I just listed this Terramar property for sale that allows for 60% FAR coverage, which should mean that two 3,600sf oceanview homes with ADUs for could be built on this R-15 lot and it’s only $1,999,000! The two homes should be worth around $4 to $5 million each when done. I mentioned the tax assessor’s valuations – they appraised the land value of two non-oceanfront properties on Shore Drive for $3,000,000+ with the same size lot without the R-2 zoning. Build the family compound!
He doesn’t mention that we don’t get paid up front, we don’t get paid along the way, and we only get paid if we successfully close the sale – which in this day and age is harder than ever.
Ok, ok – yesterday I said that we’re at the highest pricing ever, but the San Diego non-seasonally-adjusted Case-Shiller Index isn’t quite there yet.
But it feels like record pricing around the north county coastal region, doesn’t it?
The index dropped eight months in a row last year, and it might track negatively over the next few readings of 2023 – big whoop. The index gave back 11% last year, and we’ve regained all but 2% of it this year. It is a seasonal event that will probably repeat in the coming years.
If the pricing keeps trending upward in 2024, at least it should be somewhat offset by lower mortgage rates this time. The quick rise in rates in the middle to late 2022 had to be reflected in the pricing, which it was. But this year, pricing held up nicely in spite of touching 8% rates recently.
I’m predicting an increase in listings next year, and it could amount to a full-blown surge. I already have three listings lined up for early-2024, which has never happened this early – there have been years where I get well into January without sniffing a new listing!
I’ll survey my fellow agents over the next couple of weeks to see what they say – two have already agreed!
Hopefully the hubbub about realtors’ pay will cause consumers to investigate agents more thoroughly, which I’ve been encouraging for a while. Here’s one of my blog posts from 2009 – check the comment section too:
by Jim the Realtor | Jul 24, 2009 | Thinking of Buying? | 34 comments
Most buyers struggle to find a quality realtor to assist them in buying a house, and it’s the realtors’ fault. The national, state, and local associations are so adamant about protecting the new agents and giving everyone an equal chance, that they provide no help whatsoever to the general public.
Their message? When trying to find good help, you’re on your own.
So how do you get what you need?
Everyone tells you to ask around, get referrals from friends, go to open houses, go with a big company, go with a small company, new agent, old agent, kickbacks, etc., that it probably doesn’t matter where you get a realtor, what matters is how to evaluate them.
Here are my things to look for when evaluating a realtor’s ability to help you buy a house:
1. ASK ABOUT THEIR RECENT TRACK RECORD OF SALES – Let’s cut to the chase, shall we?
Has the agent been able to successfully guide others to the finish line this year? The best answer is 1-2 closings per month, if you want an agent who delivers personal service. Any agent who sells four or more per month is slamming people into houses, and those at zero, well let’s face it, they don’t have anything of value to add to the equation. Get a testimonial from a past client, and/or at look at the sales they’ve done and judge them to see if they were good deals. (I’ve assisted 10 buyers with closing their sale this year).
These current market conditions are unlike any seen before. If your agent has been closing some buyer transactions this year, they must have something of value to share. Here’s what to look for:
2. ASK THEM, “WHAT/WHERE ARE TODAY’S HOT BUYS? How they answer that will tell you just about everything you need to know. If they give you a smart-aleck answer, they probably aren’t the right agent for you, only because they aren’t in the game. If they can name one, at least they are looking at properties, and those are agents who can provide value – ideally your buyer’s agent is previewing property every day, in person.
3. THEY SHOULD ASK YOU QUALIFYING QUESTIONS – If they jump in the car without asking questions, their time must not be too value to them, and this isn’t a business where wasting a lot of your time makes for good quality realtors.
4. THEY SHOULD KNOW ABOUT FINANCING – I guess it’s alright if they just hook you up with their lender to get pre-qualified, but if they can ask/answer the qualifying questions themselves, it might help when it comes time to structure an offer.
5. HAVE THEM SHOW YOU SOME HOUSES – Go in their car, and if they don’t need a map to get around, you’ve found an experienced veteran. It’s not guaranteed that they can help, nor is it required, but it’s a good indicator. If they are pointing out specific sales/listings along the way (theirs or others), then they know the comps too, which is another great indicator.
6. EVALUATING THE PROPERTY’S CONDITION – They don’t have to be a general contractor, but they should be able to educate you about the property’s condition. If all they do is point out that “This is the living room”, they’re not going to have much to offer in terms of added value, unless you don’t know what a living room is.
7. HAVE A VENDOR’S LIST – Successful agents know professionals to call to fix stuff – the more thorough the list, the more problems they have encountered.
8. DO THEY CHARGE FOR THEIR SERVICE? – Ask about “transaction fees”, “processing fees”, or “compliance fees”. These are junk fees used to pad their bottom line, and are not required.
9. DO THEY INSIST ON HAVING YOU SIGN A BUYER-BROKER AGREEMENT? – Pass on those, unless you got married after having one conversation too.
10. “FORECLOSURE SPECIALIST” – Be very leery – we are all foreclosure specialists now. Any agent who tries to make it sound like they have some special “foreclosure ability” is blowing smoke, unless they are listing REOs and not putting them on the open market. If they don’t mind breaching their fiduciary duty to their bank-seller, they’ll sell you down the river in a heartbeat.
11. SHORT SALES – I personally see 2-3 short sales every day that have already found their buyer before MLS input, and it is VERY frustrating. These agents don’t care about their own reputation amongst their peers, and that alone should make you wonder.
12. OFF-THE-GRID – Ask about what agents can do to find properties that aren’t on the regular websites. Any positive response would be a good indicator, and any examples of closing one would be even better.
If they can get through those questions and you still like them, you found a good agent!
NEW AGENTS – A new agent’s zeal and availability can really help buyers who don’t have the time or willingness to search for properties themselves. Want somebody to do the legwork for you? Put a new, hungry agent on it, but there may be some struggle clinching the deal if there are competing offers.
OUT-OF-COUNTY AGENTS – You’ll be doing all the work yourself, so your own proficiency in being a realtor needs to be up to par.
RELATIVES – Many deals crash and burn, and hearts are broken over houses. Want a relative to help you? Make sure that you’ll accept never wanting to talk to them if they cost you the right house, at the right price.
“GREAT TIME TO BUY” – If you hear that catchy phrase, just walk away.
The inventory of quality homes at good prices is EXTREMELY LOW, causing the buying experience to be full of frustration and disappointment. You can look for weeks or months without seeing anything attractive, so I don’t know why any agent would call that a great time.
REALTOR TEAMS – No problem, but don’t interview the big dog and then get passed off to the assistant without asking the same questions. You want to be clear about who is helping you, and what you can count on. In my case, I may have Richard or another KR realtor help me on occasion, but I’m still the main person in charge, and am responsible for your success.
What a great day! Delivering pies and talking real estate – what a privilege!
Talking points you might hear over Thanksgiving dinner.
– It’s too unaffordable. Prices have to adjust.
There will be the occasional seller who gets caught in a pinch and has to sell that day – and might take a 10% to 20% discount. All you have to do is be there on that day. It is why you have a realtor!
But will it be a superior home on a premium lot? Highly unlikely – those owners know what they got.
Buyers need to decide: Are you a lowballer, or are you trying to buy a high-quality property? It’s either/or.
Bottome line: Prices may adjust downward on the inferior properties. Take your chances.
– There seems to be more homes for sale – is it the big slowdown?
As time goes on and the market gets tighter, it will be natural for sellers to price too high and cause inventory to grow. It’s easier than ever to overprice and miss the market! What to do?
Spruce up the home and price attractively, which is about where the comps are….and not 5% to 10% higher.
Tip: Lately the local prices have been going up about 0.5% per month. But once a home is on the open market, the buyer expectations drop about 1% per week on price.
Once as home has been on the market for 2-3 weeks, there might be some negotiations on price!
– Are commissions negotiable now?
Yes, absolutely and agents who are desperate and have no skills will be happy to represent you for 1% or less. It’s a ripoff. Find an agent who will produce beyond expectations. The best thing to come out of these lawsuits is that consumers will investigate agents more thoroughly!
Get Good Help!
If it gets hot, just call me. I’m happy to talk to people on the phone!
Yesterday, 2,400 Compass agents came to the Rady Shell to hear CEO Robert Reffkin discuss the accomplishments of his clients, the agents. Here are this year’s facts to plug into our presentations:
Compass #1 in sales volume nationwide last two years.
Compass agents sell 2.5x the average agent.
Retention – 98% of Compass agents stayed last year, and 300 who left have come back.
$1.5 billion invested into the agent/client platform.
500+ people in the engineering department improving tech daily.
$1.0 billion in Compass Concierge money spent to maximize the sales price for sellers.
$1 trillion in sales volume in less than ten years.
High tech and high touch!
The support that Compass agents receive from the brokerage enables us to be more effective with helping our clients, and run our businesses with high efficiency!
Robert is one heck of a leader. This year, he has visited 40 metro areas to meet with agents in most of the 200+ Compass offices. Then on the weekends, he takes his wife and three little kids to open houses around the NYC area in support of Compass agents – including on Mother’s Day!
But in the end, it is up to the individual agents to perfect their own presentations. The best thing any leader can do to support highly competitive people is to create a contest!
There will be local, regional, and national prizes for the agents who deliver the most buyer-broker agreements and sales in 2024 – with the top ten agents being flown to NYC for dinner at Robert’s home!
It’s been over two weeks since the verdict was announced on the commission lawsuit, and the response from the realtor community has been tepid, to say the least.
Agents are waiting to see a strong example of how to convince buyers to sign a buyer-broker agreement. It’s easy for management to just say, “Have your buyers pay you directly”. But will you furnish us with anything besides the cheesy 179-point list?
The annual Compass convention starts today in San Diego, and we’ll see what management has to say.
Meanwhile, CoStar senses an opportunity, and have ramped up their advertising of homes.com to agents. They say their search portal had 100 million unique visitors last month, passing realtor.dud and pulling into the #2 slot behind Zillow.
Their pitch? They send buyers to the listing agent directly.
When Zillow visitors inquire about getting more information or seeing a home, they get sent to the call center where Zillow employees scrub the leads, and send them out to agents who have agreed to pay 30% to 40% of their total commission to Zillow.
Homes.com will send those leads directly to the listing agent, no charge.
How long will it be before agents migrate their advertising budgets to homes.com? The buyer-broker agreement should be a complete failure by next summer, and instead the march towards single agency will be well underway by then.
The conversion to single agency will look like an obvious solution to the casual observers like judges, juries, and the DOJ because it will give the illusion that fees are coming down. But it will just add to the trouncing of buyers that has been going on for years.
Just when quality buyer representation will really be needed, the trend will be in the other direction.
First, let’s identify how realtors get their business.
Either they earn the business (#1&2 above), or they buy the business (#3 above).
They earn it by creating relationships with friends and family that turn into sales. Those results create word-of-mouth endorsements that will hopefully be the foundation of the realtor’s business.
Or agents can buy the business through advertising.
There are several realtors in our area who spend $25,000 to $50,000 per month on advertising, which means they need to charge the higher commission rates – and that probably won’t change.
Billboards, bus benches, trailers in movie theaters, grocery store carts, etc. all lathered with realtor advertising that supplement their online ads, social media, and mailers to the neighborhood. These realtors hope to subconsciously create a positive image in the homeowners’ minds, which causes them to reach out to the ‘local expert’ when the time comes.
Which realtor will help you the most, and be deserving of their pay?
The best part of the realtor lawsuits is that they might cause consumers to investigate the choices more thoroughly. It is a daunting task because of the number of realtors out there, and the lack of hiring knowledge available. It’s why 80% of consumers hire the first agent they meet – they haven’t moved in a while, and in the microwave society they just want to grab an agent and go. Plus, the realtor industry provides virtually no guidance on the selection process, so you’re on your own.
My General Tips:
Those who spend the big money are vunerable to investigations – they hope that you grab and go instead. Once a team gets to 10 people or more, you have to wonder who is doing the heavy lifting. There are many top producers now in North County who have retired – but you wouldn’t know it because they leave everything in place, and just let the assistants run the machine. See if you can get the team leader on the phone, and check their reviews on Google and Zillow to see which agent is being acknowledged for the work. It’s not a bad thing to work with the assistants, but you’d like to know that up front.
The bigger the team, the less personal attention you will get. Their expertise will hopefully make up for it, but you should know that if your sale doesn’t work out, it’s not going to change their lifestyle.
Realtor websites look the same – brags about their sales, a button to search for your ‘dream’ home, and another for a computerized value of your home. With both buttons, you give up your contact information so they can pester you. Do they provide any helpful content on their website or social media? Their published content is a direct reflection of their expertise, and awareness of current market conditions.
Are they too busy for you? Simple way to find out. Call their phone number, and see what happens.
Every agent has their sales history on Zillow (whether they like it or not, because Zillow auto-loads them). If you are looking to conduct a full analysis, you’ll have fun with this data. One sale per month is a good sign, and check their mix of buyers and sellers, mix of price points, the SP:LP ratio on their sold listings, their listing presentations (quantity/quality of photos) and days on market. It’s takes work, but time well spent.
Do you want to hire the local expert? Rarely do they go into detail on what that means for you, and besides, every agent calls themselves the local expert.
Do you want to hire a long-time veteran? Only if they are still on their game (minimum one sale per month, etc.). More than half of all realtors are 60+ years old, and you don’t want to be their last sale.
Are they available? Deals are being done 24/7, so how the agent handles that is important.
Can they put a few sentences together to describe the current market conditions? It means you have to talk to them live, but it’s a terrific way to judge a realtor’s competency.
My big hope is that the realtor lawsuits give consumers the idea that they should shop around more, and they search for the best combination of quality realtor and commission rate. My guess is that the commission rates won’t change much, and they sure won’t be advertised. It should mean more scrutiny on what a realtor does for you – which is a great thing, and how the decision should be made!
A simple analogy for realtor commissions is a long-distance flight abroad.
Someone who was booking a flight from San Diego to Phoenix probably wouldn’t be too concerned about the quality. Because the flight only takes an hour, most can endure the inconveniences…..mostly due to the generally lousy service we get in every industry. We’ve become accustomed to not expecting much.
But when it comes to a long-distance flight, we might look harder at the differences.
Buying or selling a higher-end home is like flying to Australia.
A non-stop flight from LAX to Sydney, Australia is 15.5 hours, which should make people think harder about the choices. Not only does the airline, the staff, the type of airplane, the quality of the food, reviews, etc. get more scrutiny, but so does the seating chart.
Sitting in the economy section can be endured for an hour on a flight to Phoenix, but will you put up with screaming kids, the barking dog, and the guy who fills up more of his share of the seat for 15.5 hours?
Or do you deserve first class?
The problem with realtor commissions is that the agents all get paid the same, regardless of the quality of service provided. It’s as if everybuyer and seller pays for a first-class seat, but then only 10% to 20% of them get that level of service. It’s why there are so many complaints about realtors not being worth it – most don’t live up to the expectations, or their fee.
The commission lawsuits intend to change that, and they think they will cause the rates to go down.
But realtors intend to convince you that they are worth the usual fee by improving their presentations. The consumers who are willing to investigate will probably find something like this:
The exceptional realtors probably aren’t too interested in lowering their fee, so let’s examine the hiring of a realtor in the post-lawsuit era. Note that after years of using a pixel phone, I have finally switched to the iphone15promax – my first video with the new phone will start the inquiry:
