Real Estate tradition, in this part of the country says that “…there’s no point in having your house on the market in the winter between Thanksgiving and the Super Bowl…” I’ve always thought this was a silly myth and have always advised my clients – both buyers and sellers of the fallacy of this thinking. I started my real estate career on December 12th, 1982. I was offered a position with a new home builder in Glen BurnieMaryland in the winter when a really good interest rate on a home mortgage was around 13%. I’m pretty sure the real reason I was hired was not any great expectations about me doing a bang up job but, because I was “dumb enough” to take the job in mid-winter with minimal commitment from the builder, and the regular staff was all going on a company paid tour of Mexico. Being a recent college graduate and not being familiar with all the “Facts of life”, as known by the real estate industry, I did not know that no one was supposed to be out buying houses in December of 1982. I sold twelve homes that month – who knew!
They kept me on when they came back.
Anyway enough about me, here’s the point. The winter can be a truly breath taking good time for residential real estate. The transactions are typically quick, clean and fast.
Top Reason # 1 for doing real estate in the winter: Residential real estate can be a bit like driving down a turnpike for buyers, sellers and agents, because as there are more people on the road traffic tends to slow down and small bottlenecks become more pronounced. When the highway is very crowded many people make mistakes or get frustrated and everyone on the road suffers. So to buy real estate in the winter buyers have a slightly more limited pool of inventory to pick from but they have a much better pool of inventory. Typically the sellers who have their homes on the market in the winter are serious sellers, they are not putting their home on the market to “try things out and see what happens” they want or need to sell and are generally more prepared to handle issues reasonably.
Top Reason # 2 for doing real estate in the winter: Good properties just don’t sit around as long. Think of it this way: if a buyer has been thinking about looking for a home and has been scanning the web for months or has been out looking or a home with an agent or even made some offers that fell through due to any number of reasons, when a good property comes on the market these folks can see it and generally will snap it up. There’s an old saying in retail sales: an educated consumer is the best customer. These real estate consumers are self educated and well educated. Buyers at this time of year can pick out a deal and don’t wait.
Top Reason # 3 for doing real estate in the winter: There’s simply less competition. Look back at reason # 1: would you rather drive down a crowded highway in rush hour or a busy highway on a sunny day. The psychic effect of having a well negotiated clear transaction with less pressure is huge. Many times it takes home buyers and sellers years to recover emotionally from a messed up transaction. Yes there are the Holidays but you’ll also have an open road.
Remember it’s still a home, it’s not really supposed to be just an investment. You aren’t going to steal a house if you’re a buyer and you aren’t going to be the only game in town if you’re a seller – ultimately both buyers and sellers can and do wait if they don’t get what they feel is fair. All the regular rules apply to transactions, but residential real estate in the “Off Season” can be very worthwhile.
Technology is likely to have a significant impact on the structure of the real estate industry in the coming recovery for a number of reasons. Real estate transactions have basically two related and separate parts the seller side and the buyer side.
The Buyer Side will not be as greatly impacted by change as the seller side due to some factors which are basic to the process. The impact of technology on the buyer’s side will primarily be on the media not on agents and buyers. Most people who have been involved with the real estate industry over the last ten or fifteen years have known that print advertising has declined in efficacy dramatically. Virtually all buyers begin and continue their home searches on line. Broker and real estate franchise that have been tracking the source of their business for many years have seen that buyer leads that came primarily from print advertising before the internet have seen the number of viable leads from print advertising drop to a very small number of viable buyer leads. The last and most effective use of print advertising has become open house events or very short term immediate demand sort of inventory like rentals. Buyers still however require the assistance of a licensed real estate agent to help them work their way through a real estate transaction and access and view properties as well as negotiate and consummate a real estate transaction. Fees for trained and competent Buyers Agents are likely to remain in the 2.5% to 3.5% of the transaction price that they have been in for many years due to the high time consumption and relatively high failure rate that Buyer Sides of transactions experience.
The Seller’s Side of real estate is likely to see the greatest changes. For a decade or more before the Great Recession large banks had been trying to repeal laws that barred them from providing real estate services such as listing and selling homes for their customers. Now as a result of the unprecedented number of foreclosures in the hands of banks they have become The Dominant Sellers of real estate in theUnited States. Fanne Mae and Freddie Mac established 6% as the official normal commission that they would accept on both short sales and foreclosures and required that commissions be spit equally between buyer’s side and seller’s side in a real estate transaction. Every real estate agent in the United States has been trained that establishment of “Normal” or “Set Fees” has an anti Trust violation since the late 1970’s however the big banks and Fanne Mae and Freddie Mac have been seen as exempt from these laws. This has resulted in a situation where the majority of listings that sell are listed by Bank/Lenders that own them at a nominal rate of 6% with local real estate agents and agencies but using a conduit of third party companies that collect hefty referral fees on their listings leaving the selling agencies to work with 1.5% to 2% of the actual sales price rather than the 3% to 4% that they have historically have had to work with since the end of World War II. These agents and agencies have been able to do this because of the downward changes in their cost structure do to the changes in technology.
It is unlikely that as non-institutional home sellers are able to re-enter the home selling market as prices stabilize and even rise in the foreseeable future that the advantage to both consumers and Realtors of lower fees on the listings side of real estate transactions will be lost, that have been made possible by the reduced operating costs possible for Realtors due to the changes in technology.
By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT