The SP:LP ratio has been very consistent for those selling a home under $2,000,000 – you can expect to get pretty close to your asking price. Above $2,000,000 is a different story.
Mortgage rates had averaged 3.99% in 2017. You can see how the lower-end buyers became less concerned about getting a discount as rates started rising in early 2018 (they reached 4.59% in May, 2018):
This is another place that listing agents manipulate the data. When marking their listings as sold, many will lower the list price to match the sales price in order to make it look like they sell their listings for ask.
And that isn’t the only request Beverly Hills-based realtor Aaron Kirman makes to the owner of an oceanfront Dana Point house on CNBC’s new “Listing Impossible,” which premieres at 7 p.m. Wednesday, Jan. 15.
The eight-episode real estate series produced by Authentic Entertainment, a division of Endemol Shine North America, follows the powerhouse agent and his team as they take on big-ticket homes in Orange and Los Angeles counties that have languished on the market for too long.
“I am up against people that are winning and losing every day, and I felt like the world doesn’t see real estate in an accurate way on TV,” said Kirman, president of Compass’ luxury estates division who in 2019, alone, sold $500 million in real estate. “I wanted to show sellers mistakes not to do, so they could win, whether they live in a multi-million-dollar house or a $60,000 trailer.”
The series, filmed from late 2018 into spring 2019, features the jaw-dropping homes of attorneys, business executives and celebrities who aren’t used to being told what to do.
Kirman knows how to break a hard-to-sell logjam with high-priced staging, landscaping and lowering the asking price. But that hard truth is greeted with stunned looks on the faces of his potential clients.
And, naturally, there’s pushback.
“Aaron, they’re not that bad,” Renetta Caya, owner of the Dana Point property that was listed at $13.9 million for three years without one offer. That was before Kirman and his team entered the picture and told her they didn’t like her couches.
“They’re pretty bad,” Kirman insisted.
The house sold in October 2018 for $8.807 million, property records show.
Let’s touch on this topic one more time as a new season opens up.
While our 2020 market should be promising, the actual results won’t be as obvious.
Reasons to be optimistic about this year:
Rates are really low, though we expect that now and it won’t set off a frenzy.
Prices have been moderating, which gives the buyers some confidence.
We are overdue for more boomer inventory.
But don’t expect to see a bunch of hot buys hitting the MLS.
Now that the N.A.R. has laid down specific rules for off-market sales, agents are going to take advantage.
While every brokerage will have an internal network to promote new listings within the company prior to MLS-input (which is allowed), the individual realtor teams will run their latest hot listings through their stable of buyers first, before giving the rest of their company a crack at it. Only when those attempts have been exhausted will a listing find its way to the MLS.
It may only be 5% to 10% of the market, but it will be the very best 5% to 10% – those listings that every buyer wants. Without seeing those hot buys flying off the MLS within days, there will be less urgency and a false malaise setting in with those who are judging the market just based on the MLS activity.
The public won’t have a clue, either. They will be forming their own opinions about the market based on what they see on Zillow, never knowing there is a secret pre-marketing – and selling – of the best listings. It will only be those who attend open houses who will get pitched to leave their contact info to receive their off-market buys (it will be the most-heard pitch of the year at open houses).
Don’t sellers object? Not really, not when it is presented as a better alternative to having strangers traipsing through their house at all hours with little or no notice. It also becomes the happy option in between selling to Zillow for less and taking a chance on the open market.
Are the off-market sales valid comps? Everyone is going to assume they are, so let’s include them and figure they may have fetched a little more on the open market.
The rest of what happens in 2020 should look similar to what we had in 2019 – with the amount of inventory dictating the outcome. Even though buyers may be more active early on, as Diana claimed today for a second time, the higher-end areas should find the buyers being more deliberate, especially if they can’t get their hands on those prime listings.
The new C.A.R. forms for 2020 are available, and the most interesting is the MLS-exclusion form in light of the NAR Clear Cooperation policy that begins on May 1st.
Last year I asked the C.A.R. lead attorney about their stand on Coming-Soon and off-market listings, and Gov said it is up to the brokerages. Their new form reflects it too – they have left it optional for agents sellers to choose to comply:
The form does a better job disclosing the listing-agent shenanigans, and makes them a choice for the seller. But will the listing agent discuss the choices? Or just write it up and send for sigs? The sellers just want their money – they assume their agent will be implementing the best ideas to achieve top dollar.
On May 1st, the Clear Cooperation policy will be in effect, which was intended to discourage off-market sales. But in paragraph 9A you will see that office exclusives are permitted, which will legitimize selling properties in-house. The realtor shops with the most listings will prosper if they pitch them hard to their fellow agents – and most already have an internal marketing system to facilitate.
There is an argument that off-MLS sales are good for the seller because the buyers are pressured to pay all the money before the property goes on the open market.
But off-MLS sales add some uncertainties:
Did the buyers steal it, or did they over-pay?
Were there other buyers that would have paid more?
Are the off-MLS sales legitimate comps for the next guy (seller or buyer)?
Are we still committed to sharing our listings with other agents?
The MLS will still exist, and be the market of last resort because the best properties with the best prices will be sold in-house, or to the aggressive, professional salespeople.
Richard just procured a new sale for his investor client by calling agents who had sold similar properties recently. One told him that he did have a Coming-Soon that was a 6-cap, and gave him the address. Richard hustled his buyer over to the property and promptly submitted an offer, which got accepted yesterday!
Why are Coming-Soon/off-market sales attractive to listing agents? Because they can save time and money on marketing, and hurry up to the next deal. But that selfishness will change the landscape for buyers and buyer-agents, and both will need to be well-connected to succeed.
Denise B. said to Donna, “What’s happened to your Instagram?”
We have hired a company to produce Instagram content. Kayla used to be in charge, but after she moved to NYC it was left up to me to find a way to create the Instagram posts, and it just never became a big priority.
But it is now.
I was on the calls and knew that this company would be using my content generously for their posts on our Instagram. I’m paying them……to use my content…..to create my posts.
They add all the hashtags and make them look spiffy, so the likes and followers started improving as soon as they took over this month.
But seeing another company producing my content just fired me up – and now I’m inputting as many Instagram posts as they are!
If Instagram is your thing, check us out – I promise you’ll get your money’s worth:
Hat tip to bode for sending in the latest article on realtor videos. It’s behind the paywall and mostly the usual banter but here’s the money quote:
It makes sense that Hollywood-style promotional real estate is hitting a peak in Southern California, said Jonathan Miller, a New York City-based real estate appraiser and consultant. That’s because the high-end market from Los Angeles to San Diego is flush with inventory, creating longer marketing time, reduced foot traffic at open houses and greater competition between agents.
“In a market where there’s escalating supply but still anchored to another time, the sellers are trying to market much more creatively,” Mr. Miller said. In his mind, the sleeker and more expert-looking the video, the more likely it is that the seller is trying to justify a high price tag.
“When I see these videos, or something like a camel at an open house, that’s a clear sign of something that’s overpriced,” he said.
The MLS Statement 8.0 Clear Cooperation Policy is ‘a lightweight, middle-of-the-road policy that will just make the problem worse’ because it doesn’t go far enough. It’s so full of holes that it will only exacerbate the problem, and by the time they figure it out, it will be too late to fix it. It might be too late already.
The new policy just helps to define the ways that agents can avoid putting their listings on MLS:
Office Exclusives Are Allowed. Agents will shop around their new listings for days or weeks among their fellow agents in the office. Only once that avenue is totally exhausted will listings find their way to the MLS.
Submitted to MLS Within One Business Day. From now on, all listings will be signed on Fridays (or postdated).
Sellers Can Market Publicly. The listing agent isn’t supposed to publicly advertise the home, but……..
Showings Aren’t Required. Just because a listing is in the MLS doesn’t mean agents can show it. This is the oldest trick in the book. When an outside agents calls to arrange a showing, he/she is told that the property can be seen any time….as long as it’s between 5:00-5:05pm next Thursday.
No Penalties Mentioned. There has never been a MLS police, so any enforcement will be sketchy at best. But realtors love to rat out their fellow agents so complaints will be flying – but what will be the penalty? Most likely it will be the usual, which is a letter in the offender’s file for six months. Will it be that much?
Stop Using the MLS. If it gets too complicated to navigate the rules, agents will just stop using the MLS. This is why being on the right team is so critical now – if all the hot deals are sold in-house, then working at a small brokerage or being an independent broker will be detrimental. Those agents will only see the leftovers as the MLS becomes an afterthought.
Local compliance was first scheduled for March 1, 2020, but they pushed it back to May 1, 2020 so agents have six months to contemplate. Will we be sitting around discussing how important it is that we share our listings with each other via the MLS?
What’s missing is that no one in the industry is demanding that we share our listings with one another because that is what’s right for consumers and agents alike. Instead, our leaders come up with a lukewarm policy full of holes and no teeth. The spotlight will cause more people to find ways around the 8.0, and proudly conduct off-MLS sales because now they are the even-sexier option.
Yesterday, we entered into the final phase of the MLS implosion, with the latest blow being delivered by the National Association of Realtors themselves. Instead of strictly forbidding Off-MLS sales, they have tried to appease everyone by concocting a lightweight, middle-of-the-road policy that will just make the problem worse:
The National Association of REALTORS®’ Board of Directors approved MLS Statement 8.0, also known as the Clear Cooperation policy, at its meeting Monday. The policy requires listing brokers who are participants in a multiple listing service to submit their listing to the MLS within one business day of marketing the property to the public.
NAR’s MLS Technology and Emerging Issues Advisory Board proposed the policy as a way to address the growing use of off-MLS listings. The advisory board concluded that leaving listings outside of the broader marketplace excludes consumers, undermining REALTORS®’ commitment to provide equal opportunity to all. The policy doesn’t prohibit brokers from taking office-exclusive listings, nor does it impede brokers’ ability to meet their clients’ privacy needs.
Here’s the full text of MLS Statement 8.0:
Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.
MLSs have until May 1, 2020, to adopt the policy.
Rationale: Distribution of listing information and cooperation among MLS participants is pro-competitive and pro-consumer. By joining an MLS, participants agree to cooperate with other MLS participants except when such cooperation is not in their client’s interests. This policy is intended to bolster cooperation and advance the positive, procompetitive impacts that cooperation fosters for consumers. The public marketing of a listing indicates that the MLS Participant has concluded that cooperation with other MLS participants is in their client’s interests.
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