home seller Archives - Page 12 of 31 - Real Estate News and Commentary

October 8, 2017July 15, 2019

Buyer’s market home selling

Home Buyer’s market (infographic from nar.Realtor)

As winter approaches, many home sellers will be contemplating their next move after their homes have not sold. It is likely that a volatile housing market awaits home sellers during the first half of 2018. If you’re planning to list your home, you should have a selling plan that is able to adjust to market conditions quickly. In other words, know about home selling in a buyer’s market.

The good news for home sellers is that this year’s home sale prices continue to climb, as the September 26th 20-city composite of the S&P Corelogic Case Shiller National Home Price Index (spindices.com) revealed. The national index during July increased 5.8 percent compared to the same period last year, while the Washington DC area realized a 3.3 percent year over year gain. However, there is expectation home sale prices may moderate or even slightly decrease in the first quarter of 2018 because of Fed policy and other market forces.

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices stated in the release:

“While home prices continue to rise, other housing indicators may be leveling off. Sales of both new and existing homes have slipped since last March. The Builders Sentiment Index published by the National Association of Home Builders also leveled off after March. Automobiles are the second largest consumer purchase most people make after houses. Auto sales peaked last November and have been flat to slightly lower since. The housing market will face two contradicting challenges during the rest of 2017 and into 2018. First, rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”

Of course, home sale price indices only show sale prices for homes that sell. And while home sale prices are increasing back to record levels in many areas, the volume of homes sold during 2017 so far is disappointing. According to a September 20^th NAR news release (realtor.nar), August’s existing home sales dropped 1.7 percent. The Pending Home Sale Index for August dropped 2.6 percent, which made the NAR revise their 2017 home sale forecast to be “slightly below the pace set in 2016.” Home sale volume in the first quarter of 2018 may also lag due to continued lack of inventory and anticipated increasing mortgage interest rates. Lawrence Yun, cheif NAR economist, quipped

“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year…The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

Since these are August sales figures from the NAR, it is an unfortunate truth that August sales were not really affected by hurricanes. Mostly because hurricane Harvey hit Texas the very last days of August and Irma hit Florida in September. The main affects of the hurricanes disruption to existing home sales will be seen in September’s statistics. And “missed closings” is a euphemism for phantom closings, because they don’t really exist. So, with regard to sliding home sales, you should take Yun’s “headwinds” of supply and affordability very seriously.

Home selling in 2018, a buyer’s market?

Home sellers positioning themselves solely on this year’s home sale prices may be in for a rude awakening next year. Sellers may feel as if the market is getting soft, however that may change the latter half of 2018 as home prices moderate. Sellers will need to be reasonable. They will need to have awareness of many factors besides home sale prices, including existing home sales volume and neighborhood sale trends. Including home selling in a buyer’s market.

If you’re planning to sell your home, you will need to play to your audience (home buyers), and listen to their feedback. Know how to sell in 2018. Prepare your home before listing it in the MLS by repairing deferred maintenance and possibly making updates. Home buyers have a track record of paying more for a home that has been totally renovated. However, if you don’t completely repair and/or update your home, be prepared to lower your sale price.

Be flexible to quickly adjust to a seemingly buyer’s market. Feedback is highly important to get other’s perspectives about your home. However, take Realtor feedback with a grain of salt. Instead, have your agent collect buyer feedback at open houses. Home buyers tend to be more honest when giving feedback, and it can be especially helpful in a buyer’s market. If the consensus is that the price is too high, the price may actually be too high. If buyers are turned off by the condition and/or curb appeal of the home, consider making repairs or lowering price to reflect the condition. If they are focused on your décor, consider hiring a professional stager to make the home more appealing.

Rather than a soft market, we are experiencing the struggle for a balanced market due to an inventory shortage and sharply decreasing affordability. The last year and a half has been all about the home seller. However, 2018 will be about the home buyer. Home selling in a volatile or buyer’s market can be challenging. If you’re planning a sale, be realistic about your home’s condition and value. Over pricing your home from the start can make your home languish on the market, which could get you a much lower price if it sells.

By Dan Krell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/10/08/buyers-market-home-selling/

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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.

October 1, 2017November 23, 2021

Quantitative easing housing legacy

The Fed stopped purchasing mortgage backed securities and other assets through quantitative easing a few years ago. But the Fed still maintains the estimated $4.5 trillion of assets it has accumulated by extending asset maturity and reinvesting in the securities. The result has been historically low interest rates, and bubble-esque home price spikes. But that may change rapidly over the next six months.

Quantitative easing was a name for the Fed’s “large scale asset purchases” (LSAP) from mid-2008 to 2014. The purpose of the LSAP was to keep boost the economy and housing markets by keeping interest rates low. According to the Fed (federalreserve.gov):

In December 2008, as evidence of a dramatic slowdown in the U.S. economy mounted, the Federal Reserve reduced its target for the federal funds rate–the interest rate that depository institutions charge each other for borrowing funds overnight–to nearly zero, in order to provide stimulus to household and business spending and so support economic recovery. With short-term interest rates at nearly zero, the Federal Reserve made a series of large-scale asset purchases (LSAPs) between late 2008 and October 2014.
In conducting LSAPs, the Fed purchased longer-term securities issued by the U.S. government and longer-term securities issued or guaranteed by government-sponsored agencies such as Fannie Mae or Freddie Mac. The Fed purchased the securities in the private market through a competitive process; the Fed does not purchase government securities directly from the U.S. Treasury. The Fed’s purchases reduced the available supply of securities in the market, leading to an increase in the prices of those securities and a reduction in their yields. Lower yields on mortgage-backed securities reduced mortgage rates as well. Moreover, private investors responded to lower yields on U.S. Treasury securities and agency-guaranteed mortgage-backed securities by seeking to acquire assets with higher yields–assets such as corporate bonds and other privately issued securities. Investors’ purchases raised the prices of those securities and reduced their yields. Thus, the overall effect of the Fed’s LSAPs was to put downward pressure on yields of a wide range of longer-term securities, support mortgage markets, and promote a stronger economic recovery.

In the June Open Market Committee press release, the Fed signaled that it would begin unwinding quantitative easing later in 2017 through “balance sheet normalization.” Of course, the proviso was that the economy would “evolve broadly.” The normalizing the balance sheet would “gradually reduce the Federal Reserve’s securities holdings by decreasing reinvestment of principal payments from those securities.”

There is little doubt that the 3.1 percent real Second Quarter 2017 GDP (bea.gov), along with a record breaking housing market during the first half of 2017 was a large part in the decision to move forward with the balance sheet normalization program. At the very end of September’s Open Market Committee press release, the Fed stated that balance sheet normalization will begin in October.

How will unwinding quantitative easing affect the housing market?

Since the Fed’s announcement last week to unwind quantitative easing, there has been a lot of speculation as to how the housing market will respond. Lawrence Yun, chief economist for the National Association of Realtors, issued a statement saying that he believes the Fed’s unwinding pace will be “in slow motion” and “mortgage rates would rise up only modestly over time.” He expects that the 30-year fixed rate would only reach about 4.7 percent by the end of 2018 (nar.realtor).

But a sober 2013 article written by Edward Pinto, a former Fannie Mae executive, pointed out the immediate impact and consequences of quantitative easing (Is the Fed blowing a new housing bubble? wsj.com, April 9, 2013). Pinto asserted that the home price surge of 2013 was due to the Fed’s LSAP rather than the often cited “broad based improvements in the economy’s fundamentals.” Pinto stated, “The average mortgage rate during the first nine years of the 2000s was 6.3% compared with today’s [2013] rate of less than 3.5%. If mortgage rates were to increase to a moderate 6% in three years, say, some combination of three things would have to happen to keep the same level of homeownership affordability. Incomes would need to increase by a third, house prices would need to decline by a quarter, or lending standards would need to be loosened even further.”

Maybe the unwinding of quantitative easing is past due. Home sale prices have since surged past 2006 home prices in some areas, and has considerably reduced the affordability of homeownership for many Americans. Average wages have not increased significantly (if at all) since quantitative easing began. Lending has loosened some, but not enough to make up for missing home buyer sectors (such as the move-up home buyer).

Home sellers may be in for a shock in 2018. Rising interest rates will certainly moderate home prices. However, rising mortgage rates would likely mean a return to stable housing market. Mortgage interest rates will rise as sharply as they were reduced when the LSAP began, most likely rising above 5 percent by the end of 2018.

By Dan Krell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/10/01/quantitative-easing-housing-legacy/

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August 20, 2017July 14, 2019

Attract home buyers – Zillow listing

If you’re selling your home, check your Zillow listing. You may find that the information may not be complete. Or worse, the information posted is from a previous sale. But don’t worry, Zillow now gives you the tools to take control, attract home buyers, and improve your sale.

Most of the information you see on your Zillow listing is syndicated from the MLS. This means that your listing agent uploads information to the MLS and the MLS sends it to other websites. If you’re not happy with the listing, your agent can change some information via the MLS, and/or log into the Zillow listing to make changes. However, if your listing agent is too busy to service your listing or does not know about logging into your Zillow listing, you can now take control and attract home buyers.

Zillow offers home owners the opportunity to “claim” their home to access features to personalize information to help home buyers (and Zillow) to get a better picture about their home. The “Personalized Owner Dashboard” gives you control of your listing (zillowgroup.com/news/personalized-owner-dashboard).

Of the many available tools, online metrics is useful to see how much attention your home is getting from home buyers. You can view your home listing’s online activity, including how many times the listing has been viewed compared to your competition.

Improve on the house description by adding “What I love about the home.” This feature conveys to home buyers what attracted you to your home. Elicit the home buyer’s emotions to visit it and attract home buyers by adding your story.

The MLS limits the number of pictures on your listing. So, solely relying on the MLS feed can also limit your Zillow listing. Increasing the number of pictures and adding video can make your home listing more robust, and attention getting. Zillow allows you (and your agent) to upload additional pictures. You can upload, arrange, and describe additional photos to help give home buyers the best view of your home. Zillow even lets you upload a video that you record from your smartphone! Besides including a link to the MLS virtual tour, Zillow added the “walk through” video feature last year.

Not happy with your Zestimate? You’re not alone. Zillow’s Zestimate tool has received mixed reviews since its inception. Many home buyers and sellers have used the tool as a guide in to help their buying and selling by looking at house and neighborhood trends. However, there has been criticism from home owners and real estate agents saying that home valuation tool is not inaccurate and does not correctly portray their homes and listings. As a response, Zillow has changed the algorithm over the years. And this year, Zillow announced a $1,000,000 prize for the best model to improve the Zestimate tool (zillow.com/promo/zillow-prize). But that hasn’t stopped a class action suit that complains that the Zestimate is “misleading” home buyers (Rachel Koning Beals; Do Zillow ‘Zestimates’ mislead home buyers? Lawsuit claims yes; marketwatch.com; May 23, 2017).

Attract Home Buyers – Improve your Zestimate.

Yes, you can improve your Zestimate. The dashboard allows you to update the facts about your home. Updating your home’s information will give home buyers a better description, and it can possibly improve the Zestimate. Since the Zestimate is based on public records, all your home’s information may not be current or complete. Telling Zillow about the extras, such as bathrooms, a finished basement, a deck, etc. can be a plus and attract home buyers.

By Dan Krell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/08/20/attract-home-buyers-zillow-listing/

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August 6, 2017November 23, 2021

Real estate BS detector

DARPA issued a recent request for information seeking ideas about how to create automated capabilities to assign “Confidence Levels” to scientific studies, claims, hypotheses, conclusions, models, and/or theories. In other words, the Defense Advanced Research Projects Agency wants to create a BS detector. First reported by Adam Rogers for WIRED (Darpa Wants to Build a BS Detector for Science; wired.com; July 30, 2017), DARPA doesn’t look at it as rooting out “BS” but rather establishing the what, why, and how scientists know stuff. Imagine how this could be applied as a real estate BS detector!

The Defense Advanced Research Projects Agency’s stated mission on their website is “to make pivotal investments in breakthrough technologies for national security.” So, chances are that if they are able to devise a real working BS detector, you won’t know about it.

When it comes to real estate, people sometimes bend the truth. Additionally, real estate agents are known for “puffery” and are generally not trusted because of the salesy techniques they employ. But having a real estate BS detector would be huge breakthrough! Imagine being able to weed through the BS and nonsense that many real estate agents spout when they are clearly trying to sell. Wouldn’t it be wonderful to check your real estate BS detector, when an agent is pontificating about a house or themselves, to know if the agent is wasting your time? Unfortunately, the real estate BS detector is not a real device. However, there are strategies to help you detect real estate BS.

“Luke, trust your feelings.” Ok, there’s no such thing as a Jedi, but empirical research has demonstrated that intuition can be used to weed out lies. Many say they rely on their gut instincts to protect themselves. But the truth is that many ignore or don’t trust their intuition because the rational mind takes over and dominates. Increasing your intuition could help you detect the real estate BS and prepare for (and maybe prevent) regretful situations. Becoming more aware about your “gut feeling” can increase your intuition.

Being cynical can also help detect real estate BS. Don’t be rude of course, but questioning what others say helps you clarify and understand them at a higher level. It can also reveal untruths. Question all claims and over-the-top statements. For example, if you’re dealing with a real estate agent, ask for support to any assertion they make about themselves or their services. Ask to speak to their references. Also, ask for additional information that support their opinions on the housing market and deciding on a price to sell or buy a home.

Do your due diligence to discover real estate BS. After asking questions, take what others say or do during the real estate transaction at face value and take it upon yourself to verify it. It can save you a headache down the road. It’s easy to verify many aspects of the real estate transaction, because many local jurisdictions have their databases online. However, making a call or two to a helpful government employee is straightforward and can provide bonus information. Verify licenses of real estate agents, loan officers, and even home contractors. Verify permits of home improvements. Verify the local schools and the home’s zoning.

Finally, don’t feel pressured to do anything. The BS artist will make it seem as if you have to act immediately. But if you are not comfortable with the situation or are not yet ready, take a pause.

By Dan Krell
Copyright©2017

Original published at https://dankrell.com/blog/2017/08/06/real-estate-bs-detector/

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June 23, 2017July 14, 2019

Selling your home – try, try, again

If your home didn’t sell this spring, it’s ok. Rocky never quit when he lost, and neither should you. No one said selling your home was easy. Take stock and plan for your next sale.

If your home didn’t sell, you’re not alone. Consider that April’s existing home sales dropped 2.3 percent, according to the National Association of Realtors May 24^th press release (nar.realtor). NAR Chief Economist, Lawrence Yun, stated that the April slide was “expected” because March sales were very strong. Additionally, he pointed out that new and existing inventory is not meeting demand. Many prospective home buyers are frustrated because there is not much of a choice and they are not finding the homes they want. When selling your home, does it have features that buyers want?

Pending home sales also declined in April. Based on contracts signed, the forward looking indicator suggests additional decreased sales in the months to come. Yun also attributes the prospect of future decreased home sales to low housing inventory. He stated that the inventory of existing homes for sale decreased about 9 percent from the same time last year.

When selling your home, consider that the appearance of a brief period of slow sales is not necessarily a warning sign of an impending housing crisis. Instead, a slower sales trend may be considered part of a normal economic cycle after a breakthrough sales year. It is a sign of a healthy market seeking balance. The cycle is caused by home buyers and sellers struggling to find equilibrium.

If your home didn’t sell, you may have a better chance in a few months when the cycle changes. However, before going with the same strategy, try to analyze what happened during this listing period. You may find interesting and revealing information, about your home and your agent, that could help you the next time.

First, talk to your listing agent. If they were active in marketing your home, they should have a wealth of information. Start by asking them about showings. The number of showings determines buyer interest in your home. If you had few visits to your home, it could mean the price is too high. It could also be a result of low quality MLS pictures and information. Buyers start with the MLS listing to determine if the home is worth a visit. However, if you had plenty of buyer visits but no offers, there may be other issues that need attention.

Check with your agent for feedback. Agents often communicate about their visits to homes. Home buyers who attend open houses also provide feedback. Skip over the positive feedback because agents and home buyers often offer positive feedback just to be polite, even if it’s not warranted. Look toward critical reviews for help to improve your home presentation and marketing. If the same item is mentioned multiple times, you should take that as an indicator and begin there.

When selling your home, price, presentation and marketing are relatively easy to adjust. However, your home’s condition could be a deterrent. Buyers in the current market are very demanding and selective. They want a turn-key home that has the recent updates featuring the newest technologies. Even though housing inventory is low, many home buyers will not settle for any house. If your home is not updated relative to the top sales in your neighborhood, you may have to consider a major price adjustment. If your home’s condition is holding back a sale, do a cost-benefit analysis. You may discover that selling for less could net you more than if you spent tens-of-thousands on renovations.

By Dan Krell
Copyright© 2017

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