I do video tours for out-of-town clients – it’s a virtual showing to help buyers decide if they need to get on a plane. If it’s a hot one, I’ll tell you:
Category Archive: ‘Why You Should Hire Jim as your Buyer’s Agent’
The latest BRE stats are out:
Do you get the feeling that the real estate environment is like the wild wild west? Well, it is – there is virtually no oversight or enforcement going on:
When it comes down to the last 2% to 4% on price negotiation, why is there so much trouble putting a deal together?
It because the participants had no strategy going in – they just start making offers or counter-offers without regard to where it will lead.
Without a specific strategy, it’s too easy for either party to throw their hands up and say, “I don’t know how I got here, and I don’t like it!”.
This is another reason why we should adopt the auction format to home-selling. The auctioneer has a very specific strategy on price, and the increments of change – all the buyers have to do is say yes or no.
Until the auction format takes over, what can we do?
My ideas on offer/counter-offer strategy:
- Keep It Simple – Negotiate in 25-50-75-99 increments, they are easier for the receiver to compute the differences. It also helps to give the other party a strategy for their response – if they are paying attention.
- More Simple – If you can’t get on a 25-50-75-99 track, then sellers’ counter-prices end with a nine ($879,000), and buyers end with a zero ($850,000 or $860,000).
- Buyers – Have your initial offer reflect the days on market. If you offer 5% under the list price on a house that has been listed for 3 days, you won’t get a response. Make the same offer 3 months later and the seller should be happy to engage.
- Velocity – Make a big price move with your first counter-offer to encourage the other party (heck, they might be so happy they just sign it), but then pull back on the second round.
- Don’t Go Longer Than Two Rounds of Counters – Parties get tired of playing, and burnout sets in quickly.
- Expect to Split the Difference at Some Point – it’s a win-win solution.
- Know the Other Agent’s Level of Competence – If the other agent sells less than one house per month, they are likely to willy-nilly the process. Your agent needs to help them along.
If you are the buyer, it would be nice to pick up some signs along the way to assist with setting a price strategy, and lay out your expectations mentally.
Signs of seller motivations, and what a buyer can expect:
- How difficult it is to see the home. If the listing agent blows you off for a day or two, or wants to show the house at their convenience, not yours – then you can expect tough sledding ahead.
- How quickly they responds to your offer/counter. If the sellers doesn’t respond within 24 hours, it means they don’t understand buyer’s remorse – and don’t care.
- How close they stick to list price. The closer they stick, the more (over)confident they are.
- Who the seller picked for a listing agent will tell you just about everything you need to know about your chances of success. If they select a reputable, experienced agent, then you will know because the house looks sharp, it’s easy to see, and the price is attractive. If they picked a loser, then the photos are terrible, the house looks like crap, it’s hard to see, and the price is 10% higher than comps, or on a goofy range.
Remember that it takes four things to make a deal – the right house, the right list price, the right seller, and the right listing agent. If any of those four are out of whack, then a deal is unlikely.
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After enjoying the content of the first couple of dozen listings, I decided to turn on the camera and let you see what it is like being me – or any other agent out there who works with buyers. P.S. The price point doesn’t matter – this is what it’s like. I forgot to cut the first 5 seconds:
I showed 20-25 properties to buyers over the weekend, which always makes me cringe because I know what will follow – those incessant ‘feedback’ requests. In a hot market, they come by email – listing agents don’t care what you think then, because they know the property will be selling any minute.
But these days you get phone calls.
The calls usually come from assistants, and, for the most part, they don’t care what the feedback is, they just need to write something down.
But occasionally the actual agent will call, which hopefully means somebody has some real motivation over there. I like to turn these into two-way conversations and ask questions to see if the agent might be realistic.
Agents love to gush about how many showings they’ve had, and as a result, how a sale must be right around the corner. You and I know that a lot of showings but no offers means a lot of buyers not interested – at least not at this price.
But most agents are slow to accept that reality, so I’ll follow it up by suggesting that the market must have turned soft and see what they say. You can’t assume that it’s obvious to everyone, even those in the business. Besides, after the run we’ve had, most realtors think the market is soft if they don’t get multiple offers in the first week!
But what is a ‘soft’ market?
DEFINITION of ‘Soft Market‘ – A market that has more potential sellers than buyers. A soft market can describe an entire industry, such as the retail market, or a specific asset, such as lumber.
This is often referred to as a buyer’s market, as the purchasers hold much of the power in negotiations.
The market will feel ‘soft’ to sellers and agents who are getting showings but no offers. They will blame the ‘market’, as if the problem is outside of them.
But we know what the real problem is – sellers got a little too enthusiastic about their list price, and buyers are now balking. For example, see below.
Most agents are reporting no offers on their listings, and you can see why. There isn’t enough pricing momentum to propel buyers to keep paying more.
How soft is it?
Probably 5% to 10% – but do you deduct from today’s lofty list prices, or from the last comps? Results may vary!
The last third of 2016 starts on Thursday!
For the first time in recent history, October surpassed June as the most popular month to get married. And these autumn-loving brides may be on to something: Although the spring months are notoriously the best time to buy real estate (as well as have a wedding), fall may be the new ideal season to buy a home.
Here are seven insights on why you should buy a home during the fall season:
Here are Zillow employees discussing with realtors their May survey of homebuyers. Because Zillow depends on realtors buying advertising, their presentations are increasingly centered around why consumers need realtors.
I only made it to the 25-minute mark – the material is dry and somewhat dubious; maybe it gets better? But the stat above was note-worthy.
Seven homes? That’s it?
The lightweight reporters who nibble around the edges don’t ever get to the point. It doesn’t matter who wins the election, rich people are taking over. Millennials and others will have to find a way to buy a home, or be at the mercy of rich people for the rest of their lives.
Trevor Burbank is single, 27 years old, and has been house hunting in Nashville for the last year.
“My rent’s going up in August, so I have to figure out what I’m doing,” he says.
The last time Burbank looked for a place was five years ago. He decided to use his down payment to start a business instead.
“There was a house that I really liked that was going for $60,000, and I saw the house being sold in the past few months for just shy of $300,000,” Burbank says.
There’s a big debate in real estate over where home ownership rates are headed, and whether Millennials — people who came of age around 2000 — will get into the housing market the way generations before them did.
Have you seen a home sale close at a surprisingly-low price, and you said,
“Geez, I would have paid that!”
Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.
The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”. A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.
With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.
If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.
Let’s see who else is out there!
Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties. It isn’t enough to change the market, but a notable strategy.
You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.
On June 11th we noted two single-story homes for sale in Carlsbad.
This 2,726sf single-story house in SW Carlsbad listed on June 9th for $1,149,999 – and it had the extras like a good yard and view.
They received multiple offers, and it closed for $1,165,000, or $427/sf!
How do two-story homes compare?
This is asking $278/sf nearby and unsold:
Asking $299/sf with ocean view:
Base-grade tract house at $286/sf:
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