Letters to the Editor
Bad news good for home sellersBy Inman News, Tuesday, November 27, 2007.
Re: 'Real estate hurt by media spin' (Nov. 16)
The current real estate articles are just a reflection of reality, no matter how it is spun. The reality is that we are now in a huge buyer's market.
When we were in a seller's market, the articles reflected the multiple offers and bidding wars, not to mention the articles about how Realtors weren't earning their money and taking advantage of the market (these articles were characterized as negative also). The discount brokers and FSBOs could carve out their niche, and they did.
Agents could tell sellers what they wanted to hear, be less accurate and spend less time on pricing, take a long-enough listing, make adjustments along the way and still get the job done -- thus, an "order taker" could thrive in the market.
The demand for housing and the ability to create a sense of urgency in buyers is what drove the market. Sellers and agents were happy. Quite often, buyers were slighted and less than thrilled. Ditto with agents who found themselves on the losing end of competition. Buyer's agents who couldn't find houses were also unhappy.
All of this was influenced by easy money at the lower end of the market driven by subprime mortgages. There was also the easy and cheap money at the upper end that was available to investors and speculators who drove new construction.
Now with a glut of product, decreasing demand and the correction in financial markets, the "worm has turned." The buyer now calls the shots, as does the agent who can skillfully show a seller all of the critical data.
The truth is houses are still selling (even where I sell in Michigan, despite the economy and dismal political leadership), just not as many. They are also selling for market value -- what buyers are willing to pay. Now this may be a lot different from "market value" of what buyers were willing to pay in previous markets. "Market value" is fluid and it always has been. This is why data are now critical for sellers to realize where the market is and be able to price their homes in front of the market. This can be an extremely useful skill set for listing agents who have never utilized data compilation in the past.
In the current market, many discretionary seller listings have been replaced by foreclosures and short sales. This involves a whole new "skill set" for agents who want to go where the market is. It isn't as easy and pleasant as it was working with discretionary sellers in a seller's market, and most of the agent population isn't going to be up to it. Many agents aren't experienced in gathering data that is necessary to educate the sellers who can sell and at what price it will sell.
This is where the "negative spin" is very useful. Articles such as "Dump this House: Unloading Your Property in a Slow Market" by Jonathon Clements in the Nov. 7 Wall Street Journal and the many others that are populating your local papers are excellent visuals for sellers. These help present overwhelming evidence to sellers to help them make the decision to price their homes ahead of the market. This, along with the actual market data -- active listings, pending sales, accurate days on market, percentage of listings that sell versus ones that don't --will help sellers make educated decisions on how to price their houses.
So, despite the drumbeat of negative coverage, it does portray reality. It also gives us the necessary ammunition to go to the kitchen table with sellers.
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