Where are the deals? How do you buy a home at a great price? I work with many buyers who say they want a deal when we negotiate the price of a home. They want the best home at the lowest possible price. Awesome! Let's do it!
But what people fail to do is put themselves in the mindset of the Seller. Why would a Seller give away their home? Here is one answer - motivation.
In order to get a great deal on a home - or any other product, consumable or not, there has to be motivation on the seller's side. That motivation is what pushes them to accept less than what they really wanted.
It just pains me to see Buyers waste their time (and mine) trying to get a price reduction on a home that just came on the market. One that has a flat, fenced backyard. One that has an optimal floorplan, in a great neighborhood, with a pool. Why oh why would a Seller agree to a price $15,000 less than what they are asking for without waiting just a couple of days to see what the open market brings? Buyers continually tell me that they want this, that and the other - they want the best house I can find them - oh... and they want to buy it at below market value. After all, they read in the paper that it is a Buyers' market. So why shouldn't Buyers get the price they want?
Wednesday, November 28, 2007
Monday, November 19, 2007
Home Inspection Attitudes
Whew! Home inspections can be tough. I know I wrote about this before, but it warrants another call. Most Buyers and Sellers rejoice after putting a home under contract. Everyone feels like the long wait is over. The Sellers finally got rid of their home and the Buyers have now found the home of their dreams.
But wait! There's more! The process is not over. In fact, the trouble has just begun. In my opinion, the home inspection process is the most difficult process in the entire home transaction.
From the Buyers' point of view, they are purchasing a home with 'all these problems and defects'. They have every right to want everything fixed. Why should they inherit someone else's problems and baggage. After all, they are paying a good price for the home, so everything should be fixed.
From the Sellers' point of view, these 'were not problems when we moved in to the house'. Their inspector never said anything about the damp crawlspace and the creaky floors. The air conditioning works just fine too, so why should they fix it? The door will close fine, all you have to do is put some weight against it. Oh, and they never used the hot tub, so they are not going to fix that either. After all, the Buyers got a great price on the house, so they can simply fix all the problems.
As you can see, this might take a while to sort out. The point here is that neither side can have it their way. This takes negotiation, patience and a lot of compromise. Buyers and Sellers should go into the inspections with a heart of good faith. Buyers should not 'beat up' the Sellers over minor repair items like creaky doors, or uneven fence posts. And Sellers should not become angry and personally offended when a Buyer asks for items fixed.
It is my job as the Realtor/Agent to make sense out of all this mess. But I can't do it without everyone's objectivity.
Just realize that the home inspection process is a difficult one. Treat others the way you would like to be treated int he same situation. We all have to buy and sell at some time, so remember the other side when you are battling the battle. Stay objective, be fair and most of all, compromise. Otherwise, everything may end up with a home that is 'back on the market'.
But wait! There's more! The process is not over. In fact, the trouble has just begun. In my opinion, the home inspection process is the most difficult process in the entire home transaction.
From the Buyers' point of view, they are purchasing a home with 'all these problems and defects'. They have every right to want everything fixed. Why should they inherit someone else's problems and baggage. After all, they are paying a good price for the home, so everything should be fixed.
From the Sellers' point of view, these 'were not problems when we moved in to the house'. Their inspector never said anything about the damp crawlspace and the creaky floors. The air conditioning works just fine too, so why should they fix it? The door will close fine, all you have to do is put some weight against it. Oh, and they never used the hot tub, so they are not going to fix that either. After all, the Buyers got a great price on the house, so they can simply fix all the problems.
As you can see, this might take a while to sort out. The point here is that neither side can have it their way. This takes negotiation, patience and a lot of compromise. Buyers and Sellers should go into the inspections with a heart of good faith. Buyers should not 'beat up' the Sellers over minor repair items like creaky doors, or uneven fence posts. And Sellers should not become angry and personally offended when a Buyer asks for items fixed.
It is my job as the Realtor/Agent to make sense out of all this mess. But I can't do it without everyone's objectivity.
Just realize that the home inspection process is a difficult one. Treat others the way you would like to be treated int he same situation. We all have to buy and sell at some time, so remember the other side when you are battling the battle. Stay objective, be fair and most of all, compromise. Otherwise, everything may end up with a home that is 'back on the market'.
Saturday, November 10, 2007
Market Update for the Triangle Area, NC
Triangle residential real estate; third quarter summary
Published without permission from:
Stacey P. Anfindsen, Birch Appraisal Group of Cary, Editor
and
Triangle MLS, Inc., Publisher
LISTINGS
- There are currently 13,410 active listings within our four main counties. This is an increase of 23% compared to October, 2006 inventory levels.
- There are currently 4,996 new home listings, an increase of 21% compared to 2006 new home inventory levels.
- There are currently 8,414 re-sale listings, an increase of 25% compared to 2006 re-sale inventory levels.
- There were 24 (compared to 23 in 7/07) price points/geographic areas that had lower inventory . There were 74 (compared to 45 in 7/07) price points/geographic areas that had higher inventory.
PENDING SALES
CLOSED SALES
- There were 23,247 closed sales in the four county market during the first nine months. This is a decrease of 3% compared to the 23,983 closed sales during the first nine months of 2006.
- There were 2,583 closed sales during the month of September, a decrease of 3% compared to 9/06 closings.
- There were 16,696 closed re-sales in the four county market during the first nine months. This is a decrease of 2% compared to the 17,043 closed sales during the first nine months of 2006.
- The average sales price during the month was $248,500, an increase of 4% compared to the 9/06 average.
- The average price of a re-sale was $219,400, an increase of 1% compared to the 9/06 average.
- Wakefield Plantation closed the most amount of homes during the first nine months with 208 closings. They were followed by Hedingham with 203 closings and Heritage Wake Forest with 199 closings.
DAYS ON MARKET
- The average days on market for closed sales during the first nine months has been 73 days.
- The average at the end of 9/06 was 72 days and the average at the end of 9/05 was 85 days.
- The average for a re-sale home was 59 days (versus 61 in ’06) and the average for a new home was 107 days (versus 100 in ‘06).
CURRENT SUPPLY
- The current supply of all housing within the four main counties is 5 months. The current supply at the end of September, 2006 was 4 months.
- There are 14 (compared to 25 in 9/06) price points/geographic areas with a current supply of 2 months or less. There are 11 (compared to 4 in 9/06) price points/geographic areas with a current supply of 10 months or more.
Monday, November 5, 2007
I THOUGHT THE FOLLOWING ARTICLE WAS VERY INTERESTING. IT CERTAINLY HELPS DISPELL SOME MYTHS ABOUT US REALTORS.
(Reproduced and added here without permission from RealEstateABC.com newsletter.)
++++++++++++++++++++++++++++++
How Much Do Real Estate Agents Earn?
Many people think real estate agents make huge amounts of money. Some do. Most don't. But lots of consumers want to know "how much"?
Because agents are so easy to poke fun at, the media often try to present the figure in a way that indicates real estate agents are overpaid.
Maybe we'll bust a myth about that. Maybe not. During the writing of this article, we'll calculate how much agents earn in commissions. Right now, as we write the article, we don't know what the answer will be except that commissions are down from last year. We intend to calculate the figure as we go.
So let's start.
The median average sales price in America right now is $211,000 and we're currently on a pace to sell 5 million homes. Simple multiplication provides a dollar number on which the total real estate commissions will be based.
Over 1 trillion dollars worth of homes sold.
That's a lot.
Most of those sales will pay a real estate commission. Folks think that the typical commission is 6%, but it varies and is negotiable. Some "full service" agents charge seven percent. There are "discount brokers," too - and sellers will make different kinds of deals with companies offering different levels of services.
Combining all that together, the average commission charged per deal is between 5% and 5.5% depending on the region. Although the national average is probably around 5.14%, we'll go with a figure of 5.25%, just to play on the safe side.
That comes out to a total of $55 billion. The number is probably high because the estimate for 2006 was a total of $61 billion. Sales are much slower this year and prices are down. But we'll go with $55 billion.
According to estimates, >>>>
between 22% and 27% of the total goes to the company. That leaves between 78% to 73% for the agents. Sure, some experienced agents have higher splits. Some have lower splits. Some even get paid a flat fee or a salary. To make it easy, let's assume that the higher end applies - 78%.
That leaves $43 billion for the agents.
How many agents are there?
Though it is hard to put a number on it, states like California estimate they have one licensed agent for every 52 citizens. The Wall Street Journal estimates there is one real estate agent for every 75 people in America. That would be over 4 million agents! Though that many might be licensed in their individual states, most of those aren't actively selling homes. We won't use that number.
The National Association of Realtors claims 1.3 million Realtor members. Most of those are agents, but not all are actively involved in the business. At the same time, not everyone selling real estate is a member of the National Association of Realtors, either. They are still real estate agents, just not Realtors. Even lenders and appraisers are selling real estate nowadays.
So how many folks are actively working to sell real estate? Approximately 1.25 million says the Journal.
That sounds about right.
The average agent, then, would earn about $34,400 based on current values at the current sales pace. Some more. Most less.
Less an average 14% in expenses. Total? $29,584.
How do we check the figures? According to independent sources, the average commission charged per house in the USA in 2007 is $11,000. With 5 million sales, that would be...(we promise we didn't check this in advance...)
Total commissions of $55 billion
(Reproduced and added here without permission from RealEstateABC.com newsletter.)
++++++++++++++++++++++++++++++
How Much Do Real Estate Agents Earn?
Many people think real estate agents make huge amounts of money. Some do. Most don't. But lots of consumers want to know "how much"?
Because agents are so easy to poke fun at, the media often try to present the figure in a way that indicates real estate agents are overpaid.
Maybe we'll bust a myth about that. Maybe not. During the writing of this article, we'll calculate how much agents earn in commissions. Right now, as we write the article, we don't know what the answer will be except that commissions are down from last year. We intend to calculate the figure as we go.
So let's start.
The median average sales price in America right now is $211,000 and we're currently on a pace to sell 5 million homes. Simple multiplication provides a dollar number on which the total real estate commissions will be based.
Over 1 trillion dollars worth of homes sold.
That's a lot.
Most of those sales will pay a real estate commission. Folks think that the typical commission is 6%, but it varies and is negotiable. Some "full service" agents charge seven percent. There are "discount brokers," too - and sellers will make different kinds of deals with companies offering different levels of services.
Combining all that together, the average commission charged per deal is between 5% and 5.5% depending on the region. Although the national average is probably around 5.14%, we'll go with a figure of 5.25%, just to play on the safe side.
That comes out to a total of $55 billion. The number is probably high because the estimate for 2006 was a total of $61 billion. Sales are much slower this year and prices are down. But we'll go with $55 billion.
According to estimates, >>>>
between 22% and 27% of the total goes to the company. That leaves between 78% to 73% for the agents. Sure, some experienced agents have higher splits. Some have lower splits. Some even get paid a flat fee or a salary. To make it easy, let's assume that the higher end applies - 78%.
That leaves $43 billion for the agents.
How many agents are there?
Though it is hard to put a number on it, states like California estimate they have one licensed agent for every 52 citizens. The Wall Street Journal estimates there is one real estate agent for every 75 people in America. That would be over 4 million agents! Though that many might be licensed in their individual states, most of those aren't actively selling homes. We won't use that number.
The National Association of Realtors claims 1.3 million Realtor members. Most of those are agents, but not all are actively involved in the business. At the same time, not everyone selling real estate is a member of the National Association of Realtors, either. They are still real estate agents, just not Realtors. Even lenders and appraisers are selling real estate nowadays.
So how many folks are actively working to sell real estate? Approximately 1.25 million says the Journal.
That sounds about right.
The average agent, then, would earn about $34,400 based on current values at the current sales pace. Some more. Most less.
Less an average 14% in expenses. Total? $29,584.
How do we check the figures? According to independent sources, the average commission charged per house in the USA in 2007 is $11,000. With 5 million sales, that would be...(we promise we didn't check this in advance...)
Total commissions of $55 billion
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