Andrew Wetzel's Musings

April 24, 2019

Why I Enjoy Being a REALTOR®

After working in retail for a number of years I decided to make a change.  Like many, I was fascinated with Real Estate and made plans to get my license.  I did three things to prepare myself for the adjustment.  First, I started reading books about sales and then about Real Estate.  I read 12 books on sales and then 4 about working in Real Estate.  I stopped when the books got redundant and I felt that I knew enough to move forward.  Second, I selected 4 different Real Estate companies to contact and interview.  I found two of them interesting even though I was not yet ready to make a commitment.

The third step was time consuming but critical:  I wanted to try a sales position to make sure it was something I could enjoy before pursuing a career in Real Estate.  While many of us think it too easy to get licensed, it does require investments in time and money so I wanted to be prepared.  After becoming comfortable in sales, I was ready to commit to a Real Estate company.  The rest is history.

I took an extra step and became a REALTOR® which means that I belong to local, state and national REALTOR® Associations and subscribe to a formal Code of Ethics.  I have also taken many courses and earned several designations and certifications to improve my knowledge so that I can better represent my clients.  I consider myself an advisor or consultant rather than a salesperson.  As an Associate Broker I am allowed to call myself that whereas a basic licensee is not.  I work for sellers and for buyers, advising them and helping them reach their goals.  I view our relationship as a partnership although they get to make the decisions.

Like many, I had a mixed perception of “sales people” and did not want to use persuasion to convince people to do things that were not in their own best interests so that I could earn a living.  Sadly, I see people in different sales positions whose only goal seems to be to make money.  This can be especially problematic in Real Estate given the costs involved and the impact on people’s financial situation.

As a seller agent, I have enjoyed helping sellers move on in their life, many times helping sellers who had tried and failed to sell with one or more other agents.  Listing contracts typically “expire” as a result of over-pricing and/ or poor marketing.  People move for a variety of reasons and they need to determine whether the selling price or the length of time before selling is more important to them.  I have helped sellers who wanted larger or smaller homes, wanted a better neighborhood or school district for their children, were tired of dealing with tenants, who were selling estates of family members as well as other reasons.  I can assist a seller with the preparation generally required before we market a home and make it available for showings and offers.  There are many more details along the way than most sellers realize just as there are a variety of reasons for selling Real Estate.  All agents are not the same!

As a buyer agent, I have helped many purchase their first home, their next home or an investment property.  This can be very interesting if they are selling one property to buy another.  I enjoy showing people houses where they can begin a new chapter in their life or continue on their path.  Having children involved can make it more fun.  There are times when their children do not want to move and there are times when seeing children excited about their new adventure makes the process very fulfilling.  When people buy a home they are buying a lifestyle, making it a very important decision.

Helping clients these days is more complicated than it was during my first few years.  The Internet has changed things and it often adds confusion to the process.  It helps sellers by exposing their properties to the public and allows buyers to shop online for houses to consider.  It can be a great tool but it has its limitations, primarily for buyers.  Many buyers start the process by searching online to identify houses to consider buying.  That can be fun but it can lead to their paying less attention to the preparation required to make a formal offer to a seller.  Some buyers start by contacting a number of listing agents and looking at a number of properties.  Many can get overwhelmed.  Choices are great but can cause confusion!  A serious buyer needs to “position” themselves to be able to make a formal offer to a seller.  This is especially true in a competitive market.  Timing can be everything.

A buyer needs to get pre-qualified with a reputable lender to arrive at a price range for them to consider and determine their wants and needs, including locations.  Their plans will likely evolve but there should be a starting point.  If their market is competitive, any delay in preparing to make an offer could pose a problem.  Some buyers will find themselves unable to obtain the financing they need to make a purchase; others may need to do some work to get financing.  If they find out either after falling in love with a house that can be devastating not to mention being a waste of their time.

Even if there is only a slight delay in getting financing, that may allow a competing buyer to close an offer before they are even in a position to make an offer that a seller will respond to.  My best advice is to get pre-qualified and hire an exclusive agent before spending too much time “shopping”.  I also tell my clients that it may be best to ignore most of what you read online as most information is very general in nature and may have little relevance to any individual house search.

As with retail, I enjoy interacting with people and helping them navigate an endless variety of circumstances.  Unlike retail, selling Real Estate requires a longer interaction.  We establish deeper relationships with our clients than with a retail customer.  That being said, too many confuse the two types of purchases:  buying Real Estate is NOT a retail transaction.  Even if financing is not needed, a Real Estate purchase may take a few weeks and will generally include a number of “contingencies” that must be met to keep the process moving forward.  There are typically several points where either party may change their mind.

I believe that, despite the influence of the Internet or perhaps because of it, our role is more important than ever.  A professional, ethical and knowledgeable Real Estate agent was always expected to educate their consumer.  Today, I find that I often have to uneducate them as far as showing them that what they think they know may not be accurate and could be holding them back.  So much of the information the public relies on is incomplete or wrong.  While they may have access to date and information, I can provide knowledge and insight.  This does not always sit well with our clients.

I have seen a lot over the years.  In addition to working with buyers and sellers, I also teach other REALTORS®, I mediate disputes between agents or between buyers and sellers and I sit on hearing panels making decisions about possible violations of our REALTOR® Code of Ethics.  You cannot make up the things I have seen.

I have been protecting and promoting the best interests of my clients since 1996 and always tell people that, when you are planning to sell or buy Real Estate, there is no time for inexperience, empty promises or false expectations!

Remember:  HIRE WISELY!  We are not all the same!

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Multiple Offers: To Disclose or Not?

Real Estate offers many opportunities to peer into the personalities of people with whom we work.  Sometimes what we find is not what we expected.  As a professional I have laws and a Code of Ethics to guide me as well as my integrity and value system.  My clients have the same except for the Code of Ethics, of course.  One topic that brings this into focus is that of “multiple offers”, meaning that more than one buyer is actively interested in buying the same piece of Real Estate.

Some buyers are so interested in a specific property and so willing to compete for it with others that they will plunge into the deep end of the pool to do whatever they can to win.  They may start with their “highest and best offer”.  Others, despite being interested, are either risk-averse or perhaps distrusting of others when told there is competition.  Some may wish to avoid competition to prevent over-spending or they may need to meet a deadline for finalizing a move.

One of my favorite analogies is comparing buying and selling Real Estate to “playing poker”:  each party wants to know more about the other.  Buyers may want to know whether there is competition for a specific property.  Some people, including licensed agents, may think the answer a matter of courtesy or simply being honest.  However, the PAR listing contract is the governing document.  The language in paragraph 13 (“Additional Offers”) states that “Unless prohibited by Seller, if Broker is asked by a buyer or another licensee(s) about the existence of other offers on the Property, Broker will reveal the existence of other offers”.  A separate matter is whether the actual terms are confidential or not.

Let’s assume that the word “existence” means written, executable offers and not the mere expression of interest from someone.  If the seller permits this disclosure, the listing agent must say “yes” or “no”:  they have to answer truthfully!  If prohibited from answering the question, the agent must respond with words to the effect that they are not authorized to answer the question.  Is providing knowledge about competition in the seller’s best interests?  How important is the “if asked” aspect?

One of the primary reasons that a seller should hire a professional is to rely on our knowledge and insight.  The Internet and your friends and family may or may not provide a great deal of data and knowledge but a professional can put it all together.  I tell my seller-clients that I assume that I AM PROHIBITED from making this disclosure and discuss my thinking with them.  I may ask them to change that later but I have never had a seller disagree.  Which is more likely:  a buyer will make an offer when they know there is competition OR a buyer will walk away when they do not know?

Taken literally, if not prohibited from answering the question, a listing agent would have to disclose the existence of low offers which may not interest their seller-client.  Does that make any sense?

Unfortunately, many buyer-agents do not even ask if there is competition.  I am told that many listing agents are allowed to disclose the existence of other offers and think it a great strategy but should they disclose that without being asked by the buyer’s agent?  Many buyer-agents do not even make the effort to confirm that a property is still available.  Bright MLS allows listing agents 3-business-days to update the listing status so an “Active” property may not really be available.  Can a buyer be harmed by their not knowing that someone else purchased the property?  At the very least, time was wasted preparing an offer.  Even worse, perhaps their showing should have been canceled!

Strategies may differ but it must be noted that the seller is the boss and makes the decision about disclosing.  An experienced agent can advise but is compelled to abide by their client’s wishes.

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

Remember: HIRE WISELY!  We are not all the same.

March 25, 2019

Data Integrity: How Accurate is/ was your Property Listing?

Filed under: Buying,Ethics,Hiring an agent,Marketing,Price,Selling,Technology — awetzel @ 5:42 PM

What is “data integrity”?  It means that the data we collect, store and report is accurate.  What do I mean by data?  It could be the status of a property listing (is it available to see and buy? Has it been put under contract?  Has it settled?), the price, the type of property and its features.  I want to relate the importance of accurate data to three different groups of people, all part of a sale.

Let’s start with buyers.  A seller needs a “ready, willing and able” buyer to complete a sale.  Whether a buyer hires an agent to search the MLS or they search online, the expectation is that properties matching what the buyer is looking for will appear in their search results so they can evaluate whether to take the next step or they will not know a house is even available to consider.  If they cannot find it in their search results, they will not see it and they will not buy it.  Even worse, a listing agent may not know there is a fixable error and ask the seller for what may be an unnecessary price reduction which reduces their proceeds and still not make it any easier to find the property in search results.  I have many examples and will share two.

  • Early in my career a buyer identified two possible elementary schools for her daughters to attend. She drove the neighborhood and found a “For Sale” sign on a house, called me for information about the house and asked me to search the area for homes like the one she was fortunate to find.  I found several other houses for the family to consider but the one she saw was not in my search results.  The listing agent had entered the wrong zip code.  Imagine if she had not seen the yard sign and the house had remained on the market unsold.  She would have missed seeing the house they bought and the sellers may have been asked to lower their price.  By the way, the family is in the same house many years later;
  • A frustrated seller called me. His property had been on the market recently and his listing contract expired without a sale.  He called me to see what I could suggest.  I looked up the property, discussed it with him and quickly found a major error:  the MLS showed the house as having a single bathroom.  He said it had two full baths.  People searching for two full baths did not know his house was available even after he reduced his asking price.  This is sad and avoidable.

In addition to limiting the number of available houses for buyers to consider, which could lead to a buyer not seeing their best options, errors will affect a market analysis.  Buyers usually want to know what comparable houses have been selling for before they make an offer.  Houses that are not accurately listed as well as those whose statuses are not correct could impact a buyer’s perception of what to offer, perhaps causing them to lose a sale.

Similarly, a seller looking to price their house according to its location, features and condition may be relying on incorrect or incomplete information.  Their house could sit on the market unsold or they could accept less than they should have.  Over the years I have seen a number of houses not properly reported as being sold.  Instead, the listing contract expired or the agent withdrew it from the market making it look like the property did not sell which is often interpreted as meaning that the price was too high.

The last person this misinformation can impact is the appraiser.  They evaluate selling prices based on reported comparable sales.  They can only rely on what is reported even if it is inaccurate (how would they know?).  In addition to the status, appraisers rely on pictures, features and the public remarks to try to identify the prior sales most like the house they are appraising.  What is the cost of inaccurate information?  If it falsely appears that a buyer paid too much, the process may stop unless the seller lowers their asking price OR the buyer comes up with more money OR they somehow work it out.  Mortgages are based on a percentage of the appraised value so errors matter.

To conclude, data integrity is a BIG deal.  Many of my seller clients were unsuccessful with one or more agents before we met.  Many of their property listings contained at least one error and there were often errors serious enough to prevent a sale.  In many cases I was able to improve their chances simply by adjusting the marketing to enable potential buyers and their agents to actually find their property in their search results.  It is like a “Google search”:  how many inaccurate entries do you see before getting the result you were looking for?  You may give up or never find the best answer for your search.

Today many buyers start their searches on the Internet before contacting an agent which only magnifies the potential damage as they may not be as proficient identifying listings as a professional is.  People rely on our training and our experience which is why a higher percentage of consumers use our services than ever before.  I do not mean this to sound like a commercial but this is what we do.

Of course there are times when price may still be an issue especially if the length of time on the market needlessly scares buyers into thinking there is something wrong with a house.  Either way, a seller should not have to suffer a financial loss because their agent failed to do their job.  In  addition, many of my clients say that they never saw their MLS sheet with a prior agent or searched online to see how their property information looked, if it was even there.  Some said that their agent never gave them a copy of their printout and that may be true as I suspect that many know they have not generated a good listing printout.  Many listing printouts, in addition to being incomplete as far as features, lack pictures or offer only a few bad ones, some taken with cell phones, and have no public remarks section or have a poorly written remarks section that is boring, incomplete or loaded with bad spelling and poor grammar making them hard to read.

The MLS syndicates the information on your listing printout to the major search engines we all know as well as thousands of others.  If the MLS is not done well this only magnifies the problem:  “garbage in; garbage out”.  Your printout is literally like a resume.  So, unless your house is on a well-traveled street exposing your “For Sale” sign to lots of traffic, the MLS and Internet may be the only ways anyone will know you want to sell.  Does that make you feel comfortable?  What is the cost of delaying your plans or being asked to accept less money than you should?  What does your printout look like?

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

Remember:  HIRE WISELY!  We are not all the same!

Another Spring is Here: What are your plans?

Filed under: Buying,Hiring an agent,Marketing,Selling — awetzel @ 5:31 PM

We moved our clocks forward and Spring is here.  Are you planning to make a move this year?  Every year around October I see the same thing again and again and 2018 was no exception.  Many sellers took their homes off the market, apparently adjusting their plans:  some delaying them, others perhaps giving up entirely.  That is obviously their choice but I always wonder why so many owners decide to remain in a house they were willing to leave.  Many of those properties are still off the market.  What is the cost of not selling or delaying your plans?  Let me offer a few thoughts.

Perhaps some think they cannot achieve their financial goal so they give up even if only temporarily.  Price is NOT always the issue when a house sits on the market unsold.  I have seen and helped many frustrated owners by simply adjusting the marketing.  I use the term “Google search” to demonstrate this point:  buyers and their agents must be able to find YOUR house in their search results.  Unfortunately many MLS listings are inaccurate or, frankly, so pathetic that people cannot identify all of the houses that really match their needs.  Even worse, the listing agent may not realize what is really going on and ask for a price reduction when one is not needed.  How much does that cost?  How does that impact your plans?

Buyers are out looking every day of the year, even if only online.  While there is no guarantee that your house will sell if it is on the market, it will not sell if it is not.  If buyers and agents cannot find a house in their search results, they will not know it is available so they will be unable to schedule a showing and it will sit unsold.  Sellers who keep their houses on the market when others do not will increase their odds even though fewer buyers may be looking at any particular time of year.

I fully understand that selling Real Estate can be inconvenient even if a property is vacant.  Agents you do not know bring buyers they may not know (and who may not be qualified to buy) into your house and look at your stuff.  They come when they want, perhaps late, and impose on your lifestyle.  Showings are a must but we can do a better job managing them.  It gets worse if you have a lot of activity with no offers or low offers but showings are a vital part of the process regardless of what is in the MLS and online.

The two busiest selling times are Spring and Fall.  Now is the time to plan for Spring.  Of course the reasons people buy their first or next home are varied but these are the best times so frustrated sellers often take their homes off the market until the next “best” time comes which is also when they will have the most competition.

When October arrives many of us think about the upcoming holidays and we want to enjoy time with our families.  Many sellers do not want showings during those months which is a shame because houses tend to look their best inside during those months.

Whether you are thinking about selling for the first time or if you have taken take time off, I encourage not to wait too long to resume the process.  The earlier you start the better.  My suggestion, if you have not already committed to an agent, is to call me so we can discuss the market, your house and your plans.  I will give you honest advice with no obligation.  If you plan to buy another home I can also provide information about areas and houses that may interest you.  All I suggest, respectfully, is that you make a decision that works for you.

I can help you now or in the future, whichever works for you!

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

Remember:  HIRE WISELY!  We are not all the same!

How Sellers Sell Real Estate: Who is the Typical Seller?

Today I want to discuss the 2018 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 129 questions mailed to over 155,000 home buyers who purchased a primary residence between July 2017 and June 2018.  7191 were returned.  The focus of this podcast will be buyers who sold one home to buy another.  This was a national survey so your market may be quite different.  Real Estate is local:  there is no national Real Estate market so please contact me for information about your local market.

  • NAR has been collecting seller data since 1985 when the typical owner remained in their home for a median time of 5 years. In 2018 that number was 9 years which suggests that buyers may want to think long-term about their investment.  What appears to be a solid investment today may look different later.  Unfortunately, I still see sellers who paid more for their house than it is worth today and that can delay being able to sell it;
  • Sellers between the ages of 18-34 typically sold within 4 years while those over 75 sold after 17 years;
  • The median selling price was 99% of the final asking price. If you are an owner whose house is not attracting serious interest, meaning offers, this is important to know.  Many buyers think they are better at negotiating than they really are and are hesitant to start with their “best offer”.  In a very competitive situation they may not get a second chance.  On the other hand, a buyer may prefer to make an offer on a house closer to its market value to avoid having an appraisal issue or risk losing their second choice to another buyer when their offer on a house expires.  Whether a listing agent should disclose the existence of other offers is debatable but this should only be done when a seller allows it.  In some markets and with some buyers, competition may be welcome.  In others, not so much.  Sellers may also think themselves better at negotiation than they really are so they need good advice from a trusted and respected representative.  Ego can be a terrible thing to overcome.  Last point, showings are nice but they do not guarantee a sale;
  • 13% of houses purchased sold for more than asking price with 26% achieving the asking price and 24% selling for 95% or less than asking price;
  • The typical seller was 55 years old;
  • 68% were repeat sellers while 32% were selling for the first time;
  • 70% who purchased another home stayed in the same state; 16% moved to another region; 14% stayed in the same region but a different state;
  • 44% bought larger homes; 29% bought a similar size; 27% down-sized. The age of the seller strongly correlates with these statistics;
  • 50% bought a newer home than they sold; 28% bought one the same age; 22% bought an older home;
  • 47% spent more than their selling price; 27% spent less;
  • The most common reason for selling was that the house was too small (15%), followed by moving closer to friends and family (14%) and job relocation (13%);
  • 29% of first-time sellers cited size as being too small whereas repeat sellers cited moving closer to friends and family (17%). Selling is an expensive proposition so having to move in the short term because you outgrew a house or simply needed more space can be costly;
  • 91% of all sellers used a Real Estate agent with only 7% being a FSBO. 91% is the highest result recorded despite the presence of the Internet.  The % of FSBOs has steadily declined since 2000 even though the Internet was thought to have helped with exposure;
  • The median selling time for all sellers was 3 weeks. There is a correlation between the % of the final asking price achieved and the length of time it takes to sell.  While it can be a distracting obsession, many buyers look at the “days on the market” as an indicator of a home’s desirability and may avoid homes that are simply over-priced although they have no issues.  Houses that sold within 2 weeks or less achieved 100% of the final asking price whereas houses on the market for 17 weeks or more achieved only 94%.  Keep in mind that many houses are reduced in price to attract attention so looking at the final asking price as compared to the selling price is only one part of the story.  Sellers determine the asking price but buyers determine the value.  If nothing else, easy access to the Internet has allowed buyers to competitively shop meaning they at least know what is on the market although relying on valuation algorithms is risky.  Houses tend to get the most activity within a week or two of hitting the market.  Once the current supply of buyers knows a house is for sale and no one buys it, something has to energize and existing buyer or other buyers have to start their search;
  • 44% of sellers used buyer incentives to attract interest. The top two were home warranties and closing cost assistance.  These are not guaranteed to get the job done and should be discussed at the outset;
  • 64% of sellers were “very satisfied” with the process; 25% were “somewhat satisfied” and 12% were dissatisfied;
  • The overall median selling price was $259,900. Remember that this is a national number.  The median selling price for FSBOs was $200,000; for agent-assisted sales it was $264,900 and for FSBOs who eventually used an agent the median selling price was $227,900.  This clearly shows the advantage of hiring and paying a professional.

The bottom line is that this can be a very confusing process.  This NOT a retail transaction!  It is typically costly enough without making expensive mistakes.  Unless you do this regularly, I respectfully suggest that you trust a trained, experienced professional.  Whether you want to trust your most valuable asset to someone with little experience or someone who has a long track record is up to you but any professional is likely to know more than an average seller looking to save a few dollars.  I understand that signing a formal contract with someone, even if recommended to you, is quite a leap of faith.  Most of us can offer options to increase your comfort level.  After all, we want to make sure that you “fit” with us as well.

Selling Real Estate is unique compared to most typical purchases:  not only is it much less frequent than other purchases, it typically involves multiple steps, each offering its own challenges.  If you would like to discuss selling or buying or if you have any thoughts about this, please contact me.

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

Remember:  HIRE WISELY!  We are not all the same!

Living Up to Being a REALTOR®

Filed under: Ethics,Hiring an agent — awetzel @ 5:17 PM

While becoming a Real Estate agent is relatively easy compared to many other professions having less impact on the public, becoming and remaining a REALTOR requires an added commitment to a formal Code of Ethics.  Living up to its ideals takes effort; failing to do so has consequences for the agent and the public.

Many in the profession believe that it is far too easy to get a Real Estate license.  Until recent changes were made in Pennsylvania, you needed to take two 30-hour classes, pass a test in each and then pass a state test.  That requirement has been increased which is good as neither of the classes really prepare agents to help sellers and buyers with their largest purchase.  Much of the “real-life” training, including how to run your own business and understanding the law, the rules and regulations, the paperwork and the process of completing a Real Estate sale continues to fall on the agent and their office.  Most agents who change offices seem to feel that their office did not support their professional development.  While perhaps true, an agent must be motivated and take the initiative to learn more.

Becoming a REALTOR requires attending an ethics class and joining a local REALTOR association.  Why wouldn’t someone take that extra step as the benefits far outweigh the additional effort and cost?  Perhaps if the public understood and embraced the difference between agents and REALTORS that would change.

To maintain a Real Estate license, you needed to complete 14 hours of state-required mandatory continuing education every two years and a nationally required ethics course every four.  Our local association requires that we complete an additional course every two years which covers the content of national course.  While recent changes in Pennsylvania changed the requirements for entering Real Estate and maintaining your license, which is a good step, it is still harder to become a hair dresser than to get a Real Estate license.

In addition to the ongoing education requirement, we have to pay dues for renewing our license and continuing to be members of our REALTOR association as well as paying other ongoing assorted fees.  Compared to many people who start and run their own businesses, we have it easy.

There are well over a million REALTORS in the United States, about half of all Real Estate licensees.  As I have explained, a typical licensee really has to do little to earn the right to advertise him or herself as a REALTOR.  However, I strongly believe that we need to do a great deal to live up to the high expectations we place on each other and ourselves even if many in the public think we are all the same.  The most obvious difference is that REALTORS have a Code of Ethics.

I would like to draw a distinction between being a REALTOR and earning designations or certifications.  I am an Associate Broker and hold several professional designations and certifications offered by the REALTOR community as well as performing several roles for my REALTOR association.  Earning these credentials and meeting the challenges associated with each of them took a great deal of time and effort.  They have ongoing obligations and I have to live up to their standards!  You can learn more about them and their requirements and see my professional qualifications on my web site.

It will be interesting to see how the profession evolves over time.  All agents have minimum standards as established by the PA Real Estate Commission while REALTORS have a higher set of expectations as exemplified by our Code of Ethics.  I would like to see all agents comply with our Code of Ethics regardless of whether they are members of our association or not.  I think the public deserves the accountability that goes along with such a set of established standards.  That probably will never happen so, at best, I hope that the public comes to realize the difference between agents and REALTORS.

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

Remember:  HIRE WISELY!  We are not all the same!

Technology and Real Estate

Gordon Gecko might say “technology is good” but Dirty Harry Callahan would add (paraphrasing for effect) that humans have to understand its limitations!

In the 1970’s I was fascinated with Texas Instruments calculators.  They quickly went from very basic to very complicated.  Just look at a modern-day financial calculator!  Today many of us seem unable do simple math without a calculator.  In the 1980’s I was fascinated with dial-up modems and being able to send and receive email.  Then I was introduced to Lotus 1-2-3 and Symphony.  Wow!  In the 1990’s I got my first home computer.  It had a huge storage capacity of 8 megs (yes, I said megs!) and enabled me to set up a spreadsheet for a pool team I ran.  I could also word process a weekly newsletter for my team.

In 1996 I became a Real Estate agent.  The industry was evolving from what the more experienced agents call “the books” for distributing information about property listings to Internet-connected computers running on 3.5″ disks.  Until that change, property listings were collected and disseminated to offices and agents in books every couple of weeks and manually searching for listings and comparable sales was time consuming and inexact to say the least.  The data was beyond stale when received.  It was a major achievement to be able to access information about property listings online and then in our homes!  OOOH!

The Real Estate world shifted monumentally in the new century as the public was allowed to peer behind the curtain and get property listings in their homes and businesses, allowing them to bypass over a million trained agents who had controlled the data since the first cave dweller decided to relocate.  Over time, while the data was limited to active, coming soon and under contract listings, third-party web sites began using valuation models to help buyers and sellers “understand” the financial landscape better.  At least that was what they were told.  There is so much more to say about that but I want to focus on technology and how it has inserted itself into Real Estate.

Seth Godin recently blogged about the evolution of technology and he accurately describes the first three cycles, stating the we are now in the fourth.  However, at least as far as Real Estate is concerned, the fourth, while on the horizon, is far from settled.  Sure, we saw a computer beat a Grand Master in chess and win on Jeopardy BUT they have not come close to perfecting a self-driving car and the track record with predicting home values is pathetic.

So, while many of us will continue to love and embrace technology, with many being “early adopters”, I would respectfully encourage my fellow humans to engage with professionals when it comes to Real Estate.  Buying and selling is not so easily predictive as answering a question, creating a question when offered an answer or even moving chess pieces and predicting the outcome of a head-to-head chess match.  There is no doubt that computers can do a seemingly endless array of lengthy calculations faster than we can blink or access a history of information if entered and stored properly but, can computers act illogically or emotionally?  Buying and selling Real Estate are emotional decisions justified with logic.  It is one thing to provide quick access to property listings and then to try to display comparable sales history to evaluate but it is quite another to create and present a purchase offer and then negotiate what may be many steps to make sure that both parties remain committed to completing a sale.  This is not a retail transaction!

Technology certainly has its place and there is no going back in time.  The critical factor is knowing its value, its limitations and where it fits into the process.  Information and data are not the same as knowledge and insight!

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

Remember:  HIRE WISELY!  We are not all the same!

6 Buying, Selling Myths Clients Believe

Filed under: Buying,Hiring an agent,Marketing,Price — awetzel @ 4:41 PM

Today I want to discuss an article posted on “REALTOR® Magazine Online (December 2018).  The article discussed 6 myths about buying and selling Real Estate and I want to add my thoughts to each of them.  The article can be found on my Facebook business page.

Since the Internet inserted itself between the consumer and the Real Estate professional, which is called “disintermediation”, the so-called Internet Empowered Consumer (IEC) has often sought information on their own while delaying contacting a professional.  We humans tend to do that and, in terms of buying or selling Real Estate, it can lead to costly mistakes.  We tend to be drawn to sources that reinforce what we think or which offer pleasant information.  While buying and selling Real Estate is NOT “rocket science”, it typically involves doing basic things to achieve your goal and delaying or failing to manage these steps can derail the best of intentions.  Here are the 6 myths and my comments.

  1. The longer a home has been on the market, the more negotiable the deal is. Prices are what they are.  Sellers have various strategies in mind when attaching an asking price to their property.  Buyers have strategies when making offers.  However, if there is a mortgage involved, the lender will order an appraisal which will consider how a specific property compares to recent sales of similar homes and a loan will either be approved or not.  Aside from any perception about seller flexibility, I would suggest that buyers not avoid a house simply because it has been on the market for a long time.  Do not assume it is a bad house just because it has not sold.  Of course, if it has been under contract and then re-activated there may be something you need to know.
  1. An open house must be part of the marketing plan for a home. While practices may vary, I generally discourage sellers from having open houses because I have heard of too many issues with them.  While they may work, the percentages are low.  I prefer private showings for my buyer clients.
  1. A 30-year fixed-rate mortgage is the best form of financing. The length of the loan should be considered, especially if you have a specific idea as far as how long you plan to own a house but I am more concerned with the interest rate and my client’s comfort with their monthly payment.  A professional lender is better able to advise my client than the Internet and I prefer a face-to-face meeting rather than chatting online.
  1. Overpricing your house leaves room for negotiation. Perhaps true but the bigger concern is whether or not your house will come out in a buyer’s or agent’s search results.  If a prospective buyer can find suitable options at a lower price, even if your house is in their search results, they may never come to see your house or prefer to make an offer on a house that is already more affordable for them.  In the long run, a sale that is financed involves an appraisal so thinking that a buyer will pay above-market may not be the best plan and your sale could fall through.
  1. Online evaluations can give you an idea of home value. The primary tool or attraction of so-called third-party web sites is property listings.  They use them and assorted ancillary tools like property evaluations to attract eyeballs so they can use “views” or “hits” to solicit advertising.  That is how they make their money.  While these sites cost money to operate, I am not convinced that they spend enough on quality information or that they can do everything needed to ever replace human beings.  Much has been written about valuation models and their algorithms and it has largely been negative, meaning that the valuations are too often off the mark. While they may have more relevance in some areas than others, they rely on recorded data rather than recent settled data so the information is stale.  The valuations are also geared towards “average” properties and may be unable to properly evaluate what interests you.
  1. You have to put 20 percent down on a home purchase. There are many programs and many offers involve a seller offering some financial assistance.  A professional can provide advice.  We do far more than open doors and write contracts!

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

Remember:  HIRE WISELY!  We are not all the same!

How Buyers Buy Real Estate, Part 2 of 2.

Filed under: Buying,Hiring an agent,Inspections and Contingencies — awetzel @ 4:28 PM

Today I want to discuss the 2018 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 129 questions mailed to over 155,000 home buyers who purchased a primary residence between July 2017 and June 2018.  7191 were returned.  This was a national survey so your market may be quite different.  Real Estate is local:  there is no national Real Estate market so please contact me for information about your local market.

This is Part 2 of 2.  In Part 1 I focused on buyer characteristics, meaning who is the typical buyer.  In Part 2 I will focus on the process the typical buyer used to find their home, the results they achieved and how they felt about the experience.  There will be some overlap between the parts.

As I learned years ago, buying a home is an emotional decision justified with logic.  This is what can make it fun or not.  The process can be interesting enough when there is only one buyer involved.  People have different ways of making decisions and we all handle challenges and stress differently.  Buying a home typically offers plenty of both.  When more than one buyer is involved, there can be quite a negotiation between the parties and they often seek my opinion.  Purchasing a home is typically the largest financial transaction anyone will ever make and it involves many lifestyle factors.  It is a serious process.  Here are some highlights:

  • 86% purchased existing homes; 14% bought new construction;
  • Nationally, buyers typically paid 99% of the asking price;
  • 56% of buyers said that finding the “right property” was the most difficult part of the process; 24% mentioned financing (including saving for a down payment (13%) and getting a loan (8%)), 20% cited the paperwork and 16% mentioned understanding the process. And yet, buyers often avoid or delay seeking professional assistance.  Given 24/7 access to the Internet, some may find this interesting.  I am not surprised as it supports my belief that Realtors bring value to the process of buying Real Estate above and beyond simply providing houses to look at.  While that is obviously important, buyers need to arrange financing and determine what they want and need in a house so that they can evaluate their options and make the best choice for themselves, keeping in mind that they may have serious competition.  Some houses sell quickly.  Buying a home takes time and effort.  For example, I have worked with many buyers during my career and have been able to identify houses for them to consider that they did not or could not find on their own.  My experience working with sellers, especially those whose properties other agents could not sell, has taught me a great deal about marketing homes to ensure that they appear in buyer’s search results.  Think “Google search”.  This knowledge helps me with buyers.  I will be happy to explain this in detail;
  • 88% financed their purchase, typically financing 87% of the price with first-timers financing 93% and repeat buyers financing 84%;
  • 9% found the mortgage application process to be much more difficult than expected with only a 1% difference between first-time and repeat buyers. This explains why so many wait to do this, perhaps to their detriment.  Sellers tend to focus on three parts of any agreement:  the amount of the offer, the buyer’s financing and the terms and conditions of the offer.  Sellers want to avoid or minimize the risk of a failed sale;
  • 13% reported that saving for a down payment was the most difficult step with 50% of those citing student loans. This is a problem that has been well reported.  It delays many aspects of life;
  • 50% of buyers found the home they purchased online; 28% through an agent; 7% from a “For Sale” or an open house sign. There is no doubt that the Internet has displaced agents as a valuable source of property listings.  No one can or should dispute that.  However, it has clearly NOT displaced the need for us to assist with the numerous tasks that are necessary to buying a house regardless of where or how it was identified.  One final point here is that it is important that a buyer provide accurate information as far as what is important for them.  Having a buyer search online for one set of criteria while their buyer-agent searches for something different can and will cause problems.  We should be finding the same possibilities!  Communication is critical;
  • 92% were “satisfied” with the process but only 62% reported being “very satisfied” and 8% were very dissatisfied. Buying a house or investment property can be very frustrating.  Trying to justify the emotion of a home purchase with logic can be a challenge.  I have met a number of owners who told me that they made a mistake when they bought their home; some realized that sooner than others.  While their situations may have varied, this often meant that they would have some difficulty selling or achieving what they wanted or needed to make a move.  I can share some stories;
  • 26% were given agency disclosures at the initial meeting. In PA you may know this as the Consumer Notice form that we are required to use.  The purpose of this disclosure is to offer a buyer choices as far as how we are to work together.  Historically many buyers assumed we were representing “their best interests” even though they had not formally committed to using our services.  Prior to buyer agency all agents worked for the seller’s best interests!  23% only received the required disclosure when their offer was being  written; 11% received it some other time.  The good news is that 60% received it, even if late.  23% say they never received it and 18% said they did not know.  In addition to being a REALTOR and Associate Broker, I am a Mediator and have spent years working on our Professional Standards Committee.  In those roles I have been involved in many situations where the consumer, meaning a buyer or seller, had quite a different perception of their relationship with an agent than their agent had.  Trust me when I tell you that this can cause problems;
  • Continuing with that thought, 40% said they had a written representation agreement with their agent; 16% said it was oral; 31% had no agreement and 14% did not know;
  • Buyers ranked a number of agent qualities: 97% want honesty and integrity; 94% want them to be knowledgeable; 92% want them to be responsive; 84% want them to be able to negotiate;
  • The top three benefits Real Estate agents provided were: 60% said helping buyers understand the process, 57% said pointing out features or faults with properties and others said negotiating better terms.

Buying Real Estate is a unique purchase:  not only is it much less frequent than other purchases, it typically involves multiple steps, each offering their own challenges.  If you would like to discuss buying or selling or if you have any thoughts about this, please contact me.

Please look for Part 1.

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

 Remember:  HIRE WISELY!  We are not all the same.

How Buyers Buy Real Estate, Part 1 of 2. Who is the Typical Buyer?

Filed under: Buying,Hiring an agent,Inspections and Contingencies — awetzel @ 4:06 PM

Today I want to discuss the 2018 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 129 questions mailed to over 155,000 home buyers who purchased a primary residence between July 2017 and June 2018.  7191 were returned.  This was a national survey so your market may be quite different.  Real Estate is local:  there is no national Real Estate market so please contact me for information about your local market.

This is Part 1 of 2 and will focus on buyer characteristics, meaning who is the typical buyer.  In Part 2 I will focus on the process the typical buyer used to find their home, the results they achieved and how they felt about the experience.  There will be some overlap between the parts.

As I learned years ago, buying a home is an emotional decision justified with logic.  This is what can make it fun or not.  The process can be interesting enough when there is only one buyer involved.  People have different ways of making decisions and we all handle challenges and stress differently.  Buying a home typically offers plenty of both.  When more than one buyer is involved, there can be quite a negotiation between the parties and they often seek my opinion.  Purchasing a home is typically the largest financial transaction anyone will ever make and it involves many lifestyle factors.  It is a serious process.  Here are some highlights:

  • 33% were first-time buyers. The typical buyer was 46 years old, with those age 25 to 34  accounting for 24% of all sales;
  • Buyers moved a median distance of 15 miles while those who sold one primary residence to buy another moved a median distance of 20 miles;
  • There were several reasons mentioned for buying: 84% felt that a home purchase was a good investment; 66% of first-time buyers wanted to own their home as did most buyers under age 61; those over 61 mentioned being closer to family and friends or down-sizing;
  • Buyers expected to live in their homes for a median time of 15 years with 19% saying they did not plan on making another move;
  • As far as motivating factors: 58% prioritized the quality of the neighborhood, 41% the affordability of the house (owning can be cheaper than renting!) and 24% the quality of the school district.  When you buy a house, you are buying the neighborhood and a lifestyle:  this is more than simply buying a product;
  • 44% of buyers looked online before doing anything else with 95% using the Internet at some point during the process; 17% started by contacting an agent; 11% started by looking online for information about the process; only 7% started by contacting a lender or bank. This can be good or bad, depending on what a buyer really knows and understands about the process and their local market.  There is a wealth of information online but my experience suggests that much of it is wrong or does not apply to all markets.  Some buyers will spend valuable time “shopping”, which is admittedly the “fun part”, instead of doing other things that might make their search easier, especially if they find that they need to do some homework to get financing.  They might find a home they really like only to find themselves unprepared or unable to compete with other buyers who had a better game plan.  The process can make all the difference;
  • 93% of buyers relied on the Internet for information; 86% on an agent. Traditional methods are still used but to a much lesser extent than in the past.  For example, only 53% visited open houses, 46% looked for “For Sale” signs and 13% looked at newspapers.   Please keep in mind that these statistics refer to sources use to search for available properties, not necessarily what led to a sale;
  • 67% walked through homes they found online; 41% drove by and did not go inside.  You might be amazed to learn that, while driving through a neighborhood to see if it meets your needs is an excellent way to narrow your focus, many buyers eliminate houses simply because the exterior needs some attention;
  • Buyers typically searched for 10 weeks and looked at a median of 10 homes. They waited for 3 weeks before contacting an agent.  A lot can happen in 3 weeks!  On the other hand, buyers who did not use the Internet spent 4 weeks searching and viewed 4 homes.  I wonder which group was more satisfied with their purchase in the long run;
  • For internet “shoppers”, 87% found photos and 85% found detailed property information very useful. They enjoy the “online shopping experience” much more than actually looking at house after house.  What an agent uploads to their MLS typically feeds “as-is” to the Internet:  too often this is a case of “garbage in; garbage out”.  Sadly, many listing agents make looking at their property listings more challenging than it should be.  Many property listings offer few quality photos, some listings have none and many are not labeled making it difficult to know what you are looking at.  Many agents use their cell phone for taking pictures.  I often see photos that seem to have been uploaded randomly, bouncing from interior to exterior and even turned sideways or upside down.  I also see poorly written or missing descriptions as well as listings having minimal searchable features which can make it difficult for those listings to even appear in a buyer’s search results and, when they do, a buyer may not really know what they are looking at.  The result is that they click through to the next property listing.  The good news for buyers is that properties attracting little attention often get needlessly reduced in price which rewards a persistent buyer.  If you are a seller, have you been asked to reduce your price?  Have you seen your MLS printout and searched online for your own property?;
  • 87% used a Real Estate agent; 6% bought directly from a builder or their agent; 5% bought directly from the owner which would include FSBOs or “private sales” where one or both parties are not professionally represented. The number using a professional has actually trended higher since the Internet entered the picture.  This proves to me that we can coexist with the so-called third-party sites if we bring “value” to the process.  Our “value” extends well beyond searching for houses.  Once you identify a house that you like, there are a number of steps that must be taken to get it under contract and then to complete the purchase.  This is no time to cut corners!

Buying Real Estate is a unique purchase:  not only is it much less frequent than other purchases, it typically involves multiple steps, each offering their own challenges.  If you would like to discuss buying or selling or if you have any thoughts about this, please contact me.

Please look for Part 2.

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

Remember:  HIRE WISELY!  We are not all the same!

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