Friday, January 30, 2015

Buying a FiSBO? Use a Realtor®

Inventory in many markets, including ours locally is a bit tight. It is particularly so in the bottom half of the price range.Some sellers choose to sell their own home without the use of a real estate brokerage. This is typically called a For Sale By Owner listing or FiSBO. I can spend a week explaining why selling a home without the benefit of a brokerage will almost always be more expensive for the seller in the long run. Some people however cannot wrap their arms around the idea that a brokerage will likely net them 5-10% more money on the sales price.

For buyers a FiSBO can be dangerous territory. All of the laws of real estate still apply to a private seller. Improper procedures or disclosure can still result in a lawsuit. Buyers shopping FiSBO properties are typically looking for a better deal. That better deal may not be so good when the transaction begins to unfold. Buyers can still use a broker to buy a FiSBO. The brokerage can either charge a fee to the buyer or they can seek to convince the seller to pay a fee. Either way the transaction will be better handled with the aid or a professional real estate brokerage.

I have been involved in a number of FiSBO transactions for my clients over the years. Last year alone I had two transactions I aided buyers with that were For Sale By Owner listings. Some agents may not want to take on a FiSBO but I embrace them. My goal has always been to provide service to my clients. Whether or not I make as much money doing it doesn't matter. The client comes first. There are pitfalls when working with an owner. My experience is that they are often unwilling to deal with issues found on an inspection, they often don't understand the legal requirements to close a real estate transaction. They are not under the counsel of a brokerage so they cannot be expected to have this knowledge. Buyers that try to negotiate and close a transaction with which no real estate professional is involved can quickly find the transaction escalate into a nightmare.

Buyers are well advised to keep their favorite Realtor® in mind when they find a FiSBO listing. Your trusted professional should be able to help you through the transaction. Should that agent not be willing to tread those waters, then perhaps it's time to find a new agent.

Sellers are also well advised to interview several local professionals before deciding to sell themselves. There are many opportunities for sellers out there and statistics strongly support the idea that a hiring a good brokerage will net them at least as much or more money at closing. Taking the risks associated with closing a real estate transaction and netting the same or less is illogical.

The best advice is to look very closely at all options before deciding which course of action to take.

Friday, January 23, 2015

Real Estate Photos are More Important than Ever Before

One of the things that chaps my hide as a Realtor® is finding listings on the MLS with lousy pictures. Sellers are paying real estate firms a handsome fee to market their homes. I understand some "discount" brokerages that offer limited service, but I am talking about traditional "full service" brokerages. I come across full service brokerage listings with crummy photos made with a phone. I have even seen, albeit at a lesser frequency, high end homes with poor quality photos.

Today's buyers are more likely than ever to utilize public online real estate services prior to actually engaging an agent. My friends, Google and the National Association of Realtors® performed an extensive study that showed an amazing statistical fact that cannot be ignored. 90% of home buyers shopped or researched homes online during their home buying process.

Sellers, can you afford to have your home look shabby with poor photos when 90% of the buyers are looking online? A quality Realtor® will either utilize good camera gear and make quality images of their listings or they hire a photographer to do so. Sellers are well advised to insist their real estate agent provide quality photos. If the agent can't deliver on the simple idea of presenting a property well to marketplace, then that agent is not the seller's best choice.

As a Realtor® that participated in 30 closings last year, I can say bad photos are often hard to overcome for buyers. I often look past poor photos and will preview listings that have bad photos. I find these homes to be opportunities for my buyers to get a value. Listings with poor photos will get shown less often. Less showings means a longer marketing time. More time on market substantially increases the chance a seller will take less for the home. This is good for my buyers, bad for the sellers.

Manufactured Home in Park
$55k sold in a month!
This is not to say the Realtor® needs to hire a high end photographer that charges hundreds of dollars, but they can either invest in good gear or hire an reasonably priced photographer. They are out there charging less than $100 for a good set of listing photos. Photos should be well exposed with properly controlled lighting and sharp detail.

The photos need not be masterpiece museum quality. Just clean, clear and sharp. The home shown here was a property that was difficult to sell. Manufactured home in park and at the top of the price range. The photo isn't spectacular but it is well exposed, clean and sharp. It makes a difference. Too many agents fail to take good photos, especially with the less expensive listings. All listings deserve to have a great set of photos.

Sellers should also insist that the listing agent utilize all 16 MLS photos (Local limit is 16). Raw land and one room flats may take less but a traditional house should have a full set of interior and exterior photos. Failing to show the interior will conjure up visions of dilapidation in mind of the buyers. They will assume the interior is so bad the Realtor® didn't want to show it.

Sellers should insist upon great photos because today's buyers are discriminating and 90% likely to find the home they buy online whether sent by an agent from the local MLS or on a public site! Photos are more important than ever before.

Friday, January 9, 2015

The Gap Between the Bottom and Middle is Tight, For Now

Have you felt trapped in your house over the last few years? Biding your time waiting for the real estate market to correct so you can sell? 2015 may be the year for you. Over the last two years here in Clark County we have seen a roughly 20% increase in the median sale price. Many people that were not able to sell now may find themselves in a positive situation. We very well could be at a turning point of opportunity. For people that are making a move up in price, selling their less expensive house now for a slightly lower amount than they might get next year could prove advantageous. The more expensive house they want will also likely be more expensive. So selling a small house for less to get a big house for less sometimes makes sense.

I saw prices on entry level houses flatten a bit in the second half of 2014. I believe that the market for the 40 year old 3 bed 2 bath home is just about as high as the economy will support right now. Barring any dramatic improvement in the overall economic condition 2015 is a great time to sell an entry level home. Where the market continues to see improving prices is that middle move up. Last summer I ran into situations where a simple 1400 foot ranch home would sell for $220k and a gorgeous 2100 foot home in the same area was fetching just 10% more. I believe that the gap in those market segments should widen this year as the entry level could be flat and the middle will continue to swell in values. Selling the little house to get a big one is prime for 2015. Some people may even find that their house payment is only marginally higher since rates are quite low right now.

Generally a real estate market rebound will begin at the bottom. The bottom of the market can drive the middle. If the bottom is soft so will the middle be. When the bottom begins to move up in value the middle is going to trail behind for at least six months. So that leaves a window to move from the bottom to the middle with the move up house feeling like a bargain. Once the bottom hits the high plateau then there is only a six month window of opportunity to capitalize on the middle lagging behind on growth. This is the gap between the market segments. As an example, entry level homes that were fetching $160,000 two years ago are now selling for $200,000. But the middle houses that were getting $220,000 two years ago are running about $260,000 now. The 25% gain at the bottom and a 16% at the middle translates into a relative deal for the move up buyer. This year there is a good chance the $200,000 house will only rise a little maybe to $210,000 but that middle market is showing signs of activity suggesting the 260,000 house will get to $285,000 this year. So holding out for an extra ten to buy a house that will cost an extra 25 may not be the best approach.

Keep an eye on the real estate trends. Have your favorite Realtor® send you listings so you can keep your finger on the pulse of the market. I can only see trends, I am no Nostradamus, so anything can happen. Real estate is however a very trend based market and it typically follows modestly predictable patterns. Let me know if you have any questions and feel free to comment below.

Friday, January 2, 2015

Happy New Year!

If you didn't buy a house in 2014 but you think you might in 2015, earlier is better, especially if you are a first time home buyer. Why, you ask? Because those who buy a home in the first month of the year enjoy a full year of delicious home mortgage interest deductions. Mortgage interest is heavily front loaded so that first year is always a very nice tax deduction. I will of course included my standard disclaimer and suggest that any decision readers make based on taxation should be done under the counsel of a professional tax advisor. That said, buyers can take advantage of a full year of tax benefits and the winter market is generally a little more forgiving on terms. Win, win.

Those of us up in the northern half of the country definitely have a seasonal cycle in real estate. As I have pointed out before, plenty of real estate transactions happen in the winter, but it is about 25% slower and that extra bit of market stress relief can be the difference between a firm seller and a seller with a little room for wiggle.

Get out and brave the elements and find that dream home. We are having a mild winter anyway here in the Northwest. Now is the time!