Downsizing is a very prevalent trend in today's' real estate market. And the two graphs below demonstrate this trend. The first shows the months-of-inventory of single family family homes that are over 4000 square feet in size (21 months), while the second graph shows the months-of-housing inventory of homes under 4000 square feet (7 months). History shows us that a balanced market is one where the months-of-inventory number is 6. In other words, at 6 months-of-inventory the forces of supply and demand are at equilibrium; subsequently we do not see either appreciation or depreciation of real estate prices.
To reiterate: There are presently 20+ months-of-inventory of homes like the one that you're looking to sell and only 7 months-of-inventory of homes like the one that you're looking to buy. So by putting off the move, what will in all eventuality happen is that you'll end up selling in a depreciating market while buying in an Appreciating market. This is the case because the market for the smaller homes is almost at equilibrium and will enter its appreciating cycle shortly thereafter; the market for the home that you're looking to sell still has plenty of depreciation left in it!
The take-away is that by making the move now you will have MORE MONEY to take with you towards the new house.
Friday, December 30, 2011
Monday, December 19, 2011
Meet the new real estate agent, same as the old real estate agent
This post was originally published by a colleague. I felt it was relevent enough to repost it:
Of course this is a play on “Meet the new boss, same as the old boss.” But what I am trying to address here is that many people think changing real estate agents will help a listing that is not selling. One agent is as good as another, so if one doesn’t “perform” then we just move on to the next. Commoditization of the work force seems to be the order of the day – so it is somewhat natural that buyers and sellers would treat real estate agents the same way.
Sometimes change can be a good thing. If your agent isn’t doing a good job marketing your home, bringing in a new agent may be the answer. But in other cases, and perhaps more often than not in this crazy market – it will make little or no difference in the final outcome. In fact, it could actually work against a seller to do this.
Agents have limited control over the final sales price…
One dirty little secret of real estate is that an agent has a very limited ability to influence the final sales price. We can help you get the most that the market will allow….but beyond that we too are at the mercy of market forces. The notion that we can beat the bushes through saturation bombing marketing and pull out the ONE buyer willing to pay a premium for your home because of its special features is the stuff of urban legend.Look at it this way: If Hondas have gone down in price by 10%, can a Honda dealer realistically be expected to move them for their original price? The answer is plainly no. And although there no two houses are identical, the ability of the agent to defy market forces (fully tricked out kitchen and crown moldings not withstanding) is simply not there.
The above is particularly true given that you have to sell your house three times. Once the buyer says “yes” the home still has to pass muster with the inspector as well as the bank and the bank appraiser. So even if you find a buyer willing to pay $1.25 on a $1.00 value, there are several more “decision makers” in the mix that can nix the deal… and these decision makers are not buying with their hearts – for them its all about the bottom line. So unless you find a cash buyer (and those are generally as rare as hens teeth) the home will have to pass muster with the bank. The banks are NOT happy campers right now and they will not fund an 80% loan if the home is overpriced. Period.
So how does changing agents harm the seller?
By giving them false hope….in a declining market false hope is your worst enemy. Actually TIME is your worst enemy, but false hope ensures that you waste time and chase the market down. In a rapidly declining market, sellers need to realize that they are losing money – significant money – every week their home is on the market.
Holding out for that higher price, will get you less in the end. Relisting with another agent under these conditions accomplishes nothing and can be an expensive mistake.
Original author > © 2011 – Ruthmarie G. Hicks- http://thewestchesterview.com All rights reserved.
Of course this is a play on “Meet the new boss, same as the old boss.” But what I am trying to address here is that many people think changing real estate agents will help a listing that is not selling. One agent is as good as another, so if one doesn’t “perform” then we just move on to the next. Commoditization of the work force seems to be the order of the day – so it is somewhat natural that buyers and sellers would treat real estate agents the same way.
Sometimes change can be a good thing. If your agent isn’t doing a good job marketing your home, bringing in a new agent may be the answer. But in other cases, and perhaps more often than not in this crazy market – it will make little or no difference in the final outcome. In fact, it could actually work against a seller to do this.
Agents have limited control over the final sales price…
One dirty little secret of real estate is that an agent has a very limited ability to influence the final sales price. We can help you get the most that the market will allow….but beyond that we too are at the mercy of market forces. The notion that we can beat the bushes through saturation bombing marketing and pull out the ONE buyer willing to pay a premium for your home because of its special features is the stuff of urban legend.Look at it this way: If Hondas have gone down in price by 10%, can a Honda dealer realistically be expected to move them for their original price? The answer is plainly no. And although there no two houses are identical, the ability of the agent to defy market forces (fully tricked out kitchen and crown moldings not withstanding) is simply not there.
The above is particularly true given that you have to sell your house three times. Once the buyer says “yes” the home still has to pass muster with the inspector as well as the bank and the bank appraiser. So even if you find a buyer willing to pay $1.25 on a $1.00 value, there are several more “decision makers” in the mix that can nix the deal… and these decision makers are not buying with their hearts – for them its all about the bottom line. So unless you find a cash buyer (and those are generally as rare as hens teeth) the home will have to pass muster with the bank. The banks are NOT happy campers right now and they will not fund an 80% loan if the home is overpriced. Period.
So how does changing agents harm the seller?
By giving them false hope….in a declining market false hope is your worst enemy. Actually TIME is your worst enemy, but false hope ensures that you waste time and chase the market down. In a rapidly declining market, sellers need to realize that they are losing money – significant money – every week their home is on the market.
Holding out for that higher price, will get you less in the end. Relisting with another agent under these conditions accomplishes nothing and can be an expensive mistake.
Original author > © 2011 – Ruthmarie G. Hicks- http://thewestchesterview.com All rights reserved.
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