Playing the Odds

We were doing some research this week, and were startled to discover that, from January 2010 through the present date, only one-third of all listings taken have sold.  That means that, for every seller who put his or her home on the market and sold it, two sellers put their homes on and nothing happened.  If you add those people who haven't bothered to list their properties due to the poor selling climate, there is a big supply out there. 

Since real estate agents work solely on commission, this is obviously a troubling state of affairs.  We only get paid one out of every three times we list a home, and listing always used to be the guaranteed way to make money, since the percentage of buyers who look and don't buy is higher than that of sellers who don't sell.  The combination is deadly.

 It does prove, however, that sellers should be listening to their agents about the price and improvements necessary to attract an offer in today's market.  What's the point of cleaning everything up and making plans to move, only to sit there for two years without a sale?  If you do want to sell, you need to do more than just sign a listing--you actually need to have a property in the top third of all properties, in order to sell it.  That's food for thought.

Still a Divided Market

The real estate market is more complicated than it would appear from reading the papers. There are things that are selling, and selling quickly. There are other properties that are hanging around, some without even being shown. This has been true for a while now, but it's not what people expect in a so-called "buyer's market" (read "bad real estate market").

In more traditional renditions of a buyer's market, there are not enough buyers, and so they can bid low on properties, and sellers will have to take low offers if they want to sell. It tends to be true across all segments of the market, from starter homes to mansions. In a seller's market, the opposite occurs: People who want to get a property need to move quickly and bid high, or they will lose to other, more motivated buyers.

This market has aspects of both. Many people have listed their properties a long time ago, and those places have been sitting around. They are often overlooked by agents and buyers, as they can be considered as tired, and usually as overpriced. Other places come on, attract attention right away, and sell quickly, sometimes with multiple offers. What's the difference? Sometimes it's location, or staging, or size. Sometimes there's just a buyer who needs what a seller is selling, and needs it right away. More often, however, it's perceived value. The market--that amorphous body of economic value judgment--rates the property as a good value, and that sparks interest.

All of this makes it difficult to price properties. However, the possibility of multiple bids and early interest means that it's hard to underprice in today's market, as buyers will bid the price up to where it can/should be. It's easy, unfortunately, to overprice. Many sellers look at what's on the market at the time, and place their home in the range that they feel it belongs, without distinguishing between the overpriced inventory and the value properties that are getting all the interest. And that's a big mistake. Look at what's sold, and do it with a clear eye. Then listen to your real estate agent, and get your property into the sold column. Then you can become a buyer, and use all that knowledge to get a great value!

Leading RE

We belong, as many independent real estate firms do, to a network of similar professionals. In our case, it's call Leading RE. When its member firms combine their sales, Leading RE outsells any of the national networks, and its reach extends around the globe. I just spent some time on the website, and the tools available to us far exceed what could be obtained in the pre-web days.

What's the advantage to consumers? For one thing, we can refer people from New Haven to anywhere around the world, and ensure that they receive service at a high level. It's the difference between walking in the door of any professional establishment and having the name of a good person at the other end of the phone. Also, it allows us to coordinate the services on both ends of a move. We can use trusted colleagues in another location, and count on them to keep us informed about what's happening with the purchase or sale in their area. Sometimes that involves bridge loans or changes in moving dates, and it helps to have everyone in the loop.

These things are helpful for agents as well, obviously, but it is their ability to take advantage of the accumulated knowledge base of others in the field that is most useful. Sometimes you just need to avoid reinventing the wheel! In fact, we belong to a much smaller group of large independents, The Leadership Council, about which I've written before. We just started a joint site to post training, advertising, marketing, and various documents which would be interesting for the group to see.

It took a very long time to get our very fractionalized industry to the point where it could share more than basic rules of conduct in common. But it's been worth the wait!