What’s the common denominator in the real estate market? The sale price, the commission you pay to brokers and the marketing techniques. All three of these topics are creating headlines in the new year.
Starting with the price of real estate, it’s almost redundant to say that existing home sales are on track for their strongest year since 2006, and this is expected to continue with low mortgage interest rates. Currently, mortgage interest rates for a 30-year, fixed-rate mortgage are just over 3%. However, the Federal Reserve has indicated they could move to raise the federal funds rate, which could influence the long-term mortgage rates. Nevertheless, the rates are still low for most buyers and won’t have a major impact on the market.
As reported at the end of December, Manatee County hit another record high in November with the median sale price of single-family homes at $450,411, 28.5% higher than last November. Nationally, as reported by the National Association of Realtors, the median single-family home sold for $353,900, up 13.9% from last November. Note that this is about $100,000 less than Manatee County’s median.
Realtor commissions have always been a source of constant conversation among home sellers, and with selling prices sky-high, the conversation is not about to change. Now, the Justice Department is investigating home sales commissions, which are typically in the 5% to 6% range. Previously, the Justice Department and the National Association of Realtors reached an agreement to provide more disclosure on broker fees and make them more competitive. This agreement was withdrawn last summer so the government can pursue a broader investigation into broker commissions.
The National Association of Realtors indicates that in a tight sales market with rising prices, the job of the real estate agent has become more important than ever to sellers and buyers trying to navigate an unpredictable market. In addition, real estate commissions are fully negotiable and have declined slightly to a national average of about 4.9%.
Finally, since every seller is looking for the best deal they can get, many, especially those who need a degree of privacy, are choosing off-market transactions. Off-market transactions are those that do not go through the local Multiple Listing Service to market the property. This frequently happens when brokers approach homeowners directly with the promise of a buyer for their property, which is technically not on the market. Some homeowners may be thinking of selling but don’t really know the true value and are overwhelmed when they are told what the value actually is.
This may or may not work out for the homeowner, or it can be the old adage: if it sounds too good to be true, it may be too good to be true. There are lots of pros and cons to off-market, with the top con being not hearing offers from other potential buyers and eliminating the “bidding war” that is happening in most transactions in this market.
The National Association of Realtors does allow brokers to market homes through its agency in certain circumstances without sharing with other brokers in the community. This is called an office exclusive or pocket listing and again may be advantageous for certain sellers.
If these types of marketing techniques appeal to you as a seller, do your homework first. Get the comps independently of the broker by checking tax records and online comparable sales, and make sure your home is located in a desirable area.
Every property has its own unique qualities, and every property also shares similar marketing options. It’s up to you to choose what’s the best way to market your property. Sale prices up, inventory down; nothing appears to be changing in the new year.
