Can Low Commission Hurt Your Chances of Selling Your Home?

Steve, a home seller in Williamsburg, VA posted the following question on Trulia, “Can low commission hurt my sale?” It’s obviously a hot topic because there have been 506 responses (and counting) since June 4.

Here’s my answer:

No agent/broker should ever “steer” or “sort” listings by commission amount. That harms the buyer and is therefore unethical without the expressed permission from the buyer client (in writing).

Buyer’s agents who take it upon themselves to shy away from listings that are offering less than what is written into their Buyer’s Agency Agreement with their buyer clients,

1) don’t have a Buyer’s Agency Agreement signed in the first place

and/or

2) haven’t spoken in detail with their buyer clients as to what happens when a seller/listing broker is offering less than what is agreed upon in the Buyer’s Agency Agreement.

There are plenty of ways to legally and ethically negotiate a contract to cover the difference in commission between what is being offered by the seller/listing broker and what is in the Buyer’s Agency Agreement prior to contract ratification (with the buyer via seller subsidy). Unfortunately, not many agents know how.

And if you’re wondering why many consumers don’t like Realtors, answers such as, ” Many people look though MLS email updates. Some agents secretly filter their searches so that the automated service won’t send their clients listings unless they are 3% listings. “ is one reason why. Those agents should all have their licenses revoked immediately.

Since I spoke a bit about what a Buyer’s Agent should not do, I’d also like to talk about what a Buyer’s Agent should do…

A Buyer’s Agent should be looking through every property on the market for a property that meets their buyer client’s needs regardless of the commission amount being offered by the seller. This includes properties that are “For Sale By Owner” (FSBO).

I have been asked by my buyer clients many times if they could look at FSBO properties and if I could represent them on the purchase of a FSBO property. The answer is “yes.” There plenty of ways to deal with the issue of commission and they’re all pretty simple, straight-forward and easy if you ask me.

So what’s  your response to Steve’s question, “Can low commission hurt my sale?”

How Observant Are You?

Watch this video to see just how observant you are. This is actually a British safety video to raise awareness for bicyclists (click here if you don’t see the video).

Hat tip to Dan for forwarding this on to me.

Understanding Closing and Settlement Costs

If you are buying or selling a house and are curious as to what closing and settlement costs are for, check out this short video entitled, “Understanding Closing and Settlement Costs” (click here if you can’t see the video)…

Hat tip to Midori Miller

Loudoun Community Spotlight: Pulte Homes, Windermere in Ashburn

This Loudoun County Community Spotlight falls on the Pulte Homes Windermere community in Ashburn, VA. The Windermere community is located near the corner of Claiborne Parkway and Croson Lane immediately next to the Broadlands community.

Windermere is a mix of large town homes and medium sized single family homes. A total of 91 town homes and 83 single family homes will make up the community. Pulte has built or sold about 35 percent of the total homes so far and they’re expecting to sell the remainder of the community within the next 18 months. That puts completion of the entire community at about 24 months.

In speaking with the Pulte sales staff, I found out that they’ve already sold 9 homes this month (that’s a lot for new construction especially in a community of only 174 homes). I’m sometimes skeptical at how busy they say they are, but I’m going to believe them on this one – there at the same time as I was today were three Buyer’s Agents with their clients, two other sets of buyers without an agent and one set of buyers about to write a contract. And that was at 3:30pm on a Wednesday.

Base Prices/Models

Prices on the town homes start at $380K for the Westley II interior model (2296 – 2735 sq ft) and $390K for the Tyler exterior model (2411 – 2857 sq ft).

Prices on the single family homes start at $524K for the Kenley model (2696 sq ft on upper two levels); $533K for the Wynnewood model (2770 sq ft on upper two levels); and $542K for the Jamestown model (2974 sq ft on upper two levels).

Delivery Dates

Delivery dates vary, but count on about 4 to 6 months on the town homes and about 6 months on the single family homes. There are some “spec” homes available for earlier delivery including a Tyler model in the low $400K’s with a September delivery date.

Incentives

Pulte is offering some incentives as far as closing costs if you use their preferred lender. As for wiggle room in the base prices and/or options, there may or may not be any – that’s a secret I’ll only share with my clients (it’s only fair).

Amenities/HOA fees

Two things that popped out at me were the lack of amenities and not-much-return HOA fees. There are no amenities in the community yet, the HOA fee is $86 for single family homes and $100 for town homes. Considering what other communities within Ashburn and Loudoun County charge for HOA fees and the amenities they offer, Windermere has high HOA fees with little offered to home owners in return. In case you’re wondering…neither I (nor the sale rep from Pulte) could figure out why the town home fees are higher than the single family home fees.

Photos/Video Tour

There should be a slideshow of community photos I took at the top of this post (click here if you don’t see it). And don’t forget to check out my two-part video tour of the Windermere Pulte Homes Westley II and Tyler model town homes – part one and part two.

Visiting the new homes sales center in person

Make sure you have your Buyer’s Agent with you when you visit a new home/builder sales center. Click here to find out why.

“On The Streets” of the Loudoun County Housing Market

You read the news and see the statistics. You hear what you’re neighbors and friends are saying. But what is really happening “on the streets” of the Loudoun County housing market?

Here you go…

Buyers looking to get a great deal on a property are seeing well priced properties sell within weeks if not days of coming on the market. Many very well priced properties are seeing multiple offers and bidding wars – 2, 5 even 10+ offers. Many buyers are bidding on 2, 3 even 5 properties before finally having the winning offer and buying a house.

Sellers who price and market their property correctly are seeing lots of buyers coming through their property almost immediately after coming on the market. An offer within the first few weeks on the market is common for properly priced properties. On the other hand, no activity and no offers is the norm for overpriced properties. In a nutshell, Value is King.

We’re also seeing an up-tick in median prices in some areas of Loudoun County (as well as some areas of Fairfax County) – though this does not necessarily reflect an increase in any one specific property’s value. Take a look at the latest statistics regarding median prices and inventory levels in different parts of Loudoun County to see for yourself.

The local market is such because inventory levels (number of homes on the market) have decreased an average of 50 percent since 2007 and an average of 20 percent since this time last year. At the same time, buyer demand (aka number of homes being sold) has increased by an average of 50 percent thanks to historically low interest rates and the $8,000 first-time home buyer credit. This translates to more buyers trying to buy the same type of property, but there are less homes to choose from. But even though more buyers are fighting over fewer properties, buyers are not being suckered into or getting frustrated to the point of overpaying for a property.

Note: Despite the majority of the Loudoun housing market showing signs of stabilization, the $1M+ home sector is not fairing as well. Inventory is stagnant as is buyer demand. This is bad for sellers of $1M+ properties, but good for home buyers in that price point.

Another trend we’re seeing is a substantial decrease in foreclosure/bank-owned inventory on the market (thanks to the foreclosure moratoriums of late 2008/early 2009) and a significant increase in short-sale inventory. This has led to increased frustration on the part of buyers and agents some of whom are not familiar with the nuances of short-sale transactions and don’t know how to properly navigate through such a transaction. Getting a response from the bank(s) on a short-sale can take as little as 45 days and as long as 6 months with the average being about 90 days (more on this in a future post over at LoudounForeclosures.com).

Up until this year, many real estate investors were sitting on the sidelines as median prices continued their downward trend and good investment opportunities were rare. But that has changed. We’re seeing investors getting back into the market buying up distressed properties, doing rehab on them and then either flipping them for a 10 to 30 percent profit or renting them out as part of their long-term investment plan. Investors are especially prevelant in parts of Sterling and Leesburg.

And that folks, is the reality of the Loudoun (and Northern Virginia) housing market.

If you would like me to go into more detail or need information about a specific town, neighborhood or subdivision in Loudoun (or north/east Fairfax County), feel free to contact me.

The Evolution of Dance

The Evolution of Dance. As Jeremy Hart over at NRVLiving says, “always a crowd favorite” (click here if you can’t see the video)…

Sterling Housing Market Update

Here’s a look at what’s going on with the Sterling housing market (all zip codes)…

Sterling Median Price

The median price has been falling in Sterling since the market turned until about March of this year. Over the past rew months, the median price has spiked significantly (by almost $100,000).

Sterling Inventory

Inventory of single family and town homes in Sterling has dropped by 60 percent since 2007 and 56 percent since this time last year. The condo inventory in Sterling has dropped by 45 percent since this time last year. This is most significant decrease of inventory out of any large town in Loudoun County.

Sterling Housing Market Overview

The huge drop in inventory throughout Sterling along with a huge increase in buyer demand has lead to a huge shift in the housing market in Sterling. Sterling has some of the lowest price points in Loudoun and lots of foreclosure and short-sale activity making it extremely attractive to first-time home buyers and investors. We’re even seeing areas of Sterling with slight to substantial recent price appreciation.

Homes that are priced well are getting a lot of traffic and a purchase offer within 1 to 2 weeks on the market. Homes priced slightly below (or way below as is the case with many bank-owned and short-sale properties) are getting multiple offers (5, 10, 15+ offers) and are bidding up over asking price within days, if not hours of hitting the market.

We’re seeing slight signs of the inventory leveling out. Unless it levels out, we’ll most likely see median prices continue their upward trend and lots of multiple offers on properties well into the summer.

South Riding, 20152 Housing Market Update

Here’s a look at what’s going on with the South Riding/20152 zip code housing market…

South Riding/20152 Zip Code Median Price

The median price for single family and town homes in South Riding/20152 zip code is showing a slight uptick after having dropped over 70 percent over the last 2.5 years. We’ll need to see some more evidence of median prices going sideways or up to call it a trend.

Condo are in the same boat as single family and town homes. After having dropped over 60 percent over the last 2.5 years, they showing slight signs of stabilizing. We’ll have to wait and see what median prices do this summer and fall before coming to a more firm conclusion.

South Riding/20152 Inventory

Inventory of single family and town homes spiked like crazy in the 2nd quarter of 2007 and South Riding/20152 zip code has been working it off ever since. Inventory of single family and town homes is down over 40 percent from July 2007 and down almost 20 percent from this time last year.

Condo inventory spiked way up, then went pretty much sideways for a year and is now down almost 40 percent from this time last year. It’s gone up slightly over the past two months, but appears to be going sideways at the moment.

South Riding/20152 Housing Market Overview

The South Riding and 20152 zip code housing market is a bit more volatile than other markets in Loudoun County because it’ has less total properties within its’ boundaries with everything from condos to large McMansions. The lower price points are selling faster and at a higher rate.

Much like the rest of Loudoun County and Northern Virginia in general, if the property is priced well, it will sell in less than 30 days. If it’s not priced correctly, it’ll just sit on the market collecting dust.

Leesburg Housing Market Update

Here’s a look at what’s going on with the Leesburg housing market (20175 and 20176 zip codes)…

Leesburg Median Price

The median price of single family and town homes in Leesburg has been bouncing up and down between just over $600,000 and $640,000 for over 2 years. Over the past few months, we’ve seen it go from about $608,000 to about $625,000.

On the other hand, the median price of condos in Leesburg has steadily dropped over 60 percent since the spring of 2007. The good news is that the median price hit about $245,000 at the very end of 2008 and has been going sideways, if not slightly up since then.

Leesburg Inventory

Single family and town home inventory in Leesburg was cut in half from the summer of 2007 to the spring of this year. We’ve seen an increase in single family and town home inventory over the past three months, but it looks like the rate of new inventory coming on the market may be slowing down as the summer months approach.

Condo inventory in Leesburg is down over 40 percent from this time last year. It looks like it showing signs of a potential plateau, but we’ll have to wait and see to know for sure.

Leesburg Housing Market Overview

It’s hard to generalize the Leesburg housing market because even two neighboring communities within the same zip code can have completely different housing market conditions. One example is River Creek versus Potomac Station. Another is Beacon Hill versus Shenstone Farm. Yet another is Tavistock Farm versus Stratford Landing.

Generally speaking, the Leesburg housing market is stabilizing a bit thanks to lower inventory and more buyer demand. But how much depends on the specific community/subdivision within Leesburg and price point. Some properties, such as town homes and entry-level single family homes are seeing multiple offers left and right while the $800K- $1M+ properties in communities such as River Creek, Lansdowne, Shenstone Farm and Beacon Hill are seeing less overall activity due to a much smaller buyer pool at that price point.

Median prices will probably continue their sideways trend while inventory levels level out or possibly drop a bit during the summer months depending on the type of property and price point.

Ashburn Housing Market Update

Here’s a look at what’s going on with the Ashburn housing market (20147 and 20148 zip codes)…

Ashburn Median Price

After it’s most recent drop from October 2008 through March 2009, the median price for single family and town homes in Ashburn has ticked up over the past two months.

Condos in Ashburn aren’t showing an uptick in median price, but they have plateaued.

Ashburn Inventory

The number of homes for sale in Ashburn continued it’s downward trend. We saw an uptick during the “spring market”, but inventory is either plateauing or on the way down once again. A downward trend should continue through the summer months because many sellers think that the summer is not a good time to put their homes on the market.

Ashburn Housing Market Overview

As inventory diminishes and buyer demand increases (thanks to lower prices, historically low rates, $8K tax credit, etc), we’re seeing the market stabilize a bit. We’re even seeing pockets of Ashburn with slight price appreciation due such low inventory and increased buyer demand.

Homes that are priced well are getting a lot of foot traffic and a purchase offer within 1 to 3 weeks on the market. Homes priced slightly below (or way below as is the case with many bank-owned and short-sale properties) are getting multiple offers and are bidding up over asking price within days of hitting the market.

Unless the inventory or rates increase (or some huge economic news rattles the entire nation), we’ll see these trends and this type of market continue through at least the summer.

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