Monday, 29 February 2016
Don't get me wrong based on the title of this article. I'm not suggesting sitting and watching trying to catch the week you should sell your home to get the most out of it. First and most important, homes don't usually sell that quickly, and you can't just call a broker and execute a sell order.
However, there are a great many homeowners out there who have considered selling, or even want to sell, but they're waiting and watching rising prices to get a bit more at the closing table. Some are retired and would like to move to a retirement or tourist community and enjoy life. Others will be downsizing or upsizing. There are many reasons that a homeowner can be ready to list for sale if they decide it's the right time market-wise.
It's tempting to keep waiting when the news is telling you that home prices are rising in your area. In many areas this can be the case when inventories are low. Some analysts are even blaming baby boomers for keeping inventories low as they are holding on instead of selling. Supply and demand will always rule the markets, so holding on and watching rising prices makes you a part of helping your cause by holding off the market.
However, when news stories with titles like More Markets Favoring Sellers popping up in the media, it can make you wait too long. The same supply-demand dynamic that you're using in your favor right now can come back to bite you. And, it can happen very quickly. You have real estate professionals out there soliciting listings, and often they're doing so using these news stories to convince owners it's time to sell. At some point, the tide can turn.
The "real estate is local" meme is also important in this decision. Suppose for example that your home is in a popular subdivision with perhaps 200 or so homes. Right now you're holding and watching prices rise because only around a half dozen or a dozen or so homes are for sale in your subdivision. There may even be some bidding wars on the best homes.
The question is just how many listed homes it will take in your subdivision to tip the supply-demand scales. If it's a smaller subdivision, it can take just a few. In our example subdivision, past sold property data may show that a "normal" market would have 15 homes listed in your subdivision.
Suppose the eight currently listed became 15 or 20 within a week or two. The bidding wars would probably disappear, and prices would very likely soften significantly. It happens. Remember, there are others in your area doing just what you're doing, so keep that in mind and don't wait too long.
Of course, selling a home is a major lifestyle decision and shouldn't be made based solely on current prices. But, if you're in selling mode but holding, don't hold too long.
Thursday, 18 February 2016
OK, maybe a tug of war image is overdoing it a little, but they say all life is a negotiation. When it comes to selling or buying a home, you can negotiate with the real estate professional. At least you can if they can. Huh? Most real estate agents are licensed under the supervision and responsibility of a broker. They get their instructions and business practices from that broker.
That doesn't mean that you can't negotiate with an agent who must get approval. But, get ready for some of that "used car" thing with "I'll have to check with my broker" thing. If the agent has certain latitude, it does make the process faster and easier. Let's look at both sides, first a home seller and then a home buyer.
Negotiating with a Listing Agent
Ten years ago, it was difficult to get a home listed at anything but an industry-wide 6% fee. Prices can't be fixed, but that was the generally accepted commission, and most brokerages just quoted it and stuck to it. However, the average commission has slipped, coming down to around 5% average nationally. So, just ask for a better rate and see what happens. If they tell you that they have to spend a lot of money to advertise your home in magazines and print, you could tell them to forego that, as it's most likely to be sold because it's listed in the MLS.
Another thing few sellers know about is the "dual variable" commission. You see, the total commission paid by the seller is split between the listing brokerage and another brokerage who brings the buyer (the most likely scenario). However, if the listing brokerage also brings the buyer, they double their commission, getting both sides. You can negotiate that dual representation commission down, usually by around one-percent.
Last, you could look for a "real estate consultant" or flat rate listing real estate company in the area. They may offer some reduced level of service or the consultant may charge a base and get paid for their time, but it's almost always significantly less expensive.
Negotiating with a Buyer's Representative Agent
OK, you're a buyer. Like many these days, you've spent days, weeks or months searching the Internet and locating a few homes for your short list. The agent isn't going to be showing you twenty or thirty, as you've done a lot of the prep work yourself. First, ask if they can rebate a portion of their commission. It's not legal in all states, but it's becoming more so these days.
If it isn't legal, don't ask them to do something that could cost them their license. It gets more difficult if legality is an issue. The seller is paying the entire commission, so you would have to get both sides involved in getting some relief. You could ask for a concession in the selling price if your agent will take less in commission, but the seller would have to be involved and their agent as well. Another option would be a credit from the seller for closing costs, but again, your agent would need to offer to give up that much in commission.
Just know that everything is negotiable in a deal. It's a little more direct when you're the seller, but still doable as the buyer. Just asking can get some suggestions. They make no money unless you go through with a deal.