Andrew Wetzel's Musings

October 22, 2019

Bright MLS Quarter 3, 2019 Housing Report

Bright MLS has released their Residential Market Statistics for single family homes for the third quarter of 2019.  In today’s podcast I will discuss YTD results through September for Delaware County Pennsylvania.  If you would like information about this or any other County in the Delaware Valley, please contact me.

The report compares the current results to one-year ago, same time period.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market so, whether you may be looking to buy or sell, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market.  Deciding whether it is the right time to sell or buy is a personal decision typically involving a number of variables.  I can provide the knowledge and insight to help you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data is stale.  While a sale may be settled or closed today, the real question is when was the offer negotiated?  Typically sales take 45 to 60 days to close so the market today may be different.  Up-to-date information is important!

As far as the statistics, 5312 properties were settled through September with an average “selling price” of $293,033 and a “median” selling price, meaning that half of the sales were higher and half were lower, of $230,000 compared to 5468 settled last year at an average price of $272,624 and a median price of $210,000.  The year-to-year change in average selling price is up 7.5% while the number settled is down 2.9%.  The DOM or “days on the market” for settled properties was 42 days compared to 51 one year ago.  The “inventory accumulation” ended at 1.8 which suggests a seller’s market overall with 3 months being generally considered a “balanced market”.  The underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

We can debate whether averages or medians are more important but what really matters is how your property or one that interests you compares to those appraised and settled with similar location, features and condition.  Appraisers rely on nearby settled properties so average or median pricing loses some validity but may provide insight for both the short term and the long term.

What about the properties that did not sell?  Many came off the market and remain unavailable.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their market and/ or they were poorly marketed, meaning that some buyers may not have even known that a house was available to purchase.  Of course this may well depend on the ratio of buyer and sellers so there is more to this than raw statistics.  If a market has a lot of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market.  While sellers may be open to negotiating their price, many never get the chance.  I will happy to discuss specifics with you.

The overall economy is doing well with some adjustments here and there.  Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are opportunities out there.  As with the stock market, it is very difficult to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  I am a phone call or email away and getting started is easy once you take action.

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!


New Bright MLS Listing Policy (October 2019)

This week Bright MLS announced a new policy regarding property listings that are “advertised”.  The policy begins with the following language:

“The MLS system encourages competition in the marketplace while also ensuring cooperation and compensation among real estate professionals.  Full participation in the MLS ensures the seller has the largest possible marketplace, and the buyer has the widest possible selection.  This policy will help provide transparency and access to information in the real estate marketplace”. 

The reaction on Facebook was as swift and voluminous as I have ever seen in my years of engaging in social media.  I called the response “nuclear”.  While many, including myself, agree with the thought behind the policy change, a majority found it objectionable, questioning the ability of the MLS to interfere with how they conduct their business.  Let me add some history and context to the situation.

Bright was formed in 2018 by the merger of multiple MLS systems.  It covers several mid-Atlantic states and serves almost 100,000 Real Estate licensees.  Before Bright, our local MLS was called Trend and it served about 30,000 agents.  Until this new policy, there was a “3-day rule” that stated that any change in the status of any property had to be reported to MLS membership within 3 business days.  It excluded weekends and national holidays and the date the change was made counted as the first day.  The changes included new listings taken, price reductions and status changes.  The rationale was transparency.  The rule still applies with the one exception covered by the new policy.

For sellers, it encouraged full-market exposure for their properties which should result in more competition and the sellers attaining the highest value.  For buyers, it meant they could access all property listings that matched what they were looking for so that they could make an offer knowing they had considered of all their options.  For agents and their clients it meant having the ability to evaluate the market for comparing and attaching values to properties offered for sale.  All that being said, allowing 3 business days created problems even when agents complied with the rule.  What could happen in 3 business days?

New listings could be shared with segments of the market before receiving full exposure.  Sellers might not get the benefit of full competition.  Buyers might put a house under contract without seeing all of the possibilities.  Agents might show houses that were already “under contract”.  Will any rule change any of these?  Probably not but trying to minimize the problems we have dealt with might add to market efficiency and effectiveness and enhance our image as professionals.  One can only hope!

In my various roles in addition to listing and selling houses, I have heard many complaints over the years from agents unable to get information about houses not yet uploaded to the MLS.  Their buyers saw “For Sale” signs and some information online and wondered why their agent was unable to provide additional information they needed to make an informed decision about property.  Even if the information is in the MLS, some listing agents are the point of contact for scheduling showing appointments and some do not respond to inquiries in a timely manner but that is a separate issue.  What good can come from keeping property information secret?  The general presumption is often that these listing agents do not want competition and that they are trying to sell their own listings.  That may or may not be fair but their actions create those feelings and those perceptions taint all agents.

Here is the new policy:   Within one business day of marketing a property to the public, the Participant must submit the listing to Bright MLS for cooperation with other Bright MLS Participants.”

Let’s break this down.  “One business day” apparently means 24 business hours.  I would prefer that it really meant a “business day” as that is easier to monitor.  “Marketing” should be easy to define but it apparently isn’t.  For example, putting up a “For Sale” sign or uploading property information to the Internet is considered marketing but, as was explained in a Bright MLS video intended to clarify the new policy, “marketing” in emails seems to be correlated with how many people are included in the communication which makes this awkward to say the least.  I like definitive rules and regulations.  Regardless, I believe the intent is good and, if followed, will allow agents to answer questions about price and features and should help the overall Real Estate experience.

I have followed the developing reactions online and have read a number of reasons why some agents seem to feel this new policy is wrong.  One specific concern that makes sense is that agents who use a third-party to install their “For Sale” signs may not know exactly when the sign has been installed.  The easy answer is to upload the listing to the MLS before placing the sign order.  Frankly, while I am certain that some agents have valid concerns that needed to be discussed and addressed, most of what I have read seems to be complaints that some listing agents will not be able to control activity which makes me wonder whose interest they are serving.  A number have mentioned wanting to restrict needless showings to minimize their clients’ inconvenience.  I wonder how they do that while complying with the various laws affecting Real Estate.  Frankly, I empathize with the thought but, as I have opined before, this is not a retail transaction:  showings are generally required to allow buyers and agents to assess Real Estate and they will be inconvenient but that  inconvenience will end once an agreement is signed.  Trying to manage showings and control the marketing might make people wonder who is being restricted from viewing a property and what the real intent might be.

I saw one interesting comment from a buyer’s agent:  they said they had a client who wanted to buy a house that had not been in the MLS or on the Internet to avoid any privacy issues after settlement.  Again I empathize:  listed properties stay online after the sale closes or after the house is taken off the market and anyone can see interior photos even if they reflect prior ownership.  The Internet has affected privacy and I am not sure how to change that.  In my opinion, only active and available properties should be online and properties that sell or come off the market should be removed.

Time will tell if this new policy works.  Will it be modified?  Will deviation be allowed?  What will happen to those who violate it?  There is a heavy fine proposed for non-compliance.

As an experienced, educated and knowledgeable professional, I embrace the efficiency of the MLS.  Prior to our having an MLS, trying to get property information out to the broad a market was tedious, time-consuming and expensive because it was so inefficient.  As someone who bought a personal residence prior to there being an MLS, I remember all too well the hardship we faced identifying every possibility to consider.

Buying and selling Real Estate are infrequent acts that typically involve our biggest asset so the processes deserve all the attention and respect we can give them.  Article 1 of our Code of Ethics requires us to promote and protect the best interest of our client above all else.  While some may think that that means keeping information off the MLS, my best guess is that an overwhelming majority benefit by getting information published as quickly as possible.  We need to make sure our clients fully understand the benefits of using the MLS and our services even if that means we lose a little control.  I certainly hope that it isn’t all about the commission!

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!

October 4, 2019

Selling Real Estate Without Representation: Reward vs Risk

The Philadelphia Inquirer recently ran a Real Estate story that made many people angry.  REALTORS were not involved.  What has happened and will undoubtedly continue to happen is sad and, perhaps, entirely preventable.

The article talked about people buying Real Estate, such as vacant land, from people with a high level of urgency or people with limited information.  The article described many as being poor which adds to the emotion.  The buyers either searched for people they thought would want or need to sell property or responded to owners looking to sell quickly.  In many cases the buyers “flipped” the properties for huge profits, often without making any repairs or little added cost to themselves.  Now the sellers and others are blaming the buyers, saying the buyers took advantage of the sellers.  But did they?

Would I like to have this done to me or someone I know?  Absolutely NOT!  So, what is the answer? Assuming these transactions were not coerced, who is responsible for this?  Whether the sellers were misled about the “market value” or worth of the Real Estate is a separate issue.  What is the seller’s responsibility as far as learning the “market value” of what they want or need to sell?  What should the buyers have done differently?  What is society’s role:  do we want to require a third-party to review and evaluate sales to protect whomever we think “vulnerable”?  That would seem excessive.

Please do NOT misunderstand me:  the article did not accuse the buyers of fraud and I would certainly NOT condone that.  In fact, the buyers say they do a lot of work to put these deals together and provide a benefit to sellers.  Frankly, what we have are two parties with their own interests and motivation as well as two different ideas of property value.  The same thought applies to a sale where both parties are represented by professionals although they would have an added layer of “protection” if their agents performed as we are supposed to.

In Real Estate there have always been a number of “private sales”, meaning there are no agents involved.  About 8% of national transactions do not involve agents although many of these involve parties who know each other.  Sadly, many who buy or sell Real Estate without professional representation come to realize there was a problem AFTER the sale closed and those sales tend to result in lower proceeds even when you consider that the Real Estate fee was not charged.

While the article has several very sad stories, absent fraud, many of these sellers need to look at what they did and what they expected to happen.  They took a risk by not hiring a professional.  Could they really have gotten “top dollar” on their own or did they have the resources to maximize the “highest and best use” of the Real Estate?  Again I ask:  whose job was it to protect and promote their interests?  They had choices, even if somewhat limited, and now they have the consequences of what they did.

While anyone can make the decision to buy or sell Real Estate without an agent, what is the TRUE co$t of trying to save the fee?  If the issue was a matter of time, trying to sell fast usually comes at the expense of profits since the market was not allowed to function properly.  Absent hiring a professional, please, at least pay an attorney to review any documents involved and/ or hire an appraiser to determine the true “market value” of your property.  While doing either may not get you what you think you are due, at least you will know your options.  Certainly do NOT trust random online property valuations and, respectfully, do not rely on friends and family.  Business is business!

In the event there was any fraud or misrepresentation, pursue that through legal channels.

When Real Estate (or anything of value) is involved:  there is no time for inexperience, empty promises or false expectations! 

HIRE WISELY:  We are not all the same!

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