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February 18, 2019November 23, 2021

Home sale choices

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

Don’t stick to conventional wisdom
Explore your options. There is no “one size fits all” home sale plan.
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.
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?
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.
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 published at https://dankrell.com/blog/2019/02/18/home-sale-choices

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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.

January 25, 2019July 23, 2019

Buy vs rent market

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 22^nd 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/rent_vs_buy/) 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 published at https://dankrell.com/blog/2019/01/25/buy-vs-rent-housing-market

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January 19, 2019April 22, 2019

Winter home sale prep

winter home prep — Winter home prep (infographic from cdc.gov)

The winter holidays are over, so there shouldn’t be any more disruption to your winter home sale, right? A winter home sale may not have much competition during the winter months, but the weather could potentially put a stopper on buyer visits. And in the aftermath of this week’s snow storm, you might have second thoughts about your winter home sale. But since you’re one of the savvy home sellers, you know that weather is fleeting and winter home buyers are serious. You know to focus on the winter home sale prep.

Selling during the winter is not much different than selling during any other time of year. In other words, home sale prep is required. And just as you would during the summer, you should prepare for home buyers to visit your home during a winter home sale. Instead of the heat and thunderstorms of summer, you should prepare for the cold and snow of winter. Your home should be warm enough to make visitors comfortable to help them envision living in your home. Also, consider having a large mat in the entrance where visitors can wipe their shoes or remove them, so as to help keep your home clean.

Decluttering and maintaining a clutter-free home during a home sale is a challenge. But during the winter, when we tend to retreat inside and “nest,” maintaining a home ready to view can be a test of your will. Give yourself more time for home sale prep before a home buyer comes knocking. Consider a daily quick onceover through the house to help maintain order. Limiting buyer visits to specific times of day can help you feel in control, as well as designate a daily private time when you can relax.

Weather permitting, winter open houses are still appealing for home buyers. And during the winter when there are few homes listed for sale, there are even fewer open houses making your open house a destination. Summer or Winter, an open house is an ideal way to have many home buyers visit your home in a concentrated time period. You should coordinate visiting times and open houses with your agent to eliminate surprises.

Regardless of how well you care for your home, maintenance issues are always a concern during a home sale. More so during the winter. If your HVAC system is not working efficiently, it may not be heating your home evenly and consistently. Aging shingles can cause of ice dams, and allow water penetration into the home. Blocked gutters and downspouts can cause safety issues by causing standing water and ice on walkways. Poorly insulated doors and windows cause drafts and cold spots in the home.

Prepare your home for a winter sale and address maintenance issues before the house goes on the market. Have your HVAC system serviced and cleaned. Have a licensed roofer check your roof for missing or damaged shingles. Consider having a pre-listing home inspection to spot concerns.

Recent inventory shortages and buyer demand has made winter a great time to sell your home. However, some home buyers still believe that they can lowball a winter home sale. And there is a good chance that you will a receive a lowball offer. You prepare for these buyers by strategizing with your agent on negotiating tactics. If you receive a lowball offer, don’t get offended. Instead, take the opportunity to start a dialogue with the buyer. If the home buyer is serious, they will negotiate in good faith.

Original published at https://dankrell.com/blog/2019/01/19/winter-home-sale-prep

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January 12, 2019July 23, 2019

Occam’s razor home selling

Occam's razor and selling a home — Staging is one of the four basics of home selling. (infographic from nar.realtor)

Many home owners are preparing to sell their homes this year. And in doing so, home sellers are looking for new and exciting ways to sell their homes fast and for top dollar. But the reality is that selling a home is not rocket science. There really isn’t a secret trick or approach to selling a home. Rather, it’s more like magic, where properly performed fundamental tasks can set the stage for a satisfying experience. If you don’t know how Occam’s razor (or what it is) can help you get the most from your home sale, pay close attention.

Unfortunately, it’s a human trait seek a complex solution to a simple question. In other words, applying Occam’s razer to your home sale can save you time and allow you to get out of your own way. Occam’s razer is a tool that is often used to figure out solutions and devise scientific theories. It has become popularized as the “keep it simple stupid” method. However, Susan Borowski’s history and explanation of Occam’s razor, written for the American Association for the Advancement of Science, gives it teeth (The Origin and Popular Use of Occam’s Razor; aaas.org; June 12, 2012). Borowski states, “Occam’s razor doesn’t necessarily go with the simplest theory, whether it’s right or wrong; it is not an example of simplicity for simplicity’s sake. It merely tries to cut through the clutter to find the best theory based on the best scientific principles and knowledge at the time.”

In other words, focus on the tried and true fundamentals of selling a home. Anything above and beyond may not necessarily help to sell the home faster or for more money, but could help make the process more enjoyable. That in mind, let’s consider these four basic concepts:

First, consider the condition of your home. Do you have deferred maintenance issues? Does your home need a makeover? Homes that get top dollar are “turnkey.” Many home buyers are willing to compete and pay more for recently upgraded and renovated homes. Selling a home with deferred maintenance or lacking recent updates can not only turn off many home buyers, but can encourage low-ball offers. A pre-listing home inspection can help you identify maintenance issues. Also, consider consulting with a design professional to help you understand which updates (if any) are necessary to help your home sale.

Next, work on the home’s presentation to give it a clean and spacious feel. Decluttering is one of those tasks that can be overwhelming, but it’s importance cannot be overstated. Decluttering will force you to decide which items to keep in the home. Additionally, staging your home can help balance space, furniture and décor. This can help home buyers envision living in the home.

Deciding on a list price is often a conundrum. Although enticing, don’t be seduced by the agent who tells you the highest sales price without understanding their rationale. The housing market can turn on a dime. If your home isn’t priced correctly, it can languish on the market. There are many aspects that go into deciding a price, so work with a respected seasoned agent to go through the market details and scenarios.

Finally, when the home is ready to list, how is it to be marketed? Today’s MLS listing syndication takes advantage of the fact that most home buyers actively search homes on the internet. Don’t rely on gimmicks that promise activity on your listing. A complete marketing plan will take into account the factors we discussed here, and apply strategies to attract motivated home buyers.

Original published at https://dankrell.com/blog/2019/01/12/occams-razor-home-selling/

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December 29, 2018July 22, 2019

Real estate futurism

Humans are fascinated with the future and technology. Whether it’s the promise of hope and deliverance, or the warning of a dystopian nightmare, there will always be a continued conjecture of the future. And it’s no different with real estate. Real estate experts also like to dream about the future and technology, and depict real estate futurism

Housingwire is one the foremost authorities on anything real estate and housing. It also is a leader in reporting about real estate technology too. This year’s reporting of Housingwire’s Tech100 Awards caught my attention. But it wasn’t about some shiny new technology that is touted to be “the next big thing.” Instead, it was the real estate futurism prediction and where real estate technology is headed (Expert: Here’s where real estate tech will be in five years, And will AI replace humans?; housingwire.com December 21, 2018).

Although the article was only one expert’s opinion of real estate futurism, it’s telling nonetheless. The expert sees that tech assisted appointments and automatic doors are technological advancements. Additionally, home buyers will be using virtual reality to view homes. He sees that consumer searches are geo-located. Big data will know what they want based on their online behavior, and so on. If his list of the industry’s future tech sounds as if it came from the early 2000’s, you’re not alone. If you think about it, much of this five-year tech advancement prediction has already been around in one form or another.

This expert’s vision of real estate tech in the not-so-distant future is basically more of the same. It makes you wonder if the real estate industry is focused on using shiny things to get people’s attention (but really doesn’t do much to make the transaction easier and safer). This interview also signifies that real estate futurism is relegated to existing tech. In other words, real estate technology is not exclusive unto itself, but is only the application of existing technology.

Predicting the future is difficult and requires the ability to depict a new paradigm. Spyros Makridakis, an expert in understanding future technology, writes that tech advancement depends on four things; (1) the benefits of the technology, (2) funding to create/implement the technology; (3) growth in funding the technology; and (4) the urgency to solve a problem (Forecasting the Impact of Artificial Intelligence, Part 5:The Emerging and Long-Term Future; The International Journal of Applied Forecasting; 2018; issue 51 p36-41). Makridakis’ vision of future technology will not be about shiny things that make you go “ohh,” but instead how you interface with technology.

Makridakis’ prediction for the future is that you won’t be using computer screens like you do today. Instead, you will have a type of wrist device that projects holographic images that will “blend virtual and augmented” reality. These devices will be like your smartphone but allow holographic communications. Additionally, brain-computer interfaces will allow you “unlimited access to computer power.” He believes that this paradigm shift will affect how you work and interact socially. He also believes that robots will become personal assistants and be assigned the boring and uninteresting work.

Real estate futurism based on Makridakis’ futuristic thinking could mean a slightly different home buying and selling process. Your augmented brain-computer interface will allow you to process information about a home significantly faster, as well as digitally sign AI prepared contracts and closing documents. And instead of scrolling through pictures or wearing a virtual reality mask, you will be walking through holograms of homes right in our living rooms projected from your wrist.

Original located at https://dankrell.com/blog/2018/12/29/real-estate-futurism

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