For this month’s blog entry we’re going to look at how sellers and buyers need to adapt to today’s market. And who better to ask for advice than Bill Malkasian – President of the Wisconsin Realtors Association in Madison.
Q: How does today’s market differ from markets of the past?
Bill: In the old model, the majority of the listings went on the market in the spring and you’d do the sale in May, June or July. The family moves, they enter the new school district in the fall, and the listings get lower toward the end of the year. We’ve gone through so many different turns and twists since then. Last year’s homebuyer tax credit was unbelievable. It moved everybody to make a decision between January and the end of April, making the middle of the year look flat. Now people think the interest rates are going to go up over the next 6-8 months, and that makes them move.
Q: What do sellers need to do in this market?
Bill: Pricing is important, location is important, condition is important, and timing is important. But the number one thing is to price their property realistically. If they price it realistically, and have a good location, they will get a buyer. Another major factor is the condition of their property (called “curb appeal”). People are looking for a deal so they don’t want to buy something that’s broken. Timing is also important. Putting your house on the market in December, in the middle of the holidays, is probably not the best time to list your house.
Q: How do Realtors play a role in this?
Bill: I believe the fundamental role the Realtor plays in representing the seller is understanding the marketplace. Selling is an emotional decision. Everybody thinks their house is worth more than it really is. The Realtor’s job is to take the emotion out of it and say, “Let me show you comparable properties in the area and what they sold for.” The seller’s Realtor is also truly a negotiator. The Realtor knows what is and is not realistic and is the one who can negotiate well.
Q: How can sellers partner with their agent?
Bill: They can help by providing all of the updated information about the property as possible. Is there a tax assessment? A lien? Telling your Realtor everything you can about your property helps them understand the property and disclose it to a buyer. That’s very important. Also, be neutral. We tend to fall in love with our house and the way we live. For example, if your house is full of antiques, you think everyone wants antiques. But they don’t. That’s why it’s sometimes so painful for sellers because the Realtor will try to neutralize the home through staging so a potential buyer look at the house the way they want to see the house and can better imagine how it could look if they lived there.
Q: In this buyer’s market, what do sellers need to be aware of?
Bill: There are a lot of bargain hunters out there. There’s no question the buyer is going to put in an offer potentially below the listed price because, at the moment, they feel there’s a lot of choice out there, and they feel they have the opportunity to get a bargain. Deep down, if they really want the property, and if the property is priced right, the ratio between offer and listing price can oftentimes be very small. It all depends on what that person wants. If they’re bottom-fishing and looking for a deal, that’s one thing. But if they’re emotionally connected, they’ll put in a reasonable offer, and they’ll probably negotiate it a lot faster.
Q: How can buyers help their Realtor?
Bill: Online searches are so sophisticated that buyers can search by number of bedrooms, proximity to parks, neighborhood characteristics, nearby schools, taxes, transportation to work, etc. The best way buyers can assist Realtors is by searching for properties online, and narrowing down the most important variables that are necessary for them to make a decision to purchase.
Q: How do Realtors play a role in Buying?
Bill: Though the Internet has changed everything, Realtors are still important because the buyer has just as much emotion in the deal as the seller. Their role is to get the negotiated price, and also to assist on the closing side because the closing process has become much more complex .
Q: What can buyers and sellers expect for 2011?
Bill: I can tell you that 2011 is going to be better than 2010. The market is slowly coming back because I think people here in Wisconsin realize four things: that our prices have begun to bottom, that interest rates are not going to be low forever; there are a lot of great available bargains out there; and you’re starting to see some confidence on the jobsite. That the real critical thing. Once you get the security of a job, there’s a lot of product out there you can buy.
Now, to help us understand coming interest rates and financing incentives, here’s an outlook from Jim Zimanek of Associated Bank:
Mortgage rates are going up. If a buyer waits to purchase in the future when rates increase half a point to a full percentage point over where they are today, over the life of that loan, it could cost them tens of thousands of dollars. There’s no question it’s an incentive to buy now.
Good news for veterans, the first time buyer’s tax credit is still available to them. If a veteran has an accepted offer by April 30th 2011 and close by June 30th, they qualify for the $8,000 first time buyer’s tax credit.
In the next month or two, Fannie Mae (and probably Freddie Mac as well) will be increasing pricing on loans to further mitigate their risk. Unfortunately, it’s going to affect those even with pretty good credit (720-730) who haven’t been affected by pricing adjustments in the past. They can expect closing costs to increase as well.
