Open Question: Realtor pitches to sellers.
In the spirit of ‘ask VHB’ I’m posting an open question received via email regarding what realtors are saying to potential sellers in Vancouver these days:
We’ve all heard the realtor mantra ‘Buy now or be priced out forever’ but what are realtors saying to those that are on the fence about selling?Is there anyone out there that has sold recently that can enlighten us on what the sales pitch is on the other side of the market? The upsurge in listings recently in conjunction with the now obvious bad news in the United States suggests that they might be pushing for sellers to enter the market now in an effort to maximize revenue and commissions before the bottom falls out of the market.
I don’t know if ‘buy now or be priced out’ is a realtor mantra, I think its more of a general fear amongst potential first time buyers, but I’d be interested in all angles of this question: if you’re a realtor are you finding it easier or harder to find sellers? If you’re looking to buy or sell what are you hearing from realtors? Is there any discussion about the US market popping up amongst local realtors?
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March 17th, 2007 at 6:17 pm
pope:
I find that younger Realtors tend to work buyers more (they know fewer owners, after all). Older/more established Realtors do both, depending on their personality. That said, listings are picking up again for us.
If I had a client who wanted to sell any time in the next five years I’d quiz him a bit before I proceeded.
If he was selling due to age (cash out) I’d list now. If you’re in your 70s it’s harder to wait for the next uptick if we’re at the top now than it is to forgo an additional 5%-10%-15%.
Selling due to terminal illness and estate clean up, same thing. Sell now, leave cash for heirs, unless the heirs are active investment types.
If he was selling because he thought the market was going to correct, I’d talk about arranging financing at today’s values and rates, and then taking advatage of a correction should it come. He’d have almost as much cash, could put it in a different vehicle short term, and he would neither crystalize the profit or, if he’s right about the correction, the loss. You can arrange the financing on a LOC basis and you don’t even have to draw the funds down. Better upside, I think. Also, I don’t like market timing. Some may be good at it. It seems too risky for me given the other alternatives.
If they wanted to sell to downsize then I might just say “Do it now. Take the profit on the $1 million house and take the loss on the $700,000 house. Reduce monthly costs, and hedge a little”.
March 16th, 2007 at 2:30 pm
Rob: I agree, thats why I said “I think its more of a general fear amongst potential first time buyers” rather than a ‘realtor mantra’ in the original post.
Are your realtors finding it easier or more difficult to find properties to list these days? Inventory is certainly going up, but it looks like quite a lot of expired listings are being put back on the market.
If you had a client that wanted to sell any time in the next five years would you say now is a good time or advise them to wait?
March 16th, 2007 at 1:09 pm
“…When housing prices rise one of two things happens: incomes rise (wage inflation) or housing prices drop”
Oh! So that’s why my wife got a 50 cent increase per hour this year! And all along I thought it was just because she was doing a good job.
March 16th, 2007 at 12:21 pm
Pope:
I wouldn’t say “buy now or be priced out forever” is a Realtor mantra. I’m sure some use it, but I haven’t actually heard it aside from out of the mouths of potential buyers on blogs. When housing prices rise one of two things happens: incomes rise (wage inflation) or housing prices drop.
domus aureas:
“Chipman knows about facts as much as anyone else……why do you think the sudden hurry in completing his flip/conversion”?
Now THAT is funny! If you’re concluding that I’m flipping my house then you’re obviously not too bright. If you’re not too bright with that deduction, I think it makes your subsequent conclusions somewhat suspect as well. Keep ‘em coming!
March 16th, 2007 at 6:52 am
Is that for real?
yessirree, dont think i made a mistake on that one.
March 15th, 2007 at 10:45 pm
duck: Those anagrams are priceless, I’m having a hard time believing the ‘buy now’ one, but I dont’ have the energy to check. Its too perfect. Is that for real?
March 15th, 2007 at 10:34 pm
more little known facts:
realtor can be rearranged to: rear lot, roarlet, err a lot, rat role.
realtors can be rearranged to: star role; loser rat.
real estate agents can be rearranged to: a satan gee letter; a tartans glee tee; a gentle tease rat.
Vancouver house prices can be rearranged to: Our Sun perceives havoc; Chaos uncover pee virus; Voice nervous purchase; Purchase our vices oven.
buy now or be priced out forever rearranges to: Peon overbid, rob future, cry, woe.
March 15th, 2007 at 9:20 pm
Most of realtor in canada are very nice
on this i agree. but lots of people are nice. indeed, lots of things are nice. For example, “what a nice car.”, “have a nice day”, “hey, nice bruise you got on your face, dude”.
mostly, nice relates to niceties which has the connotation of diplomatic exchanges; this of course focuses our thoughts on insincerities.
and this is how i see realtors … as insincere. so when you say realtors are very nice, i read that as very insincere.
i’ve been fooled every time by them.
little known fact: if you combine and rearrange the letters in nice with the letters in rinse, you can make insincere. i think there is a hidden message here, but i don’t have a clue what it is.
March 15th, 2007 at 8:40 pm
20 HOURS ( with realtor)
CANADIAN REALTORS
Honest ,trustworthy, reliable,
Most of realtor in canada are very nice,They give us Idea estimate and round the clock advice free when ever we need.
Hire a lawyer and pay as you talk
Hire a realtor pay only when sales finish.
Some time we need patience and education to understand them but most of time they are acurate
Ok Realtor1
it was my first purchase only 4 month on current job and I purchased one bed room suite I never understood how does that happen.now its been 10 year and I am thanking that realtor who also convinced broker and brought him in my house.
Realtor2
That was second purchase 4 partner after the deal finished I realize that he hose us on the deal as he help us hook up with mortgage broker we have to buy high risk mortgage but few year later I understood there was nothing wrong
Realtor3
I was buying suite of TV TOWER 2 there was a condition that buyer will enter in at 6 pm and will stay there until next day till we get purchase any body leaving the premises more then 10 min gone for the day.
I spend whole night there from 6 pm to next day 2am total 20 hour.
realtor 3 approch me and convince me to set him up for the deal well we had talk for 20 hours and he told me everything honestly.he was very trustworthy and reliable even he brought coffee for me 2 time and donuts but next morning I refuse to hire him still he did not p/off he has given me comfort and also passed me number that as token I can turn my self in early than my own number I was very impress but there was other realtor who offered me refrence money which I thought was a good deal $500.00 for refrence.
Realtor 4
I met him to purchase Smart living and he advice me the best and I manage to win first condo for 243k include upgrade which currently selling for 370k see the margin in 1 1/2 month only.
Mostly this honesty thing always win heart and bring costomers any body not honest there is lots of advice can come from anywhere thats what scare most bussiness and realtor
be confident about realtor they are never ever hardly heard one case only last month
If house is not selling for year they are there stick with people and appointments countless think how much we will be paying lawyer or doctor
March 15th, 2007 at 6:42 pm
Boom, Duck, keep an eye on the local media. The “usual suspects” will begin to pump out reports from the “impartial think tanks”
on how Vancouver is insulated from the rest of the world.
They usually start on Thursdays, we will know soon how much trouble the industry is in, if they start spouting the touchy feely bs, about how homeownership is about kids, and puppies, and of course it’s a long, long term investment
March 15th, 2007 at 6:14 pm
I on the other hand feel the need to tell out loud at the mall about:
the default tsunami!
dearest tulip, i expect a well-travelled blogger such as yourself will have seen the latest post on CR, but just in case you haven’t, it fits in well with your “default tsunami” post.
Click on the second map for a glimpse into the future:
http://tinyurl.com/32a95r
March 15th, 2007 at 5:50 pm
Yes, Tulip. As Trudeau said, “Perhaps the universe is unfolding as it should.”
March 15th, 2007 at 5:31 pm
If you bring up the US market, the local realtors will use: “the standard Chipman maneuver” and tell you they are not experts outside their area.
I on the other hand feel the need to tell out loud at the mall about:
the default tsunami!
PS It won’t be long before I no longer have to post:
Tick Tock, Tick Tock
March 15th, 2007 at 5:20 pm
domus aurea all good arguments.
re mortgage troubles. Yes I think there will be trouble here too though I cannot see it being as wild-west as down south. That said, I have concerns over the risk of “stated income” on some Canadian mortgages.
re employment. Your point is valid. I am having a hard time separating employment from the loan profligacy. We can say that if unemployment went higher the problems in the US would be way worse.
re family loans. This will never “dry up” completely. I guess the argument is whether it is more prevalent now than before. There is a big hump in the population that chooses to work but could retire, likely more than 10 years ago.
“Speculative markets collapse under their own weight.”
Yes but the market is not entirely driven by speculation. There are still people that can afford to buy and buy for utility not profit. Prices are set at the margins (who said that?) but will the game of chicken last quarters, months, or days? US housing data even from Cali show increases through 06 for some areas (e.g. LA and San Bernardino counties).
March 15th, 2007 at 5:00 pm
jesse: “The three primary factors are that mortgages are generally not in trouble here, employment is high, and FTBs are being helped out by their families.”
Speculative markets collapse under their own weight.
Sure, a reversal of the ‘Goldilocks’ picture will speed that (and is also inevitable), but this market could crash with all the things you list remaining the same. Exhaustion of rate of demand.
March 15th, 2007 at 4:46 pm
“The three primary factors are that mortgages are generally not in trouble here, employment is high, and FTBs are being helped out by their families.”
Jesse:
thanks for the pointers.
As for point 1, i think it is a matter of time before we start seeing some serious mortgage troubles here. I feel that here, like the US, many people leveraged their position under the assumption that house price increases would rescue them. If appreciation stops (even if prices do not go down) lots of people will find themsleves in high, stormy waters.
As for point 2: high employment is true also in the US. In fact i think the US is experiencing levels of low unmployment unprecedented in the past 30 years. I guess what matters is really your income vs your liability: having a job is no guarantee of meeting your repayments as prices stop growing. This is what i would tell people enetering the RE market. Think about it…..
As for point 3: families can indeed be used as piggybanks for a while. However they can’t support a growing market. This argument seems a bit week, at least in quantitative terms.
I take your point on timing: that is still dubious. It could be this Spring or next fall. But I tend to think it will happen and it will be rough for many.
Let me reiterate: many RE agents are selling their holdings. I have never seen so many doing that: it must mean something.
March 15th, 2007 at 4:44 pm
My motives are irrelevant though economics for me is a hobby. My happiness is also irrelevant. But thanks for caring.
FWIW, the chances of me being right are far below 50%. There are extremely compelling arguments for prices to go down but playing devil’s advocate never hurts.
March 15th, 2007 at 4:24 pm
jesse, if you are so sure of yourself, why do you constantly visit this place?
I imagine your life would be a whole lot happier otherwise. Unless, of course, you’re in someway addicted to cortisol.
March 15th, 2007 at 4:20 pm
“If you have any arguments supporting your views I’d be glad to hear them”
The three primary factors are that mortgages are generally not in trouble here, employment is high, and FTBs are being helped out by their families. Any can change and will precipitate a correction but I personally don’t think it is this year. I still think prices will be up 5% from the 06 peak this year.
You are right that eventually the market must move below the average, or the average has to change. Consider if there are any structural changes that could have caused the average to change.
If you pare back everything but the necessities, food, clothing, and shelter (mortgage), how much could your mortgage be? I think that is the absolute affordability wall if someone really wants to own property. Don’t know how many people are still around that are willing to make that sacrifice.
In any case, I like Scotch but I’m hoping the market goes down. But as they say pessimists can only be pleasantly surprised.
March 15th, 2007 at 3:59 pm
Jesse:
if I was you I’d be much less smug. Anyone can be wrong: however this call is rather simple to me. Any further appreciation will only result in a larger crash. If you have any arguments supporting your views I’d be glad to hear them: but it seems that all you do is repeat that the market is always right and will never cease to go up……
March 15th, 2007 at 3:30 pm
At this time of year, like most other years, Realtors are making educated guesses about pricing. It is akin to the murmor before the opening bell (see the movie Trading Places). You will see prices over the map until actual transactions of the new inventory sets the price. Remember this is not an exchange market:
- There is a multiple day lag to present pricepoints and changes, as well as to present actual sale prices, to the market.
- Bids are for the most part “secret”.
- There are generally few “comparables” though downtown condos are coming close to commoditisation.
slugora is right that the market direction will be known in late April and May. Deep down, bears, you know what is coming. The best investment you can make now is buying a nice bottle of Scotch. Certainly a lot cheaper than a house and probably more fun.
March 15th, 2007 at 2:30 pm
licketyclit:
Chipman knows about facts as much as anyone else……why do you think the sudden hurry in completing his flip/conversion?
Realtors are realizing that it is safer to unload their properties sooner rather than later.
Incidentally, I know of at least 3 realtors who are doing just that: selling condos that they bought years back…..they did not seem to be in a hurry last Fall but things must have changed.
Chipman is no different: he must have realized that he does not have much time to finish his work, hence his heightened working speed.
Funny how quickly things change: all of sudden I have an absoulute certainty that Vancouver housing is going to hit the ground.
March 15th, 2007 at 1:32 pm
So what do they know that Chipman does not?
March 15th, 2007 at 1:22 pm
Myles,
The realtors own the properties for sale. It is their own homes they are selling.
March 15th, 2007 at 12:08 pm
I can only comment on sales in my neighbourhood (Grandview). I’m not a realtor, nor am I actively looking. My information comes from attending open houses and noticing for sale signs.
There are more for sale signs than in December, but no more listings on the MLS than usual. You rarely see a house for sale in the area and the number of condos is normal between 14 and 20. Currently there are 12 on the MLS.
Places seem to be taking longer to sell compared to last fall when a house would sell (remodelled character ones for almost a million) in three or four days and a condo in a couple of weeks. It now seems to be taking a few weeks.
Last fall, condos and houses were going for over the asking price.
Two condos is my building just sold – one for asking, the other for a few thousand below asking. The latter was sold within a week.
The realtors still seem confident. Out of curiousity, I called the realtor about putting in an offer on the second one at asking price with a subject clause (sale of my current place) and was told an offer with such a subject clause would only be considered if there were no other offers. Two days later, the place was sold.
It will be interesting to see what they get for the listing at Dharma Digs (MLS V634954 asking $269,000) as this seems to be where most flipping is going on.
This is not “one of the best buildings in the area” as it says in the listing, but it has been marketed very well. It was a rental building that was converted to a strata. The owners made a few cosmetic changes to the entrance and hallway, repackaged it with a trendy name and took full page ads out in local papers. Forty-seven units sold in two days because the prices were good. This place would have sold for $150,000 at that time.
March 15th, 2007 at 11:51 am
Myles: It looks like the realtor IS the owner. In a normal situation the realtor would at least advise on current market conditions and asking prices. In the end though its the buyers that set the actual prices.
March 15th, 2007 at 11:28 am
A friend of mine lives in a area where two realtors are selling out on the same street within half a block of each other. One realtor already dropped the asking price by 20k and still no bites. The other realtor is asking an outrageous price, nothing has ever sold for that price range in that neighbourhood. Funny thing is if that was your own home for sale, the realtor would be quick to tell you, you would never get that price, yet they think they can get the moon, sun, and stars for their own home when it is up for sale. This house is priced 120k over the highest selling price ever in the neighbourhood.
I doubt the realtor will get anywhere near the asking price for their house, but if they end up selling the place for close to asking then the real estate market is hotter than I think.
funny.. when I sell a place I do the raising and dropping of the price. .if my realtor were to do that I would fire and sue him.. I think the term you want is OWNER drops the price..
March 15th, 2007 at 9:02 am
Listings usually decrease during winter. The March sales/listings ratio for the last 4 years that VHB gave us a couple of days ago works out to an average 74.0 (well above our current pace)
The real listings flood usually starts in April and peaks in May, just in time for the stats from the subprime mortgage fiasco to start showing up in the monthly US housin reports.
March 15th, 2007 at 8:17 am
Usually sales and listings go up in the spring, but in a hot real estate market sales will outpace listings. Then you get into one day sales, bidding wars, etc.
That kind of market has not existed since June 2006. Listings have outpaced sales since then.
March 15th, 2007 at 7:21 am
Dont sales and listings always go up in the beginning of the spring? I guess as long as there are ‘greater friends’ as Ozzie puts it, this crazy market will keep on going.
March 15th, 2007 at 6:54 am
A realtor told us sales are increasing and prices are going up. When I mention well they can’t go up forever sooner or later you hit affordability walls. The realtor replied, “Oh, they have been saying that for years.”
When I questioned the realtor about the 30% more listings out there compared to last year, I was told there is nothing out there. Sure…that is why there is so many more listings this year, nothing out there.
A friend of mine lives in a area where two realtors are selling out on the same street within half a block of each other. One realtor already dropped the asking price by 20k and still no bites. The other realtor is asking an outrageous price, nothing has ever sold for that price range in that neighbourhood. Funny thing is if that was your own home for sale, the realtor would be quick to tell you, you would never get that price, yet they think they can get the moon, sun, and stars for their own home when it is up for sale. This house is priced 120k over the highest selling price ever in the neighbourhood.
I doubt the realtor will get anywhere near the asking price for their house, but if they end up selling the place for close to asking then the real estate market is hotter than I think.
If we end up with major flooding this spring as they are predicting that will put a damper on the real estate market too.
March 14th, 2007 at 10:41 pm
I don’t think the growing listings mean that there’s a push to get people to sell. It’s more likely a natural side effect of less people being able to buy combined with some people wanting to cash out while the gettings good.