As 2013 begins to wind down, our real estate market seems to be following suit. As we reported last month, demand has dampened significantly. Many observers will attribute this to the “seasonal effect” – meaning that the market has its peaks and valleys every year in a somewhat predictable pattern – the fall season being one of the valleys. They would be wrong; this is beyond the season. This fall, pending listings are falling faster in 2013 than any fall since 2000. To restate again what is causing the steep drop in demand, as much as the psychology of buyers can be generalized, here is what we believe is happening:
1. Interest rates escalated rapidly (as a point, rates rise rapidly but drop slowly). The fact that they have now stabilized for the time being seems to be offering only a small amount of comfort to buyers.
2. Two years of price increases has made our fame as “one of the best bargains in the country” suddenly no longer true. The fact that our market is still below the hard cost of commodities (roofing, concrete, drywall, etc.) and below the inflation/appreciation trend line of the last 12 years seems, at the moment irrelevant to buyers.
3. Investors are dropping out of the market. Currently investors make up around 19% of the sales. This is the lowest percentage since June 2010. Even just a year ago the number was closer to 29%.
4. The economy, government shutdown, and threats of government debt defaults aren’t exactly instilling confidence in the buying public. When the future seems uncertain, the emotions that run the financial markets can turn from greed to fear. It would seem that fear is dominating at the moment.
So what will fix the demand problem? Well, usually price would be the answer to lowered demand. In this case, we are not expecting to see any major pricing drops. More likely than any significant pricing drops is that price appreciation is likely to come to a halt until the demand issues recover.
What is the message to sellers? We are now in a balanced market. If you have been waiting for prices to peak or flatten before selling – this is likely the time. A balanced market also means sellers may be required to be more flexible in contract negotiations, the days of multiple offers may become scarcer, and the choice of agent will matter more than ever.
The message to buyers? Ease your fears. Rates and home prices are both still under market norms. Choices of homes are finally becoming abundant and that should be welcome news for choice starved buyers.
How long will this last and what will 2014 bring? Whatever it is we will do our best to keep you posted on this ever changing market. What never changes for us is our deep gratitude to our clients who have allowed us to serve them this year and years past. We hope you have a joyful holiday season!
Demand for homes has been a complete non-issue in the valley for the last 3 years – so much so that the current drop in demand has come as a bit of a shock to anyone observing it. Supply has been beyond abundant through our recent distressed market. Banks were overwhelmed with the volume of short sales and foreclosures swamping them – and unlike “normal sellers” the banks had to sell – no matter the price. The number of listings on the market hit all-time new highs. In short, the only headline was supply, supply, supply. As the supply of homes surged, so did demand. Investors swarmed Phoenix to pick up bargain basement values that were everywhere. Tax credits lured the first time home buyers to the market. Net migration was up (i.e. more people moving in to the valley than were moving out). New builds were effectively at zero – meaning no new supply was being created. Sellers were swamped with multiple offers, many cash. It seemed like that party would never end.
Of course the only thing that stays the same is change. So the pendulum has swung (however temporarily) and now the real estate headline has switched to the drop in demand. This drop is inciting the “doom and gloom” gang to heat up once again (although we cannot recall them ever really cooling off). These are the same people who refused to believe there was no “shadow inventory” being stashed by the banks which would “be released” and crash the market. That theory never materialized, but gave birth to the newest version: demand is down and therefore the “recovery has stalled”. Like the earlier rumor, we don’t believe there is any basis to this theory. As Michael Orr so brilliantly states:
In the normal world, no market improves every month without a rest now and then. There are always changes going on, and we are way overdue for a cooling off.
A move towards normality should not be regarded as a sign of impending doom, just a sign of impending normality.
A move towards normality does not mean prices will come down. Unlike the stock market, prices almost never move downwards in a normal real estate market. Sellers only lower their price expectations when very desperate. Desperate times do occur a few times per century, but they are very rare. For a while in 2004 and 2005 we forgot that they could ever happen. Now the public knows all too well they do and consequently expects prices to drop at any moment, even when it is least likely to happen.
So if “everything is fine” why is the market stalling? Affordability and Psychology. Buyers have been hit by a double whammy – rising prices and interest rates. Affordability in an area is monitored by pricing, interest rates, and income. It is a pretty safe bet that income has not jumped much in the last 2 years – and certainly no where near the level that prices and interest rates have jumped. So although local real estate is still (in our opinion) undervalued, affordability has taken a hit. The fact that long term trends for “normal interest rates” fall around 8%, placing today’s rates at well below normal, the psychology of affordability has kicked in. Buyers, hoping that either rates or pricing will come down, move to the sidelines as emotion overtakes logic. The bulk investors, the hedge funds, have done the bulk of their purchasing here and that also adds to the drop in demand. This should be good news to the “normal” buyer who often lost out when competing with these “professional” buyers. Michael Orr further explains:
“Buyers probably need some love and to be treated with more respect. There is still a long term shortage of supply and prices are unlikely to come down, but ordinary buyers need more convincing of the virtues of stepping into the market at this time. Large scale investors are backing off. They have made the bulk of their purchases already. If the market is to run at full speed we need more owner-occupier buyer motivation to overcome the sticker-shock…
Going forward, we should expect buyers to feel like they have the option to say no. More marketing and selling is going to be required to maintain the speed of the recovery. Without that, the recovery will probably slow and price increases will moderate. We are still in an early phase of a long term recovery, but right now home buyers will need much more convincing of that fact.
This is probably a temporary phenomenon, like the lull in demand after the tax credit expired in 2010. However at the moment it is still unclear how long it will last
What does dropped demand do to supply? One would suppose that the lessened demand would create a large surplus of supply, but the story is more nuanced than that. Michael Orr further explains:
So far in September we have only 2,988 new listings added to ARMLS. That is the lowest number in 13 years. However 1,848 of those listings are priced between $150,000 and $500,000. That is the largest number for this period since 2009 and it is 29% more than last year. Between $250,000 and $500,000 we have the most new listings during this early part of September since 2008. So supply is growing in the mid-range and in contrast the low-end under $150,000 has seen new listings drop by 40%. I’m sure a lot of buyers wish there were more homes available under $150,000. Above that mark buyers now have a lot more choice, but can they afford them?
What does this mean for home sellers? If the trend towards normalcy continues, we can expect fewer offers, slower price appreciation, and more competition for buyers. Sellers, who have been waiting for price appreciation to peak, might consider if that time is approaching. Buyers who are waiting for lower rates and price drops, are likely to be disappointed and should get off the sidelines.
Doesn’t “normal” sound like a place we all want to be? As always, we will strive to keep you apprised of the ever changing market.
You are thinking of buying a home – but not sure if now is the “right time”. If you are waiting for the perfect time – it was May of 2011. It isn’t coming back. I fully understand that numerous national experts are blathering on about a “bubble” and the big problems that will result from all of the institutional investor owned homes in thePhoenixarea. All of the people spewing this nonsense (even the ones wearing suits and who have a doctorate degree) have one thing in common: they have no actual grasp of the market and aren’t really very good at counting either. Don’t rely on them to guide you on the decision to buy. Did any of them tell you to buy back in May of 2011? Nope.
Arizonaprices would need to rise another 48% to make a new all time high. Foreclosures here (a meaningful LEADING indicator) are already below normal. Short sales are falling fast. The rate at which prices are rising is slowing as the market returns to normal. Interest rates are no longer at record lows but still much lower than the average mortgage interest rate (8.6%) for the past 40 years. A year or two from now, people who wait will say I should have bought back in the last quarter of 2013.
“Prediction is very difficult, especially about the future.”
~ Niels Bohr
Now that we are past the spring selling season and into the lull that comes before the pre-holiday pickup, some interesting trends have appeared (at least to us who have been trend wonks for years). In no particular order of importance they are:
Listing inventory is at long last climbing. This year began with the lowest numbers since 2001 for new listings coming on to the market. The previous winner for that honor was 2012 (the highest number of listings coming to market was 2006). That has now shifted and the numbers are starting to climb. While we don’t expect this year to set records for new inventory – it would appear the shortage of homes for sale is starting to improve. This is primarily good news for buyers who have been “house starved” for quite some time. For sellers it means price increases are flattening as we move towards a more balanced market.
Move to a more balanced market. While listings are finally beginning to climb (supply), the bigger story is in the drop in demand. At the moment demand still exceeds supply by a wide margin, but the gap between them is smaller than it has been since August 4, 2011. The exact why of the dropping demand is not as easy to assess. Is it the interest rates rising, the fact that “bargains” are evaporating, the small pool of homes available under 150K, or a combination of them all? Whatever the reason, the fall in contract activity is certainly affecting the lower price ranges more than the higher ones.
The number of pending listings today is down a massive 28% from last year’s August. Scottsdale is the clear exception among the larger cities. There is an improving trend in the luxury market which is also affecting Paradise Valley. The slowdown in demand is most apparent in the close-in cities such as Phoenix, Avondale, Tempe and Glendale and in the Southeast Valley – Gilbert, Chandler and Queen Creek. These had been riding high until June. Cities on the fringes had slowed down many months ago … It is possible that some buyers have decided to drive until they qualify and diverted their attention from the inner locations to the fringes where the same house can sometimes be bought much more cheaply. Active Adult cities like Sun City, Sun City West, Sun Lakes are seeing exceptionally low supply for the time of year and are not part of the trend discussed above. The gap between supply and demand is widening in these locations. El Mirage and Litchfield Park are also bucking the general trend….
We note that the greatest decline is in the price ranges below $150,000. Above this mark the numbers are not so very different from last year and above $800,000 they are much higher than last year. The luxury market is seeing strengthening demand while the demand at the lower end is down substantially. Some might argue that the pending listings are down because supply is very low, but it was very low last year at the low end too.
Lending practices. Ever since the “mortgage meltdown” of 2007, lending has been constricted. The impact of lending upon the real estate market cannot be over stated.
Future appreciation will depend very much on how lenders change their mortgage guidelines. At the moment they seem to be warming up to jumbo loans and are making them both easier to obtain and available on more attractive terms. At the other end we haven’t seen much improvement in the flow of loans to first time home buyers. The significant increase in mortgage insurance costs for FHA loans has put a distinct dampener on this segment of buyers. We remain convinced that the recent surge in interest rates has had only slight impact on the market with some buyers stopping to rethink their strategy while others have been given a greater sense of urgency. …If President Obama’s initiative to make loans more freely available to new-home buyers is effective this will probably overcome the slowing effect of the higher interest rates. However if it is not effective, or comes too late, then we would expect the market to continue to cool down over the coming months… On balance, not much changed. As usual it is the availability of finance which is important not the cost. So the luxury market has improved while low end demand has waned a little.
Cash deals. Cash deals are declining in Maricopa County. In July 24.4% of the money spent on homes and recorded with an Affidavit of Value was in all-cash deals. This is the lowest percentages since October 2009. The peak was February 2011 with 35.8%. If we count transactions rather than the total spending, the cash share in July was 29.3%, which is the lowest percentage since June 2010. The peak was again in February 2011 with 41.9%.
We still have a long way to go to get back to the old ways in which the vast majority of housing transactions were financed. Until January 2008 the percentage of cash transactions was usually no more than 12%. Since the end of 2008 it has never been less than 25%.
Which of these trends surprised us the most? The push away from what seemed like what would be a very severe shortage of homes for sale – towards the trend, that if it continues, would appear to result in a balanced market. Stay tuned as these competing trends resolve.
All italicized quotes are from Michael Orr of the Cromford Report.
Russell & Wendy Shaw
From Michael Orr:
According to most of the media. the housing market in the USA is currently “dominated by institutional investors”. The largest of these (by far) is Blackstone (BX) which has about $60B in real estate assets under management. It currently owns about 31,000 single family homes in the USA with a total book value of about $5 billion. $5 billion sounds like a lot of money, but everything is relative. The total value of all homes in the USA is roughly $20 trillion. So Blackstone’s rental inventory represents approximately 0.03% of the housing stock value. Foreign buyers as a group are more than 13 times as significant as Blackstone. According to NAR’s reports, for just the 12 months ended March 31, 2013 foreigners spent $68.2 billion on US homes. The Chinese accounted for 18% of that number or $12.3 billion. Nobody (including me) is claiming that the Chinese are dominating the market, yet they spent more than twice as much as Blackstone’s entire inventory. Blackstone represents about 30% of all the institutional ownership, so the total value of all the single family homes owned by institutions is roughly $17 billion. This is only 25% of the value of all homes bought by foreigners in the period April 2012 to March 2013.
Large numbers seem to cause some people to lose their sense of proportion and form completely false impressions of reality. Many of them write blogs on housing and articles for news outlets. Many of these are misrepresenting the state of the housing market right now. Their conclusions are bogus.
Home prices are NOT going up because of institutional investors. It is the other way around. Institutional investors are buying homes because their prices are going up. In other words – they are not stupid and can recognize an opportunity to own an appreciating asset and have their holding costs paid for by a third party – their tenants.
Home prices are going up because of chronic low supply. It is as simple as that.
From Michael Orr of the Cromford Report:
“There is no inverse correlation between interest rates and home prices. In the past, home prices have often gone up when interest rates went up and they have also gone up when interest rates went down. Home prices only go down in unusual situations when supply is well in excess of demand. Prices have fallen like this in the Phoenix area between 1989 and 1991 and between 2006 and 2011. Between mid 1989 and mid 1991, the fall in prices was about 9 to 10%. During this time 30-year fixed mortgage interest rates fell from around 10% to around 8.5%. No inverse correlation there.
Between June 2006 and August 2011 prices were also in a strong downward trend, though most of that decline happened between 3Q 2007 and 1Q 2009. Between 2006 and 2011 mortgage interest rates dropped from around 6.75% to around 4.5%. No inverse correlation there.
Interest rates went up sharply during 1994, during 1996, between 1998 and 1999 and between 2003 and 2006. Did prices go down during these time. No they did not, they went up just like the interest rates. No inverse correlation there.
During all these times the direction of home prices and the direction of mortgage interest rates were the same. At other times they can move in opposite directions. There is no clear correlation either negative or positive. The fact that the majority of people believe there is a correlation, does not change the reality.
Prices have moved strongly upward between August 2011 and June 2013. During that time interest rates drifted down from 4.5% to around 3.5% and very recently have moved back up to around 4%. There is little evidence that low interest rates had any major influence on the market pricing. Demand has been only slightly above normal during this time despite the very attractive interest rates. It was lack of supply that drove these huge price increases.
So now that interest rate have finally started to rise from a ridiculously low level, some people have said this is going to cause home prices to fall. There is no logical basis for this assertion at all.
When interest rates rise, this causes affordability to fall. However affordability does not equate to demand. Demand is one of the two key factors that influence prices, affordability is not. The highest demand we have seen in the past 30 years was in 2004 and early 2005 when affordability was extremely low.
In fact increases in mortgage interest rates often cause an increase in demand in spite of falling affordability. That is because many people expect the upward trend to continue, so they want to lock in the current rate by getting a mortgage now before it rises higher. This “sense of urgency” phenomenon is very real and has been observed many times in the last 60 years and confirmed by many experienced Realtors®.
Now if interest rates were to increase dramatically and suddenly, this could destroy the “sense of urgency” because people would immediately feel they were too late to make the move. I am talking of a jump from 4% to 9% or something of that nature. But is that really likely? I doubt it. The government likes to interfere with interest rates and they are unlikely to let that happen.
Gentle and predictable rises in interest rates will actually be good for the housing market because the rising gap between low and high rates will probably encourage lenders to be a little more flexible with their underwriting practices. Opening up the market to more people will have a much larger effect than the increase in their monthly payments. It’s no good being able to afford a mortgage payment if you can’t get approved for it.
Of course demand is not sufficient to determine prices. Supply is the other key factor. The foreclosure crisis has caused us to under-build new homes by a huge amount for over 5 years. This is still creating a supply hole that has been largely unrecognized by the general public. This effect is likely to dominate the market for a very long time, except in areas where the population is shrinking. Only the builders can create significantly more supply. It is not coming from lenders, it is not coming from landlord investors and it is not coming from ordinary homeowners. Ordinary homeowners and landlord investors usually involve homes that are occupied. So when they sell they do not create net new supply. The families or individuals living there move into a new home, often not too far away. This means they add 1 to supply and 1 to demand. The net effect is zero. Only when that home is somewhere other than Greater Phoenix do we see an increase in our supply. For the foreseeable future those people are likely to be outnumbered by the people who are moving here from somewhere else, who add 1 to demand and 0 to supply.
This housing cycle still has a very long way to run before it turns down again. None of the negative factors mentioned by observers recently have enough market power to overcome the dominant effect of the chronic supply shortage.”
From Michael Orr of the Cromford Report:
“There have been few topics as subject to wildly untrue reporting as the institutional investment in single family homes. I noted an interesting post in the Blackstone Blog two days ago that I think addresses some of the popular misconceptions about the situation and I commend it to you. Blackstone makes the following points:
Blackstone is not buying houses in sufficient number to make an overall difference in house prices.
29,000 homes owned out of 115,000,000 housing units in existence in the USA
25,000 homes acquired in the last 12 months out of 5,600,000 purchases
( I would add – about 3,000 homes owned in Maricopa County out of about 1,700,000 housing units)
Blackstone operates in only 13 out of 300 metro areas..
Prices are rising simply because the country has not built enough homes.
The USA has added only 700,000 homes over the last 4 years
Population growth and obsolescence require 1,500,000 homes to be added per year to meet demand
Home prices still lag behind long term trends
Still 22% below the long-term price trend from 1951-1999
These are factual points that I agree with, simply because they are true.
In contrast I believe the editorial in the New York Times on June 8 shows that the Editorial Board fails to understand the true realities of the current housing market, and most of the conclusions drawn are incorrect.
Unfortunately people who read the New York Times vastly outnumber the people who read the Blackstone Blog, so the facts will once again lose out.
The institutional investor myth is starting to replace the shadow inventory myth. Both sound plausible but have been wildly exaggerated out of all proportion to their real impact. Neither will have a significant lasting effect on the overall Greater Phoenix housing market. The tiny numbers involved sound large to the uninformed, but in fact they are swamped and made irrelevant by the huge size of the normal market. This is obvious to people like us who spend our lives actually counting homes, but no doubt this new myth will linger on for several years just as the shadow inventory has.”
More from the brilliant Michael Orr:
“We keep reading everywhere that the housing market is “dominated by institutional investors”. This is often taken to be 1. true and 2. a bad thing and sometimes suggested as a pre-cursor to a market collapse. All of these ideas are based on a false perception of the fundamental nature of the housing market. They also imply a misunderstanding of what the word “dominate” means…
Institutional investors are as active in Phoenix as anywhere, yet they still make up a small part of the market. If they are bidding for the same property as you are, it will certainly feel like they are an important factor. They have deep pockets filled with cash and can be very determined. However they do not even compete for the majority of homes for sale. They are interested only in cheaper homes that they can rehab and rent out for an acceptable cash flow. Even in this small subset of the market, they do not dominate. Small scale investors buy more than twice as many homes as institutional investors. Normal homeowners buy three times as many homes as all investors put together. The market is in fact dominated by ordinary homeowners. Their transactions are by far the largest and most significant part of the market. They always have been. Even at their highest penetration investor purchases never got higher than 40%. Right now they are well below 30% and falling.
Over the last 4 years institutional investors have come to own between 10,000 and 11,000 homes in Maricopa County. This not a very large number. Remember that in March 2009 we had over 10,000 foreclosure notices in a single month. That was a major event. But an inventory of 11,000 rental homes is not big enough to impact the overall market in any major way. It represents less than 1% of the housing stock. It represents less than 1.5 months of sales. If all of these homes were to be dumped onto the market at once through ARMLS it would theoretically increase the active listings from 19,400 to about 30,000. This is still less than what would be considered sufficient for a balanced supply, which would be about 33,000 to 35,000 for ARMLS as a whole. So we would still have a supply shortfall, not a glut.
Of course, these homes will not come onto the market all at once. And as and when they come onto the market over the next several years, the tenants will have to find homes, creating a corresponding increase in demand to offset the increased supply. Only an empty rental homes creates an increase in net supply.”
This is too great not to share:
A very misleading view of the US housing market has been written recently by Heidi Moore of the Guardian, and given prominent publicity by Yahoo as if it were a serious analysis. It is based on several flawed assumptions and therefore arrives at incorrect conclusions . You can find the original article here. Among the many false assumptions in the piece are the following two:
1. “Lenders are controlling the housing supply by reducing the number of houses for sale”.
Like any original researcher worth their salt, we actually count the number of homes owned by lenders in Greater Phoenix. We know the total of unlisted single family REOs in Greater Phoenix is 1,778 as of June 1, 2013. This number is insignificant relative to the size of our market, where some 75,000 single family homes are sold through ARMLS each year.. You can download a spreadsheet of the REOs here to see for yourself (the spreadsheet also includes the REOs listed on ARMLS) and you can examine the unlisted REO inventory by ZIP code here. The idea that 90% of REOs are held off the market artificially is completely untrue and in fact there are so few REOs in total (3,749) that it would make little difference to the supply if they were all dumped on the market at once. This however is not going to happen.
2. “House-flippers are driving up prices”
In fact house flips in Greater Phoenix have fallen to their lowest levels in many years. In April 2013 there were 368 single family home flips in Maricopa County, down 58% from April 2012 when there were 875. In April 2011 there were 882. The market is now dominated by normal sales transactions between normal home owners and normal home buyers. Investor transactions, though still high by normal standards, have been on a downward trend since July 2012. The vast majority of investor transactions are not flips but purchases with cash to create rental homes.
The idea that the housing recovery is somehow “dubious”, “false” and based on far-fetched conspiracies between government and lenders is plain silly, at least as it applies to Greater Phoenix. We suspect that the same is true elsewhere, but we don’t keep the detailed data for counties other than Maricopa and Pinal, so we make no claims about other markets. However if Heidi were to actually try to buy a home in Phoenix she would be shocked by how different the real world is from the one she imagines.
The real situation is much simpler. We don’t have enough homes on the market to meet demand, and there is no significant source of new supply. Hence prices rise. There is nothing fake about that.
After years of the most brutal buyer’s market the Valley has ever endured, sellers are now enjoying the pendulum swing favoring them. Values are continuing to edge upwards and sellers are frequently receiving multiple contracts – often within days of offering their home for sale. With the real estate market so clearly favoring the seller, it would be easy to assume that sellers are bullet proof. Unfortunately this market, like all past strong seller markets, is still fraught with potentially costly seller mistakes. Our hope is by sharing some of these we can protect a seller or two from making the most common mistakes.
Zestimates or other automated valuation systems. While Zillow has done a fabulous job of marketing their automated online valuation system, what they haven’t done a fabulous job of is being accurate with that valuation. Too often would-be sellers jump on to their site (or the multitude of sites that are similar) to determine “their home’s value”. Sadly, these systems are no substitute for an appraisal or (even better) the full blown exposure of the home on the open market. Ultimately, a home is worth what an arm’s length buyer will pay. In a market that is generating competition for homes, prices can escalate beyond what any automated value system or appraisal says the home is worth. Valuation systems use preset computer metrics to estimate the value. It is difficult to ever foresee a time when they will be accurate, as determining home values is something of an art. Values are composed of market conditions, the property’s location, features, pricing, accessibility, market exposure (i.e. marketing), and negotiation. There is simply no substitute for someone with real estate expertise actually viewing the property.
Appraisals. Speaking of values, let’s talk about the weakness of appraisals. Appraisals are an “opinion of value for lending purposes”. That is what it is, an opinion of value. This is so true that homes that obtain more than one appraisal often receive entirely different numbers. It isn’t that appraisers aren’t attempting to do good work, it is that they are always using rear view mirrors in looking for value. Appraisers are required to use sales in the last 3-4 months (it used to be in the last 6-12 months!) The highest likelihood of an appraisal being accurate, is where the homes are homogenous and supply and demand is in equal balance (a four to six month of supply of homes) for an extensive period of time. Balanced markets in the valley have not been common. In a declining market (such as we saw in 2007-2011) appraisals often came in higher than true market value. This is due to the fact that the very definition of a declining market is one where a home today is selling for less than yesterday. Conversely, a rising market has tomorrow selling higher than today. This is the current problem for sellers – appraisals are often coming in lower than buyers have offered to pay. Without addressing these appraisal issues upfront, sellers can find their value being slashed.
Choosing your agent (friends and family) Too often sellers use the first agent they talk to (so the primary hiring criteria is someone simply being there). Additionally, sellers may pick an inexperienced agent. This does not mean the agent hasn’t “been in real estate for years” but simply they lack experience. Did you know the average agent does approximately 6-8 home sales a year? Compare that to someone doing over 400 sales a year and you can see experience cannot be measured by the year. Another error can be using friends and family. It can be difficult for sellers and their family to have the conversations that are necessary to really sell a home. Comments on pricing, proper staging, and commissions can result in frayed relationships. Again, finding the agent with both knowledge and marketing power can produce results that outperform an average agent by thousands of dollars, not to mention save relationships.
“Saving the commission” At the risk of sounding self-serving, sellers can sometimes be “pound wise and penny foolish”. What we mean is that sellers often worry excessively about saving the commission while missing entirely the benefits that commission is really paying for. If it doesn’t matter who sells your home then sellers would always be better served just selling it themselves or paying the part-time agent a small amount to write up the deal. This is not the case however. If an agent cannot produce results above what a seller can do, you simply have the wrong agent. A quality agent can not only counsel sellers on how to prepare the home for market (avoiding the first costly mistake, a badly presented home) but expose the home to the maximum amount of buyers. Competition for a home (demand) is the single most important factor in generating the most money for the home.
As this is a subject near and dear to our hearts, we have plenty more to say on the subject! Hopefully, we have given you a thought or two about protecting your home value. As always, we are here to help and serve you!