Creating home staging vision

home staging vision
Creating home staging vision (infographic from nar.realtor)

Although home staging has become entrenched in the home sale process, it doesn’t have to be a pricey way to prepare your home sale. Not only has it become part of the home seller experience, the home staging vision is now expected by buyers and their agents when they visit homes. 

The spring home sale season is the perfect time for the National Association of Realtors to roll out the results of their 2019 Profile of Home Staging survey (nar.realtor).  In a March 14th press release, NAR President John Smaby summed up this year’s profile by stating, “Realtors understand the importance of making a residential property as welcoming and appealing as possible to potential buyers. While every Realtor doesn’t use staging in every situation, the potential value it brings is clear to both homebuyers and sellers.” 

Staging may affect a home’s time on market, and it’s likely due to visual cues.  Meaning that home staging vision helps the home buyer picture themselves living in the home. More than half of the agents who responded to the survey indicated that home staging reduces time on market.  Forty percent of buyer agents said that home staging effects most buyers’ perceptions of a home.  Eighty-three percent of buyer agents believe that home staging vision makes it easier to visualize living in the home.

It’s not surprising that agents agree that the most staging attention goes to the living room, kitchen, master bedroom, and the dining room.  It’s not that these rooms have special significance, but rather it’s because it’s where people spend most of their time in the home.

The NAR survey also found that real estate TV shows has impacted home buyers’ views and expectations.  Thirty-nine percent of buyers indicated that they experienced a more difficult home buying process than what they expected.  Twenty percent of buyers reported being disappointed that homes they visited didn’t look like the ones portrayed on TV.  While ten percent believe that homes should look staged as they are depicted in TV shows. 

Not all agents stage the homes they list for sale.  Only twenty-eight percent of listing agents said they staged all sellers’ homes prior to listing them for sale.  Compared to the thirteen percent of agents who confessed that they only stage homes that they deem difficult to sell.

Does home staging affect sale price?  It was noted that all agents surveyed indicated that home staging affected their home sale positively.  Twenty-two percent of the agents reported an increase of up to five percent in buyers’ offers, while seventeen percent reported offer increases up to ten percent. Only two percent of the agents responded that it increased offers up to twenty percent.

But the idea of staging your home to get top dollar may just be traditional wisdom, as evidenced by NAR’s survey.  One of the few studies on staging revealed that indeed, staging does not have a significant impact on sale price.  Lane, Seiler & Seiler’s 2015 study (The Impact of Staging Conditions on Residential Real Estate Demand. Journal of Housing Research, 24,1. 21-35) concluded that although staging affects the home buying process and the buyer’s opinion and perception of livability, it’s not enough to result in a higher sales price.  The authors stated, “These results stand in stark contrast to the conscious (stated) opinion of both buyers and real estate agents that staging conditions significantly impact willingness to pay for a home. As such, the findings are new and useful to a large group of stakeholders (sellers and agents).”

Original located at https://dankrell.com/blog/2019/03/21/creating-home-staging-vision/

Copyright© Dan Krell

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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.

Housing market mini-cycles

housing market mini-cycles
Housing market mini-cycles

In a statement last year, NAR chief economist Lawrence Yun discussed the housing market’s recovery since the Great Recession (Realtors Chief Economist Reflects on Past Recession, What’s Ahead for Housing; nar.realtor; August 28, 2018).  Citing increasing homeownership rates and addressing the recent home sale slowdown, Dr. Yun believes that concerns about a significant housing slump are unsubstantiated.  Instead, we may be going through housing market mini-cycles.

Dr. Yun is not the only one pointing to affordability (home prices and mortgage rates) and lack of home sale inventory as causes of market disruptions.  But his statement is almost trite: “…even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases…”

Housing market mini-cycles and the economy

The housing market, like the overall economy, goes through cycles of boom and bust.  It’s been about eleven years since the last recession, and many are saying we’re overdue for another one.  But if the economic cycles, as described in 1876 by economist Henry George and modernized by Glenn R. Mueller, accurately include recovery, expansion, hypersupply, and recession, there is no clear phase to describe recent housing activity.  Instead, what we are experiencing is housing market mini-cycles.

Most understand the concept of the broad economic boom and bust cycle. But most are unaware of the mini-cycle that manifests as repeat periods of short-term growth and slowdown.  Recessions typically have broad effects on the economy, where as mini-cycles are are fast cycling and specific to economic sector. So, a complete housing market mini-cycle can last several months or longer and may not spill over to other sectors.

Since 2013, the housing market has undergone at least three mini-cycles of growth.  These cycles peaked with record sales volumes, only to be set back by months of sluggish home sales.  The causes of the housing market mini-cycles are debatable and, like a recession, clear in hindsight.  Of course, Dr. Yun and other industry experts are likely to be correct saying that home prices (affordability) and inventory are to blame.  However, there may be other reasons worth exploring as well.

Micro-economic factors are playing a large role in the housing market mini-cycle.  Take for example the increase in employee telecommuting.  There is an abundant research pointing to how telecommuting has affected the commercial real estate market.  These studies point to increased office space vacancies due telecommuting.  Companies are downsizing offices because of the reduced need for space as employees are working from home.  This trend is recognizable in real estate brokerages.  Real estate office spaces are shrinking as the industry becomes increasingly “virtual.”

Telecommuting is also impacting home sales. According to Global Workplace Analytics (globalworkplaceanalytics.com) “Regular work-at-home, among the non-self-employed population, has grown by 140% since 2005, nearly 10x faster than the rest of the workforce or the self-employed.”  Currently, there are about 4.3 million employees that work from home at least half the time.  As businesses are increasingly hiring a telecommuting workforce, workers opt to stay in their current residence rather than relocate near their new employer. 

Does housing market mini-cycles lead to recession?  Maybe the the mini-cycle is a brief market correction that helps avoid the broader effects of recession. Take for instance the three housing market mini-cycles that recently boomed in 2013, 2016, and 2017-2018. During these mini-cycles, home prices soared and home sales broke recent records (since Great Recession).

Current economic indicators (at the time of this writing in March 2019) point to a positive home sale season.  The Bureau of Labor Statistics (BLS.gov) most recent unemployment statement was 4.0 percent (which included government shutdown stats).  The Consumer Price Index remains stable (the CPI-U was last reported unchanged). Real average hourly earnings was reported to increase 0.2 percent from December to January.  And after a three-month decline, the Conference Board (conference-board.org) reported a rebound in the Consumer Confidence Index.  Given the winter housing slump, real estate may be on everyone’s mind again in this spring.

Original located at https://dankrell.com/blog/2019/03/09/housing-market-mini-cycles

Copyright© Dan Krell

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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.

Home sale choices

home sale choices
Home seller snapshot (infographic from nar.realtor)

Having a choice is good.  For many, have having a choice represents freedom.  For others, choice creates angst out of fear of making the wrong selection. Dr. Barry Schwartz wrote about this phenomenon in his book The Paradox of Choice.  Dr. Schwartz describes that having too much choice can create negative well-being.  This phenomenon also exists in real estate.  There are many home sale choices!

Consumers have more home sale choices today than ever before.  However, choosing the best option for you can be confusing. Making the wrong selection can result in remorse. How do you choose between a full-service agent, a limited service broker, à la carte broker, private placement broker, or sell by owner?  How do you know decide among your home sale choices?

Recently published research further supports the value of hiring a full-service real estate agent.  A study conducted by Rutherford, Rutherford, Springer, and Mohr (Limited Service Brokerage: Positive Broker Intermediation?; Journal of Real Estate Research: 2018, Vol. 40, No. 4, pp. 551-595) compared the outcome of using a limited service brokerage to a full service real estate agent.  The results indicate that although the limited service brokerage time on market is similar to the full-service agent, your home sale price is likely to be less with a limited service broker.

Although there have been conflicting studies in the past, Rutherford’s recent study confirms that using a limited service brokerage is likely to sell your home for less.  The authors concede and discuss other factors that may influence results, such as housing market conditions.  Studies that reported positive outcomes of limited service brokerages may have occurred during the go-go market prior to 2007. 

How much commission should you pay? 

Conventional wisdom says that full service agents are “full-price” (whatever that is) and expensive.  However, that’s no longer true.  Many full service, high quality agents charge as much (or as little) as discount brokers.  A 2015 study by Barwick & Pathak (The costs of free entry: an empirical study of real estate agents in Greater Boston; The RAND Journal of Economics; Vol 46, No. 1, Spring 2015, p.103–145) indicated that increased Realtor competition has forced average commissions to decrease over the last few decades.  Of course, they found that the decreased commission structure of the full-service agent good for consumers and the housing market.  They also concluded that decreased commissions would increase quality by decreasing entry into the industry for the wrong reasons.

To make better home sale choices, educate yourself. 

Understand what services are available and what it costs.  You should ask yourself if the services can meet your expectations of helping you through the process of selling your home?  And, how will it impact your sale, time on market, and price? 

Unfortunately, the National Association of Realtors doesn’t do enough to educate consumers about their choices when buying and selling a home. Including negotiating reduced commissions and buyer rebates.  And I wouldn’t expect they will any time soon because of their mission statement (posted on their website nar.realtor): “The core purpose of the National Association of REALTORS® is to help its members become more profitable and successful.” 

So how do you choose among your home sale choices?  Be a savvy home seller.  Don’t stick to “conventional wisdom.”  Explore your needs and expectations.  Investigate your choices and ask questions.  Don’t fall for sales tactics. And don’t be afraid to negotiate commission

Be a savvy home seller

  1. Don’t stick to conventional wisdom

    Explore your options. There is no “one size fits all” home sale plan.

  2. Search for an agent that meets your needs and expectations

    What are your plans? How fast of a sale do you expect? In what condition is your home? Interview several agents with different approaches to your home sale.

  3. Ask Questions

    Every agent has their own process. Some are hands on and responsive, while others hand off your sale to their “team” and you never see them again. Can you call anytime, or are their limited times? How will the agent meet your expectations?

  4. Don’t fall for sales tactics

    Many real estate agents spend lots of time and money learning sales tactics to get the listing. Many have developed polished presentations that are very convincing. Call the agent’s past clients to find out if they over promise and under deliver.

  5. Negotiate listing commission

    It’s a very competitive market. Although some agents won’t negotiate their commission, many will. Some will limit their services when they reduce their commission, while others offer full service.

Original located at https://dankrell.com/blog/2019/02/17/home-sale-choices

Copyright© Dan Krell

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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.

Identity protection real estate

identity protection
Be proactive with identity protection (infographic from nsa.gov)

Even with precautions and laws to protect your sensitive data while conducting financial transactions, there can still be a weak link in the chain that can put your personal data at risk.  You may not have heard about the latest data breach, but it involved the potential leaking of over 24 million mortgage documents. Identity Protection during the real estate process takes awareness and vigilance. However, what do you do after the transaction is over?

The data breach to which I refer was discovered and reported by Bob Diachenko, Cyber Threat Intelligence Director of Security Discovery with the assistance of Zack Whitaker of Techcrunch.  This data breach was discovered by Diachenko just by searching public search engines.  According to Diachenko’s report (securitydiscovery.com/document-management-company-leaks-data-online), the unprotected database contained about 51 GB of credit and mortgages information.  The database potentially exposed more than 24 Million files.

Essentially, the over 24 million unprotected records (24,349,524 according to Diachenko) that existed on the database were likely scanned (OCR) from original documents.  Diachenko stated, “These documents contained highly sensitive data, such as social security numbers, names, phones, addresses, credit history, and other details which are usually part of a mortgage or credit report. This information would be a gold mine for cyber criminals who would have everything they need to steal identities, file false tax returns, get loans or credit cards.” 

Diachenko and Whitaker tracked down the owner of the database and found that the exposed database belonged to a third party.  After the database was secured, however, Diachenko found a second vulnerable server that contained original documents.

How is consumer identity protection handled through through institutional real estate transactions?

According to Whitaker, the documents date as far back to 2008, possibly further.  The documents concerned “correspondence from several major financial and lending institutions” including government entities such as HUD.  Whitaker stated that not all data was “sensitive,” however the database included: names, addresses, birth dates, Social Security numbers, bank and checking account numbers.  They also found some documents that contained other “sensitive financial information,” such as bankruptcy and tax documents, including W-2 forms. 

To understand the broader implications of identity protection in a real estate transaction, read Diachenko and Whitaker’s first (techcrunch.com/2019/01/23/financial-files) and second (techcrunch.com/2019/01/24/mortgage-loan-leak-gets-worse) report. The reporting of Diachenko and Whitaker is significant because it exposes how your identity and sensitive information can be mishandled in the broader financial transactional process that occurs between entities.  Even though direct correspondence with you may be encrypted and secure, security lapses can occur during the institutional transaction process (such selling and/or transferring a mortgage)

The moral of the story is that once your information is out of your hands, you cannot assume it’s 100 percent secure.  Even blockchain technology, which has been touted as a safe means of digital data management, has weaknesses.  And as governments and financial institutions are looking to blockchain as the “answer” to data security, there are reports of “attacks” of increasing sophistication according to James Risberg (Yes, the Blockchain Can Be Hacked; coincentral.com; May 7, 2018). 

Take your identity protection seriously when buying and selling a home

Be vigilant and proactive to protect your identity and sensitive information.  Be wary of unsolicited requests for information, even if it appears to be from someone with whom you are conducting business. Always make a call to confirm the request. Consider a credit freeze to prevent fraudsters from opening credit accounts in your name.  Check your credit report regularly and dispute errors.  If you’ve been a victim of identity theft, the FTC’s IdentityTheft.gov site can help you report it and create a recovery plan.  You can learn more about protecting yourself from identity theft from the FTC (consumer.ftc.gov) and the Federal Reserve (federalreserveconsumerhelp.gov).

Original located at https://dankrell.com/blog/identity-protection-real-estate

Copyright© Dan Krell

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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.

Buy vs rent market

buy vs rent
Buy vs Rent Housing Market (infographic from keepingcurrentmatters.com)

After last year’s active spring, the housing market’s fall home sale decline shocked many.  Although home sales were on target to outpace the previous year’s activity, the slowdown diminished the spring’s impact.  In fact, the National Association of Realtors (nar.realtor) January 22nd press release indicated a sharp decline of home sales during December.  The 6.4 percent month over month nationwide decline should not have been a surprise because of the season.  However, December’s nationwide 10.3 percent sales decline from the previous year is significant.  The Greater Capital Area Association of Realtors (gcaar.com) indicated that Montgomery County single family home sales decreased 12.2 percent during December. Is this an indication of another buy vs rent market?

Back in August, I predicted and discussed the causes for the fall’s sales slowdown.  Among the issues that contributed to the slowdown include increasing mortgage rates and the continued home sale inventory shortage. However, it’s important to note that although home sales seemed to go to sleep during the early winter, home sale prices continue to increase.  It’s not the 4-5 percent price gain that home owners have become accustomed.  But the 2.9 percent nationwide price increase (2.7 percent increase in Montgomery County) during December is indicative that home ownership is still valued.

Although there are many who are saying it’s now a buyer’s market, it’s not entirely true.  The current housing environment has home buyers under pressure.  Increasing mortgage interest rates are making buying a home more expensive, and there are not many homes from which to choose.  Consequently, motivated home buyers who are eager to buy a home during the winter are pushing back against high home prices.  The reality is that home sellers will remain in the driver’s seat as long as they price their homes correctly.

There is a lot of promise for the spring, but it still depends on many factors (such as inventory).  But the push back on increasing home prices will likely continue, as home buyers are increasingly sensitive to housing costs.  “Buy vs rent” and housing affordability will once again become hot topics this spring. 

Buy vs rent is on the mind of home buyers. Although buyers are in the market to buy, there is no urgency. However, it’s clear that this market is about value.

If you’re a home buyer trying to figure out the market, consulting with a professional Realtor can help you decide if it’s the right time to buy a home.  Trulia’s Rent vs. Buy Calculator (trulia.com) is a tool that compares the cost of buying to renting a home over time in a specific area.  It can estimate the point at which home buying is better than renting.  However, depending on your budget and area, renting may be a better financial option.  Montgomery County Department of Housing and Community Affairs (montgomerycountymd.gov/DHCA) and the Housing Opportunities Commission (hocmc.org) offers affordable housing programs for first time home buyers and renters.

If you’re a home seller, think back to the 2014 spring housing market when home buyers pushed back at the sharp home price gains of 2013.  It’s recommended that you don’t take home buyers for granted, buyers are just as savvy as you.  Keep in mind that buyers are thinking about “buy vs rent.” Don’t over-price your home, however expect to negotiate the price.  Make your home show its best through preparation and staging.  Stay away from cheap renovations meant to look expensive, this can actually decrease your home’s value.  If you’re selling “by owner,” consider consulting a staging professional to help prepare and stage your home.  If you’re listing your home with a Realtor, your agent should have a strategy to sell for top dollar in this market. 

Original located at https://dankrell.com/blog/2019/01/25/buy-vs-rent-housing-market

Copyright© Dan Krell
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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.