Spring 2010 Real Estate Market

Sellers

With only half the number of sellers putting their properties on the market during the last 12 months, we can expect a small flood of new Listings this Spring. Of course, the properties that show well should get sold within 30 days as long as the Vendors don't try to raise the prices. It is unlikely that the multiple offer mania in some areas will happen again this year as there should be proportionately more active Listings.

Over-priced Listings will continue to sit until the prices are reduced after 60 or 90 days. Unfortunately, over-pricing and under-pricing is very common nowadays. Few realtors have the skills to create an Excel database of your area and then analyze the mix of properties. Also, very few have even been inside more than 1 or 2 homes in the area, so they make wild guestimates based upon sales of completely different local properties. Sometimes they just accept unrealistic and biased prices that the homeowner comes up with.

Unfortunately, many Vendors, (and their agents?), don't understand the stigma of an older Listing. In most cases, the list price is reduced by larger amounts and more frequently. The Vendor ends up getting 3-5% below what they would have got if they had priced right in the first place. Most of the eventual Buyers aren't fooled by the agents who re-list each time there is a price reduction.

Vendors who list with discount agents rarely see all the facts. The discounters don't make enough to afford a proper and effective marketing plan. They tend to also over-list and have the most price reductions and the most expired Listings. The fact that they can't negotiate a normal commission rate should indicate that they aren't going to be able to negotiate the top selling price either. Many don't have the knowledge or expertise to effectively pre-market and pre-sell their listings and pricing strategies.

Buyers

The number of Buyers will still exceed the number of new Listings as people try to lock-in some reasonable interest rates before the Summer arrives. However, these Buyers aren't foolish.

They usually have done a lot of Internet shopping and have created some biases in their minds. Most have agents who will at least check competitive sales in the area. Also, the bank's appraisers tend to be quite conservative, so an over-priced home will not get financed.

There are still a surprising number of Buyers who decide they will work with the Listing agent in the expectation that the Vendor will sell for less if they get a commission reduction because the agent represents both parties. This is one of the greatest myths in real estate sales.

The are a few Listing realtors who will fully educate these buyers on local market values and adopt a professional mediator role. In this way, the Buyer and Seller tend to obtain very good deals in a win-win scenario. But this often doesn't happen.

The fact is that the Buyers tend to focus on the .5 to 1% commission discount instead of the actual fair market value of the property. From my experience, the discount always benefits only the Vendor. The Buyers are not treated equally and thus end up paying as much, and often more, than if they had their own realtor. There are also quite a few other areas in the actual Agreement of Purchase and Sale where these Buyers can come up short if the agent favours his/her Vendor client over their new Buyer client.

The fact is that this whole area involves trust and integrity. An agent with an outstanding reputation for trust and integrity will make sure both clients get a favourable deal. An aggressive or pushy agent will have difficulty representing both parties fairly.

Let me know if you have any questions.

Jim