August 27, 2004
The Market Sleeps
Not much going on in the market now and there won’t be until school starts, kids get settled into their routine and owners are ready to start showing their houses, probably the week of September 12th. Twenty-four new residences were listed last week and fifteen houses went to contract, the latter ranging in price from $2,990,000 (35 Keofferam Road, Old Greenwich) to $765,000 (19 Pleasant Street, Cos Cob). There were also thirty-four house closings but these reflect activity from May and June, when the market was more active, and the closing prices reflect it: a number of above-asking sales and even more full price sales. Until September, then, you’ll find most agents at the beach.
Realtor Bashing
A recent opinion piece in Slate, the on-line magazine, suggested first killing all the lawyers and then turning knives on Realtors who, the author argues, represent a relic from the pre-internet days before web-cams and email enabled buyers and sellers to interact directly. The author should try his hand at this business, I think, before concluding that real estate agents are over-paid. The typical five percent commission he rails against, for instance (as a former trial lawyer used to gnawing off a third of what I recovered, I consider five percent to be a horrible come down) is split four ways. That doesn’t amount to all that much for each player although admittedly, the seller doesn’t care who gets what so much as how much she pays, total. So what does the commission buy a seller? Exposure to the multi-list and the number one house-buying site, Realtor.com, obviously, plus print advertising, but also much more. A solid opinion of price, for instance. I was consulted recently by a home owner who had been trying unsuccessfully to sell her house herself and wanted my opinion on why it wouldn’t sell. There was, it turned out, nothing wrong with the house itself; no need for “staging” or otherwise improving its appearance. What was wrong was that she was asking almost half a million dollars more than the street would support. That doesn’t work, with or without a Realtor. Another benefit, the value of which depends on the seller’s valuation of her own time, is customer vetting. Those of us who try to earn a living at this business try not to spend three weeks with people who merely want guided house tours, so we learn who they are, where they work, what they can afford and so on. There’s a pretty good chance that, if your house is shown to a potential customer by a real estate agent, that customer is truly looking to buy a house here in town, in your price range. When I was selling my own house in Maine years ago in order to return to Greenwich I tried to sell it myself for several months. I would leave my law office, drive to the house to show the property and discover, again and again, that I had interrupted my day for the curious and the penniless. A discouraging process that only ended when I listed it with a brokerage firm. They sold it within a few weeks.
Buyers benefit from using a real estate agent, too (as they should, since the commission is usually built into the price that they’re paying). We can give an objective opinion on a house’s asking price. The Slate author argues that we’d never do this because. “the higher the price, the higher the commission”. Leaving aside the fiduciary duty a buyer’s agent owes his customer, I’d point out that the agent’s share of, say, an extra $100,000 amounts to about $1,250,000. It would be stupid to jeopardize a relationship (buyers eventually become sellers, after all) for such a relatively small sum. A good agent has seen every house in a buyer’s price range and can advise on the merits of each; location, condition and price. Touring houses with an agent should not be a mutual voyage of discovery—you should be receiving the result of tens, even hundreds of hours of that agent’s preparation.
Will Ebay replace real estate agents? I suspect that it will, which is why I pursue an alternative career as a writer. Pricing information is no longer secret; buyers can learn on the internet, instead of through a real estate agent, what’s for sale and who is asking what. That kind of transparency will ultimately result in more and more direct deals between buyers and sellers. I’m not convinced, however, that either group will find this an unmitigated blessing, just as deregulation of the airlines did little to improve flying conditions or airline food. Still, price usually conquers all, so I suppose that this ruminative column is more of an obituary than a stirring defense of the real estate business. I just hope the change holds off until my kids are through school.
Not much going on in the market now and there won’t be until school starts, kids get settled into their routine and owners are ready to start showing their houses, probably the week of September 12th. Twenty-four new residences were listed last week and fifteen houses went to contract, the latter ranging in price from $2,990,000 (35 Keofferam Road, Old Greenwich) to $765,000 (19 Pleasant Street, Cos Cob). There were also thirty-four house closings but these reflect activity from May and June, when the market was more active, and the closing prices reflect it: a number of above-asking sales and even more full price sales. Until September, then, you’ll find most agents at the beach.
Realtor Bashing
A recent opinion piece in Slate, the on-line magazine, suggested first killing all the lawyers and then turning knives on Realtors who, the author argues, represent a relic from the pre-internet days before web-cams and email enabled buyers and sellers to interact directly. The author should try his hand at this business, I think, before concluding that real estate agents are over-paid. The typical five percent commission he rails against, for instance (as a former trial lawyer used to gnawing off a third of what I recovered, I consider five percent to be a horrible come down) is split four ways. That doesn’t amount to all that much for each player although admittedly, the seller doesn’t care who gets what so much as how much she pays, total. So what does the commission buy a seller? Exposure to the multi-list and the number one house-buying site, Realtor.com, obviously, plus print advertising, but also much more. A solid opinion of price, for instance. I was consulted recently by a home owner who had been trying unsuccessfully to sell her house herself and wanted my opinion on why it wouldn’t sell. There was, it turned out, nothing wrong with the house itself; no need for “staging” or otherwise improving its appearance. What was wrong was that she was asking almost half a million dollars more than the street would support. That doesn’t work, with or without a Realtor. Another benefit, the value of which depends on the seller’s valuation of her own time, is customer vetting. Those of us who try to earn a living at this business try not to spend three weeks with people who merely want guided house tours, so we learn who they are, where they work, what they can afford and so on. There’s a pretty good chance that, if your house is shown to a potential customer by a real estate agent, that customer is truly looking to buy a house here in town, in your price range. When I was selling my own house in Maine years ago in order to return to Greenwich I tried to sell it myself for several months. I would leave my law office, drive to the house to show the property and discover, again and again, that I had interrupted my day for the curious and the penniless. A discouraging process that only ended when I listed it with a brokerage firm. They sold it within a few weeks.
Buyers benefit from using a real estate agent, too (as they should, since the commission is usually built into the price that they’re paying). We can give an objective opinion on a house’s asking price. The Slate author argues that we’d never do this because. “the higher the price, the higher the commission”. Leaving aside the fiduciary duty a buyer’s agent owes his customer, I’d point out that the agent’s share of, say, an extra $100,000 amounts to about $1,250,000. It would be stupid to jeopardize a relationship (buyers eventually become sellers, after all) for such a relatively small sum. A good agent has seen every house in a buyer’s price range and can advise on the merits of each; location, condition and price. Touring houses with an agent should not be a mutual voyage of discovery—you should be receiving the result of tens, even hundreds of hours of that agent’s preparation.
Will Ebay replace real estate agents? I suspect that it will, which is why I pursue an alternative career as a writer. Pricing information is no longer secret; buyers can learn on the internet, instead of through a real estate agent, what’s for sale and who is asking what. That kind of transparency will ultimately result in more and more direct deals between buyers and sellers. I’m not convinced, however, that either group will find this an unmitigated blessing, just as deregulation of the airlines did little to improve flying conditions or airline food. Still, price usually conquers all, so I suppose that this ruminative column is more of an obituary than a stirring defense of the real estate business. I just hope the change holds off until my kids are through school.
posted by Chris Fountain at 8:40 AM
0 Comments:
Post a Comment
<< Home