Many things changed as the real estate process morphed from a seller’s to buyer’s market over the last 3 years in Northern NJ. Now, at the start of 2011, buyers and sellers seem to have a somewhat better handle on what is expected of them and what they can expect from each other. But the struggle’s not over yet.
It’s been a difficult dance, with some steps still to be determined. Many listed homes, still overpriced, have not sold. In many communities in our area, 50 to 75 percent of MLS listings in 2010 failed to find buyers. Sellers face the dilemma of wanting to move on but without the financial rewards they always expected. Some will move forward anyway, to get where they want to go in life. Others will keep the house, the taxes, the upkeep — and defer the dreams to avoid capitulating to unpleasant market realities.
Meanwhile, buyers are reeling, as well, because the signposts for maneuvering in a “buyer’s market” are as murky as they come. Is it the bottom yet? Why shouldn’t that house that’s been on the market forever sell for 10 percent under the asking price? Will we lose money once we close? Can we contest our taxes based on old valuations? What are we getting ourselves into? Without all the facts, anxiety prevails; hence, the procession of “low-ball” offers that we Realtors® see every day.
And so, we sales professionals are quietly counseling buyers who really want to buy, to start negotiations in a “decent” place. Start too low the seller fumes at the get-go and closes up. Even if a deal emerges, the legacy of the original low offer may echo through attorney review and inspection in unfortunate ways. It’s difficult information to process. Many buyers have to go through it to get it.
Buyer: I like the house but in my gut I feel it’s overpriced. I need wiggle room with my opening offer. If I start higher, I lose my negotiating power.
Seller: You want our home? Then be nice, be fair. Otherwise, we’re not interested. We’re not giving it away.
Buyer wants a bargain. Seller wants respect. And since all real estate transactions depend upon compromise, without that spirit, there’s nowhere to go except to dance to another house.
Roberta Baldwin, a realtor since 1995, is a partner at Keller Williams NJ Metro Group, Montclair.
Why not lower your commission a percent or two, Roberta? That would surely stimulate the market and increase your share of listings. Let’s dance!
Do these postings ever say anything different? Maybe this is just a paid advertisement to hawk their “knowledge” of the market and the ad revenue helps support other features on baristanet, but otherwise I don’t see the point.
I’d rather the broker just came out and said “We want you to buy a home, and then we want you to sell that home and trade up in 2-3 years.” The costs and procedures involved simply with buying/selling a home are a money/time pit. I wonder if the housing market would be more efficient if standard broker commissions were 3% instead of 6%.
Town A: 6% standard commission, $350000 median home value, Buying Population = X
Town B: 6% standard commission, $175000 median home value, Buying Population = 1/2 X
The broker makes more money for doing the same job—which is arguably easier in a densely populated area. How does that make sense?
I think I noticed some movement in the Dow just before 3 pm, when this article was published, which probably indicates insider trading on the part of the Baristas. Be careful, ladies! Don’t you know news about the dance between buyers and sellers can move markets? Knowing that a renowned real estate prognosticator is about to publish a piece on how she is “quietly counseling buyers who really want to buy, to start negotiations in a “decent” place,” and trading on that knowledge, could land you in the slammer.
There’s way too much crapola junk on the market. Billious brick McMansions with preposterous two story entries ( fit for the unlikely event that really tall guests will attend your finger food and champagne parties, I suppose ) and three car storage rooms (oy we need room for the Suburban and the Escalade and the Tundra and my minks and Heather’s skates and Marshall’s lacrosse sticks ) have skewed the market. Now that their owners feel bamboozled, and they’re hot to sell ( they had a revelation reading magazines in their dentists’ offices and want to bail and live in something intelligent). Too bad thirtysomethings won’t touch your attempt at backdoor high society assimilation efforts…….
Thank God Montclair had enough taste to fend these toilet and bidet-laden home equivalents of Hummers away! (into the dustbin of history)
(ROC, nothing personal – we know you polish your H2 as frequently as cathar polishes his peg leg) – although there is a dreadful brick box up by Heller Way that looks like Bensonhurst on steroids – (Dag T canya diggit ) Let’s hear it for stoooops with 23 steps from God’s earth to Your marble clad front door ($8000 retail but you got a closeout)
Spiro Yup!
I’m going to have lunch in the River Cafe Thurs. with some of my Brooklyn friends and if the weather permits wander the old neighborhood.
Spiro, I do not like any of those overgrowen and under performing giant SUVs. I drive the original, and the original is STILL the greatest. ‘Ya know, sometimes the original is very hard to beat. I drive the original, the vechile that was credited to have won the war for the USA, still has the highest used car percentage of its value retained. It called a JEEP.
and it impossible to BEAT. But that house, is just too big for a family of 3, as we are. I’d like a 4 bedroom, beautiful BIG kitchen, a level property, of course central A/C and a real honest to God Wood Burning fireplace and dining & living room Lots of closets & 2.5 Baths, all brick exterior and put it in Springfield, Oh…and 6 garages for “the kids”
Just 3 overhead doors but each one 2 cars deep. ALARMED !!
Sandy, originals can’t be beat, I agree.
Dag, where did you wander in Bklyn?
Why is the word “realtor” listed as a registered trademark?
@Spiro. Clark St. Station on the IRT
ahh, DagT, got it. !
Before accepting any “counsel” from agents or sales professionals, please be sure to ask “Who does the agent/sales professional represent?”
Even Derek Jeter had to fix things up to sell. Anyone have $20M?
http://sports.yahoo.com/mlb/blog/big_league_stew/post/Movin-on-up-Buy-Jeter-s-luxurious-NYC-pentho?urn=mlb-309328
This is a highly intelligent and well written piece of commentary about the housing market today and about what goes on between buyer and seller during a real estate transaction. It also happens to be written by one of Essex County’s top agents. Everyone thinks they’re an expert when it comes to real estate, but that’s not always the case.
@thirtyseconds. When did it become a crime in this country to be good at what you do and get paid for it? Why should a Realtor reduce their commission? That won’t stimulate the housing market. The job market will! People going out and spending money will! Once the general population has jobs & more disposable income, the economy as a whole will recover. It’s not rocket science.
@budmanzz. The standard broker commission is actually 5%, split between buyer and seller agent. So it’s 2.5% each. And actually, no, it’s NOT easier in a more densely populated area to sell homes. More densely populated areas have more agents, which means there is more competition between real estate firms. The average Realtor in Northern New Jersey does a measly 3 transactions a year, compared to, say, one in Asheville, NC where a 4BR house sells for 100k and a Realtor could have 8-10 deals pending at one time because there are 1/2 as many agents selling them.
@mmmm. Really? “Why is the word Realtor listed as a registered trademark,” is the only thing you took away from reading this piece? Realtor is a registered trademark that identifies a real estate professional who is a member of the National Association of Realtors (NAR) and subscribes to its code of ethics. That’s why.
The point of this article is to paint the picture of what is happening between buyer & seller these days. Sellers don’t want to face the fact that their home is losing value just like everyone elses, and buyers want to be extra cautious because they don’t want to be “that” person who overpaid. Believe it or not, there actually ARE houses on the market these days that are priced according to the market statistics because agents are educating their sellers to price to sell. Once houses are consistently priced right, the market will make its way to recovery.
Nix79′s self-serving attempt to justify the the real estate agents commissions glosses over several facts.
Selling agents seek and most fequently get 6%. A savy seller can negotiate that down to 5%. But even a reduced $25,000 commission on the sale of a 500k home is outrageous, particularly when you consider that the agent is totally unnecessary. The buyer and seller can arrive at a deal and have their respective lawyers (whom they well need anyway) settle the contract for standard fees that are in the hundreds of dollars and not the multi-thousand dollars of commissions.
Nix79 also weeps tears for the poor agent who splits the commission with the buyers agent (another unnecessary leach in the process).
In a place like Montclair, intelligent buyers and sellers have no need for the posturing and over compensated “realtors”.
Best question here is WHY does Baristanet continually use their advertisers for columns instead of an unbiased report? Great questions on the posts. The article is self serving…trying to build business versus news. That’s always been her “MO”. Roberta, sorry you see selling a home as a tango versus the sale of one’s largest investment and something most people are very emotionally attached to.Come on baristanet…unbiased reporting would be nice…we all know she’s your friend.
budmanzz This is NOT a PAID advertisement…IT IS FREE and used to boost placement in search engines and build a resume…don’t you get it…FRIENDSHIP
You are right nix79…it’s not rocket science, it’s self serving.
What a load of self serving BS. Realtors are not your friend, they have a vested interest only in the deal happening, not necessarily In your interest. This is a BUYERS market any buyer not making a rock bottom offer is a fool and only paying more to line the pocket of the Realtors®.
ROC. I like your line “not your friend, they have a vested interest only in the deal happening” Reminds me of your friends in the oil and gas industry – you know, the ones you defend all the time….
But seriously, I’d speak highly of realtors in many cases. The best ones listen carefully, show you the properties that reflect your preferences, and look to the long term for relationship building, since they know most people move every several years anyway. ( and have friends in town to whom they can recommend a good realtor, and who are also moving every several years)
Here’s one place where I’d tout the virtues of the free market more than you, ROC !
nix79: of course reducing broker commission would stimulate the market. Simple math – buyers would have to pay less for sellers to receive a fair amount. I never said it was a “crime in this country to be good at what you do and get paid for it.” And I certainly never likened the real estate game to “rocket science.” Thank you for your propaganda.
Wow to some of the comments above … all I have to say is that I never realized how much a Realtor is needed until I became one myself. Maybe your words ROC are correct in the good old days of 10 buyers to a house and overbidding. I wasn’t a Realtor at that time so I can’t speak to those days – but today the reality is that for the lucky few homeowners that can walk away from the closing table on the + side no one is happier and on their side more than their Realtor. For the majority who have to short what they owe well again if they have the right realtor, s/he is negotiating with the banks on their behalf for 4-6+months and not getting paid over their commissions. I don’t need to prove anything to the comments above because the reward to me are the number of clients I helped and who really value my work. They recommend me to their friends and family and they have the utmost respect and trust in me as I do for them – and that’s reward enough.
This is unfortunately the most undervalued and underpaid job I’ve had and the hardest I had to work…. I can easily go back to my 6figure salary and I ask myself at times why don’t I just do it — and the answer is simple – after 20 years in IT creating systems doesn’t equal the joy in helping a couple find their dream home or helping a family move on – call it naive or worse – I’m sure I’m going to get flack but when you reach a certain age you have to do what makes you happy.
Some timely info. S&P forecasts another 7-10% drop in prices this year.
http://finance.yahoo.com/real-estate/article/111848/the-eight-states-running-out-of-homebuyers?mod=realestate-buy
” Maybe your words ROC are correct in the good old days of 10 buyers to a house and overbidding. ”
huh? about bidding rock bottom as a buyer? In a seller’s market the opposite is true. The seller should be asking an absolute premium and is (conversely) a fool if they’re listening to a broker counseling them to “not ask too much” .
And then if you are a buyer you have your friend the Realtor® telling you to “bid aggressively” or “lose the opportunity” of having your “dream house”.
Look, brokers have their place if you think you need one. I think it’s a waste of a lot of money, personally, I’ve done it with and without a broker. The broker wants the deal (else they don’t get a thing). That motivation can *sometimes* align with the client’s and often not. The smart buyer or seller understands this conflict of interest and acts accordingly.
But Baldwin’s article is like asking the tip-earning waiter if he thinks you should have a small salad and water or splurge on the steak and martini. You are not, shall we say, going to get an unbiased opinion.
That’s a national average, Kevin, and even that article qualifies the outlook as “wildly uneven” and calls out NYC as one region that could buck the downward trend.
Roberta Baldwin may be a fine realtor, but this column is dead boring. It says nothing that we all didn’t know already, nothing that couldn’t have been written word for word a year ago, or two years ago. It reads like one of those paid “advertorials” or the kind of promotional writing you get in those home-listing pamphlets on the cardboard wracks near the exit doors at A&P.
I have found, in my many years, that the general public has a bug up their___, over that word Commission! A sports star can earn 4 million a year, and the public loves him. But, if a salesperson makes a commission ON THEM, they get their undees all bunched up! The commission could be just $100.00 – yet whatever was sold, for whatever the goods or services, nor how long it took to come to completing the sale, the buyer resents the commission.
I agree, Sandy. People understand goods but are either willfully or naively clueless about services.
About the most interesting piece concerning realtors, and the ethics thereof, that I’ve read recently was in the book Freakonomics. According to the authors, it seems that realtors are much more likely to leave their own homes on the market for considerably longer than they counsel their clients to do. When you do the math and calculate the percentage of the commission that a realtor retains, what would be a substantial amount of money for a seller just translates into a few hundred bucks for the agent personally. They’d rather just get the sale and move on.
First time I’ve seen the word ‘advertorial’.
Any time that anything is sold, there is a commission involved. Be it a car, a home, stocks, burial plot, a building, or almost anything else. SALES make the world go around. When sales (comissions) stop…it is called a depression !! I was in sales for 27 years, to to those who are not familiar with sales, it’s one extremely tough (and often not that rewarding in the “pocketbook”.
Sandy: Why so angry at the sports stars? Aren’t they buying the big houses with all that money? Big sales = big commissions, no?
All kidding aside, I certainly am not trying to stand in the way of a salesperson making their commission. I am, however, suggesting that many factors influence a particular sale – none more important than “negotiation.” Buyers, sellers AND brokers each have their own motivation. Buyers want to close low. Sellers want to close high. Brokers want to close – period. “Coffee is for closers.”
I actually had a realtor drop me as a buyer years ago because I was taking to long and looking at too many houses. This was after about 4 months of looking.
curious Jerseygurl did you eventually buy a house? it was the realtors fault for not sitting you down and revisiting your requirements at certain intervals and having you tighten up your requirements instead of expanding them – that’s confusing! if you didn’t find any homes you liked enough to make offers in those 4 months you either weren’t ready or you didn’t know what you wanted … hope you found your home! if not it’s a great time to buy now!!!
Who says you have to like something in 4 months? Or that there’s a limit on what you can look at? I was paying cash, coming out of a rental and it was the bottom of the depressed market in the early 90′s. I wanted to look at every listing in my price range as it came on the market and was willing to drive by on my own. The Schweppe realtor just wanted the sale. I went to Weichert and asked the agent to just give me listings as they came out. Of course, everything is on line now so it’s easier. I did eventually buy a house and have since sold it and moved into something else in the past 2 years and the experience the second time around was not much better. I had a buyer for my house and the house I wanted to buy fell through. My agent, wanting to make a sale no matter what told me it was almost impossible to sell and buy at the same time and I should either take on two mortgages or sell and move to an apartment. Instead, I called my attorney and had him ask my buyer to give us a grace period of 45 days to find something else. And I did both closings on the same day. When I have to do it again I’m doing it FSBO and keeping the commission since I’m a licensed agent anyway. ( I got a license as a lark years ago but haven’t ever used it.)
Jerseygurl, My wife and I also moved here in the depressed market period of the early 90′s. We randomly selected a broker, discussed a price range and other criteria, and he began showing us everything in sight, except what we were looking for. We would get these urgent calls, leave our offices at a moment’s notice to be shown some dump that had just come on the market. We must have looked at over fifty houses. Then, we took a break for a couple of months and came back to a new realtor. She took our measure, told us nuances about different neighborhoods, and slowly explained that we would have to stretch a bit to get what we wanted. We bought a house within two weeks that the other broker would never have thought to show us.
We looked to move within town in the late 90′s, and again looked at dozens of houses before finding anything we liked, and one other house that was great, but just out of our range. Bottom line is that it’s tough to get what you want in this town. Houses can have great curb appeal, but be totally run down inside. That was so often the case we found, since old time Montclairites understood the folly of home improvement in a moribund market with an aggressive tax assessor.
Being a Realtor (r) is about information asymmetry. Before the internet, a Realtor was god. Since then, they are a glorified locksmith. Get me in the door, and stay quiet. I’ve never had a knowledgeable realtor who could tell me about the history of the home, or even tell me the year the house was built without looking at the spec sheet first. The book Freakonomics summed up the motivation and incentives that a Realtor has when representing a buyer vs a seller. Now, if a Realtor could act as a lawyer, bank and mortgage broker I could see their value. Any Realtor worth their weight should own their own agency. After all, they are basically paying for everything out of pocket anyway
Good post Jimmytown. That chapter on realtors in Freakonomics is a “must read.”
Since when did making money in America become a crime? Many real estate agents work long months with indecisive buyers and ONLY when a deal is closed do they get paid- this could be 6 months if not longer (a typical closing is at least 60-90 days in NJ)! So yes, they make a larger chunk with a commission, but when you break it down for the amount of time spent with that one client, it doesn’t (normally) add up to more than a few dollars a hour!
For those of you saying that real estate agents should lower their commissions, why should they work for less money? I hardly doubt any of you are willing to lower your yearly salary. If your all so bitter with the ”little” amount of work that real estate agents seem to do and the thousands and thousands they make from one sale, then why haven’t you become one yet?
This dance is definitely being led by the buyers.
http://www.nytimes.com/2011/01/26/business/economy/26econ.html?_r=1&nl=todaysheadlines&emc=tha25
boxie22: Once again, no “crime” in making money. Nobody here has accused realtors (or anybody else who makes money) of committing crime. So, please, enough with the histrionics. Cutting commission is a sound business tactic in a stale marketplace. And, yes, plenty of us non-realtors are cutting our own prices / day-rates / fees in this economy. Thank you.