Month: May 2009

Why You Should Utilize A Buyer’s Agent

Buyers’ agents are agents who are experienced in representing the needs and desires of the buyers. Many buyers incorrectly believe that if they don’t use a buyers’ agent they can get the seller to “discount” the property in-lieu of paying the full 5% to the listing Broker. A seller enters into a listing agreement (a legal and binding contract) with the listing Broker for an agreed upon percentage of the final sales price; usually 5%. The 5% is roughly divided 4 ways, the listing side gets 2.5% and the selling side gets the other 2.5%. The 2.5% is then split between each office and sales agent. If the listing agent sells the property directly, the firm that agent works for gets 100% and is shared with the listing agent. Most agents cannot negotiate the company commission. The contract states that the agent has a fiduciary responsibilty to represent only the seller. Included in that representation, it is the agents job to negotiate the best possible price for that home. An agent cannot represent both the buyer and a seller in a contract. The agent may not disclose personal information about the seller without the sellers consent. If for instance you wander into an open house and you decide you want to make an offer with the sellers agent, you the buyer and the seller must agree in writing that this is taking place. Be aware, the sellers agent is still representing the seller, you are not represented by anyone. Futhermore, the seller’s agent and the firm they work for stand to receive 100% of the commission. So the agent has a different finacial stake in your specific offer. No agent cannot promise you she/he can do better on the price if you buy directly from them. It is illegal. Of course the agent wants you to make an offer with out another agent, they receive the buying and selling side of the commission. It has been my expereince that buyers without buyer representaion pay more for the property.

Reliable advice and information is the key factor in making a good decision. A buyer’s agent will provide you with information, but not necessarily limited to the following.

The original purchase price of the house

The mortgage amount still owed on the house

Comparative market analysis for similar homes in the neighborhood

The original list price and any price adjustments since listing date

The number of days the house has been on the market

If the house has been listed for sale in a previous year and did not sell

Information about a house having been under contract but is now back on the market

Evaluating improvements the seller may have made to the house and whether the seller obtained proper permits. A town permit requires all subcontractors to be licensed by the state

The relationship to assessed value and market value

Accompanying you to the inspection and re-negotiating on your behalf if nesessary

Introduction to reliable mortgage lenders, home inspectors, closing attorneys

Keeps track of important dates (mortgage commitment, inspection contingency) and communicating their importance to you.

Protects your P&S keeping track of these dates and communicating effectively with seller’s agent, mortgage broker and attorney.

Provide a list of pre-schools, churches, temples, restaurants, transportaion, however, we cannot make evaluations or offer an opinion regarding the schools and temples etc.

So why do buyers think they are getting such a good deal when they buy a house without the aid of a broker? They haven’t been educated. Most believe the seller’s agent is also representing them. A seller’s agent must be honest and disclose what she knows about the house, but their fiduciary responsibility is to the seller. Would you go to court without representation? Would you have surgery without discussing what was going to happen with your Doctor? Buying a home is a huge financial and emotional undertaking, you shouldn’t go it alone..

Where have all the Homebuyers Gone?

Where have all the homebuyers gone? Buyers are asking where have all the realistic home sellers gone. Sellers need to look in the mirror and ask what they would pay for their own home. The kitchen you renovated in the 80’s looks the same way the 50’s kitchen looked to you when you bought the house 30 years ago. That modern 70’s bath with groovy tiling is now just an eyesore. While wall-to-wall carpeting was all the rage, it-is-no-longer, ditto for the wallpaper. Moreover, that knotty pine lower level you entertained your friends in back in the day is now just a musty basement. The truth is, someone is buying the bones of your home, and they want to create their own memories. You don’t like the cabinets, the tile, the siding or the paint colors on your next home either. Buyers don’t care about your daughter’s wedding in the backyard and how beautiful it was. Honestly, when was the last time you spent money on the garden other than weekly maintenence. We cannot be in both a seller’s market and a buyer’s market at the same time. It is highly unlikely that you will sell your home for a premium and buy your next house at a discount. If your home is not selling, it has nothing to do with your Realtor’s marketing plan. It’s the price; price melts away objections.

Every house has a fair market value; the price point at which a buyer is willing to pay and a seller is willing to sell. Both parties need to be realistic, but in a buyers market the sellers need to be more flexible. As a seller, is it more beneficial for you to sell your home now or ride out this cycle and wait for the next boom? Does it make sense to list a home with a fair market value of $1.5 million for $1.650 and wait until next year or beyond to get the higher price? Do you think the market will be 10% higher next year? The catch is- the market needs go up 20% because your house is listed 10% above fair market value. Just ask the sellers who finally sold their homes after a year on the market what their early offers were, the price they found insulting; I can assure you it was substantially higher than what it ultimately sold at. I am not suggesting you accept a low-ball offer, but ask yourself, is it the buyer or me who is unrealistic? Remember, sellers who understand fair market value set the price for future sales. You don’t want your home making the competition look good.

Most sellers are emotionally stuck on an arbitrary number and have trouble accepting a lower price. Oftentimes this number was something a friend said at a cocktail party. The conversation usually sounds like this, “did you see the house across the street sold for 1.5 million? Well your house is so much nicer you could get 2 million”. Of course, this person has no real estate qualifications, but now the sellers feel like they are losing money, you can’t lose money you never had.

The question only you can answer is, do you stand to gain more from waiting? Will you be substantially better off if you sell in 1 -2 years, as compared to selling at today’s market value? Most often the answer is no.

Digging Deeper into the Warren Group’s Numbers for Newton

I posted these numbers April 1st using MLS market sold statistics. Do these numbers make- sense-yes and no, all parameters must be taken into account, not just price.
First, MLS statistics have Newton’s median price up about 2%, not down, the median price was $717,500 in 2008 versus $735,000 in 2009. MLS uses only homes listed publicly for sale by a member of Multiple Listing Service. I got a lot of flack for posting average numbers in my last blog post which showed 2009 down 7% from the same period last year. $875,124 in 2008 versus $807,163 in 2009.
Since April 3rd we have seen inventory rise to 245 single family homes,
184 condos for a total of 428. 105 above 1 million, and 31 above 2 million. 54 homes have gone under agreement in the past month, however, 99 new listings have come on the market, so twice as many new listing are coming on than going off. This is not rocket science; we are clearly in a depreciating market. Sellers who understand this concept and act first to lower prices or list with a realistic price will reap the rewards, because buyers out there.

Let’s look at what I posted on April 1st.

Newton Housing Stats 1st Quarter ‘09 vs. ‘08
Posted by szerlip under Uncategorized | Tags: Greater Boston Real Estate, Newton/Brookline Real Estate, REAL ESTATE |

The 1st quarter year over year results are in for Newton Single Family Homes

Homes Sold 45
Average Sale Price $811,100
Median Sale Price $735,000
Days on Market 90
Highest Price $3,000,000
Lowest Price $314,000

Homes Sold 77
Average Sale Price $875,124
Median Sale Price $717,500
Day on Market 113
Highest Price $1,850,000
Lowest Price $375,000

Prices are down about 7% from 1st quarter of ‘08. Volume is down a whopping 40%, but days on the market is also down, from 113 days in ‘08 to 90 days in ‘09. The market is struggling the most at the high end. So far this year there have been nine sales above $1,000,000 compared with 21 at this time last year. Only two house have sold above 1.5 million 1st qurter this year, last year 12 homes sold above 1.5. At this point Newton has 26 homes priced above 2 million dollars, (a record) expect to see homes withdrawn or price reductions to get the high end moving again.