It looks easy, doesn’t it? With the internet, how hard can it be to buy or sell a home?
There are no shortage of options. Buyers see thousands of homes for sale, and sellers find thousands of agents happy to list a home for fees ranging from $100 to 6%.
Yet the perception remains that the process is stressful and costly. Why, when it looks so easy from the outside looking in?
Here are ten reasons why buyers and sellers should Get Good Help:
Friends and family – Buyers and sellers have friends and family who are happy to critique every move. Most of all, they remind sellers not to give it away, and possible deals get crushed regularly over 1% to 2%.
HGTV – Where consumers learn how the home-selling game works. The fact that HGTV is scripted entertainment doesn’t phase the viewer – the content seems plausible enough that it could be real, and the industry doesn’t provide anything better so by default HGTV has influence.
Inexperienced and unethical agents – Agent blunders can cost you a sale. But whether they were accidental (inexperienced) or on-purpose (unethical), they also cast a pall over the industry that causes participants to be frustrated and leery. You need to get good help to endure and triumph over these agents.
Escrow, title, and lenders – These folks have been over-worked since the beginning of time, and they make mistakes. Consumers need good help on their side just to minimize the impact.
Appraisals – A bottle of scotch doesn’t work any more – appraisers are independent and untouchable now, which means they can kill any deal. They are like baseball umpires – they can strike you out, even if the pitch was a ball, because it’s just their opinion.
Shoddy Repairs – Whether it’s to fix any historical work or corrections done to satisfy today’s repair requests, the house needs to be in decent shape to close escrow – or the sellers need to be willing to take a sizable discount. Having vendors who can quickly make impressive repairs for a reasonable fee is critical.
Packing and Moving – A great agent has ways to prevent your move from turning into an evacuation.
Gimmicks – This business has always been notorious for its deceitful gimmickry, and these days you need a supercharged BS-detector to get the truth.
Correctly Interpreting Market Conditions – Get the right answers to: Are we in a bubble? Should I wait? How much is this home really worth? Are there two birds in the bush?
Consumer Inexperience – This might be the biggest hurdle of all, and what causes buyers and sellers to rush a decision before doing enough investigation. Having proper guidance throughout the process is what relieves the stress and costly experiences you hear about!
Get Good Help – it’s never been so important. These are the highest home prices ever!
Being a casual home buyer is fine, and most people are.
They’re looking for the perfect home for them, and they will know it when they see it. But because virtually every house needs something – even new ones – it can be a long hard road in search of perfection.
Try this approach.
Instead of declaring yes or no on each house you see, put a number on it.
At what price would you buy it?
It takes more time to research the comps and compare the features, but it gets you onto the playing field. Here are some of the benefits:
Hone your home-evaluating skills.
Get more familiar with the comps.
Identify what features are most important to you.
If you do make an offer, it bolsters your case with seller.
Your offer negotiations have a specific target.
If you don’t make an offer, it prepares you for the next time.
When do you make an offer?
If your research concludes that you might pay within 10% of the list price, then make a written offer and see where it goes.
If your price is more than 10% below list, then call it in and see what the listing agent says. Nine times out of ten they will hang up on you….and you’re looking for the tenth!
The yes-or-no approach won’t buy you a house – instead, put a number on it!
To further examine the off-market phenomenon, here are the first few entries snipped today from Facebook realtor groups:
I don’t fault the listing agents – this is realtor marketing in 2019, and everyone is doing it so it must be ok. Agents who represent buyers need to be well-connected and searching for homes in other places besides the MLS.
Our client wanted a smooth transition when moving, and he got the quality help he needed from Neat Method. Here’s an introduction, plus our client’s warm words about Donna and her assistance at the end of the video:
Homesnap provides the MLS mobile app to agents, and, as a result, has the direct connection to the sales history. They publish the data on each agent from the last 24 months, which provides a more extensive track record, and:
Helps to iron out any hot and cold streaks
Shows the average days-on-market and sales-price-to-list-price ratio
Shows listings that didn’t sell (labeled ‘off-market’)
The average days-on-market and sales-price-to-list-price ratio gives you a good sense of the agent’s pricing accuracy. If listings languish too long on the market, there is an increased likelihood that buyers will offer less.
We know that 40% of all listings don’t sell, so failure can happen. Select an agent who has done better – in my case, one seller decided not to move, two decided to rent instead of sell, and the fourth was when I was mentioned as Richard’s co-agent on a listing.
If they have a huge number of off-market listings, they are probably a serial refresher, which means they like to manipulate the market time – which aggravates other agents and buyers.
Bottom line: An agent’s sales history verifies how successful they are at getting clients to the finish line. With the market changing, buyers are putting up a fight now, and you want an experienced agent on your side to ensure success.
Here’s the link to Homesnap (their mobile app is better):
While some folks can’t make sense of a move up or down, there are others who have specific wants/needs, and are willing to forge ahead – if they can just sell their existing home and pour their equity into the next one.
I’m three for three this year with contingent sales already, and I wouldn’t be surprised if half of my sales in 2019 will involve contingent buyers.
The challenge gets more complex when multiple sales are contingent! They stack up like dominoes, all dependent on sales on either side to be completed successfully – and risk all crashing if a problem pops up that can’t be solved.
Up to now, listing agents and sellers haven’t had to deal with contingent buyers because we’ve had enough non-contingent buyers to go around. Not any more.
The #1 reason sellers and listing agents should consider a contingent offer?
Contingent buyers pay more.
They know they are asking a favor, and in effect, they are purchasing a favor.
Plus, their purchase is contingent upon them selling their house (read: getting the price they want), so everybody gets what they want. Win-win!
Contingent sales can be highly speculative, however, and our existing system doesn’t provide a safety net, so there is a risk that every seller could get left holding the bag.
How can we tighten these up?
Have buyers obtain full loan approval. At least if the buyers are fully approved by the mortgage underwriter, that concern is satisfied. A pre-qual letter isn’t solid enough to tie up a property.
Review the lender downstream. If there is a chain of contingent sales domino-ed together, let’s take a good look at everyone’s lender letter – because we’re all in it together.
Review the agents downstream. Is everyone competent? If my sale is reliant upon an agent downstream finding and solving problems, then it’s not asking too much to know who it is. What else have they sold lately?
Supply comps and photos of contingent properties. Every agent involved should know – and get to render their opinion – on the price/value of the other homes in line.
Bridge loans. Bridge loans are out there, and Compass should have a good alternative ready before too long. A fantastic option that solves everything.
There is another viable alternative that every contingent-buyer should consider: Selling your home first. The immediate reaction is usually the same – I don’t want to be left homeless, or I don’t want to have to move twice, which is understandable.
But we do have the seller contingency that allows us to find a suitable buyer for your home while not binding the seller to move until they find suitable housing:
Our ability to master the contingent sale will probably make or break the market this year. Without them, will there be enough buyers with the equity, desire, and ability to keep the party going? It’s doubtful.
Most realtors, let alone buyers and sellers, are unfamiliar with contingent sales. But this is where our creativity will pay off in a challenging market!
Kayla returned from Manhattan for the long Thanksgiving weekend, and we were talking about the sluggishness in New York City market, which has been going on for 2+ years. By now agents have learned that there’s no use fighting it – you have to learn to adapt.
It was in the year of her birth, 1991, when I experienced my first market slowdown. All I knew was that there wasn’t a buyer for miles, and with a newborn child, I need to hurry up and figure this out!
This is my third time around the block, so I offered her a few ideas.
First let’s acknowledge how it works in a seller’s market. Buyers find a house that is a good fit, and they buy it. Agents might offer up a strategy to get a discount, but for the most part, buyers pay the sellers’ price. It’s binary – it is yes or no, is this the right house? If it is, then pay the price.
Now it’s different, and if you can get a buyer to look at homes, their answer will be the same everywhere – ‘no’. Because they are looking for any reason not to buy – and every house has one – once they find it then it’s game over. But rather than just saying no to every house and never buying anything, let’s take it a step further.
At what price would you be a buyer?
Price will fix anything, and the price itself is usually the problem – it’s too high.
If the buyer would be interested at a lower price, then all you have to do is present a powerful case to the seller and listing agent to see if there is enough motivation to at least listen, and hopefully make a deal.
If you just make a lower offer without justification, I can already tell you what the answer will be: “No, and get off my lawn”.
To get something, you have to give a little. Here are ideas:
Make an clean offer with quick close date. These work best on vacant properties where sellers might be eating an extra payment.
Make an offer using older comps, and point out that the Case-Shiller pricing (or other) has retreated back where it was X months ago.
Make an offer based on the cost of the needed improvements, and include contractor quotes when possible.
In all cases, include a photo of the family and pets, and an introduction that explains the offer. Usually the listing agent will just forward the explanation right to the sellers, so it’s a way to have influence over the outcome. Without an introduction and explanation, the listing agent has to justify the low price himself, and he won’t try too hard and risk looking bad.
We need price discovery!
The only way to find out what the seller might take is to put an offer on the table. It may seem risky to be among the first to take the plunge, but by April/May we should see more people finding a way to make a deal. Those will probably be with the sellers who have been trying to sell for 90+ days, and are tired of the process. Let’s give it a shot!
This isn’t a sign that the bottom is falling out of the market. Instead, after years of rapid price increases, experts say the market is becoming more stable and for the first time in quite a long time, it is shifting in favor of buyers.
That shift is most evident when you look at the number of times sellers have reduced prices. The share of home listings with a price cut grew to its highest level in at least eight years, says a recent analysis from Trulia.San Diego had the most reductions — 20.5 percent — of the 100 biggest metro areas in the United States so far this year. (It tied with Tampa, which also saw 20.5 percent of homes with a price cut.)
7171 Terra Cotta Road — $545,000. The four-bedroom house (1,804 square feet) in the Bay Terraces area has had four price reductions, starting at $569,000 at the beginning of November.
4225 Florida St., Unit 4 — $395,000. The two-bedroom condo (794 square feet) in University Heights has had three price reductions, starting at $425,000 in mid-October.
3655 Ash St., Unit 2 — $322,100. The two-bedroom condo (824 square feet) in Fairmount Park has had six price reductions, starting at $330,000 in mid-September.
Listing agent April Khamphasouk said the tough thing about selling the house at 2873 Upas St. is that it is basically two homes in one (the property is 1,698-square-feet and has a guest suite above the garage).
She first listed the home for $1.1 million in early October. By mid-October, the price was lowered by $19,000. There were three more price reductions and by Nov.12, the asking price for the home had decreased by $55,900. It is still on the market.
Khamphasouk said the recent price reduction seemed to be greatly increasing interest. Still, she said a lot of the issues in the past month have been related to rising mortgage interest rates.
No mention was made about the Upas property selling for $775,000 in May. The Terra Cotta house just had a model-match sell for $415,000 nearby, and the Florida St. condo is on the corner of El Cajon Blvd. and next to a paint store. If these homes represent the types of properties that need to lower their price, then the shock is that only 20% needed a price reduction.
The real news was that nearly 80% of the listings didn’t lower their price!
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