Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000
Jim Reid, Broker, (905) 731-2000
MICRO-NEWSLETTER NOVEMBER A 2006
"LONG LISTINGS RISKY?"
"MARKET OUTLOOK"
In November, I noticed that one of my mortgage lenders was offering a five year interest rate at less than their current variable rate. This was quite a unique occurrence.
What it told me was that competition is heating up as available funds for mortgages increase once again. They hope to lock-in some of the vast numbers of variable rate borrowers before central bank rates are reduced.
This could be good news for both Buyers and Vendors.
Buyers will be encouraged to upgrade their lifestyles as mortgage payments become more affordable. They will also want to get into the market before the next round of property price increases arrive in the GTA. (The global recession may delay this for a while.)
Many homeowners will enjoy the extra amount of principal paid down from lower variable rate mortgage interest. Also, more Buyers will mean less pressure to reduce prices.
Of course, the financial sector isn't going to want lower interest rates, but hopefully there will be enough demand for lower cost funds that they will be forced into creating a competitive market.
However, if unforeseen circumstances push rates up, then there will be a shortage of Buyers in the market. This would force property prices down.
So, there is less upside and a small downside in this market. "He who hesitates&ldots; ?"
We don't use tele-marketers! Please call us!
"LONG LISTINGS RISKY?"
Ever notice my competitors' "For Sale" signs on lawns for weeks and weeks and months and months? This may be great advertising for the realtors, but what about the Vendors?
My recent analysis of a local neighborhood's real estate sales really surprised me!
I already knew that 1/3 of my competitor's listings were not sold during the original listing period, whether it was listed for 60 days or even 180 days!
It didn't surprise me to learn that 25% of the "Sold" properties took 60 days or more to sell. But this means that only 42% sell in less than 60 days.
I know that my average time to sell most homes is only 21 days, so my marketing programmes are usually very effective.
But what really surprised me was how much it cost the Vendors in time and in dollars who didn't sell within 60 days!
The average time to sell properties on the market more than 60 days was 130 days in 2006! This four months on the market represents a major inconvenience to those homeowners.
But, even worse was the prices they got! The average discount from list price for the homes sold within 59 days was 3.3%. However, the homes that took 60 days or more to sell had an average discount of 9.9%!
("No wonder I think Vendors who list with discount realtors are making a huge mistake!")
For the faster selling homes, the average discount from list price was about $21k, but for the slower sellers it was a whopping $66,000!
There are likely several reasons for these huge differences in the data.
These slow sellers all had at least one price reduction before they sold, so they were most likely over-priced from the outset.
Also, the smaller neighborhood of just under 1000 homes that I was analyzing may not represent all the homes in the local markets. There were only 24 sales in the first 10 months. (I will do a larger area in my analyses when the full year's data is in.)
But the fact remains that these properties, (or agents?), significantly under-performed in the minds and expectations of their owners.
MLS regulations require Vendors to list for at least 60 days. My thinking is that if I can't sell your property within 90 days then you should be free to work with someone else.
This gives me lots of time to bridge short-term market slowdowns and to try different marketing strategies.
From time to time, I get calls from Vendors who haven't sold in less than 60 days. (They have seen my listings come and go.) But, I can't help them because they listed for 120, 150 or even 180 days with their representative!
Many times, I've seen Vendors "fire" their agents and their listings become "suspended" on the MLS. But, I can't show these properties to my buyers until the full listing period expires!
Since we have entered a "Buyer's Market", it is crucial that you have the best possible marketer for your listing. So, it may be prudent to only sign up for 60 or 90-day periods in case you are forced to change realtors.
Also, be sure your realtor explains to you the special kinds of marketing techniques they will employ in this unique marketplace.
Why not begin by calling Jim Reid or Lou Recine?
Office: (905) 731-2000
E-Mail: rpms@sympatico.ca