in conjunction with the Web, his competition is relatively small.
There are maybe six or seven other firms that deal with that sort of thing as opposed to hundreds of real estate agents who are competing with each other, said Greller.
While the residential markets have continued to flourish for some firms, attorneys are cautiously optimistic that the trend will continue.
Attorney Jim Carrig of Niebler, Pyzyk, Klaver & Wagner, LLP,
stressed the importance of diversity for any size firm in the real estate field or other areas of the law.
Carrig, who deals with for-sale-by-owner transactions, has also picked up business in foreclosures.
Balance is a key, especially for the smaller firms because sometimes they dont practice in other areas like civil or family law, like larger firms do, said Carrig who is one of five attorneys at Niebler, Pyzyk, Klaver & Wagner and one of three who deal in real estate law.
Greller agreed that potential for a severe decline in business is substantially greater for his firm than for others because of the specialized focus and size. He has also seen signs which point to a change in seller leverage.
Ive noticed changes in closing time, said Greller. It used to be Id carry around files for three months, but now its much longer.
Of his clients with listings this year, 14 sellers have had property over 60 days old with no action. Despite the fact that Greller receives his flat fee regardless of the time it takes to sell, volume is decreased and ultimately revenue is lost.
Sellers are definitely more anxious to unload these days, said Carrig. The ratio of buyers to houses is not what it was a year ago.
The willingness to negotiate with buyers is something that sellers will need to embrace if they expect to sell their home according to Greller.
I think people were selling homes at a record rate and raking in the profits, which may have made them a little greedy in the market, said Greller. Now, sellers have to be more flexible. Its a great time to be in the market because there are good deals to be had and interest rates are still pretty low, but the question is, can I sell my house now.
Nationwide numbers indicate the answer is increasingly no, but so far the negative impact has been limited for real estate attorneys in Wisconsin.
Whatever may be happening around the nation, it seems Wisconsin is lagging behind and in this case, thats a good thing right now, said Chiarelli.
Jack Zemlicka can be reached by email.