Looking Twice at Overpriced Plano Real Estate

Common logic dictates that if a home doesn’t sell there must be something wrong with it. This is a very true statement. In a normal market there is something wrong with Plano real estate that doesn't sell. But contrary to what most people believe, it's not always the condition or location of the house. The number one reason why an otherwise home in good condition in a good location does not sell is the listing price. Homes that are overpriced often never sell at all. Why is this the case? Because home buyers will rarely look at overpriced houses let alone make offers on them.

Home Buyers Don’t Make Offers on Overpriced Listings

· Sometimes they believe that if the buyer is not reasonable about pricing the house correctly in the first place that they will be difficult to deal with.

· They don't want to offend the seller. It goes against human nature to offer substantially less than asking price to a seller. It's can be insulting to the seller and embarrassing for the buyer.

· Buyers many times believe that the seller knows the home is overpriced. They believe that if a seller would be willing to sell for less, the seller would simply lower their list price.

How Do You Find an Overpriced Listing?

The easiest way to find overpriced listings is to ask your real estate agent. He or She can search the multiple listing system for Collin County Homes or Highland Park real estate for example of homes that have been available for higher than normal days on market (DOM). Then ask your agent to study the listings and give you a print out of every home that has been on the market longer than the average DOM.

If your agent is a specialist in the neighborhood you are searching in, it is likely he has viewed many of these homes and has hands on knowledge of the condition and layout of these homes. Ask him to share this information with you. Also ask your agent which of the homes he thinks are overpriced. You will learn that often buyers agents don't tell listing agents that their listings are overpriced because agents don't want to offend anyone either. But listing agents sometimes make mistakes when estimating the market value for a seller. Ultimately, it is the seller who set the listing price.

Why Would a Seller Lower the Price?

A couple who bought a beautiful house at first wondered the same thing. The home sat on the market for more than three months at an asking price of almost $840,000. In a market seller’s market, it probably could have sold for about $820,000, but the market was soft and demand was weak and the sellers had moved out of the area, leaving the home vacant. The listing agent was not aware that the home was overpriced. The sellers were certainly motivated. Pointing out this information to the sellers, this couple was able to negotiate a deal to buy the home for about $160,000 less than the list price. To make their offer more attractive to the sellers, the buyers did not include the sale of their existing home as a contingency. They also offered the seller a large earnest money deposit to show that they were a serious buyer. And they also showed the seller a list of homes that sold in the neighborhood at prices closer to their offer.

Not every home that is overpriced will end up selling for less than its market value. But many homes that are listed at unrealistically high prices are sometimes owned by sellers who are motivated and who are willing to listen to reasons why they should sell at a lower price to you. If you find out that a seller has turned down other offers for less money, it might mean that it's just a matter of timing. At some point the seller will come to his senses and say yes. There are overpriced gems hiding among the inventory of homes for sale every day. Don't just pass them by. You could be passing up an opportunity to buy your dream home at a dream value.

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.