The internet has swaths of information on everything and anything. fact, I bet I could find plans, lessons, and instructions on how to build a home myself. The fact of the matter is unless I had some background or personal guidance, I wouldn’t know how to interpret the information given to me on building a home.
That being said, Realtors are experts in their field and they are the ones who provide the knowledge buyers need and rely on. Knowing what inspectors, appraisers contractors that are trustworthy is a very important factor in your home purchase.
It’s one thing to look at comparable sales in the computer to try and determine value, but it’s another to have your agent see these homes first hand to know if they had functional floor plans or not.
The internet is a wonderful tool, but real estate agents with a vast amount of knowledge still hold a higher value. Buyers also put their trust in agents to protect them with the legal jargon in the contract as well.
Okay, Just stats this week. All the numbers are still looking good for market recovery, but remember due to stricter loan rules most of pending sales are going to take longer to get through escrow. How much longer will each transaction take? In the past, we would estimate a home taking about 30 days on average to get through escrow. But now, with new restrictions we are estimating escrows to take on average of 60 days. Short sales often taking longer than 90 days.
With that being said, here are this weeks stats!
The encouraging news on Active and Pending Listings continues. The number of single family homes in the six city survey continues to be 4% lower than it was at this time last year. The “Actives’ trend line is flattening out after a rapid rise.
Pending sales are again 23% higher that they were last year at this time. In fact, last week our stats showed that the number of pending sales was higher than the previous two years and only one pending sale lower than 2006. This week ALL the pending sales in the previous 3 years were lower than what is currently pending. We now have one MORE pending sale that 2006 at this time.
Closed escrows remain on their downward trend, but the increase in pending sales should ultimately positively influence the number of closed escrows. It seems that the longer time periods negotiating the approval of short sales and increased buyer documentation for loan approval has increased the average number of days in escrow. We had several escrows that were scheduled to close in April that were pushed back to May and some of those transactions have now closed.
Again, the majority of closed escrows to date in San Mateo were sold over the asking price. 12 of the 18 closed escrows sold for the asking price or higher. Restated from last week, I think that it shows the buyers have confidence in the future value of those homes if they are bidding over the asking price. In today’s San Francisco Chronicle, Many Homeowner’s Face Facts article, Zillow’s survey of homeowners implies that the homeowners lack of confidence in home values may have bottomed out. The article’s author continues that they would be curious to see what homebuyers think the home values will go over the next six months. In the San Mateo area, I think we’re starting to see the answer.
After looking at today’s statistics and chart you will notice a few things that show the market is coming back!
The trend line for “Active” Listings is leveling off. Number of listings in the “Active” status is only 4% higher than last year at this time.
At 23% higher than last year, the trend line for “Pending Sale” shows that homes are selling. In fact, we are higher for this time of the year in 2007 and 2008 and only one Pending Sale lower than 2006.
The number of “Month-to-date” Closed Escrows is down quite a bit, but that is just a residual of the slower market 30 – 45 days ago. The number of Pending Sales would indicate that this trend should be at its end.
In fact, of the 7 closed escrows in the City of San Mateo, 6 of them sold for over the asking price. That statistic tells me that:
1) The agents are pricing the properties more in-line with qualified buyers’ perception of value
2) Those buyers also perceive them as ‘good values” and have enough confidence in the future of the market to bid over the asking price
3) That San Mateo’s multiple offer sales are in the most active of the price ranges. Typically the properties that have sold for over the asking price in the other communities were in the same price ranges as San Mateo.
In the other communities where the properties are selling for below asking price, the differential between listing price and selling price is sometimes more than 10%. I know that pretty much any agent in the business would write an offer for at least 10% under the asking price if their client loved the house, there was no competition, and/or the property has been on the market for a considerable period of time. So, if a Seller has had their property on the market for 30 days or more and there have been no offers, it is safe to assume the home is overpriced by at least 10%.
Many sellers make a make a critical mistake by over pricing their home. Please remember, buyers will not purchase your home because of what you want or need, they will purchase it for market value, at that given time. The market value determines what your home is worth and you need to price it accordingly.
To make my point, would you sell your home for $50,000 less than the market value because a buyer liked it, and doesn’t want to move to a less desirable area? Probably not. But guess what, it works both ways, they aren’t going to pay you an extra $50,000 because of your want or needs.
Buyers make decisions based on value and what has recently sold. Whether it’s a buyer or sellers market, it’s very important to price your home correctly from day one. If not, you wont receive any offers and your home will just sit there and become a stale listing. At that point you will either have to do one of two things, reduce the price significantly or take it off the market.
I’d like to share a real scenario between a buyer and their agent. Each week, agents go on Broker Tour to see the new inventory available. After touring the homes, agents call their buyers with an update. When the buyer asks if they saw anything that might be a match for them, the agent says ” I saw a nice home, but it’s overpriced,” would you like to see it? The buyer almost always says no, not if it’s over priced.
If they say yes and decide to make an offer, they will offer way less because their agent told them it was too much in the first place.
Now, if they didn’t look at it. After weeks or months, your listing is stale and agents forget about it. It’s out of sight and out of mind.
At that time, the buyer asks the agent whatever happened to that home over on …. the agent says it was over priced and it didn’t sell. The buyers says let’s take a look at it. Believe me, If they like it they will make an offer for WAY BELOW what you were asking. Why, because if no one else was willing to pay your price, why would they. You can’t expect them to outbid themselves.
Sellers, when it comes time to list your home, hire an experienced agent who knows the area well, the value of your home, has the best marketing plan, and most importantly possesses the skills to make certain the possible price and terms can be negotiated for your property.
What seperates a good agent from a TOP agent is their knowledge and skills. Hire the person that you believe will do the best job for you and not the one who makes promises with no clear plan on how they will be delivered.