Christmas Home Sales

Sure, spring and summer are hot seasons for Realtors, but is it better to wait for the market to simmer down a bit before buying? According to lists from Zillow and Ebby Halliday Realtors, the winter holiday season is a great time to buy your dream home.

According to the folks at Ebby Halliday Realtors, here are the top reasons to sell your home this winter:

1) The median home sales price in North Texas is up almost 13% over this time last year.

2) Mortgage interest rates are at historic lows.

3) Consumers who shop for a home during the holidays are serious, motivated buyers.

4) There are fewer homes on the market during the holiday season. With less competition, your home is likely to sell faster.

5) Typically, the supply of homes for sale increases significantly in January, meaning there may be less demand for your home after the holidays. Less demand means you’ll have to make your home more attractive to buyers, possibly through a price reduction.

6) Homes “show” better when decorated for the holidays.

7) Due to vacation schedules during the holidays, buyers have more time to look for a new home, specifically on weekdays.

8) Some people must buy before the end of the year for tax reasons, and they must close before December 31 to claim a homestead exemption for their taxes.

9) January is traditionally the month for employees to begin new jobs. Since many transferees are not able to wait until spring to buy, your home should be on the market now to not miss out on this significant group of buyers.

10) Even if your home is listed, you’ll have the option to restrict showings on days you have holiday parties and out-of-town guests.

11) If your home sells during the holidays, your agent can arrange for a delayed closing or for extended occupancy so your holiday season won’t be spent packing.

12) By selling now, you’ll have an opportunity to be a non-contingent buyer during the spring, when many more houses will be for sale, which most likely will mean lower prices. This could allow you to sell high and buy low!

And here’s what Zillow’s blog had to say about why the winter holidays make an excellent time to buy:

Less competition

Let’s start with the obvious one: less competition. This lowers the chances of multiple offers and bidding wars (something we saw a lot of last spring/summer), and should translate into a bigger discount for you. Know your market! This is where sites like Zillow come in handy. Start your research here for comps in your area and to see what homes are selling for.

Serious home sellers

Why would sellers pick such an inconvenient time — while everyone is busy entertaining family and friends and enjoying the spirit of the holidays — to list their properties? Probably because they need to sell and may feel compelled to do so before the end of the year for tax purposes. What this means for you: less hassle when it comes to negotiating; a greater willingness, on the part of the seller, to agree to concessions; less chance of the seller waffling; and greater respect for your offer, even if it’s a little lower than the seller was perhaps expecting.

Faster mortgage approval

Lenders aren’t as busy this time of year, and less volume could mean faster approval. Some lenders might even be willing to reduce fees during the off-peak season in hopes of gaining your business. Regardless, don’t just go with the first lender who comes along. It pays to shop around. Get multiple quotes and check out lender reviews on Zillow Mortgage Marketplace.

Greater affordability

Sure, home prices have been rising, but they’re typically lower in December than during any other month (so you don’t have to be as aggressive with your initial first offer, compared with buying during peak to high season). Zillow’s third quarter Real Estate Market Reports showed home value appreciation slowing. As we enter the slower home shopping season many overheated markets are moving away from bubble brink and ultimately becoming more affordable than they have been historically. If you want to take advantage of low interest rates, the time to act is now.

Some markets will have higher demand than others year round, but these seem like good reasons to both buy and sell outside peak market seasons. What do you think? Is the winter a better time to sell or buy?

Zillow Trick or Treat Map

Dallas’ lack of sidewalks and abysmal walk scores kept it from making Zillow’s list of top cities for trick or treating. I have several great memories of trick or treating, but the all involved piling into the bed of a slow-moving pickup truck and cruising through the neighborhood. We rarely walked between houses, because if you did that, it would take you all night to fill your pillowcase with treats.

Best Cities to Trick or TreatThat’s probably what fueled the thinking of Zillow statisticians who came out with this year’s list of the top 20 cities for trick or treating. They measured cities based on their  Zillow Home Value Index, population density, Walk Score and local crime data from Relocation Essentials. “Based on these variables, the Index represents cities that will provide the most candy, with the fewest walking and safety risks,” the website said.

Ranking No. 1 for the third year in a row is San Francisco, with Boston and Honolulu ranking second and third, respectively. Some choices that are kind of surprising to me include Washington, D.C. (8), Miami (14), and Baltimore (19).

You’d think that because of the many wealthy enclaves that are incredibly walkable (Hello, Park Cities, Lakewood, and Uptown) that Dallas would have ranked somewhere close. Of course, we shouldn’t feel too bad because not a single Texas city made the list. They don’t know what they’re missing, right?

Still, this list isn’t surprising because it has the same cities as last year, just in a slightly different order.

To see the full breakdown, visit Zillow’s site.

for sale signI have never met a real estate agent who likes Trulia or Zillow’s market home valuation estimates. Excuse me, “Zestimates”.

I have never met a real estate consumer who didn’t like searching for real estate online and being able to get values instantly. We live in a real time society, which means, we want information when we want it, usually RIGHT NOW!

Consumers think Realtors don’t like the Zillows and Trulia’s because they take over the “agents’ job”. But most home buyers I know start on these sites, then after they’ve noodled around with neighborhoods and homes styles and school reports, call an agent. Thus the home valuation estimates become tools in the preliminary search process for a new home.

But now an expert is proposing something unique: could these home valuation estimates be distorting home values? And the market?

Clifford Rossi, a business professor at the Robert H. Smith School of Business at the University of Maryland, wonders if “arming consumers with such tools without providing them with disclaimers on the limitations of these models can magnify price volatility in housing markets and hurt house sales.”

In an over-simplified nutshell, he is saying that no statistical model can know the market conditions and intricate attributes of a single property. Even in a subdivision where homes are basically Levittown-like replicas of each other, differences exist.

Rossi says “lying behind online home value estimators are a host of complicated statistical models that attempt to predict a home’s price based on comparisons with similar properties (comparable sales) using county property record data on a variety of attributes such as house square footage, number of bedrooms and bathrooms, among a number of features unique to that property. ”

Yes, aggregated data has come light years but is not a perfect science and significant information lags exist. And when we rely on “modelled outcomes” like, say, we did prior to the real estate bust, well things don’t always work out like the models say they should. In fact, it leads to a misunderstanding of risk.

These models have been around for a number of years and during the boom years were used extensively behind the scenes by banks (including those I worked for) as well as Fannie Mae and Freddie Mac as a way of reducing processing costs. During these years, regulatory agencies identified a number of significant limitations surrounding the use of these models. They tend to work better on homes of similar type and quality but break down quickly on custom homes, homes in rural areas, small neighborhoods and nonstandard property features. Further, no statistical model can understand the market and condition issues of a particular property. For example, these models cannot factor in property upkeep or whether the property sits directly across the street from a gas station, which could reduce its value.

Yes, we know that. Real estate is a hyperlocal story. But how can these ‘Zestimates” hurt a flea? I mean, most of us know they are off but it’s fun sometimes to see the numbers they come up with. But what if someone uses them to formulate an offer on a property?

Of some concern for regulators is the tradeoff between the percentage of homes where an automated valuation model could be used (known as AVM coverage) and the accuracy of the estimated value. The greater the use of the model across property types, the higher the valuation errors, typically. Those tradeoffs remain, and as we have learned from the crisis, anytime we become overly reliant on modeled outcomes it leads to a misunderstanding of risk: so saith Rossi.

In the specific application of online valuation engines, buyer offers can be highly influenced by the estimates generated from these models. In forming an offer, a buyer needs to obtain a reasonable view of what a home is worth. LOCAL appraisers are a good place to start. The values displayed by online real estate sites provide an easy way for a buyer to develop an offer. Let’s say they don’t know that the numbers they are looking at are at least 6 months old and many plusses about the house were not even recorded. Many homeowners fail to report property improvements, thinking they are saving on property taxes.

So what you get, says Rossi, is a lower offer based on flawed information. Flawed, old, stale information.

…Such outcomes create an artificial drag on house values during recovery periods and amplify price appreciation trends during boom periods given potential data lags in market pricing. In addition, the use of such valuations in forming bids can lengthen or prevent real estate transactions from being consummated given large potential gaps between sale and offer prices using these estimates.

I have to admit, I never thought of it that way. Did you?

Pain in the butt ad...First of, apologies for this visual, but can you believe this was an actual billboard for an agent? I shudder. I came across a most interesting article over the weekend from a site called Property Portal Watch: Why Redfin, Zillow, and Trulia Haven’t Killed off Real Estate Brokers. The article initially ran in Businessweek. Interesting, albeit long story, but I strongly suggest you read it. You know that 90% of all consumers now begin their real estate search for homes, condos or apartments on line now, right, this from the NAR. Still, brokers are handling more sales than ever and real estate commissions, in fact, have gone up, not down! The average real estate commission paid in 2011 was 5.4%, up from 5% in 2008. And U.S. real estate commissions are higher than the median commission rates abroad, with the exception of islands and resort properties.

 “Ten years ago almost no one started their home search online. And yet none of that value has come back to the consumer,” says Glenn Kelman, Redfin’s chief executive officer.

There was a time, back in 2001/2002 when I clearly recall agents getting worried they would go the way of travel agents. In fact, the co-founder of Zillow is none other than Rich Barton, the guy who put travel agents out to pasture by creating Expedia.com.

Think about of that for a moment: does anyone use a travel agent anymore to make plane reservations? I buy all my tickets on my iphone or online. My millennial kids don’t even know what a travel agent IS.

feature_redfin11_buyerschart__605The thinking back in 2004 was that perhaps real estate purchasing could be done much like buying an airline ticket, or booking a hotel. As you learn in this fascinating story, it was David Eraker, the original founder of Redfin, who first put real estate search on line for consumers. Eraker was a Seattle-based geek (who had dropped out of med school) who was frustrated he could not find a condo on line and thought the irrationality of broker commissions that remained fixed… regardless of housing supplies or competition among agents well, sucked. So in 2002, working with a Yalie partner who had a degree in electrical engineering,  the dynamic duo went live with a site that displayed homes for sale on a digital map in Seattle.

Redfin’s initial philosophy was a bit different from the Redfin of today — I have a story on the Dallas Redfin group coming up, impressive group of agents. Redfin hoped to eliminate the agent or minimize his/her role in the home purchase, much like the Expedia model. That is not the Redfin of today. The idea was to save consumers money — whittle down that real estate commission.

Over at Zillow, the founders were thinking along those money-saving lines, too. At first they thought they could hold online auctions for homes as a way to disrupt the status quo of selling homes. Rich Barton soon saw that real estate agents were not anything like travel agents:

 “It was obvious to us, regardless of how relatively frustrated consumers were with the whole process, how important the agent relationship was to customers. No robots were going to eliminate the agent,” Barton says.

No, no robots and no online platforms. Quicken and Quickbooks sure didn’t eliminate our CPA, just helped me organize financial information. When it comers to  complicated, expensive, emotional, life-changing purchases, people still want someone with experience to guide them through.

feat_redfin11_agentschart__605According to this article, economic theory suggests that the relationship between an agent and a buyer is not optimal because of the diverging, almost conflicting, interests of the Principal (the customer) and he Agent representing him or her. Agents make their commission by selling the home. They also bear the brunt of marketing costs, though increasingly I am hearing of agents who ask the Sellers to cover the cost — the parties, the ads, the gas! Do some agents pressure sellers into selling quickly and accepting lower offers just to make a quick buck — we have discussed Pocket Sales here at length? The theory is that if the home sells for the maximum amount the market will bear, it’s a win/win for the agent broker and the seller. The conflict may be even worse for buying agents — do they pressure clients to pay too much to fatten their commission?

In 2008, Stanford University economics professors B. Douglas Bernheim and Jonathan Meer published the results of their study of nearly 30 years of house and condo sales on the university campus. They found that an owner’s use of a broker to sell their property reduced the eventual selling price by 5.9 percent to 7.7 percent, compared with homes sold by the owner directly.

Do you know what I think when I see a FSBO? I make it a mental game to see which agent will pick up the listing in 3 months. There are exceptions in hot neighborhoods and hot markets, but fewer than ever homeowners are selling their own homes without an agent:

Yet only 9 percent of homes were sold directly by owners in 2012, down from 13 percent in 2008, according to the National Association of Realtors. As one might expect, members of the housing industry argue that people simply value the expertise and service that agents can provide and are nervous about venturing out on their own or trusting an online discounter for the most complicated transaction of their lives.

What do you think about all this? Will the current model ever change? I think it may at some point, at some lower price levels, where the marketing costs and time input may not be worth the commission. Mid to high end homes will always, always have an agent.

Last October, at a Seattle technology conference, an audience member asked Spencer Rascoff, Zillow’s CEO, if sales commissions were ever going to decline. “There are other startups that are trying to break down those agent commissions, and I think most of them will fail,” he said. Rascoff said later in an interview that “consumers don’t really care about commissions. They say they care, and they talk a big game in the off-season. But when push comes to shove and it comes time to sell their home, the transaction is so infrequent and so highly emotional and expensive—and consumers are so prone to error—that they turn to a professional.”

 

 

logo-realtorThis is something that you may not think is a big deal, unless you are voraciously house hunting and use Realtor.com Trulia and Zillow a lot. The board of directors of the National Association of Realtors voted in Chicago today to give Move Inc., the company that operates Realtor.com, more freedom and flexibility to compete with Zillow and Trulia. The NAR actually owns Realtor.com. Yippee, Realtor.com now gets to publish new home listings and rentals. Actually, after today they can “publish listings from entities that are not even Realtor owned and controlled” like FSBO’s! Who’d have thunk it!

For consumers, this means more great resources when you are looking for homes. One thing Realtor.com did not get, however, is an in-house economist. Trulia has Jed Kolko and Zillow has Stan Humphries who, if you have ever met him, totally blows the stereotype of what a nerdy economist looks like: Stan is adorable, as is Jed.Stan Humphriesjed Kolko

Inman News’ Andrea Brambila quoted Move Chief Strategy Officer Errol Samuelson as saying this will give consumers “the most accurate source of information, but also the most comprehensive. Whether its for sale or for rent, (to give) an entire view of the market.”

In real estate, accurate sales data and information is considered gold. That data is gathered from MLS associations and brokerages across the country, who then feed it to Realtor.com, Trulia or Zillow. It’s one-stop shopping for consumers as each site tries to outdo the other in providing more and more information to buyers. Initially, these sites — in real estate they are called “third-party sites” — were seen as great ways to make listings available to more eyeballs. They promised to scratch the back of the brokers or associations who handed the info over. But now, some brokerages think all these companies

“sucked us in with all the free stuff — I’ll be the first to say we were supportive. We gave our listings to Trulia and Realtor.com,” says Bob Peltier, president and CEO of Edina Realty Home Services, Minneapolis, Minnesota. “Now they say you have to buy enhanced listings or ad space or you are not going to get leads back. That’s a poor business model I’m not willing to support.”

In late 2011, Edina pulled all their listings from third-party sites, and the world did not end.  

“If we give (third-party websites) our listings, they come up higher in search results,” Peltier said. “Then they turn around and want to sell ads to our agents.”

Edina is huge in Minneapolis-St.Paul: 2,100 Realtors working out of 60 offices in Minnesota, North Dakota and western Wisconsin, Edina Realty is one of the nation’s largest brokerages, handling 25,000 transactions and $5.3 billion in sales in 2010. Hanging onto their own listings, they found consumers just clicked over to their sites and scrolled away. Like I said, the world did not end. Peltier said he did what was best for his company and is not trying to start a revolution.

“I have to say it, but (paying for advertising on third-party websites) is no different than buying ads in the newspaper,” Peltier said. “People did it because it was expected, and it was mostly fulfilling the seller’s wishes. But at the end of the day, you’re really got minimal return on that investment.”

Bottom line: there’s a race to create the best possible real estate search experience possible for consumers, and after today that race got more intense.

Karen tag

Agent Reboot was a blast as usual. The Inman social media gurus gave us so much information my head was spinning. Good thing I took notes for ya’ll! Inman, of course, is the industry’s leading source of national real estate news.

Agent Reboot is their traveling information “show.” Basically they educate industry professionals about the latest tools and resources that will help them to create a better marketing platform and increase brand awareness.

There were so many takeaways, but first and foremost, you had better be found on the Internet. Do not be a “Secret Agent.” I love that! Get your profile up on Zillow, Trulia, and Realtor.com. It’s free and it’s where people will find you.

Geeky

Katie Lance (left) emphasized building a presence on the Internet.

Realtors were also encouraged to be local experts. Everyone is on the Internet. We can all press “search” on Google, so you have to know the hidden things, the secret bike trails, the best wine shop, who gives the best massage or mani-pedi, and share that information to attract a loyal following. You cannot serve every area of town and do it well, so find your niche and be the very best, most knowledgeable in that market. Own your target market!

Yes you need to blog but don’t make a federal case out of it. It’s just like talking to a friend, so blog about that dish that is not on the menu at Matt’s or the special deal the YMCA offers each January or the best Christmas tree farm. It’s as simple as that. Make sure your blog is linked to your website. If the words blog and link give you the heebie-jeebies, call a teenager and have them get you linked, optimized and teach you to COPECreate Once, Publish Everywhere!

Bouchard Stovall

 

Dallas City Center Realtors Juliette Bouchard and Andra Stovall

Another uber important message was that agents need to provide “unparalleled service.” That means pick up the phone. Do not rely on texting. Be extremely responsive and exceed expectations. The reliable adage “under promise and over deliver” has never been more important.

 

economicrecovery

Economists were pleasantly surprised last week after a glowing jobs report that has lead to surging 30- and 15-year fixed mortgage rates. The 30-year fixed rate is up from 4.17 percent to 4.41 percent, and the 15-year fixed rate is up to 3.41 percent from 3.38. That’s the word from Zillow’s Mortgage Marketplace, at least:

“Rates surged on Friday after a stronger-than-expected jobs report and upward revisions to prior months’ unemployment levels,” said Erin Lantz, director of Zillow Mortgage Marketplace. “This week, rate movement will depend on whether Wednesday’s release of the Federal Open Market Committee meeting minutes and Fed Chairman Ben Bernanke’s speech reinforce or depress market expectations of a September start of easing federal stimulus.”

So, are we officially in recovery mode after two years of ridiculously low, economy stimulating interest rates? I think so. What’s your verdict? Are we getting back on our feet?

azalea early framing.jpg2

I guess I fall in to the 60 percent of Americans who will be renovating their homes this summer. We’ve already had some work done on our back deck, as well as some landscaping. Sure, it’s no tear-down, but it makes us happy!

What Zillow discovered during its Zillow Digs Summer Home Improvement Trend and Spending Survey, is that 60 percent of homeowners plan to make a home improvement or addition this summer. That includes areas both inside and outside of the home.

Of those surveyed, 40 percent planned to add some panache to their patios or outdoor spaces, while 14 percent had bathroom renovation planned.

Interesting stats, but what’s even more interesting to me is the new Zillow Digs web app. It’s scarily similar Houzz.com and Pinterest, allowing you to favorite rooms and decor.

What do you think of Zillow Digs? Will you be using it for inspiration for your summer renovation?

Azalea front