Andrew Wetzel's Musings

July 16, 2020

Delaware County Residential Property Reassessment 2020

On July 1, 2020, property owners in Delaware County PA were mailed letters advising them of their new “assessed values” to be used starting with the 2021 tax year.  This began the formal tax appeal process.  I have heard from many, especially on social media, concerned that their taxes may skyrocket given how much their “assessed value” had risen.  I empathize and ask people to remain calm.  There are additional steps to follow.

Taxation has ALWAYS been a point of contention for Americans going back to our founding.  However, I am finding that, with the combination of the pandemic, social protests, the economy and the upcoming election, some may not have been paying much attention as the reassessment process moved forward and they are now shocked as it starts to “get real”.  Reading both sides of the mailing should provide some comfort but many focus only on their assessed value and what it could mean.  Let me provide some background.  There is ample information available for anyone who wants to learn more and now is certainly the time to get engaged with the process.

Delaware County was last reassessed in 2002.  That was a major undertaking.  The current process seems easier because the information is more current and technology has improved.  There are over 203,000 parcels to assess so every property could not be visited.  Property owners have had two opportunities to appeal the new valuation.

The reassessment was court-ordered after two families filed lawsuits alleging that the system of determining assessments was not fair.  As a REALTOR I am very familiar with the complexity of trying to be uniform in determining assessments, especially across municipalities and with respect to new construction.  The judge ruled that assessments were so inconsistent that they violated the state constitution.  Property taxes are an “ad valorem” tax, meaning that they should be uniformly levied in proportion to property value.  The goal was to make the process more transparent by using “market value”, while specifically preventing a tax windfall to the County.  That is unlike what happened in Philadelphia and differs from what happened in the County in 2002.

Several steps were taken to determine a property’s value as of July 2019.  Owners were mailed initial paperwork to review to see if the County “knew” what they actually owned.  There was an “appeal” process if there was a disparity.  Now that the “final” values have been mailed there is a second, formal “appeal” process.   The last day to appeal is September 1 with all appeal hearings to be concluded no later than October 31 so that the new assessment rolls can be certified no later than November 15.  Only then can they can determine the millage and the actual taxes.

The “burden of proof” rests with the property owner to provide competent and credible evidence that their valuation is incorrect.  An appraisal is not required but can be very helpful as far as meeting the “burden of proof” standard necessary and an owner may wish to hire an attorney.  Absent an appeal, or if someone does not report for their hearing, the assessor’s value is presumed correct.   I have heard some say that they do not feel comfortable with the appeal process and I can appreciate that but that is how the system works.  Facts, not presentation skills, will determine the outcome.  If your value “appears” reasonable, you may decide to do nothing.  That is your choice.

The goal is to arrive at a County-wide assessment total.  Once that is established, the County will need to link that with their budget by determining the “millage”.  Only then will individual property owners have the opportunity to know their tax liability.  NOTE:  this article pertains only to residential properties.  While all parcels are part of the process, valuing non-residential properties follows different guidelines.

Two final points.  First, the new assessment is based on market value which explains why it “rose”.  The last assessment was based more on generalities such as square footage meaning that two similar properties could be assessed and taxed similarly even though one was “distressed”.  I have seen that in my Real Estate business.

Second, appeals are permitted every year based on an advertised schedule.  If a property owner misses an opportunity they will have another one but will risk overpaying until then.  I respectfully encourage everyone to remain patient, follow the deadlines and let the process play out.

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

HIRE WISELY:  We are not all the same!

Selling Real Estate: Three Scenarios

Selling Real Estate in and of itself, as an “independent act”, can be interesting enough.  Contracts and paperwork aside, it has to be marketed/ exposed, identified as matching someone’s needs, visited, negotiated, inspected and eventually survive several steps proving that both parties can and want to complete the deed transfer.  Every one of these steps can be lengthy.

I have found that there are really three basic scenarios possible when someone wants to sell a property.  While similar at their core, the different scenarios each add their own dimension to the process and an agent and their client need to know the scenario and what makes them different.

The least complicated sale is one where a seller simply wants to sell a piece of Real Estate.  “Least complicated” does not always mean simple or easy.  The agent needs to know the seller’s motivation, is it a matter of time or money?  Do they want a quick sale or require a certain “return”?  Are their liens?  What is the condition?  What is the “fair market value”?  What is the local market like?  How easy is it to schedule showings?  Over time these may change and more questions may arise.  It takes an experienced, trained, educated and knowledgeable agent to properly advise their client as there is so much more to this than uploading the information to the MLS and Internet, installing a “For Sale” sign and waiting for a stampede of anxious buyers.  This is not a “retail transaction” and often gets more complicated once buyers and their agents start to express interest.  Experience will allow a professional to better prepare their seller-client for what the seller does not know might or will happen.

Many sellers need to sell to buy something else, even if not another piece of Real Estate.  The biggest difference here is that they “attach” a number to the sale that they think has to be met or the process does not make sense for them.  Even if they simply want to achieve a certain level of proceeds that changes the basic sale and may well end it before it starts.  If they want to buy another property that connects one evolving process to another and, at times, synching two evolving processes can become challenging.  For example, can a seller move into their next home when they need to or will they own two properties at the same time or will they need a place to stay for a short time?  Sometimes a sale happens without a seller knowing what happens next.  Sometimes they find their “next home” without having sold their present home.  While these situations often work out nicely, there are times where sellers who become buyers do not have any idea how juggling two evolving processes can possibly work out but history suggests that it does.  However, it requires more than luck.

Some sellers are looking to sell and buy but do not “need” to coordinate both  processes.  They can carry two properties and are willing to do that which makes both aspects easier to manage.  This does not mean that they are comfortable doing that or that their thinking won’t change later so a professional must ask enough detailed questions to avoid later surprises.

Not to minimize the time, effort and training required, it is relatively easy to get a listing contract signed and upload the information to the MLS and Internet.  Technology has made the marketing so much easier but we are paid more for what happens next and throughout the process, likely earning nothing if a property does not sell or if a sale falls though.

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

HIRE WISELY:  We are not all the same!

June 3, 2020

How Buyers Bought Real Estate in 2019:  Who is the Typical Buyer?  Part 2 of 2.

Today I want to discuss the 2019 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 125 questions mailed to over 159,750 recent home buyers who purchased a primary residence between July 2018 and June 2019.  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:

  • 87% purchased existing homes; 13% bought new construction;
  • Nationally, buyers typically paid 98% of the asking price;
  • 55% of buyers said that finding the “right property” was the most difficult part of the process; 26% mentioned financing (including saving for a down payment (13%), getting a loan (8%) and the appraisal (5%)), 19% cited the paperwork and 18% 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;
  • 86% financed their purchase, typically financing 88% of the purchase price with first-timers financing 94% and repeat buyers financing 84%;
  • The median down payment was 12% for all buyers with 6% for “first-time” and 16% for “repeat”;
  • 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 51% 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;
  • 94% were “satisfied” with the process but only 63% reported being “very satisfied” while 7% were somewhat or 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;
  • 61% were given agency disclosures at some point with 27% at the first meeting, 23% when the contract was written and 11% at some other time. 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!  The good news is that 61% received it, even if late.  20% say they never received it and 20% 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, 39% said they had a written representation agreement with their agent; 19% said it was oral; 28% had no agreement and 15% did not know;
  • Buyers ranked a number of agent qualities as “very important”: 97% want honesty and integrity; 93% want them to be knowledgeable about the process; 93% want them to be responsive; 88% want communication skills, 83% want them to be able to negotiate and 46% mentioned technology skills.
  • The top three benefits Real Estate agents provided were: 61% said helping buyers understand the process, 60% said pointing out features or faults with properties, 48% said negotiating better terms, 47% said providing a list of service providers, 37% said negotiated a better price and 30% said shortened the home search.

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 expectations! 

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

May 20, 2020

PA Governor Amends Covid-19 Executive Order:  Real Estate is Now “Essential”!

Since March 19, 2020, the PA Real Estate market has been in a form of suspended animation.  For those agents who followed the law, business stopped on a dime.  Properties that went “under contract” prior to that date were allowed to move forward although many municipalities and contractors were not willing or able to help complete the sale.  Even then, many of those owners were frustrated in their efforts to buy their “next home”.  Some ended up paying two mortgages.

 

Otherwise, agents were not allowed to conduct business “in person”, owners with “active” listings could not have actual showings and buyers could not visit properties to see inside.  Business could be conducted “virtually” which likely worked better with “under contract” properties since those prospective buyers had likely seen the interior of their intended purchase.  Properties that had been inspected were in the best position although getting to settlement had its issues especially if a municipal inspection needed to be done since many of those departments stopped doing business.

 

Owners still looking for buyers had issues.  Most buyers are reluctant, even in a competitive market, to make an offer without actually being able to see the interior.  Buying “sight unseen” happened but I liken it to “online dating” where someone tells or shows you what they want you to “know”.  What could go wrong?  At least that was better than going on a “blind date”!

 

While I respect different “business models” and understand that some buyers and sellers needed a “creative” solution to work past our being the only state where Real Estate was considered “non-essential”, buying “sight unseen” is risky.  For a few hundred dollars a buyer could use a property inspection as a way out.  While not intended as legal advice, it happens.  Some buyers cannot afford to waste any money so this may not have been an option for them.  What about a seller who risks this happening to them?  If the listing agent follows the rules, the property history may stigmatize the property if others thought there were issues with the house whereas the problem was really the buyer.

 

Fortunately, there is a new “dawn” albeit with some restrictions.  Some sellers and buyers will jump at the opportunity; others may choose to wait to see what happens.  How many are currently unemployed and unable to get financing?  How many sellers need to buy their “next home” and are not ready to compete or who feel that the “right one” is not yet on the market?  If possible, some sellers may want to get their house sold even if it means renting for a short time.  At least their purchase won’t be tied to a sale and they may be able to determine if they really like an area they were considering.

 

As I always say, you cannot “time the market” so I encourage buyers and sellers to determine what is in their best interests.  I am an experienced, trained and educated REALTOR and can offer the knowledge and insight to help you evaluate what is best for you.  Assuming that people follow the guidelines and requirements for resuming Real Estate activity, my hope is that PA continues to improve so that we can avoid a set-back.  Time will tell.  Either way, I can help you now or later!  I do suggest doing some planning and preparation so we can do an effective and efficient campaign when you are ready.  That could make all the difference.

 

In the meantime, please visit my web site, listen to my podcasts and read my blogs.

 

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

 

HIRE WISELY:  We are not all the same!

May 9, 2020

How Buyers Bought Real Estate in 2019: Who is the Typical Buyer? Part 2 of 2.

Today I want to discuss the 2019 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 125 questions mailed to over 159,750 recent home buyers who purchased a primary residence between July 2018 and June 2019.  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:

  • 87% purchased existing homes; 13% bought new construction;
  • Nationally, buyers typically paid 98% of the asking price;
  • 55% of buyers said that finding the “right property” was the most difficult part of the process; 26% mentioned financing (including saving for a down payment (13%), getting a loan (8%) and the appraisal (5%)), 19% cited the paperwork and 18% 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;
  • 86% financed their purchase, typically financing 88% of the purchase price with first-timers financing 94% and repeat buyers financing 84%;
  • The median down payment was 12% for all buyers with 6% for “first-time” and 16% for “repeat”;
  • 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 51% 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;
  • 94% were “satisfied” with the process but only 63% reported being “very satisfied” while 7% were somewhat or 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;
  • 61% were given agency disclosures at some point with 27% at the first meeting, 23% when the contract was written and 11% at some other time. 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!  The good news is that 61% received it, even if late.  20% say they never received it and 20% 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, 39% said they had a written representation agreement with their agent; 19% said it was oral; 28% had no agreement and 15% did not know;
  • Buyers ranked a number of agent qualities as “very important”: 97% want honesty and integrity; 93% want them to be knowledgeable about the process; 93% want them to be responsive; 88% want communication skills, 83% want them to be able to negotiate and 46% mentioned technology skills.
  • The top three benefits Real Estate agents provided were: 61% said helping buyers understand the process, 60% said pointing out features or faults with properties, 48% said negotiating better terms, 47% said providing a list of service providers, 37% said negotiated a better price and 30% said shortened the home search.

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.

Please look for my post on how sellers sold Real Estate in 2019.

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

HIRE WISELY!  We are not all the same.

How Buyers Bought Real Estate in 2019: Who is the Typical Buyer? Part 1 of 2.

Today I want to discuss the 2019 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 125 questions mailed to over 159,750 recent home buyers who purchased a primary residence between July 2018 and June 2019.  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 same as in 2018. The historic number has been 40%.  The typical buyer was 47 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: 81% 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 20% saying 1 to 5 years, 45% saying 16 or more and 20% saying they did not plan on making another move;
  • As far as motivating factors influencing location: 63% prioritized the quality of the neighborhood, 46% convenience to their job, 44% the affordability of the house (owning can be cheaper than renting!), 26% the quality of the school district, 20% walkability.  When you buy a house, you are buying the neighborhood and a lifestyle:  this is more than simply buying a product;
  • As far as characteristics of the home and how they compromised: 25% prioritized price, 23% condition, 19% size, 7% quality of the neighborhood, 3% quality of the schools.  29% did not compromise.
  • 44% of buyers looked online before doing anything else with 93% using the Internet at some point during the process; 16% started by contacting an agent; 12% 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; 87% on an agent. Traditional methods are still used but to a much lesser extent than in the past.  For example, only 51% visited open houses, 39% looked for “For Sale” signs and 11% 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;
  • 65% 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 9 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 often 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?;
  • 52% of buyers who used the Internet found the property they bought online. 71% who used a mobile device found their home through a mobile application.  29% through an agent;
  • 89% of buyers used a Real Estate agent and 91% who used the Internet used an agent; 5% bought directly from a builder or builder’s agent; 4% 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!
  • 52% of buyers wanted a Real Estate agent to help them find the right house, 23% wanted help negotiating (12% mentioned “terms” while 11% mentioned “price”), 8% wanted help with paperwork and 6% wanted help valuing comparables.

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.

Please look for my post on how sellers sold Real Estate in 2019.

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

 HIRE WISELY!  We are not all the same!

How Sellers Sold Real Estate in 2019:  Who is the Typical Seller?

Today I want to discuss the 2019 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 125 questions mailed to over 159,750 recent home buyers who purchased a primary residence between July 2018 and June 2019.  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 2019 that number was 10 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 5 years while those over 75 sold after 19 years;
  • The median selling price was 99% of the final asking price with 27% getting full price, 17% getting more than asking and 20% getting less than 95% (7% got less than 90%). 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;
  • Houses selling in the first 4 weeks achieved a median of 99%; after 16 weeks the number fell to 93%.
  • 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 57 years old;
  • 69% were repeat sellers while 31% were selling for the first time;
  • 70% who sold a home stayed in the same state; 17% moved to another region; 13% stayed in the same region but a different state;
  • 44% bought larger homes; 30% bought a similar size; 26% down-sized. The age of the seller strongly correlates with these statistics;
  • 48% bought a newer home than they sold; 28% bought one the same age; 24% bought an older home;
  • 44% spent more than their selling price; 26% spent the same; 30% spent less;
  • The most common reason for selling for all sellers was that the house was too small (13%), followed by moving closer to friends and family (a combined 16%), job relocation (11%), change in family situation (10%) and neighborhood became less desirable (10%);
  • 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;
  • 89% of all sellers used a Real Estate agent with only 8% being a FSBO. 89%, while down from 91% last year, is consistent with the last few years 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.  Most of those involved a seller who the buyer already;
  • 89% of all sellers listed their homes on the Multiple Listing Service while 4% did not; 65% used a yard sign;
  • 21% of sellers wanted help marketing their home, 20% wanted to sell within a specific timeframe, 19% wanted help with pricing and 16% wanted help with ways to sell it for more;
  • The median selling time for all sellers was 3 weeks with 11% selling in less than one week, 35% taking 1-2 weeks and 14% taking 3-4 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;
  • 34% of sellers used buyer incentives to attract interest. The top three were home warranties (17%), closing cost assistance (14%) and remodeling/ repair credit (8%).  After 16 weeks this number rose to 47%.  These are not guaranteed to get the job done and should be discussed at the outset;
  • 66% of sellers were “very satisfied” with the process; 26% were “somewhat satisfied” and 8% were somewhat (5%) or very (4%) dissatisfied;
  • The overall median selling price was $275,900. Remember that this is a national number.  The median selling price for FSBOs was $200,000; for agent-assisted sales it was $280,000 and for FSBOs who eventually used an agent the median selling price was $261,000.  This clearly shows the advantage of hiring and paying a professional;
  • The median equity in a sold home was $60,000.

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.

Please look for my posts on how buyers bought Real Estate in 2019.

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

HIRE WISELY!  We are not all the same!

April 2, 2020

The Spring Market is Delayed

The coronavirus is having a major impact on the world, our country and most of us.  My deepest sympathy goes to everyone who has been personally impacted in any way.  Life is very different today than it was just a few weeks ago.  Let me discuss Real Estate.  I am not minimizing or dismissing any other profession but I am a REALTOR and Real Estate is a major component in our economy.  It will be crucial for our recovery.

The “spring market”, the peak selling season of the year, has usually begun by now.  Many owners want to move after school has ended or before enjoying the summer.  However, the pandemic has essentially stopped the typical spring market, perhaps delaying it for months.  Whatever the long-term results of this, it touches on something I see and say every fall and winter.

Fall, specifically September and October, is typically the second wave of Real Estate activity.  While Real Estate can and does sell every day of the year, there are really two major seasons.  After summer and enjoying the great outdoors, I suspect some return home from vacation feeling claustrophobic as they adjust to spending more time indoors while others want to sell before the new year.

What is interesting and happens every year is that many owners who were unsuccessful trying to sell, decide to wait until the next spring.  Some are frustrated by the process; others want to enjoy the coming holiday season.  Every year I remind people that houses sell every day, that most houses look their best in the fall and, as we are clearly seeing NOW, who knows what spring will bring?  There are many who came to regret leaving the market in 2008.  Then the market crashed.  How many might have sold and moved on had they committed to trying to sell?  And now this.

We started off 2020 with nice weather so the Real Estate market continued to perform well.  Some still kept their houses off the market.  Inventory levels remained low which undoubtedly concerned many wondering where they might move.  What happens to their plans?  Does this describe your situation?

How long will this last?  What will life be like afterwards?  What will be “normal”?  How quickly will our booming economy return?  There are so many questions but we have to look forward, don’t we?

In PA Real Estate is not considered an essential industry so we are not allowed to have direct contact with prospective clients.  Properties that were already “under contract” are moving forward, likely relying on technology, although there are hiccups.  Property “due diligence” inspections, mortgage processing and municipal inspections are facing hurdles requiring cooperation to continue moving forward.

However, trying to sell houses that have been recently listed or still on the market unsold is very difficult.  We are not allowed to show houses in the usual way.  We can rely on technology which is great but that puts buyers and their agents into the position of doing business without actually visiting a homeWhat could possibly go wrong?  Taking new listings is equally difficult if we are following the rules.

I  am confident that this will pass.  Hopefully quickly!  Owners will have an opportunity to decide whether to move forward with their plans, albeit delayed, or wait until some later date, perhaps “next spring”.  I am here to help you and provide knowledge and insight to help you make an informed decision.  Whether sooner or later, we can get back to normal and move forward with your plans.

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

HIRE WISELY:  We are not all the same!

March 14, 2020

Buying Real Estate “Sight Unseen”

When we experience a “seller’s market”, meaning that there are more buyers looking than there are properties available for them to buy, the competition often leads to frustration.  This is especially true when getting to see inside becomes an issue.  It is not unusual for a buyer to have to bid on several houses before getting an offer accepted.  At least they got to see inside and make an offer, right?

A new policy created by NAR, the National Association of REALTORS, and implemented by Bright MLS has added to the drama.  As a result, some are making offers to buy Real Estate “sight unseen”.  What does this mean and what are the implications?

We have experienced “seller’s markets” before and we will again.  Generally speaking, a combination of low mortgage interest rates and low inventory causes houses to sell quickly, making many buyers and sellers act differently than they might in a more balanced market.  Asking prices may be the “floor” rather than the “ceiling” when it comes to making an offer and a buyer, assuming they have an opportunity to see inside a house and make an offer, may not get a second chance so it may be wise to offer their “highest and best” from the beginning.  However, the regulations covering appraisals are stricter than in the past so offering above the asking price is not always the best answer.  What to do?

Many buyers, frustrated by competition, bidding wars and houses they cannot get in to see, are trying to be creative.  They have several options in addition to the amount of their offer such as:  offering a high deposit, being flexible with a settlement date and waiving inspections.  Some may give up or delay buying.  Many sellers are overwhelmed by multiple showings, multiple offers and, as unusual as this may sound, not knowing whether their highest offer will appraise and, if they get an acceptable offer, whether they will even be able to find their “next” home.  One of the ironies of this type of market is how a seller who has a lot of leverage when selling will react when they are buying without having the same leverage.  The shoe may literally be on the other foot.

Enter the new NAR policy called the “Clear Cooperation Listing Policy”.  It has caused confusion and frustration although most REALTORS understand why it was necessary.  Frankly, it is impossible to deny its purpose.  It requires brokers to upload property information to the MLS within 1 business day, excluding weekends and national or state holidays, of any public advertising which includes a “For Sale” sign and social media.  Violating the policy may result in a substantial fine.  Absent public advertising, we are required to upload the information to the MLS within 3 business days.

Some think the new policy a direct assault on a long-standing business model known as the company or office “exclusive listing” where listings were taken and “publicly advertised” but kept off the MLS because the listing broker would not offer to compensate buyer agents working for other “brands”.  Real Estate prides itself in having many different business models as long as we operate within our various rules and regulations.  However, some of this creativity may appear to conflict with our core principles.  I discuss “exclusive listings” in an article entitled “Coming Soon” and will mention that, while still a legitimate business model, they are no longer able to be “publicly advertised”.

The MLS platform is a member-only web site for sharing property information among members to “cooperate” with them for our mutual benefit.  We are “match makers”, meaning that we help bring buyers and sellers together.  A major aspect of this is that we sell each other’s property listings. The creation of the MLS platform made our jobs easier by increasing the effectiveness and efficiency of how we marketed and learned about property listings.  Before the MLS, agents and companies were on their own.

The goal is to expose Real Estate to the broadest possible market which should theoretically “protect and promote” the interests of both sellers and buyers as required by Article 1 of the REALTOR Code of Ethics.  Presumably, this should allow sellers to achieve the highest possible selling price and the best terms in the shortest period of time by ensuring that as many buyers and agents as possible would be able to access property information, schedule showings and, if a buyer liked what they saw, make an offer.  It essentially levels the playing field by making information and properties accessible to all.

Unfortunately, we still live in a society where some people or groups are excluded from opportunities to see and buy Real Estate.  Undercover investigations and complaints from the public still show this to be true even if not as obvious or pervasive as before.  It is unacceptable when anyone is prevented from being able to buy housing and live where they want to live when affordability is not an issue.

The reaction to any major policy change such as this one can be interesting and it remains to be seen how this one plays out.  Will any listing agent blatantly disregard the policy despite the MLS stating their intention to impose a severe fine for violations?  The public, including agents representing prospective buyers, also has options for responding.

What can a buyer or agent do when they cannot get the information they need about a property listed as “Coming Soon”?  The “Coming Soon” status means no showings are allowed to anyone but the MLS should provide information, shouldn’t it?  The concern is that some agents and their buyers, including the listing agent’s own buyer-clients, are being allowed to view these properties and make offers before they are made available to the public.  Instead of converting to an “Active” status many of these go right to “under contract”.  What are an agent and buyer supposed to do?  They will know the “projected” date when the listing status will change to active, allowing showings, and may even know when offers will be presented.  However, those dates can change without notice so should they wait and hope or take some other form of action?  Waiting may result in failure.  Some are making offers on houses without the buyer or their agent actually seeing inside.  This raises two concerns.

First, we have a fiduciary duty to represent our buyer-clients but what is our risk in preparing an offer on a home that neither of us has seen?  Suppose neither has actually visited the location to see the exterior or the neighborhood?  While I am certainly not a contractor or an inspector, I have seen a number of things both inside and outside houses that made me question the pricing or condition of a home and, when asked, I have offered my opinion on whether to pursue a house, how to negotiate the price and what to inspect.  Obviously an agent needs to make sure they are not exceeding their level of competence.

What options does a buyer have if they come to realize that a house is not as nice as they had hoped or expected based on the exterior or the MLS presentation including pictures and public remarks?  Suppose the listing has poor quality or no pictures and little or nothing in the way of a description?  Most agents will tell you that an inspection contingency provides a “way out” and, while it does, it has a cost to the buyer and it takes time.  Would they make an offer “sight unseen” without inspections?  I could go on.

Second, as a listing agent, as attractive as it may sound to sell a client’s house without their having the  inconvenience of showings, suppose a buyer uses a home inspection to terminate a sale when there is really nothing wrong or a seller would make any repairs they might request?  Perhaps they offered a low deposit and are willing to forfeit it to terminate a contract?  A failed sale stigmatizes a house, perhaps even worse than a lengthy time on the market.  If a house comes back on the market quickly after going under contract it generally means that something happened during the inspection contingency time frame.  That could negatively impact future interest as well as the eventual selling price.  Some listing agents do not report that a house is “under contract” to avoid all of this.

I have heard both sides and wish I had an answer.  There is no perfect solution and buyers and sellers, including their agents, will always have a different perspective.  If a buyer wants to make an offer without seeing inside, is this really the best option?  Where is the liability?  I am not sure.

Realistically, if I were a seller I would be reluctant to accept any offer without a showing especially if it contained a frivolous or easy way out unless there were a substantial, perhaps even a non-refundable, deposit.  If I were a buyer I would be reluctant to buy “sight unseen”.  At the very least I would want to walk the exterior to identify potential concerns and include them in my offer.  Otherwise, a seller might say a house was being sold “as-is”, another contentious term, and was priced accordingly or that any concerns should have been factored into the buyer’s offer.  The cost to inspect and potential time lost could prevent a buyer from seeing the best house.  Does it make sense to reduce buying Real Estate to essentially being like a “blind date” where neither side has any real obligation?

While “seller’s markets” will occur over and over again, the new “Clear Cooperation Listing Policy” has added a new twist to an old theme and time will tell how we all adapt to it.  The first fine for violating the new policy will have a major impact going forward.  A “buyer’s market” will change much of the drama.  Either way, there will always be another twist.

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

HIRE WISELY:  We are not all the same!

January 18, 2020

Bright MLS December 2019 Residential Housing Report

Bright MLS has released their Residential Market Statistics for single family homes through December  2019.  In today’s podcast I will discuss 2019 results for Delaware County Pennsylvania.  If you would like information about this or any other County or any specific municipalities in the Delaware Valley, please contact me.  I am only a text, email or phone call away!  I respond promptly to all inquiries.

The report compares 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 any more than there is a national weather forecast so, whether you may be thinking about selling or buying, 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.  This is especially true if you are relying on Internet valuation models which use recorded data rather than up-to-date MLS information.  Even then, while a sale may be reported as 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, even if not perfect, is important!

As far as the statistics, there were 8931 units listed for sale through December 2019 compared to 8788 listed in 2018 with an end-of-month inventory level of 1022 compared to 1412 in 2018 with a monthly supply of inventory or MSI of 1.9 compared to 2.8.  6994 properties settled in 2019 with an average “selling price” of $289,411 and a “median” selling price, meaning that half of the sales were higher and half were lower, of $225,000 compared to 7057 settled in 2018, same time period, at an average price of $271,767 and a median selling price of $208,000.  The year-to-year change in settled properties declined less than 1% while the average selling price was up 6.5%.  The “days on the market” or DOM for settled properties was 42 in 2019 compared to 50 in 2018.  The MSI suggests a seller’s market with low inventory levels overall.  A 3-month supply of available inventory is generally considered a “balanced market”.  Again, these numbers vary:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

We can debate whether average or median numbers 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, recently 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 still remain unavailable.  Did owners delay, change or give up their plans?  This happens more often as the holidays and year end approach which I find fascinating.  I tell my clients that I cannot guarantee that their house will sell if it is on the market but am fairly certain that it won’t if they take it off the market.  Anyone trying to sell now will have less competition and houses tend to show their best this time of year.  I understand that showing and selling a house during the holidays and winter-time can interfere with enjoying the season and it can be messier but buyers out looking now tend to be serious.  Of course, if a seller needs to buy their next house, the inventory level is much lower than normal.

Generally speaking, 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 and agents may not have even known that a house was available to look at or 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:  why try to negotiate a price down when other similar properties are available at more competitive prices?  Many sellers open to negotiating their price will 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.

I hope you had a great holiday season and have a happy and healthy new year!  If you want or need to sell any type of Real Estate, whether you tried and did not succeed before or are planning for the first time, NOW is the time to plan for 2020.  Please do not wait for what you think is a better or the best time to start.  Buyers look all year long and can only see and buy properties that are available to see.

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

HIRE WISELY:  We are not all the same!

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