Research Triangle Real Estate

Real estate articles

2006-10-18T14:15:00.000-04:00

Planned
Chapel Hill project worries neighbors

Developer's
project faces resistance in Hayti

Durham's historic black-owned business district
fears its history will be erased

Quarry
incentive passes Chatham board

Are buyer's agents free?

2006-10-18T09:11:00.000-04:00

Many real estate agents will try to entice buyers to use them as a buyer's
agent with the claim that they will receive true agent representation and it
will be for free. This is based on the way commissions are typically paid
out on real estate sales. Commissions to both the listing agent and the agent
working with the buyer are typically shown on the sellers side of the closing
statement, and are paid out the sales price of the property. Does this mean that
the buyer pays nothing toward the expense of the buyer or sellers agent? This is
a debate that rages inside the real estate industry - who pays the commission?
Buyers bring the money, the commission shows on the sellers side, sellers and
listing agents offer a commission to agents representing the buyer and sometimes
offer bonuses to buyers agents, some buyers agents offer rebates - it all seems
very confusing, and is, not only to most consumers, but unfortunately to most
real estate agents as well. One thing that I feel fairly certain about
though is that rarely do you get anything of value for free, and I don't know of
any real estate agents who do not want to get paid. I also know that true buyer
representation from many agents who make this claim is a myth, as many will slip
into a dual or designated agency role when that suits their main goal of
securing a commission. (For more on types of agency, the NC Real Estate
Commission has a brochure explaining buyer, seller, dual and designated agency).

A trend worth noting here is sellers offering as little as $1 in commission
to the buyer's agent. Current MLS rules say that listings must offer some sort
of compensation to other agents. This is the basis of the MLS - an offer to
cooperate and share compensation. In this area, buyer agent commissions have
typically been 2.4% in the Wake County market area, and 3% in the Durham and
Orange market area. Many agents do not even discuss with buyers what they are or
should be paid, but accept the compensation offered. Are they going to be
willing to accept $1? Are they going to steer buyers away from listings offering
less and toward those offering more? If they do, are they truly representing the
interests of the buyer, who is likely looking for the best property for the best
price? A good agent will have an upfront discussion with buyers they represent
and have an agreement with the buyer as to how and how much they will be paid.
Goddin Real Estate has several
innovative programs for representing buyers which can result in substantial
rebates of part of the buyer agent commission to the buyer. We could claim this
means that we are better than free, we actually pay buyers to represent them. We
could, but we don't, because we know that sellers are far more concerned with
their net proceeds than the sales price of the property, and the less they pay
in commission, the less the buyer has to bring to the closing.

What are limited servce and MLS entry only listings?

2006-10-17T11:18:00.000-04:00

The Rules and Regulations of the Triangle MLS define limited service and MLS entry only listings as follows:

SECTION 1.2.1 LIMITED SERVICE LISTINGS (LS) are listing agreements

under which the listing broker will not provide one, or more, of the following services:

(a) arrange appointments for cooperating brokers to show listed property to

potential purchasers but instead gives cooperating brokers authority to make

such appointments directly with the seller(s);

(b) accept and present to the seller(s) offers to purchase procured by cooperating

brokers but instead gives cooperating brokers authority to present offers to

purchase directly to the seller(s);

(c) advise the seller(s) as to the merits of offers to purchase;

(d) assist the seller(s) in developing, communicating, or presenting counter-offers;

or

(e) participate on the sellers behalf in negotiations leading to the sale of the

listed property.

The listing will be identified with an appropriate code or symbol (“LS”) in

MLS compilations so potential cooperating brokers will be aware of the extent

of the services the listing broker will provide to the seller(s), and any potential

for cooperating brokers being asked to provide some of these services to

listing brokers’ clients, prior to initiating efforts to show or sell the property.

SECTION 1.2.2 MLS ENTRY ONLY LISTINGS (EO) are listing agreements

under which the listing broker will not provide any of the following services:

(a) arrange appointments for cooperating brokers to show listed property to

Revised October 2006 4

potential purchasers but instead gives cooperating brokers authority to make

such appointments directly with the sellers(s);

(b) accept and present to the seller(s) offers to purchase procured by cooperating

brokers but instead gives cooperating brokers authority to present offers to

purchase directly to the seller(s);

(c) advise the seller(s) as to the merits of offers to purchase;

(d) assist the seller(s) in developing, communicating, or presenting counter-offers;

or

(e) participate on the sellers(s) behalf in negotiations leading to the sale of the

listed property.

The listing will be identified with an appropriate code or symbol (“EO”) in

MLS compilations so potential cooperating brokers will be aware of the extent

of the services the listing broker will provide to the seller(s), and any potential

for cooperating brokers being asked to provide some of these services to

listing brokers’ clients, prior to initiating efforts to show or sell the property

These are the two types of listings commonly offered by flat fee listing
companies. Depending on the property being sold and the knowledge, experience
and available time of the seller, these can be appropriate listing types to use,
and can save the seller considerable money in listing commissions. It is very
important that all parties involved (seller, listing agent, buyer, buyer's
agent, etc.) understand what services are being provided and what should be
expected of the other parties involved in the transaction. As with many things
in life, effective communication and reasonable expectations will go a long way
toward avoiding problems. Many buyers and sellers enter into agreements with
agents without fully understanding what is being offered, how and how much the
agent expects to be paid, and what is expected of them as customers or clients
and what they should expect from the agent involved. Read anything you sign. Ask
questions about things you don't understand. Time spent doing these things on
the front end of your deal can save you considerable time, money and stress down
the road.

How much is my house worth?

2006-10-17T10:20:00.000-04:00

How much is my house worth seems like a question on the minds of a lot of
people these days. The easiest answer is that your property is worth what
someone is willing to pay you for it. But how do you figure out how much someone
will pay? One way is to put it up for sale and take offers. But what if you
don't really want to sell your property, you want to borrow money against its
value. Or say you do want to sell and want to determine what is a reasonable
asking price. The most common way to evaluate residential property values is
through a comparable sales analysis. By comparing your property to other similar
properties that have sold recently and making adjustments up or down based on
their differences, a current market value for your property can be estimated.
The ease or difficulty of this task can vary greatly depending on the property
and the availability of the needed information. If you are selling a condominium
in a large development with numerous recent sales of very similar units,
determining the market value is a relatively simple task. A unique property in
an area without many recent sales presents a far more complex challenge. You can
find any number of web sites that promise you free evaluations of your homes
value. These range from sites like Zillow,
which attempts to use available public record information on properties and
sales to generate a value, to a lead aggregation site like Housevalues.com,
which will ask you to register then sell your contact information to a real
estate agent in your area, who will provide you with an estimate of value as a
way to get their foot in the door to list your property. Many agent and firm
websites also offer a free market analysis, which allows them to bypass the lead
aggregator's fees and make more money if they end up getting your listing. Like
most things that are free, you generally get what you pay for. In the case of
Zillow, the problem lies in the accuracy of the information used and the
inability of the program to think rather than just obey instructions. As an
experiment, I asked Zillow to estimate the value of a townhome that I listed and
which sold in July. This is the MLS sheet for the property, which closed 7/10/06 at a price of $142,400. Here is Zillows current estimate of value, which is 13% higher than what the property
actually sold for 3 months earlier. Zillow lists the square footage as 396
instead of the actual 976 based on Orange County property data that does not
make sense even to me, much less to the computer program Zillow is using. Zillow
compares this property to other nearby properties using equally flawed property
information to arrive at its conclusion. Relying on Zillow's estimate in this
case would not be a good idea. In areas with more accurate property data
available, it seems likely that Zillow would provide more accurate values, but
its inability to actually think is a severely limiting factor in its accuracy.
Free market evaluations from real estate agents, whether coming from a lead
aggregator site or generated by their own website, will also vary widely in
their accuracy depending on such factors as the knowledge and experience of the
agent, the amount of time, effort and thought they expend, and their goal in
providing you with the value. The use of inaccurate data by an inexperienced
agent seeking to list your property will often lead to a flawed value estimate.
If you want to know what your property is really worth, it pays to understand
how the provider of that estimate comes up with the value. And remember, rarely
in life is anything of value given away truly for free.

Business cycles

2006-10-06T16:27:00.000-04:00

Business cycles have been around as long as man has traded one thing of value
for another. Every Econ 101 student has learned about the Dutch
Tulip Craze , yet most people seem to forget the lessons learned from that
when the next big boom comes around. The 1990's produced a record period of
economic expansion and record levels for all stock market indexes. A new
paradigm was proclaimed, one where traditional business cycles were declared a
thing of the past, done in by productivity increases brought on by the
information age. Five years later, the Dow Jones has now returned to those
previous record levels, the S & P 500 still has a way to go, and the Nasdaq
continues to linger at about 50% of its highest levels. The proclaimers of the
new paradigm moved on the other things, apparently many of them getting into
real estate in Las Vegas, Miami, San Diego, coastal North Carolina and other
places. With money cheap and plentiful and stocks not looking so rosy, investors
flooded the real estate market. As with any commodity, when demand outstrips
supply, prices rise and new craze is born, and with it a new set of reasons why
this time things are different. As we are seeing now in many parts of the
country, the more things change, the more they stay the same.

Along with learning about the tulip craze in college, I also learned Le
Chatelier's principle in chemistry class. The main point here is that
systems tend toward equilibrium, and when a system is not in equilibrium, its
variables will change. Economists seem to be grasping this principle in regards
to economic systems, although it seems to have taken them a little longer than
the chemists to buy into it. What is economic equilibrium? In the stock market
it seems to be where the valuation of equities reflects the earnings those
companies actually produce. In real estate, it has to do with the value of
property actually reflecting the cost of reasonable alternatives (rents vs.
sales price being the real estate equivalent of a P/E ratio), reflecting the
percentage of people who live in an area being able to afford it and reflecting
the possibility that supply can reasonably be produced to meet an increase in
demand (the U.S is one country where population is rising, so there is a need
for an increase in housing supply, although probably not at the pace we have
seen over the past few years). In many areas, real estate markets have gotten
severely out of equilibrium and now face variables changing as those
systems work their way back toward an equilibrium state. In most cases, the
variable likely to change is sales prices, and they will have to come down in
order for the system to become equalized. Does this mean that you should not
invest in real estate. No, but it does mean that you should invest wisely and in
properties with good fundamentals. While rents are likely to rise as interest
rates go up and the excess supply of properties is worked off, don't depend on
that to make your mortgage payment. If you are buying a home to occupy, don't
buy one twice as big and expensive as you really need because you think the
appreciation on the property will far exceed the negative amortization on the
payment option, interest only loan your broker talked you in to getting. Don't
buy pre construction condos in Las Vegas or Miami or Wrightsville Beach thinking
you can double your money on a flip before they break ground.

What happens when my property is listed on the MLS?

2006-10-06T16:25:00.000-04:00

When your property is listed on the MLS, it is disseminated in a number of
ways. The first night it is listed, it will automatically be sent by email to
anyone who has been set up to receive notifications of new listings and whose
search criteria fit your property - generally these search criteria would be
price, size and location, but they can be more detailed than that as well. These
automatic email notifications have to be set up by a real estate agent who is a
member of the MLS (and who understands how to do it). Since the people receiving
these notifications presumably include a number of people actively looking to
buy property like yours, it is very important that your listing be accurate and
look good from the start. Posting a listing with poor or no pictures thinking
they can be changed later is not a good idea as your best prospects may reject
the property that first day and not come back for a second look. To see an
example of a listing sheet like those emailed, click here.Within a day or two, depending on how often the site updates its data, your
listing will be available on IDX (Internet Data Exchange) searches. These
searches are what the public use to search for properties on almost all real
estate agent and firm web sites. To see this same property on an IDX site click here, click to search by MLS number and insert 872708. You can also use this search
to find any other listed properties, with Advanced Search giving more search
options. This same property is featured here
on my web site. Once your property is listed on the MLS, it is also sent o a
number of other search sites such as trianglehomesource.com, Realtor.com , Immobel.com, and many others.

What is the MLS

2006-10-06T07:03:00.000-04:00

MLS stands for Multiple Listing Service. The basis of the MLS is an agreement among a group of real estate agents to share information on their listings and to offer compensation to other agents who bring a buyer for their listings. In its early years, MLS participants held information on listed properties very tightly, meaning if a consumer wanted a source of information on which properties were currently listed, they had to consult a participating agent. Information was published in books with prominent warnings of confidentiallity and penalties for unauthorized disemination, kind of a funny way to do business when you think about it. If you were selling a home, you would likely want as many potential buyers as possible to know about it, not keep that information confidential. The Internet has changed that (against the wishes of some in the real estate industry, who fought-and are still fighting-to maintain their stranglehold over information). While consumers still can not directly search the MLS, they can search for information on listed properties through IDX(Internet Data Exchange) sites, which have information on all listed proeprties for sale in a given area, but not as complete information as can be found on the actual MLS. Consumers can get access to the more complete MLS information, but still must do that through a relationship with a real estate agent.

To see an example of an MLS sheet, click here to view one of my current listings http://www.goddinrealestate.com/mlslist9.html
To see that same property on an IDX site, click here
http://www.goddinrealestate.com/mls.html
then click to search by MLS number and enter 873816
This same property as displayed on my website is here
http://www.goddinrealestate.com/listing9.html
You can use the search screen from the second example above to search all listed properties in the Triangle MLS. Advanced search provides more options.

Real estate articles

2006-10-05T12:56:00.000-04:00

Carrboro building
moratorium

Chatham lawsuit over Haw River development

Home prices

Loss
of forest land in Wake County

The importance of pictures

2006-10-03T14:18:00.000-04:00

When searching for homes to buy, most buyers start by looking on line. They will use details such as price, square footage, number of bedrooms and baths, etc. to narrow their search from the thousands of homes for sale to the tens of homes that might suit their needs. To further refine their search to the homes they will make the effort to go and see in person, they rely heavily on the pictures of the homes. I have had many buyers tell me that they will not even consider visiting listings that don't have good pictures. While this may be a mistake on a buyer's part, causing them to miss out on the perfect property because of the incompetence of the seller's agent (and possibly missing out on good buy since these properties don't get as much traffic), not making sure that their property is well presented is a huge mistake on the part of a seller, potentially costing them large amounts of time and money in the marketing of their property. As a seller, you better check out how your property appears on the MLS and in advertising, especially on line, because this is where most serious buyers look for property. MLS sheets are sent by automatic email to prospective buyers on the first day the property is listed, so it is important for the listing to look good from the start because you don't get a second chance to make a good first impression. Most serious buyers doing their own searches utilize an IDX (Internet Data Exchange) site on a local broker or agent web site (example here from Goddin Real Estate's site http://www.goddinrealestate.com/mls.html ) I continue to be amazed at how many properties are listed with bad pictures. Taking pictures and uploading them to a web site is a relatively easy thing to do, but to take good pictures, particularly interior shots, and size them correctly for their intended application is a much more difficult skill to master. Typical interior shots made with a point and shoot digital camera have a narrow angle and end up showing only a corner of a room or a piece of furniture. Lighting and exposure are usually poor with blown out (overexposed) windows and dark (underexposed) backgrounds. Goddin Real Estate makes every effort to photograph your property to show it at its best in the places where serious buyers are looking for homes to buy. Please visit http://www.goddinrealestate.com/index.html to learn more about our affordable listing solutions to help you sell your property for the highest return.

First post

2006-10-03T09:45:00.000-04:00

This is my first post as newbie blogger. My goal is to provide blog readers with interesting information on real estate goings on in the Research Triangle area of North Carolina. I will provide links to interesting articles both local and national, as well as opinions and commentary. Feedback and comments are welcome. Here is a link to an interesting story from this mornings N & O. Sounds as though missing out on the rapid appreciation experienced in other areas over the last few years my be a long term benefit to our real estate market, but maybe not so good for the schoolchildren of Wake County.
http://www.newsobserver.com/102/story/494011.html