Putting The Right Value On It
It sure seems like a frenzy when you hear about the lowest rates ever and Southern California median prices going up 17% year-over-year. But there isn’t a rising tide that’s floating all the boats higher – lots of homes aren’t selling. It would be simple to say that their price is wrong – but that’s obvious.
But why is it wrong?
It’s because homebuyers today are demanding quality. Unlike during the rah-rah years when buyers only cared about staying short-term and moving up again, today’s buyers are looking long-term. They are investing larger down payments and locking in an ultra-low rate on a 30-year fixed loan – and planning to stay forever.
This quality-based mindset brings a complication to the home-buying experience. How do you know if you are buying a quality product? How do you pinpoint the value/worth of the many variables – and pay the right price?
You need to have an experienced eye to gauge correctly. This is a sticking point when tinkering with ideas to change the realtor experience.
Redfin has pioneered the salaried-agent idea, and wants to grow.
Glenn Kelman, chief executive of Redfin, says he is looking to increase the company’s workforce of 400 agents nationally by 50% by the end of January. “I’m going across the country meeting with managers, and the only topic we’re talking about is hiring,” he said.
Earlier this year, the company ended up sending about half of its referrals to other companies because “demand outstripped the supply of agents,” he said.
Redfin is unusual among real-estate companies because it pays a salary and benefits to its agents instead of commissions. “Our model means we have to go long on real estate, and we did not go long enough,” said Mr. Kelman.
I love Redfin’s website and renegade spirit, but do they deliver on this critical component of being able to summarize a home’s variables, and put a proper value on them? At a recent hot open house, the local Redfin field agent stopped by, and we had a nice chat.
She said that she was a stay-at-home mom, and just worked weekends opening doors for buyers. Indeed, she had two sets of buyers visit back-to-back, and she stood by idly by while the people looked around. She didn’t offer any advice or instruction, and in both cases the buyers left with a cursory good-bye exchange.
This agent commented further that she doesn’t write the offers. If the buyers want to pursue it, they would contact the main agent, who writes all the offers. The end result? The buyers are faced with composing their offer with an agent who hasn’t seen the property, and who may write other competing offers too.
On their website they say that their associate agents “point out things you might miss”, but in this case there was nothing offered. And if both sets of buyers wanted to write an offer?
If prices keep rising, buyers will want and expect even better quality – both in the properties they are considering, and in the advice they get from their agent.
I take great pride in identifying the good and bad components of each property, and being able to put a value on their worth. People will say, “well can’t I just get a home inspection?”, but my analysis includes more than just the physical elements of the building. I evaluate the worth of the location, view, lot size, house size, neighbors, etc. and their impact on resale – and how to factor them in to pay the right price today.