Holiday Shopping: Boston Real Estate

November 13, 2012 By Leave a Comment

One of the best examples of a self-fulfilling prophecy is in the seasonality of the Boston real estate market. Every year, as Thanksgiving approaches, home sellers ask me, “Does it make sense to put the home on market now? There are no buyers looking.”

From potential home buyers I hear, “ Should we wait until Spring to buy? There are no homes on the market now.”

Yet, despite the expectations for a quiet holiday season, almost every year I am on the phone putting together a deal while checking-up on my stuffed Tofurky. This year the real estate market seasonality will be less pronounced than ever.

Both buyers and sellers will find advantages of pursuing their real estate goals during the holiday season.

Home Seller Advantages to Holiday Home Selling

Low Competition: Inventory shortage is what characterized our Boston real estate market the past few months. Newton, Brookline, Cambridge, Arlington and Brighton have all had too few homes for sale to satisfy demand, leaving many buyers still looking.

My friend Marilyn Messenger wrote a great article, The 5 Reasons the Sell Your House Now! She outlines the benefits of selling your home during the holiday season. One of the top reasons is the lower competition as many home sellers decide to wait or take their home off market for the holidays.

Serious Buyers: Marilyn also reminds us the buyers coming through a home between Thanksgiving and New Years’ are serious. These are determined buyers, who are not going out in harsh weather during overscheduled holidays to look at a home for kicks.

This year, home sellers can expect buyers who are eager, ready to buy after losing out on multiple offer situations in September and October.

Holiday Home Buyer Advantages

Fewer Buyers Looking: The worry of fewer homes on market is balanced by many buyers exiting the market and new ones waiting until 2013. Fewer buyers translate into fewer multiple-offer situations, and home sellers who are more likely to entertain your offer and work with you.

Shorter Mortgage Queue: Underwriting mortgages is taking weeks if you get stuck with the wrong bank, and closing delays are common. Much of the refinancing business will waiting until January, leaving your attorney with more time to work for you.

Homes are Ready to Sell: There will be two types of properties on the market. First, the “leftovers” from the busy fall market. These homes haven’t sold because of poor marketing or they were overpriced at critical moments. Neither of these reasons reflects poorly on the houses, but gives you an opportunity to negotiate.

There will also be new listings. Savvy home sellers want to take advantage of the low inventory and serious buyers. It’s a perfect time to match home buyers and home sellers who are ready to move on.

My advice to my clients has been and always will be to first work around your own schedule. You never know if your ideal home buyer / home seller has plans matching yours. Real estate surprises us regularly, as not everyone conforms to the same self-fulfilling prophecy, and not everyone celebrates the same holiday season.

(Coming in July 2013, an article entitled, “Boston Realtors Gone to Cape. Please Resume Your Real Estate Activity After Labor Day.”)

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Accepted Offer, Open House and Annoyed Buyers

October 18, 2012 By Leave a Comment
I annoyed many people on Sunday. After an offer was accepted, I went ahead and hosted an open house. Why would I host an open house if I have an accepted offer? Isn’t it a waste of time for me and the prospective buyers?
Before you go huffing and puffing because you came to a condo too late, let me suggest to you this open house wasn’t wasteful for the buyers or the seller.
Why isn’t an open house after an offer was accepted a waste of time for buyers?
First, as a buyer, looking at property is never a waste of time! Every property you see makes you wiser about the market. How can that be bad? Several buyers learned the nature of the market, and the necessity to move quickly on properties. Don’t wait for an open house if you are serious about buying a home.
Not all buyers will like the property. In fact, the overwhelming majority of prospective buyers coming through an open house are not a match to the property. This is true of every open house everywhere. Going to open houses helps buyers shape the criteria list, narrow down the search and become more focused. It is likely you wouldn’t have bought it anyway.
Several times I was asked some version of the question, “What is the purpose of this open house?”
Remember, I work for the seller. It is my job to generate as much interest for her condo as possible. Even if we accepted an offer, who’s to say the buyers and sellers won’t have a falling out. These days, transactions are falling apart and often don’t close. This is why backup offers are commonplace. Another buyer can put an offer on the property, ready to be accepted by the seller, should the previous offer fall through. Between inspection, tight credit, and human indecisiveness, deals are fragile.
Lastly, and most importantly, wouldn’t you rather have a friendly face greet you at the property than a sign on the door that says, “open house canceled?” It was a pleasure greeting every single person who walked through the doors today. That’s what being a real estate agent is all about.
Learn your market, and don’t wait for open houses when you are ready to buy a home. If you want to learn about my listings before they debut on Multiple Listing Service, follow me on twitter @bostonruth or better yet, come join the fun at G+.
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Doing the Numbers: Brookline Real Estate Months of Supply

September 27, 2012 By Leave a Comment

“Months of supply” in real estate is the closest thing we have to a forecasting tool. The months of supply measures how long it would take to sell the current number of homes on the market. Low inventory, means demand exceeds supply, hence rising prices are a logical expectations. Anything under a three months supply is considered low inventory and a seller’s market.

Brookline’s condo market is extremely tight! There are 72 condos on market, which is just over 1 month of supply. I’ve included a chart breaking down months of supply by price range for Brookline condos. You’ll find the $300,000-$400,000 range with low inventory, with about two to three weeks supply. The $500,000-$700,000 price range has only at about two weeks supply.

The slowest Brookline condo segment is in the luxury $1,000,000+ market. But it is still robust!

Next, single family homes. There are 70 houses on the market in Brookline, which is 3.6 months of supply. Brookline’s house market is a seller’s market, not as strong as the condo market, though. In most price ranges, inventory is between 2-3 months of supply, with few exceptions. The popular $800,000-900,000 price range has only a three week supply of homes. Buyers in this pricing category are having a tough time finding a home that delights.

Brookline’s luxury house market is a different story. Six months supply of homes priced $4,000,000-$5,000,000, and 21 months supply of homes priced $5,000,000+. This market has different standards, thought, and a house in this category is expected to take longer to sell.

The statisticians among you will tell me there are all sorts of issues with the measurements, but it is the best way we have to look at the current inventory of homes and get a sense of where we stand. For me, anecdotes are great, just not enough.

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Brighton, MA Condo Update: Summer Numbers, Fall Predictions

September 13, 2012 By Leave a Comment

The Brighton condo market has seen a visible change for the better this summer compared to last, and I’ve put together some numbers for you to see. Notice average prices are up 8%, and days on market as much shorter, 33 days less time on market! The number of sales during the summer of 2011 and 2012 are fewer but I think this only points to a very dynamic fall.

One of my favorite statistics is the average sale price to original price ratio. This number tells us how far apart buyers and sellers are. The lower the number, the more price reductions and negotiations. SP:OP in Brighton is up 2%. It is now at 96%, which means the final sale price is on average 4% lower than the asking price. A shrinking gap indicated a tightening market.

Expect a busy fall real estate market for Brighton, MA condos. I have several listings coming on, and sellers are excited to finally be able to move into bigger homes, or sell unwanted investment properties without losing money. This is the first time since 2008 that I can regularly give home owners in Brighton good news.

Do you want some good news? Give me a call and let me know if you are ready for a bigger home, or you are sick of being a landlord. It may not be your time to sell quite yet, but you may be surprised.

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The #1 Deal Killer for Newton and Brookline Houses

July 2, 2012 By Leave a Comment

Last Spring market, which ended roughly a week ago, looked something like this: buyers want to buy, sellers unsure they want to sell, plenty multiple-offer situations and many deals falling apart mid-way to closing. This is the nature of a market with rising prices.

Homeowners, believing prices will rise, stay on the sidelines and don’t feel a need to sell their homes. On the flip side, there are not enough homes on the market to satisfy all the buyers, who are bidding up the prices of homes.

But many of the home sale transactions don’t make it to closing, or at least not without some disappointments and fighting. The dreaded appraisal is the culprit!

The appraisal is a third party evaluation of the home which the bank requires for a mortgage approval. An appraiser comes to the home and compares it to recent sales. In our market, the appraiser has a difficult job because there may not be enough recent sales of similar properties, and the price buyers are willing to pay is higher than it was just a few months ago.

Because of the formulas, regulations and rules the appraisers must follow; their evaluation is often coming short of the offer price, which the buyer and seller already agreed upon. What does this mean? Here’s an example:

Four offers are submitted on a house in Newton, and the best offer was accepted at $800,000. The buyer agrees to pay a 30% down payment, $240,000 and submits a mortgage application for a 70% loan, $560,000.

The appraiser uses the limited recent sales data for similar houses nearby, and comes up with an appraised value of $750,000. The mortgage company will still fund 70% of the appraised value, but now this number dropped to $525,000.

Once of several things may happen next:

  • The buyer may demand the price reduced to the appraised value. Why should he pay more than that?
  • The buyer can make up the difference in cash.
  • The buyer and seller can negotiate a price between the $800,000 and $750,000. The buyer will pay cash for anything over $750,000.
  • The buyer and seller may terminate the agreement, (if there is an appraisal contingency in the agreement, which I’ll discuss in another posting).

Whatever the decision, it is never a romantic time during a real estate transaction process. Both parties are usually upset – buyer fearing he is over paying and dreading the added cash expenditure and seller annoyed she is making less than expected. This is especially disappointing when there were several offers, four buyers is willing to pay more than the appraised value!

Five years ago appraisals were rarely a problem. But are and will continue to be an issue everywhere prices are going up, inventories are low, and buyers are ready, willing and able to buy.

Buyers and sellers must prepare themselves for the appraisal. I’ll discuss that in upcoming posts.

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FSBO Do’s and Don’t Introduction

June 12, 2012 By Leave a Comment

I don’t know why anyone wants to be a FSBO – for sale by owner. To me, selling your own property is like doing your own dental work, a bad idea. But let’s say you super-glued your chipped tooth and want another adventure. Here are the do’s and don’ts for a sale-by-owner if you want a shot of succeeding.

Do pay a commission to buyer’s agents. The buyer’s agent compensation is figured into the prices of professionally listed homes. Agents who will bring buyers probably have a contract for compensation, so you will pay it either way. It will either be part of the offer price, or your offer price will be lower by that amount. So expect to pay for a buyer’s agent.

Don’t assume you’ll sell to unrepresented buyers. Buyers don’t want to be unrepresented, partly because they don’t want to deal with you, dear home seller. First-time home buyers are especially savvy at interviewing and choosing their buyer’s agent. They also understand it is the best way to buy a home, at no added cost. Move-up buyers are usually also selling a property, and working with an agent on both the buy and sell.

Unrepresented buyers are usually in earlier stages of their home search and likely not ready to buy. They may come over to look at your home, maybe even love it and you may hit it off. That is a far cry from putting money on the table.

Do list on Multiple Listing Service. There are brokerages that will list your home on MLS for a nominal fee. You must do it for the chance of brokers and buyers finding you. This is the most important source of information for anyone in the real estate market.

Do have information packages ready for buyers. At the very least, provide town records information. Include pictures, a floor plan, and a list of improvements you’ve done in recent years. Off season photos are nice, too, and any interesting house history. Don’t forget the price, condo fees, and taxes!

Don’t hide information. Share what you know to be true, even defects you have chosen not to repair. You are liable for what you know about the house, and remember, inspection is coming anyway. Termite damage, roof leaks, water damage, wet basement…I’m a big fan of honesty and disclosure.

A great way to get some marketing ideas is to follow some of the area homes on the market, and go to open houses. Who knows, maybe you’ll do very well and find yourself in a new career. But if you get sick of it, or for some reason the home is not selling, give me a call and we’ll fix that.

Good luck!

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Monthly National Association of Realtors Pending Home Sales Update

June 7, 2012 By Leave a Comment

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How to Choose a Listing Agent to Sell Your Home

June 5, 2012 By Leave a Comment

I hope you invest some time to look for the right listing agent to sell your home. You don’t want to be the one telling the story of how you hired your cousin’s connection who dabbles in real estate, or your agent is an out- of-town friend, or how you called just one of the big companies and hired whoever walked in the door.

At an average price of about $1,000,000 in the Brookline and Newton area, you’d think an approximate paycheck of $50,000 warrants some investigation. The truth is that many potential home are overwhelmed by the research, and some bully agents discourage it. Here are some tips to choosing the right real estate agent for you.

  1. Call several offices. Take the time and speak to a few companies. And don’t just stick to the two big ones in Chestnut hill, Brookline and Newton. Call some boutique agency, maybe a mid-sized office, or perhaps a brand new realty office just opened. This way you’ll get a variety of perspectives on the marketing options, and you’ll choose what you think works best. There are pros and cons to various sized companies, much of it depends on your comfort level and the agent representing the company.
  2. Remember, it’s about the agent. If you don’t like the agent, things will end badly regardless of the brokerage firm. You’ll be going on a long bumpy ride with this agent, so choose someone you feel is hard working, understands fiduciary obligations, and someone you’ll enjoy working with. Yes, it’s personal.
  3. What’s the marketing plan? You need a clear plan of action of how your home will be marketed. You need to know the marketing plan that will be implemented, and that your home’s sale is a top priority. What will be done, when will it be done, and by whom should all be answered. As Brian Tracy said, “failing to plan is planning to fail.” It always amazes me some agents are still “winging it.”
  4. Local market knowledge. It is vital a listing agent knows as much as possible about the local market. An agent planning on listing your home should have seen other homes in your neighborhood, and understand local housing trends. For example, the Newton market the past spring was extremely busy, and multiple offers very common. Yet the numbers show single family home prices are down in Newton about 10% this year. Does your agent know the seasonal price changes, and how it affects the pricing for your home?

The right listing agent will have a great marketing plan, in-depth knowledge of the local housing market, and the backing of a brokerage firm you like. But most importantly, your listing agent will be someone with whom you’ll feel comfortable and confident to make very big decisions.

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The Truth About Open Houses

June 1, 2012 By Leave a Comment

Home sellers: why are you pinning high expectations to open houses? Is this your idea or your agent’s? It is a mistake to think open houses are an important marketing strategy for your home to sell. Open houses are not so important. They haven’t been for years, since about 2006 in my opinion.

The real function of open houses is for agents to pick-up buyers. The majority of buyers walking through your house on Sunday afternoon are in the early stages of their home search. This makes for an excellent way for agents to meet buyers who are often unrepresented. The buyers usually expect this, as they are shopping around for a buyer agent, and for general neighborhood and market information.

The buyers coming to your house are shopping, but not for a home…not yet. When they enter the stage of readiness to buy, they’ll book a private showing.

Why have open houses lost their purpose as a main showcase for your home? First, let’s blame (or thank) the internet. With all the media available, buyers are able to learn a lot more about houses online. They don’t need to see fifty houses to learn what the market has to offer. Instead, they can view videos, pictures, floor plans and neighborhood information anytime, on a handy device, from anywhere.

Second, with the slow market of the past few years, buyers are less fearful of losing a home. If they can’t get to a home on Sunday, they’ll come see it on Monday or Thursday. There is more inventory and homes stay on market longer. What’s the rush?

But open houses are not a total waste of time for you. You should have your agent (or team member) host an open house occasionally. Open houses are a great way learn about the market. Agents share information about about open house traffic to gauge what is going on locally. In open houses we also hear honest feedback direct from buyers, which can be very helpful.

So don’t nix the open houses completely. Adjust your expectations instead, and ensure that the open houses are not your listing agent’s marketing tool of choice.

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Look at Homes Priced Higher Than You Can Afford in Brookline and Newton

May 1, 2012 By Leave a Comment

My fellow real estate agents will hate me for this post, more the reason you, my non-agent friend, must read it.

Are you looking to buy a home? What’s your price range?

Whatever your price range, look at homes priced up to 10% higher! You can find a home you love at a great price. This strategy works if you have time, patience, persistence and an agent who is not shy about negotiating.

This is not a suggestion simply based on a few anecdotal stories, but statistics. Looking at the ratio of sale price to list price (SP:LP), you learn the final sale price of a house compared to the asking price. This ratio was 95% in Brookline and 96% in Newton in 2011. But there is a ratio I like even better: sale price to the original asking price (SP:OP) . From this number you learn the final sale price as a percent of the asking price before it was reduced. This number is obviously lower, at 91% in Brookline, 93% in Newton.

On average, a houses in Brookline in 2011 sold for 9% LESS than their original asking price, and 5% LESS than the final asking price. For example, a house went on market for $1,650,000. Over time, the price was reduced to $1,580,500, and finally sold for $1,501,500. A buyer who can pay up to $1.5 could have seen this house, waited 125 days (average market time in Brookline in 2011), and bought it.

This means the house was overpriced. Not all the houses will be overpriced when put on the market at $1,650,000. These days, they may even sell for over asking. But on average, if the house prices in Brookline in 2011 sold for 9% less than the original asking, you should be looking at homes priced higher than you can afford.

Please have your agent check the SP:LP and SP:OP ratios for your area and neighborhood. We can search it by zip codes, price ranges, types of homes, etc. Adjust your search criteria accordingly. Note that usually the higher the price range, the lower the ratio (larger price differential).

Buy bravely!

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