"Roulette Economy of 2007 is Almost Over"

'Roulette Economy' of 2007 Is Almost Over“

2007 has been a year of challenge; 2008 will be a year of opportunity for serious buyers and for REALTORS®,” NAR Chief Economist Lawrence Yun told a packed house at the NAR Conference Tuesday. What Yun characterized as “the roulette economy” of 2007, fueled by subprime greed and then buyers’ fear, is almost over. With a favorable economy, pent-up home demand, and Wall Street “fessing up to its losses and cleaning up its underwriting,” 2008 will be a healthy market for serious buyers, he said.Home prices nationally have declined by some 1.5 percent in 2007, which is "no big deal" after years of rapid appreciation, said Yun. In addition, he noted, there are still many markets such as Utah, North Carolina, and Tennessee that are appreciating and may even be undervalued.

Remind Clients That Markets Are Local“

REALTORS® have to educate their clients that all markets are local and that problems in a few areas aren’t meaningful," he said. "A national picture of the real estate market is just about as valuable as giving a national high temperature for the day." Yun also noted that while the credit crunch slowed deals in 2007, much of the pain is being felt in the subprime area, while other mortgage sectors are stabilizing. Subprime constitutes only about 10 percent of mortgage loans, but accounts for some 40 percent of current foreclosures. Going forward, proposed federal legislation that would increase FHA loan limits should help moderate-income buyers, said Yun. Yun expects GDP growth of 2.8 percent and job growth of 1.1 percent in 2008. Inflation should also remain under 3 percent, and interest rates should rise only slightly, he predicts. “For buyers who are into home ownership for the long term, housing still remains the best investment,” he concluded.

Strong Fundamentals Bode Well for HousingOther national sales downturns in the last 30 years were spurred by broad economic problems, Yun said. This year, by contrast, economic fundamentals remain solid, with the U.S. gross domestic product expected to grow by a respectable 2 percent, supported by 2 million job gains in the last two years and continuing low interest rates. Yun said 2007 existing-home sales will exceed 5.5 million, close to the level in 2002, a record-setting year. At the same time, home prices remain near record highs despite drops in a few markets.

Get Ready for the New Generation

Following Yun’s presentation, former NAR economist John Tuccillo gave attendees a preview of what the next real estate market would look like. When recovery comes, said Tuccillo, most clients will be Gen X and Gen Y. These younger buyers don’t want relationship selling; instead they want the best bottom line deal you can find and the one-stop shopping to make the deal faster so they can get on with their lives. Other big buyers in the next decade will be retiring boomers, who will want homes in 24-hour cities and college towns. “Real estate practitioners have traditionally worked with first-time buyers. Think of these people as last-time buyers,” he quipped. It’s hard to predict when any local market will begin to improve, but there are three indicators, said Tuccillo. First would be a drop in new listings, indicating sellers are withdrawing from the market. Second, days on market will fall. And third, the gap between listing price and sales price will narrow.

— REALTOR® Magazine Online

Jose R. Cordova

Broker/Owner

CENTURY21

Casa Real Latino 973-546-8888

Take a few minutes to evaluate your real estate potential

http://c21crl.agenttype.com/

Raising Commission Paid To Buyers Agent May Sell Your Home

October 28th, 2007 Real Estate Sales

If I were to sell my home tomorrow I think I know how to do so. Instead of going on the cheap on the commission with a discount broker trying to save some of the difference in housing prices from the peak, I would go the other direction and prey on human nature. I would offer a higher commission to the buyers agent.
Now there are some nay sayers that will say, “Tom, you are such a homer for the real estate agents, of course you will say raise the commissions.” And you would be completely off base.
When the real estate market was rocking I was calling for lower commissions. Selling a home was like shooting fish in a barrel and thus commissions should be lower. But the real estate world is not rocking, it is hurting. Hurting bad as they say in the south. There are real estate agents waiting tables like actors it is hurting so bad.
So sellers should prey on human nature. If a real estate agent is having a bad year but has a buyer, don’t you think their is the slightest chance they may look in the MLS and sort homes for sale by buyers commission? And if your home has an extra incentive in it for them that they may just happen to show your house even if it is not the perfect fit in a down market? I have never seen a home sell without a buyer, have you?
I am not glorifying the real estate agents with this post, but I am recognizing they are human. And if it takes a little motivation to get your home shown in a down market, then good for you. Here is an example of this from an article in the St. Petersburg Times.
With home sales less than half of what they were during the 2005 peak, you would think commissions would shrink. Underemployed agents are chasing a dwindling number of sales. But just because you can bargain hard on commissions doesn’t mean you always should. Think of it this way: A commission is prize money. All things being equal, a buyer’s agent will show a home paying a 6.5 percent commission to one paying 4 percent.That’s why I sweetened the pot by offering an extra 0.5 percent for the buyer’s agent. Compared with other homes for sale in my neighborhood, my commission was the highest. Less than two weeks after my agent and I signed the contract for 6.5 percent, we had a deal on my house. An acquaintance living nearby who offered 4 percent hasn’t sold his house in a year.via SF Gate
Now for a little math to help you decide this may be the right way to go. Let’s say you are selling a $250,000 dollar home. The commission at 6 percent is $15,000. If you added a 1% bonus to the buyers agent the commission would be $17,500, a difference of $2,500. But it would also put you at the top of the chart on buyers commission paid in your community and odds are you house would be shown a great deal more than others in your price range.
If you sold the home a month quicker you would be very close to breaking even at a 6.35 percent mortgage and typical utility and tax costs added in. And you would have a home sold in a down market which in itself is no mean feat.
So my advice to motivated sellers. Sweeten the buyers agent commission. Prey on the greed of the real estate agents. You are not being taken by the real estate cartel by offering a better commission. Instead you will be putting yourself ahead of the other homesellers and may have a better chance in selling your home in a down market.(from: http://www.therealestatebloggers.com/)

Jose R. Cordova
Broker/Owner
CENTURY21 Casa Real Latino
973-546-8888
Take a few minutes to evaluate your real estate potential http://c21crl.agenttype.com/