Everyone likes to have their work validated, even indirectly. A new website for the investment industry uses my market reporting methodology-- the change in Sold Average Square Foot Price-- as their means to compare price appreciation in local housing markets. Charlotte ranks 2nd in growth nationally according to Radar Logic,11.3%, growth in the Sold Average Cost per square foot. (cps)Radar Logic is a tech company serving the investment banking industry.
For some time I've had issues with the Carolina MLS's regular reporting and the Charlotte Observer's regular coverage of the monthly median price index. It offers little in statistical meaning because it doesn't adjust for changes in average square foot of homes sold, so if one month people buy homes that average 50 sf larger than the year before, there is no meaningful comparison of price. That's why our market reports vary from theirs; our numbers here and for our clients are always based on the average cost per square foot of the sold property. SOLD COST PER SQUARE FOOT! And it isn't hard to figure, it's a mathematical process called division.
Here is the Radar Logic view, "The price per square foot metric provides a powerful tool to analyze housing markets because it significantly reduces the influence of property sizes on overall housing prices that can skew results."
Couldn't say it any better.
Showing posts with label transparent real estate. Show all posts
Showing posts with label transparent real estate. Show all posts
Monday, October 08, 2007
Monday, October 01, 2007
Buyer Agent Bonuses and Other Mistakes
Yes I've accepted them in the past. No, I can't accept them in the future. Why? Well you have to ask, who am I representing? I'm representing Buyers. If a Seller is paying me a bonus, what is he paying a bonus for? In other words, what's his motivation? And if its OK to accept a small bonus, when is that bonus too big? I wrote this post about a $50,000 Buyer Agent bonus last month that just put me over the edge. Then the article in today's Observer. Thought they could be abused, and they were.
Now let me point out right away I have never sold a home because of a bonus. I never wanted to hear a customer say you sold me this home because of the bonus. In almost every case I disclosed the bonus. But not every case. And it did adjust the playing field once-- a Centex home with a 10K bonus worked its way onto the View list. I remember selecting it for the View list along with about 10 others, out of 30 or so...
The buyers bought this house, not at my suggestion, but inspite of a lot of things. The bonus was nice, I could justify it because Centex dropped the price to my buyer by 35K or so-- but still, how much do my customers have to pay for my services?
And they did pay for the enire commision, within the sales price of the home, didn't they? Anyone doubt I could have negotiated a 10k price reduction giving up the bonus?
So- if there is a Buyer Agent Bonus what will we do? Pay it to our buyers, either in reduced sales price or rebate. There can be no other answer- because even a small bonus may distort the playing field.
We either represent the Buyer's interests alone, or we represent someone else. I choose the Buyer.
Now let me point out right away I have never sold a home because of a bonus. I never wanted to hear a customer say you sold me this home because of the bonus. In almost every case I disclosed the bonus. But not every case. And it did adjust the playing field once-- a Centex home with a 10K bonus worked its way onto the View list. I remember selecting it for the View list along with about 10 others, out of 30 or so...
The buyers bought this house, not at my suggestion, but inspite of a lot of things. The bonus was nice, I could justify it because Centex dropped the price to my buyer by 35K or so-- but still, how much do my customers have to pay for my services?
And they did pay for the enire commision, within the sales price of the home, didn't they? Anyone doubt I could have negotiated a 10k price reduction giving up the bonus?
So- if there is a Buyer Agent Bonus what will we do? Pay it to our buyers, either in reduced sales price or rebate. There can be no other answer- because even a small bonus may distort the playing field.
We either represent the Buyer's interests alone, or we represent someone else. I choose the Buyer.
Monday, September 24, 2007
Carolina MLS DOM: Delibarately BAD
Breaking Down The Carolina MLS Numbers, first of at least two post.
Well after quite a number of tries, I was able to duplicate the results for the MLS August press release with one exception, Days on Market... that's not surprising since Days on Market, DOM, is a meaningless statistic the way Carolina Home computes it.
This is first in a series on our local MLS and will be included in the transparent real estate section of the blog- in this post I examine how the Carolina MLS and the DOM numbers are deliberately inaccurate and how they work against buyers and their agents.
Good agents and brokers use the MLS daily and it is generally a very reliable source of data- a truth teller for the property, and a truth teller for the market. It needs to be because customers depend on it... we send them "Customer Full Reports" in their email every day. They can and frequently do compare properties side by side for features and square foot for square foot. Accuracy is so important, an Agent or Broker can be sued for knowingly putting in false information, and censured by the real estate commission for accidentally putting in false information.
So why isn't MLS's Days on Market accurate? And why did I say deliberately above? You be the judge.
For the Carolina MLS, and many, but not all MLS across the country, the Days on Market given by the MLS don't start necessarily when the house first went on the market. DOM is often an indicator of seller motivation and the general health of the market. A seller with a DOM of 200 is more likely to take a lower offer than one with a DOM of 5, wouldn't you think? That might be important information to have when considering how much to offer, wouldn't it? But what if the reverse were true? That DOM 5 was actually over a year old, could you miss making an offer here? Yes you could and the truth is client or agent don't know from our MLS reports. Interestingly, the inaccurate DOM does not appear on the "Customer Full Report" only on the "Agent Full Report"
As an aside, I spoke to our MLS today, asking how they arrived at their DOM reported in their last Press Release? I was told by their Data base manager that the "Numbers were flaky from the start." Back to the customers...
Customers frequently ask, "How many days has it been on the market?" We refer to the Agent Full Report and tell them. And it may not be correct at all. How is that so? Well in the example above, in the Carolina MLS, the DOM 5 could have been on the market much longer than the DOM 200. Say that again? Thats right, the DOM 5 could have been on the market longer, because the way CMLS measures it, it is from the last Listing Date, not the original listing date. In the example above, the DOM 5 listing could have been on the market for one year, 365 days, then fired their first agent. A day later they re-listed with a new agent. Presto, new listing date (latest listing date) and a brand new DOM, 4 days later we (buyer and buyer agent) are reviewing and it says DOM 5. Can we research this and find the true answer? Yes, but again, why is this Wrong answer on the MLS Sheet WE strive so hard to make accurate?
Two additional questions: Why isn't DOM on the "Customer Full Report"? and Why do they measure it from the last listing date, instead of the first, like so many other MLS's do? In the example above, the Listing Date and DOM should have been taken from the first listing date, not the last, for accurate DOM.
Why? It is figured from the last List date on the MLS to yield the smallest (DOM) number to protect Sellers. It not being on the Customer Full Report protects the MLS from liability, and in the process they leave us Buyer Agents liable. What? We're liable as Agents when the MLS printed the info? Yes because we tell the customer the DOM from the Agent Full Report. That means the liability is with us, if we don't also explain every time we say "DOM is 20, but that number doesn't mean much I'll research it." They then ask why it doesn't mean much...
Then after explaining why this number is not to be trusted, the customer then asks, which other numbers can not be trusted? It happened to me this past month, just this way working with an astute California couple moving to Charlotte. He pointed out to me the differences and asked the same questions I am trying to answer here.
I think it is clear-- Days on market should be from the first listing date- as I understand in California if its re-listed within 30 days it is the same listing. And I think it should be on the Customer Full Report-- no reason to hide it and set up an inexperienced agent to mislead his client by not doing his homework.
What other numbers on your MLS are hidden from the customer? What other numbers do the MLS use to favor sellers? Ah the subject of my next post. There is a movement nationwide towards transparent real estate, I'm getting on board because transparent real estate is better real estate.
And its been this way forever? Do you think they don't know the DOM numbers are bad?
I knew you were a smart crowd! :)
Well after quite a number of tries, I was able to duplicate the results for the MLS August press release with one exception, Days on Market... that's not surprising since Days on Market, DOM, is a meaningless statistic the way Carolina Home computes it.
This is first in a series on our local MLS and will be included in the transparent real estate section of the blog- in this post I examine how the Carolina MLS and the DOM numbers are deliberately inaccurate and how they work against buyers and their agents.
Good agents and brokers use the MLS daily and it is generally a very reliable source of data- a truth teller for the property, and a truth teller for the market. It needs to be because customers depend on it... we send them "Customer Full Reports" in their email every day. They can and frequently do compare properties side by side for features and square foot for square foot. Accuracy is so important, an Agent or Broker can be sued for knowingly putting in false information, and censured by the real estate commission for accidentally putting in false information.
So why isn't MLS's Days on Market accurate? And why did I say deliberately above? You be the judge.
For the Carolina MLS, and many, but not all MLS across the country, the Days on Market given by the MLS don't start necessarily when the house first went on the market. DOM is often an indicator of seller motivation and the general health of the market. A seller with a DOM of 200 is more likely to take a lower offer than one with a DOM of 5, wouldn't you think? That might be important information to have when considering how much to offer, wouldn't it? But what if the reverse were true? That DOM 5 was actually over a year old, could you miss making an offer here? Yes you could and the truth is client or agent don't know from our MLS reports. Interestingly, the inaccurate DOM does not appear on the "Customer Full Report" only on the "Agent Full Report"
As an aside, I spoke to our MLS today, asking how they arrived at their DOM reported in their last Press Release? I was told by their Data base manager that the "Numbers were flaky from the start." Back to the customers...
Customers frequently ask, "How many days has it been on the market?" We refer to the Agent Full Report and tell them. And it may not be correct at all. How is that so? Well in the example above, in the Carolina MLS, the DOM 5 could have been on the market much longer than the DOM 200. Say that again? Thats right, the DOM 5 could have been on the market longer, because the way CMLS measures it, it is from the last Listing Date, not the original listing date. In the example above, the DOM 5 listing could have been on the market for one year, 365 days, then fired their first agent. A day later they re-listed with a new agent. Presto, new listing date (latest listing date) and a brand new DOM, 4 days later we (buyer and buyer agent) are reviewing and it says DOM 5. Can we research this and find the true answer? Yes, but again, why is this Wrong answer on the MLS Sheet WE strive so hard to make accurate?
Two additional questions: Why isn't DOM on the "Customer Full Report"? and Why do they measure it from the last listing date, instead of the first, like so many other MLS's do? In the example above, the Listing Date and DOM should have been taken from the first listing date, not the last, for accurate DOM.
Why? It is figured from the last List date on the MLS to yield the smallest (DOM) number to protect Sellers. It not being on the Customer Full Report protects the MLS from liability, and in the process they leave us Buyer Agents liable. What? We're liable as Agents when the MLS printed the info? Yes because we tell the customer the DOM from the Agent Full Report. That means the liability is with us, if we don't also explain every time we say "DOM is 20, but that number doesn't mean much I'll research it." They then ask why it doesn't mean much...
Then after explaining why this number is not to be trusted, the customer then asks, which other numbers can not be trusted? It happened to me this past month, just this way working with an astute California couple moving to Charlotte. He pointed out to me the differences and asked the same questions I am trying to answer here.
I think it is clear-- Days on market should be from the first listing date- as I understand in California if its re-listed within 30 days it is the same listing. And I think it should be on the Customer Full Report-- no reason to hide it and set up an inexperienced agent to mislead his client by not doing his homework.
What other numbers on your MLS are hidden from the customer? What other numbers do the MLS use to favor sellers? Ah the subject of my next post. There is a movement nationwide towards transparent real estate, I'm getting on board because transparent real estate is better real estate.
And its been this way forever? Do you think they don't know the DOM numbers are bad?
I knew you were a smart crowd! :)
Saturday, September 15, 2007
August Market Report- 28031
Cornelius, NC, Lake Norman's capital city, still growing strong on the lower lake.
Again I think it is fundamentals at work here, same Lake Norman as Mooresville, but 25-30 minutes closer to Charlotte, in Meckenburg vs Iredell County and frankly better infrastructure to go with it (I can hear the howl now) and just better planning-kudos to city of Cornelius.
Their Realtors and sellers are a little wild in their Asking prices with ATS (Asking to Selling) index of 138-- but it doesn't seem to have affected sales or appreciation does it? This demonstrates the transparency of the resale market-- underlying value is what counts! Despite out of line asking prices (37% high!) sales continue with high appreciation rates, but no where near Asking. Why? Because buyers can tell the real value when they go there, and then online they can see what the homes should be selling for- and that is what they are offering. And then sellers come back to the real world too.
A genuine Days on Market stat would be telling here, as would a MLS sheet that showed price drops.
All data is derived from the Carolina MLS, but is not provided by the MLS
| Average | 2006 | 2007 | % Inc/dec |
| Cost per SF | $151.12 | $172.09 | 13.88 |
| # Solds | 56 | 56 | 0.00 |
| Aug-07 | Average Sales Price | $445,380 | |
| ATS | Index | 137.9 | |
| Months Inventory | 3.4 | ||
Again I think it is fundamentals at work here, same Lake Norman as Mooresville, but 25-30 minutes closer to Charlotte, in Meckenburg vs Iredell County and frankly better infrastructure to go with it (I can hear the howl now) and just better planning-kudos to city of Cornelius.
Their Realtors and sellers are a little wild in their Asking prices with ATS (Asking to Selling) index of 138-- but it doesn't seem to have affected sales or appreciation does it? This demonstrates the transparency of the resale market-- underlying value is what counts! Despite out of line asking prices (37% high!) sales continue with high appreciation rates, but no where near Asking. Why? Because buyers can tell the real value when they go there, and then online they can see what the homes should be selling for- and that is what they are offering. And then sellers come back to the real world too.
A genuine Days on Market stat would be telling here, as would a MLS sheet that showed price drops.
All data is derived from the Carolina MLS, but is not provided by the MLS
Tuesday, August 28, 2007
So How Much Is Enough? A $50,000 Buyer Bonus?
So how much is enough? Take a look at the flyer I received by email today. Suppose the home sells for 1.3M, that is a 39k Buyer Side-- plus 50K, 89K 6.8%-- not the 12% I've heard from AZ but still, loads of dough. Two questions, 1) Is it unethical to show this home even if you make your buyer aware of the agent bonus 2) As the LA, is it unethical to make this offer to increase showings... do you think it will increase showings? I do. The last question I have is a rhetorical one, with offers like this, is it any wonder that the Redfin's of the world want a peace of our business... or that they can suggest we are lazy bums not sufficiently motivated by 39k so they need to bribe us with 50K more?
$50,000 Selling Agent BONUS!
Did you know average price per square foot of waterfront homes in Cornelius is over $300 per square foot???
Offered At: $1,450,000
* Waterfront
* 3 Level Home
* Private Dock
* Year Round Deep Water
* 3 Car Garage
* Large Rec Room with Full Bar and Wine Room
* 5612 HLA with additional 700+ unfinished sq ft for another bedroom/bathroom
COMMENTS:
Custom built waterfront home in Cornelius is listed $300,000 below value(5,612 x 312=$1.75M)! Some agents have not shown this home because of it's proximity to I77. We are giving you 50,000 reasons to show it! This 3-year old custom home couldn't be rebuilt today for under $1,000,000! Just ask yourself - what would a half-acre waterfront lot, with a private dock/pier and deep water in Cornelius cost? $500k?, $600k? the average is $700k just for the land! Bring your buyer now for an unbelievable deal - plus a $50,000 BONUS!
Scarrier yet Zillow ranks us as the 3rd strongest market in the nation... yeow.
$50,000 Selling Agent BONUS!
Did you know average price per square foot of waterfront homes in Cornelius is over $300 per square foot???
Offered At: $1,450,000
* Waterfront
* 3 Level Home
* Private Dock
* Year Round Deep Water
* 3 Car Garage
* Large Rec Room with Full Bar and Wine Room
* 5612 HLA with additional 700+ unfinished sq ft for another bedroom/bathroom
COMMENTS:
Custom built waterfront home in Cornelius is listed $300,000 below value(5,612 x 312=$1.75M)! Some agents have not shown this home because of it's proximity to I77. We are giving you 50,000 reasons to show it! This 3-year old custom home couldn't be rebuilt today for under $1,000,000! Just ask yourself - what would a half-acre waterfront lot, with a private dock/pier and deep water in Cornelius cost? $500k?, $600k? the average is $700k just for the land! Bring your buyer now for an unbelievable deal - plus a $50,000 BONUS!
Scarrier yet Zillow ranks us as the 3rd strongest market in the nation... yeow.
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