Healthy real estate markets...

Builder mag: 8 healthiest housing markets

Where the real estate industry is wrong

Many of my colleagues know that I'm generally very tough on myself, as well as our industry. I'm not afraid to dish out tough love when I sincerely feel it's called for. And here's such a case.

You don't need me to tell you that it's simply a tough market to sell a home; especially when you get into the upper pricing tiers. It's a well known fact that many of the properties that are on the market today are just not going to sell; at least not the first time around anyway. There's certainly enough blame to go around as to why this is happening. But I don't think that we need to go very far to find one of the culprits; it's the real estate brokerage industry.

From real estate school to company training to continued education we're taught a very methodical, quantitative, and easily repeatable formula for determining a property's market value. We're conditioned to rely on it, and then we in turn use it to recommend a list price to the home seller. Problem is..............it's wrong!

It's wrong because we're relying on yesterday's data to determine today's market value. What a home sold for 6 months ago, 6 weeks ago, or even 6 days ago has absolutely no bearing on what the next buyer will be willing to pay. So to price a home based on those factors is a losing proposition that more often not leads to overpriced properties that languish on the market, sometimes for years, and often at great expense to the homeowner.

Many of the home sellers that I work with are surprised when I show up for our initial meeting without a list of recent sales. They're surprised because that's what the last agent, who coincidentally failed to sell their home, brought with them. Yet what I bring to the kitchen table is far more important; their competition!

Curb appeal

Paint…$25.00
Plants…$75.00

Instant curb appeal………………PRICELESS!

Mastery of the process

The real estate brokerage industry has gone through some dramatic changes in the seven years that I've been privledged to particpate in it. And quite often, the acceptance of these changes could be marked by the industry-wide kicking and screaming as we struggled to accept, innovate, and keep up. Yet nothing has had more dramatic an effect on the way we do business as the advancement of technology. In the early 1990's, only 10-15% of buyers started using the internet as a primary search tool. And my industry was shaking in its pants! After all, we were the keepers of the information. If you wanted to know anything about what homes were on the market, when they sold, what they sold for, or even to get access to them; you had to come to us. Then all of a sudden.....OMG! If the consumer now had access to all of this information, then what did they need us for? Even though I wasn't a Realtor a the time, I distictly remember op-eds talking about the end of the real estate brokerage industry as we knew it. Needless to say, these gloom and doom scenarios never materialized. But,we don't even have to go back that far. The transaction itself is quickly turning into a paperless affair. For example, Coldwell Banker's Homebase system takes the entire transaction online giving all parties online access to all pertinent informaton and documents. And as expected, some agents are balking at having to turn over pertinent paperwork and/or information about about their clients.

Reality check: We will never again be the keepers of the information. And our value to the public that we're so priviledged to serve lies not in some fictitional proprietary claim to John Does' phone number and email address.

Our value is derived from the mastery of the process!

sell the large home now...the net effect

Our present economic environment has created a discernible paradigm shift in the psyche of the American populous. The signs are everywhere, that bigger is no longer necessarily better. For example, luxury car brands are now offering compact cars, and many home builders are now rolling out increasingly smaller models.

I feel a bit compelled to write about this trend because I'm presently speaking with a prospective home seller of a large home, and he's considering down-sizing (surprise surprise!), yet this homeowner is hesitant to bring their home to market because my assessment of the property's market value is somewhat lower than his. Could this possibly be you?

If you live in a large home and are thinking about selling it for whatever reason, here are just three reasons why selling now is better than later.
1. The trend amongst affluent buyers is to buy a home that's smaller, smarter, and more energy efficient. Simply put, the demand for large homes is decreasing, and so are the selling prices.
2. Jumbo Loans are becoming scarcer and harder to qualify for. Coincidentally speaking, the FHA loan limit for Jumbos has been reduced in many areas. So even if the buyer pool for larger homes is still be ready and willing, will they be able to buy?
3. Reason #3 is in my opinion the most compelling. Presently, in Miami-Dade County the months of inventory of homes under 3000 sq. ft. is 7.1, while the months on inventory of homes over 3000 sq.ft. is 12.3 months! The effect of this difference in months of inventory is that your large home will continue to depreciate for a longer period of time than the the smaller one that you'd like to buy. To mitigate this situation, consider selling your large home now, and you'll be much more likely to have more money to take with you towards the smaller home home because you will be both selling and buying in the same market cycle. The possible peril of waiting to sell is that one runs the very real risk of selling on the downside of the market cycle while then buying on the appreciating side. So instead of having $10.00 to apply towards your next home, you could conceivably end up with only $7.00.

So if you don't want to miss out on those three bucks, sell the large home now!

Another one.......SOLD!

Thought You'd be Interested

hyperlocality, and choosing the best agent

“How’s the market?” Seems like everybody wants to know. And it’s really such a loaded question with real world implications for my business. When many folks ask this question, what they’re really asking is “how’s your business”. In other words, the “how’s the market” question is quite often an informal job interview. And the way that the I answer it gives the interviewer a lot of instant information about my knowledge base, my attitude, and my overall proficiency in the subject at hand….real estate that is.

This is not to say that I ought to have a canned, oober impressive, industry laden jargon beast of an answer. But let’s say, all things being equal, that you ask 2 real estate agents the big question:

Agent #1; “The market’s great!”

Agent #2; “The Real estate market today is very hyper local. And those gloom and doom market scenarios that you read about have to be taken with a grain of salt. For example, homes in Las Vegas are down 60% from peak prices, while homes in Pittsburg are down only 1% from their peak. Wouldn’t you agree that they strategy for getting a home sold in either of these two markets would have to be different?”

Now which one of these two agents would you hire to handle the sale of your house?