As we slide into the “off-season”, sellers are left with the dilemma: Should they keep loitering on the MLS, or cancel the listing and wait for better times.
Here are both sides of the coin:
STAY ON THE MARKET
1. You’ve Come This Far – It is a hassle to keep the house in showing condition, and to work around the appointments – especially with those pesky agents who give little or no notice. Let’s get this over with!
2. Your Agent Has Worked For It – You’d like to see the sale happen for your agent’s sake too, because they’ve been at it for weeks or months.
3. Other Listings Will Cancel – You might have the local market to yourself in 20-40 days, hang in there.
4. Price Reduction is Mandatory – If you’ve been on the open market for more than 30 days, everyone who is interested in your home has seen it by now. There won’t be many buyers starting their search in fall, so to re-ignite the possible enthusiasm you’ve already built, lower the price 10%. Don’t scoff – if nobody bought it during the selling season, it’s because your price was too optimistic – and know that 10% might not be enough.
It’s nothing personal; your house is probably worth the money – just not today, apparently. If you absolutely refuse to lower the price, then you might as well cancel and hope something will be different next year.
CANCEL LISTING, AND TRY AGAIN NEXT YEAR
1. Agents are Dogs – Once you cancel your listing, you will be hounded by other agents incessantly until you list the home, or die.
2. More Competition – With the much-higher pricing available, we’ve been expecting a surge of new listings – and you only need a few neighbors to spoil your chances.
3. Buyers Will Remember You – The new buyers in town will see your previous attempts to sell on Zillow – you’re not going to fool anyone – and they will hold the price failure against you unless reduced.
4. Higher Prices Next Year – The only reason to wait is if you think prices will be higher – and you won’t raise yours! It’s an important distinction – you’re choosing to wait for prices to catch up with your current list price.
When you look at both sides of this coin, I guess you can say they are pointing in the same direction!
Would it hurt to wait? Yes it could, because if there is a surge of new listings around you, the chances of getting this year’s money is remote (which is probably 5% to 10% below your current list price).
There is an unsettling relationship between the amount of inventory, and buyers’ willingness to step up. Notice the history of the number of NSDCC detached-home listings below. After three years of lower counts, in 2006 there was a 16% increase of new listings between Jan 1 and August 31, and it was enough of a surge that not even Angelo’s no-down, no-doc loans could save us:
Year
# of New Listings Between 1/1 – 8/31
2002
4,377
2003
4,037
2004
3,920
2005
3,976
2006
4,602
Year
# of New Listings Between 1/1 – 8/31
2011
3,923
2012
3,335
2013
3,685
2014
3,555
2015
???
The 2003-2005 era was similar to today – a long winning streak of reduced inventory and rising prices. Will 2015 be the year of the inventory surge? If so, you’ll be glad you sold this year.
It’s official – Kayla is back in the sales division after an extended stay in the admin department. You have to learn it all if you’re going to take it over someday! Hopefully we will feature her more on videos!
This lending freeze is not just preventing people like the Sleimans, who have struggled to document their income, from chasing their dreams. It’s bad for the overall economy too.
Laurie S. Goodman, an expert in housing finance at the Urban Institute, a think tank in Washington, D.C., recently calculated that lenders would have made an additional 1.2 million loans in 2012 had they merely loosened standards to the prevailing level in 2001, well before the industry completely lost its sense of caution.
As a result, fewer young people are now buying first homes, fewer older people are moving up and less money is changing hands. Instead of driving the economic recovery, the housing business is dragging behind. “An overly tight credit box means fewer individuals will become homeowners at exactly the point in the housing cycle when it is advantageous to do so,” Goodman and her co-authors wrote in their study, published in The Journal of Structured Finance. “Ultimately, it hinders the economy through fewer new-home sales and less spending on furnishings, landscaping, renovations and other consumer spending.”
“We’ve locked down mortgage lending to the point where it’s like we’re trying to avoid all defaults,” said William D. Dallas, the chairman of Skyline Home Loans, who has three decades of experience in the industry. “We’re back to using rules that were written for Ozzie and Harriet. And we’ve got to find a way to help normal people start buying homes again.”
Navy Fed is doing their part, and these aren’t VA loans. Rate is around 5.50%:
Dataquick released the August sales yesterday, and at first glance you might think we should be looking for lifeboats – this is the second month in a row that Dataquick has reported SD sales dropping more than 18%:
But August, 2013 was probably the last month that buyers were able to lock in a mortgage rate in the 3s, before rates jumped at the end of June.
If you look at San Diego’s 2014 monthly sales, they look consistent and remarkably strong considering that prices have been going up every month. Here are the MLS counts for all property types in the county:
Jan = 2,116
Feb = 2,271
Mar = 2,778
Apr = 3,321
May = 3,255
Jun = 3,182
Jul = 3,043
Aug = 2,806
If sales fall off the next few months, the blame will be on the holidays, and sellers will expect a vibrant selling season again next spring.
1. They have launched their transaction management business in San Diego. But they’ve been having trouble with their website this week, and you have to register just to take a look. With Zillow and others giving you free and anonymous access, consumers expect to roam around before committing their email address. Specifically, buyers and sellers will want to see the homes-for-sale inventory.
2. Timing is everything. If they could have caught the early frenzy when there wasn’t as much scrutiny of pricing, consumers would have been more willing to take a chance on a new-fangled system. People will still be curious, but pricing is the issue with all for-sale-by-owners. They aren’t as motivated, and without any guidance, they will price high. But buyers today don’t know if prices are going up or down, and they will want to be conservative about price – creating a significant gap from the start. The chances of buyers and sellers coming together on price today – even with an agent – aren’t that good.
3. Her first pitch is for participants to save the commission. But only one party can save the commission, not both. For sellers to save the commission, their price has to be so attractive that buyers pay the full price. But buyers want to save the commission too, so they subtract 6% from the seller’s price just to get started.
4. She dwells on the fact that her service is free to get around RESPA. Two points: A) They are appealing to the money-savers, who aren’t going to tolerate paying higher fees for the other services provided. B) When a customer has a problem or concern, and they can’t get help from her – who is going to make the deal?
5. She does concede that consumers may need an agent, and if so, they can find one and work out a pay structure on the side. But she is missing the big game-changer that a new-fangled company could provide: realtor help if/when needed, at a reasonable cost. Consumers don’t mind paying a reasonable fee to get adequate help, and if she just provided that one last step she might pull it off. But instead, she chides the industry with her snarky comments like she is a ‘recovering realtor’, which alienates realtors everywhere.
6. She said that she was a realtor for ten years, but the BRE says that she obtained her California real estate salesperson’s license in 2007 – who knows, maybe she had a license in another state? According to the San Diego MLS, she has sold 40 homes in her life, which means she hasn’t handled a big sales pipeline. A company built on skimming fees needs to generate a large volume of sales, and they are trusting that a computer can do the job that they have never done themselves.
7. The ‘scorched-earth’ mentality means game-on. Note that she wouldn’t name the title and escrow company yet – why? Because that title and escrow company already has a book of business with traditional realtors, and they are probably concerned about alienating them. The mortgage company, Prime Lending, is crazy to think that being associated with this effort won’t affect their normal realtor business, and likewise for whoever the other affiliates are.
Other attempts to disintermediate the real estate business have stumbled. The old IPayOne was probably the best combination, because they did provide realtor help when needed but they skimped on quality and eventually closed down. Redfin has been around for years now; has name recognition, a great website, discounted commissions, and 44 team members in SD – yet according to the MLS, they only have a 1.6% market share this year. Why?
Because the consumers’ perception of realtors tells them to go with someone else 98.4% of the time.
The company that will bust the real estate cartel is the one that provides great-quality help for less cost. But if that happened, traditional realtors could adjust their commissions accordingly, and then it’s a nothing-burger.
This is a new video of the remodeled 1,946sf single-story house on Manzanita in Carlsbad that just hit the MLS today for $799,000. Kayla and I will be there from noon to 3pm on Saturday for open house, and Richard will be there on Sunday during the same time period – stop by!
