Get Salem Real Estate Blog
Dec 11 2013

A real estate ruckus.

Within the ever swirling controversy that is the real estate industry, new seismic activity is happening.  A real estate earthquake is approaching. Agent Match.

What is Agent Match?  Just like it sounds. A way to match an agent with a consumer.  This isn’t a new concept.  Realtor.com is one of the top four consumer visited websites for real estate.  Zillow and Trulia are #1 and #2 respectively. There are several agent ranking or matching websites out there right now.  Most of them are horrible.  Seriously, as a consumer they are useless to you because the source of their data is bad.  Realtor.com which gets its data directly from a MLS has an incredible advantage. None of these other sites can compete with the access to data that Realtor.com has.

What kind of data are we talking about?

Redfin tried putting agent sales on their website for consumers a couple of years ago, but quickly pulled it due to MLS data issues.  Trulia entered this space earlier this year by allowing agents to manually enter transactions under their profile.  They could track your listings based on homes you advertised on their site, but homes sold as a buyer agent had to be manually entered. Zillow has entered this space recently as well.  You will start to see an agents sold homes appear if they are a listing and/or buyer agent on these two sites.   Consumers take note that agents have to manually enter this data so you will likely not see lifetime sales, but the past years data is still helpful I think.

Consumers have been asking for this data so Zillow and Trulia have obliged.  Zillow has taken a commanding lead in the real estate net world, so it wasn’t surprising that Realtor.com was going to jump into the fray with Agent Match.

Realtor.com has been doing some trials with a consumer-to-REALTOR® matching system based on neighborhood home sales, list to close ratios, days on the market, and probably some other stats.  These trials have caused a real estate ruckus because essentially it takes a whole being of a real person, and turns them into an algorithm.  Not a pleasant thought.   Hence the outrage by REALTORS®.

EquationsReal Estate Data Interpreted

List to sales price has always had issues.  The reason is because many MLS’s run their list to sales price information based on the list price at the time the offer came in which may or may not be the original list price.   You can calculate original list price to sales price, but most data isn’t crunched that way.  With Realtor.com’s access to the direct MLS feeds, they could crunch this information.    This seems like it would be a good number for potential home sellers to have as it would indicate how good of a job an agent does on their pricing.  While this might be true, it is also an indication of agents that are willing to overprice at their sellers request.  So sellers that want to test the market with an agent that agrees to do so, will impact the stats of that agent.  So, a potential consequence of putting this statistic online for all consumers to see, is for agents to walk away from these kinds of listings.  Once these statistics go online, they will impact an agents ability to generate business for better or for worse.  So sellers, if you want to have agents that willingly allow you to test the market, take note that this statistic being online or part of an equation, may remove that as an option for you.

Another issue with this data is the basic math.  Some agents price on the lower side to drive up multiple offers.  Some price higher and come down, but all that matters is the net to the seller.  So under the currently used algorithms, an agent that prices a home at $200,000, gets three offers, and ends at $215,000 gets to have the stat of 107.5% of list.   Who wouldn’t want an agent that can do that?  It looks like they are great negotiators, and get their clients more money, right? BUT the agent that prices at $235,000 for the same house, gets one offer, and gets $230,000 looks worse on paper.  Why?  Unfortunately the math equation doesn’t work in their favor as they get 97.9% of list in their ranking profile, yet they got their client $15,000 more.  So who is the better agent?

Days on the market.  This is another common statistic for how long a listing sits on the market.  Again, agents will be reluctant to let sellers test the market knowing that it will negatively impact this statistic, and make them look less than adequate in the algorithm.   Transparency of this statistic will also impact those of you with unique properties.  I have a unique listing that should close soon, but spent 1200+ days on the market.  You can see where I am going with this, right?  That stat will kill my days on the market statistic because it is so grossly disproportionate to a typical property.   I knew taking the listing that it would sell in one week or five years.  I just had to wait, patiently, for the buyer to enter the market.  So, sellers of unique properties beware. In putting this stat online, you may find it hard to find a listing agent.  Without the ability to cull outliers from the data, it presents agents with a conundrum.  Protect your algorithm or take the listing and watch your rankings drop.

Home sales.  This seems like it should be straightforward, but this statistic creates complications.  Some agents work in teams where just the team leader gets the credit for the home sale.  The #1 agent in Salem (my city) has a team of 8-10 people.  So it isn’t that the one agents closes that many transactions. Their team does. This issue is what caused problems for Redfin in their earlier attempt.  This statistic will create problems for people that work in teams.  There are people in teams all over the U.S. that do a lot of transactions, but you would never know it as a consumer because their name isn’t associated with the sale of the property on the MLS.  So, what does it mean for those agents?  Agents that have been around for 10 years with no transactions look bad in the algorithm, but the algorithm doesn’t know they closed 400 during that time. These stats may kill off the real estate team concept.

best_awardSo here is the deal consumers.  You want the data.  You will get it whether agents want you to have it or not.  It will happen because you want it, but there may be some unintended consequences for sellers.  I just encourage you to think about how that data is generated so you can interpret it to make a good decision for yourself.  I trust you enough to know that data is only one factor in your decision to hire an agent or not.  I know you know I’m not an equation.

My concern for you is simple.  You will have data that you think is transparent and helpful, but is fraught with issues.  As such, you won’t be making the informed decision you were hoping to make.   The seismic shift you were hoping to get in the real estate industry may be what you want, or you may end up with unintended consequences.  Like all changes, there will be winners and there will be losers.  Who ends up on what end remains to be seen.

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Jun 17 2013

Salem Home Sales Report May 2013

The Salem market made a swift turnaround, like many areas of the country.  In May, it was the best home sales (for single family homes) for three years and it was only eclipsed by the year that there was the tax credit deadline for June.    Spurred by low interest rates, a housing price bottom, and a reduction of foreclosures on the market, buyers dove in to buy homes.  The median home prices are up 15.5% year over year, but we will have to see if those gains hold all year as interest rates are expecte to creep up as the year continues.
Home prices for May 2013 in Salem Oregon
Inventory is lower than it has been in a while.  Salem overall is at 4.7 months of inventory, which places it in a seller’s market.  When you look at the data a bit more, you see where the really hot market is.  If you have a home under $200,000 to sell, there is only a 2.5 month inventory.  This makes sense as this price level is commensurate with Salem incomes.  These homes are flying off the market if they are in good condition and typically with multiple offers.

Between $200-$300,000 is 6.7 months.  This is the lowest this has been in a while because our starter home buyers are finally able to sell and move up.  $300-$400,000 is still in a solid buyer’s market with 10.6 months of inventory, and anything above $400,000 is well into a buyer’s market at 25 months of inventory.

Home Sales for May 2013 for Salem Oregon

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

These numbers were crunched from data supplied by the WVMLS.

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Mar 9 2013

It’s all about the shoes

Shoes.

They get worn soles, sometimes get hole infested, and sometimes turned into stink bombs beyond recovery (yeah teens, I’m talking to you).   They still need a place to call home.

Flip flops

 

 

Maybe your shoes are looking for a big deck with plenty of room for tables and a barbecue.   For when other flip flops might want to come over and visit and share in your newest recipe and favorite glass of wine.

 

shoes fence

 

 

 

 

Maybe your shoes are looking for a place to work hard.  Spend some time in the dirt, close to the earth.  A place where they don’t have to have another pair of shoes right next door only five feet away. Some shoes like a lot of space.  boots after a match 2

Maybe your shoes need a lot of green grass to kick around a soccer ball when we get our sunny days and warm weather.  A place for your cleats to dig in and get some work.

 

If you have shoes that are thinking they might need a home, I know someone that helps with that.  She wears these shoes.  Some people just have crazy cool shoes. shoes

I’d like to welcome an agent to my company, Summer Pommier.  If you see some great shoes walking around town, it might be her.

Summer has a MSW and has a passion for old homes and cool shoes.  I’m a little jealous of her antique purses and cameras too.

If you are trying to find a house that is as comfortable as an old shoe, Summer would be happy to talk to you.  She has this shoe thing covered.

Welcome Summer.
Summer Pommier

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Feb 21 2013

To the trees…

Any of you that read local blogs know that we have a very active blogger that is a bike lover.  The Breakfast on Bikes blog has great local information about everything related to the city and alternative transportation, especially bike use.   Personally, I am excited that we have such local advocates for bike friendliness, since that is becoming more important to people as we try and cut emissions.  Yeah, I know I’m a bit of a hypocrite since I’m an agent that drives around in their car all day long for work. BUT…doesn’t mean I can’t love it for times that I don’t have to drive.

BIke parking in trees

Breakfast on Bikes has written 48 posts about bike parking, and our serious lack of it, in our city.  While I was out house hunting with a buyer the other day, I saw a “unique vision” that I just had to share.  Really, it solves all of our problems because while we don’t have spots for cars or bikes downtown, we do have trees.

Seriously.  Tree parking.  Who knew?

Now, we might not have road space, but c’mon, this is Oregon!  We have trees. Lots of trees.

As I saw this vision of “awesomeness” I couldn’t help but think “wow, we could be the only city in America where we park our bikes in the trees.  Bet they don’t even do that in bumpkin country.  Salem could really stand out!”

We have those gorgeous cherry trees at the mall, but let’s face it, after the blossoms drop, eh…they are just boring.  We could brighten up the Capitol Mall with maybe a brightly colored Schwinn or for those of you that race, a Torelli.

 

BikesinTrees

Now I realize that my idea may be a bit unconventional, but desperate times call for desperate measures.  I mean what is a parent to do when your kid wants to ride his Radio Flyer all over town, and then jump and play in the mall fountain.


Now I know that the Swiss are all modern and high techie with their ideas, but clever designs?  Hello, this is Salem.  Boston has their Hubway, but clever names don’t cut it, either.  Salem needs to make its own mark, and we can be inspired by one of our own.

Portland move aside.  It’s Salem’s turn.

Take to the trees.

 

End Note: Just in case there is someone out there sarcastically challenged…please don’t put bikes in our trees.

 

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Feb 14 2013

The State O’ Religion

I have been asked numerous times if Oregon, in particular Salem, is a place that atheists can live without being judged.  Salem is considered to be more moderate to our more liberal leaning neighbors of Portland and Eugene.  One of the nice things about Oregon is that is has a “to each his own” kind of attitude about many things, religion is one of them.  You typically won’t see people preaching on the street about your eminent demise if you don’t believe in God.   People go on about their daily business with the ability to be whom they are.

Where does my rambling lead?  The Gallup Poll just released their data on “How Religious is your state?
For anyone that has lived in Oregon for any length of time, you will know that Oregonians, while often spiritual, don’t often classify themselves as highly religious.

The most religious states were in the Bible belt, and it keeps its well deserved name.  Oregon was 45th out of 50 states.  The least religious states were:

  • Vermont at 17%
  • New Hampshire at 23%
  • Maine at 24%
  • Massachusetts at 27%
  • Rhode Island at 29%
  • Oregon at 29%

Don’t worry if you are a regular church attendee.  There are ample places to practice your religion in Salem for varying religion from Catholic, Lutheran, non-denominational Christian, Latter Day Saints,  to Jewish, Islam, Sikh, et al.  Just know that Oregon is home to a lot of different people with a lot of different ways of thinking and all are welcome.

For those of you interested, they have an interactive map on their site.

 

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Feb 2 2013

The Box o’Homes

The cutting edge.

Back in the days of chisel and stone, yeah some of you remember those days, there was paper.  Lots of paper.  These were before my days in real estate, but a long time ago, in a land nearby, real estate agents didn’t have the internet.  There was no way for a consumer to sit and flip through images and find that perfect house. They were reliant on agents to help find homes.  Literally.

MLS cards

Agents had boxes of homes.  Yeah, you heard that right…boxes.  Homes were on index cards with one not at all helpful black and white image.   As new homes came on the market, a new card was created.  Home searching literally took on a whole new meaning as it was the job of an agent to literally help you find homes in their box o’homes.   No slick filters for wood fireplace or gas heat.  The only filters were the ones created on the tabs by agents. Want a house with a view, wood fireplace, central air, and a large lot?  Yeah…good luck filtering that in the box o’homes.

Then real estate became really high tech and came out with books.

MLS book

Printed every two weeks, these books “streamlined” the process for agents, making it easier to try and find homes for buyers.

I think I would need to don my detective hat in order to hide my need for a magnifying class to read this thing. Thankfully this was before my time.  I’m spoiled that way.

For those agents that were tech revolutionaries  there was the Texas Instruments Silent 700 tele data printer. With thermal paper that smudged the minute you touched it, and faded if you let sunlight touch the paper for more than three seconds.  I remember thermal paper from college printers.  This was for agents that wanted to get listings the minute they “hit” the MLS.  Otherwise, it could be two an old MLS printerweeks before it hit the book.  As an iPad geek, I know I would have had one of these things if I was practicing real estate in 1978.  Love the rotary dial phone.   Ohhhh….ahhhh.

Needless to say, real estate is different these days.  The internet hunts, gathers, and pulls data together for all of us.  Real estate agents spend less time curating home sale content and more time curating a good customer service experience.   So the next time you get frustrated because a website shows a house as active, but it went under contract 24 hours before, just remember how far the industry has come.   It could be worse.  You could be digging through the box or book o’homes.

 

A special thanks to Jay Gordon, head honcho over at the WVMLS, for letting me share these images of his. Please don’t take them without asking Jay first.  He’s a nice guy.  He will probably say yes.

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Jan 30 2013

Salem Market Report

Phew.  Agents have been sweating the market filled with insane underwriters, oversupply, and distressed homeowners.  It hasn’t been easy for anyone.  The good news is that 2012 was better.  Not great mind you, as the economy is still struggling, but real estate agents working the Salem area finally took a collective breath and said “about time.”

Salem Oregon Average Home Prices

Home prices were still down in 2012 over 2011, but it was only a 1.3% drop.  The 3rd and 4th quarters saw an increase in activity that helped to pull home prices up and a nice burst in sales.

Assuming the economy continues at its slow pace with no big impacts from bond markets and such, home prices in Salem will likely increase by a couple of percent in 2013.

Salem Oregon homes sold in 2012

The number of homes sold really tells the story as this was the best sales year since 2007.

There was a 14.8% increase in home sales in 2012 over 2011.   That is a huge surge that was brought on by insanely low interest rates and a perception that home prices were pretty much at bottom.  Affordability for buyers was really good in 2012.

So while all seems good, inventory, as of this moment is still favoring buyers.  Salem had been hovering around 7 months in the 4th quarter.  With buyers backing out over the holidays and new listings coming up with the improved market, Salem right now has 10.24 months of inventory.  That is a solid buyers market.  I would expect that number to inch closer to neutral as we near the spring, but the improving numbers could cause many sellers to dive into the market.  We still have an oversupply of homes, but some neighborhoods and some market segments lack good supply.

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Jan 21 2013

Keizer Market Report

It’s that time of year.  Mid-January gives agents a chance to get all of their sold data into our local MLS so we can run some data and see where the year ended.  The 4th quarter in real estate in most of the Salem metro cities was brisk, well in comparison to recent years anyway.  There were many happy agents as the year ended better than it started.

EOY Listings sold Keizer

 

Home sales were up 22% over 2011.  We could tell. It was much more common to have multiple offers on homes, and verifying the availability of a property before showing it was once again a smart move.

In the past few years, agents could wait a few days before setting up showings, but with the inventory actually selling, this is no longer the case.

 

So what did this spike in home sales do for our overall sales prices?

Home sales in Keizer

They were still down, technically, but 0.6% is not significant and in fact is great.  At the midpoint in the year, Keizer was down 5.94%.  Home prices increased in the third and fourth quarters to bring that median drop up to a mere 0.6% drop for the year overall.    Keizer is chugging along so well right now that they are heading towards a sellers market.  With a mere 4.79 months of inventory on the market, that is a market that favors sellers, just barely.

My best guess for Keizer real estate for 2013 is home price increases in the 2-4% range.   Yep.  Really.  Home prices should increase in Keizer this year.

Note: data was crunched from data provided by the WVMLS for 2012 single family properties with one acre or less.

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Sep 6 2012

Take that

Take that!

No, I’m not talking about the British boy band.

In a complete in-your-face move, Bend agent Kip Lohr, came out with his “3 Beats 6″ business model.    What is that?  He is no longer offering buyer agent compensation to buyer’s agents.  He strictly charges his sellers a listing fee, and buyer’s need to pay their agents directly for representation.  Got that?  He will no longer charger a higher listing fee and then share a part of that fee with buyer agents.

Bold move.

Sure to get serious pushback, I have no doubt that he is in for a bumpy future and probably some nasty emails.  So is this a smart business decision?  Is this what consumers are wanting?  You tell me.

The reason listing agents pay buyer agents is a relic from the past.   A long time ago, all agents worked for the seller.  There was the listing agent, and then the “buyer agent” was a sub-agent who represented the seller.  As the industry shifted, and consumers demanded, the concept of strict buyer agency came into play in the 1990′s.  The problem is that the MLS system of cooperation wasn’t designed for independent representation like that, but that is the system that we had.  So agents worked around it and the current system, where for the most part, listing agents pay buyer agents, stayed.

I think most agents would prefer that buyers pay their agents directly and sellers pay their agents directly.  Really, when you think about it, it makes little sense for a seller to pay for a buyer agent to write a low offer against their property, dicker with them on repairs, and then pay a buyer agent a large sum for the privilege of hammering them in negotiations.   I am sure you can see why sellers are upset with this system.  Some buyers question their buyer agent’s loyalties since they are being paid by the dark seller side.

So in an effort to stop the nonsense, Kip decided to take action himself.  While I admire Kip for throwing this out there, he has some significant issues that will make this model difficult.   First, lenders like VA  won’t allow buyer’s to pay buyer agent fees.  They have “allowable” closing costs that our military men and women can pay, and agent fees isn’t one of them.  So for agents that represent a lot of military, it means always having to negotiate the fee into the seller side of closing.  Those fees cannot appear on the buyer side on the HUD-1 statement.   As we do not negotiate real estate fees in our purchase and sale agreements, this means a separate side agreement between the buyer agent and the seller.

Second, lenders have a cap on closing costs.  So looking at FHA for example, the maximum allowable closing costs to be paid by the buyer is 6%.  Closing costs without buyer agent fees run around 4.5%.  That would only leave around 1.5% to cover any buyer agent fees.  That will be problematic for most agents as FHA homes tend to be first time home buyers that often just have their downpayment plus a little bit more for closing costs.  I can’t think of a single FHA buyer, in my 9 years as an agent, that could have paid a full 6% in closing costs, plus the 3.5% down payment.  So this means, once again, that in order to make the transaction work, the buyer agent would have to have a side agreement with the seller for any shortfalls.  Considering 19% of our local market is FHA buyers, it makes little sense to eliminate this pool of buyers as prospects to buy your home.

Third, most buyers would prefer to wrap the costs of representation into their mortgage.  Buying a home is expensive with packing, moving, and if you are a first timer, buying things like a lawn mower.  Having to spend a lot of money on representation out of pocket isn’t doable for many home buyers.    With the cap of 6% in closing costs for almost all loans,  it just isn’t a realistic financial model for most home buyers.

Fourth, real estate agents aren’t bold enough.  Good buyer agents are already in the industry.  Good buyer agents are advisors, guides, consultants, whatever you want to call them.  Door openers and paperwork pushers aren’t good buyer agents but they get the job done.  Most buyers spend more time deciding what type of toothpaste they want to buy than they spend interviewing and picking a buyer agent.   Right now, the system allows for buyers to just go with a nice agent because the service is “free.”  They don’t have huge expectations.  When agents are forced to sit down and explain their monetary value to clients, they have to convince people that they are more than nice.  They have to convince buyers that they are good at what they do and that they are worth it.  Maybe L’Oreal could offer bulk rates for their hair products for real estate agents.  Most agents aren’t confident enough to sit down and say “because I’m worth it.”  It will be easier to trash Kip’s business model, than it will be to sit down and decide what they are worth, and then PROVE IT to consumers.

Despite the ire that this will stir in the real estate industry, I think it is short lived.  I appreciate Kip’s philosophical stance, but the reality is that the real estate system with lenders is based on the antiquated methods of paying for representation via the seller.  Because of this, his idea, while bold, will fail over the course of time unless the lenders agree to change their policies and structure to allow for independent representation.

Thesa Chambers, a Bend real estate agent wrote her opinion as well.

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Jul 31 2012

A tour of Salem Oregon

One of the things I have been working hard on this year is redoing my videos on my website.  I decided to go a totally different direction and my first one is done.  Jeff and Ashley with Silverman Studios did my first video and I’m excited to share it with you all.    So, here is my video about Salem Oregon.  I’d love your thoughts in the comment section.  The music is from Oregon local band, Rootdown. Their music is great, in my opinion, and you should head over to the Rootdown website to listen and buy some.

 

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