Mixed Signals

The latest issue of the Commercial Record illustrates our current problem for sellers and buyers.  If you look at New Haven county for June, the most recent month available, compared to the same month last year, sales are down by 12% and prices for the whole county are up by almost 6%.  If you look just at the shoreline towns and add Woodbridge, to try to capture the higher end of the market, sales are slightly up and prices are down.  Go figure. 

I guess the lesson as a whole is that we can't pay too much attention to what we read in the national press.  Connecticut is following its own, slower, path to recovery.  Our listors at the high end of the market are beginning to accept that there seems to be a ceiling on prices for luxury homes, and that no one can say what a given home is "worth".  We can predict that it won't sell for what the seller thinks it should, given what money is in the house and what the condition is, but we can't find examples that will pinpoint the exact price.  We can't even promise that it will sell at a lower price, nor can we swear that we're not "making a market" by lowering prices, causing low prices to slip lower.  What can we say?  We can tell buyers that it's a great time to buy direct waterfront, or properties over a million dollars.

In other submarkets, the picture is murkier.  The numbers of months of supply in houses has declined, and is now in the range of a balanced market.  That should mean that neither seller or buyer has an advantage.  But, depending upon where you are, and the type of house you have, you could find a bidding war or few showings, with maybe a lowball offer.  However, the only way to test the market is to put the property on at a "fair" price and see. 

There is a bump every fall, when buyers try to close and move before the end of the year, and, this season, it may tell the final tale of 2013.  Let's see what happens.  We do know this--mortgage rates, over the long run, matter much more than a few thousand dollars here or there in the sales price.  So buyers should definitely act, because interest rates have already gone up about 15% from their lowest point, and will likely rise further after the elections.  Time is fleeting--carpe diem!

Winter Weather

You might think that, in such an evolved society, with so many technological advances, weather wouldn't matter so much.  But you would be wrong.  Last winter, with storm after storm hitting our region, most people didn't work a full week until sometime in March.  Most of us just hunkered down and waited for spring, which didn't even come early after all that snow. 

This year, we've seen almost the opposite.  We had that one freak snowstorm, which seemed like some kind of Ice Age event, as opposed to the start of winter, and very little since then.  The first winter storm came on a Saturday morning, when many people did  not have to be on the roads, and it melted quickly. 

So, you may ask, how does that relate to real estate?  The harsher the winter, the slower the spring market, and vice versa.  People want their homes listed before the spring rush, but it's not always clear when that will be.  It won't be before the streets and sidewalks are cleared.  Even though a bad winter should keep people indoors, getting ready to move, it doesn't seem to work that way.  Until they can come out from under blankets--either of snow or the literal kind--they don't get their homes ready to list. 

Since this year has so far proven to be mild, we are anticipating that the spring market may come early.  I'm writing this too early to know what the groundhog is going to do later this week, but I want to get in an early warning:  Get ready before the market takes off without you, whether you are a buyer or a seller.  Be ready to go when it pops.  And that means, this year, that it's already time to begin.

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.

Buyer Brokerage Again

It's time to explain buyer brokerage again. The real estate business has changed a great deal over the years, and buyers don't always understand the changes. It is similar in many ways to the medical field, where privacy concerns have led to the HIPAA law, requiring patients to sign documents each and every time that they see a physician. Even lawyers have gone in this direction; a client must now sign a retainer agreement before any work on his or her behalf can begin.

Well, we have those rules as well. When you begin to work with an agent, he or she is required, at the first significant contact, to present representation forms. Although we are allowed to take you into our own listings, that is because, in those cases, we represent the seller. We cannot take you into someone else's listing without having buyer brokerage. If we do, we don't have to be paid. Would you work at your job without knowing whether you are going to get a check?

These rules are also for your protection. If we don't represent you, we cannot tell you things that it would be in your interest to know. For instance, we are only supposed to tell you the listed price without a buyer brokerage agreement, not what we think you should offer or what we think the property is actually worth. The current regulations arose out of a genuine feeling that everyone deserves his or her own agent, looking out for his or her own interests. Almost all of the time, the seller still pays the commissions to both agents--that's because the seller is the one with the cash, since buyers cannot roll commissions into the mortgage amount. However, even that will probably change some day.

In the meantime, be kind to your agent who asks you to sign a form that you didn't used to have to sign. He or she is just trying to do his or her job in the best possible way, and to help you get all the information you need to make a good decision.