Real estate sales have always tied closely to the index of consumer confidence. Buyers' attitudes toward spending in general matter as much as interest rates to our level of sales. The index has been going up most of the time over the past couple of years, rising even before we noticed an uptick.
Now, although the real estate market is much improved, the consumer confidence index is wobbling. The past couple of months have seen declines, and, although we aren't seeing its effects directly, we know that the market recovery has always been shaky. Every change in the stock market or mortgage policy makes us nervous. We cannot count yet on the rising tide to carry us back to a strong sales climate.
We certainly can keep our fingers crossed that the recent dip is just that--a dip. Also, it seems as though our improvement has come disproportionately from first-time buyers, who might be less inclined by age (they can't remember past downturns), life status (they are in the peak years of household formation), and risk profile (they tend to be less conservative), to worry quite as much about statistics. Let's hope so.
Showing posts with label buyers. Show all posts
Showing posts with label buyers. Show all posts
Wednesday, June 27, 2012
Thursday, May 31, 2012
Where are the Young Real Estate Agents?
We spent a good deal of the morning brainstorming about recruiting. Nationally, and for us, the average real estate agent is in his/her late 50s. Since the market is now being driven by first-time homebuyers, and since they are mostly in their 20s and 30s, there is a disconnect between professionals and clients. Most of the agents are digital immigrants, and might have kids the same age as the buyers, so it would certainly be good to develop a pool of younger agents. Younger buyers, and sellers, have vastly different expectations about technology, about time, about how to shop for anything, and about risk.
When we thought about recruiting agents to match this profile, we realized that there are many aspects of a real estate career that would appeal to Gen Xers and Millenials. Unlike the Greatest Generation, they aren't expecting one steady career for a lifetime, so the ups and downs of a commission-based agent wouldn't necessarily trouble them. Unlike older workers, they aren't tied to an office or a standard work day--they could start at noon if they were serving sellers and buyers who shared their hours! They wouldn't be limited to two weeks of vacation every year, and their dress code would be flexible. In all those ways, it's a perfect career for a younger person. And, if their parents have to support them in this job market, as they graduate and look for work, why not enter a field where hiring--and potential--are unlimited?
When we thought about recruiting agents to match this profile, we realized that there are many aspects of a real estate career that would appeal to Gen Xers and Millenials. Unlike the Greatest Generation, they aren't expecting one steady career for a lifetime, so the ups and downs of a commission-based agent wouldn't necessarily trouble them. Unlike older workers, they aren't tied to an office or a standard work day--they could start at noon if they were serving sellers and buyers who shared their hours! They wouldn't be limited to two weeks of vacation every year, and their dress code would be flexible. In all those ways, it's a perfect career for a younger person. And, if their parents have to support them in this job market, as they graduate and look for work, why not enter a field where hiring--and potential--are unlimited?
Tuesday, May 8, 2012
Lots of Cash
Many more real estate sales lately are for cash. While it's true everywhere in the country, it's particularly true in Connecticut. Can you guess the percentage of people who close with cash? If you guessed 39%, you're right!
While that seems like a lot, and it is, it makes some sense when it's so cumbersome to fill out the paperwork for a mortgage, and when the restrictions are so much tighter. I suspect that some number of those buyers later apply for, and receive, mortgages, especially with rates so low (although they're certainly not losing much in the way of interest on cash, and they don't have a great deal of stability in the stock market).
When there is no mortgage, the closings often happen much sooner. We see people closing in a couple of weeks, once all the inspections are finished. Getting a mortgage later really speeds the process up.
One tricky question, however, is how to know whether the buyer is serious and qualified, without the help of the mortgage qualification letter. It seems strange, but it's sometimes easier to believe that someone is really going to buy if they are borrowing the money, than when they say that they have it in the bank. Not a bad issue to have, I guess, but it has been arising more frequently. The danger of real damage is less, however, when the closing is quick. Nothing's perfect, but cash is king!
While that seems like a lot, and it is, it makes some sense when it's so cumbersome to fill out the paperwork for a mortgage, and when the restrictions are so much tighter. I suspect that some number of those buyers later apply for, and receive, mortgages, especially with rates so low (although they're certainly not losing much in the way of interest on cash, and they don't have a great deal of stability in the stock market).
When there is no mortgage, the closings often happen much sooner. We see people closing in a couple of weeks, once all the inspections are finished. Getting a mortgage later really speeds the process up.
One tricky question, however, is how to know whether the buyer is serious and qualified, without the help of the mortgage qualification letter. It seems strange, but it's sometimes easier to believe that someone is really going to buy if they are borrowing the money, than when they say that they have it in the bank. Not a bad issue to have, I guess, but it has been arising more frequently. The danger of real damage is less, however, when the closing is quick. Nothing's perfect, but cash is king!
Tuesday, May 1, 2012
Activity Abounds
Finally, spring has sprung, and the real estate market has responded. I hear stories every day about listings that have sold in one day, listings that have not sold for two years and now have two offers in one week, listings that are having showings right and left, and buyers that are finally moving off the fence.
The market continues to be driven by first-time homebuyers, and there are still people moving here from other places that are choosing to rent before buying, but the activity is clearly on the upswing, and there is much more of a sense that things are beginning to recover. While we have more inventory than many other regions of the country, even we are seeing quick turnover in some neighborhoods and price ranges. For instance, Guilford still has 275 homes on the market, which is a 50% increase over last year, but houses are selling quickly there when they come onto MLS. East Rock in New Haven has 30 houses for sale, but one of our agents just sold one in a single day.
Have you been waiting for the market to turn so that you could buy or sell? Have you been waiting for prices to bottom out? Have you just been waiting? Wait no more. The time is now!
The market continues to be driven by first-time homebuyers, and there are still people moving here from other places that are choosing to rent before buying, but the activity is clearly on the upswing, and there is much more of a sense that things are beginning to recover. While we have more inventory than many other regions of the country, even we are seeing quick turnover in some neighborhoods and price ranges. For instance, Guilford still has 275 homes on the market, which is a 50% increase over last year, but houses are selling quickly there when they come onto MLS. East Rock in New Haven has 30 houses for sale, but one of our agents just sold one in a single day.
Have you been waiting for the market to turn so that you could buy or sell? Have you been waiting for prices to bottom out? Have you just been waiting? Wait no more. The time is now!
Monday, April 9, 2012
Buyer's Remorse
For some reason, buyers have been pulling out of contracts more than they ever did in the past. Most of us track business through signed contracts, figuring that the number of signed contracts that do not close stays relatively close to the same percentage year in and year out, so we don't feel that we have to adjust for sales that do not close, since they don't change year over year comparisons. For the past couple of years, however, that hasn't been the case--nationally, contracts that don't result in closed sales have doubled or tripled. For a long time, we all thought that was the fault of banks and, through them, appraisers.
While banks are always popular to blame for most things, it appears that there may be something else at work. Even though we are now at a point in the real estate market where units are increasing and mortgage rates have started to rise, buyers still seem to feel that they have unlimited time and unlimited choice, so they dither. Each time something new comes on the horizon, they go off to see it, even when they have already signed a contract for something else. Instead of the principle of cognitive dissonance, which says that your mind will convince you that you've done the right thing when you make a choice and it is done, they now seem to deal with buyer's remorse by revisiting the choice again and again. Is this a generational issue, since first-time homebuyers, who dominate the current market, have older relatives coming in and advising them before their purchases are finalized? Or is this the result of a world where no one thinks that his or her decisions are final? We'll find out when the economy improves more, since there won't be as much distraction with other choices drying up. In the meantime, our advice to sellers is age old: Don't count your chickens before they hatch.
While banks are always popular to blame for most things, it appears that there may be something else at work. Even though we are now at a point in the real estate market where units are increasing and mortgage rates have started to rise, buyers still seem to feel that they have unlimited time and unlimited choice, so they dither. Each time something new comes on the horizon, they go off to see it, even when they have already signed a contract for something else. Instead of the principle of cognitive dissonance, which says that your mind will convince you that you've done the right thing when you make a choice and it is done, they now seem to deal with buyer's remorse by revisiting the choice again and again. Is this a generational issue, since first-time homebuyers, who dominate the current market, have older relatives coming in and advising them before their purchases are finalized? Or is this the result of a world where no one thinks that his or her decisions are final? We'll find out when the economy improves more, since there won't be as much distraction with other choices drying up. In the meantime, our advice to sellers is age old: Don't count your chickens before they hatch.
Tuesday, March 13, 2012
Learning from Ebay
I'm not an Ebay person, but I have lots of friends who are, and I've certainly read enough about the philosophy to get the idea. You go on looking for something, and then you watch the bidding over a period of time. In the end, if you want to get something, you pay the price that it takes to get it. If you can't stand watching others bid, you take the "Buy It Now" option.
There's a real estate theory along the same lines. When a house is listed, potential buyers look, and note the price. They often sit back and watch the action, sometimes bidding, but often waiting. If they really, really want just that house, they will go in early and strong, and close the deal. If not, they wait and see. At the end of their search, if that's the house they want, they need to outbid others to get it.
The idea is that things will sell, in most cases, for what they're worth. There may be times when sellers get lucky, or buyers do, because of circumstances not created by them, but by the other party. Most of the time, property goes for its fair value, because bidders will eventually come in and pay what they know it's worth. The moral? It's not the listing price, it's the inherent value. Put your property on low, and let buyers bid it up. Just as in Ebay, if you can create a feeding frenzy, you will get more, and much more quickly, than if you list it too high.
There's a real estate theory along the same lines. When a house is listed, potential buyers look, and note the price. They often sit back and watch the action, sometimes bidding, but often waiting. If they really, really want just that house, they will go in early and strong, and close the deal. If not, they wait and see. At the end of their search, if that's the house they want, they need to outbid others to get it.
The idea is that things will sell, in most cases, for what they're worth. There may be times when sellers get lucky, or buyers do, because of circumstances not created by them, but by the other party. Most of the time, property goes for its fair value, because bidders will eventually come in and pay what they know it's worth. The moral? It's not the listing price, it's the inherent value. Put your property on low, and let buyers bid it up. Just as in Ebay, if you can create a feeding frenzy, you will get more, and much more quickly, than if you list it too high.
Monday, October 10, 2011
Mortgage Woes
There has been a lot of talk about how low mortgage rates are today--the lowest in memory--but much less talk about how hard they are to get approved. We have found that buyers may wait for weeks with promises of commitment, only to be told after a long period of time that they are being denied. The annoying part--actually, make that one annoying part--is that the denial is frequently for something that you would have thought that the bank had known all along. This is true of delays as well. We have had closings delayed multiple times, with some delays being for things that should have been settled well in advance.
I suspect that some of the problem lies in confusion at the banks, and probably understaffing. The bigger issue may be that no one has the authority to pull the trigger on anything, so things have to wend their way up a ladder of approvals. Just to be clear, all of the blame does not belong with the banks. Governmental changes in policy have caused all kinds of changes, and sometimes at the last minute. The feds are always trying to protect us against the last problem, so many of the rules seem largely unnecessary. This is one of the situations where we can groan when we hear that "we're from the government, and we're here to help you."
Buyers can contribute to the delays also. Anyone who has gotten a loan in prior years may be amazed at how much information is demanded on today's applications. Some people waste time trying to argue their way out of requirements. Since most are imposed on the banks, as opposed to by the banks, this is a delay not worth taking. The one I hear frequently is this: "I don't need to get a loan. I could pay cash. If they just look at my bank balance, they won't ask for all this paperwork." Not true. Get over it, or go ahead and pay cash.
The statistics from the CT Multiple Listing Service show closing times of around 60 days. That's not so far from the 30 to 45 days of the past, but should be noted, especially as almost 40% of sales are for cash these days, and therefore have no delays. The time frames may get worse as we near the holiday season, so plan ahead to avoid disappointment.
I suspect that some of the problem lies in confusion at the banks, and probably understaffing. The bigger issue may be that no one has the authority to pull the trigger on anything, so things have to wend their way up a ladder of approvals. Just to be clear, all of the blame does not belong with the banks. Governmental changes in policy have caused all kinds of changes, and sometimes at the last minute. The feds are always trying to protect us against the last problem, so many of the rules seem largely unnecessary. This is one of the situations where we can groan when we hear that "we're from the government, and we're here to help you."
Buyers can contribute to the delays also. Anyone who has gotten a loan in prior years may be amazed at how much information is demanded on today's applications. Some people waste time trying to argue their way out of requirements. Since most are imposed on the banks, as opposed to by the banks, this is a delay not worth taking. The one I hear frequently is this: "I don't need to get a loan. I could pay cash. If they just look at my bank balance, they won't ask for all this paperwork." Not true. Get over it, or go ahead and pay cash.
The statistics from the CT Multiple Listing Service show closing times of around 60 days. That's not so far from the 30 to 45 days of the past, but should be noted, especially as almost 40% of sales are for cash these days, and therefore have no delays. The time frames may get worse as we near the holiday season, so plan ahead to avoid disappointment.
Tuesday, October 4, 2011
Playing the Odds
We were doing some research this week, and were startled to discover that, from January 2010 through the present date, only one-third of all listings taken have sold. That means that, for every seller who put his or her home on the market and sold it, two sellers put their homes on and nothing happened. If you add those people who haven't bothered to list their properties due to the poor selling climate, there is a big supply out there.
Since real estate agents work solely on commission, this is obviously a troubling state of affairs. We only get paid one out of every three times we list a home, and listing always used to be the guaranteed way to make money, since the percentage of buyers who look and don't buy is higher than that of sellers who don't sell. The combination is deadly.
It does prove, however, that sellers should be listening to their agents about the price and improvements necessary to attract an offer in today's market. What's the point of cleaning everything up and making plans to move, only to sit there for two years without a sale? If you do want to sell, you need to do more than just sign a listing--you actually need to have a property in the top third of all properties, in order to sell it. That's food for thought.
Since real estate agents work solely on commission, this is obviously a troubling state of affairs. We only get paid one out of every three times we list a home, and listing always used to be the guaranteed way to make money, since the percentage of buyers who look and don't buy is higher than that of sellers who don't sell. The combination is deadly.
It does prove, however, that sellers should be listening to their agents about the price and improvements necessary to attract an offer in today's market. What's the point of cleaning everything up and making plans to move, only to sit there for two years without a sale? If you do want to sell, you need to do more than just sign a listing--you actually need to have a property in the top third of all properties, in order to sell it. That's food for thought.
Tuesday, July 12, 2011
Not the Typical July
The weather surely signals that it's midsummer, but the slow start to the real estate year means that the dog days of summer have a little more life to them. We are still seeing new listings, new offers, and new sales. Our web hits doubled from May to June. There was a downward blip for the Fourth of July, and then they went up again. People are clearly thinking about buying and selling, even if every contract seems a long and tortuous process.
On that note, I was spending the weekend in Vermont last weekend with a friend from North Carolina. She was trying to close the sale of a commercial building, which she had sold already once and it had fallen through. She was in negotiations with the new buyer on the day before what was supposed to be the closing. Her husband was bemoaning her travails. I told him that MOST commercial contracts seem to fall apart at least once, and that it is, unfortunately, very common for the buyer to come back at the last minute and ask for concessions, often due to financing conditions. Even in residential, we have a number of contracts now that seem to have taken on a life of their own. They go on and on, with delays, threats, changes, grandstanding, and probably tears. I'm telling you this so you won't take it personally if it happens to you! Forewarned is forearmed.
On that note, I was spending the weekend in Vermont last weekend with a friend from North Carolina. She was trying to close the sale of a commercial building, which she had sold already once and it had fallen through. She was in negotiations with the new buyer on the day before what was supposed to be the closing. Her husband was bemoaning her travails. I told him that MOST commercial contracts seem to fall apart at least once, and that it is, unfortunately, very common for the buyer to come back at the last minute and ask for concessions, often due to financing conditions. Even in residential, we have a number of contracts now that seem to have taken on a life of their own. They go on and on, with delays, threats, changes, grandstanding, and probably tears. I'm telling you this so you won't take it personally if it happens to you! Forewarned is forearmed.
Monday, June 27, 2011
Still a Divided Market
The real estate market is more complicated than it would appear from reading the papers. There are things that are selling, and selling quickly. There are other properties that are hanging around, some without even being shown. This has been true for a while now, but it's not what people expect in a so-called "buyer's market" (read "bad real estate market").
In more traditional renditions of a buyer's market, there are not enough buyers, and so they can bid low on properties, and sellers will have to take low offers if they want to sell. It tends to be true across all segments of the market, from starter homes to mansions. In a seller's market, the opposite occurs: People who want to get a property need to move quickly and bid high, or they will lose to other, more motivated buyers.
This market has aspects of both. Many people have listed their properties a long time ago, and those places have been sitting around. They are often overlooked by agents and buyers, as they can be considered as tired, and usually as overpriced. Other places come on, attract attention right away, and sell quickly, sometimes with multiple offers. What's the difference? Sometimes it's location, or staging, or size. Sometimes there's just a buyer who needs what a seller is selling, and needs it right away. More often, however, it's perceived value. The market--that amorphous body of economic value judgment--rates the property as a good value, and that sparks interest.
All of this makes it difficult to price properties. However, the possibility of multiple bids and early interest means that it's hard to underprice in today's market, as buyers will bid the price up to where it can/should be. It's easy, unfortunately, to overprice. Many sellers look at what's on the market at the time, and place their home in the range that they feel it belongs, without distinguishing between the overpriced inventory and the value properties that are getting all the interest. And that's a big mistake. Look at what's sold, and do it with a clear eye. Then listen to your real estate agent, and get your property into the sold column. Then you can become a buyer, and use all that knowledge to get a great value!
In more traditional renditions of a buyer's market, there are not enough buyers, and so they can bid low on properties, and sellers will have to take low offers if they want to sell. It tends to be true across all segments of the market, from starter homes to mansions. In a seller's market, the opposite occurs: People who want to get a property need to move quickly and bid high, or they will lose to other, more motivated buyers.
This market has aspects of both. Many people have listed their properties a long time ago, and those places have been sitting around. They are often overlooked by agents and buyers, as they can be considered as tired, and usually as overpriced. Other places come on, attract attention right away, and sell quickly, sometimes with multiple offers. What's the difference? Sometimes it's location, or staging, or size. Sometimes there's just a buyer who needs what a seller is selling, and needs it right away. More often, however, it's perceived value. The market--that amorphous body of economic value judgment--rates the property as a good value, and that sparks interest.
All of this makes it difficult to price properties. However, the possibility of multiple bids and early interest means that it's hard to underprice in today's market, as buyers will bid the price up to where it can/should be. It's easy, unfortunately, to overprice. Many sellers look at what's on the market at the time, and place their home in the range that they feel it belongs, without distinguishing between the overpriced inventory and the value properties that are getting all the interest. And that's a big mistake. Look at what's sold, and do it with a clear eye. Then listen to your real estate agent, and get your property into the sold column. Then you can become a buyer, and use all that knowledge to get a great value!
Monday, June 6, 2011
More Reasons to Buy Now
The Wall Street Journal this morning had one of the most positive articles about the current real estate market that I've seen in a long time. They said that, if you take out foreclosures, the real estate prices are really off less than 1 percent from a year ago, suggesting that we are at the bottom of the market. In addition, mortgage rates are near a 50-year low, and the ratio of housing prices to income is over 20 percent better than the fifteen-year average. Although household formation rates have fallen recently, the aging of the baby boomers portends an uptick in home purchases and second home acquisitions over the next number of years. They even went on to say that most people still want to own homes, even discounting or ignoring the investment value, because of control over their environment and access to schools and other amenities. They predict that prices will start to climb soon.
All of this seems to indicate that now is the time to buy. It never pays to try to find the low point at its exact nadir. All indications say that we are now close to that point, and therefore buyers should be rushing out to buy. The article does talk about the new difficulties in qualifying for and obtaining mortgages, but there are many other people who simply aren't buying because they are worried about the future value of their investment. Do those people not worry about the stock market? The bond market? The value of art and antiques? In fact, do they sleep at all?
It seems clear that we need to continue to convince buyers that the time to act is soon. If not today, then later this week or month!
All of this seems to indicate that now is the time to buy. It never pays to try to find the low point at its exact nadir. All indications say that we are now close to that point, and therefore buyers should be rushing out to buy. The article does talk about the new difficulties in qualifying for and obtaining mortgages, but there are many other people who simply aren't buying because they are worried about the future value of their investment. Do those people not worry about the stock market? The bond market? The value of art and antiques? In fact, do they sleep at all?
It seems clear that we need to continue to convince buyers that the time to act is soon. If not today, then later this week or month!
Wednesday, May 25, 2011
Financing Woes
There has been plenty of discussion about what's wrong with the real estate market. We've been through a few years where the focus was on what was wrong with the banks, and the government put in a lot of money to make sure that the problem got fixed. Somehow, the banks are now rolling along with big profits. It would be too much to say, however, that they are rolling along just as they did before. There are numerous new rules and regulations, intended to prevent the same thing that happened before from happening again. This time, though, it is the same taxpayers who paid the bill for the last fiasco who are being harmed. The banks are passing the consequences of those new rules along to the consumers. I'm not saying that this is necessarily wrong, but what's happening is that real estate is suffering, perhaps disproportionately, for what went on with the banks in 2008 and 2009. Where before people could, and did, finance 97% of the purchase price of a home (yes, that was the median financing amount in the boom years), now they have to put down 20% in many cases. So, of course, real estate sales have slowed.
The answer is not that we should all go back to financing the whole cost of a real estate purchase. However, our economy will clearly not recover until people have jobs and until real estate, which represents the biggest asset class most people own, bounces back to normal. Not where it was before, but to normal--that's all we're asking. In order for that to happen, we cannot spend all of our time trying to fix the last problem, and we may have to put in some money and effort to boost sales through this period. It's not enough for banks to make money again. The whole system is bogged down, and it has to be jump-started. Now.
The answer is not that we should all go back to financing the whole cost of a real estate purchase. However, our economy will clearly not recover until people have jobs and until real estate, which represents the biggest asset class most people own, bounces back to normal. Not where it was before, but to normal--that's all we're asking. In order for that to happen, we cannot spend all of our time trying to fix the last problem, and we may have to put in some money and effort to boost sales through this period. It's not enough for banks to make money again. The whole system is bogged down, and it has to be jump-started. Now.
Tuesday, May 3, 2011
Real Estate Around the Country
I just returned from my semi-annual meeting with other large independent brokers from around the country. This time, we met at Lake Lanier in North Georgia. The weather was great, but the real estate climate is, in some respects, sobering. National experts are saying that equal supply and demand and a "normal" market may come as late as 2015. Sales for the first quarter were down around the country, in double digits. Some of that was weather-related, but the rest is still about jobs and financing issues.
There is a silver lining, though, and it's a big one. The interesting news was that prices of sold properties were up by a fraction, 1% or so. This is counterintuitive, if you think about the effect of foreclosed properties and short sales on the value of homes. What it seems to suggest is that it is the best homes (not the most expensive, but the most desirable homes in every price category) that are moving. What that means for sellers is that homes must be put on the market at levels that seem to be good values.
What it means for buyers is even more important. There aren't great bargains out there, at least on homes that are well priced and well maintained. Putting in a lowball offer isn't going to result in a purchase. It goes back to the old saying "You get what you pay for". If you want it, you're going to have to buy it at its value, and not at a fraction.
We just had an offer on a commercial property with a listing price of $2.1 million. Someone submitted an offer of $700,000. That's just wasting everyone's time. The statistics seem to indicate that the short sales and foreclosures aren't yet changing prices on regular properties, and given what we are experiencing in delays on such sales, we can vouch for that. Those things are backed up in the pipeline. What's moving through are the good deals, but they are good deals at good prices, not bargain basement fire sales. Buyers should assume that they won't get what they want if they insist on bottom fishing. It may be a sport, but it's not a strategy.
There is a silver lining, though, and it's a big one. The interesting news was that prices of sold properties were up by a fraction, 1% or so. This is counterintuitive, if you think about the effect of foreclosed properties and short sales on the value of homes. What it seems to suggest is that it is the best homes (not the most expensive, but the most desirable homes in every price category) that are moving. What that means for sellers is that homes must be put on the market at levels that seem to be good values.
What it means for buyers is even more important. There aren't great bargains out there, at least on homes that are well priced and well maintained. Putting in a lowball offer isn't going to result in a purchase. It goes back to the old saying "You get what you pay for". If you want it, you're going to have to buy it at its value, and not at a fraction.
We just had an offer on a commercial property with a listing price of $2.1 million. Someone submitted an offer of $700,000. That's just wasting everyone's time. The statistics seem to indicate that the short sales and foreclosures aren't yet changing prices on regular properties, and given what we are experiencing in delays on such sales, we can vouch for that. Those things are backed up in the pipeline. What's moving through are the good deals, but they are good deals at good prices, not bargain basement fire sales. Buyers should assume that they won't get what they want if they insist on bottom fishing. It may be a sport, but it's not a strategy.
Tuesday, April 5, 2011
Referrals Everywhere
It's been a busy few weeks for people calling me to ask for help in selling real estate here and elsewhere. After all the talk about the Internet as a way to sell real estate oneself, and all the fears about the demise of our profession, it's heartening to see how many buyers and sellers out there know that they can use our help profitably. Even though all the studies show that the vast majority of transactions are done through real estate companies, there is a perception that that time has passed. It is true that the information buyers need can now be found online in many cases. What isn't true is that buyers don't need assistance in interpreting the data, in learning about a region, and in structuring an offer. And sellers are much the same. I've heard some talk about using Zillow to price a property, although it is very unreliable in certain areas. I've also known people who do their own marketing and even open houses. Much more often, though, I've heard people say how much they value having an intermediary in the negotiations, especially when they know the other party. What would seem to be an advantage--familiarity with the other side--makes most sellers and buyers very uncomfortable. The addition of professionals is highly comforting. At a time when saving money is chic, the use of real estate agents and agencies is a clear sign of their value. And you get what you pay for. As they say about lawyers ("he who represents himself has a fool for a client"), so goes the saying for sellers and buyers.
Wednesday, March 30, 2011
Double Dip Fears
Lately the papers have been full of talk about the possibility of a "double dip" in real estate sales. What some experts worry about is that current economic conditions will cause real estate sales, which had started to creep up, and values, which had not fallen as far as had been feared, to go down once again. The curve would then look a little like a W (although the anemic recovery would suggest that it might be more like a U, bumping along the bottom). The worst case scenario would be a V, with two downward slopes before any rise. Should those fears affect what consumers do this spring? I'm going to argue that those worries should not determine short-term behavior. In fact, if consumers step up to the plate and buy, they will actually cause the real estate market to improve and avoid the second drop. Even if units do go down again, however, we need to look at the facts in our region. Prices didn't go way up here, and they shouldn't dive downward, either. In addition, our non-profit engines are still strong, and should keep sales from plunging. Even if there isn't call for wild optimism, normal buyers should be fine, as long as they don't plan to flip their properties too quickly. The market seems to be taking care of that possibility, as more people rent until they are secure in their jobs and locations. To make a comparison, suppose that your car was old and needed replacement. Even if you thought that prices might come down for cars in another year or two, would you wait? Really? Or would you move ahead with your life, and enjoy the peace and security of owning something you valued, knowing that giving up a little in resale value is worth it in the overall scheme of things? I would bet on the latter course. I'm hoping buyers agree this spring.
Monday, March 7, 2011
Almost Too Late to Beat the Spring Rush
Everyone knows that more homes get listed and sold in the spring season, mostly because of school schedules. People either start jobs at the start of an academic year, or want to have their kids into new schools by September. What isn't as settled by all experts is the ideal time in which to list during that season.
I'm a firm believer in the earlier, the better. It's hard to know exactly when the market will pop, but there are certainly signs already--lots of ads, lots of open houses, lots of calls. If you are a seller, you want to have your home on the market before all of the sales activity really begins. It takes time to get the paperwork processed, get the home ready, and set a price. If possible, you want to list before the vast majority of people do, so that early lookers will see your home when there aren't as many places from which to choose.
We don't know when the snow will stop for good, nor when the temperatures will really start to climb. We do know the school vacation schedule, the holiday schedule (and Easter is very late this year), and the traditional boom times. In our company, we believe this: It's best to begin right now. If you are thinking of selling, call your agent today!
I'm a firm believer in the earlier, the better. It's hard to know exactly when the market will pop, but there are certainly signs already--lots of ads, lots of open houses, lots of calls. If you are a seller, you want to have your home on the market before all of the sales activity really begins. It takes time to get the paperwork processed, get the home ready, and set a price. If possible, you want to list before the vast majority of people do, so that early lookers will see your home when there aren't as many places from which to choose.
We don't know when the snow will stop for good, nor when the temperatures will really start to climb. We do know the school vacation schedule, the holiday schedule (and Easter is very late this year), and the traditional boom times. In our company, we believe this: It's best to begin right now. If you are thinking of selling, call your agent today!
Tuesday, February 1, 2011
Waiting for Spring
While I am snowed (or iced) in tonight--again!--I am thinking once again about how happy I am that real estate is not as time sensitive as some other industries. If you had a restaurant this week, or a theater, or an airline, you would be losing revenue that wouldn't be replaced, in many cases. With real estate, it's different. I was looking at Google Analytics tonight, which tells us how many people look at http://www.hpearce.com/, and from what sites those people reach us, and it was amazing. Every snowstorm for the past month had a huge spike upward, showing us that prospective buyers and sellers are using the downtime we've all experienced when there just isn't anything to do in all this snow, and they are using it to look for real estate on the Web. They can't get out to look at property (we didn't even officially open our offices today, preferring to leave the roads to those who absolutely need to get to work), but they certainly are thinking about it.
That's great news for us. We already know that a bad, snowy winter is usually devoid of sales, but that it is generally followed by a robust spring market. All that searching on the internet, and all that time cooped up inside, leads to a frenzy of springtime real estate activity. If that's the normal pattern, what on earth will we see this spring? Real estate flying off the MLS in April and May, we hope! So, if you are a potential seller, use this indoor time to de-clutter your home and do all those fix-it projects. If you are a potential buyer, keep surfing the net--we'll be waiting for you when the sun shines!
That's great news for us. We already know that a bad, snowy winter is usually devoid of sales, but that it is generally followed by a robust spring market. All that searching on the internet, and all that time cooped up inside, leads to a frenzy of springtime real estate activity. If that's the normal pattern, what on earth will we see this spring? Real estate flying off the MLS in April and May, we hope! So, if you are a potential seller, use this indoor time to de-clutter your home and do all those fix-it projects. If you are a potential buyer, keep surfing the net--we'll be waiting for you when the sun shines!
Tuesday, December 28, 2010
Blizzard
We were closed yesterday. I was supposed to be leaving town, but that obviously didn't happen. When I woke up, I couldn't tell how much snow there was, because it had blown around so much. There is no school this week, so I couldn't use the school closings as a guide. It was Monday after a holiday, so I didn't have yesterday's news to go by. Since we'd already cancelled the paper and Comcast was knocked out by the storm, I didn't have today's news to go by! So how did I decide to close?
Well, real estate is almost always a delayable purchase. Many buyers, as well as agents, don't want to drive if they don't need to do so. Those warnings and pleas from the Governor's office, to stay home if you can? They generally apply to us. In addition, most people don't want their properties shown in bad weather, because they don't want to take the risk that a prospective buyer would fall or get hurt trying to get in. Most inspections, closings, negotiations, and other business can be delayed for a day. Everything else, including anything that can be done with a computer and email, will proceed as usual. It's one of the benefits of the change in real estate, away from bricks and mortar and toward clicks.
Of course, we always worry that we will inconvenience someone who expects us to be open. That's why it matters whether everything else is up and running. As far as I could tell yesterday, not much was. So why make employees struggle to come in, only to sit around without any calls or visitors?
Finally, I think a lot of people hoped that the Christmas spirit would linger one more day, if we all took a deep breath and relaxed. And, at least for us, it did!
Well, real estate is almost always a delayable purchase. Many buyers, as well as agents, don't want to drive if they don't need to do so. Those warnings and pleas from the Governor's office, to stay home if you can? They generally apply to us. In addition, most people don't want their properties shown in bad weather, because they don't want to take the risk that a prospective buyer would fall or get hurt trying to get in. Most inspections, closings, negotiations, and other business can be delayed for a day. Everything else, including anything that can be done with a computer and email, will proceed as usual. It's one of the benefits of the change in real estate, away from bricks and mortar and toward clicks.
Of course, we always worry that we will inconvenience someone who expects us to be open. That's why it matters whether everything else is up and running. As far as I could tell yesterday, not much was. So why make employees struggle to come in, only to sit around without any calls or visitors?
Finally, I think a lot of people hoped that the Christmas spirit would linger one more day, if we all took a deep breath and relaxed. And, at least for us, it did!
Tuesday, December 21, 2010
Is the Tide Turning?
Yesterday was the busiest day for property sales that we've had in a long time. I spent the morning today trying to track down the reasons, and there are several possible causes. Two sales came about because the owners brought down their prices. In at least one instance, that produced multiple offers, so clearly buyers are motivated also. They aren't closing before the end of the year, so I don't think it's for tax purposes on the seller's part. It could, however, be due to the cold weather and the arrival of heating bills.
Two of the buyers are coming from Manhattan, so we're wondering whether the bonuses came early this year. There have been some news articles that make that claim, so it could be true. One buyer is about to start a new job, and was in a hurry (although, in the past, those people could have--and probably would have--rented in the short term). One renter turned into a buyer, and that could be an outgrowth of interest rates rising, with the prospect of higher rates next year.
We've had walk-ins as well, which means that people have gotten the message that the time to buy is now. Or maybe it's our Christmas present as agents! Either way, we'll take it.
Two of the buyers are coming from Manhattan, so we're wondering whether the bonuses came early this year. There have been some news articles that make that claim, so it could be true. One buyer is about to start a new job, and was in a hurry (although, in the past, those people could have--and probably would have--rented in the short term). One renter turned into a buyer, and that could be an outgrowth of interest rates rising, with the prospect of higher rates next year.
We've had walk-ins as well, which means that people have gotten the message that the time to buy is now. Or maybe it's our Christmas present as agents! Either way, we'll take it.
Tuesday, December 14, 2010
Rate Rise Alert
We've been talking about this for months, but it's finally happening. Interest rates are going up. The latest rates are almost half a percent higher than they were a couple of months ago. What does this mean?
First of all, the cost of owning a home with a mortgage goes up when the interest rates rise, meaning that fewer people can afford to purchase a home. It also indicates that, in most cases, buyers can afford to pay less for the same home, since they will qualify for a lower mortgage amount. In a buyers' market, which we are in now, that burden falls on the seller in large part. So, if you are selling, you will almost always receive less for your home when interest rates are higher.
In the larger sense, it could also mean that we are past the bottom of the market. Mortgage rates generally start to rise when things are starting to improve. Some of that is a signal from the stock and bond market that inflation could be a worry, and part is that the government will stop holding rates down if demand increases.
So, just as people often try to time buying an airline ticket to wait as long as possible to buy a non-refundable ticket at the lowest price, and frequently hesitate just a little too long (as I recently did....), you may already have waited past the point where you should have bought that property. Just don't wait any longer. Once things start to turn around, prices can move quickly. Consider this your warning!
First of all, the cost of owning a home with a mortgage goes up when the interest rates rise, meaning that fewer people can afford to purchase a home. It also indicates that, in most cases, buyers can afford to pay less for the same home, since they will qualify for a lower mortgage amount. In a buyers' market, which we are in now, that burden falls on the seller in large part. So, if you are selling, you will almost always receive less for your home when interest rates are higher.
In the larger sense, it could also mean that we are past the bottom of the market. Mortgage rates generally start to rise when things are starting to improve. Some of that is a signal from the stock and bond market that inflation could be a worry, and part is that the government will stop holding rates down if demand increases.
So, just as people often try to time buying an airline ticket to wait as long as possible to buy a non-refundable ticket at the lowest price, and frequently hesitate just a little too long (as I recently did....), you may already have waited past the point where you should have bought that property. Just don't wait any longer. Once things start to turn around, prices can move quickly. Consider this your warning!
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