Limited-Service Listings Come With a Full-Service Contracts
May 30, 2007 | 2 Comments
Being in real estate, people love to share their real estate stories with us. It is always interesting to hear the perspective of others. One such recently shared story involved a couple who had listed their home with a limited-service real estate brokerage. Basically, for a fee, this company would put the home in the local MLS. That’s it. Everything else was left up to the homeowners. The homeowners had to coordinate the marketing, showings and, had a contract come in on the home, the owner would have had to go through that process on their own as well. There are a number of these companies out there.
Unhappy with the way things were going, the owners decided that they would rather try their hand with a full-service real estate brokerage. They thought that changing brokers should be easy. “After all,” they said, “the home was For Sale By Owner.”
You see, to them, the home was “for sale by owner.” They were the ones doing all of the work. The brokerage merely placed the home in the MLS. What they did not realize, however, was that in order to place the home in the MLS, the brokerage required them to sign an Exclusive Right To Sell agreement. This agreement is the standard listing agreement that most sellers sign when listing their home.
In thinking that their home was “for sale by owner” they thought they could just switch listing brokerages. They called up the new agent that they wanted to work with, and tried to do just that. What they did not realize, and what that new agent informed them of, was that because of the Exclusive Right to Sell agreement, the new agent was precluded from doing anything with their house until the expiration of the agreement.
The owners were stunned.
Luckily for them, they were able to call up the limited-service brokerage, voice their dissatisfaction with the way things were going, and obtain a release from the agreement. They promptly listed with their new agent, and all was right with the world.
Things did not have to go that way. In fact, because of the Exclusive Right to Sell Agreement, the limited-service company could have actually refused to let them out of the agreement and held onto the listing until the agreement expired. In fact, the Virginia Association of REALTORS standard Exclusive Authorization to Sell agreement contains no provisions for canceling the agreement, other than the expiration date. The agreement is also pretty vague when it comes to the responsibilities of the owners and the broker.
What you can learn from this story is to be very aware of the documents that you sign. They are legally binding documents, and you should fully understand them before you sign them. And if you choose to use a limited-service brokerage, be aware that doing so comes complete with a full-service contract. KNOW WHAT YOU ARE SIGNING. If you know what you are getting into, it is a lot easier to get out when you need to.
[tags] real estate, realtor, charlottesville, virginia, limited service, listing agreement [/tags]
Should You Make Improvements to Your Home Before Selling It?
May 24, 2007 | 4 Comments
One question that I get asked during every listing presentation is, “Is there anything I should do to the house?” Usually, the owner is referring to whether or not they should repaint, or move/remove furniture, or change landscaping, make minor repairs, etc.
The short answer is– YES.
Two or three years ago, the market was so hot and homes were selling so quickly that the need to make improvements to a home prior to selling it was low. Sure, there were owners who wanted to make changes to try and increase the value of the home, but there was not as much pressure to make minor improvements simply to get the home sold. The current market conditions have changed things significantly.
The market today is highly competitive. Inventory is high, and every price range has an ample selection of homes. When I am taking buyers out to look at homes, the amount of inventory is causing them to be a bit more selective. No longer is there as much pressure to write a contract on a home today for fear that it is gone tomorrow. Buyers are much more willing to wait. This means that sellers must work harder to set their home apart from the rest of the market and entice the buyer to act.
Some people will say that they don’t want to spend a lot of money fixing-up their home just to sell it. That’s fine. I’m not saying that you have to spend a lot of money. But think of it this way– if you could spend $500 today in order to sell your home one month faster, would you do it? I would hope so, unless you are lucky enough to have a mortgage payment that is less than $500.
So what can you do to make your home more competitive? Most of the things are simply, and cost little more than some elbow grease:
–Do you have any doors that stick? Grab a screw driver and some WD-40 and fix them! A sliding-glass door that doesn’t open properly can be annoying to a potential buyer. And while it may be easy to fix, they will look at it as a problem, regardless of how easy it is to remedy.
–Any switch plates or outlet covers that are cracked? Head down to the local hardware store, spend the 75 cents a piece to buy new ones, grab the aforementioned screw driver, and get to work. Again, cracked or old switch plates and outlet covers are simple to fix, but buyers who see them will wonder if there is other maintenance on the house that has been neglected.
–Scuff marks on your walls? Re-paint. I know that no-one likes to paint. The fact of the matter is, however, that interior paint can really show the age of a house. Sometimes, in fact, it can even give buyers a mistaken impression about the age of a house. I have been in many homes that, for whatever reason, had walls that looked more worn than they should be. A simple coat of paint can transform a house. Oh, and when you do repaint– go neutral. I’m not saying your walls need to be stark white, but you would do well to stay away from that electric blue bathroom you have always wanted to try. Chances are that you and the buyer will have different tastes, no need to turn them off right away.
–Been thinking about replacing those dying shrubs in the front yard? Now is the time. The exterior of your house is the first thing that buyers will see. You want it to make the best possible impression. Sometimes that will mean getting some new mulch, keeping the lawn trimmed more often than usual, and finally replacing those dying shrubs. No matter what changes you make to the inside of your home, they will all be for naught if no one wants to go inside.
Those are 4 very simple things that anyone can do to make their home more competitive on the market. There are plenty of others. As I said, every home is different, and when you choose a REALTOR to help with the sale, he or she will be happy to offer other suggestions that will give your home the best possible chance to sell.
Don’t forget that you aren’t the only one who can help put your home’s best face forward. Your REALTOR should be doing things as well. The first of which is taking good pictures. Wouldn’t it be a shame if you made all the necessary improvements to your house, only to have buyers ignore it because the pictures didn’t show it off? Pictures will be the first introduction buyers have to your home, and they should be every bit as stellar as the home itself.
Remember, today’s market is highly competitive. Buyers are being far more selective than they have been in the past. Your home will be competing with dozens of other similar homes. In order to give your home the best possible chance to sell, you must be willing to do whatever you can to make your home stand out from the crowd.
[tags] real estate, realtor, charlottesville, virginia, home improvement, selling your home [/tags]
The Zebra Falls Into a Black Hole
May 23, 2007 | 1 Comment
. . . and we’re back.
For those who may not have noticed, I have been having a horrific time with my host server. The blog was available intermittently over the weekend, and went down completely on Monday afternoon. Service was finally restored this morning some time. For a while there, I feared that the entire blog was lost, but the only apparent damage was the loss of some of my picture files, which I am trying to re-load as I find them.
In light of this major outage, and a series of smaller, equally annoying outages, I am seriously looking to move to a different host. If anyone knows of any good hosts for a Wordpress blog, let me know. If you know of any bad ones, let me know that too!
April Stats for Charlottesville Area Real Estate
May 16, 2007 | 1 Comment
It’s about that time once again. Time to check out the monthly real estate sales statistics for the Charlottesville area. Below are the monthly statistics for April and the year-to-date stats compared to 2006. Let us see what we can see:
April 2007
April 2006
YTD 2007
YTD 2006
Breakdown:
The more things change, the more they stay the same. Our market is continuing to change, but it is also continuing the pattern of declining sales that was established months ago. For the month of April, every area fell short of the marks set for monthly sales in 2006. The final tally: Albemarle -11%, Charlottesville -43%, Fluvanna -15%, Greene -8%, and Nelson -11%. Overall, the area saw 26% less sales in April 2007 compared to April 2006. As expected, the overall Days on Market (DOM) was up, although Fluvanna actually saw a drop in DOM for April.
For the year-to-date, the news is more of the same. Every area has seen a decrease in sales (Albemarle -14%, Charlottesville -26%, Fluvanna -14%, Greene -29%, Nelson -16%) and the Charlottesville area as a whole is 18% behind the pace set in 2006.
What I find even more intriguing than the sales numbers is the median home price. The median is down in all but two of the areas: Albemarle -10%, Charlottesville -6%, Fluvanna +9%, Greene +16%, and Nelson -33%. Overall, the area median home price has dropped by 4% so far this year. Obviously the year isn’t over, but there are going to have to be significant gains in order to see the area median come out ahead. The most surprising drop is in Albemarle, which is typically the strongest performer out of the bunch. A 10% drop in the median in Albemarle is significant.
A drop in the median is good for buyers. If, however, you bought a home a year ago and are unlucky enough to be forced to sell now, you may end up losing money. Even if you bought a home two years ago, you may be very lucky to break even. This is a reality that many are going to be very unwilling to face.
I’m not sure how many times I can say this, but it bears repeating: THE MARKET OF 2000-2005 IS NOT COMING BACK. To think that we are suddenly going to return to multiple offers and yearly appreciation of 15% is ridiculous. That does not mean, however, that the sky is falling. It simply means that it is time to face the realities of our current market, and act according to what is happening now– not what we wish would happen.
[tags] real estate, realtor, charlottesville, virginia, statistics, housings sales, fluvanna, albemarle, greene, nelson [/tags]
How the Time-Value of Money Can Help You Sell Your House
May 10, 2007 | 5 Comments
The Bawldguy is one of my favorites. Not just because he used to be an umpire, either. Jeff is one of my favorites because it is obvious that he “gets it,” and more importantly, he is very good at helping others “get it” too. I saw in my RSS reader his most recent post regarding what is technically known as the time-value of money concept. As always, he sums the idea up perfectly:
First — And don’t smirk — More is better than less.
More after tax profits. More after tax cash flow. If it has to do with return, maximize it one way or another.
Second — Sooner is better than later. Hey! I said no smirking.
It’s surprising how many folks don’t understand time’s place in real estate investment. Calling time a crucial factor is like saying water is wet. Neglecting time’s effect on your Plan and it’s execution is almost always injurious if not outright fatal.
Conclusion — The synergy between the two factors produce yet another Captain Obvious epiphany.
More — sooner — is much mo’ betta.
The idea that more money sooner is better forms the basis for all real estate investing. Heck, it forms the basis for all investing really, but it is especially important in real estate investing. In fact, it is the FIRST thing that you learn in the CCIM courses. This idea isn’t new. In fact, it is very old. I am sure you have heard the expression, “a bird in the hand is worth two in the bush.” That old axiom is a simple way of stating the same thing. The reason that the concept of “more is better sooner” is true is simple– the future is uncertain.
I get asked all the time about what I think a house might be worth in the future. As I tell people: if I could tell you how much this house would be worth in 3-5 years, you would have to try and find me on an exotic beach somewhere, because I would be making a lot more money. The fact is that no one can predict the future 100% of the time, so in order to hedge your bet, it is a good idea to take more money now, rather than hope that you have it later.
There is another reason that the concept is important to real estate investing– inflation. Quite literally, a dollar is worth more today than it is one year from now. So if you can take your money right now, and then invest it at a rate greater than inflation, you will always come out on top. If you wait for your money later, it has already lost some of its value, relative to today.
So, “more is better sooner” is a pillar of real estate investing, but what does it mean to the average homeowner without any real estate investments? The homeowner who is just selling their one house right now because they need to move. Adhering to “more is better” sooner can be the difference between success and failure for the average homeowner as well. This is true for the same reason it is true for the investor– the future is uncertain. Here’s an example:
You are selling your house. Your agent has it listed for $300,000. The home has been on the market for 45 days, not bad for the area, and it is receiving fairly regular showings. Finally, an offer comes in from some interested buyers. The offer comes in at $275,000. The terms are fairly standard, and the house should close in 30 days. You are able to negotiate back and forth and come to an impasse at $290,000. That is $10,000 below your asking price. You aren’t thrilled with the idea of having to take $10,000 less than your asking price, so what do you do?
Remember, more is better sooner. In this case, you have the option of $290,000 today, or NOTHING tomorrow. I know what you are going to say, “but the house is getting showings, and someone could come and make an offer for full price in a week.” Sure, or the house could sit on the market for another 45 days, by which point you will probably have to reduce your price. Remember, in a market such as our current one, there is no shortage of inventory. Buyers have options.
There is also the cost of carrying the house to be considered. With the current offer, you will only have 30 more days of carrying costs. That means only one more mortgage payment, and 30 days of utilities and maintenance. If you wait, chances are you will have to make at least one additional mortgage payment, and continue to have maintenance costs. This doesn’t even take in to account the psychological and emotional value of having your home sold, as opposed to continuing the process.
Now for those of you who are thinking, “are you telling me to give my house away?” No, that is not at all what I am telling you. What I am telling you is to remember that more is better sooner. The question you must answer is, “how much more?” If the offer in the example were for $275,000 perhaps the evaluation would be different. The idea of “more is better sooner” is simply a tool to help you evaluate your situation and what is in your best interests. I have seen owners squander deals over minimal amounts of money due to pride or foolishness or both, only to watch the home languish on the market to a point that the original deal would have been preferable.
Selling a home is an emotional process, and sometimes we need tools that help bring us back to reality and remember that while selling a home may be emotional, it doesn’t have to be irrational. The concept of the time-value of money, and that “more is better sooner,” is one of the tools that real estate investors use to evaluate investments; but it can be equally valuable to the average homeowner as well.
[tags] real estate, realtor, charlottesville, virginia, investing, selling, buying [/tags]
Fluvanna Opts for Colonial-Style Shopping?
May 10, 2007 | Leave a Comment
In what I found to be one of the more interesting recent happenings regarding economic development in Fluvanna County, the Planning Commission recommended the rezoning of 28 acres of land on route 600 from A-1 to B-1 in order to make way for a Williamsburg-style pedestrian shopping center. From the Fluvanna Review:
Planners Okay Pedestrian Shopping CenterReleased 05/03/07
By William J. Des Rochers
A new design concept for a shopping center may be coming to Fluvanna if the Board of Supervisors adopts the Planning Commission’s recommendation.
At its April 25 meeting, Commissioners unanimously recommended approval for a shopping center that will emphasize wide sidewalks and limited storefront parking.
According to the developer’s representative, Kelly Strickland, the separate buildings will be as small as 3,000 square feet and in the “Colonial Williamsburg” architectural style. The effect will be to create a pedestrian friendly atmosphere designed to encourage patrons to linger.
Planners largely did not address the concept since they only were considering a rezoning application from A-1, Agricultural to B-1, Business, General. However Commissioner Sam Babbitt (Fork Union) expressed his disappointment that there was no residential living included in the proposal.
The parcel consists of 28.7 acres in the Palmyra District and is located on Route 600 between the Broken Island and the Sycamore Square subdivisions.
Obviously, the county is a long way off from actually seeing the shopping center constructed, and there are a lot of steps in between now and a ground-breaking. I do find it interesting, however, that the county is showing a willingness to consider such an idea. The land in question is in an area that is slated to see much more economic development in the near future. Time will tell if the idea of a pedestrian shopping center in Fluvanna is one whose time has come.
[tags] real estate, realtor, fluvanna, virginia, development [/tags]
Could the Charlottesville Market be Hurt by Weak ARMs?
May 4, 2007 | 2 Comments
The C-Ville Weekly interviewed me recently about adjustable-rate mortgages (ARMs) and the effect they may have on foreclosure rates in the Charlottesville area and the area market overall. The article ran in this week’s edition. Read the C-Ville article and let me know what you think.
As with most journalistic endeavors, they asked a lot of questions but only have the space to print some of the answers. I thought the article was good, but let me expand on my thoughts a little bit for you. . .
Foreclosure rates have been rising in many areas of the country. In some areas, the rise in foreclosures has been staggering. There is little doubt that failed ARMs are contributing to this increase. To say that failed ARMs are solely responsible isn’t quite so easy, however. The problem is not ARMs themselves, but high-risk ARMs obtained by high-risk borrowers.
The rise, and current fall, of the sub-prime mortgage industry has been well-documented as of late. Sub-prime borrowers are people who have less than average credit histories, or show some other signs of being high-risk borrowers. ARMs are by their very nature, risky loans. At the very least, they carry more risk for the borrower than the “traditional” fixed-rate loan. When you combine high-risk borrowers with high-risk loans, the potential for failure goes way up. This exact scenario is being realized all over the country. Banks are getting burned by giving high-risk loans to high-risk borrowers. The result is an increase in the foreclosure rates.
It is difficult to track exactly how many of the foreclosures are the result of failed ARMs. It is also difficult to track exactly how many of the foreclosures are on sub-prime loans. To think that the rise in sub-prime lending has nothing to do with the rise in foreclosures is coincidental is wishful thinking, at best. My guess is that when all the dust settles a few years from now, lenders will look back on the last few years and wish they had not engaged in so many high-risk loans to high-risk borrowers. The only question that remains is what effect the foreclosures will have on real estate markets. Of course, real estate is local, so some areas will be hit harder than others.
As far as the Charlottesville area market is concerned, I don’t think that the impact is going to be tremendous. We may see a slight trend upward in foreclosures, but I don’t think it will be drastic if it does occur. Our area is very economically stable, so the risk of foreclosures due to job losses is minimal. As far as I can tell from talking to area lenders, we did not experience as big an increase in sub-prime lending as other, larger markets. It is obviously hard to predict, but I don’t think that the Charlottesville market is going to collapse due to foreclosed ARMs.
If you are one of the people who does have an ARM, read the article, and you might do well to take my advice as well. Be prepared. Know what you are getting into, and know how you can get out if you need to. ARMs aren’t inherently dangerous or bad, but they do require a bit more planning and attention from borrowers. In fact, when handled correctly, ARMs can be of tremendous benefit to borrowers.
[tags] real estate, realtor, charlottesville, virginia, foreclosure rates, ARM, adjustable rate mortgage [/tags]
1 Down, 3 To Go
May 3, 2007 | 2 Comments
I received an email from CCIM informing me that I passed my CI 101 test. I obtained a 92% on the final test. Not bad, I’ll take it. Now I need to plan and prepare for CI 102, and continue my journey to the dark side.
Zebra Returns from Roaming the Desert
May 3, 2007 | Leave a Comment
In case you have been wondering why there hasn’t been a lot of activity on the blog for the last week, it was due to the fact that I was spending time in the Arizona desert visiting my Grandma. She lives in Lake Havasu City, AZ. It was interesting, as it was my first trip to the western U.S., and my first visit to the desert. It was especially good to see my Grandma, since I had not seen her in almost 10 years, and I had never had the chance to visit her at her home in Arizona. Perhaps I shall share some of my experiences in future posts.
Now that my desert roaming is over, time to get back to blogging, among other things. . .
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
