Home Buyer Archives - Page 24 of 36 - Real Estate News and Commentary

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/

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.

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

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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

September 17, 2014November 23, 2021

Retro-future of real estate – buyers like representation

When I wrote about the future of real estate brokerage seven years ago, I predicted that consumers would become increasingly reliant on the internet; while the process of selling homes would remain interpersonal. Once thought to free home buyers and sellers from real estate brokers, the internet has become ancillary to the home buying and selling process.

Some real estate experts point to home buyers’ perception of buyer agency as a reason for the integration of the internet into the buying process. The internet has become a prolific source of information that funnels buyers directly to listing agents. With information in hand, many buyers are seemingly ditching their agents when viewing homes; some thinking they can negotiate a sweat deal directly with the listing agent.

Consider this 2012 anonymous post from a popular real estate web site. The poster proclaimed to have fired their agent and on their own negotiated a $490,000 price, when a previous buyer backed out from a $515,000 contract. The poster stated that “it makes financial sense,” the rationale being that there is always a 6% commission built into the price. The post stated that the seller makes more money if there is no buyer agent to pay, even if the offer is lower; while also getting the listing agent to accept a lower commission.

The post’s rationale may seem ostensibly compelling; and if the tactic works, it most likely has nothing to do with commissions per se. The strategy of negotiating a better price based on commission falls flat when you understand how broker commissions are negotiated. Generally, commissions are negotiated between the listing broker and the seller before the home is listed; the negotiated commission is expressly stated in the listing contract. The commission belongs to the listing broker, not the agents. The listing contract is also specific to the amount of the commission to be split if the buyer is represented by a buyer broker. Trends in commissions vary; including variable commissions, which is an agreement to a reduced listing commission if the buyer is not represented.
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Of course this do-it-yourself (DIY) home buyer post (and many others like it) has garnered a lot of attention and unconfirmed corroboration. However, there is no additional information about this specific transaction; and two thoughts immediately come to mind, either: the home did not appraise at the higher price (this was 2012); or the buyer walked on the home inspection.

The truth is that many still value buyer broker representation, which goes beyond just finding a home and negotiating a sales price; and may include (among other responsibilities) identifying and guiding you through any obstacles that can arise during the transaction. Of course, not all agents are the same. If your agent is a strong negotiator, the probability on settling on a better price is higher; as well as other occasions during the transaction where negotiation is paramount – notably during the home inspection process.

What some experts proclaim to be evidence of a trend of home buyers purchasing sans a buyer agent, may actually be just a shift in buyer behavior. Sure, there will always be the “DYI” buyer trying to justify a price by reducing commissions. But the reality may be that, rather than ditching the buyer agent altogether, the internet has allowed many home buyers to put off signing a buyer agency agreement until they are ready to make an offer.

August 6, 2014November 23, 2021

Millennials, home buying, and tiny houses

Many analysts are trying to provide answers for this year’s disappointing home sales volume. One factor that has been maintained is the lack of participation from young home buyers, which may be supported by statistics compiled by the National Association of Realtors®. Highlights from the National Association of Realtors® 2013 Profile of Home Buyers and Sellers cites the median age of home buyers was 42 years old (increased from the median age of 39 reported in 2008, when three-fifths of all home buyers were under 45); and the median age of the first time home buyer was 31 (increased from the median age of 30 in 2008, when 54% of first time home buyers were reported to be between the ages of 25 and 34).

Millennials, typically described to be between the ages of 18 and 34, have recently been the focus of much financial analysis. There is a consensus that millennial economic participation has been impacted by employment and a challenging job market. Along with a burdening student loan debt, many millennials have decided to delay family formation; not to mention forgoing home purchases for rentals and moving back with mom and dad.

David Jacobson, in his A July 16^th Money article “10 Things Millennials Won’t Spend Money On” (time.com/money) described millennials as a financially savvy group who, like the generation of the Great Depression, has learned from the Great Recession. When it comes to housing, Jacobson states that it is not a lack of desire for homeownership, but rather just a matter of affordability. He cites a Harvard Joint Center for Housing Studies finding indicating that homeownership fell 12% among those younger than 35 during the period between 2006 and 2011; and an additional 2 million are living with their parents. Even though he describes improving economic conditions, Jacobson attributes the prohibitive cost of housing to the combination of economic challenges along with recent changes to the mortgage industry.

Emily Parkhurst, the Digital Managing Editor of the Puget Sound Business Journal, provides additional insight in an August 1^st blog post (Zillow data shows millennials don’t buy houses). Identifying herself as a millennial by saying “I’m that 32 year old non-homeowner they’re talking about…” she shares her frustrating experience with selling her husband’s condo with an underwater mortgage. Having purchased the condo before their marriage, and then having to make job related moves, they tried selling it via short sale and then trying a deed-in-lieu; but after more than three years, she states, “It’s been an insane back-and-forth with no promise of resolution any time soon. Why would I ever sign up for the possibility of that again?”

Although homeownership may still be a challenge for many, including millennials; the “Tiny House Movement” may be viewed as an affordable alternative to traditional housing. Another take on manufactured housing (mobile and double-wide homes), the Tiny House Movement was described by Randy Stearns of TIME (Tiny Houses With Big Ambitions; May 29, 2014) as “…efforts by architects, activists and frugal home owners to craft beautiful, highly functional houses of 1,000 square feet or less (some as small as 80 square feet).”

Maybe the Tiny House may not solve all of the problems in the real estate industry, but the concept of mobile, tiny efficient housing seems to be catching on not only with those who are downsizing – but also as mobile apartments for millennials.