Andrew Wetzel's Musings

April 24, 2021

My Buyer’s Offer Did Not Get Accepted. What Can They Do? Part 2 of 4: The Search

Whether you are starting the process of buying a home, actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is part 2 of 4, The Search.  This is a broad topic with no “one size fits all” answers.  My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.  How a buyer and their agent conduct “the search” will help determine the outcome.  Is the buyer convinced that they are aware of every house that is a potential match?

As I discussed in part one, Planning and Preparation, I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  Once you have hired an agent, spoken to a lender to determine your financial comfort level and thought about your “needs” and “wants”, you are ready to move forward.  There is no guarantee of success but working on those three items can be a real asset later.  All you can do is put yourself in the best position to compete.  The search then becomes the focus.

If you have not already set up a search, now is the time.  If you already have one set up, I suggest you re-evaluate it.  Your search criteria may change so I suggest that you keep your agent informed so that they know what you are looking for.  You may even have more than one search set up.  My point is that you and your agent should be searching for the same properties for you to consider.  Otherwise, you may miss an opportunity.

For many buyers, the initial search results can be overwhelming:  do not get frustrated or complacent with the number of possibilities or how to evaluate them.  You will likely find that many are not real matches so do not think that a high number of search results guarantees accuracy or ensures success.  Some of the houses on the list may already be under contract or close to it:  you are not the only one seeing the information.  On the other hand, there are probably houses you might like that do not appear in your search results.   I will cover this further in part 4 but will tell you that any search results are only as good as the information a listing agent uploads and the criteria a buyer or their agent uses.  This is why searching on your own can be deceiving.

If there are only a few houses in your search results, you can wait to see if any house sales fall through and what houses come on the market.  Or, you can revisit your comfort level or your wants and needs to try to expand your options.  Your time frame and patience will determine what you do.  If there are many houses, you may want to consider adding to your search criteria or prioritizing the list before starting any showings.  Again, do not take comfort in thinking you have many options.  In either case, do not feel pressured into pursuing the best of a number of bad choices.  Buying a house is a major life decision.

Buyers need to stay on top of new and updated property listings.  Again, you are not the only one getting this information.  Where and how frequently you get information are things to consider.  You need to decide which houses to visit unless you are willing to make an offer “sight unseen”.  Showings add a potential new task to the list and it frustrates some buyers.  Let me explain what I mean.

I have shown buyers just one house while I have shown a few buyers as many as 20 or so houses during one tour.  I have found that showing a buyer about 5 houses makes a good tour if there are that many to see.  This allows buyers to take their time and remember what they saw.  A tour should not be a race to get done.  After the initial search results, unless a buyer makes a major change to their criteria, you may only see a house or two on any given tour and that is fine.  Waiting until you have more to see only allows other buyers to get there first.

If there are 5 or fewer houses in your search results, we should try to see them all.  Of course some may already be under contract or our schedule may conflict with an owner’s which can create an issue if you really like one we see but you want to wait to see one or more we couldn’t get in to see.  What do you do?  If you wait, the one you like may be sold to another buyer and you may find that any you waited to see were not right for you.

Suppose there are 10 houses in your search results.  We could try to see them all but let’s assume that we need to go out twice.  If a buyer has prioritized their list from “best to worst”, they may have eliminated some and we can start looking at the best.  Then, if they see something they like during our first tour, they may be able to commit to making an offer knowing that the remaining houses did not measure up to what we saw.  In slower markets you may be able to see a house a second time.  You may want to compare two or more or have someone whose opinion you value take a look.  In hot markets, especially with low inventory, there is little time to waste.

How buyers prioritize their list is subjective but technology has made it easier.  The MLS and Internet allow more pictures and longer descriptions than in the past.  That being said, some agents use far too many pictures while others upload no pictures at all or only a few.  Some delay uploading pictures:  do you wait to see them?  Many listings have pictures of low quality but at least a buyer gets to see more than they could years ago.  The MLS and Internet can really help with eliminating houses instead of wasting your time and effort.  Every day you spend looking at houses that you don’t like could let another buyer get one you would have liked.  Buying Real Estate can be very competitive.  It can be like shopping on Christmas Eve for that new toy.

If there is time, especially if we will need to go out several times to see all of the options, I encourage buyers to drive by houses first so they can prioritize where to start showings.  This is especially true if the pictures or description are lacking.  The initial search results tend to offer the most possibilities which means more drive time than may be needed later.  Future results will likely be fewer in number making this easier.  Some buyers just want to get inside and question why they should take the time to drive by.  When you buy a house, you are buying the neighborhood and a lifestyle.  I have had many sellers tell me they wish they had spent more time looking to see if a better option were available.  Some just wished they had bought a different house.  Their houses tended to be harder to sell and provided lower equity than others they might have bought.

Driving through neighborhoods on your way to see houses on your list will help you learn more about different areas and your potential neighbors, especially if you are looking in unfamiliar areas.  In addition to gathering information, you may even see a “For Sale” sign on a house not yet listed.  I have had buyers add or eliminate areas to their searches based solely only on their driving through neighborhoods.  The better informed and more comfortable a buyer is, that goes back to planning and preparation, the better off they will be when they commit to making an offer.  Hesitation and indecision are not good, especially when there is competition.  Driving by houses is a great way to prioritize the list.  Some buyers may need to consider compromising between the best area and the nicest house.  You can change or update a house but the neighborhood is what it is.

Ideally, when a buyer finds a house they really like, if they have done the planning and preparation and are satisfied with how we have searched for options for them to consider, they will feel more comfortable making an offer.  They may learn something later that affects their decision which is why we have contingencies like property inspections.  Looking online is not the same as walking through a house and, unless you are a contractor, you won’t have a complete understanding of a house after a showing.  Again, this is not retail.  The process has several steps, allowing buyers and sellers opportunities to change their mind.  If there is doubt when making an offer, it can get magnified later.

As I mentioned earlier, house sales fall through putting some houses back on the market and new listings will appear.   Perhaps a price reduction makes a house an option that was not there before.  A buyer can wait, hoping or expecting something better to come along.  Maybe it does; maybe it doesn’t.  If a sale falls through, what happened?  Is there an inspection report available or was there a financing issue?  In general, how is the market evolving during your search?  Are prices rising, stable or falling?  What is the trend in the interest rate?  Any of these can add pressure, especially if you are not completely comfortable with what we are doing.  There is a lot that goes into buying Real Estate!

The simple fact is that there are many variables when it comes to identifying houses to consider buying and how to react to the information you have.  Some are controllable; some are not.  The challenge may seem endless and the “fun” aspect can evaporate.  All any buyer can do is put themselves in the best possible situation to identify and react to any choices they have.  They may or may not have a lot of time to see a house or decide whether to make an offer.  They should not assume they will have a second chance to reconsider how interested they are.

Any buyer can readily get a lot of the data and information from numerous sources but most need a professional to provide the knowledge and insight required to navigate the entire process.  When is it time to stop and make a decision?  Once you think you have identified the BEST house for you, how do you get to own it while protecting yourself if something goes wrong?  In part 3 I will discuss The Offer.

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

HIRE WISELY:  We are not all the same!

April 16, 2021

Is it a Better Time to Sell or to Buy Real Estate in Spring 2021?

As is usual, my best answer is it depends!  Can the answer be a “tie”?  I would like to think that when Real Estate is sold that both people “won” but Real Estate is a competitive process where two people have opposite if not adversarial motives.  No buyer ever said I want to give the seller as much money as possible unless, of course, they know there is competition or they intend to use their successful offer as leverage to negotiate something to their benefit later such as inspection results.  No seller ever said they wanted to give a buyer the lowest price unless they wanted to dump the property or intended to make no repairs.  Most sales happen between those extremes.  Getting to settlement is another matter.

The market today, Spring 2021, is as competitive as I have ever seen and I have been doing this since 1996.  The years from 2003 through 2008 were fairly hectic but that was a true “bubble” fueled by government manipulation to increase home ownership that relied on loose lending standards which financially destroyed many of the buyers it was supposed to help.  Sadly, many who bought were not really qualified to manage the finances and, frankly, many flippers took advantage of the market and sold bad rehabs.  I could go on but my main point is that this is NOT what is happening today.

Today is very different.  The market has been created by a combination of perpetually low interest rates, extremely low inventory and pent-up demand delayed by the pandemic.  Lending standards appear to be solid so buyers are better situated today, at least financially.  That being said, this cannot go on forever.  Interest rates have been rising slightly but there is plenty of money to lend.

Two significant variables are likely to change.  One is the number of buyers.  If this is anything like the “bubble years”, buyers have jumped off and over the proverbial fence and decided to buy earlier than they had been planning.  Sooner or later the market runs low or out of qualified buyers and I hope that does not result in easing lending standards.  The other variable is the inventory level.  My best guess is that the number of properties for sale will rise once whatever is holding owners back changes.  Just as the number of buyers was inflated by a number of factors, I believe that owners have been held back by a number of factors.  These diverging trends produced what we are seeing today.

Real Estate depends on “supply and demand”:  buyers and sellers are on opposite ends of a proverbial see-saw.  The supply of one often exceeds the supply of the other causing prices to rise and fall.  Competition drives prices up; excess inventory drives them down.  External factors like interest rates, the general economy and other variables like a pandemic play a vital role.  So back to the original  question, is it a better time to sell or to buy?  Let me break it down this way.

I believe that the group that has or had the most to gain in the current environment are the owners of properties which they were not selling to buy something else.  I call these “extra” properties.  Whether they are vacant, used for investment or the owners were willing to go into a rental or some other arrangement, those owners only had to focus on getting the most they could for their property.  What they achieve is determined by their understanding of what is going on and their risk tolerance.  Did they sell too soon or did they wait too long?  Many will regret missing the opportunity to “cash in”.

While I value home ownership and embrace the concept of owning compared to renting, I fear that the group who may have the most to lose are the buyers who jumped in without really thinking long-term.  It is nice to talk about building equity and owning a home for almost the same monthly payment as your rent but home ownership is more complicated than numbers.  A home purchase decision can easily become regrettable if one or more of the following happens:  you spend your savings for a down payment and suffer a loss where your savings are needed, you buy without doing the legwork to see if a neighborhood or house fits your lifestyle (having to resell in the short term can be costly), you made an offer you come to regret (did you buy “sight unseen” or waive inspections to make your offer more competitive?).  Long term, Real Estate tends to be a great investment.  However, the short term is more volatile.  Either way, you have to live somewhere but Real Estate is an investment and subject to risk.

Don’t get me wrong, private home ownership is one of the many blessings we have in America.  However, with any opportunity comes responsibility.  Buying Real Estate is an emotional decision justified with logic.  “Normal” markets generally allow a buyer time to really consider whether it is the right time for them to buy and whether a specific house really fits their “wants” and “needs”.  You may have time for a second showing or to have family and friends take a look.  Sadly, I have worked with many sellers who told me they wish they had bought another house.  I have heard many stories of how they made their decision, what they wish they had done differently and how their decision impacted their life.  Where you live affects the quality of your life.  A poor decision can rob you of equity.

The current market does not generally allow a lot of time to think and ponder, let alone compare your options.  It may compel buyers to make unwise offers they may come to regret.  I have heard many buyers respond to being told that a seller accepted another offer by saying “it wasn’t meant to be”.  That is a great response, especially if they meant it.  I have also seen people react as if their world were crumbling.  I try to prepare my clients as best I can and hope that they are ready for the process.  Planning to buy Real Estate requires a serious commitment and can be like a full-time job.

If the last frenzy was any indication, I suspect that 10 to 15 years from now, some of today’s buyers may find that their house is worth about what they paid, no more and hopefully no less.  At least that means that they “broke even”.  You have to live somewhere.  After 10 to 15 years of paying rent you walk away with nothing and, chances are, your rent has gone up dramatically.

On the other hand, unless they are forced to sell, I don’t see sellers reminiscing about a house they sold, wishing they could get it back.  Cars have that effect but not houses.  That is not to say that all sellers succeed.  Their motivation or sense of urgency may cause them to accept an offer that was not the best.  On the other hand, patience is a virtue but it can be expensive.  Contingencies within an offer can cost them money even if the price seemed nice.  A seller needs to be informed about the market just as buyers do.  Are they more focused on the money they achieve or how long it takes to sell?

There is one more group to consider:  the seller who needs or wants to sell one house to buy their “next home”.  In this market, they may be facing an uphill battle especially if they have competition.  That type of contingency can really impact the process.  It also impacts prospective buyers for their house.  I see listing contracts expire or get canceled because a seller wants a buyer to give them time to find a house or they want a short-term rent-back.  Any of that may be a concern for buyers.

If a seller is buying their “next home”, aside from how they manage an agreement with their buyer or the seller of the home they like, they need to compare their market with that of their “next home”.  It may be a great time to sell, convincing them that they may never have another chance to get what this market offers.  However, what will their “next home” cost them?  One of the ironies I have seen a number of times is the owner who expects top dollar for their home and thinks they can get their “next home” cheap.  There is a serious disconnect there.  On the other hand, while the two processes have to be coordinated, I have seen sellers who really needed to reduce their asking price but refused to even consider it.  If a reduction makes buying impossible I understand that but ego can get in the way.  If the seller’s property’s market value is flat or declining and the cost of buying is rising, we have a conflict.  Every day, week or month that passes is costing them more than they are gaining.  Some sellers are willing to rent so that they can sell and, ideally, buy later when prices stabilize, whatever that means.

Buying or selling as a single, disconnected act is one thing.  No one can predict what tomorrow will bring and decisions always look clearer in hindsight.  Tying a sale to a purchase or a purchase to a sale takes the game from checkers to chess and expands the thinking.  The possibilities can be endless!  All you can do is get the best information you can, decide what you want and need to accomplish and know when to make a move or when to hold back.

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

HIRE WISELY:  We are not all the same!

My Buyer’s Offer Did Not Get Accepted.  What Can They Do? Part 1 of 4: Planning and Preparation

Whether you are thinking about buying a home, are actively engaged in house hunting or you have already been denied a house you wanted, I want to share some time-tested advice.  I am going to cover this from four perspectives.  This is a broad topic with no “one size fits all” answers.  I strongly believe that planning and preparation will put you in the best position to identify houses that may interest you and, when you find one, maximize your opportunity to own it.  There are many variables in the home buying process, some of which you can’t control.  I encourage serious buyers to control what they can.

My advice comes with two disclaimers:  this is not intended as legal advice and it is not meant to interfere if you have an existing business relationship.

Let me start with the premise that a buyer (or perhaps you) made an offer and it was rejected.  If a buyer makes what they think is a reasonable offer and the seller does not accept it, they should have no regrets.  Easy for me to say.  If yours was the only offer, I would assume that you had a chance to negotiate but that you could not reach a mutually beneficial solution.  If you were competing with other buyers, only one offer could win.  Did the buyer have the right expectations about the process and how it might go?  Could or should their agent or the listing agent or the seller have done anything differently?

If the seller was given an opportunity to review all offers and was properly informed of any possible interest that existed and they accepted what they thought was the best offer, there may be no valid  reason to complain about the outcome.  Every signed agreement does not close so you may get another chance, if you want one, but do not assume you will.  In fact, depending on the type of Real Estate market, you may want to assume that you will not have a chance to change your initial offer.

I provide my buyer-clients with knowledge that I have gained through my years of experience, training and education.  I have also learned a lot by conducting mediations between buyers and sellers and listening to ethics complaints about agents.  Fundamentally, I believe that the process of buying or selling Real Estate is best looked at as a business decision, not a personal one.  It is also not a retail transaction.

Looking for a house can become a full-time job but it is worth it.  Your life will get back to normal after you succeed.  Bad decisions can be costly and their effects can last a long time.  How long do you plan to live in your “next home”?  Real Estate is typically our largest investment so buying or selling it requires planning and preparation.  It deserves our full attention.

I suggest that buyers do three things before they even start looking at houses and this includes not visiting open houses or looking online.  The goal is avoid being teased or distracted.  They may not even be consciously thinking about buying a house.  If they are, most buyers want to jump right in.  Frankly, looking at houses and imagining “what if” is the fun part although that can “get old” really fast especially after an offer has been rejected or terminated.  Easier said than done but if they see something they like and want to schedule an appointment or make an offer without really being prepared, the “process” can be frustrating, especially if a better prepared buyer likes the same house. 

So what are the three things?  They are all part of the “planning and preparation” that any serious house hunting requires.  If you fail to plan and prepare, you need to be prepared to fail.  Is failure an option?  What constitutes failure anyway and what happens next?

The order may vary but here is what I suggest doing:

  1. Hire an agent.  You want an experienced, trained and educated agent to protect and promote your interest throughout the process.  Sellers have an agent, so should you.  Hiring an agent includes related topics like understanding agency representation, contracts and the agreement of sale.  We do more than open doors and write offers.  You can find a lot of information about buying and selling Real Estate on my website AndrewWetzel.com.  Having agents you will not hire show you houses can be a problem, especially if you find the right house with the wrong agent.  I understand that committing to one agent, especially at the beginning of the process, seems challenging.  Tell us your concerns and let’s have a conversation.
  2. Get financially pre-qualified with a local, reputable lender.  Local and reputable are important.  I believe that only a live person can provide the information and service you will need.  Be wary of online offers, advertisements and “teaser” rates.  They may be “too good to be true”.  The interest rate is important but what are the total costs?  Do NOT overlook the quality of the service.  A serious buyer needs to know how much they can borrow, what it will cost them and, in some cases, whether they can actually get a loan.  Many buyers learn that they cannot get financing or that they need to do some work to get a loan.  It will be very frustrating if you learn either of these after finding the house of your dreams.  Some buyers may want to get a larger loan so they can buy a house they really like rather than settling for less.  Once you learn how much you can borrow, you need to determine your comfort level in terms of the monthly payment and your out-of-pocket expenses.  Knowing your comfort level will help determine the price range to search.  The type of market will complicate this:  is a seller’s asking price the “floor” or the “ceiling” for negotiating?
  3. Determine your “needs” and “wants”.  What is absolutely NON-negotiable?  Locations, schools, the number of bedrooms and bathrooms and other factors are important for most buyers.  “Quality of life” issues require some investigating and that can take time.  What would be nice to have?  Needs and wants add cost to a purchase.  Some buyers need to consider “trade-offs” or reducing their expectations while others can add to their “wish list”.  Your search criteria may change but you need a starting point to focus your attention.

Once you have managed these three, you can set up a search, start reviewing the possibilities and take action to own your “dream house”.  If there is competition, there is little time to waste getting into houses or making a decision.  Of course, if you have already started looking, you may have a search set up.  Now would be a great time to re-evaluate the search criteria. 

In part two, I’ll discuss the search for your first or “next home”.

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

HIRE WISELY:  We are not all the same!

January 13, 2021

Delaware County PA December 2020 Residential Housing Update

Tri-County Suburban REALTORS and Showing Time, using Bright MLS statistics, have released their Local Market Insight report for single family homes in Delaware County Pennsylvania through December 2020.  If you would like more information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, AndrewWetzel.com.  I am only a phone call, an email or a text away!  I respond promptly to all inquiries.

The market continues to be affected by the pandemic and resulting economic impact.   However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision whether and when to sell or buy Real Estate is a personal one influenced by a number of lifestyle factors and external variables.  The pandemic typifies that.

The report compares current year-to-date 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 greatly 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 as well as 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 are 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 can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 8309 units listed for sale through December 2020 compared to 8993 listed through December 2019, a decrease of 7.6%.  Low inventory levels continue to affect related data points.  There were 7139 closed sales through December 2020 compared to 6984 through December 2019, a 2.2% increase.  The median selling price through December 2020 was $250,000 compared to $227,000 through December 2019, an increase of 10.1%.  The large decrease in inventory, meaning the number of properties being listed, had a relatively small effect on the number sold while substantially increasing their selling prices.  The number of currently available properties is well below one year ago and the Days on the Market (DOM) and “Sold to List Price” ratio are much improved.  Do we have an inventory problem or pent-up demand?  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract. During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen”, some without inspections to make their offers more attractive to sellers.  The effects of these strategies remain to be seen but Real Estate, perhaps with the exception of those properties acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing let alone removing the protection of an inspection contingency.  Even with our property disclosure law in PA, many sellers either do not know about underlying issues with their properties or forget to disclose them.  Whatever your feelings about property inspections, they can provide important information to a buyer.

What about the properties that did not sellMany came off the market and still remain off the market.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have issues holding them back.  Given the statistics, are people making an informed decision or reacting to what they “think” is happening in the market?  A brief conversation may be very helpful if you have any questions about selling or buying.

Anyone thinking about selling or buying needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  However, the effects of buying and selling remain for years.  They are important decisions and likely require the knowledge and insight that an experienced, trained and educated professional can provide.

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 keep it off the market.  Anyone trying to sell now may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite the pandemic, every house will not sell.  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 local market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a property was available to look at or purchase.  Some buyers may even make “full price” offers just to control the process only to have remorse later as inspection results are revealed.

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 be happy to discuss specifics with you.

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 always 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.  Getting started is easy once you take action.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  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.  Based on what we experienced in 2020, is waiting for Spring something you would consider?

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

HIRE WISELY:  We are not all the same!

January 12, 2021

How Buyers Bought Real Estate in 2020: Who is the Typical Buyer?

NAR or the National Association of REALTORS has released its 2020 Profile of Home Buyers and Sellers.  The profiles are based on a survey using 131 questions mailed to over 132,550 recent home buyers who also purchased a primary residence between July 2019 and June 2020.  The focus of this article 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 conducts their survey annually.  This year’s results were unique as it was impacted by the pandemic starting in March of 2020.

As I learned years ago, buying a home is an emotional decision justified with logic.  Your home is typically your largest asset and picking the “right one” involves many lifestyle factors.  The buying process can be interesting enough when there is only one buyer involved, however, there are often situations involving more than one buyer.  Family and friends may also be involved.  People have different ways of making decisions and we all handle challenges and stress differently.  Buying a home typically offers plenty of both.

  • 31% were first-time buyers, compared to 33% in 2019.  The historic number has been 40%;
  • The typical buyer was 47 years old (33 for first-time and 55 for repeat buyers), with those aged 25 to 34 accounting for 23% of all sales;
  • The primary reason for buying was the desire to own their own home:  the numbers were 64% for first-time and 27% for repeat buyers;
  • 85% purchased existing homes, 15% purchased new construction;
  • 81% purchased detached, single family homes;
  • 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;
  • The median purchase price was $272,500, up from $257,000 in 2019 ($230,000 for first-time and $297,000 for repeat);
  • Buyers typically paid 99% of the asking price; 15% paid more than asking;
  • Buyers expected to live in their home for a median time of 15 years, 10 years for first-time and 15 for repeat, with 21% saying they would never move;
  • 43% started their search online while 18% contacted a Real Estate agent;
  • 91% found their agent to be a very useful or somewhat useful source of information;
  • Buyers typically searched for 8 weeks and saw 9 houses, 5 of which were only viewed online;
  • 97% of buyers used the Internet, the increase likely related to the pandemic;
  • 64% were very satisfied with the home buying process;
  • 88% used a Real Estate agent, 6% used a builder and 5% bought from the previous owner;
  • 51% prioritized hiring an agent to help them find the right home;
  • 87% financed their purchase with 95% of first-time and 83% of repeat typically financing 88% of the price.  First-time buyers financed 93% of the price and repeat buyers financed 84%;
  • 11% said that saving for a down payment was the most difficult step.  47% of them cited student loans as a problem with 43% citing high rent/ mortgage payments and 36% citing credit card debt;
  • 83% view a home purchase as a good investment;
  • Buyers typically searched online for 3 weeks before contacting an agent, two weeks during the pandemic;
  • 72% of first-time buyers were renters, 72% of repeat buyers owned their previous residence;
  • As far as motivating factors influencing location:  62% prioritized the quality of the neighborhood, 45% convenience to their job, 43% the affordability of the house;
  • As far as characteristics of the home and how they compromised:  23% prioritized price, 20% condition, 31% did not compromise;
  • 53% 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%)), 17% cited the paperwork and 15% mentioned understanding the process.  20% reported no difficult steps, which was common for repeat new home buyers;
  • 56% walked through homes they found online, down from 65% in 2019, 37% drove by to look at the exterior and did not go inside.  Driving through a neighborhood to see if it meets your needs is an excellent way to narrow your focus while perhaps seeing areas you may not have been considering.  Many buyers eliminate houses after seeing the exterior;
  • For internet “shoppers”, 89% found photos and 86% found detailed property information very useful;
  • 64% were “very satisfied” while 30% were somewhat satisfied and 7% were dissatisfied;
  • 59% signed an agency representation disclosure at some point with 27% signing at the first meeting, 23% signed when their purchase contract was written, 11% signed at some other time.  28% had no representation agreement;
  • 51% of buyers wanted a Real Estate agent to help them find the right house, 24% wanted help negotiating (13% mentioned “terms” while 11% mentioned “price”), 8% wanted help with paperwork and 6% wanted help valuing comparables;
  • The top benefits Real Estate agents provided were:  62% said helping buyers understand the process, 61% 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;
  • Buyers ranked a number of agent qualities as “very important”:  98% 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 48% mentioned technology skills; 
  • The median down payment was 12% for all buyers with 7% for “first-time” and 16% for “repeat”;
  • 28% found the mortgage application process to be much more difficult than expected with only a 1% difference between first-time and repeat buyers. 

Buying Real Estate is unique compared to most typical purchases:  not only is it done much less frequently 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 questions about the process, please contact me.

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 2020: Who is the Typical Seller?

NAR or the National Association of REALTORS has released its 2020 Profile of Home Buyers and Sellers.  The profiles are based on a survey using 131 questions mailed to over 132,550 recent home buyers who also purchased a primary residence between July 2019 and June 2020.  The focus of this article 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 conducts their survey annually.  This year’s results were unique as it was impacted by the pandemic starting in March of 2020.

  • The typical seller was 56 years old and had lived in their home for 10 years;
  • Sellers aged 18-34 sold within 5 years, those 65 and older sold within 16 years;
  • 69% had sold a home before and 31% had not;
  • 80% of the homes sold were single, detached;
  • 70% bought in the same state and the typical distance moved was 20 miles, 16% moved to another region, 14% stayed in the same region but in a different state;
  • 44% bought a larger home, 30% bought a similar size and 28% bought a smaller home;
  • 61% bought a newer home than they sold, 21% bought one the same age, 26% bought an older home;
  • 49% spent more than their selling price, 23% spent the same, 27% spent less;
  • The most commonly cited reasons for selling were to be closer to friends and family (15%), to buy something larger (14%), and a change in their “family situation” (12%);
  • 89% used a Real Estate agent, 88% used the MLS, 68% used yard signs;
  • 22% wanted to sell within a specific timeframe, 21% wanted help with pricing, 17% of sellers wanted help marketing their home, 16% wanted help with ways to sell it for more, 11% wanted help finding a buyer;
  • Houses typically sold within 3 weeks and achieved 99% of their final asking price.  Homes on the market for 2 weeks or less got full price, 29% sold in less than one week and got more than the asking price;
  • The typical selling price was $242,300:  pre-pandemic median @ $270,700 compared to $300,000 later;
  • The reported level of urgency rose after the pandemic, 46% compared to 39%;
  • The median equity in a sold home was $66,000;
  • 46% used incentives to attract interest.  The top two were offering seller assistance with closing costs and home warranties;
  • 69% were very satisfied with the process, 21% were somewhat satisfied, 10% were dissatisfied;
  • Only 8% sold without an agent, the lowest share since this survey began in 1981;
  • The typical FSBO was 57 years old;
  • The typical FSBO selling price as $217,900, more than 10% less than Real Estate-assisted sales ($242,300);
  • 77% of FSBO homes old within two weeks likely because they sold to someone they knew (51%) and sold for less.

The bottom line is that selling your home or any piece of Real Estate can be a very confusing and emotional process.  This NOT a retail transaction!  I respectfully suggest that you hire an experienced, trained and educated professional whom you can trust to sell what is likely your largest asset.  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 done much less frequently 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 questions about the process, please contact me.

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

HIRE WISELY!  We are not all the same!

January 2, 2021

Bright MLS November 2020 Residential Housing Report

Showing Time, using Bright MLS statistics, has released their Local Market Insight report for single family homes in Delaware County Pennsylvania through November 2020.  If you would like information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my web site, AndrewWetzel.com.  I am only a text, email or phone call away!  I respond promptly to all inquiries.

The overall market continues to be affected by the pandemic and resulting economic impact.  However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that.

The report compares current year-to-date 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 are 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 can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 7911 units listed for sale through November 2020 compared to 8661 listed through November 2019, a decrease of 8.7%.  Low inventory levels are the cause of related data points.  There were 6379 closed sales through November 2020 compared to 6381 through November 2019, a negligible decrease.  The median selling price through November 2020 was $252,000 compared to $226,000 through November 2019, an increase of 10.6%.  The large decrease in properties being listed had a relatively small effect on the number sold while substantially increasing their selling prices.  The number of currently available properties is well below one year ago and the Days on the Market (DOM) and “Sold to List Price” ratio are much improved.  Do we have an inventory problem or pent-up demand?  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract.  During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen”, some without inspections to improve their odds.  The effects of that remain to be seen but Real Estate, perhaps with the exception of those properties acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing let alone removing the protection of an inspection contingency.  Technology, however advanced, has its limitations.

What about the properties that did not sellMany came off the market and remain unavailable.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have issues they are dealing with.  My only concern is whether people are making an informed decision or reacting to what they “think” is happening in the market.

Buyers and sellers need to do the same planning and preparation that those tasks typically require.   Anyone looking to sell or buy needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  However, the effects of buying and selling remain for years.  They are important decisions and likely require the knowledge and insight that a professional can provide.

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 may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite the pandemic, every house will not sell.  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.  Some buyers may even make “full price” offers just to control the process only to have remorse later as inspection results are revealed. 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 be happy to discuss specifics with you.

The overall economy is coming back but many are still hurting financially.  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.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  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.  Based on what we experienced in 2020, is waiting for Spring something you would consider?

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

HIRE WISELY:  We are not all the same!

November 28, 2020

Delaware County PA October 2020 Residential Housing Report

Bright MLS has released their Residential Market Statistics (which they call Local Market Insight) for single family homes in Delaware County Pennsylvania through October 2020.  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 overall market continues to be affected by the pandemic and resulting economic impact.  However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that.

The report compares current year-to-date 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 can 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 7282 units listed for sale through October 2020 compared to 8133 listed through October 2019, a decrease of over 10%.  Low inventory levels are the cause of related data points.  There were 5684 closed sales through October 2020 compared to 5879 through October 2019, a decrease of over 3%.  The median selling price through October 2020 was $250,000 compared to $227,500 through October 2019, an increase of almost 10%.  The large decrease in properties being listed had a relatively small effect on the number sold while substantially increasing their selling prices.  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract.  During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen”, some without inspections to improve their odds.  The effects of that remain to be seen but Real Estate, perhaps with the exception of those acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing let alone removing the protection of an inspection contingency.  Technology, however advanced, has its limitations.

What about the properties that did not sellMany came off the market and remain unavailable.  As the pandemic has evolved, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have issues they are dealing with.  My only concern is whether people are making an informed decision or reacting to what they “think” is happening in the market.

For example, I recently sat on an Auxiliary Tax Assessment Appeal panel and heard almost 1000 appeals by people generally questioning whether their proposed assessed value is realistic or not.  While I understand their concern about how the new assessments based on July 2019 market values will affect next year’s tax bills, many are saying that the pandemic has lowered selling prices which is a debatable statement.  Whether true or not is easily demonstrated but, regardless, the new assessed values are based on July 2019 long  before the current pandemic was known.

Buyers and sellers need to do the same planning and preparation that those tasks typically require.   Anyone looking to sell or buy needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  However, the effects of buying and selling remain for years.  They are important decisions and likely require the knowledge and insight that a professional can provide.

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 may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite the pandemic, every house will not sell.  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.  Some buyers may even make “full price” offers just to control the process only to have remorse later as inspection results are revealed. 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 be happy to discuss specifics with you.

The overall economy is coming back but many are still hurting financially.  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.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are planning for the first time, it is never too early to start the planning and preparation.  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.  Based on what we experienced this year, is waiting for Spring something you would consider?

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

HIRE WISELY:  We are not all the same!

October 25, 2020

Delaware County PA September 2020 Local Real Estate Market Insight

Bright MLS has released their Local Market Insight statistics for all single-family homes, meaning both detached and attached, in Delaware County Pennsylvania through September 2020.  If you would like more detailed information about Delaware County 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 and I respond promptly to all inquiries.

The overall market continues to be affected by the pandemic and resulting economic impact.  However, generally speaking, the results in many areas are encouraging and, as always, your experience may differ depending on your location and how you have been personally impacted.  As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that.

This report compares current year-to-date 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, if you are 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 have the experience to provide you with the knowledge and insight critical to helping you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are 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?  Many sales take 45 to 60 days to close, sometimes longer if there are issues, so the market today may be different.  Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 6417 properties listed for sale through September 2020 compared to 7370 listed through September 2019, a decrease of 12.9%.  Low inventory levels are having a major impact on the Real Estate market in many areas, with many buyers competing.  There were 4893 closed sales through September 2020 compared to 5296 through September 2019, a decrease of 7.6%.  Compare units listed to closed sales and it is obvious that many houses did not sell.  The median selling price through September 2020 was $250,000 compared to $230,000 through September 2019, an increase of 8.7%.  Interestingly enough, all statistics just for September 2020 are much improved over September 2019, suggesting that the market has continued to rebound after a sub-par spring.  Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

Generally speaking, low inventory levels in some areas have produced multiple offers and a frenzy among buyers, some of whom may live to regret a hasty decision to get a property under contract.  I still see people who regret decisions they made or did not make during the last boom.  During the shutdown when “in-person” Real Estate activity was not permitted, many buyers made offers “sight unseen” or without inspections.  The effects of that remain to be seen but Real Estate, perhaps with the exception of properties acquired strictly as “investments” with documented income, is generally not something given its expense and complexity that the typical buyer would want to purchase without an in-person showing and inspections.  Technology, however advanced, has its limitations.

What about the properties that did not sellMany came off the market and still remain unavailable.  As the pandemic continues to evolve, some properties did come back on the market but many have not.  Did owners delay, change or give up their plans?  Buying activity has been strong but the sellers may be reluctant to allow showings or may have other issues they are dealing with.  My main concern is whether people are making an informed decision or reacting to what they “think” is happening in the market.  As always, some opinions are just that.

For example, I am sitting on one of five Auxiliary Property Reassessment Appeal panels in Delaware County and to date my panel has heard over 600 appeals by owners questioning whether the new assessed value assigned to their property is realistic or not.  Many who purchased their homes during the past few years are telling us that they overpaid for their homes and they are questioning why their assessments are being based on what they actually paid.  It remains to be seen how people buying this year feel going forward.

Buyers need to do the same planning and preparation that buying always requires.  Selling involves the same planning and preparation as in the past.  Anyone looking to sell or buy just needs to understand their local market and decide how to react to the pandemic as a “variable” that was not here last year and, hopefully, will be gone in the near future.  The reassessment adds another dimension of uncertainty as far as what your tax rate will be going forward.  As always, the effects of buying and selling remain for years.

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 may have less competition and more offers to consider.  Buyers may have more competition and fewer houses to consider.  Hiring an experienced, trained and educated professional is more important than ever.

Despite any pandemic, every house will not sell.  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 property was available to look at or purchase.  I have recorded a blog and a podcast on that very subject based on two very recent experiences, one with a seller and the other with a buyer.  Some buyers may even make a “full price” offer just to control the process only to have remorse later as inspection results are revealed. 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 coming back but many are still hurting financially.  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.  An educated consumer faces better odds than a lucky one!  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.

If you want or need to sell any type of Real Estate, now or in the future, whether you tried and did not succeed before or are doing it for the first time, it is never too early to start the planning and preparation.  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!

October 3, 2020

Data Integrity: How Accuracy Impacts Searches and Profits

“Data integrity” ensures that reported information is accurate and can be relied upon.  In Real Estate this could be the status of a property, the price, the type of property and its features.  The importance of accurate information cannot be overstated as people make costly decisions based on what is reported.

A seller needs a “ready, willing and able” buyer to complete a sale.  Buyers “acquire” Real Estate information from a variety of sources.  They expect that all properties matching their search criteria will be in their search results so that they can evaluate them and decide whether to take any action.  Suppose they get wrong information or they do not know that a property is available?  They may never get to see it so they cannot buy it.  Houses may sit on the market unsold causing the listing agents to ask the sellers for an unnecessary and costly price reduction which reduces their proceeds but does not make it any easier for buyers to find their property in their search results.  Think Google search.

Errors will affect a market analysis for both sellers and buyers.  Sellers looking to price their property according to its location, features and condition may rely on bad information causing them to overprice or underprice their property.  Their house could sit on the market unsold or they could accept less than they should have.  Buyers need accurate information when deciding how much to offer a seller.

Houses that do not sell typically have a pricing or a marketing problem.  By marketing I mean wrong or missing “searchable” property features, missing or poor-quality pictures and missing or poorly written property descriptions/ remarks sections.  In addition to excluding properties that really matched their search criteria, poor marketing may cause buyers to dismiss properties because they “look” bad.

Bad information can also impact the mortgage appraiser.  They evaluate selling prices based on reported comparable sales.  They rely on and verify what is reported but how would they know if something is missing?  Appraisers rely on pictures, features and the public remarks to try to identify the prior sales most similar to the house they are appraising.  What is the cost of inaccurate or missing information?  If relying on bad information makes it appear that a buyer paid too much, their sale 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 sellers have wasted months or even years on the market when they really had little chance of selling given the inaccurate information.  I call these “fatal errors”.  Marketing exposes property information to potential buyers, their agents and anyone else who may need or want to rely on what they hope is accurate information.  Garbage in; garbage out!

The Internet has made this more complicated.  Most buyers “shop” online, many even after hiring an agent.  The MLS syndicates property information to the major search engines.  If the MLS information is inaccurate, this magnifies the problem because the information is going directly to the consumer, unfiltered. Your printout is literally like a resume.  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?

I recently met two couples looking to work with me, one to buy and the other to sell Real Estate.  Both plans involved my searching the market to identify comparable properties.  Let me briefly discuss my experiences with both.

First let me discuss the buyers.  They are ready to buy their first home, have saved the necessary funds, done a little exploring on their own and are ready to conduct their search.  We discussed their budget, their “needs” and their “wants”.  Fortunately, my experience enabled me to share how the best search can get messed up because listing agents or those they utilize to upload the details of their property listings often enter incorrect information or, just as bad, incomplete information.

These buyers had two specific “wants”:  a porch and a yard.  I performed a search without those features, found 26 “results” and sent them to my clients.  Then I did two additional searches, adding the two specific “wants” separately.  I found only 3 listings that showed there being a porch and only 3 showing some yard.  I knew that seemed low but never expected the results to be so wrong.

I looked at the more basic search with 26 results and identified an additional 17 properties with porches, raising the real total to 20, and found an additional 21 properties with a yard, raising that total to 24.  How pathetic!  If I wanted to take the time I might review the pricing history to see how long the incorrect listings had stayed on the market and then to see how many took price reductions.  The bottom line is that I assume nothing:  porches and yards are salable features but not present on every home so not entering them when they are present can be costly.

The other couple is looking to sell a 4-unit building.  It features a large lot with a detached 2-car garage and ample parking so nothing is truly comparable.  However, determining a range of potential pricing should not be as difficult as it was.

Using my experience, I knew that I had to start my analysis by looking at multi-unit properties without specifying the number of units.  When I do this I often find “commercial” properties, meaning they offer more than 4 living units, but that did not happen here.

My search identified 22 properties.  7 were listed as offering 2 units; 1 was listed as 3 units; 1 was listed as a 4 unit.  All were correct but there were 22 in the search results?  13 properties were listed as only having ONE UNIT!  So sad and so avoidable!  My best guess is that the people who uploaded the data thought “unit” referred to “buildings” and not leased, income-producing units.  Who entered the information?  Did the property owners know?

Of the 13 errors, 11 offered 2 units and 2 offered 3 units.  Had I been searching specifically by number  of units and not known better, I would have missed information that could be helpful to these sellers.  I wonder if any buyers missed these 13?

One additional point.  Only 7 of the 22 showed annual income, an important measure used by investors.  I understand that some of these buildings had vacant units but think it important to enter “projected rent” rather than assuming that every investor knows the area they are searching.  Many investors own Real Estate located far from where they live.  One agent actually had the monthly rent instead of the annual rent.

The bottom line is that buying and selling residential or investment Real Estate can be challenging enough without hiding property from people.  Data integrity issues can cause buyers to miss the best listings and some sellers may take needless price reductions when price may not be an issue. 

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

HIRE WISELY: We are not all the same!

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