Plano Realtors - Talk to Your Sellers About Absorption Rates

What are “absorption rates” as they pertain to real estate sales?   The absorption rate takes into account how many homes are on the market and how long, on average, it will take that home to sell on the open market.  Professional Plano Realtors and DFW Realtors have a duty to their Seller clients to explain this calculation so they will have an idea about how long it may take them to sell their home.  Whether you are at the listing presentation, or you're following up with a seller who's been listed a while, providing the added service of helping the sellers to understand absorption rates and how their price falls into the current pool of available homes for sale in their area. Absorption rates are now required from appraisers for all government related loans; which is just about every loan out there today.

Fannie Mae's Form 1004MC, and Freddie Mac's Form 71 both require that appraisers calculate days on market, inventory levels, and absorption rates for the comparables and immediate area around the subject home. The assumption is that tracking the variability of these three measures across time periods can provide trend information to determine home value direction. The appraisers must also take into consideration the Plano foreclosures on the market which could impact the absorption rate.

Absorption Rate Calculation Example- Say we take the number of closed sales for the last six months in a certain area, and it is 110. We then check the current number of active listings, and it is 420 in that area. First, divide the 100 sales by 6 months, to get a rate of 17 closings per month. Then, divide the 420 active listings by 20 to arrive at 21 months to move that inventory; that's the absorption rate.

Under the Freddie Mac's Form, we see that they require this number for three time periods; the immediately preceding three months, four to six months back, and seven to twelve months in the past. Then, the appraiser must indicate whether the absorption rate is decreasing, stable, or increasing. If it's decreasing, then the market appears to be slowing, and this could cause the value of the home to be adjusted downward. Also considered are corresponding periods for days on market, inventory, and the sale-to-list price ratio. If sale prices are getting lower in relation to list prices, this will be evident on these addendum forms, and the appraiser should be adjusting the home value downward. So, it's clear that a good market is showing higher absorption rates, lower inventories and shorter times on market on average. They prefer to use "median" numbers.

On the bad side, if median absorption rate is declining, and days on market and inventory are rising, this doesn't look good for the market in the near term. Couple that with wider spreads between list and sale prices, and the picture darkens as well. But, good or bad news, you should be on top of this information and sharing it with sellers and prospects to help them in their decision processes.

Is Now a Good Time to Start a Dallas Real Estate Career?

It seems like every day we hear about more and more DFW real estate agents going out of business, sometimes, whole offices.  It must be a terrible time to think about becoming a real estate agent, or is it?  It may be a great time to become an agent.  These tough times are squeezing out all of the so-so agents and so-so brokerage companies.  This opens the doors for new, aggressive agents that embrace technology and are willing to learn the best strategies of selling real estate in this market environment.   This crop of new agents will understand that it is no longer about transactions, it is about helping people, many of them with limited resources and serious personal and financial challenges. 

These upcoming agents will have to specialize in Dallas foreclosures, short sales, ever changing financing programs and even a little bit of psychology.  If you are considering a career in real estate, get the proper education, the proper tools and the proper guidance.  With the right mindset, drive, determination, and a genuine desire to help people you can become a huge success when many of the others will tell you that you will fail.  Step up and prove them wrong.

Is Using a Discount Dallas Real Estate Broker a Good Idea?

In this real estate market there are many Dallas homeowners who have very little equity in their homes. If they find themselves in a position where they have to sell their home every dollar counts especially when it come to sales commissions. But can you really save sales commission dollars and get the market exposure that your property needs and the proper representation you need to ensure that you aren’t being taken advantage of? Is someone watching out for you to make sure all the local, state and federal laws are being complied with? Is selling Plano Real Estate the same as selling a Dallas Foreclosures property? Do the rewards outweigh the risk of using a discount Dallas Real Estate Company? The answer, in most cases, is yes but only if you are careful and do your due diligence. Google Dallas FSBO (For Sale by Owner) real estate companies or Dallas Flat Fee real estate companies. Study several of their websites and compare them. Cost should not be the only determining factor as many of the “cheap” programs do nothing more than stick your property in the MLS and on some websites. Look for a comprehensive program where your property gets full market exposure and you have full representation through closing. Many of these programs cost between $1,500 and $2,500 but do the math. You will find that using one of these discount Dallas real estate companies will save you thousands of dollars.

Sellers Who Are In The Know Can Compete Against Dallas Foreclosures

Dallas Foreclosures Aren't Usually the Great Bargain Many Buyers Expect:

Unlike what so many home buyers think banks are not giving properties away or selling them for half price. Despite the commercials and advertisements you see about stealing Dallas foreclosure homes for pennies on the dollar. Many banks will price a foreclosure property near the true appraised value, unless the property is in need of substantial repairs. With these Dallas foreclosures properties priced at little or no discount to market value, sellers of non-foreclosure Dallas Homes can make their properties look very enticing by having them in move-in ready condition and at little or no premium to foreclosure properties owned by the banks.

It Can Take a Long Time to Close a Foreclosure Property:

You would think common sense would say that these banks would be in a hurry to get these foreclosed properties off their books, but this rarely the case. These banks can take many weeks instead of days to respond to offers and counter offers. Getting responses from these banks can take almost forever. Many astute home sellers know that their home is going to fare well in competition with these foreclosures because buyers will be able to close and move in on a realistic time schedule. Even with nearby Plano homes getting a foreclosed property to close in a timely manner is a challenge to say the least.

Disclosure of Defects / Not With Foreclosures:

Banks will not disclose anything about the condition of the foreclosure property because they have no knowledge of problems with the property. Most state laws exempt Banks from disclosure requirement. Sellers will fare well much better in competition against theses foreclosed homes with a full disclosure, plus correction of what can be fixed prior to listing. Buyers will be comparing an unknown quantity with a full disclosure and condition report.

Repairs on Foreclosure Property Can be Scary:

The bank will not want to do any pre-closing repairs, offering the property "as-is." The buyer(s) will do an inspection, and it is likely that the list of repairs could be very extensive. The buyer's lender will want some or all of the problems corrected before closing. This causes a huge dilemma for the buyer and which will usually cause them to walk away from the property. A smart Dallas home seller will have done their own pre-listing inspection and corrective repairs. They will be offering the alternative of a move-in ready home, with proof of all repairs they've done to bring it to that condition.

Professional Realtors Need to Educate Their Sellers:

As a professional Dallas Realtor being consulted about listing a home, it is best that you educate your sellers about the pitfalls of Dallas foreclosures. They may be entering the market with the fear of needing to price their home at discount to compete with local foreclosure properties. Let them know all the facts first. Show them the advantages they have over the bank foreclosures. Advise then to make the appropriate improvements and repairs in order to come on the market with all of their competitive advantages in place.

Plano Real Estate and Buyer's Broker Agreements

Plano real estate buyers generally sign a buyer broker agreement with their Plano Realtors before writing an offer on a home. This buyer broker agreement spells out precisely that the Realtor represents the buyer only. This is also known as a “buyer representation agreement”. There are a variety of buyer broker agreements that are used throughout the United States. For example, we will review three most common types of buyer broker agreements, with most weight given to Exclusive Right to Represent because it's the preferred form for many Realtors use when selling Plano real estate and Collin County Real Estate.

Buyer Broker Agreement / Non-Exclusive

This agreement outlines the Realtors duties and obligations to the buyer, agency relationships to all parties, Realtors scope of duty and buyer obligations; it does not provide for Realtor compensation for the sale of any DFW Homes.

· Buyer has the right to single agency

· Buyer may hire more than one Realtor to locate property

· Buyer is not obligated to compensate the Realtor

Buyer Broker Agreement / Non-Exclusive Right to Represent

A non-exclusive agreement outlines the Realtors duties and obligations to the buyer, agency relationships of all parties, Realtors scope of duty and buyer obligations. This type of agreement does provide for Realtor compensation. It also removes the buyer's responsibility to pay a commission if the Realtor is paid by another party such as the seller.

· Buyer has the right to single agency

· Buyer may purchase a property through another Realtor, as long as the property is not a home the first Realtor brought to the buyer

· The Realtor can receive a higher commission than the negotiable fee stated in the agreement if the seller elects to pay more and as long as it is disclosed

Buyer Broker Agreement / Exclusive Right to Represent

This is a standard form that many Realtors prefer to use with their buyer clients. It is similar in scope to the non-exclusive form except for one major difference; the buyer has agreed to work exclusively with this particular Realtor.

· The commission is negotiable

· The buyer cannot hire more than one Realtor to represent them

· Buyer has the right to single agency

· The buyer is not responsible for the commission if another party pays it, such as the seller

· The Realtor can receive a higher commission than the negotiable fee stated in the agreement if the seller elects to pay more and it is disclosed to all parties.

A non-exclusive agreement may run for a month or two, exclusive agreement terms generally run anywhere from three months to a year. If the buyer elects to purchase any property introduced to her by the Realtor, they will owe the Realtor a commission. Exclusive representation gives the Realtor the ability to negotiate with unrepresented sellers (for sale by owners as an example) on the buyer's behalf. In these cases, the commission is typically added to the sale price and then paid by the buyer to the Realtor as part of the financing. If the buyer is able to purchase the property at a discount through the Realtors negotiating ability, the Realtor will have earned their commission. Exclusive representation means the Realtor is retained by the buyer and will work diligently on their behalf and have a fiduciary duty to that buyer client.

Termination of Buyer Broker Agreement

Ask the Realtor if they will release you from the buyer broker contract if you find that the relationship is not a good fit for you or and/or them. While Realtors are not bound to release you, if they won't agree to a termination upfront, don't sign the agreement with them find a Realtor that will agree to it. Professional Plano Realtors will give personal guarantees that the customer will be satisfied.