The local index is about where it was last month AND last year at this time.
It is 3% below the peak of last May, and +9.6% year-to-date.
It wouldn’t surprise me if it slides downward ~3% the rest of 2023, then up ~3% in the first half of 2024, then down ~3% in the second half of 2024….recession or not.
Because rates won’t be going down until 2025 (at least), pricing should stay rangebound. Without wild swings in pricing, the buyers can focus on finding the perfect home without compromise.
When there are bidding wars and rapidly-rising prices, buyers are prone to just grabbing something and paying whatever it takes. Without those, sellers and agents have to be really good at selling homes – which hasn’t been required over the last several years.
It is common to see the same words or phrases in the MLS descriptions.
A few years ago, the fancy new buzz word was ‘boasts’; a word realtors would use to describe the home’s best features. The word got overused, and eventually we would read that a home “boasts three bedrooms, and two baths”, as if that was something special.
There are two buzz-phrases you hear regularly these days.
Watch how many times you see, ‘this one checks all the boxes’ and ‘this is the one you’ve been waiting for’.
For those who have access to the confidential remarks, you will see a third phrase currently that is very curious: “Reviewing Offers As Received”
Isn’t that what you are supposed to do? Isn’t that required by law? I think so!
The phrase is probably a response to inquiries from buyer-agents wondering about their full-price offer they just sent in. Sometimes the listing agent will tell you that they have a specific date in mind to review offers with the sellers, or they are reviewing them as received, one by one.
What the buyer-agents really want to know is….when are you going to respond? How long will my buyers and I have to sit on pins and needles while you dink around with no strategy or game plan and instead just play around with the process?
The reason buyer-agents don’t like asking that question is because they cringe at the thought of having to hear one more time the same answer given by listing agents in almost all cases: ‘I don’t know’.
You get a very specific answer from me: “Should we have multiple offers, everyone will receive a highest-and-best counter-offer from us on Monday, and we hope to select a winner by Tuesday night”. It gives buyers and agents alike a specific idea of what to expect, and they can start planning their response.
It’s part of the slow-motion auction – full transparency includes an clear outline of the process, and how to win the game. Our counter-offer will level the playing field by balancing out the other terms, and ensure that everyone knows the winner will be determined by price.
It may sound simple and obvious, but I haven’t seen any other agents embracing full transparency.
I have another example happening now. The listing agent said they have already received one offer and expect a couple of more. When I asked how they will handle it, I got the usual uncomfortable laugh and a vague, joking response of doing something about it next week.
A constant flow of 3-6 groups at a time all to see our hot new PQ listing off the 56 and only one exit down from CCHS. Talk about a convenient location – within five minutes you can get to top-rated K-12 schools, shopping, grocery, and freeway on-ramps without hearing any road noise. Perfect!
For homes in this location, the demand is overwhelming the supply. We’ve already received two offers over list, and we’re just getting started. The way it sounds, I think there will be 8-10 offers.
How do I handle it?
I am as upfront and forthright as possible, and I discuss how the process works with everyone:
We’ve covered the ways that buyers and buyer-agents are getting battered by listing agents.
Making homes tough to show, no transparency about offers and bidding-war process (if any), below-market commissions, sandbagging listings in-house for days or weeks before exposing to general public, etc.
Some can be chalked up to inexperience or clerical errors, but most are a deliberate attempt by the listing agents to box out other agents, and limit the number of offers.
Agents input their listings onto this website only, which gets the property onto Zillow and Realtor.com where waiting buyers might see it. Typically, the buyer-agents are using their local MLS to track the new listings, so they’re not watching Zillow or Realtor.com (and certainly not some unknown MLS website).
It has to be a deliberate attempt by the listing agents to limit the exposure to fellow agents, with the intent to reach buyers directly and double-end the commission.
Won’t somebody just produce an all-encompassing (pardon the pun) website to facilitate homes sales? There is a new disruptor every month with their unique solution, and it’s ALWAYS born out of their frustration with buying a home recently so they are happy to bash agents and the current process.
But consumers have become more adept at searching online, and because there are so few quality homes for sale in 2023, their standards will probably relax further as their frustration mounts. Pretty soon, they will accept just about any risk, just to get their home search over with.
If a bigger company with some brand recognition put together the right website at the perfect moment when the consumers’ frustration is mounting and agents are flailing, it might catch fire. Something like this:
I’d prefer an auction company because it would be more effective at selling homes fairly, and for top dollar. But the winner will be the company that advertises the most.
I spoke to a few agents on the broker preview yesterday about business this year, and the common theme was that agents are have big trouble finding people who want to sell their home. It suggests that the inventory of quality homes will be extremely low this year.
What happens, when that happens?
It means that when listing agents get a hot new property to sell, they will be tempted to find their own buyer first, and/or spoon it to a select few of their agent friends, and then maybe expose it to their office mates before putting it on the MLS/open market.
The extinction of buyer-agents is well underway.
As the market tightens further, more listing agents will be tempted to sandbag their listing and not put it on the open market. Look what happened to the agent this week who received 20+ offers (they told me the final count was 30 offers). After the listing was put on the open market, the flood of offers caused regrets about the workload, so they just grabbed one and shut it down.
Last night I popped off in the comment section about how the business gets shadier every year.
Here’s proof – not every listing with zero days on market was sandbagged, but let’s face it. If you mark your listing pending within a few hours of it going live on the MLS, you didn’t get full exposure.
NSDCC Annual Closed Sales With Zero Days On Market
Year
Annual Detached-Home Sales, Total
# With Zero Days on Market
Percentage
2016
3,107
84
2.6%
2017
3,084
99
3.2%
2018
2,799
84
3.0%
2019
2,834
100
3.5%
2020
3,190
116
3.6%
2021
3,184
173
5.4%
2022
1,939
124
6.4%
When agents see other agents touting their off-market business, they think it must be ok, so they do it too. It feeds on itself, especially when the allure of double-ending the commission is so strong in a tight-inventory environment.
This disease among agents is everywhere. You will notice it at every open house you attend – the agents conducting the open house can’t wait to tell you about their off-market opportunities to get you to sign up. You’ll see it mentioned on social media daily – agents don’t think there is anything wrong with promoting off-market deals. Heck, everyone is doing it!
I regularly ask the agents who have a quality home for sale how they will handle multiple offers, and the answer is always the same: “I don’t know”, before they stumble and mumble something about the seller will decide (oh, thanks for that!) so the agents don’t get blamed for the end result. It’s embarrassing that they don’t have any strategy, and want to leave the door open for shenanigans later. No wonder they want to do an off-market deal, with no scrutiny.
Because no one is doing anything to intervene, the off-market deals will continue to be an accepted practice, and exacerbate the trend towards single agency (and the extinction of buyer-agents). Within the next year or two, every buyer will just go to the listing agent and take their beating.
I don’t think anyone in the realtor industry recognizes the harm being done to the consumers by squeezing out the buyer-agents. The good ones offer a valuable service by assisting homebuyers with the complexities of purchasing a home; a challenge that is tougher than ever in 2023.
For example, let’s say you come across a good buy – what do you do with this?
This weekend, the listing agent got 20+ offers and shut it down. Then he just accepted one. Game over.
None of the other buyers got a chance to win. But at least they had a chance to offer.
If buyers were directed to the listing agent, do you think the realtor teams would have 20+ buyer-agents ready to serve everyone who wants to make an offer? Or would they just write offers with the first couple of buyers and shut it down?
I can’t tell you how many times we see in the confidential remarks, “PLEASE NO MORE SHOWINGS”. We already have an environment where listing agents believe there is no incentive to keep taking offers – especially if/when they already wrote an offer with their own buyer and will double-end the commission.
It’s only going to get worse. Forces within the industry are conspiring to eliminate buyer-agents altogether, and are conspiring to create a system that makes it even harder for buyers to get a fair chance. The local MLS companies are launching a new search portal that directs all inquiries back to the listing agent.
Do you think an outside buyer-agent will have any chance of selling that listing now? If multiple buyers contact the listing agent, then what happens?
With the goal to “promote a more competitive marketplace,” three of the largest multiple listing services announced plans to launch a new consumer home search portal this spring.
Called Nestfully, the website will be owned and operated by California Regional MLS (CRMLS) and Bright MLS, under a joint venture, and REColorado has signed on as a participant. The founding MLSs designed the site and its features, and real estate tech company Constellation1 is providing technology services.
Key points:
Nestfully is expected to debut by April 1 with listings from a pool of 240,000 agents and brokerages that are MLS subscribers.
Agents will get leads at no cost, and consumers will have direct access to the property’s listing agent.
“With Nestfully, we believe we are in the best position to deliver what agents want and need in this changing market,” said Brian Donnellan, CEO and president of Bright MLS.
With the goal to “promote a more competitive marketplace,” three of the largest multiple listing services announced plans to launch a new consumer home search portal this spring.
Called Nestfully, the website will be owned and operated by California Regional MLS (CRMLS) and Bright MLS, under a joint venture, and REColorado has signed on as a participant. The founding MLSs designed the site and its features, and real estate tech company Constellation1 is providing technology services.
“Nestfully is run by MLSs whose primary goal is to promote an open, clear, and competitive marketplace,” Art Carter, CEO at CRMLS, told Real Estate News. “We are a neutral source working in the best interests of consumers, brokers and their agents.”
For agents, Nestfully offers a financial advantage over advertising-powered portals. The site will not have ads, and leads will be delivered directly to agents and their brokerages at no cost, “taking a significantly escalating cost out of the existing system,” Carter said.
Agents and brokerages companies will also have access to a lead management platform on Nestfully with lead tracking, analytics and metrics that gauge success.
“We believe we are in the best position to deliver what agents want and need in this changing market,” said Brian Donnellan, CEO and president of Bright MLS, adding that the new search engine will “serve as an extension of the agents’ marketing initiatives to promote listings, attract qualified lead prospects and forward these opportunities directly to the agent at no cost.”
The goal is not to monetize the consumer search, he said, but to help answer consumer questions about properties for sale and connect potential buyers with property listing agents or with a local agent or broker in their communities.
Asked in an interview if MLSs will be compensated for the initiative, a company spokesperson said that “financial arrangements are not being disclosed.”
Will they advertise enough to compete with the established search portals? They will need to promote some new whiz-bang feature…..which will be that buyers should go direct to the listing agent, and use their fancy new portal to do so.
I don’t think they have a clue – or they are flat out ignoring – how they will be putting buyers at a bigger disadvantage, and destroying our business as we’ve known it for the last 100 years.
KCM is a fine group of people who supply realtors with content for them to publish in their newsletters, social media, etc. They provide an invaluable service for the agents who’d rather just pay for content than create it themselves. It tends to be a softer version of what I do here at bubbleinfo.com because most realtors aren’t interested in a deep dive – they are fine with the lightweight stuff.
But because I said last week that “price it right” is code for listing your home for the realtor’s price, I thought I should comment on the above.
UNDERPRICED – The fear of underpricing your home and leaving money on the table is real….if you list with an agent who just wants to take the first offer and go back to sleep. When you list your home with an agent like me and the market responds favorably, I will let EVERY buyer compete for your home and then pit them against one another to drive the price up.
OVERPRICED – Realtors want to be the hero and are just as likely to overprice a home as a seller. This is especially true when several agents are competing for the listing – it is irresistible for sellers to strongly consider, and end up hiring, the agent who quotes the highest price.
The worst part about overpricing is not reacting quick enough. Once a home is on the open market, both the sellers and the listing agent wants to believe that if they just wait a little longer, the magical perfect couple with 2.2 kids will come along. But today’s buyers are watching the market time of each listing very closely, and making up things in their head about what it means – and none of that is good for sellers.
MARKET VALUE – It would be a miracle if a seller or agent could guess the market value. The conditions are changing every day in every area – and NOBODY knows what a buyer will pay until a home is on the open market. Besides, there is a slush factor of 5% on every house, based on it’s unique location, upgrades and condition, ease of showing, and the competence of the listing agent.
The best thing any seller could do is to hire a listing agent who is an expert in handling what to do if the market conditions cause the home to be underpriced OR overpriced – because every agent can handle a listing that gets lucky and miraculously happens to be perfectly priced.
Buyers have become more reluctant about executing the terms of the contract – and the NBPs are back!
Here is the explanation on how they work:
Q. My buyer was sent an NBP on Wednesday. My question is does the NBP expire 48 hours from delivery/reception, or at 11:59:59 Thursday night?
A. The Notice to Buyer to Perform (“NBP”) provides for a two-day notice to performance (it is not calculated as forty-eight hours – there is a difference). For example, if the NBP was issued on Wednesday, day one is Thursday, and the deadline for performance would be Friday at 11:59pm. The seller may issue a Cancellation of Contract (“CC”) at 12:01am Saturday.
Conversely, if the NBP was issued Thursday, then day one is Friday and day two would end at 11:59pm on Saturday BUT the last day for performance cannot land on a weekend or holiday. In this example, the buyer would have until 11:59pm on Monday (assuming Monday does not land on a legal holiday) to perform (except under the the San Francisco Purchase Agreement).
Remember the NBP can be issued no earlier than two days prior to the Scheduled Performance Day in order for the NBP to be served in accordance with the purchase agreement. If the NBP is served improperly it would have to be sent again thereby extending the timeline for performance.
In another installment of what listing agents can do to improve their chances, let’s mention one of the habits that were made worse by the frenzy – responding to an offer.
Over the last two years, it became part of the business that buyers had to wait around for days while waiting for the listing agent to decide the winner. There weren’t many other homes for sale, and every new listing was priced higher than the last so buyers would tolerate a long delay.
Not any more.
Today, listing agents who are lucky enough to receive an offer should jump on it and respond the same day – and if possible, within an hour or two. Buyer’s remorse has never set in so fast, and in this environment, it is more than just an emotional bummer, it is a deal-killer.
Specifically, what can listing agents do better?
Answer your phone – it might be an agent with an offer!
Prepare the sellers to respond quickly, and be standing by, ready to sign.
Have a full set of seller disclosures and reports ready to send.
Don’t counter over stupid stuff.
Consider not countering at all, and just sign the offer.
Buyers are looking for ANY reason NOT to buy, and stay on the fence longer where it is comfortable. And you want to take a chance on countering over which title or escrow company? Or try to get the sellers a couple of months of free rent – heck, at least offer to pay for it!
The journey over the next couple of years will be a long arduous slog through the bad habits developed by realtors during the frenzy. It made agents lazier than ever, and gave them the impression that once they had a listing, it meant they were a real estate god and could boss people around.
