home seller Archives - Page 19 of 30 - Real Estate News and Commentary

April 2, 2015

Home seller expectations are high for 2015 market

Have you ever waited to be seated in the new trendy restaurant? You’re anticipating the menu, and thinking about what you might eat. If the wait is too long, your patience wears thin; you begin to calculate the time to the next open table. You might even scan the dining room trying to determine how much longer individual diners intend to stay at their table. If your wait is too long, you might even decide to leave. If you do get seated, you might be disappointed with an over-priced and limited choice menu.

Today’s housing market is much like the visit to that restaurant. Home buyers are motivated to jump into the market and eagerly await the next home listing; and like the restaurant menu, are often disappointed with limited choice and high prices. Additionally, low housing inventory, much like the restaurant’s long table turnover, may leave many to look for other options; some would-be home buyers are putting off their purchases and renewing leases for another year.

One of the factors that contribute to low housing inventory is the velocity of home ownership (how often a home gets sold). And indeed, home owners are staying in their homes longer before selling, according to a special study conducted by the National Association of Home Builders (nahb.org). Dr. Paul Emrath, of NAHB’s Economics and Housing Policy, provides details in a follow up study showing a decline in home owner mobility since 2007. Single family home owners stayed in their homes for an average of 12 years between 1987 and 2007. However, since 2007 the average time the home owner stayed in their home increased to 16 years. And since 2001, first time home buyers stayed in their homes 4 to 7 years less than move-up buyers.

If you’re one of those who feel that your stay in your home has been long enough, it may seem as if the market would favor a home sale. You might believe that the low inventory environment should make your sale quick, and possibly resulting in multiple offers. After all, the low number of homes listed for sale was cited for price growth by National Association of Realtors® Chief Economist Lawrence Yun in the NAR March 23^rd press release (realtor.org). And it makes sense to think that that first time home buyers should be motivated by relatively low interest rates and higher rents.

But before you set your expectations too high, consider that not all homes sell quickly – even in today’s low inventory environment. The Montgomery County average days on market during February exceeded 70 days. And even though the NAR reported a 7.5% increase in the average home prices across the country during February; the Montgomery County average sale price during February decreased 5.4% compared to the previous February and decreased 2.1% compared to January, according to RealEstate Business Intelligence (getsmartcharts.com).

If you’re putting your home on the market, don’t take home buyers for granted. Just like diners at the restaurant, home buyers have high expectations and want choices. Home buyers typically look for a combination of location, quality, and value. And just because inventory is low, buyers are not compelled to purchase your home – especially if the home is perceived to be over-priced.

For best results this spring – work with your listing agent to prepare your home, and price it according to neighborhood trends.

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

January 1, 2015July 5, 2019

Relief and uncertainty for short sellers

Although we’ve come a long way, the housing market is still feeling the effects of the financial and foreclosure crises. Consider that the CoreLogic’s October National Foreclosure Report (corelogic.com/about-us/news.aspx) indicated that there were 41,000 “completed foreclosures” (the total number of homes lost to foreclosure) during October, which is a 26.4% reduction of the 55,000 recorded during the same time last year; and about 65% lower than that of the peak during September 2010. Although moving in the right direction, the 41,000 completed foreclosures is a far cry from the 21,000 average monthly recorded completed foreclosures before the housing downturn (2000 and 2006).

Also seen as progress is the increasing number of home owners who are paying their mortgages; which is observable from the decrease of mortgage defaults since 2010. The November 2014 S&P/Experian First Mortgage Default Index, was 0.97%; and although this is slightly higher than the 3 months prior, there has been a -3.72% change from the November 2010 index of 4.69% (us.spindices.com).

Negative equity mortgages are making headway too. CoreLogic reported on September 25^th (CoreLogic Reports 946,000 Residential Properties Regained 1 Trillion Dollars in Total Equity in Q2 2014) that “950,000 homes returned to positive equity” during the second quarter of 2014. The number of underwater borrowers dropped to 5.3 million (compared to 6.3 underwater borrowers reported in the previous quarter). However, as of Q2 there were 3.2 million underwater borrowers with first mortgages, and an additional 2.1 million underwater borrowers with first and second mortgages.

The number of home owners that continue to be underwater may have been the impetus for Congress to pass the Mortgage Forgiveness Debt Relief Act before adjourning for break; the legislation was subsequently signed by the President. A December 17^th National Association of Realtors® press release (realtor.org) praises the passage of the legislation meant to help “distressed home owners and commercial property investors with transactions made during 2014.” NAR President Chris Polychron stated, “Realtors^® strongly supported the bipartisan Mortgage Forgiveness Tax Relief Act, which was included in the package to prevent underwater borrowers from paying taxes on any mortgage debt forgiven or cancelled by a lender in a workout or after their home was sold for less money than was owed.”

The Mortgage Forgiveness Debt Relief Act of 2007 was initially passed and signed into law December 20^th 2007; which, if you remember, was a time when the housing market was in a sharp downturn. Any debt forgiveness from lenders (either from a mortgage refinance/ modification or a short sale) typically resulted in a huge tax liability (debt forgiveness is usually considered income). The legislation provided tax relief through 2009 to qualified underwater home owners and sellers seeking to avoid foreclosure. The legislation was extended several times thereafter.

Since the last extension expired December 31^st 2013, the recent passage of the Mortgage Forgiveness Debt Relief Act was received as a reprieve by many underwater home owners expecting tax relief from debt forgiveness of short sales that closed during 2014. However, since the recent extension only covers mortgage debt forgiveness during 2014, those who have a short sale planned to close during 2015 find themselves in a tentative situation.

Current politics and economics have many pundits believing that any further extensions of the legislation may not be forthcoming. If you have a short sale planned for 2015, you should consult with your tax preparer about any potential tax liability you may incur.

By Dan Krell
© 2015

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November 14, 2014November 23, 2021

Narcissistic real estate agents?

A common criticism of real estate agents is that they are manipulative and often focused on their own needs rather the home buyer or seller. Could it be that real estate agents are narcissists? Samuel Lopez De Victoria, Ph.D. describes a narcissist in the World of Psychology blog (psychcentral.com/blog) as someone who is preoccupied with “self, personal preferences, aspirations, needs, success, and how he/she is perceived by others.” How can you tell when you are dealing with narcissistic real estate agents?

In an industry that relies on self promotion, it’s not as easy as you might think to spot narcissistic real estate agents. They initially don’t often come across as manipulative or self centered. Dr. Lopez De Victoria describes. Extreme narcissists as being able to portray themselves in many ways to attract others to get what they want. They will seem likeable and be the “nice person.” They may often seem to be the “proper diplomatic” person. They often appear to care about you, but it is not authentic empathy. And of course, they are often a charming person.

Dr. Lopez De Victoria says that having some amount of narcissism is normal and even healthy. So even though most agents are not extreme narcissists, it does not address the remorse expressed by some about the agents they chose. Even though industry experts recommend interviewing several agents before buying or listing a home, the majority of home buyers and sellers do not. According to the National Association of Realtors® 2014 Highlights of the Profile of Buyers and Sellers (realtor.rog), 70% of home sellers and about 66% of home buyers only contacted one agent before listing or buying a home. Regardless of the remorse expressed by home buyers and sellers about their agent, maybe they would have chosen to work with other agents if given the chance.

Although interviewing several agents before you buy or sell a home won’t eliminate all remorse over your choice of agent, it can certainly increase the probability of your satisfaction. If you choose to interview several agents, you might consider having a conversation about their experience, knowledge, and expertise. Additionally, knowledge about the local neighborhood market and surrounding neighborhoods is extremely important because market trends are hyper-local. You should also talk about the agent’s specialized experience, if your buying or selling situation is unique.

You should also ask about the agent’s limitations. This is an area where some agents get themselves into trouble is by not knowing, or are unwilling to disclose their limitations to potential buyers or sellers. By discussing the agent’s limitations, you can understand what the agent can and cannot do as well as know when the agent will refer you to other professionals for advice; this can also frame your expectations.

To get some insight into the agent’s way of thinking and service, you might consider asking atypical questions too! Surely an agent is more than happy to talk about their accomplishments, number of sales, and even name drop a past client or two; but what about the listings that didn’t sell? Have they been fired by a client?

The ratio of expired to sold listings can be telling; is the agent focused on servicing your listing or is it a “numbers game” for them? If an agent is open to sharing those figures, ask for reasons why the listings didn’t sell; was it about price or the marketing? If an agent has a history of being fired, it could be a possible indication of issues with the quality of service, including over-promising and not meeting expectations.

Original published at https://dankrell.com/blog/2014/11/14/narcissistic-real-estate-agents/

November 6, 2014July 5, 2019

Real estate changed by internet

The National Association of Realtors® annual Profile of Home Buyers and Sellers is characterized as being a survey of home buyers and sellers that reveals “demographics, housing characteristics and the experience of consumers in the housing market, including the role that real estate professionals play in home sales transactions (nar.realtor). The release of the Highlights of the 2014 Profile of Home buyers and Sellers on November 3^rd by NAR provides insight into home buyer and seller behavior. I compare a small sample of data from three Profiles that demonstrates how real estate changed. Some things have changed, and some things have stayed the same.

The recent lack of first time home buyer participation is one of the issues that experts point to as holding back a full housing recovery, and has been highlighted by the 2014 Profile of Home buyers and Sellers. Only thirty-three percent of home buyers surveyed in 2014 were first time buyers, which the NAR points out as being below the “historical norm of forty percent among primary residence buyers.” Compared to 2003, NAR reported that forty percent of home buyers were first time home buyers. However, fifty percent of home buyers reported being first time buyers during 2010, which is most likely due to the first time home buyer tax credit that was offered at the time to stimulate home sales.

The 2014 survey revealed that home buyers searched on average for 10 weeks and viewed 10 homes; which is reduced from the 12 week average search indicated the year prior. The 2010 report also indicated a 12 week average search, looking at an average of 12 homes. But these home search stats are a far cry from the 8 week average search time viewing 10 homes reported in 2003.

As you might have expected, home buyer use of the internet has grown. In the 2014 survey, ninety-two percent of buyers reported using the internet in some way in the process. The first step for forty-three percent of home buyers was to look at properties online; while only twelve percent of home buyers initially used the internet for information about the home buying process. The use of mobile applications has significantly increased as technology allowed; fifty percent of buyers reported using mobile websites or applications. Compare this to 2010, when about ninety percent of home buyers reported using the internet; and in 2003 when only forty-two percent of home buyers reported searching for homes online.

Rather than eliminating real estate agents, the internet has changed the relationship between agents, buyers and sellers. Ninety-eight percent of buyers in 2014, who used an agent, viewed them as being a useful source of information. Eighty eight percent of surveyed buyers indicated they used an agent to purchase their home, compared to eighty-one percent in 2010, and eighty-six in 2003.

Ninety-one percent of surveyed sellers in 2014 reported their homes were listed on the MLS, but eighty-eight percent had assistance from real estate agents. Only nine percent of surveyed sellers sold “by-owner.” The 2010 seller stats are consistent with the 2014 Profile; while the 2003 survey indicated eighty-three percent of home sellers used an agent’s assistance to sell their home.

There are differences between buyers and sellers also. Among the differences in how they choose their agent: the 2014 survey indicated that forty-four percent of home buyers, compared to thirty-eight percent of home sellers, found their agent by a referral through a friend or family.

Original located at https://dankrell.com/blog/2014/11/06/how-home-buyer-and-sellers-have-changed-and-remained-the-same/

By Dan Krell
© 2014

October 30, 2014July 5, 2019

When Selling a Home – stay away from gimmicks & listen to buyers

You’ve probably heard a story or two about a home that was priced very low to “create a buzz” and illicit a bidding war. And in fact, there was a 2012 article in a local newspaper about such a sale in DC that touted the rebounding housing market. But guess what? A recently published study, with robust empirical data, suggests that such a strategy may not be the best for a home seller. Furthermore, the study suggests evidence that real estate agents who recommend under pricing as a strategy believe that homes listed for less – sell for less than comparable homes.

Bucchianeri & Minson (A Homeowner’s Dilemma: Anchoring in Residential Real Estate Transactions. Journal of Economic Behavior & Organization. May 2013: 76–92) collected and compared data related to “anchoring” (higher list price to prompt buyers to make higher offers) and “herding” (lower list prices intended to creating bidding wars) theories. Although actual sale prices may depend on location and time on market, the conclusions are that homes listed at higher prices sold for more than those that relied on bidding up the price. The authors suggest that sellers should think twice before under pricing their home to create a bidding war; and suggest that results from such strategies are typically anecdotal.

If setting a higher price may translate into a longer time on market, how could you know if you are priced too high or low? Listen to home buyers. A study conducted by Case, Shiller, & Thompson (“What have they been Thinking? Homebuyer Behavior in Hot and Cold Markets.” Brookings Papers on Economic Activity. 2012: 265-315) of 25 years of data in four metropolitan areas concluded that there is a strong relationship between buyer’s perception of price trends and actual price changes; the stronger the price trend (in either direction), the stronger the agreement among home buyers perceptions.

Home buyers’ short term and long term expectations of home prices can differ. And although Case, Shiller, & Thompson indicate that it is more difficult to gauge long term pricing expectations, they were undoubtedly impressed that buyers’ were “out in front” of short term home price changes. They stated, “…We find that homebuyers were generally well informed, and that their short-run expectations if anything underreacted to the year-to-year change in actual home prices.”

If deciding on your home’s selling price gives you a headache, Stefanos Chen wonders if taking a Tylenol could assist in making a decision. In his October 23^rd Wall Street Journal article (Can Tylenol Ease the Pain of a Home Sale?), Chen reported of to-be-published research that indicates taking the pain reliever may ease the anguish associated with “loss-aversion” (an avoidance of a perceived loss).

“Can acetaminophen reduce the pain of decision-making?” by DeWall, Chester & White is expected to be published in the January volume of the Journal of Experimental Social Psychology (pages 117-120). The results indicate that those who took acetaminophen sold a mug (that was given to them 30 seconds prior) for significantly less than those who tool a placebo. Chen’s question whether taking a Tylenol could help a seller take a lower sales price is a stretch, considering that the study was limited to 95 college student subjects. Although further research is indicated, the study’s conclusions may have implications to lessening the “pain” of letting go of ownership.

By Dan Krell
© 2014