Need a realtor to sell a home in this market?

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I Shrugged
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Need a realtor to sell a home in this market?

Post by I Shrugged » Tue Apr 13, 2021 1:18 pm

I'm a believer in using a realtor to sell.
Today, at this moment, I'm not sure I see the value.

We are planning to sell our main house. I could sell it on Facebook in 48 hours, I think.
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Re: Need a realtor to sell a home in this market?

Post by tomfoolery » Tue Apr 13, 2021 1:52 pm

Some thoughts based on my research into realtors:

The buyer may have a realtor who will expect to get a commission from you as the seller. Generally the seller pays a 6% commission, half to the selling agent, half to the buyer agent. So you’d only be saving half the commission without an agent unless you sell to a buyer who has no agent.

If you list the property as for sale by owner, most buying agents won’t take their clients there because they dislike that you decide to sell outside of their fiefdom. In this market though, it shouldn’t matter. There’s no houses for sale so the option a buyers agent has is to not show your house out of spite against FSBO, or not get any commission since there’s no houses to help their client buy.

Buying agents will do dirty tricks. That if you’re not familiar with, you’ll get screwed over. A sellers agent knows those tricks. If you’ve bought and sold a bunch of houses or researched this, you can probably figure most of them out for yourself. For example, putting an inspection contingency and then nickel and diming you, while your property is locked up under contract.

I would say, sell it to a cash buyer so there’s no financing risk. And sell it with no inspection contingency. As-is for cash. No buying agent commission paid. Hire a real estate attorney to handle the contract. There’s no houses for sale so you can do that.
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Re: Need a realtor to sell a home in this market?

Post by flyingpylon » Tue Apr 13, 2021 1:54 pm

The relative of an acquaintance of mine recently put their "nothing special" house in a suburb of Buffalo, NY on the market at $415k. Within 4 days they had 11 offers, 4 were all cash, and the accepted offer was $500k all cash with a quick close.

I really would like to see a breakdown of who is buying these homes and what they plan to do with them compared to more "normal" times.
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Re: Need a realtor to sell a home in this market?

Post by doodle » Tue Apr 13, 2021 2:19 pm

We keep rehashing real estate over and over here but no one talks about the hundreds of places in this country where housing hasn't gotten stupid expensive. There are places all over america that are completely affordable. Is there a reason why these places are being ignored?
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Re: Need a realtor to sell a home in this market?

Post by tomfoolery » Tue Apr 13, 2021 2:28 pm

doodle wrote:
Tue Apr 13, 2021 2:19 pm
We keep rehashing real estate over and over here but no one talks about the hundreds of places in this country where housing hasn't gotten stupid expensive. There are places all over america that are completely affordable. Is there a reason why these places are being ignored?
I keep hearing about these mythical places and no one has listed any specifics.
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Re: Need a realtor to sell a home in this market?

Post by whatchamacallit » Tue Apr 13, 2021 2:39 pm

flyingpylon wrote:
Tue Apr 13, 2021 1:54 pm
The relative of an acquaintance of mine recently put their "nothing special" house in a suburb of Buffalo, NY on the market at $415k. Within 4 days they had 11 offers, 4 were all cash, and the accepted offer was $500k all cash with a quick close.

I really would like to see a breakdown of who is buying these homes and what they plan to do with them compared to more "normal" times.
Wow. I would question whether you could pay me $500k to live in Buffalo NY for to long. Must be a nice suburb.
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Re: Need a realtor to sell a home in this market?

Post by doodle » Tue Apr 13, 2021 2:50 pm

tomfoolery wrote:
Tue Apr 13, 2021 2:28 pm
doodle wrote:
Tue Apr 13, 2021 2:19 pm
We keep rehashing real estate over and over here but no one talks about the hundreds of places in this country where housing hasn't gotten stupid expensive. There are places all over america that are completely affordable. Is there a reason why these places are being ignored?
I keep hearing about these mythical places and no one has listed any specifics.
Seriously???? There are literally hundreds of nice cities and towns in this country that are very affordable.

This one happens to be good enough for one of the richest men in America. But I'm sure you can think of many others that don't show up on the covers of travel magazines.

https://www.realtor.com/realestateandh ... 342-24336
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Re: Need a realtor to sell a home in this market?

Post by doodle » Tue Apr 13, 2021 3:04 pm

Just noticed it backs up to gerald ford conservation center and gardens....that might be a bit uncomfortable for a liberal like yourself...
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Re: Need a realtor to sell a home in this market?

Post by murphy_p_t » Tue Apr 13, 2021 3:26 pm

Who knows if there's any truth behind this rumor...

http://voxday.blogspot.com/2021/04/mail ... ouses.html
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Re: Need a realtor to sell a home in this mark

Post by tomfoolery » Tue Apr 13, 2021 4:28 pm

murphy_p_t wrote:
Tue Apr 13, 2021 3:26 pm
Who knows if there's any truth behind this rumor...

http://voxday.blogspot.com/2021/04/mail ... ouses.html
It’s fact, not rumor, that blackrock has been scooping up SFHs for the last decade. What might bring truth to the rumor, is seeing what portion of the Fed’s $40B per month buying of MBS is going to blackrock.

Since all of these sales are cash, black rock would be paying cash and generating a mortgage on the property, selling it to the fed.
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Re: Need a realtor to sell a home in this market?

Post by glennds » Tue Apr 13, 2021 4:37 pm

Apparently the herd extends well beyond Wall Street hedge funds. Include pension funds, and foreign investors (institutional foreign investors and sovereign wealth funds).

https://www.wsj.com/articles/that-subur ... 1618306380
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Re: Need a realtor to sell a home in this market?

Post by doodle » Tue Apr 13, 2021 4:43 pm

Why aren't they buying all those homes in omaha for under $100 a square foot then?
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Re: Need a realtor to sell a home in this market?

Post by glennds » Tue Apr 13, 2021 4:51 pm

doodle wrote:
Tue Apr 13, 2021 4:43 pm
Why aren't they buying all those homes in omaha for under $100 a square foot then?
When they're done with the large metro areas mentioned like Atlanta, Las Vegas, Phoenix, that may be where they go next. Usually the low hanging fruit is the first to go.
On the other hand, this opportunistic SFH institutional buying may be limited to the high population growth markets, for now at least. I think they're looking for a combination of renter market and growth, more than bargain prices.
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Re: Need a realtor to sell a home in this market?

Post by tomfoolery » Tue Apr 13, 2021 4:53 pm

doodle wrote:
Tue Apr 13, 2021 4:43 pm
Why aren't they buying all those homes in omaha for under $100 a square foot then?
They will be. Wait until next year.
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Re: Need a realtor to sell a home in this market?

Post by tomfoolery » Tue Apr 13, 2021 5:38 pm

There's some conspiracy theorists who believe this is part of "The Great Reset" where housing becomes unaffordable which allows the government to institute UBI and digital currency that depreciates if unspent.

As a long-time registered Democrat, I find that absurd.
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Re: Need a realtor to sell a home in this market?

Post by doodle » Tue Apr 13, 2021 7:53 pm

tomfoolery wrote:
Tue Apr 13, 2021 4:53 pm
doodle wrote:
Tue Apr 13, 2021 4:43 pm
Why aren't they buying all those homes in omaha for under $100 a square foot then?
They will be. Wait until next year.
So what are you waiting for???

I mean, I know these are red states with conservative politicians and all...that might be uncomfortable for a liberal like you...but still
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Re: Need a realtor to sell a home in this market?

Post by vnatale » Tue Apr 13, 2021 9:07 pm

West Virginia wants YOU!

Vinny


Wanna move to West Virginia?
The State of West Virginia launched a program yesterday in which it’s offering a cash payment of $12,000 and is giving away thousands of dollars worth of free passes for outdoor recreation activities like whitewater rafting, golf, ziplining, rock climbing, and horseback riding. The catch: you have to move there:

The coronavirus pandemic sent the work-from-home concept into the stratosphere over the past year with tens of millions of employees temporarily or permanently pushed out of their offices. West Virginia officials are counting on that to continue.

Participants whose employers are based elsewhere will be given access to work spaces set up in three communities selected earlier this year as remote networking hubs. These hubs will connect them with entrepreneurs and state business leaders.

They are accepting applications for the first round now. In that round, you’ll be asked to move to the Morgantown hub. In the later two rounds they’ll be asking people to move to the hubs in Shepherdstown and then the one in Lewisburg. Personally, I’d take the Lewsiburg one. It’s closer to cooler, prettier stuff. And the town is kind of funky too. If I didn’t have kids in school here I’d do it in a second.

You should. What the hell else are you doing with your life?



https://apnews.com/article/west-virgini ... 47530bb1c4


https://ascendwv.com/
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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Re: Need a realtor to sell a home in this market?

Post by sophie » Tue Apr 13, 2021 9:49 pm

Unless you really know what you're doing you should probably get a realtor.

I'm buying an apartment for my mother direct from a seller in my coop. No brokers involved, and for cash. The price the seller asked is so low, I'm afraid the board might not be pleased about it. I was expecting an ask of more than $100K higher, and on the open market the unit would probably get another $100K beyond that - at least!

TomFoolery, if you're at all into the idea of NYC, there is at least one other internal, no broker sale going on in my coop. There are a lot of elderly relatives moving in - I'm not the only one.
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Re: Need a realtor to sell a home in this market?

Post by glennds » Tue Apr 13, 2021 10:36 pm

tomfoolery wrote:
Tue Apr 13, 2021 5:38 pm
There's some conspiracy theorists who believe this is part of "The Great Reset" where housing becomes unaffordable which allows the government to institute UBI and digital currency that depreciates if unspent.
Then there are others who run the numbers and realize what the hedge funds have figured out. Compared to multi-family housing and apartment investments, they can acquire rental stream for a lower capital cost by aggregating single family home purchases on a large scale.
Plus complete elimination of load factor, which by itself is huge.
Just a good old fashioned business opportunity, and a clever one.

Not to take away from a good conspiracy theory though because yes, OTOH it might all be a governmental plot to take away people's rights.
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Re: Need a realtor to sell a home in this market?

Post by flyingpylon » Wed Apr 14, 2021 4:26 am

glennds wrote:
Tue Apr 13, 2021 10:36 pm
tomfoolery wrote:
Tue Apr 13, 2021 5:38 pm
There's some conspiracy theorists who believe this is part of "The Great Reset" where housing becomes unaffordable which allows the government to institute UBI and digital currency that depreciates if unspent.
Then there are others who run the numbers and realize what the hedge funds have figured out. Compared to multi-family housing and apartment investments, they can acquire rental stream for a lower capital cost by aggregating single family home purchases on a large scale.
Plus complete elimination of load factor, which by itself is huge.
Just a good old fashioned business opportunity, and a clever one.

Not to take away from a good conspiracy theory though because yes, OTOH it might all be a governmental plot to take away people's rights.
One’s perspective on this probably depends on whether they’re looking for a place to live.
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Re: Need a realtor to sell a home in this market?

Post by Kriegsspiel » Wed Apr 14, 2021 7:18 am

vnatale wrote:
Tue Apr 13, 2021 9:07 pm
West Virginia wants YOU!

Vinny


Wanna move to West Virginia?
It's rare that I hear about WV-related news from Vinny before I hear it from my parents ;D We talked about the income tax proposal, and at the time I guessed that Morgantown and Martinsburg (DC exurb) would be the big winners. It looks like the incentive is all going to Morgantown right now, which is just as well because Morgantown fucking rocks. I can see this being a big pull from Pittsburgh, with its large number of software and hostpital/banking people who can work remote.
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Re: Need a realtor to sell a home in this market?

Post by I Shrugged » Wed Apr 14, 2021 10:26 am

glennds wrote:
Tue Apr 13, 2021 10:36 pm
tomfoolery wrote:
Tue Apr 13, 2021 5:38 pm
There's some conspiracy theorists who believe this is part of "The Great Reset" where housing becomes unaffordable which allows the government to institute UBI and digital currency that depreciates if unspent.
Then there are others who run the numbers and realize what the hedge funds have figured out. Compared to multi-family housing and apartment investments, they can acquire rental stream for a lower capital cost by aggregating single family home purchases on a large scale.
Plus complete elimination of load factor, which by itself is huge.
Just a good old fashioned business opportunity, and a clever one.

Not to take away from a good conspiracy theory though because yes, OTOH it might all be a governmental plot to take away people's rights.
What is load factor as it applies to rental property? In airlines it means the percentage of seats filled.
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Re: Need a realtor to sell a home in this market?

Post by glennds » Wed Apr 14, 2021 7:37 pm

I Shrugged wrote:
Wed Apr 14, 2021 10:26 am
glennds wrote:
Tue Apr 13, 2021 10:36 pm
tomfoolery wrote:
Tue Apr 13, 2021 5:38 pm
There's some conspiracy theorists who believe this is part of "The Great Reset" where housing becomes unaffordable which allows the government to institute UBI and digital currency that depreciates if unspent.
Then there are others who run the numbers and realize what the hedge funds have figured out. Compared to multi-family housing and apartment investments, they can acquire rental stream for a lower capital cost by aggregating single family home purchases on a large scale.
Plus complete elimination of load factor, which by itself is huge.
Just a good old fashioned business opportunity, and a clever one.

Not to take away from a good conspiracy theory though because yes, OTOH it might all be a governmental plot to take away people's rights.
What is load factor as it applies to rental property? In airlines it means the percentage of seats filled.
It refers to non-leasable space, such as common areas and circulation. In an apartment complex or shopping center there is a considerable amount of it, sometimes 20-30%. The load factor refers to the cost associated with these common area expenses being shared on a pro rata basis among tenants. But in an apartment complex, the load factor is simply estimated and built into the rent rather than a true known accounting pass-through. For a landlord this is an issue because the market rent may not cover the load factor and also vacancy (and the associated pro-rata load factor) is on the owner's dime.

These scale single family home purchases are brilliant because it's like creating a synthetic non-contiguous multi-family housing portfolio with no common areas or load factor. The rent is truly net to both parties.
I ran the numbers today, using a large 582 unit apartment for sale in my metro market which is listed at $155MM. Based on the quoted cap rate, and a quick Zillow search of rent and sale prices for single family homes, I estimate you could achieve the same rent stream by purchasing 147 homes and do so for 27% less capital cost with a management fee to a third party management company. And your risk is diversified among 147 properties as opposed to one. And you have the appreciation on 147 smaller properties compared to one and a much more liquid buyer market when it comes time to unload.

This is why I thought it was absurd to find a conspiracy theory in any of it. Crunching the numbers, it's a pure business opportunity due to the spread between rent and home prices at a given investment cap rate. This is why institutional money is pouring in, and unless rent drops, home values will escalate to a value based not just on comps, but on an investment value driven by implied rate x cap rate. And if interest rates drop into negative territory, this will go wild.

BTW, this may not work in all markets, it really depends on the rent levels, demand, inventory and forecasted growth in that market. This must be by the funds have been strategic in market selection.

Of course the fallout will be an affordability disconnect, especially for younger buyers who will be mostly trapped in a renting situation, which ironically, also works to the institutional buyer's advantage. Price escalation not only improves the value of their portfolio, but it also reduces affordability hence forces many people into a trapped rent cycle where they cannot afford to buy.

Just wait until they start packaging these portfolios, rating them, and selling bonds against them if they aren't already. It will be like 2008 all over again. Maybe AIG will sell credit default swaps if you want to bet against them. Long post, sorry.
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Re: Need a realtor to sell a home in this market?

Post by I Shrugged » Wed Apr 14, 2021 8:24 pm

Thanks Glenn. Very interesting analysis.
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Re: Need a realtor to sell a home in this market?

Post by tomfoolery » Wed Apr 14, 2021 9:59 pm

glennds wrote:
Wed Apr 14, 2021 7:37 pm


This is why I thought it was absurd to find a conspiracy theory in any of it. Crunching the numbers, it's a pure business opportunity due to the spread between rent and home prices at a given investment cap rate. This is why institutional money is pouring in, and unless rent drops, home values will escalate to a value based not just on comps, but on an investment value driven by implied rate x cap rate. And if interest rates drop into negative territory, this will go wild.
Here's where my conspiracy theory comes into play.

And I know this is going to sound really absurd and impossible, but play along.

What if Blackrock has agents that somehow can have secret meetings with high ranking US Government officials. I know, ridiculous, but let's say it could happen.

And Blackrock said, "you know it would be a fantastic opportunity for us to buy up more single family homes, if interest rates could come down a bit on mortgage-backed securities so we can buy properties with cash, close in 14 days, and then equity strip with a mortgage. Any chance you can get the Fed to buy a ton of Mortgage Backed Securities to drive the rates down?"

And this hypothetical politician/power broker laughed and said, yeah, "We'll say that the Fed needs to buy $20B of mortgage backed securities every month, indefinitely, to keep the housing market solvent, and even when the housing market has gone up 30%, we'll keep doing it HAHAH"

And Blackrock's agent said "Make it $30B a month!"

And the US Gov official chuckled and said, "Why not $40B?"

They both had a great laugh, then snorted cocaine and got lapdances from strippers.

Later, there was some concern that Blackrock buying up all the properties would cause CPI to go up. And the government official laughed and said, "owner-equivalent rental rates! Instead of looking at housing prices at market price for CPI, we'll send out a survey to a few thousand Americans asking how much they could rent out their house for. And everyone who gets the survey who is under 70 years old will throw it away because they're too busy to care. And the 70 year olds have no idea how much their house would rent for and remember milk used to cost a nickel a gallon."

Then a different government official says, "Hey wait a minute, Blackrock bought up all the houses L-O-L (he says the letters outloud), and jacked up rents 20% year over year. Good thing we dont' look at actual rental costs in CPI and just use this bullshit survey that a handful of 80 year olds responded to! Now no one can afford rent, but if they vote for us, we'll give them UBI"

The blackrock agent asks "but wont printing money to give to people just cause more inflation?"

The government official laughs, "Inflation is what we say it is!"

And the Blackrock agent then gives the politician a huge donation and gives them $10M to speak to Blackrock employees for 15 minutes one day after they retire from office.

Way too conspiratorial, I know. People would be out in the streets with pitchforks if there were no houses for sale and the Fed was printing $40B a month to give to hedge funds to lend to hedge funds at 3% 30-year fixed rates to buy the handful of single family homes that come onto market as people die.
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