The internet is good at many things. Manipulation and misdirection are sometimes part of that skill set. Understanding the goal of online real estate sites may shed light on what information is useful and which is not.
I am often amazed at how influential real estate websites are and what power they hold over the general public. Rarely a day goes by that someone doesn’t ask me about something they saw on Zillow. I do my best to field the question and educate the questioner on the role many websites like Zillow play in the grand scheme of our industry.
Most sites like Trulia and Zillow are advertising sites for Realtors and Brokerages. I advertise there because home buyers and sellers go there; the same reason I advertise in local real estate publications and, of course, in the Reading Eagle. Let me repeat; these sites do not sell houses, they sell advertising.
Websites are not required to play by the same rules as licensed realtors. The low home inventory environment that presently exists is not beneficial to real estate websites. The more homes for sale the more consumers visit the site. In an effort to manufacture more listings, these sites may spread misinformation or bend the truth to gain more lookers. One way to beef up inventory is to display homes that are pending sale as still for sale. They will also display homes that are in pre-foreclosure status which are not for sale. I have seen the same house listed as for sale and not for sale on these sites at the same time. By delivering more leads by whatever means necessary the website can validate their existence as a lead provider to the paying agent. It is then up to the agent to convert the would-be misled customer and turn them to another available property.
If a particular home seller does not want to use the internet sites to sell their home, known as opting out, for privacy or personal reasons the online real estate websites list the home as off-market or not for sale. To me, this practice is overreaching and should be considered misleading by consumer advocacy groups.
I do not suggest depending on any single source of information for all your real estate wisdom. You would never have only one tool in your toolbox you would use for every task. Even sites like Zillow and the rest depend on the real estate industry to do the heavy lifting. Unfortunately, that heavy lifting may someday lead to agents becoming little more than real estate uber drivers, but that’s another story.
Again, real estate websites like Zillow do not sell real estate; they sell advertising to real estate agents. They often do not compile their data and information but acquire it from third-party resources. The accuracy of data is not a prerequisite.
It has taken me years to learn the dynamics of how to value real estate and just as long to understand the metrics of the Reading and Berks Housing market which I have served for over 25 years. How can Zillow do that with a mathematical algorithm called a Zestimate? As far as I know, Zillow has never been to Reading and Berks County.
Using real estate sites is the now and future of our business. I hope it becomes responsibly regulated to provide the same ethic, and honesty, we as realtors uphold. The lesson I teach is that no real estate website can outperform any real estate agent who understands their community and is educated at their craft, at least not yet!
Knowledge is Power!
Jeffrey C. Hogue
Let’s take a look at the year that was 2018 and see if it offers insight into what’s in store for 2019 as it relates to real estate here in Reading and Berks County.
Yes, it is that time again! Time to reflect on the year that was and time to dust off the crystal ball and see if it can foretell what the future holds. It is my humble opinion that the big real estate story here in Reading and Berks for 2019 was the low home inventory. Yes, I believe it is even a bigger story than the ever-rising property taxes that plague our area year in and year out.
Home Inventory ~ Supply and Demand
With just four calendar days left in 2018, there have been 6,344 residential homes listed for sale. A total of 6,833 homes were listed in 2017, a year-over-year decrease of 7.1%.
Home sales for 2018 are at 5,055 units compared to 5,325 units in 2017, a decrease of 5.1%. Even though there were fewer sales in 2018, the ratio of sales to listings is better. The result of an improved listing to sales ratio is often climbing home prices and fewer days on the market. In 2017 the time a house was on the market until it sold was 99 days. That number dropped to 76 days on market in 2018. Here is where things start to make less sense. The median sales price of a residential home here in Reading and Berks County in 2017 was $164,900. Even with the low inventory, good listing to sales ratio, and lower days on market, the median price only climbed to $164,990. Yes, a slim $90!
Mortgage Interest Rates
There was a lot of noise this year regarding rising interest rates. The year started with 30-year mortgage rate around 4%. Presently rates are around 4.625%, down from 5% in November. For comparison sake, 2017 began with mortgage rates around 4.3% and ended at 4 % as mentioned earlier.
I believe when it comes to mortgage rates it is more about consumer perception. Rates dipped to below 3.5% in 2016 and have since rebounded approximately 1%. Most interest rate prognosticators believe that mortgage rates will top out around 5.5% in 2019. If that happens, it will be a rise of 57% since their lows in 2016. That is the kind of number that makes news and sells papers. In real dollars, the difference between a $100,000 mortgage payment at 4% and 4.625% is approximately $37 per month. In any case, rising interest rates, perception or not, is never really good for property values.
Thoughts and Predictions
As I have stated in the past, home values here in Reading and Berks are more a product of policy and law than statistics. Until we get a grip on out of control property taxes, all other sales metrics remain a distant second. High property taxes are hurting the new home market which aids in keeping home inventory absurdly low. Improving what is fast becoming an aging population of homes can be a problem if they are reassessed due to existing tax policies. Owning a home above $400,000 often comes with property taxes that have an aggressive negative impact on the homes true value. Without upside leadership from the new house and upscale market, our area may continue to be value capped.
We are about to finish a year which saw low home inventory, good sale to listing ratios, rising but handleable interest rates, and a rising national economy and yet our median home prices barely moved. How many years will these good housing statistics prevail? What will happen if interest rates start to rise, the national housing market cools, and the economy waivers?
I believe the Reading and Berks County real estate market is likely to be a carbon copy of 2017 and 2018. The low inventory will likely continue and our strongest sales months will be June through August. Watch out if interest rates start to move faster than expected, the national housing market cools too quickly and the media jumps on a “Sky is Falling” mantra. These events would likely lead to increased inventory due to lack of buying and then all bets are off.
Listen to me on WEEU in January for much more on this subject, and remember. Knowledge is Power!
Happy New Year!
Jeffrey C. Hogue
Homesellaphobia is my self-proclaimed way of labeling the fears some homeowners’ experience when it’s time to list their home. Following is a list of those fears and ways to combat them.
Over the many years, I have served home buyers and sellers here in Reading and Berks County, I have observed various emotions. Needless to say, there is a lot of emotion in the buying and selling of homes. The one emotion I am contracted to diffuse is fear.
Most of us have heard the term “Cold Feet” and know it relates to a buyer changing their mind about a purchase. The closest phrase we have for a seller who changes their mind is “Seller’s Remorse.” In either case, the emotion that best describes the conditions is fear which causes indecision.
Causes of Homesellaphobia
The first and most obvious concern is value, “What’s my Home Worth?” Some national housing statistics say that In 2018, 62% of all listings undersold and predicted that number to climb to 75% in 2019.
Condition and Cleanliness
Many sellers express concerns about the general condition and cleanliness of their home. They think that buyers and agents coming to see the house will think less of them and the home if it is not in tip-top condition.
Real Qualified Buyers
Home sellers often ask me if every buyer seeing their home has been financially qualified to purchase it. The concern here is one of practicality and safety. No one wants to ready their home for someone who has no business being there or is up to no good.
Inspections come from the buyer, appraiser, and in some cases, the municipality where the home resides. Most of the anticipation relating to these inspections is detrimental to the homeowner.
All the Paperwork
Understanding the listing contract, Agreement of Sale, and the sea off associated documentation can be daunting.
I have yet to meet a home seller who was excited about gathering up all their things and moving. Moving can be a daunting task and often takes considerable planning and effort.
Solutions to Homesellaphobia
Your agent can help you establish a value for your home that will be acceptable to the home buying market. Once a value has been established the agent will furnish a net sheet showing the costs and proceeds from the eventual sale based on the asking price. This practice can take much of the ambiguity regarding dollars out of the equation, so the home seller better knows what to expect.
I am often asked what can be done to a home to enhance its value. In my opinion, home sellers are better served by an agent who will tell them what they need to hear and not what they want to hear as it relates to the condition and cleanliness of the home. In my experience, most homes are in better shape and cleaner than the seller realizes.
Agents are professionally licensed and should bring ready, willing, and able buyers to preview homes for sale. That said, I am sure that some agents show homes to people who are not qualified. Unfortunately, the solution to this issue would be worse than the problem as fewer homes may sell if showing restrictions were too tight. For the most part, the system of home showings works rather well.
Home inspections have become a standard part of almost every home sale. I take the time to counsel home sellers on what they can expect and how to avoid the pitfalls of these inspections by being proactive and, in some cases, considering pre-sale inspections.
A full explanation of all the paperwork involved in a real estate transaction is prudent. Many agents will counsel with their clients several times during the transaction to update the seller on the status of the performance and other important dates and conditions of the agreements.
As you can see, an experienced real estate agent can be worth their weight in gold. Your agent can be the medicine that cures any homesellaphobia!
Knowledge is Power!
Jeffrey C. Hogue
Price plays the starring role of most home sales while terms and conditions are often considered the supporting cast. In reality, the terms and conditions of a real estate transaction will determine whether your home sale is a hit or not.
Every home listed for sale has one major thing in common. It has an asking price. In many cases, the success or failure of the home sale is relegated to finding a buyer who will pay the asking, or listed, price, or more. It is obvious that price is important but what about the terms and conditions of the sale?
It is interesting to note that in Pennsylvania, the STANDARD AGREEMENT FOR THE SALE OF REAL ESTATE reserves one line of its 13 pages to price and the remainder to terms and conditions. Certainly, it is obvious why this is the case, but it does help make my point. Without terms and conditions that are clearly understood and responsibly met by all parties in a real estate transaction, there will be No sale price because there will be No sale. I would further state that reasonable ~ (and I use the word loosely) terms and conditions are the keys to a happy and smooth real estate transaction.
Top selling price is excellent, but it is the orchestration of a well-planned real estate deal that brings many positive accolades. No one likes a tough deal where the buyer and seller are scratching for every inch of turf. It creates ill will and can make real estate professionals look, well, not professional. Furthermore, what good does it do if the price you get or pay is eroded or impacted by costs that could have been alleviated using beneficial terms and conditions?
Specific terms and conditions like the settlement date are very standard, but there may be more to consider. If you are a buyer, you may want to consider moving things into the home before settlement. The pre-settlement possession addendum would work nicely here. The seller may desire to move out of their home sometime after settlement. The standard document used in this case is the post-settlement possession addendum.
Another often used condition of sale is the home inspection contingency. This contingency gives the buyer the right to have home inspectors investigate the property to make sure it is to the satisfaction of the buyer. If it is acceptable to the buyer, the transaction continues. If it is not acceptable, the buyer can terminate the agreement. There is a third option the buyer can consider which involves renegotiating or requesting that the seller repair, replace or credit the buyer an amount of money that will make the home acceptable to the buyer. While these choices are a fundamental part of our agreement, it is my opinion it opens the door to unwanted renegotiation. There are times this type of renegotiation is necessary, but occasionally these things can be handled differently. The terms of any reparations, if necessary, and the costs thereof can be discussed and agreed to up front.
The point is a simple one. There are as many considerations in a real estate transaction as there are stars in the sky. Our standard agreement is a good start. A well-versed real estate agent can supply both the buyer and seller with valuable options that stretch above and beyond the status quo.
There are no two properties alike and no two people that are the same. Every real estate transaction is unique unto itself. The success of your transaction could easily rest on the experience of your Realtor® and the planning of your terms and conditions.
Knowledge is Power!
Jeffrey C. Hogue
The term “Home is Where the Heart is” can be interpreted in two different ways. Firstly, it can mean that wherever our loved ones are, that is our home and Secondly, it says our family home is the focus of our love or heart. In either case, the proverb very much reflects our love and thankfulness for those in our lives and the familiar places we gather. And there is no place more familiar to most of us than home.
We Americans can trace the Thanksgiving celebration back to the first settlements in Plymouth and Jonestown in the early 1600’s. The new world settlers held a harvest feast after a successful growing season giving thanks for their new home and bountiful harvest that would sustain them throughout the severe winter.
The majority of us here in America no longer have to labor on the land as they did back then or wonder if the weather will produce life-saving crops. Our toil is much different today, but our goals are the same. We seek shelter from the elements, sustenance for our bodies as in food and water, safety, and security from the wild, and, of course, freedom. In many cases, our residence provides the shelter and safety.
The dream of many in America is to own a home. Their pursuit, while not as dramatic as the first settlers, is none the less just as important to them. These “New Settlers” work to obtain the funds necessary to acquire and sustain their dream. There are yet others who own a home and plan to sell it to pursue other endeavors or due to circumstance. In either case, they are headed to new surroundings thus leaving familiarity and memories created.
It is especially at this time of year when I reflect on all people I have assisted in selling or buying a house. I am proud to have been a part of your journey. I understand and respect the anticipation, emotion, and fear that goes into every real estate dealing. I will continue to be a student of my craft, so I am a competent resource for all your real estate needs.
So to all that have put their trust in me over the past twenty-five years by choosing to make me your guide into the “New World” I am forever thankful. I will be thinking of you this holiday season and wishing you abundant peace, joy, and love.
To all my future clients; I look forward to offering you the same high level of service and respect that has been a hallmark of my real estate career. It is a journey we experience together, and no two rides are ever the same.
Remember, a Realtor® can find you a house, but only you can make it a home! Choose your Realtor® wisely, home is that important! After all, it will be where your heart is:)
Knowledge is Power!
Jeffrey C. Hogue
Reading and Berks home sales were on fire throughout most of 2018. Will fall and winter bring a cool to the real estate market? Let’s see if the latest home sale statistics can help us better anticipate the near future.
It is the time of year when I am often asked if it is wise to sell a home with the holidays fast approaching. Most that pose the question have already surmised that trying to sell a home in winter is less lucrative and more difficult. While perception is often reality, I like to see what the numbers say. Let’s take a look.
Reading and Berks Housing Trend – The Numbers
Inventory of available properties in Berks County remains at historic lows. As of November 8, 2018, there are 1,233 available homes which is almost a 20% decrease from November 2017. The home Inventory numbers continue to reflect positive value trend.
Sold and settled homes in Berks County from January 1 through November 8, 2018, totaled 4,571 units, a 4% decrease from the same period in 2017, (4,759 units). It is interesting to note that home sales from January 1 through July 30, 2018, totaled 3,084 units which are all but identical to the number in 2017 during the same period (3,079 units). What is impressive about the 2018 figure is the sales number was achieved with the 20% decrease in overall inventory. Equally remarkable is that the median home sale price in July and August hit a high of $180,000 according to the Trend Market Trends report, a feat we have not seen in Reading and Berks real estate going back over ten years! A pure case of supply and demand working to push housing prices up.
Reading and Berks Housing Trend – Have We Peaked?
Home sales numbers from January through July 2018 outpaced overall 2017 sales in 6 out of the seven months. Since then sales have decreased compared to the 2017 totals. From August 1 through November 8, 2018, there have been 1,487 total sales compared to 1,680 in 2017, a decrease of 11.4%. Most notably was the month of September which saw 430 sold properties in 2018 compared to 552 in 2017, a decrease of over 22%. Fortunately, the median price held up in September at $172,000, an increase of 1.2% over the 2017 figures according to the Market Trends report.
Should I wait Until Spring To Sell My Home?
I recently spoke with a friend who relocated to Arizona from Berks several years ago. He told me how hot (literally) the real estate market was there. His impression was that they sell 3,000 homes a month in the Phoenix area and only a handful in Berks over the holidays and winter.
As I stated earlier, perception is everything, but numbers do count. December was the 6th busiest month for Berks property settlements in 2017 at 450 units sold. That number was higher than the March and April figures of the same year. The stronger than perceived “Off Season” data is in part due to a phenomenon I like to refer to as “The Holiday Effect.” You can read about it in an article I did in 2013 ~ Berks County Home Sales & the Holiday Effect. Also, check out the Holiday Home Selling Guide.
The internet has certainly changed how people shop for homes and has diluted the home sale seasonality argument to a degree. If you need or desire to sell your home now, then do so. I believe the real estate market here in Reading and Berks is still strong, but the winds may be changing. One thing for sure is that I will be watching the trend so to inform my clients better no matter what time of year it is.
Knowledge is Power!
Jeffrey C. Hogue