Autumn Home Selling

autumn home selling
Autumn home selling

What was once considered a winding down period for the year’s home sales, has become housing’s second wind.  Autumn is not only a time when the leaves start falling, but it also has become a target selling season for home sellers who miss the spring market.  Autumn home selling is also a second chance for those who could not sell their home earlier in the year.  In fact, the fall has become an active home selling season.

The general consensus for the autumn home selling phenomenon is that home sale inventory is low.  But the truth is that the fall tends to be when home sale inventory begins to decrease anyway.  Many home sellers who didn’t sell their home during the spring or summer will be pulling their homes off the market.  Sure, new listings are available during the fall, but not as many as there were in the spring.  Fall is a time for home buyers and sellers to strike while the iron is hot.  The combination of fewer listings along with serious home buyers and sellers makes the fall housing market a brisk selling time. 

This year, autumn home selling may be different.  Existing home sales have declined year-to-date (compared to last year).  The National Association of Realtors reported that as of June, existing home sales are about 2.2 percent behind last year’s sales.  Year-to-date Montgomery County home sales are 2.1 percent below last year’s sales.  This decline actually started last fall.  The home sale drop-off stifled what could have been a record year for 2018 home sales.

Autumn home selling

If you’re selling a home this fall keep an eye on neighborhood home sales.  Setting a reasonable list price will be key to getting your home sold.  Keep in mind that although home sale prices continue to climb, monthly appreciation is slowing.  The S&P CoreLogic Case-Shiller Home Price Index (spindices.com) reported a year-to-date nationwide 2.29 percent increase.  You get a sense of the magnitude of decelerating appreciation when compared to 2018’s increase of 4.55 percent, and 2017’s increase of 6.24 percent nationwide.  The year-to-date Montgomery County average home sale price is about $554,932, which is only an increase of 1.2 percent from the same time last year (MarketStats by ShowingTime). 

Over pricing your home can be a disastrous mistake during the fall market.  Don’t be greedy, and be prepared to adjust your pricing strategy.  There are many storms brewing that can easily scare home buyers.  If the list price is too high, you may end up with low ball offers because of a protracted time in the MLS. 

Although having less competition makes it a good time to sell your home, it can also be challenging.  Fall weather can be significantly different day to day.  Be prepared to adjust the thermostat.  Make sure your HVAC system gets a fall service so it will be ready for colder temps.   

Don’t forget to keep up with your home’s curb appeal.  Although you may want to get lazy about maintaining your lawn, don’t let it grow too high.  Also, remove excessive leaves from the ground too, as this can also diminish your home’s curb appeal.

Make accommodations for home buyers to visit your home.  Many home buyers will probably schedule tours after work, when it will be getting dark.  Open houses are still a good option for a fall home sale.  Turnout may be scant, but fall open house visitors are more likely to buy.

Original article is located at https://dankrell.com/blog/2019/09/15/autumn-home-selling/

By Dan Krell
Copyright© 2019

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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.

Take it or leave it

take it or leave it
Home staging (infographic from nar.realtor)

If you’re listing your home for sale with a Realtor, you will likely encounter a one-page disclosure that’s important yet often neglected.  The purpose of the “Inclusions/Exclusions Disclosure and Addendum” is to communicate with the home buyer what conveys with house and what you intend to take.  This helps you decide to “take it or leave it.” If completed as intended, the disclosure can help you avoid a dispute with the buyer after closing. 

It’s understandable that, after completing a stack of listing documents and disclosures, home sellers want to quickly check the boxes of the obvious items that convey with the sale.  However, in their haste, many sellers overlook or forget about the fixtures they intend to take it or leave it when they move.  Common items that home sellers take include the chandelier (and other lighting fixtures), bathroom mirrors, brand new washer/dryer, or the extra freezer. 

The up-to-date GCAAR Inclusions/Exclusions Disclosure and Addendum helps you decide what fixtures and personal property convey.  The first paragraph states: “The Property includes the following personal property and fixtures, if existing: built-in heating and central air conditioning equipment, plumbing and lighting fixtures, sump pump, attic and exhaust fans, storm windows, storm doors, screens, installed wall-to-wall carpeting, window shades, blinds, window treatment hardware, mounting brackets for electronics components, smoke and heat detectors, TV antennas, exterior trees and shrubs. Unless otherwise agreed to herein, all surface or wall mounted electronic components/devices do not convey…

You’ll notice that the disclosure specifically mentions wall mounted electronics and mounting brackets.  This wording was added because new norms emerged with new technologies that created disputes about what was considered “permanently” attached.  As wall mounted TV’s became commonplace, home buyers expected plasma TV’s to convey and unsightly wall mounts to be removed. 

A more recent technology incorporated into a home that has become commonplace is the solar panel.  Do they convey or not?  Many home owners who install solar panels don’t actually own them, they are leased.  Of course, confusion and disputes regarding solar panels have occurred, and are now listed in the Lease Items and Service Contracts section. To help clarify what leased items convey and transfer, the Inclusions/Exclusions Disclosure states: “Leased items/systems or service contracts, including but not limited to: solar panels & systems, appliances, fuel tanks, water treatment systems, lawn contracts, security system and/or monitoring, and satellite contracts do not convey unless disclosed here…”

It’s not uncommon for a dispute to arise at the walkthrough because the home seller decides to take a fixture or appliance that is not listed as an exclusion.  Regardless whether the seller misunderstood or had a last-minute change of heart, the home buyer may be demanding the return of the item(s).  And since the Inclusions/Exclusions Disclosure and Addendum is part of the contract, the buyer may have recourse.

Take it or leave it?

If you’re selling your home, deciding to “take it or leave it” may be the last on your mind. But take the time to read and complete the disclosures carefully.  When completing the Inclusions/Exclusions Disclosure don’t be afraid to over communicate your intentions about taking or leaving fixtures and appliances.  Make sure you list items you will take as “Exclusions.”  It also helps to tag these items indicating “Does Not Convey,” so home buyers are on notice when they visit.   Also, don’t forget to identify older appliances or fixtures that are staying, so the buyer doesn’t assume you are removing them.  And of course, ask your agent for assistance if you’re unsure if specific items are fixtures and should be listed in the disclosure.

By Dan Krell
Copyright © 2019

Original located at https://dankrell.com/blog/2019/07/29/take-it-or-leave-it/

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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.

Buyer agent commission controversy

buyer agent commission
Annual mean wage of Real Estate Brokers (infographic from bls.gov)

One of the hottest controversies in real estate that you have yet to hear about is who should pay buyer agent commissions. Agent commissions controversies have been around in one form or another for decades.  The commissions issue typically becomes front and center when the housing market is doing well.  This time, however, the buyer agent commission controversy is gaining steam and has the potential of changing (and possibly upending) residential real estate and online real estate platforms.

The debate is center in an anti-trust class action law suit filed against the National Association of Realtors and a number of major real estate brokerage brands.  As I reported last month, the law suit alleges that the defendants engaged in “anticompetitive practices.”  Among the alleged issues listed in the law suit, includes a “Buyer Broker Commission Rule” that requires buyer agent compensation for a home to be listed in the MLS. 

Regardless of how a listing agreement “structures” broker commissions, the perception and general acknowledgement is that the (buyer broker) buyer agent commission is paid by the seller.  The seller typically pays the listing broker a commission, which is shared if another broker represents the buyer.  This commission “pass-through” is responsible for the growth of online platforms selling home buyer leads and contacts.  It has also been responsible for the growth of real estate groups that act as “buyer mills,” which rely on high volume leads generated via online platforms and other means.  It can be argued that because of Buyer Broker Commission Rules, the billions of dollars that are generated and spent on home buyer leads (as well as buyer rebates) can be traced back to the home seller. 

Home sellers are not the only victims.  A study (jstor.org/stable/24887258) conducted by Joachim Zietz and Bobby Newsome (A Note on Buyer’s Agent Commission and Sale Price; The Journal of Real Estate Research; 2001, Vol.21 No.3 p.245-254) revealed that buyer agent commissions had a positive effect on home sale price, but only on lower-priced homes.  The conclusions suggested that buyer agents “do not act in the best interest of their clients because of the institutional structure of sales commissions.

Is it possible that the MLS perpetuates steering and anticompetitive behavior?  A recent study by Barwick, Pathak and Wong (Conflicts of Interest and Steering in Residential Brokerage; American Economic Journal; 2017, Vol.9 No.3 p.191-222) has shocking conclusions that resonates with those who are wary of the residential real estate industry.  The study pointed out that real estate commissions are higher the US than other industrialized countries.  The authors concluded, “Properties listed with lower commission rates experience less favorable transaction outcomes…they are 5% less likely to sell and take 12% longer to sell. These adverse outcomes reflect decreased willingness of buyers’ agents to intermediate low commission properties (steering)…”  They “provide empirical support for regulatory concerns” because the data indicates buyer agents will steer their clients towards homes paying higher commission.

Home sellers can learn from home builders about marketing and agent compensation.  Home builders figured out buyer broker commissions a long time ago.  They will not pay advertised compensation to buyer brokers who don’t show up with their clients.  And during hot markets, they pay a modest referral fee in lieu of commission. 

All things considered, the issue of buyer broker commission is a complex issue that depends on multiple factors, including market conditions.  However, increasing awareness is inventing new business models and lower buyer broker compensation expectations. 

Original located at https://dankrell.com/blog/2019/05/24/buyer-agent-commission-controversy

By Dan Krell
Copyright © 2019

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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.

Mixed housing stats

mixed housing stats
Mixed housing market stats (infographic from keepingcurrentmatters.com)

This week’s National Association of Realtors press release (nar.realtor) sends mixed signals about the housing market.  Reports of sluggish home sales and slowing home price appreciation is not what you would expect when the spring market should be humming along.  But then again, mixed housing stats may be a vital sign of a healthy market in motion.

First, let’s talk about home sale prices.  The NAR’s report on metro home prices and affordability indicate that the average home sale price for the first quarter of the year was $254,800.  This is a 3.9 percent increase compared to the same time last year.  Average home sale prices in the Baltimore metro area were slightly higher than the rest of nation at $275,300.  Not surprisingly, Washington metro prices were significantly higher at $420,000 (a 6.5 increase from the same time last year).

The latest S&P CoreLogic Case-Shiller U.S. National Home Price Index (spindices.com) is almost spot on with the NAR, indicating a 4 percent increase in home sale prices nationwide.

Affordability is always a concern when mixed housing stats confound the market. So, how much income do you need to qualify for a home?  The National Association of Realtors Qualifying Income report indicates the average qualifying income for a 5 percent down conventional mortgage is $60,143 nationwide.  The average qualifying income in the Baltimore metro area is slightly higher at $64,982.  However, because of significantly higher home sale prices, the average qualifying income in the Washington metro area is $99,137. 

The neighboring Baltimore and Washington metro areas highlight home pricing extremes in competing markets.  Many home buyers who work in the Washington metro area are opting for longer commutes to make homeownership affordable.  Others are opting for alternative work to not only lower their housing cost, but eliminate the commute as well.  Commenting on affordability, NAR’s chief economist Lawrence Yun stated, “There are vast home price differences among metro markets. The condition of extremely high home prices may not be sustainable in light of many alternative metro markets that are much more affordable. Therefore, a shift in job search and residential relocations into more affordable regions of the country is likely in the future.”

Although home sale prices continue to climb, the national home sale picture is another story.  The 1.2 percent increase in spring home sales compared to winter sales should be expected.  However, the 5.4 percent decrease from last spring is a disappointment.  According to MarketStats by ShowingTime (getsmartcharts.com), the number of homes sold in the Mid-Atlantic region decreased 4.77 percent year-to-date.  There was a larger decline in Montgomery County, where there was a 7.25 percent decrease in home sales year-to-date! 

Days-on-market is another fundamental indicator of the housing market.  And, like home prices and units sold, days-on-market can vary depending on the local market.  Homes in the Mid-Atlantic region are taking a bit longer to sell, as days-on-market increased 7.04 percent to 76 days.  However, houses in Montgomery County are selling quicker, where days-on-market decreased about 13 percent to 65 days. 

Mixed housing stats can confound home buyers, sellers, and their agents. But consider the analysis of David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. He stated that that home sale prices gains have been slowing down until recently.  And although mortgage rates are lower, home sales have “drifted down” from their peak during February 2018.  Even new home sales and residential investment have shown weakness since last year.

Original published at https://dankrell.com/blog/2019/05/20/mixed-housing-stats/

By Dan Krell
Copyright © 2019

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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 buyer preferences

home buyer preferences
Trendy renovations (infographic from nar.realtor)

Homes can vary along a spectrum of many factors.  Size, style, location, are just the basic differences and are generally used by home buyers in their home search.  However, even similar homes in the same neighborhood can differ depending on the homes’ features.  Home buyer preferences and trends toward home features is usually the reason for price differences on similar neighborhood homes. This truth was validated by a study conducted by the National Association of Home Builders (How Features of a Home Impact Its Price; nahb.org; November 30, 2004).  If you’re selling this spring, consider home buyers preferences and current home buyer trends.

In past columns, I talked about how most home buyers in the current housing market want a turn-key home.  And that still holds true.  Home buyers still prefer to buy a new home.  However, buying a recently updated/renovated home is the next best thing.  Generally, homes with new kitchens, bathrooms, and flooring get multiple offers and sell very quickly.  Alas, updating and renovating a home takes time and money.  Discuss with your listing agent how making (or not making) updates and renovations affect your sale price. You may have to adjust your pricing expectations accordingly.

So, what tops the list of home buyer preferences? The National Association of Home Builders latest “Trends in Home Buyer Preferences” (nahb.org) indicates that the kitchen is a prime area of focus.  Current kitchen trends include a strong preference to either “traditional” or contemporary style cabinets.  The styling would depend on the kitchen overall (consulting with a design center would be helpful).  Additionally, water filtration has also become a desirable feature.  If not already installed, water filtration can be added when replacing a refrigerator, as it is now a common function of modern refrigerators.

In today’s growing awareness of environment and sustainability, it’s a given that home buyer preferences show a strong preference toward energy efficiency.  When updating, consider Energy Star (energystar.gov) certified appliances.  Energy Star appliances typically use 50 percent less energy than standard models.  Additionally, consider having an energy audit prior to listing your home.  The energy audit will reveal the home’s energy efficiency.  It will also highlight where improvements are recommended.  The report itself is useful to the home buyer, even if you don’t follow all the recommendations. 

New flooring is also important to home buyers.  The preference towards wood flooring has always been strong.  However, be aware that there are differences in quality of flooring products, as well as workmanship of installers.  Even if you purchase top quality hardwood, poor installation can actually negatively impact the sale price.  If you’re installing wood, tile or similar flooring, hire an MHIC licensed flooring contractor.  Your flooring contractor can also help with trendy flooring options.

As a home seller, you certainly consider your home as being special.  And you probably spent a good amount of money on customizing your home over the years.  However, a problem many home sellers encounter is that over customization and personalization can negatively affect the home sale price.  The truth is that home buyers have preferences too, and their preferences may not reflect yours. 

Home buyer preferences and trends are constantly changing.  Your listing agent should be able to help understand how current home buyer preferences and trends impact your home sale.  Additionally, consulting with a home staging or interior design professional can assist you with deciding on making relevant updates to your home.

Original published at https://dankrell.com/blog/2019/04/27/home-buyer-preferences

By Dan Krell
Copyright © 2019.

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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.