National Expert's Market Report, Part 1

Most consumers are concerned about understanding our changing real estate market and what that might mean for a potential purchase or sale. One of the top real estate economists shares his insights in an article posted on the National Association of Realtors website, and I am providing that article for your review in two parts. The second half of the article will be posted next week.


Home Prices Correcting, Buyers Returning to the Market
WASHINGTON, October 11, 2006 - Home sales appear to be bottoming out with lower home prices attracting buyers in many areas of the country, according to the National Association of Realtors.

David Lereah, NAR’s chief economist, said the housing market is showing signs of life and that sales may be leveling out. “Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,” he said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”

Existing-home sales are forecast to be fairly stable in the fourth quarter and sales for all of 2006 are expected to drop 8.9 percent to 6.45 million – still the third strongest year after consecutive records in 2004 and 2005. New-home sales are forecast to fall 17.3 percent this year to 1.06 million, the fourth highest year on record. Housing starts should be down 10.9 percent to 1.84 million in 2006.
With a recent correction in the market, the national median existing-home price is likely to rise 1.6 percent to $223,000 for all of 2006; it’s anticipated prices will remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 – largely the result of builder price cuts to move unsold inventory.

Consumer Survey On Agent Ads

It seems that everywhere we look, there are agent ads vying for our attention. Shopping carts, busses, billboards, sides of cars, moving vans, and what's next. So I'm just curious about how you view all these giant agent photos plastered all over? Do you see an agent billboard and say to yourself, "Check it out! I think when I'm ready to buy/sell I'll call that agent"? Or do you see yet another billboard or moving van agent ad and say, "Not another one! When will these agents learn that the whole world doesn't revolve around them"? Do claims of honesty and integrity on ads impress you and make you want to call that agent? When you see a sign rider that says "Area Expert" on it, does that make you want to call? Do you think we need more agent ads in publications or less? When you look at real estate ads, what does make you want to call a particular agent or company? Take a moment to share your thoughts by posting a comment.

What is an "AS IS" Sale?

If you ask five people what it means to sell a property "AS IS", then you'll probably get five different answers. Even within the real estate industry, the term "AS IS" gets used differently by loan agents, underwriters, and agents. So what does it really mean when a Buyer makes an "AS IS" offer or accepts an "AS IS" counter offer? For a lender or underwriter, this means that no repairs of any kind need to be made by a Seller and no inspection reports need to be furnished by the Seller to satisfy the terms of the contract. This is typically the way investors purchase properties that would otherwise need repairs to be completed in order to close escrow. For a Seller, an "AS IS" offer means that they are not obligated to make any repairs for the Buyer. Sellers still need to make all disclosures including all material facts about the property to the Buyer. Buyers can have any and all inspections they deem of importance on the property even though it is being purchased "AS IS". Here's where it gets tricky. Some Sellers have the notion that since it is "AS IS" that the Buyer must complete the purchase no matter what they find during these inspections. Sellers also expect that Buyers will not even think of asking for any repairs on an "AS IS" purchase. Both these notions are not correct. If a Buyer finds conditions they deem unacceptable during the inspection process, they can cancel the contract to purchase with cause or ask the Seller to perform repairs to that unacceptable condition. So then what good does it do to have an "AS IS" clause in the contract if the Buyer can still ask for repairs? The "AS IS" clause actually benefits the Seller, because it releaves them of any obligation to make the requested repairs. But Sellers have to realize that if they do refuse to make any repairs, the Buyer may elect to cancel the purchase agreement. In actuality, in California, with the exception of wood destroying pest repairs, all purhase agreements are "AS IS" agreements unless the Buyer asks at the time they make the offer for the Seller to take corrective actions on known conditions. An example of this would be asking a Seller to clean or replace soiled or worn carpeting or to provide a two year roof certification. I recommend that any homeowner serious about selling their home hire their own termite and home inspector so that they are aware of any dificiencies in the property before they accept an offer from a Buyer. This way the Seller can anticipate the costs of repairs that potential Buyers may request the Seller make to the property. Sellers are obligated to furnishes copies of any such inspection reports to Buyers once a contract has been ratified. Some agents, myself included, recommend making the reports available to prospective purchasers before they even make an offer. In this way, you can weed out the prospects who find the conditions unacceptable from the outset.

Can I Trust My Zestimate?

For those who spend time on the net, you no doubt have found several sources that promise free estimates of value for your property. House Values is one company that spends lots of ad dollars to drive you to their site to ask for a free estimate. Zillow is another company that made a big market splash as well. The difference between a Zillow and other companies like House Values is that Zillow is fully automated and instantaneous. So the question then is how accurate will your "Zestimate" be. Zillow allows for a 10% margin of error up or down. That's quite a large price gap if you really need accurate pricing for your property. And because no realtor or appraiser actually participates in the process, many of the comparables used are not truly comparables. Companies like House Values do a little better because they do submit your request to a licensed real estate agent to provide comparable sales data. The problem with these type companies is that agents pay a subscription fee to receive leads (that's what you are once you request a free estimate). The agent that you get assigned to may not even have any experience in the area where your property is located, and they teach their agents to give you a really wide price range so that you have to request a more in depth analysis in order to get the information you need. That way they hope to get an appointment, and you as a client. Is there a better way to get a free estimate of value that is accurate and dependable? The best way to be sure your estimate is as accurate as possible would be to develop a relationship with a local realtor familiar with your area. Most reputable agents are always willing to assist you with an estimate of value at no charge and to consult with you regarding any real estate related matters. If you are searching for such an agent, please visit my personal website to review my agent profile (http://www.janicespencer.com) or visit my office website to see a roster of our agents along with their website information (http://www.windermeresignaturecollection.com).