Month: October 2007

Want to sell faster? Try paying real estate agent more

This was the headline in an article published in the San Francisco Chronicle on Sunday. The author said that he raised his commission to the Buyers Agent which he thinks resulted in his home selling faster. You can read the article here

This one gets my blood boiling. To me, a real estate agent that will “push” a home because it has a higher commission than another home that also fits what the client is looking for is a crook for violating trust. These type of agents deserve the Realtor-bashing that some give to the entire industry. I wish I could say that this doesn’t happen but I’ve met agents who focus on the commission offered when they look at new listings. I’ve heard stories about some agents that have called Listing Agents and said “how dare you put a home on the MLS at such a low commission rate”. Unfortunately, these agents are still out there selling in our area and the people they have sold homes to aren’t even aware that their needs were not the #1 priority for the agents they trusted in finding them a home. Some of these type of agents are even rewarded with “Top Producer” awards which is more of a sales award than a service or integrity award.

So, how can you avoid these type of agents??

Well, you’re already doing the most important thing if you’re reading this blog which is doing your own research and becoming educated. With the multiple MLS Searches I have on my website, you are able to see homes on the market yourself rather than having an agent pick ones they think interest you. Some Buyers still don’t go on the Internet to search for homes before they contact an agent so they are at risk of having one of these bad agents filtering what homes to show them based on the commissions offered.

The second thing you can do is ask your agent for the Buyer Agent commissions on the homes that you are interested in. If your agent tries to make an excuse why they can’t provide you with this info, I’d RUN away from this agent and go get one that will. Why wouldn’t you want to know what commission the Seller is offering? A good price negotiator will want to know this.

Being the statistics guy I am, I ran some reports to see if the facts supported the article. I looked at the Solds in October for Single Family Homes (stick-built) in SLO County to see how long it took to sell for different commissions offered. I first did it for all price ranges but then I thought that breaking it down into price categories may be a better comparison. Following is what I found…

For homes selling under $500,000-
2% commission to Buyers Agent – 31 properties – 106 Days on Market (DOM) average
2.5% commission – 28 properties – 111 DOM
3% commission – 18 properties – 142 DOM

For homes selling between $501,000 – $750,000
2% commission – 22 properties – 125 DOM
2.5% commission – 19 properities – 135 DOM
3% commission – 16 properites – 128 DOM

For homes selling over $750,000
2% commission – 33 properties – 178 DOM
2.5% commission – 24 properties – 145 DOM
3% commission – 6 properties – 92 DOM

So the stats say that the amount of commission doesn’t have any impact on how quick a home is sold for homes priced below $750,000. For under $500,000 homes, the higher commission ones even took longer to sell!

I don’t know if the the differences in the over $750,000 market are due to the price of the commissions or other possibilities. This price range has the biggest percentage of price drops so maybe Sellers offering 2% are doing less price drops to price their home to today’s market??

If I was a Seller listing a home in today’s market, I’d offer the Buyers Agent what I thought was a fair commission. If I had a home in good condition and with pest (and home inspection) reports already done, chances are the Buyers Agent will have an easy time. If I had some issues with my property and knew that there were going to be some hurdles to overcome that the Buyers Agent would need to assist with, that’s when I’d think about offering a higher commission. It should be more about fee for service anyways!!

Ryan’s Mortgage Blog:
As expected the Feds lowered short-term interest rates today, which is the second time in as many months. They did suggest this may be the last cut in rates, at least for a while, they will play the wait and see game. Many believe this was their last cut to help the economy through this rough housing market. I am interested to see what this does to mortgage rates since many lenders had been lowering them the last couple of weeks so I don’t think- this rate cut will cause them to go drastically lower, but lets hope J. Great time for a refi!

I took a blurb out of an article from the NY Times today so you can see what else this rate cut affected: “Treasury prices fell, reflecting some concerns that lower interest rates could stoke inflation. Oil prices surged nearly 4 percent and gold futures were up about 1 percent. The dollar modestly weakened against other major currencies. Yet just a few hours before the Fed announced its decision, the Commerce Department reported that the nation’s gross domestic product expanded at a healthy pace of 3.9 percent in the quarter that ended Sept. 30.Consumer spending, which accounts for more than two-thirds of America’s economic activity, climbed 3 percent. Job creation has slowed in recent months, but employers are still hiring more than firing and wages are rising faster than inflation. The unemployment, at 4.7 percent, is low and has barely budged.”

Many commercial banks announced today that they are cutting their prime lending rate for certain credit cards and HELOCs. Also, after the news of the Feds cut, the Dow jumped 100 points.

Off Topic, as most of you know I am a huge football fan. Colts vs. Patriots are this weekend, which are the two best teams in the NFL, both undefeated. This game may be better than the Superbowl. My prediction is the Colts hold on for three quarters but get blown out in the 4th and lose by 10.

PS – Congrats to Keith on getting in the Sunday Paper…great article!

I can be reached at RBaker@PeregrineLending.com or 805-540-0866

Best of Carvan – San Luis Obispo

Attention Business Owners, Investors and Professionals! Own your own office in downtown SLO! San Luis Obispo’s Best of Caravan for this week is a property zoned office /professional, located in a prime location, on a corner lot, in downtown SLO. This remodeled 1922 structure offers hardwood floors, a greeting area , two offices/rooms , a kitchen and a half bath plus a 3-car parking lot. Charm, location and parking- all for $570,000.

We don’t have a link to this property but would be happy to send you more information. Just send us an email and ask about MLS #136385.
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(Best of Caravan is chosen by one of our team of local expert Realtors as the property that stood out on the weekly Broker’s caravan of new listings. If the photo is missing or the link doesn’t work, this mean the property is no longer on the market.)

A blog reader sent me a link for a new site that intends to (according to their website) do the folllowing:

“We are the first real estate search engine of its kind that helps you find bad neighbors before you move so you don’t regret the purchase of your new house, home, condo or apartment.”

The site is http://www.rottenneighbor.com/

I’ve looked at this site and would sum it up as a good idea but a poor implementation. A lot of the posts I looked at were slanderous and racist. While the terms and conditions prohibit these type of postings, they also state they aren’t responsible for anything on their site, nor do they monitor the posts. The biggest problem with this site is that when you post, it’s 100% anonymous. This isn’t they type of anonymous where you need to register and then the posts don’t have your name, you don’t even need to register on this site to post. You can walk up to one of the Internet-connected PCs that they have all over campus at Cal Poly and post whatever you want to say about a person and there’s no way to be held accountable. If you post from your home PC, there may be a way to track back to that PC if they keep the IP address of the post which they don’t say they do.

Also on the website, it says this:
“Real estate agents will never tell you about bad neighbors.”

The problem with this statement is that it’s the Sellers that know the neighborhood and need to disclose this type of information. The real estate agent must also disclose material facts too but it’s silly to think that an agent knows what’s going on in a neighborhood unless they live there too. Now, if a real estate agent is told something by the Seller, the real estate agent might need to disclose it.

It gets fuzzy because of what someone would consider a “bad” neighborhood too. Since people have property rights, they can do whatever they want to on their property unless they violate a law. One neighbor might not like someone with a woodcraft hobby because they were sawing wood in their garage at 8 pm at night while someone else might not like their neighbor being in a bookclub that meets weekly which causes cars parked in front of their home. Are either of these needed to be disclosed to a potential Buyer as a neighborhood issue??

It all comes down to due dilegence. The Buyer needs to do the research. Be that walking the neighborhood at night, talking to neighbors, or even creating their own questions to submit to the Seller. There is nothing to stop a Buyer from asking the Seller “Are there any dogs on the street that you hear barking more than a minute a day?”.

The rottonneighbor site also believes that more Buyers are looking to the Internet for guidance. That is true. So I agree that having information to help make a good decision is critical. To me, it would be nice to have the ability to search a local Police department’s log to see what calls were made to homes in a neighborhood. This would show if there were any barking dog complaints, suspected drug-dealing homes, neighbor disputes that got ugly, etc.

I don’t see a future for the RottenNeighborhood.com site unless they change the way people generate the posts. The site intends to make money by getting Realtors to advertise on their site. Since the site says they aren’t responsible for the posts, and the people posting are anonymous, maybe the advertisers will be the ones getting sued for slander.

Here are some more examples of significant price reductions on recently sold properties:

– A home in the Cypress Ridge Golf Course community originally listed for $1,399,000 sold for $950,000.

– A REO home in Paso Robles listed for $499,000 and sold for $340,000.

I ran a report tonite to look at the percentage of homes currently on the market that are Vacant. For single family homes (stick-built) on the market, 38% are vacant in SLO County. I’m going to run this report periodically to see how this number changes compared to inventory. The national average is 13.1%.

This is a neat website if you want a quick data about a city (zip code) taken from the 2000 Census data. http://www.zipskinny.com/

Did you read the article in the Trib today about the local housing market? You may recognize someone quoted in it. 🙂

http://www.sanluisobispo.com/business/story/178024.html

The reporter used my www.SloWatch.com site to get the inventory info.

Check you clocks!

I have a couple alarm clocks that have the feature of automatically setting the time when you plug them in. When I woke up today, they were one hour ahead. Guess whatever mechanism they use to update still thinks that daylight savings time was to happen today and not November 4th.