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Question for realtors / real estate agents

marmasatt

marmasatt

Diamond Member

Well, wife and I are looking for a new home. Not sure about everywhere else, but it is really quite a buyer's market in New England right now because there are so many choices. 46% more in amount of choices in our city alone then from last year.

I'm wondering if I can get some insider info. I have some questions and I don't know if they are truths or misconceptions. And I will preface this by stating I never trust anyone, not that I think anyone is being deceitful or misleading 🙂.

Had a realtor in our home and he went through a market evaluation and appraised our house. Nice guy, carries himself well, seems to know what he's doing, seems real honest, etc. He wants to list it only 2 grand less than what the market eval came in at....He spent an hour and a half with us and told us all about the houses that sold in the neighborhood this last 6 months.

I always though that you find the price you want to sell your house for, list it at 20 Grand higher and go from there..... He told us you don't do that in this market. It won't sell and you'll be stuck with a house on the market longer and longer and people will begin to wonder "what's wrong with it."

My thoughts (and again, I don't trust anyone) is that he just wants to price it low, because it will sell easier/quicker and he can just move on after the sale. If he's getting 5% of the sale, what does he care about a few hundred bucks out of his pocket. When I'm thinking, by listing my house at $ 290,000 say, instead of $ 300,000, sure I'll sell it quickly, but I'm losing out on $ 10,000 that I really could have gotten and could have used......

Any thoughts on this one, before I add a few more? Please advise. Thanks very much for any info.

Oliver
 
He's pricing it low because as you said, it's a buyers market. Price it too high and it will just sit.
If you can't take the lower price, you may want to sit tight. But, no one knows what the market will do or how long you'll have to sit.
 
IMO your realtor is right. It's a buyers market now and you don't want to list above market for exactly the reasons he said. The house will sit overlooked and then you'll have long listing time or "price reduced" issues to contend with. Your realtor does care about the sales price, and has more than enough incentive to price it as high as possible (beyond just his own commission, as a low sales price could bring down the value of his entire "farm" or sales territory), but OTOH he doesn't want to get stuck with a listing that doesn't move. And neither should you.
 
The realtor is right.. that is, from what i learned in my principals and practice class. How badly do you want to sell?
 
How many months worth of mortgage payments are you willing to keep throwing at the place before it sells? Can you afford to sit on it for 3 months, 6 months? Or longer?

In this market, price it fair and your first offer will probably be your best.
 
Originally posted by: iroast
Not a realtor.

You can price it at evaluated price and see. You can always bring it down later.
Click to expand...
Unwise. Buyers generally avoid "price reduced" houses that have been on the market a long time like the plague.
As a seller, you want more than just a buyer. You want a well-qualified buyer for a smooth transaction that doesn't fall apart at the last minute.
 
Personally, I'd list it below market by a couple grand, get the hell out of the market, rent for a year, then buy a place at a much lower price.

I have said it a million times, this market is going to go in the crapper. It's just a matter of time.
 
Originally posted by: LegendKiller
Personally, I'd list it below market by a couple grand, get the hell out of the market, rent for a year, then buy a place at a much lower price.

I have said it a million times, this market is going to go in the crapper. It's just a matter of time.
Click to expand...
I have to disagree. There's still too much money out there. The only real issue right now is that the market is slowing with a reduced number of transactions. Where people were swapping each other's homes like crazy, now they're mostly just sitting put. Listings have remained flat, so supply is up, and that is driving buyer concessions and a flattening of values, but sellers who aren't getting what they want are -- for the most part just taking -- their homes off the market when their listings expire. The reduction in volume is pushing lenders to offer more products with more lenient terms, and interest rates are declining. Overall, this speaks of a long flat market, not one headed for the crapper. Some other outside influence is going to be required for that, like a major economic recession with high unemployment or inflation, etc. But gas prices are moving rapidly down, so that should be averted.
 
Originally posted by: Vic
Overall, this speaks of a long flat market, not one headed for the crapper.
Click to expand...
Will you please define your vision of a long flat market? Is it one where prices are steady, or is it one where prices are steady after inflation adjustments?

If it is the former, then both Vic and Legendkiller could be correct at the same time. 😉
 
Originally posted by: skrilla
Your Realtor is correct here.

Just wondering... is he getting 5% of the sale or is he listing it at 5%.
Click to expand...
He and the selling (aka buyers) agent will split 5% of the sales price as their commission. $14,500 on a sales price of $290,000.
Quick breakdown on how realtors get paid (I'm a mortgage guy). The usual splits are either 50/50 or 55/45 (listing/selling). Commissions and splits are part of the negotiating process for each transaction and are generally detailed in the purchase and sales agreement. Agents usually then give at least 20% of their gross to their brokers, with as much as 80% back to themselves, but they pay for all their own costs (marketing, personal staff, etc.) except for whatever desk/office services their broker might provide for them (but it's not unusual for agents to have to pay for their own desk computer and software even). Agents who fail to close a certain amount of volume will have to pay their brokers an annual desk fee, while agents who close above a certain volume can get back 100% of their commissions after they have gone above that sales goal.
 
Wow. Thanks for the responses everyone. So he is right? You're advice is to sell and not worry about the extra 10K I *might* get? Are any of you legit realtors or just computer nerds giving your .02? 😀

Another thing, we're obviously biased and attached to the house. He is not. He's the informed one and the one who's a realist. How on earth did he get the market appraisal without fully seeing the house? He never went downstairs. Only breezed through upstairs. Didn't see the 3 season porch, etc. We were kind of suprised. Is this legit? He's going strictly buy numbers and our sq footage and bedrooms, vs. other houses selling prices, etc. Any thoughts on this?

edit: Oh and he'd be getting basically 2.5% on each end - purchase of new house and selling of ours. I've heard other realtors tell us they make 5/6% on the sale of ours but really nothing on purchasing a new one, so I don't know what gives there.......
 
Originally posted by: Vic
Originally posted by: LegendKiller
Personally, I'd list it below market by a couple grand, get the hell out of the market, rent for a year, then buy a place at a much lower price.

I have said it a million times, this market is going to go in the crapper. It's just a matter of time.
Click to expand...
I have to disagree. There's still too much money out there. The only real issue right now is that the market is slowing with a reduced number of transactions. Where people were swapping each other's homes like crazy, now they're mostly just sitting put. Listings have remained flat, so supply is up, and that is driving buyer concessions and a flattening of values, but sellers who aren't getting what they want are -- for the most part just taking -- their homes off the market when their listings expire. The reduction in volume is pushing lenders to offer more products with more lenient terms, and interest rates are declining. Overall, this speaks of a long flat market, not one headed for the crapper. Some other outside influence is going to be required for that, like a major economic recession with high unemployment or inflation, etc. But gas prices are moving rapidly down, so that should be averted.
Click to expand...

I am going to save myself some time and post this.


http://forums.fiveparagraphs.com/index.php?topic=235.0


The market is headed for a downturn, no matter how you look at it. Lenders have over-stepped their credit boundaries, creating a record amount of sub-prime assets, including non-conforming, Alt-A/B/C, exotic mortgages and such. *NEVER* in history has the amount of non 30-year fixed been as high as it is today, furthermore, *NEVER* before in history has equity been so low, people have used houses as piggy banks. The bubble is only supported by the next highest valuation, not by anything fundamental, except for localized job market strength, which can easily fall if the market goes down.

There are no fundamentals that support the asset bubble. GDP, population growth, productivity growth, inflation, building supply costs have all been far outstripped by the increase. Prices are now 200-300 or as much as 400x monthly rent, far outstripping the age-old standard of 100-200x.

Much of the problem has been pushed off on to the market, through Securitization and other means. However, that doesn't bury the cold hard fact that credit has been way over-extended and the piper is calling. Age-old standards of 33% disposable income have been tossed.

Nationwide there are already localized areas feeling the heat and it's only going to get worse.

Many people thought it would level, but that isn't the case, anybody who says otherwise are the same type of dips that fell for the market leveling off in Feb 2000.

What's worse is that the problem can be magnified by economic problems. If GDP goes down, and it will due to decreased housing additions, then we could go into a recession. If unemployment goes up significantly, then more loans will default, further depressing prices. As more people are flipped on loans and ARMs reset and IO go to Principal, more foreclosures will happen, depressing prices yet again.

I really think that we could be on the cusp of the biggest credit crisis this world has ever seen. If you think a good economy = good credit environment and a support for houses, just look at the UK credit market in the last 9 months. Losses have doubled or tripled in every credit sector.
 
Originally posted by: dullard
Originally posted by: Vic
Overall, this speaks of a long flat market, not one headed for the crapper.
Click to expand...
Will you please define your vision of a long flat market? Is it one where prices are steady, or is it one where prices are steady after inflation adjustments?

If it is the former, then both Vic and Legendkiller could be correct at the same time. 😉
Click to expand...
Former. I should have clarified. So yes, it could end up as a net loss after inflation adjustments. Expect some volatility in-between though, depending on market. As most buyers shop based on monthly payment instead of actual purchase price (which matters more to the sellers and realtors than anyone else), a lot of that volatility is going to depend on the interest rate outlook and consumer confidence IMO.
 
Originally posted by: marmasatt

Wow. Thanks for the responses everyone. So he is right? You're advice is to sell and not worry about the extra 10K I *might* get? Are any of you legit realtors or just computer nerds giving your .02? 😀

Another thing, we're obviously biased and attached to the house. He is not. He's the informed one and the one who's a realist. How on earth did he get the market appraisal without fully seeing the house? He never went downstairs. Only breezed through upstairs. Didn't see the 3 season porch, etc. We were kind of suprised. Is this legit? He's going strictly buy numbers and our sq footage and bedrooms, vs. other houses selling prices, etc. Any thoughts on this?
Click to expand...
County records. What he did is not an actual RE appraisal though. That will be done later by a licensed RE appraiser for the buyer's lender.
 
Originally posted by: marmasatt

Wow. Thanks for the responses everyone. So he is right? You're advice is to sell and not worry about the extra 10K I *might* get? Are any of you legit realtors or just computer nerds giving your .02? 😀

Another thing, we're obviously biased and attached to the house. He is not. He's the informed one and the one who's a realist. How on earth did he get the market appraisal without fully seeing the house? He never went downstairs. Only breezed through upstairs. Didn't see the 3 season porch, etc. We were kind of suprised. Is this legit? He's going strictly buy numbers and our sq footage and bedrooms, vs. other houses selling prices, etc. Any thoughts on this?
Click to expand...

He probably did a market analysis, its not an actual appraisal.

It is basically just an estimate of what your home should sell for under the current market conditions. He doesn't have to get the details like bedroom sq. footage, although he probably should have seen the porch. Usually agents will take that info and look on the MLS and compare it to what has sold, what is for sale, etc.

I don't know man, I work for a real estate company (not an agent however) and right now the biggest complaints are that nothing is selling, and people still want to overprice their homes. They end up sitting on the market for 6 months, blaming the agent who told them what their home was worth 6 months ago.


 
In this market there is very little chance that your house will sell for $20k over the average for your area. Your realtor is right, it will sit for months and the listing will go stale.
 
Originally posted by: LegendKiller
I am going to save myself some time and post this.


http://forums.fiveparagraphs.com/index.php?topic=235.0


The market is headed for a downturn, no matter how you look at it. Lenders have over-stepped their credit boundaries, creating a record amount of sub-prime assets, including non-conforming, Alt-A/B/C, exotic mortgages and such. *NEVER* in history has the amount of non 30-year fixed been as high as it is today, furthermore, *NEVER* before in history has equity been so low, people have used houses as piggy banks. The bubble is only supported by the next highest valuation, not by anything fundamental, except for localized job market strength, which can easily fall if the market goes down.

There are no fundamentals that support the asset bubble. GDP, population growth, productivity growth, inflation, building supply costs have all been far outstripped by the increase. Prices are now 200-300 or as much as 400x monthly rent, far outstripping the age-old standard of 100-200x.

Much of the problem has been pushed off on to the market, through Securitization and other means. However, that doesn't bury the cold hard fact that credit has been way over-extended and the piper is calling. Age-old standards of 33% disposable income have been tossed.

Nationwide there are already localized areas feeling the heat and it's only going to get worse.

Many people thought it would level, but that isn't the case, anybody who says otherwise are the same type of dips that fell for the market leveling off in Feb 2000.

What's worse is that the problem can be magnified by economic problems. If GDP goes down, and it will due to decreased housing additions, then we could go into a recession. If unemployment goes up significantly, then more loans will default, further depressing prices. As more people are flipped on loans and ARMs reset and IO go to Principal, more foreclosures will happen, depressing prices yet again.

I really think that we could be on the cusp of the biggest credit crisis this world has ever seen. If you think a good economy = good credit environment and a support for houses, just look at the UK credit market in the last 9 months. Losses have doubled or tripled in every credit sector.
Click to expand...
In that case, I look forward to the buying opportunities. But as I know that many other people share that same sentiment, I don't see it happening. As soon as prices dip appreciably, bargain-hunting buyers will rush in to prop them up.
 
Originally posted by: Vic

In that case, I look forward to the buying opportunities. But as I know that many other people share that same sentiment, I don't see it happening. As soon as prices dip appreciably, bargain-hunting buyers will rush in to prop them up.
Click to expand...

The problem is that they won't be able to prop them up enough to justify their levels even at a 10-20% reduction. Look at Shiller's graph on the site/thread I linked to, there isn't anything that can justify or prop up the level of over-pricing that has occurred.

 
I recently purchased a 3-family home in Cambridge, MA. You're in Cranston so I assume you're aware that Cambridge is (was?) at the very heart of the Northeast real estate boom. Luckily I was not directly subject to any of this because it was a friendly transaction within family, but I am certainly aware of the current climate up here... just setting up.

Basically, your realtor is right. I have a condo in a larger complex in Shrewsbury (just east of Worcester) that I was living in before this Cambridge house fell into my lap. I have decided to become a landlord and rent, not sell, the condo partially because it just isn't worth it right now... The complex is made up of several 9-unit buildings, 3 units per floor. I was the only one left on my floor--the other two were already empty and on the market. One eventually sold, but only at $5k under asking and like $10k under value (it's easy to get exact comps when the floorplans are the same). There's just too much out there. He's not somehow pulling a fast one on you. The last few years have been so good to sellers in this area that we just expect the offers to pour in. I mean I've heard firsthand stories of prospective buyers literally submitting "resumes" and writing essays on why their offer should be accepted. Those days are over though.

Regarding the glance at your home, you'd be surprised how quick appraisals are, and how little your appliances etc. matter. All they really seem to look for is general structure. As someone already pointed out, an appraisal is more detailed than a market analysis, but not by much.
 
Originally posted by: LegendKiller
Originally posted by: Vic
In that case, I look forward to the buying opportunities. But as I know that many other people share that same sentiment, I don't see it happening. As soon as prices dip appreciably, bargain-hunting buyers will rush in to prop them up.
Click to expand...
The problem is that they won't be able to prop them up enough to justify their levels even at a 10-20% reduction. Look at Shiller's graph on the site/thread I linked to, there isn't anything that can justify or prop up the level of over-pricing that has occurred.
Click to expand...
I think you are being overly bearish. Yes, certain markets that were overly irrational (*ahem*CA*ahem) are going to get hit hard, but you need to keep in mind that many markets saw little to no appreciation at all.
As to the graph, that doesn't take into account that asset values have gone up across the board, not just in real estate. Look at the post WWII era and tell me that this level of appreciation followed by a flattening does not have historical precedent.

I think our difference of opinion is possibly based on a disagreement about momentum. I do not believe that market values have momentum. Prices simply are what they are at any given time. IMO they are never going up or going down, but have gone up or gone down. So bull or bear, either way IMO it's exhuberence. An expectation of future performance based on past performance.
Right now, the market is taking a breather after last year's frenzy. People are uncertain as to what will happen next. At this point, that is all. In the meantime, I'm still doing business everyday.
 
Originally posted by: Vic
In that case, I look forward to the buying opportunities. But as I know that many other people share that same sentiment, I don't see it happening. As soon as prices dip appreciably, bargain-hunting buyers will rush in to prop them up.
Click to expand...
You've said that before. And to a certain extent it is true. Some people have been staying in apartments hoping for prices to crash and to get in the market. But many of the people waiting have houses of their own. And they are just waiting to upgrade. The net result is FURTHER price declines on the low- to mid-end houses as those are sold to upgrade to the now cheaper high-end houses. So, much of the prop up effect may only be focussed on part of the housing market.

Suppose prices do drop from last year's price. Well, mortgage interest rates have increased in the same time period. Thus, even if home prices do fall, monthly prices may not fall. So, like you said above, people are more interested in the monthly payment and thus might not rush in.

I'm just not a believer with your idea that in the period with falling demand that housing prices can be proped up by strong demand. I do agree with you that LegendKiller is probably overly bearish though.
 
Originally posted by: Vic
I think you are being overly bearish. Yes, certain markets that were overly irrational (*ahem*CA*ahem) are going to get hit hard, but you need to keep in mind that many markets saw little to no appreciation at all.
Click to expand...
FWIW, I would contend that OP is asking specifically about the one housing market (Boston, and New England by extended association) that most certainly was as irrational as CA during the boom. If he's still looking in the Cranston/Warwick area of RI, prices/alleged values certainly got a good swift kick in the pants (highway / airport / beach access, etc.)
 
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