What are Home Buyers Really Thinking about Real Estate Agents?

Raincity Guides is one of our favorite blogs has a great post and alot of comments regarding a "Home Buyers Perspective". There is some good information in the post but as a very pro-consumer service, we are intrigued about where and what home buyers think of agents and the service they provide.

What is it that makes buying a home so confusing that buyers feel they must us an agent? Could it be just emotionally difficult and the agent is really just a sounding board to insure the decision you are making is a good one? Do home buyers use agents just for encouragement or is there real value being provided. Home buyer let us know what you think and what would make things "perfect" from a buyers perspective.

California Real Estate Buyers Committed to Bigger Mortgage Payments... Scary

Not really surprising information from Dataquick today which reported that Southern California home sales hit a 9 year low. What was scary was Inman News article on the story which indicated the following...

The typical monthly mortgage payment that Southern California buyers committed themselves to paying was $2,437 last month, the same as the previous month, but up from $2,052 a year ago. Adjusted for inflation, current payments are about 6.2 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle, DataQuick reported.

Some of you may remember what happened in Southern California in 1989-1990 with property values. Also, what is unknown is how many "interest only" loans where factored into this average to determine this monthly payment data. Interest-only mortgages where was practically non-existent in 1989.

What do you think... will common 2/28 interest-only adjustable rate mortgages cause bigger problems to real estate values than in 1989?

Zillow Home Values via Text Message

At the Inman Real Estate Connect Conference, Zillow annouced a new toy... Zillow Values via Text message. Here are instructions from their blog on how it works:

From your mobile device, send a text message to z@labs.zillow.com.
In the message field or subject line, enter an address for which you want a Zestimate, then send the message.
Examples:
2911 W Boston St Seattle WA
2911 W Boston St 98199
Tip: The format is not case sensitive and you do not need to use punctuation.

A text message from Zillow will be returned to your mobile device within a few seconds or slightly longer, depending on the network or your mobile phone provider.
The return message will contain the home's address, the Zestimate, number of bedrooms, number of bathrooms, square footage and year built.

Is this overkill or a really useful tool for home shoppers? Who will use it most... real estate agents or borrowers? Or are mobile phone users setting themselves up for text spam?

Fed pauses interest rate hike... will real estate pick up?

After 17 straight rate hikes and two years... the Fed has finally paused on increasing interest rates. Every one with home equity lines of credit and 2/28 adjustable rate mortgages can finally breath a sigh of relief.

The relationship between real estate prices and interest rates.

Here is an interesting quote from the Fed speech...

"Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices,"

It's interesting to note that a main reason indicated is the "gradual cooling of the housing market" which tells you just how much our economy depends on the real estate machine.

Now that people are no longer pumping billions into the economy from their "home atm's" the impact is really felt. Just how much, time will tell.

Will real estate pick up?

So now the burning question. Since we have a pause in interest rates which should lead to some stability in mortgage rates... will that raise the general publics' outlook on real estate prices again?

Damage already done?

Consider that the majority of commercial real estate is financed by mortgages priced on the prime rate. So businesses have already felt a giant crunch in the bottom line with increased "site" costs and lease fee's. What do they do... stop hiring and raise prices... (as evidenced by missed job growth and inflation).

What do you think?

As a real estate professional or home buyer do you think it's too late and the real estate market will continue to cool or will it light up again?

Who REALLY pays for the REALTOR Commission… Are Real Estate Commissions Really 10% - 12% ?

The home seller? The home buyer? The wholesale lenders? If you ask the home seller he / she will say them because it’s paid out directly from their net proceeds on the HUD 1 statement as a deduction. This is why many are looking at alternative routes, like for sale by owner or ala carte / discount services.

Others argue that the home buyer is paying the real estate commissions (but they don’t know it)… by financing it into the sales price of the home which is often artificially raised by most home sellers to cover the cost of using an agent?

Are today’s real estate commission really 10-12%?

If the seller pays it and the buyer finances it… can they be 10 – 12%. Value is based on comparable sales and most comparable sales are based on homes sold with a REALTOR, are most property values based on comparable sales artificially pumped up to cover these costs?

Real changes in real estate coming?

Mortgage lenders regularly cut sales prices on transactions… but what if they cut them 5% - 7% (the typical real estate commission) as a way to hedge a slowing real estate market and troubled loans? As property value is not an exact science and any appraiser can selectively make the value come in 3% to 5% higher using creative adjustments. Mortgage lenders are the ones that can truly change the industry overnight.

What if the “buyers agent” real estate commission was indicated as a "closing cost" on the buyers closing HUD 1 statement as I suggested on a previous blog post? After all, real estate agents argue that it's important to pay for the best representation which justifies their costs, but in the current real estate system buyers don't view the buyers agent as a "cost"... why not? If they did, would buyers still use an agent?

REALTORS, Mortgage Lenders, Buyers and Sellers… what do you think?

Is anyone really surprised pending home sales index Up... Down?

The NAR released it's Pending Home Sales index and surprise... it's Up Down? Down from last year... really? But on the positive note, up from last month. Let's see what August will bring... since that was the probably the true top. How was my Pending Home Sales prediction from 6 months ago? Is this just good spin on bad news?

Real Estate Commission Limbo...

Here is interesting post at the Inman blog which I commented on. Agents still fighting over commission rates. Here is my post:

The problem is that most agents cannot seem to break-down what they do. Most just say it's going to be X% to list. Instead agents should try to truly explain what your services are and really provide a break-down and explain the most important facet, the emotional support you provide. Obviously I'm not an agent but here is a tool we use to show the hourly savings between FSBO vs. REALTOR transactions and I think that the more an agent can do to provide tools like this the better chance of holding onto your current pricing structure. Also, keep in mind that the traditional real estate industry has yet to feel the real effect of new alternative realty agencies. Buyside, Zip, Redfin, Expert, etc. which will capitalized on the marketing aspect that buyers can save a significant amount of money using their models in this new buyers market. Traditional agencies have only felt the attack from one side so far and look at the impact, the selling commission from the discount and flat fee brokers, which have only about a 3-5% market share. Now the buying commission is also coming under attack and let’s assume they too can pick up the same market share.

Where most of the companies will make true head-way in this battle is that they will capitalize on the inefficiencies of individual agents. Real estate is an individual business with each agent trying to out market each other spending lots of money in advertising, instead of focusing on the customer and pooling their resources into massive marketing power. When companies like expert and buyside have a 24/7 customer service centers, there is no way individual agent can compete with the service level provided and the marketing power they can provide just based on the discounts they receive on bulk buying. Just think about what NRT / Cendant / HomeServices do, buy a dominate local company which spent millions a year in advertising / branding budget. They reallocate this money back into the main franchise brand saving millions and increasing the bottom line without really changing a thing,. Individual agents can learn a lot by studying M&A.

The commission limbo is just starting and the bar is decreasing pretty quick, those that want to stay in the limbo better stretch your back and... Mind.


Am I way off base or what?