Sunday, March 2, 2008

Some quick observations and Guest Post #1

I was in D.C. on Friday. I was impressed with how clean it was. Granted I was in the business district but wow, brick sidewalks, not a cigarette butt nor needle to be seen, and the architecture... certainly doesn't make Victoria appear "world class." I came home from Van yesterday on the seaplane. Flew right over downtown. Anyone who thinks we don't have more land for development should fly over town. There is much more land here than I realized.

Care_bear sent in the content below for a guest post. It's a different take than we've seen here for a while. I'm inclined to think a good discussion may arise.

Selling in a bear market

It drives me nuts to see the number of home sale listings increase daily in yet people still think that they can sell their house/condo/whatever with minimal effort and for ridiculously inflated prices. The market is different today than 2 years ago people.

I drove by a newly advertised 'for sale by owner' duplex the other day and the sign looked like it was made by the owners 10 year old kid. It was complete with flashing bike light on top. How a flashing bike light is supposed to convince someone to drop $400k on a duplex is beyond me.

If you want to sell your property in today's market then you will have to do more than your neighbours who are selling the exact same place. Here are some hints:

1) Get a real estate agent. Get a good agent. Reality is that you need to be playing with a full deck of cards in order to complete such a huge transaction. Even selling a bachelor condo is a huge transaction these days. Believe me that I'd love to say that you can save the huge amount of real estate commission by doing it can't. Maybe you could 2 or 4 years ago.

2) Watch your agent like a hawk. Make sure the ad is perfect. Make sure you bug them for updates regularly. Make sure you get feedback from everyone that was through your property. Most real estate agents do a good job but they have many clients besides you and any sale will be the result of the partnership and not soley your agent.

3) Price accordingly. Your price must be exactly right for the market. You will not sell if you're overpriced. Likewise, make sure you don't get bamboozled into selling for less than market value. It's up to you to determine the value of your property and not your agent (they will have an important opinion). It's your money.

4) Make sure your property is the best one available in the area for the price. Paint some walls, cut the grass, reno a bathroom, etc. Your property must be better than your neighbours as the amount of buyers looking for your place is not as high as in years past. If there's a serious buyer in your area then you want them to buy yours as you can't afford to wait for the next buyer (if there is one).

5) You need maximum exposure. List on MLS, usedvictoria, craiglist, wherever you can think about. Tell people at work, post signs, use the newspapers. Have open houses every weekend. You need to find your buyer as it's much less likely that a buyer will find you.

If you really need to sell your place now then you must take the initiative. Fortunately, things are still selling but the amount of listings is increasing rapidly and the window for you to sell (and not lose a lot of money) is only narrowly open.

DISCLAIMER: I am not a real estate agent nor am I involved in the real estate industry in any fashion.


HouseHuntVictoria said...

I'm not sure we want to be giving hints around here on how not to get a haircut... :) bring on the correction...

Ish said...

Yes please, bring it on... We've already started looking for a SFH in Victoria, and the pickings seem to be slim, at least on MLS..

Tim Ayres said...

Tim Ayres:
Thanks for the guest post. Obviously, I couldn't agree more with your suggestions. You need an agent who knows how to market properties. No longer will it suffice to stick a sign in the lawn and hope for a quick sale. Realistically priced homes that are marketed correctly sell quickly and for top dollar. The correct agent makes all the difference. You should expect regular updates and feedback on the marketing process, good photography, creative, high quality marketing materials like brochures and booklets with photos, floor plans, maps, and any other pertinent information that a visitor to your home can take away. It helps them to remember your home over the other 11 or so they will likely look at before deciding on a purchase. Photos like this won't cut it in today's market. Demand better.

- Tim Ayres

roger said...

Great guest post. Nice to see Tim posting again. Tim - great comment on the photos.

Tim I have a couple of questions:

1. What are your thoughts on the re-listing scam where an agent relists a property in order to "freshen" it up. Usually this is done after it has been on the market for a while or when it has had several price reductions. Sometimes it is done at the time an offer is accepted in order to make it look like it sold near full price.

2. Does this re-listing trick fool anybody? If an agent or buyer is familiar with an area surely they must recognize the relisted property.

Here is Scott Simmons perspective on this practice on Saltspring.

Tim Ayres said...

Tim Ayres:
@ Roger:

1. I think I have commented on this before on this blog, but maybe it was another. From an agent perspective, I've been asked several times to re-list a property that's been on the market some time and has thus become "shopworn." It's frustrating to both agent and seller when the only reason a property won't sell seems to be the Days on Market counter ticking away. Of course, there are always times when it's priced too high to begin with.

But in some situations, I've re-listed a property at the same price as before, or with a minor (5-10K) price adjustment and it sells quickly. Never have I advertised that I've sold it quicker than I have, nor would I advertise the list/sold price ratio in this case. I think it's asking for trouble. But I'd agree that some agents choose to advertise this way. There is some discussion at the board level about a CDOM (cumulative days on market) stat that could be displayed as well, but this would likely only be for agents so that we can adjust prices, etc for market analyses.

I do agree that it can throw off statistics, if one is looking at average days on market, etc. I think that the public is really only at risk when an agent approaches them touting his or her statistics based on these types of somewhat deceptive practices.

It's a bit of a fine line I suppose.

2. I think it might fool some agents into thinking it's a new listing, especially new or inexperienced ones. I always always always check the address to see if it's a re-list or not. It certainly affects any offers that I prepare on behalf of clients. I think you're right about anyone watching a neighbourhood though. They're more likely to know than their agent in some cases what has been going on in any given area.

- Tim Ayres

talus said...

As a repetitive home shopper (every 3-5 years due to work) I rely on MLS more than the agent. A good agent will save you some time and find out what you really want. A bad agent can waste you time and show you crap - or in one instance only HER own crap listings. Tell the agent exactly what you want - if you know what that is. If you don't know what you want, tell them that also - don't be a poser.

Using MLS, it doesn't take long to weed out the good from the bad and photo's are very telling. Ever notice the quality of the photo's on the houses listed for 1 million plus? Personally, I think that any house selling for more than 250K should have some decent photo's taken. Your realtors point-and-shoot (or cell phone camera!) just doesn't cut it. Most people can do better with a little effort.

I'm also not a fan of the "open house". To me it's a waste of my time and simply a chance for the neighbours to have a snoop. Sure they may tell a friend but I find it's mostly "lookers" and not buyers. However, I do believe in Agent open houses or Agent tours - one agent can only show so many houses, getting all the agents on board is what you want.

As a compulsive / obsessive viewer of show homes, show suits, and HGTV it doesn't take a rocket scientist to figure out how to "show to sell".

As sellers we have made sure to have the house ready, clean, and "dressed" including place setting for the dining room table. We have made a point of taking exterior photo's through the seasons so that we have a few to choose from. You don't want to show it with 2 feet of snow in the driveway (unless it's a ski condo). Interior photo's are only done when the house is prepped.

From then on it's just a matter of keeping the house in "show" condition and getting out of the realtors way. If I'm buying I expect the sellers house to be in similar condition. If you don't keep it clean inside why would I expect the remainder of the property to be in better condition? If owners don't keep a well maintained property, I start knocking dollars off big time. I may not like your wallpaper, carpet or decorating but if it's clean and well cared for I can live with it until I change it. If I'm afraid to take my shoes off and I can't see how big the garage is because it's full of crap, expect to loose money.

Once I have the house narrowed down and I'm ready to make an offer I usually go knock on the neighbours doors. I just introduce myself, tell them I'm buying and ask them what they think of the neighbourhood, good and bad. Amazing what you'll learn. I once stopped into the local coffee shop just down the street and asked the cashier what she thought of the area. She filled me in on the two Meth clinics on either side and the most recent knife incident. Good to know. If you have the time it's also a good idea to stop by at a few different times of the day - you might just learn that your street is used during rush hour or that your under the local airports flight path.

Anyway, once your eyes are bleeding from checking MLS incessantly, and you can price a home in any neighbourhood just driving by, then your ready and informed to make a purchase.

roger said...

Tim Ayres said

It's frustrating to both agent and seller when the only reason a property won't sell seems to be the Days on Market counter ticking away.

But in some situations, I've re-listed a property at the same price as before, or with a minor (5-10K) price adjustment and it sells quickly.

Tim, thanks for your frank response. If the property does sell quickly after being relisted this would appear to be due to one of the following:

1. The buyer did not know that it was relisted and thought it was a new listing. (The agent did not check to see if it truly was a new listing). The buyer made an offer without knowing the sales history. Agent was negligent.

2. The agent knew but let the buyer believe it was a new listing. The buyer made an offer without knowing the sales history. Agent was unethical.

3. The price reduction and relisting appealed to the buyer and they made an offer based on the true facts. Everything was above board and seller/buyer were fairly represented.

When I lived in Ontario relisting was not allowed unless the property was being listed with a different broker (even if it was off the market for months). The buyer should be protected and know all the facts prior to making an offer.

patriotz said...

Agent was negligent.

Agent was unethical.

Well no. Anyone being paid by a commission on the sales price is working for the seller, period, and any buyer who thinks otherwise is kidding himself. The agent owes nothing to the buyer except to accurately represent the physical property for sale, and no, prior attempts to sell the property don't fall under that.

And this future buyer has something to say: I'm going to pay what I think a property is worth based on a sensible multiple of market rent, and I don't give a hoot how long or how many times it was listed.

Anonymous said...

I liked the guest post!

Let's keep HHV going. :-)

roger said...

Bears kick a touchdown

VREB March stats are released.

The only bright news for the bulls was that the SFH median price rose to 543K from 530K in January. December 2007 median in Greater Victoria was 536K.

Bear News:

1. Average SFH price fell for the second month in a row. December-624K; January-606K; February-587K

2. MLS Sales in February 2008 totalled 619 down 12% from the 707 sales in the same month a year ago.

3. The total number of properties available for sale rose to 3,311 in February - a 13 per cent increase over February of last year.

4. Average condo prices fell for from 349k in January to 333K in February. There were 208 condo sales in Feb. 2007 and 177 in Feb. 2008

5. Townhouse average sale (424K )and median prices (392K)remained the same in January and February 2008. But they are much lower than the November peak of 474K and 421K respectively.

roger said...

More interesting stats:

Last month there were 316 SFH sales. 158 sold over the median of 544K.

Today there are 572 single family homes for sale above 550K on MLS. 392 under 1 million and 180 over..

At the higher end of the market, Joe noted that there were nine sales in Greater Victoria and one sale on the Gulf Islands of over $1 million.

Things are going to get interesting.

roger said...

Local Victoria REALTOR® reports that Victoria RE price trend is falling in Realty Times.

hhv said...

I don't know how he can call a market that is seeing falling prices balanced between sellers and buyers?

roger said...

hhv said

I don't know how he can call a market that is seeing falling prices balanced between sellers and buyers?

The RE industry considers rhe market to be "balanced" if the sales/listing ratio is in the range of 40%-60%. Above 60% it is a sellers market; below 40% is a buyers market.

The recognition that prices are falling is significant. REALTOR® assessment of the market is important to sellers and buyers as noted by Tim in his post.

olives said...

Vancouver seems to have the same problem at the high end:

Happy Owner said...

An increase in listing numbers, on the surface, can indicate a trend toward a buyers market (downward pressure on prices). But how many listings are just sellers looking for a price and don't really have to sell? Significant price drops only occur during "HAVE TO" sell listings. The investment market ,which is mostly condos and up-to-the-eyeballs-in-debt small time developers, will be the best bet for the bears. SFH is still the benchmark for real estate success, even with flat or slightly diminishing prices.Look at all the bears sitting around here waiting for the right price point to buy in. There is demand, and with demand, over the longer term, buying in will NEVER be a bad thing. I would definitley wait for prices to shake themselves out but "major drop" or "collapse" may be a warm and fuzzy for the (bear crowd) potential buyers out there, but it's not going to happen.