Home Owners are Still Leary About the Market

February 17, 2011 by

I find and track every “For Sale By Owner” (FSBO) listing in the U.S. and Canada. In 2008 we saw that the number of FSBO properties on the market had dropped by 50% from the previous year. We haven’t seen the numbers increase in the past three years. It appears that home owners are content to be patient and wait until the real estate market rebounds.

A Tip For Sucess

July 15, 2009 by

URL: http://realtytimes.com/rtpages/20090715_toughmarket.ht

I read this article today and it really struck a chord with me. When business is slow, I can make excuses for slowing down too. I learned from this article that when things slow down, I need to keep up a fast paced prospecting campaign. If I slow down along with the market, then it is only going to hurt my business even more.

Check it out:

More Biz in Tough Market: Success Secret #11

by Brian Hilliard

Want a quick tip for getting more business in today’s tough market? How about this thought: Successful people don’t stop themselves, whereas unsuccessful people do exactly that.

Allow me to explain.

I’m coaching an 8th grade boys basketball team here in Atlanta, GA, and one of the things I tell them all the time is the importance of moving around while they’re on the court, and not “defending themselves” by simply standing still and not getting open.

Because if you’ve ever watched basketball at the college or even professional level, what you see are 5 guys constantly moving around, constantly trying to get themselves or their teammates open so they can shoot the ball.

What you don’t see are a bunch of guys standing around hoping something good will come their way.

Yet in the world of real estate, where everyone is talking about the housing “slump” this, and the economy that, I can’t tell you how many Agents are doing just that – standing still when it comes to getting more business.

I’m talking about things like:

  • Not going to networking events because “it hasn’t worked before”
  • Not publishing an electronic newsletter because “it takes too much time”
  • Not asking for referrals on a consistent basis because “the market just isn’t there yet”
  • Not getting into the office as early as they used to because “nothing’s going on anyway”

All of these actions – or this case, inactions – take you out of the game. They put you on the “sidelines” and don’t give you or your business a chance to be successful.

This is why Realtors left and right are falling out of the business. Not because of the market, not because of the economy, but because they stopped trying and essentially took themselves out of the game.

So the question becomes: What are you doing on the proverbial basketball court of real estate? Are you hustling to get open and “score a basket” or are you standing around complaining about the market, and waiting for something good to happen?

If you’re like me and want to excel in the world of real estate, then I’d recommend you learn as much as you can, as fast as you can, about building your business – especially in a market as tough as this.

As a matter of fact, we have a free report on how to get more business in today’s tough market, which has some tips and tricks on getting more business in a market as tough as this. Just email info@agitoconsulting.com (Subject: Today’s Tough Market), and we’ll be sure to send out our free report right away.

And in the meantime, stop standing on the sidelines and get in the game! Believe me, you’ll feel so much better when you.

Published: July 15, 2009

Increases In Home Sales & Prices of Homes Explains An Influx of Realtors In Certain Regions

June 29, 2009 by

An article by Erik Pisor, published in today’s Inman News, discusses some recent statistics that seem to outline current real estate market conditions.

The article can be found at: http://www.inman.com/news/2009/06/29/realtor-membership-rises-in-some-areas?page=0%2C1

After reading the statistics and trends that Pisor outlined, I actually came to a different conclusion that he did.

While NAR reports a 10% decrease in membership, some local and regional associations are showing an influx of Realtors, which might be a result of a rebound in the real estate market, or at least the expectation of a rebound sometime soon.

The San Diego and  Sacramento markets show both an increase in homes sales as well as an increase in the number of Realtors joining their regional associations.

In California as a whole, sales are up 35.2% from May 2008, AND more people are taking the Realtor exams than last year. Maryland is showing a similar trend as well.

What does this mean for Phoenix, Tennessee, New York, Arizona, Texas, Washington D.C., & North Dakota – all of which show a similar influx of Realtors?

While Antuoun & Kleinhenz both claim that people commonly turn to Real Estate when they lose a job, it seems that the influx of Realtors into various regional associations is more likely due to the increase in the number of home sales.

This goes back to a simple economic model of a perfectly competitive market that has free entry and exit. When any given market that has free entry and exit becomes profitable, firms enter the market to get their share of the economic pie. When the market is not profitable, firms exit the market because they are losing money. After so many firms exit the market, the competition decreases for those who have stayed in the market, and those who have stayed become profitable again. Of course, that means that firms will start entering the market again because it is profitable for them. We see this ebb and flow in many different markets: the fast food market, the automotive industry, the computer software surge in Silicon Valley, and the door-to-door pest control and security salesmen.

Realtors are becoming profitable again in certain markets, and this is why there is a regional influx of members of local realtor associations. This is supported by the fact the Boston, MA has seen a continual drop in the number of Realtors, along with a continual drop in transactions.

Additionally, while Thompson, a Realtor in Boston, MA claims to have entered Real Estate when the market is down (see article), she is doing so with the expectation that it will rebound soon and that she can become profitable. Even if even if Realtors in other markets are still struggling to be profitable, it seems that those Realtors entering the market again at least have the expectation that doing so in their particular market will soon make them profitable.

While the median price of homes is still down 30.4% from May 2008, house prices have steadily been recovering for the past several months, and economists at NAR expect them to continue to rise. If the price of homes is starting to rebound,  and if the number of transactions is also on the rise (as shown in the cited article), it should not surprise us if more Realtors are entering the real estate market again.

It all goes back to a simple economic model of a perfectly competitive market with free entry and exit.

Is real estate starting to bounce back?

June 22, 2009 by

Is the housing market starting to recover? In talking to hundreds of real estate professionals in different markets across the country, I have found that some markets seem to be starting to recover.

What about your market? Are things getting better or worse?

The following article, published in The Wall Street Journal this past weekend, looks into some areas in California that seem to be starting to recover from this recession.

Please read, and more importantly, tell us what you think! How is your local real estate market doing?

California Housing Market Shows Pockets of Recovery

Prices Have Dropped Far Enough to Lure Buyers in a Trend Also Showing Up in Other Parts of the Country

URL: http://online.wsj.com/article/SB124545407944432853.html


SAN JOSE, Calif. — A home-sales revival that began last year in some of California’s cheaper inland areas has begun to spread to several more expensive coastal areas, another hint that devastated real-estate markets in the state — and other parts of the country — may see less grim days ahead.

Homes are selling briskly again in the lower end of the market in Santa Clara County, just south of San Francisco, with prospective buyers making multiple offers and bidding well above asking prices. The median sales price of a single-family home in May was $445,000 in the county, up 5.7% from February, when prices stopped dropping.

Santa Clara County is one of several areas around the U.S. where prices have dropped far enough to lure buyers, including investors, back into the market. Other metro areas showing this trend include the northern Virginia suburbs of Washington, parts of Phoenix and San Diego, said Ivy Zelman, chief executive of research firm Zelman & Associates. Even in glutted markets like southern Florida, investors are “gobbling up distressed inventory” in some areas, she added.

In Northern California, a big factor is first-time buyers like Denise and Steve Petrosky, who are newly optimistic about the market and can afford a home for the first time. The Petroskys in February paid $374,900 for a three-bedroom home in Morgan Hill, just south of San Jose, that last sold in 2006 for $610,000.

The couple were too leery to enter the market last year while prices were still heading down, said Mrs. Petrosky, 43 year old, an office manager, but felt prices had bottomed early this year. “Basically, we had set a budget what we could afford, which was below $400,000,” Mrs. Petrosky said. “When the prices came down below that, we bought, because we could afford to.”

Home prices are still falling in many California markets. But the state’s average existing single-family home price has been inching up for two months, with the median sales price climbing to $256,700 in April from $247,590 in February. Much of that increase is thanks to a growing number of pockets of recovery in the housing market.

In Northern California, the median price has risen for four straight months in Santa Clara and for three months in Contra Costa County, according to estimates by MDA Dataquick Information Services, a market-research firm in La Jolla, Calif. In Southern California, the median price has risen or stayed the same three months in a row in Los Angeles County.

Those price increases might not presage a lasting resurgence in California’s housing market. The state’s high unemployment rate — 11.5% in May — could lead to more foreclosed homes that banks could then dump on the market. California’s median home price remains down 37% from a year ago.

More broadly, Ms. Zelman and other housing economists cautioned against interpreting signs of greater sales activity as meaning the housing bust was nearly over. Interest rates on 30-year, fixed-rate prime mortgages have risen well above 5% in recent weeks and could rise further if inflation fears push up rates. A national tax credit for first-time home buyers ends Nov. 30, removing a big incentive.

“The overall economy in California hasn’t gotten its footing,” said Katherine Aguilar Perez, executive director of the Los Angeles office of the Urban Land Institute, an industry think tank. “So it’s difficult for me to say we have hit bottom.” Still, she said, “there are some pretty clear signals there is some leveling.”

A look at Santa Clara County shows some of the dynamics behind the leveling. Home to Silicon Valley in the north, the county of 1.8 million residents went into the slump with the rest of the state, with county unemployment shooting above 10% this year from 5% in 2007. The median price of a previously owned home fell 48% to $420,000 in January from a high of $805,000 in August 2007, according to Dataquick.

Late last year, the county’s sales still lagged behind those in inland areas like Riverside and San Bernardino counties, where sales volumes were up 251% in November 2008 over November 2007, according to the California Association of Realtors. Santa Clara County’s November sales were up only 16%. The inland sales were booming, in part, because prices fell further there.

Then the lights seemed to turn back on in Santa Clara County home sales. Sales were up 40% in December, and kept rising into 2009. The median price, which had slid steadily since June 2008, stopped falling in February. The number of pending sales in the county has nearly doubled to 3,882 as of last week from 2,096 a year ago, according to the Santa Clara County Association of Realtors.

The biggest catalyst, local agents say, has been affordability. By April, the number of Santa Clara county residents who could afford a home in the county, based on household income, had jumped to 50% from 18% two years ago, said Quincy Virgilio, president of the Santa Clara County Association of Realtors.

Typical buyers are Scott and Yuriko Herbig. Mr. Herbig, a 28-year-old engineer, said they had a budget of less than $400,000, and couldn’t find anything in that range when they began looking in 2008. Then, early this year, Mr. Herbig said, the market suddenly started filling with homes under $400,000. The couple in March bought a four-bedroom home in Gilroy for $362,000. “We got lucky,” Mr. Herbig said. “I think we hit right at the bottom.”

As in other areas of California, the hottest part of the Santa Clara market has been at the lower end — in this area, that’s under $600,000. For example, prices rose 15.6% to $540,000 in April in one zip code near downtown San Jose from $467,000 in January, according to Dataquick.

By contrast, prices in some higher-income neighborhoods in Santa Clara County are still falling — such as in parts of tonier towns like Cupertino and Los Gatos. Agents said that reflects borrowers’ problems getting jumbo mortgages to make those purchases. Home prices are still falling in parts of San Francisco and San Diego County for the same reason, they said.

—James R. Hagerty contributed to this article.

Write to Jim Carlton at jim.carlton@wsj.com

Printed in The Wall Street Journal, page A3

Economists’ Commentary: Home Sellers Seeking Professional Representation Rising

June 15, 2009 by

February 12, 2009

By Harika “Anna” Barlett, Senior Research Analyst


With housing inventory at its highest since the early 1980s, a greater number of home sellers understand the value of professional representation. This is understandable given that the housing market has been challenged in the past two years and inventory of homes for sale reached its highest point since the early 1980s.

The 2008 NAR Profile of Home Buyers and Sellers reveals that among recent home sellers surveyed in August 2008, the pure For-Sale-By-Owner (FSBO) sales – those cases where the seller did not know the buyer – remain historically low at 7 percent. It had been closer to 10 percent during the housing boom years.

Among the shrinking pool of FSBO sellers, the outcome results of such sales are highly questionable. FSBO sellers, who sold their home to someone they did not previously know, sold their homes within a median of six weeks. By contrast agent-assisted sales took a median of nine weeks. In addition, the median selling price as a percentage of the asking price was 97% for those FSBO sellers, compared to 96% among agent-assisted sales.

At first glance,  FSBO transactions appear to be doing quite well. However, the median selling price of an open market FSBO home was $150,100, while the median price for agent-assisted sales was $211,000.

FSBOs have typically been more popular among lower income households trying to sell lower priced homes. So one may argue that price difference results between FSBO and agent-assisted sales is due to characteristics of lower-valued and smaller-sized FSBO homes. Indeed, the average home size in FSBO sales is smaller. The median home size in open market FSBO sales is 1,515 square feet, compared to the median of 1,850 square feet in agent-assisted sales.

However, when we compare median prices per square foot of home, the data show that it was $92 in FSBO sales, and $116 in agent-assisted sales, with a difference of $24 per square foot of home sold. Considering the median size of 1,515 square feet in FSBO sales, this translates into a price difference of $36,360 on a size-adjusted base. So the claims that FSBO sales are getting completed faster and the owners get a price closer to their asking price are misleading. The FSBO homes, given the nature of the market, are being listed at deeply discounted prices. Because lower prices get buyers’ attention, any subsequent price concession afterwards tend to therefore be small. FSBO owners have in essence mispriced their homes too low.

The chart below shows the price comparisons between FSBOs and agent-assisted sales. The FSBO segment is broken out between those sellers who already knew the buyer to delineate arms-length transactions like those that with occur within a family or friends.

Regarding the length of time a home was on the market prior to sale, the time will obviously be much shorter for mispriced, discounted homes. That result is revealed in the chart below. The length of time a home was on the market prior to sale also changes by location, in addition to sale method. In open-market FSBO sales, the median time on the market was six weeks, compared to the median of nine weeks for agent-assisted sales. This difference gets bigger in the sale of those homes located in a small town – five versus ten weeks. However, it is smaller for those sales that take place in a suburban area (six versus eight weeks); and it is reversed in those sales that take place in an urban area.  In urban areas,  open market FSBO sales take a longer time, a median of ten weeks, compared to the median of eight weeks for agent-assisted sales.

Consumers are smart. In more difficult times for housing and the economy, a greater number of people are seeking professional real estate advice. Consumers in the end are also greatly benefiting as a result of having sought out professional representation.

U.S. Real Estate Market

November 13, 2008 by

The U.S. real estate market is going through some turbulent times.  Most experts agree that the market will continue to worsen before it gets better. Alas, in the midst of all of this somebody has taken the time to put together a hilarious parody on the market.  I hope you will all find this as funny as I did. http://www.youtube.com/watch?v=bNmcf4Y3lGM

Where have all of the FSBO’s gone?

September 25, 2008 by

I have been tracking For Sale By Owner properties one way or another for the past 8 years.  Recently, I’ve noticed that FSBO listings have substantially dropped off.  For example, in May of 2007 my company, FSBO Leader (www.fsboleader.com), found over 50,000 new FSBO listings.  Compare that total with August of 2008 when we only found about 13,000 new FSBO listings. 

Where have all of the FSBO’s gone?  In this down market, it’s obvious where they all went.  In this market even FSBO property owners have decided not to sell.  I see this as good news for the industry as a whole.  Those FSBO’s who are still trying to sell in this market are the ones that must sell so buyers should be able to find great deals on those properties.  In addition, the FSBO’s who haven’t sold will be more inclined to list after giving it a try on their own for a few weeks, which is good news for real estate agents.

Yes, there are fewer FSBO’s on the market now, but we have found that they are serious about selling.

Loan Officers Profit by Working with FSBOs

August 14, 2008 by

I have worked with many loan officers over the years benefit greatly from working directly with FSBO’s.  I have jotted down a few ideas.   


First, loan officers offer to prequalify buyers for FSBO home owners.  Loan officers should give each FSBO a call and introduce himself.  Explain that they help home owners by pre-qualifying their buyers.  Loan officers explain to the home owner all of the time and frustration they will save by having their buyers pre-qualified.  The great part about this method is that every buyer who the loan officer pre-qualifies for that home will be a lead for the loan officer whether they buy that home or some other home.   


Second, loan officers establish reciprocally beneficial relationships with real estate agents by working with FSBO home owners.  After the loan officer has worked with the home owner for a month or two and the home owner is frustrated because they still have not sold their home, the loan officer can refer that home owner to their preferred agent. 


Third, offer the FSBO home owner marketing materials for free, like a yard sign and flyers.  Of course, all of the marketing materials will be co-branded with the home owner’s information and the loan officer’s information. 


Fourth, it’s likely that the home owner is selling their home because they are moving into a different home.  Loan officers establish good relationships with the home owner and help them with their mortgage for their new home and refer them to an agent to help them with their search.        


Fifth, once you have established a good relationship with the home owner, make her a part of your sphere of influence.  Send her periodic emails, letters, and postcards to be in the forefront of the home owner’s mind when they want to refinance or move.   

The FSBO World

August 4, 2008 by

I have been tracking For Sale By Owner (FSBO) properties for nearly 10 years.  I have become quite the expert at finding FSBO’s in publications throughout North America.  I have helped thousands of real estate agents, brokers and real estate investors work with FSBO properties to make thousands of dollars. 

I find two stats quite interesting… the first, according to NAR, 84% of FSBO’s will eventually list their property with an agent.  The second stat is that for those few FSBO’s who do sell on their own, they sell for 12-24% below the value of the equivelant listed property, so investors can find great bargains working with FSBO’s.