Let’s Take a Quick Look at the Worcester Real Estate Market…
by Jim Gatos - October 27, 2008 7:01am
There’s a “clearance sale” of sorts going on in Worcester.
The inventory’s been getting smaller, and as a real estate agent working Worcester daily, I can tell you, stuff is moving.
Most of the real estate inventory available is kept online by MLSPIN, A very big chunk of available inventory is bank owned or Short Sales. MLSPIN just recently started trying to classify bank owned and short sale properties, but as of now, there’s no way to give you a correct number on bank owned inventory. I wouldn’t be surprised if over 35% of all available Worcester properties were either bank owned or short sales. I show a lot of 2 and 3 families and it seems to me almost every other one I show is either one or the other.
It really shouldn’t matter to you anyway. What you should care about is what you are getting for the
price. In a lot of cases, bank owned properties can be a little “difficult” to purchase.
No matter what, recently, some of my clients have been in multiple offer situations. There’s a lot of
stuff being aggressively priced out there. Like anything, if it’s priced to move, it’ll move. Sometimes
the demand is so high, even nowadays it’s not uncommon to see a home sell for $ 10, $ 20, $ 25,000 higher than asking price. I’m not kidding…
MLSPIN is showing the following; (October 24, 2008 at 4:11 pm)
For Single Families, Multi Units, Commercial Properties for Sale & Lease, & Land, there are 1,472 listings available.
There are 333 listings on deposit.
441 listings have sold and closed (some are leased) in a 3 month period.
Average sales price of all single families is $198,489 Market time is 147 days.
For condo’s the average sales price is $119,229 and the market time is 167 days.
For Multi’s the average is $143,492 and the days on market was 176.
The inventory is being “flushed” out a couple of ways. The agents and sellers that don’t “get it” about
the market reality are beginning to leave an already crowded market. Banks are generally not as “cocky” as they were last year and for the most part adjusted their prices. Programs like Buy Worcester Now are helping buyers with alternative and more flexible financing options.
It’s a “Brave New Real Estate World” in Worcester. Almost like a “real estate colon cleanse”…
Generally speaking, prices are much more affordable than a couple of years past, and that’s a good
thing. I sincerely hope there’s some stability in the real estate market THIS time around. The “American Dream” has been taken away from a lot of us…
I found your blog on MSN Search. Nice writing. I will check back to read more.
Eric Hundin
With the latest legal decisions regarding listings monopoly what is your opinion about selling or buying a house without a real estate agent nowadays. I can save a bundle right?
Hello, Janice, thanks for stopping by…
First of all, may I ask you to provide a link to the “listings monopoly” legal decisions? I think I know what you’re referring to, I just want to make sure we are talking on the same wavelength.
I pride myself on trying to be realistic and “straight shooting” so let me try to tackle your question simply. If you are buying, how are you going to save money without a buyer’s agent? (An honest, ethical buyer’s agent) A buyer’s agent works for YOUR best interests. You may argue that we agents work on commision but in my case, at least, I would rather try to save you as much as I can (if possible) and impress you rather than spend my energy not being on your side and trying to get you to pay more. Why? First, it’s my fiduciary duty, by law, and secondly, I am looking for referrals. I can give you real life examples of clients I worked with and possibly have them contact you directly to vouch for what I am saying. Even if I was as greedy as some make us out to be to me it wouldn’t be worth it to try to make a couple of hundred more at the expense of you paying thousands of dollars more. That’s not good business sense.
An agent client relationship is similar to a doctor or lawyer. You pay them, right? They still are supposed to put YOUR interests above theirs. Do you bicker with good lawyers and good doctors about their fees? Would a good lawyer or doctor even stand for it? How would you feel if your dentist told you, usually the root canal is $1,500, but TODAY only you can get one for $400! Would you be thinking, “Wow, what a deal?”, or “Hmmm, should I run?” I know because the exact same thing happened to me a long while ago. I ran and I’m glad I did! The guy was in the papers everyday for botched up dental jobs and unsanitary procedures, to say the least. I was scared…
Janice, if you go directly to the listing agent it just means they will keep the listing AND the selling side of the commission. If anyone gets a break it’s usually the seller, if even so. You don’t know what a buyer’s agent could have done for you.
As for folks selling, those trying to sell on their own usually call so many agents and then they can’t find an agent to list the property at their ridiculously high price (No matter what the reason) that they wind up going “FSBO”..(for sale by owner)… They don’t realize that today, buyers aren’t as stupid as they hope they are. Even if a stupid buyer fell out of the sky and wanted to pay 30% plus more than the market price, no bank would touch it unless something else was going on. A good listing agent prices effectively, gets the best terms and conditions possible, is a razor sharp negotiator, and helps to avoid potential liability. And I’m not making this up. I could fix my own car, but I’d rather pay Jim Gardner of Gardner Automotive my good hard earned money and make sure the job’s done right. I’ve been going to Jim Gardner since I was 18 years old and I’m 47 now. I guess he proved to me he doesn’t care about how much he makes off me; he cares about servicing me and my needs as cost efficiently as possible without getting into lousy service. I know I could have gone elsewhere and paid cheaper here and there; however, I don’t want to walk around wondering what I missed.
My offer would not have been accepted, and my recent condo purchase would not have gone through without my wonderful real estate agent and real estate lawyer. After the nightmare I went through I can’t stress enough how important having a good team of professionals behind you is. I can only imagine it works the same way for a seller.
Janice.
First of all, if you’re going to be buying, no you’re not saving a bundle by bypassing a real estate agent. In 99% of real estate transactions, the buyer is not paying the agent a dime. The Buyer’s Agent is paid a commission from the Seller’s Agent once the sale is commenced. A good Real Estate agent will suggest listings, point out the pros and cons of the property, and help you negotiate the price of the property you’d like to purchase. If you go to a Listing (Seller) Agent directly, you’re less likely to work out favorable terms. The Listing Agent’s job is to maximize return for their client, and most Listing Agents would rather work directly with a buyer, because they are more likely to squeeze more money out of a buyer who does not have a real estate agent working for them.
On the selling end, yes, you pay a commission for the real estate agent’s work. However, I believe research has shown that you are (and please Jim, correct me if I’m wrong) in most cases to receive a good amount more money for your home if you use an agent, vs. a private sale. Now yes, you may end up even Steven because of the Agent’s fee. However, the Agent is the one spending time marketing and showing your house, and giving you tips on how to maximize the value in your home. This leaves you free to spend time with your family, work, and enjoy yourself.
I know as a real estate attorney in Worcester, I find that if I am representing the bank, I am hoping that both sides have Realtors. If they don’t there’s a greater chance of the closing being delayed or problems coming up because one of the sides (usually the Seller) is trying to save money by not hiring a Realtor or an Attorney. In fact, most Sale work I get as an Attorney, stems from someone who was trying to represent themselves, only to find out that there was a problem, and now their sale has been held up.
I’ve never worked directly with Jim as of yet, but his advice is smart and strong.
Pretty insightful information. Thanks guys!
I understood it all however I can’t respond to all your points. I’m not convinced either type of agent would get me a better deal.
It’s all about negotiation skills and knowing the local market price history. And hoping the buyer has an open mind. Which is not always the case.
Having been on the sell side, we knew what the market was asking for our square footage house & location. The house, a Victorian is in VG condition, the buyers agent didn’t want to negotiate. He stated his price and that was that.
We had an agent but he did little to nothing to help us get our asking price. So the contract expired.
We learned a lot from that experience and intend to sell it ourselves when the time comes.
Hello again Janice,
I’m just going to mention something here for the benefit of everyone reading. I think a couple of years ago the % of all the FSBO’s that actually sold was around 2%, and heaven knows if that’s still true in this market.
Generally speaking, when a property “expires” it’s mostly price. However, it could have been negotiating, because any other reason can be “cured” by a correct price. The correct price should attract an offer; it would be great if you had “multiple” offers. and even better if your offers went above asking price.
If you were looking for a home, would you go to a “do it yourself” site for FSBO’s?
I know if I were going to go it would be to find a deal. Why else?
The trick is two things. #1 is don’t waste your time trying to “fool” the market. If you can only get a certain price, either get it or get out. Seriously, I see FSBO’s spending THOUSANDS trying to get an impossible number. Then they wind up listing with an agent and the house sells immediately.
You lose money and time trying to sell an overpriced home, and so would I.. It just doesn’t make sense. The biggest problem with real estate agents isn’t that they are “liars”. The biggest problem is that a good number of agents try too hard to please. They find it hard to look at someone straight in the eyes and say, “No, you can’t get that kind of price, sorry…”.. Most get all “meek” and let the client lead them. Imagine if your doctor acted that way and you had a life threatening illness!! If I list an overpriced property, I stress to the seller they are wasting my time and theirs, and it’ll just sit there doing nothing except accumulate useless market time..
Investors and “Looky Lou’s” seem to LOVE FSBO’s. Probably because they’ve been around and “shunned” by serious real estate agents.
It becomes a whole new game being a FSBO. Agents explain to the buyers dislosure may be a problem, and a lot of agents probably aren’t very happy selling a FSBO listing, they’ll get paid but they don’t want to perform both sides of the deal, They can’t anyway. The law is the law… Investors will probably deduct around 30% or so so they can “flip” and make a profit. Direct buyers may deduct for commission, so they can save it since you ain’t paying it..LOL…
Just be careful, and I sincerely wish the best when you decide to sell.
[...] Jim Gatos wrote an interesting post today onLetâ??s Take a Quick Look at the Worcester Real Estate Marketâ?¦Here’s a quick excerptThe inventory’s been getting smaller, and as a real estate agent working Worcester daily, I can tell you, stuff is moving. Most of the real estate inventory available is kept online by MLSPIN, A very big chunk of available inventory is … [...]
WHAT EVERY FOR SALE BY OWNER SHOULD KNOW…
Three Facts…
1. Sellers Have Been Employing Real Estate Agents For Over 100 Years
2. 83% of For Sale By Owners List With a Real Estate Agent
3. Real Estate Agents Get A Higher Price In Less Time
Why you ask? There are 6 compelling reason…
1. Serious Buyers Only Shop For Sale By Owners to Save The Commission for example, … If 10% of all the homes available on the market are listed by For Sale By Owners, why would a buyer eliminate 90% of the homes?
2. The Law of Supply and Demand
The More Buyers We have access to, The More Valuable your Property is … And the Quicker It Will Sell! For example if the average agent has about 10 buyer leads and there are 500 agents in your market area you now have exposure to 5,000 propsects. How many would a single FSBO have access to?
3. The Difficulty of Separating the Lookers From The Buyers
For example 70% of the buyers that come into an open house have frozen equity. 15% prefer to rent. 11% cannot afford to buy. 4% are ready willing and able. How do you identify the 4%?
Picture this… If a buyer came to you and as part of his offer to you needed to sell his home, it wasn’t on the market and he was going to sell it himself, would you take your home off the market for 30-60 days to see if he could sell his home?
#4. The Longer it takes to Sell, The More Money the For Sale By Owner Loses.
“Really John, what exactly do you mean.” I am so glad you asked. Let me give you a few ‘Possible Financial Drawbacks to Increased Market Time’
Mortgage rates may go up.
When mortgage rates increase, existing home values tend to stabilize or go down.
Traditionally, new homes appreciate in value an average of 10% per year.
On a $2,000/mo. Mortgage, as much as $ 1,750 may be “thrown away” interest payments alone!
You could be missing out on tax advantages.
You might end up making payments on 2 houses.
A FSBO has to ask themself, which one of these items might apply to you.
5. MS = E = P = V+
Marketing Services =
More Exposure =
More Prospects =
Increased Value of Property
Realtors can do more in marketing services than a For Sale By Owner. Here is a short list…
Multiple Listing Service
National Relocation Services
Classified Advertising
Presentation Enhancement
Display Advertising
Professional Training
Nationally Recognized Yard Sign
Home Protection Plan
Access to Mortgage Loans
Local & National Image
6. 3rd Party Negotiating Saves Money!
Consider this…
A real estate agent is…
A trained negotiator.
Not emotionally involved.
Is knowledgeable about the market.
Understands the needs of both parties (buyer and seller).
What really matters is how much you end up with in your pocket.
Our thanks to Floyd Wickman for providing this powerful information.
Again, insightful stuff Jim & Mike. I appreciate you taking the time to respond.
The other aspect to selling is the financial status of the seller. Does he have to sell fast or not? Everyone wanted to know why we were selling. Asking roundabout questions to determine our if we were under pressure to sell for whatever reason. I played a game with several buyers, telling them what they wanted to hear. Yes I’ve been transfered… Yes we already have another house on deposit, or no we just want something bigger/smaller. The offers
under the perceived distress scenario were markedly under the other control group’s offers. My point telling a potential buyer details about the reason for the sale will be used against the seller. That’s human nature in action of course. The fact is when selling, just market the property and leave the reason for selling out of discussion. Or just tell a fib.
Another factors that we found to be a turn-off. One agent we interviewed pressed hard that we lower our expected selling price. All well and good for him, he makes a fast buck and we feel like we’ve been taken. At that price we could have sold it ourselves and saved the $20k in commissions – right? Netting the $20k lower selling price with the $20k saved commission. We don’t need an agent then.
But there is a qualitative factor to the property that everyone who looked at it immediately recognized. That being its condition i.e., renovations and updates. Simply stated other houses of similar size, age, location, style, did’t compare in the least with ours.
Ok, I’ve said enough. Again. Thanks for your time and insight Jim.
Janice, You’re a tough cookie to break…but I am going to answer a couple of points you have only for the benefit of all.. and I’ll be fast this time..
1. If the seller doesn’t need to sell within 6 months, I probably would not be inclined to list the property. A lot can happen in 6 months.
2. I’m not greedy or trying to make a fast buck. I need to allocate my resources to serious clients and I need to give them maximum focus.
3. It’s no one’s business why you’re selling. When I get asked, I usually answer “the seller would like to relocate” LOL.. ALL SELLERS RELOCATE, get it? Some buyers think they can get a break; when I’m working for the seller, I get very unemotional, logical, and almost robotic. Almost like the “Vulcan” Mr. Spock, from Star Trek. I actually enjoy the negotiating…
4. The agent pressing hard to lower your price may have been the best one yet. Forget the “fast buck” thing; if you priced your property 10% LESS than the market comps and you winded up with 4, 5, or even more offers, some WAY OVER ASKING Price, would that may you happy? Are you paying a commission to see an agent suffer for a year or are you paying a commission to get the best NET in your pocket?
5. The 20K you think you will sell, well, you have to sell it first. A lot of good buyers won’t come to FSBO’s. I know what you’re saying but I don’t agree and I have years to back my thoughts up.
Thank you for YOUR time and insight. I sincerely hope the best for you, Please just be careful out there.
Jim