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Real Estate Market Update for October 2018

Sellers: don’t price with the expectation of an increasing market

Recently, the market has mellowed as buyers retract. Home sales have continued to decrease for over 5 months as a result, leaving many real estate listings overpriced.

Buyers don’t see the same value as sellers these days which is causing properties to sit for longer, showing longer days on market in the MLS. Sellers contend that they “don’t have to sell,” thinking their perseverance will eventually get them what they perceive they deserve. This is because sellers think the market is stronger than it actually is and that it is still on an upswing which it isn’t.

If a home is priced well (without any wiggle room) and is popular with buyers, offers will come within 30 days. To make your home popular with buyers, simply price it using good sense as if no negotiations were necessary. In other words, price it at your “happy walk-number.”

Selling a home for the highest price relies on a seller being willing to sell at a price that inspires buyers to buy. We often hear sellers say, “I am not going to give my home away.” The translation of that to any real estate agent means, “I am not willing to sell my house for true market value because I want more.”

The reality is that real estate transactions happen when a buyer and seller agree on a price that both can live with. Neither Zestimates nor listing agents create value but an effective listing agent will prove value before taking an offer to contract. In order to attract buyers, one should start with a relevant listing price. The key to knowing whether you are priced relevantly is that you will not just get showings, you will get offers! To get offers flowing, the property’s price must be appealing to all suitable buyers. If more than one buyer recognizes value, then multiple offers can result, and a skilled real estate negotiator will locate the best buyer, meaning the one willing to pay the highest price—possibly above the list price. This process is called proving value.

However, I have recently observed that sellers are too reluctant to adjust their perception of the changing market dynamic. They believe that a strong second quarter GDP at 4.1% equates to eventual higher real estate prices. Unfortunately, the truth is that the market is fully-baked and with the exception of specialized bubble-protected areas, the prices are not expected to rise. All markets anticipate trends and prices shift as a result of anticipation. We are going on the ninth year of this bull market which has set a record. It has reached its peak and as everyone knows, what goes up must come down.

The future for home prices is not a bright one. What we see now is a turnaround in the 7-year seller’s market. Conversely, on the horizon we see rising interest rates (bad for buyers), reduced real estate inventory (bad for sellers), and record deficits, loan tightening, inflation and an imminent recession—likely within a year (bad for everyone).

Adding to the issue, websites like Zillow and Redfin may be falsely inflating property prices by using overly aggressive price algorithms. Some analysts believe that doing so artificially inflates home values. This happens because the algorithms track property listing views and “shares” from the site and then give weight to those data points. The more views and shares a home has, the more their forecasting pricing tool increases the “estimated value.” This is dangerous and could potentially add to a bubble effect since interest in a property does not always directly correlate to offers or a sale.

If you plan to sell your home, do not wait for the economy to boost your property’s value since that will not be happening! List it now, price it right and save some commissions in the meantime by choosing GetMoreOffers.com. Our Platinum PRO plan offers sellers full service with expert contract representation for a low flat fee.

https://www.getmoreoffers.com/platinum.asp




2017 Real Estate Year in Review and 2018 Forecast

GMO 2017 Review

A year for the records for everything but real estate. 2017 was pretty much in slow motion. New listings were few and buyers were picky to boot. I truly knew what 2017 was going to be like from the slow election-dominated news of late 2016. 2016 finished weak and there was absolutely not a single sign that 2017 would be anything but a repeat of 2016 with a bad attitude. I literally said in early January of 2017 that we had a bunch of work ahead of us and no real market gains. I was 100% correct! So what we did was to ignore the dogma of 2017 and focus on our many unique real estate brands and our new start-ups.

Knowing this, we forged forward and focused our resources on new products and getting ready for 2018. At GetMoreOffers, we made the best of it adding a few new key people to our already professional staff adding a highly talented digital marketing professional and laid the ground work for GetMoreOffers Generation II which we expect to be rolled out late 2018.

We also have decided to offer a free flat fee MLS listing in the Florida market. This new program should be released by February 2018 replacing the MLS Express plan.

Going back to real estate, the Florida market was mixed with some small gains in some cities and loses in others, like Miami. It was a tug-of-war between buyers and sellers with buyers ending up with a stronger position. It was all about price. Colorado remained super-strong.

GMO 2018 Real Estate Forecast

The future is bright for general real estate in 2018. GetMoreOffers is going to help sellers get their property listed faster and cheaper than ever before. Getmoreoffers.com is well-known all over Florida as the most reliable flat fee MLS listing service and now we will continue to forge the discount real estate market.  Stay tuned for our next plan to be released in February.

Expect a brisk pace to real estate in 2018 as compared with the snail-like malaise that dominated 2017. A high consumer confidence in combination with aggressive lending will be the main driving forces for 2018. I see no political road blocks but a few bumps along the way to a more positive market tone and direction. The labor market should continue to tighten and drive more job transfers. This all spells out a clear path to more listings hitting the market. I believe looking back at 2018 we will say it was a year dominated by making a move now for my family and not waiting.




Real Estate Market Update – 2 Quarter 2017

Greetings All,

Let’s get right to the real estate market update and what is driving sales. I also want to talk about over pricing, multiple offer pricing and relevant pricing.  Just as you have likely noticed the quietness of the market, I am quite shocked at the business climate the past 45 days. I am struggling with where we are right now nationally as well as Florida. I know Miami is on its heels after years of strength. Naples has been slower for about a year. Jacksonville greater seems to be the same as Orlando and Tampa Bay which is steady.

Interest rates are likely done moving up after the feds ¼ point raise. Mortgage rates are falling as the short term rates are rising. My prediction is a very weak GDP for the 2nd, 3rd and 4th quarter. This could result in real estate sales prices becoming weaker through the end of the year.

The weakness in May-June speaks volumes because May and June are typically the beginning for the June-July selling season as parents jockey for homes before the start of the new school year. As of right now (June 19, 2017), I see a passive and lethargic real estate market. We do occasionally see a lull occur in the middle of summer with school letting out and vacations beginning. This could be a factor.

As I have spoken about many times in my past quarterly reports, Americans are creatures of habit and without any doubt, crave safety and certainly about their future. They expect and literally demand certainty from the US government and leadership. If they lack certainty, they clam up and put off a decision until they feel safer and on better footing. That being said, the current political environment has cast doubt among many. I believe we are stuck with an uncertain political climate until the public gets comfortable and starts “making moves” again both figuratively and literally.

My suggestion: if you are selling a home currently with us or plan to shortly, price that home with no wiggle room. Homes are selling, but only the ones that are either in a hot neighborhood or are priced to attract buyers. There are three ways to price a property: Multiple Offer Pricing, Relevant Pricing and Over Pricing (or Wiggle-room pricing). Let’s explore each and the pros and cons with an in depth exploration…

Over Pricing

Most agents fall back on the Over Pricing strategy. They add wiggle room and list with the intention of negotiating down to a “meet-in-the-middle” number. When sellers do this, they typically end up lowering the price to get an offer (and thus missing opportunities during the time they were overpriced), never get an offer, or end up selling into a vacuum which means selling to one buyer well-below list price.

Multiple Offer Pricing

Multiple Offer Pricing is the most aggressive method whereby a seller prices the home slightly under or right at market valuation. Buyers love these properties because seldom do sellers or listing agents use this strategy. The reason listing agents don’t is because they typically over price homes which goes along with their tendency to overpromise service and performance. They do this either to get the listing and/or because they believe they need to over price to leave themselves a cushion for the “meet-in-the-middle” method of negotiating (a technique I do not agree with). They also may not understand or feel comfortable with managing the multiple offers that may come from Multiple Offer Pricing.

Another reason why sellers don’t use Multiple Offer Pricing is because many sellers believe they must accept a full-price offer. This is a misconception. In our case, our sellers ask us what we think and we know the seller wants honesty and guidance. We explain different pricing strategies and we know how to manage them. Multiple Offer Pricing is powerful because buyers assume they can buy at the list price or slightly below the list price. They innately feel a sense of urgency because they recognize the value and realize others will too…and the offers flow. Our strategy when using Multiple Offer Pricing is to be very patient and try not take an offer for the first 8 days of a listing to ensure we have seen most of the offers. If we see additional showings in the near future we wait on those showings to be completed before taking an offer. We often drive the final price well above the list price. By using this strategy, we get to pick the ideal buyer with the ideal terms.

Relevant Pricing

Relevant Pricing is our go-to pricing method and is based on setting the value we think is accurate for the home (based on CMA data, seller’s opinion of value and other relevant market analysis). Setting a relevant market price is an artful process that takes into account scientific data but at the end of the day, only the actual market can tell us what the value really is. Keep in mind, this is not a static concept and value can be influenced by fluctuating factors such as timing, current demand and other competition.

Using this method, we set a list price no higher than what we believe a good, well-suited buyer will pay. Our intention is to receive a full-price offer. The reason why this pricing strategy is effective is because buyers make offers based on what I call “hopeful buying” (optimistic state that an offer could reasonably be accepted). Most buyers place offers with the intention of meeting the seller in the middle. If an offer is not a full-price offer at our “relevant list price” than it is a meet-in-the-middle. That being said, the lower the list price, the higher the hopefulness of buyers. Hopeful for what? Hopeful that they can get a deal at their “happy buy number” (amount they will be satisfied buying at). That hopeful “buy number” is a meet-in-the-middle offer.

multiple offer pricingThe technique of relevant/accurate pricing hinges on a seller (or the agent negotiator) being of the mindset that whether a buyer brings their offer up to the relevant list price or not does not matter. If a buyer walks, that’s fine. But, buyers never walk, they circle…meaning they are always thinking about raising their offer. All the pressure is on the buyer. My expression is, “we care about all buyers, never one buyer.” When the buyer knows the price is good, they are more likely to hang around and stay in the game.

Let’s consider a pricing example for all 3 types of pricing:

You have a seller who wishes to add wiggle room and lists a home for $480,000 with a “walk number” (amount they will accept) at $440,000 and a “happy walk number” (amount they will happily accept) of $450,000…In this scenario, the buyer’s hopeful buy number is $440,000. So that buyer would have to offer $400,000 to meet the $480,000 seller in the middle (a huge gap!) That offer is unrealistic and the buyer has no hope of getting the seller down that far. Therefore, no offer is coming! This is how Over Pricing can backfire.

Relevant Pricing may be $450,000 which in this case is the seller’s “happy walk number.” So, if the buyer wants a $440,000 deal they would offer $430,000 and meet in the middle at $440,000. That is both realistic and satisfies the “hopefulness” of the buyer.

Multiple Offer Pricing would be a $440,000 list price. All buyers from $410,000-$440,000 want to place an offer and a multiple offer situation may occur. When that happens, the best buyer wins out and so does the seller because the seller ends up with more options and possibly the leverage to bring a buyer up to the happy walk number.

News projects….

My new book about real estate should be out by September. The title is The Sand Box. It’s all about what’s wrong with the way the majority of listing agents do business and how to effectively negotiate.

 

As always, if you have any questions or concerns, feel free to contact us at 877-232-9695.