About Your List Price

list price
Where are home buyers finding their homes?
(infographic from nar.realtor)

When you’re selling a home, a consequential decision is your list price and pricing strategy.  Deciding on your price can be confusing because, sometimes, what you hear from the media is not exactly what your real estate agent is telling you.  Additionally, making matters worse is hearing disparate information from different real estate agents.

For example, your home’s market value is not the same as a list or sale price.  It’s a common mistake to assume that your home will sell for “market value.”  However, market value is an appraisal term that describes a probable price that a home buyer would pay in any given market.  Market value can vary depending on the scope and purpose of the appraisal.  Knowing the “market value” for your home can build up expectations for your sale that may not be realized.  However, until you do an analysis of comparables and market conditions, you won’t have a realistic list price. 

Adding to the confusion is hearing that your list price may not necessarily be the sale price.  In a buyer’s market, your sale price could be less than list price.  In a seller’s market, your sale price could be more than list price.

There’s definitely a science when deciding on a list price, where you can work with real numbers.  Unfortunately, the “science” of home pricing is inexact.  Determining a list price is much like baking cookies.  The end result is similar, but expert bakers have their own recipe.  So, although listing agents don’t always agree, there’s some commonality in determining a list price.  And much like baking, some pricing “recipes” are better than others.

Part of the inexact science of home pricing is creating a market analysis.  The market analysis will guide you in deciding a list price by providing a price range.  Although there are basic guidelines for collecting data, agents don’t always agree on the process.  However, once you pinned down a price range, then you can decide your pricing strategy by considering your selling motivation, the economy, and housing market conditions.

Basically, the market analysis is deciding which recent sales are most similar to your home.  The best comparables are homes in your neighborhood that sold in the previous three to six months.  The homes in your neighborhood are likely very similar to yours, and recent sales are an indicator of market conditions.  However, it’s common to go outside your neighborhood when similar neighborhood sales are not available.  These comparables provide a price range.  The more adjustments made to comparable sales, the less exact your analysis.

Besides looking at recent sales, you should also look at neighborhood homes that are actively on the market.  Active home sales are your competition.  These sales can reveal additional market conditions by comparing price and days on market with your sale comparables.  You should also consider recent withdrawn and expired sales because they provide insight about pricing strategies that may not work in the current market. 

Your pricing strategy is how you decide to position your home in the market.  Your goal is to sell for top dollar and least amount of time on market.  In determining your pricing strategy, you need to consider your competition, as well as your motivation, economy, and housing market conditions.  Also remember that the list price may have to be adjusted as days on market accrue, while keeping an eye on your competition.

Original article is published at https://dankrell.com/blog/2020/02/14/about-your-list-price/

By Dan Krell
Copyright© 2020

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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.

Holiday Home Selling

holiday home selling
Home staging during the holidays (infgraphic from nar.realtor).

Conventional real estate wisdom used to be that timing the market was the key to listing your home for sale.  Most home sellers tried to aim for the spring and early summer months to sell their homes.  In fact, June continues to be when most settlements occur.  However, selling strategies have changed over the last few years such that home sellers are confidently listing in the fall.  Many also hold nothing back to sell during the winter months.  But how about holiday home selling?

The holiday season is typically when the real estate industry slows to a crawl.  But it doesn’t mean that the housing market is closed!  Consider that there were 658 Montgomery County MLS listed homes that went under contract since the beginning of November.  This confirms that active home buyers are constantly searching for homes, and will certainly visit houses that are available during the holiday season.  The only obstacle for home buyers (and your home sale) is severe weather.  

Holiday home selling is not for everyone. If you have not yet listed your home for sale, you may consider waiting to list after Thanksgiving.  Or you may just decide to wait until the new year.  Your listing strategy should be based on your lifestyle.  Although the holiday season is often synonymous with joy and good cheer, many experience increased stress during this time.  If the holidays are a hectic time for you, the thought of the additional stress of selling your home may sway you to waiting the holidays out.  Keep in mind that, like any other time of the year, you still have to prepare your home for sale (which includes decluttering, repairs and staging).

If your home is already listed for sale, you have some choices.  It used to be the rule that if your home was still on the market approaching Thanksgiving that the listing would be pulled from the MLS until spring.  And as of the November 1st, 181 county homes have been pulled off the MLS.  You may decide to do the same. 

But keeping your home on the market during the holiday season is no longer taboo.  As I mentioned earlier, conventional wisdom is passé.  Some home sellers see an opportunity to sell during the holiday season as many homes come of the market.  Consider that since November 1st, there were 444 new MLS listings.  There are also another 46 homes currently listed as “coming soon.”

Obviously, if your home is vacant it’s easy to show.  However, you should still visit the home weekly to make sure it is clean and shows well.  But if you’re selling the home where you reside during the holiday season, you may want to think about showings and staging.  Talk to your agent about requiring home buyer appointments to view the home so you don’t have inopportune surprise visitors.  This will give you the flexibility and emotional space to have your home show its best while you enjoy the holidays.

What about holiday decorations and holiday home selling staging?  According to Melissa Dittmann Tracey, writing for the NAR blog (Should You Stage Homes for the Holidays?; nar.realtor; December 19, 2011), most real estate professionals tell their clients to stage with “holiday-spirit and glow.”  Although thirty-seven percent of professionals indicated that they advised holiday staging without religious decorations, twenty-eight percent advised their clients to also include their religious decorations.  Only eight percent of professionals surveyed advised to do generic staging without any holiday decorations.

Original article is published at https://dankrell.com/blog/2019/11/28/holiday-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.

Real Estate Transparency

real estate transparency
10 Steps to Home Buying

Ten years ago, I reported on the growing demand of transparency in real estate.  As you can imagine, mistrust of real estate agents was at an all-time high after the housing market crash.  At that time, home buyers and sellers felt betrayed by an industry that was perceived as keeping their cards close to their chest.  However, times were changing and consumers demanded real estate transparency, especially from their agents.  Home buyers and sellers not only want their agents to act in good faith, but also want more information and communication during the transaction. 

Since then, the National Association of Realtors (nar.realtor) has been trying to mend their reputation.  The 2015 DANGER Report was intended to identify issues affecting the industry as well as provide a roadmap to the future.  One of the major issues identified was agent competency and ethics.  However, it was obvious that ethical Realtor behavior didn’t guarantee competency. And vice-versa.  The upshot of the Report was that many of the identified concerns were already known.  Ironically, the identified issues and answers only prompted more questions.  It was not known if and how the industry would provide real estate transparency.

Fast forward to 2019, when the real estate industry is at a crossroads.  Earlier this year a class-action law suit was filed that challenges how agent commissions are paid.  Also, earlier this year, the Consumer Federation of America (consumerfed.org) published the first in a series of reports focused on “the lack of real estate agent transparency on representation, compensation, and service.”  The Consumer Federation of America (CFA) is described as an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.

The class-action suit filed in March, if successful, has the potential to force a major change to the industry.  Besides having the potential to change how agents are paid, it may force increased real estate transparency in agent compensation.  Nevertheless, similar past challenges to the NAR and the real estate industry resulted in minimal (if any) change to how business is conducted. 

Serendipitously (or not), Stephen Brobeck’s most recent CFA series report, “Hidden Real Estate Commissions: Consumer Costs and Improved Transparency”was published this month (consumerfed.org).  The report confirms consumers’ “lack of understanding” of commissions.  It also points out how “concealment of commissions” does harm to consumers.  The report indicated that 70 percent of the agents surveyed charge six-percent commission.  Commissions are mostly uniform, more so for buyer agent commissions.  The report also indicates that there was a general rationale that buyer agents would not show property if the buyer agent compensation was below the average for the area.  Of the agents surveyed, 73 percent indicated they won’t negotiate their commission.  It also calls attention to administrative fees of several hundred dollars, which is typically charged in addition to commission. 

The report concludes that the real estate industry must change its attitude about agent compensation, or risk eroding consumer trust.  Home buyers and sellers are savvy, and are increasingly sensitive to the role that commissions play in housing costs.  Home seller costs could be reduced if consumers compare commission rates and ask if they are negotiable.  Home buyers can also be helped if they are aware how their agent is paid, as well as knowing the offered buyer agent compensation on homes listed in the MLS. 

Original article is published at https://dankrell.com/blog/2019/11/23/real-estate-transparency/

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.

Real estate scammers emailing you

real estate scammers
Business email scams (infographic from fbi.gov)

The warnings of real estate closing scams were rapidly broadcasted in 2015 .  And by 2016, there was awareness that criminals were wholeheartedly targeting all parties involved in real estate transactions through phishing emails.  The phishing emails that were sent seemed legit, and in many cases appeared to have come from your agent or title company, but were actually sent by criminals intent on having you wire money to them.  No one was immune from receiving these emails. Real estate scammers targeted home buyers and sellers, real estate agents, title companies and attorneys.

The FBI (fbi.gov) categorizes this type of crime as Business E-mail Compromise (BEC)/E-mail Account Compromise (EAC).  The scam didn’t begin in 2015, but the FBI began tracking this type of crime in 2013.  But it wasn’t until 2015 that it seemed as if the real estate scammers used BEC/EAC to target the real estate industry, and it spread ike a plague.  And despite efforts by the real estate industry to prevent such crime, BEC/EAC is on the rise.  Real estate scammers have adapted and have become increasingly sophisticated.  Many of the phishing emails (calls) are not distinguishable from the real thing.

Statistics compiled by the FBI Internet Crime Complaint Center (ic3.gov) indicate that there were 78,617 incidents of BEC/EAC worldwide between October 2013 and May 2018.  Over half of these victims (41,058) were in the U.S.  Total global losses during this time period is calculated to be $12,536,948,299 (U.S. losses were $2,935,161,457). 

Unfortunately, the real estate industry has been a target of interest since 2015.  According to FBI statistics, the number of BEC/EAC real estate related victims increased 1100% between 2015 and 2017.  So far, the highest number of BEC/EAC real estate victims were reported in May 2018, while the highest dollar loss from real estate victims was reported in September 2017.  The number of complaints and losses is likely correlated to real estate market activity (notwithstanding efforts to thwart such crimes).

How do criminals know about your real estate transaction?  The internet.  Real estate scammers use information available on real estate portals to identify homes that are pending (under contract) along with agent contact information.  The information is used to infiltrate agents’ emails to compile client names and closing information to target everyone involved in the real estate transaction with phishing emails.  The emails typically request changes in settlement funding.  The changes can request wire in lieu of check, and/or changes in the wire instructions (which would send funds directly to the criminals). 

The FBI has also described BEC/EAC spilling over into phone calls!  In addition to sending spoofed emails, the criminals are also calling you asking for personal information for “verification purposes.”  Experts suggest you be cautious about calls asking for changes in payment types and/or wire instructions.  The fake calls are so real such that victims have reported not being able to tell the difference. Security experts recommended that you create code phrases to verify phone calls with your agent and title company. 

Experts also warn of any communication that is exclusively email and/or asks you to call for verification purposes.  It is likely that any contact information listed in the phishing email is fake.  If the email sender claims to be from the title company or your agent, call them directly to verify the authenticity of the email.  If you receive any email requesting personal information and/or changes in payment/wire instructions, verify the email is legitimate by calling the sender directly (and use your code phrase).

Original article is published at https://dankrell.com/blog/2019/11/19/real-estate-scammers-emailing-you/

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.

Protecting Home Buyers

protecting home buyers
Home Buying Steps (infographic from nar.realtor)

Of the handful of new Maryland real estate related laws that go into effect this week, two are highly important for you to know.  These are passed for the purpose of protecting home buyers and sellers. One protects your confidential information, and the other concerns your earnest money deposit on a Maryland home sale.

Protecting home buyers and sellers’ confidentiality is HB1228/SB807, which was effective October 1st.  Besides cleaning up the definition of a brokerage relationship, the bill addresses client confidentiality.  Unless a client consents in writing, Maryland licensed real estate brokers and agents may not disclose confidential information received from or about a client to any other party and/or their representative (including their real estate agent).  The non-disclosure of confidential information protects past and present clients, and now is extended to potential clients as well. 

Confidential information is defined as: a seller/landlord willing to accept less than the listing price; a buyer/tenant willing to pay more than their offer; motivation of a client; the need or urgency to buy, sell, or rent; any facts that led the client to sell, buy, or rent; and also relates to the client’s negotiating strategy.  However, the duty to maintain confidentiality doesn’t apply to the disclosure of material facts about a property (which a home seller is also required to disclose).

Protecting home buyers deposits is effective October 1st. HB222 requires a written agreement between the buyer, seller and the escrow agent holding the earnest money deposit (EMD).  The EMD is described as “consideration” for a seller to accept an offer.  An escrow agent is the entity who accepts and holds the earnest money.  The EMD is credited to the buyer at the time of settlement.  However, if sale does not settle, the disbursement of the EMD can become contentious.  Under certain circumstances, the contract of sale is clear about when the buyer may receive their EMD.  However, real estate is not always black and white, and there are occasions when a dispute arises about whom is entitled to receive the EMD.

It used to be common practice for a real estate broker to accept and hold the EMD.  Real estate brokers are bound by law as to how to handle and care for the EMD.  However, brokers are increasingly reluctant in accepting EMDs for a number of reasons.  Instead, brokers are directing their agents to have title companies to hold these deposits.  But home buyers (and sometimes their agents) don’t realize that a title company is regulated differently than a real estate broker, and the EMD may not be handled as expected.

HB222 is important because it fills the gap for escrow agents who do not already have specific guidelines for handling EMDs. (HB222 doesn’t apply to Maryland real estate brokers and agents, and Maryland registered home builders selling new homes, as they are already regulated).  The bill provides transparency so both the buyer and seller understand the terms for holding the EMD.

The bill requires an escrow agent to enter into a written agreement with the buyer and seller when the escrow agent agrees to hold an EMD for a Maryland home sale. The written agreement must contain the amount of the EMD; the date the EMD was given to the escrow agent; the responsibility of the escrow agent to notify the buyer and seller if the EMD funds are “dishonored” (e.g., bounced check); the conditions under which the escrow agent may release the EMD; and the process to address disputes over the release of the EMD.

Original article is published at https://dankrell.com/blog/2019/10/28/protecting-home-buyers/

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.