You might have seen my rant last month about wholesale buyers. These are the people who promise that they have a buyer for your house, cash, and that they will manage the sale for just 1% commission.

In my video, which you can see here, I broke down how one couple paid effectively 9.4% to sell their house.

Don’t get me started…

I’m looking for more examples of this as I am very concerned that people are not only losing their money, but they are opening themselves up to possible future lawsuits because they did not have a realtor to protect their interests.

There are really two types of deals that are lumped in to the term “ibuyers”. The first, covered above, are the companies that buy wholesale with the promise of lower commissions, usually leaving sellers without somebody to protect their interests.

The other type is commonly referred to as “al la carte” websites. Imagine AutoTrader, but for people selling their homes. It’s a different concept. Rather than you selling (unrepresented) to a buyer through their buyer’s agent at a lower commission, these sites are kind of do-it-yourself home sales.

What they promise is that you will pay only a flat, low commission. What you get may be something else entirely.

Before I get in to it, I want to say that ibuyer sites may not be the worst thing in the world if you are selling a home under $200,000 and you’ve been educated about the most important legal aspects of buying and selling a home.

Heck, if I thought I could create a website where I could also empower you while you sell your house, I’d be tempted to make it.

Regardless, if it meets your interests and you are sure you have the knowledge to do it right, go for it.

But, for now, there are important things to keep in mind.

• What are you being charged? According to our broker, sometimes commissions from 6% to 13% can be added, as we saw above with wholesalers. Read the fine print! Here’s a summary from our broker.

• Does the ibuyer website give you important information about disclosures, your liability and your responsibility. From what I’ve seen so far, they kind of just throw the paperwork at you and say “here are some basic instructions, go at it!” On one site I saw, it just instructed you do meet federal fair housing guidelines. Well, do you know about the six protected classes and how to make certain you are not discriminating against any of them?

• Is the valuation correct? What process does the ibuying site use to value your house? Can you set your own price? Licensed realtors are trained to do comparative market analysis and take in to account local expertise, which algorithms don’t necessarily pick up.

• What services do you think you are getting and how much will it cost to get better service? The range of services goes from just listing your property with no other service, to getting you to pay for add-ons, such as photography, signage and (probably computer-driven) marketing. What will it cost if you decide that you can’t do it all yourself?

• What do you know about the agent you are assigned and how much time does he or she have for you? You will be assigned to an agent, who is probably sitting behind a desk, getting paid a lower wage and helping 20 clients all at once. At the rates the charge, the only way to make a living is through volume, which means your needs matter less. It’s kinda like those 5-minute doctor visits we all love so much. Nope! No more time for you!

• Who will have your back if you are up against a more experienced agent? Just because you are assigned an agent on the seller’s side, does not mean you can match the experience or knowledge of the agent on the other side. Some services are so trimmed down that you do all your own negotiating. Even if that over-worked agent can negotiate on your behalf, do you think he or she will really fight hard when there are so many other clients to get through in a day?

• Does the agent assigned to you have knowledge of your local market? This is a huge deal, especially in historic neighborhoods and dense urban areas. I don’t care how crafty a computer algorithm is, it probably does now know the word on the street about that big development coming in at the end of your street, etc.

What is missing in all of this is the personal connection with an agent who specializes in an area or type of home and who will spend time with you –not just some limited instructions.

Just beware. You get what you pay for.

If you have experiences with wholesalers or a la carte sites, and you are willing to share, please let give us a call at 602-456-9388.

We are excited about our new listing in the Garfield Neighborhood. See details on our listings page.

This is historic home living with two structures on the lot, and perfect for an owner who would like to have a house mate who can help with expenses.

The front house, built in 1914, is 603 sqft and the guest house is 585 sqft.

These properties are smaller, but perfect if you live downtown, and spend more time outside the house than in. We know so many people who live downtown and talk a set-up like this.

The property was lovingly renovated in 2009, and has since been spruced up with new carpeting, external and internal painting and LED lighting. The front house, in particular, had many beautiful historic details brought back to life. The guest house was outfitted with a kitchenette and. Both got tankless water heaters, which is a must in Arizona.

Compare the cost of this property to renting in those massive buildings downtown!

The current owner used it as a rental since 2009 and would really like to see this tiny beauty go to a buyer or buyers who appreciate living in a historic home, and who could offset the monthly costs with a house mate in the guest house.

As such, she is less inclined to take an offer from a property renter or a flipper. She believes in the importance of that neighborhood connection.

If you’ve been looking for that tiny home opportunity, this might be it.

Have a look at this little video that we put together for the listing and contact us at 602-456-9388 if you have a similar property that you’d like to sell, or if you are looking for something like this for your next home..

The Cromford Report tracks single family rents. Note, however that not all rentals are on the MLS. Lower priced rentals tend to go to Craigslist, etc.

The “Affordability/Rent” slide shows you how the average lease prices have really gone up recently —more so in CenPho and the historic neighborhoods.

This chart looks really dramatic, but notice that we are going from 65 cents per square foot to 90 cents per square foot over the course of five years. Not that this is nothing.

See our video on the causes of homelessness increases here https://youtu.be/OsdUlEZ1qSI

However, any time I see a chart that looks this dramatic, I like to draw attention to the numbers, not just the graphics.

So, what does this mean for you?

BUYERS: If you are not ready to buy, don’t despair. Save your money as aggressively as possible. Also, the lenders we work with have access to down payment programs for low income buyers. See if you qualify.

SELLERS: Even according to these charts, your home may be less expensive than renting. We can communicate to those renters that buying is an option. Also, from now until early June is the high season. Sell now if you are going to sell this year!

Call us directly for more insights at 602-456-9388.

The Cromford Report also compares renting vs buying.

This slide that shows how the average Principle and Interest (P&) in Dec of 2018 was very close to that of January 2005. Obviously, interest rates are lower. However, you can see how the margin between average monthly payment and average estimated monthly payment for a 1,900sf home have been diverging in recent years. 

So, what does this mean for you?

BUYERS: If you are not ready to buy, don’t despair. Save your money as aggressively as possible. Also, the lenders we work with have access to down payment programs for low income buyers. See if you qualify.

SELLERS: Even according to these charts, your home may be less expensive than renting. We can communicate to those renters that buying is an option. Also, from now until early June is the high season. Sell now if you are going to sell this year!

Call us directly for more insights at 602-456-9388.

The Cromford Report keeps an eye on affordability in the market. Here are three interesting slides about that.

It is notable that our home sales affordability in 2018 in Phoenix was just below the normal range. This is contrary to the anecdotal stories we hear about how expensive homes are. That’s probably because the horror stories we hear are probably from the dense urban cores, whereas the suburbs are more affordable. 

Over-all, the valley is still affordable.

While there are many people moving in to Phoenix (locations to Maricopa County are really high, nationally), we need salaries to increase across the board for this to get better. Either that, or prices will come down. We are, of course, seeing the latter.

So, what does this mean for you?

BUYERS: If you are not ready to buy, don’t despair. Save your money as aggressively as possible. Also, the lenders we work with have access to down payment programs for low income buyers. See if you qualify.

SELLERS: If you bought between about 2010 and 2015, you are still likely to get a great return.

This reminds us of the old saying about investing, “you’ll never know where the highest and lowest points are, but if you are pretty close, you are doing well.” 

Call us directly for more insights at 602-456-9388.

Our Cromford Report Friends also track flips in the market, which is telling us a lot —specifically, they’ve driven prices up so high now that they can’t get their margins and they are getting out.

Chickity-check this out. See the first of these two slides. (The next comes in the next post, so check back). They show how the number of flips per month has dropped 30%.

What does that mean? The flippers have realized that they have pushed prices too high and buyers are not giving them the margins they want.

What does this mean for you?

SELLERS: Don’t try to do a flip right now unless you bought really, really, really cheaply!

BUYERS: There are a lot of terribly-done flips out there. But if you are willing to look, you are in a stronger position to make those flippers drop those prices. We are not talking about 10% discounts here. But if you 

Call us directly for more insights at 602-456-9388.

This is another insightful slide about the market from the Cromford Report. Notice the little yellow highlights. They show how the seller’s market has weakened at those two points since the great recession, but how they started back up again within a couple months. 

This means that when this market change happens, it will happen quickly. 

What does that mean for you?

BUYERS: Get your financing in order. As we will discover in tomorrow’s post,  a re-balanced market could happen within a month or so. You are in a great place to start looking. Choose only the best home for you and don’t be afraid to haggle.

SELLERS: This one is tough for you. If you wait, prices could come down. This reminds us of the old saying about investing, “you’ll never know where the highest and lowest points are, but if you are pretty close, you are doing well.” 

Real estate is not the stock market. You need a home and you need to respond to what life gives you. So, to be ready, do those improvements and make the house really shine. Stand out from the others!

For more analysis, call us at 602-456-9388.

Our friends at the Cromford Report are great at providing perspective in a market like this. 

First prerequisite for the slide is to know that the Cromford Index measures whether it is a seller’s market or a buyer’s market and, if so, by how much. The 100-line is the division. Seller’s market above. Got it?

Okay, so you can see here how the seller’s advantage started tanking back in 2005 (even while prices were going up!). You can see in other years that we have had a strong seller’s market, but not a bubble.

Now, we are inching toward balance. What does that mean for you?

BUYERS: You don’t have an advantage where you can knock 10% off the price. But you might be able to get a concession or two —especially out of flippers.

SELLERS: Make that house look great! If you don’t want to renovate, then really make it shine for what it is. You may not get extra dollars from your investment in renovations, but you will probably keep yourself from losing some Benjamins. 

Also, from now until early June is the high season. Sell now if you are going to sell this year!

Call us directly for more insights at 602-456-9388.

Our friends at the Cromford Report tell us that we are at the top end of what we would expect in terms of a normal appreciation growth in the price of homes in the market. See the last post for why that is. Yep! Wholesalers and flippers have been driving up prices.

So, do we need a drastic drop in prices?

Nope.

What we need is for a move toward balance, at which point there will be plenty of buyers for good looking properties. (more on that in the next post)

So, what does that mean for you?

BUYERS: get your financing in order. As we will discover in tomorrow’s post,  a re-balanced market could happen within a month or so. You are in a great place to start looking. Choose only the best home for you and don’t be afraid to haggle.

SELLERS: If you are on the market now, price accordingly. If you are coming on to the market, do those improvements and make the house really shine. Stand out from the others!

If you are thinking of selling, really polish up that property!

Also, from now until early June is the high season. Sell now if you are going to sell this year!

Call us directly for more insights at 602-456-9388.

Our friends at the Cromford Report are tracking supply and demand, as well as the many other indicators in the real estate market. 

Here’s an odd situation that you don’t see much in the market: both the supply and the demand are below “normal”, as defined as the Cromford Index at 100, otherwise known as a balance between seller and buyer advantage.

So, the bit question is whether demand will drop to meet supply or whether supply will rise to meet demand. 

We’ve already seen a drop in demand in the market, and we know that flippers are exiting the market right now, so history indicates that supply and demand will meet soon.

What does that market feature mean for you?

SELLERS: focus on making your property look great. Make it shine. Also, from now until early June is the high season. Sell now if you are going to sell this year!

BUYERS: don’t expect to get big discounts, but don’t be afraid to haggle.

Call us directly for more insights at 602-456-9388.