Don’t Let Yourself be Bought by a Listing Agent

"I've decided to sell my house and am interviewing several real estate agents in my area to see which one can sell my home for the most amount possible."

Everything in that statement sounds ok, right?

The beginning and middle parts of that statement are totally fine. In fact, the middle – "interviewing several real estate agents" – is excellent because you should always interview 2 or 3 agents before you make a decision on which agent to hire.

But the last part of that statement – "sell my home for the most amount possible" – is a bit troubling because it screams of the seller setting themselves up to be "bought".

Here's what I mean and how it works…

Let's say that two of the agents say your home is worth right around $350,000 and the comps (recent similar sales) support that number. But one of the agents says it's worth $375,000. The agent claims that they can sell your house "for more" because they or their marketing plan "are better". You believe and hire them because you want the most amount of money possible for your house.

That, folks, is what we in the industry call "buying a listing" – an agent claiming they can sell a home for more than what it's really worth in order to get the listing. If you used the highest promised sales price as a deciding factor on choosing an agent, then you may have just been bought.

Let's dig deeper…

If your property is worth right around $350,000 and the agent says it's worth $375,000, there are only two reasons why the agent would say that:

1. They have no clue about market values, market conditions or how to do their job
2. They really know what your home is worth, but lied to you in order to get your listing

Regardless of which one it is, do you want an agent that exhibits either of those qualities representing your best interests and your $350,000 asset?!

Even deeper…

Guess what happens when your property is overpriced? It just sits on the market while your neighbor's/competitor's homes sell. The longer your home sits on the market, the more of a bad stigma it gets and the less you get for it. (Goes back to the age-old buyer question, "It's been on the market for a long time – what's wrong with it?")

The market value of your property is what it is – we as agents/brokers can not control that. Some of the things agent and brokers can control and part of the value we bring to the transaction is,

• quality and depth of marketing in order to get the most number of ready, willing and able buyers noticing your property
• quality and experience in negotiating with buyers and buyer's agents
• quality and honest guidance - part of which includes pricing your property correctly

Focus on the value that an agent/broker can bring to the transaction, their level of skill and knowledge and whether you feel comfortable working with them. Don't let your pocket book, financial situation or greed cloud your judgement. If you follow this formula, you'll avoid a lot of stress, frustration, wasted time and lost money.

Happy St. Patrick’s Day!

 

Happy St. Patrick's Day! May we all be so lucky as this leprechaun and find a pot of gold!

Possibly the Best Craig’s List Reply of All Time

Here's the posting…

What am I doing wrong?

Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly
beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York .
I'm looking to get married to a guy who makes at least half a  million a year. I 
know how that sounds, but keep in mind that a million a year is  middle class in
New York City , so I don't think I'm overreaching at all.

Are there any guys who make 500K or more on this board? Any wives?  
Could you send me some tips? I dated a business man who makes average around  
200 – 250.   But that's where I seem to hit a roadblock. 250,000 won't get me to  
central park west. I know a woman in my yoga class who was married to an  
investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a  
great genius. So what is she doing right? How do I get to her level?

Here are my questions specifically:

- Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms

- What are you looking for in a mate? Be honest guys, you won't hurt my feelings

- Is there an age range I should be targeting (I'm 25)? 

- Why are some of the women living lavish lifestyles on the upper east side so
plain? I've seen really 'plain jane' boring types who have nothing to offer
married to incredibly wealthy guys. I've seen drop dead gorgeous girls in 
singles bars in the east village. What's the story there?

- Jobs I should look out for? Everyone knows – lawyer, investment banker,
doctor. How much do those guys really make? And where do they hang  
out? Where do the hedge fund guys hang out?

- How you decide marriage vs. just a girlfriend? I am looking for  MARRIAGE ONLY 

Please hold your insults – I'm putting myself out there in an  honest way. Most
beautiful women are superficial; at least I'm being up front about it. I
wouldn't be searching for these kind of guys if I wasn't able to match them – in 
looks, culture, sophistication, and keeping a nice home and hearth.

*  it's NOT ok to contact this poster with services or other commercial interests

PostingID: 432279810

And the reply…

Dear Pers-431649184:

I read your posting with great interest and have thought  meaningfully about your
dilemma. I offer the following analysis of your predicament. Firstly, I'm not 
wasting your time, I qualify as a guy who fits your bill; that is I make more
than $500K per year. That said here's how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy 
business deal. Here's why. Cutting through all the B.S., what you suggest is a
simple trade: you bring your looks to the party and I bring my  money. Fine,
simple. But here's the rub, your looks will fade and my money will likely 
continue into perpetuity…in fact, it is very likely that my income increases
but it is an absolute certainty that you won't be getting any more beautiful!
So, in economic terms you are a depreciating asset and I am an earning asset.

Not only are you a depreciating asset, your depreciation accelerates! Let me
explain, you're 25 now and will likely stay pretty hot for the next 5 years, but
less so each year. Then the fade begins in earnest. By 35 stick a fork in you! 
So in Wall Street terms, we would call you a trading position, not a buy and
hold…hence the rub…marriage. It doesn't make good business sense to "buy
you" (which is what you're asking) so I'd rather lease. In case you think I'm 
being cruel, I would say the following. If my money were to go away, so would
you, so when your beauty fades I need an out. It's as simple as that. So a deal
that makes sense is dating, not marriage. 

Separately, I was taught early in my career about efficient markets. So, I
wonder why a girl as "articulate, classy and spectacularly beautiful" as you has
been unable to find your sugar daddy. I find it hard to believe that if you are
as gorgeous as you say you are that the $500K hasn't found you, if  
not only for a tryout.

By the way, you could always find a way to make your own money and  
then we wouldn't need to have this difficult conversation. 
With all that said, I must say you're going about it the right way.  
Classic "pump and dump."

I hope this is helpful, and if you want to enter into some sort of  
lease, let me know.

Hat tip to Chris over at The Real Hook

Putting Loudoun’s Housing Market into Perspective

You've seen the latest Loudoun County housing supply and demand numbers and statistics, but without anything to comapare them to, it's hard to put the Loudoun County housing market into perspective. So that's what we're going to do right now…

To recap, Loudoun County has 3.8 months worth of supply on the market and sales were up almost 50 percent in February 2009 over February 2008.

Now let's take a look at some other counties/cities in Virginia…

Prince William County

• 5.22 months supply on the market
• Sales were up 34 percent in February 2009 over February 2008

Stafford County

• 7.38 months supply on the market
• Sales were up 33 percent in February 2009 versus February 2008

Spotsylvania County

• 10.23 months supply on the market
• Sales were up 24 percent in February 2009 versus February 2008

Fredericksburg City

• 13.08 months supply on the market
• Sales were down 8.3 percent in February 2009 versus February 2008

Orange County

• 16.65 months supply on the market
• Sales were down 18 percent in February 2009 versus February 2008

In addition, a recent article in the Wall Street Journal talks about how Northern Virginia's housing market - Loudoun, Fairfax, Arlington, Alexandria - is ahead of DC's and MD's housing market including when it comes to a housing recovery.

Imagine seeing homes sit on the market almost 2 to 4+ times as long as they are now and seeing demand (sales) and prices still decreasing rapidly?

Loudoun's housing market doesn't look too shabby when you put it into perspective, does it…

Thank you to Sarah Stelmok for the statistics on neighboring areas.

Northern Virginia Leads DC, MD in Housing Recovery

The Northern Virginia area is ahead of Maryland and Washington, DC when it comes to the housing market (including a bottom and an eventual housing recovery). This is according to an article in the Wall Street Journal by Thomas A. Lawler, founding member of Lawler Economic & Housing Consulting, LLC.

In the article, Mr. Lawler cites statistics that show that Northern Virginia's housing market hit a peak and started its downturn ahead of the rest of the DC metro area. 

He also states that the amount of depreciation in home values that Northern Virginia has seen is greater than the rest of the DC metro area. In fact, he says that DC and MD have a ways to go before dropping as much as Northern Virginia already has.

Mr. Lawler explains one of the reasons for the difference in local markets:

One reason why reported sales prices have declined more rapidly and sales have rebounded more sharply in the northern Virginia area is that the area has seen a much greater increase in distressed sales — in part because Virginia is a “non-judicial” foreclosure state while Maryland is a “judicial” foreclosure state. The typical timeline from when a borrower stops payment to when the home is actually foreclosed on is longer in Maryland than in Virginia. As a result, the Maryland suburbs have a much larger overhang of loans that are currently in some stage of foreclosure than is the case in Northern Virginia…

Just goes to show that you can't even look at a regional area as a whole anymore – you need to look closely at the "hyper-local" real estate market you're in. What the mass media says about the U.S. housing market as a whole or even a large geographical area such the DC metro area doesn't always apply to you and your specific area.

P.S. Yes, I know…Mr. Lawler was senior VP for Fannie Mae through 2006 which is not necessarily a good thing for the resume right about now…but the statistics and his points are valid.

Related Articles

"Where are all the homes for buyers to choose from?!"

"Loudoun is a seller's market? Are you crazy?!"

It’s Official – Metro Rail is Coming to Loudoun County

That's right…it's official. The Federal Government gave a formal commitment yesterday to bring the Silver Line of the Metro Rail out to Loudoun County.

Phase One – Tyson's Corner – should be completed by 2013. Phase Two – Reston/Dulles/Ashburn – should be completed by 2015. Total cost? $5.2 billion.

Here's a map showing the stops along the Silver Line (click on picture to enlarge):

 

Though the end result of having the Silver Line come out to Ashburn will be great for the area, there will be some growing pains along the way…

…those who live, work or drive near the corridor also must focus on another reality: six years of debilitating construction that will further slow Northern Virginia's busiest thoroughfares. Although some light construction began months ago, the coming weeks and months will bring an entirely new level of din, dust and general havoc to McLean, Vienna, Tysons Corner and beyond.

Though those growing pains will be less than fun, I feel that they're a necessary evil to bring the rail and it's future benefits including less congestion, more businesses, jobs and additional tax revenue to the area.

Now that the the Dulles Metro Rail/Silver Line is official, I wonder if the Moorefield Station project will start moving forward…

The New Stimulus Bill Explained

Here is one explanation of the new stimulus bill sent to me by a friend…

Shortly after class, an economics student approaches his economics professor and says,
"I don't understand this stimulus bill. Can you explain it to me?"
 
The professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.
 
At the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.
 
They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.
 
The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told.
 
The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.
 
The confused student asked, "Excuse me, but why are we doing this?"
 
The professor matter-of-factly stated that he was trying to make the shallow end much deeper.
 
The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough.
 
However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could
have been a truly productive action!"
 
The professor put down his bucket and replied with a smile, "Congratulations. You now understand the stimulus bill."

Hat tip to Emily

Where Are All The Homes For Buyers To Choose From?!

A few weeks ago, I wrote a post entitled, “Loudoun is a seller’s market? Are you crazy?!” in which I discussed the current market conditions in Loudoun County - low inventory and high buyer demand – and how the amount of supply versus demand technically made it a seller’s market.

What’s happened since then? Check out February’s supply and demand figures to see for yourself:

• February 2009 had an almost 50% increase in buyer demand as compared to February 2008
• February 2009 saw a 33% decrease in new listings coming on the market as compared to February 2008

To put it in further perspective for you, here’s an email I received a few days ago from a buyer I’m currently working with…

How cyclical is inventory from a month to month basis? I know Spring tends to be a bit busier, but even within the past 6 weeks I’ve noticed the inventory of homes that fall within our sphere of interest dwindling quite a bit.  6 weeks ago there might have been 10 homes, now its 1-3.  Is that sort of a normal ebb and flow or is it more indicative of a whole bunch of people like me all jumping back in the pool at once?

This buyer is not the only one feeling this way. I’ve had several other buyers experss the same concern and frustration over the past two months.

Why are there no homes for buyers to choose from?

People were holding off on buying for most of the 4th quarter mainly due to the bad financial and economic news, the election, holidays, etc. Once things settled down and news of the winner of the election, the stimulus plan was announced, etc., people started jumping off the fence. In addition, as market values dropped, fewer homeowners could afford to sell. Many homeowners are stuck in their homes until they come up with the cash to sell or refinance or until some mortgage/refi help comes their way via the governement/stimulus bill.

Will there be more homes to choose from over the next few months?

Personally, I think the next few months will be the busiest for buyers and buyer’s agents since the previous crazy market of 2003 to 2005. Currently, buyer demand is increasing at a higher rate than new listings coming on the market. If the rate of inventory doesn’t increase to keep up with buyer demand, it’ll only get tougher for buyers because they’ll have even fewer homes to choose from.

 

Support Local Artists Such As Marie Straw at Reston Art Gallery and Studios Open House

Come check out and support local artists such as Marie Straw at the Reston Art Gallery and Studios (RAGS) open house this Sunday, March 8, 2009 from 12pm to 5pm.

The open house will feature the work of Marie Straw and other local artists and will have your typical art show munchies – wine, cheese, pastries, cookies, sodas, water and of course, wine.

The gallery is located at Lake Anne Plaza – 11400 Washington Plaza in Reston, VA. Lake Anne Plaza offers plenty of other things to see/do while there as well so you can enjoy other things while there, not just the art open house.

Hope to see you there!

Fannie Mae Gets Friendlier With Real Estate Investors

Fannie Mae's currently policy only allows real estate investors to own up to four properties backed by Fannie Mae. This policy has limited many investors and hindered the absorption of real estate inventory throughout the country.

But that's changing… Effective today, March 1, 2009, investors will be able to finance up to ten properties through Fannie Mae. Yes, that's great news for investors! But make sure you read the fine print because there are some strict new guidelines in place (click here for a complete list of the new policies).

Scott Rogers, a Realtor in the Shenandoah Valley area, does a good job of summarizing the new guidelines in his post at VAR buzz…

• The highest loan-to-value ratio will be 70%.
• The borrower must have a minimum credit score of 720.
• No bankruptcy/foreclosure during the past 7 years.
• No mortgage delinquencies (30+ days) in the past 12 months.
• Rental income on proposed and current properties must be documented.
• Reserves must be shown for the proposed and current properties.

Hopefully, this will help out investors and help take inventory off the market (which will help everyone).

SEARCH FOR BANK-OWNED PROPERTIES IN LOUDOUN

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