Today’s real estate market is one of the fastest-moving in recent memory. With record-low inventory in many market segments, we’re seeing multiple offers—and sometimes even bidding wars—for homes in the most sought-after neighborhoods. This has led some sellers to question the need for an agent. After all, why spend money on a listing agent when it seems that you can stick a For Sale sign in the yard then watch a line form around the block?
Some buyers may also believe they’d be better off purchasing a property without an agent. For those seeking a competitive edge, proceeding without a buyer’s agent may seem like a good way to stand out from the competition—and maybe even score a discount. Since the seller pays the buyer agent’s commission, wouldn’t a do-it-yourself purchase sweeten the offer?
We all like to save money. However, when it comes to your largest financial asset, forgoing professional representation may not always be in your best interest. Find out whether the benefits outweigh the risks (and considerable time and effort) of selling or buying a home on your own—so you can head to the closing table with confidence.
SELLING YOUR HOME WITHOUT AN AGENT
Most homeowners who choose to sell their home without any professional assistance opt for a traditional “For Sale By Owner” or a direct sale to an investor, such as an iBuyer. Here’s what you can expect from either of these options.
For Sale By Owner (FSBO)
For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent. According to data compiled by the National Association of Realtors, approximately 8% of homes are sold by their owner.1
In an active, low inventory real estate market, it may seem like a no-brainer to sell your home yourself. After all, there are plenty of buyers out there and one of them is bound to be interested in your home. In addition, you’ll save money on the listing agent’s commission and have more control over the way the home is priced and marketed.
One of the biggest problems FSBOs run into, however, is pricing the home appropriately. Without access to information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table).(2)
Even during last year’s strong seller’s market, the median sales price for FSBOs was 10% less than the median price of homes sold with the help of a real estate agent.(1) And during a more balanced market, like the one we experienced in 2018, FSBO homes sold for 24% (or $60,000) less than agent-represented properties.(3) This suggests that, while you may think that you’ll price and market your home more effectively yourself, in fact you may end up losing far more than the amount you would pay for an agent’s assistance.
Without the services of a real estate professional, it will be up to you to get people in the door. You’ll need to gather information for the online listing and put together the kind of marketing that today’s buyers expect to see. This includes bringing in a professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers—or hiring a writer and graphic designer to do so.
Once someone is interested, you’ll need to offer virtual showings and develop a COVID safety protocol. You’ll then need to schedule an in-person showing (or in some cases, two or three) for each potential buyer. In addition, you’ll be on your own when evaluating offers and determining their financial viability. You’ll need to thoroughly understand all legal contracts and contingencies and discuss terms, including those regarding the home inspection and closing process.
While you’re doing all of this work, it’s likely that you’ll still need to pay the buyer agent’s commission. So be sure to weigh your potential savings against the significant risk and effort involved.
If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.
iBuyers have been on the scene since around 2015, providing sellers the option of a direct purchase from a real estate investment company rather than a traditional direct-to-consumer sales process.(4) iBuyer companies tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.
The idea is that instead of listing the home on the open market, the homeowner completes an online form with information about the property’s location and features, then waits for an offer from the company. The iBuyer is looking for a home in good condition that’s located in a good neighborhood—one that’s easy to flip and falls within the company’s algorithm.
For sellers who are more focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale. That’s because iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations.
However, sellers will pay for that convenience with, generally, a far lower sale price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent’s commission. If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission. According to a study conducted by MarketWatch, iBuyers netted, on average, 11% less than a traditional sale when both the lower price and fees are considered.(5) Other studies found some iBuyers charging as much as 15% in fees and associated costs, far more than you’ll pay for a real estate agent’s commission.(6)
In a hot market, this can mean leaving tens of thousands of dollars on the table since you won’t be able to negotiate and you’ll lose out on rising home prices caused by low inventory and increased demand. In addition, iBuyers are demonstrably less reliable during times of economic uncertainty, as evidenced by the halt of operations for most iBuyer platforms in early 2020.6 As a seller, the last thing you want is to start down the road of iBuying only to find out that a corporate mandate is stopping your transaction in its tracks.
If you choose to work with a real estate agent, you can still explore iBuyers as an option. That way you can take advantage of the added convenience of a fast sale while still enjoying the protection and security of having a professional negotiating on your behalf.
BUYING YOUR HOME WITHOUT AN AGENT
According to the most recent statistics, 88% of home buyers use a real estate agent when conducting their home search.1 A buyer’s agent is with you every step of the way through the home buying process. From finding the perfect home to submitting a winning offer to navigating the inspection and closing processes, most homebuyers find their expertise and guidance invaluable. And the best part is that, because they are compensated through a commission paid by the homeowner at closing, most agents provide these services at no cost to you!
Still, you may be considering negotiating your home purchase directly with the seller or listing agent, especially if you are accustomed to deal-making as part of your job. And if you are familiar with the neighborhood where you are searching, you may feel that there is no reason to get a buyer’s agent involved.
However, putting together a winning offer package can be challenging. This is especially true in a multiple-offer situation where you’ll be competing against buyers whose offers are carefully crafted to maximize their appeal. And the homebuying process can get emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. In addition, buyer agents offer a streamlined, professional process that listing agents may be more likely to recommend to their clients.
If you decide to forego an agent, you’ll have to write, submit, and negotiate a competitive offer all on your own. You’ll also need to schedule an inspection and negotiate repairs. You’ll be responsible for reviewing and preparing all necessary documents, and you will need to be in constant communication with the seller’s agent and your lender, inspector, appraiser, title company, and other related parties along the way.
Or, you could choose to work with a buyer’s agent whose commission is paid by the seller and costs you nothing out of pocket. In exchange, you’ll obtain fiduciary-level guidance on one of the most important financial transactions of your life. If you decide to go it alone, you’ll be playing fast and loose with what is, for most people, their most important and consequential financial decision.
SO, IS A REAL ESTATE AGENT RIGHT FOR YOU?
It is important for you to understand your options and think through your preferences when considering whether or not to work with a real estate professional. If you are experienced in real estate transactions and legal contracts, comfortable negotiating under high-stakes circumstances, and have plenty of extra time on your hands, you may find that an iBuyer or FSBO sale works for you.
However, if, like most people, you value expert guidance and would like an experienced professional to manage the process, you will probably experience far more peace of mind and security in working with a real estate agent or broker.
A real estate agent’s comprehensive suite of services and expert negotiation skills can benefit buyers and sellers financially, as well. On average, sellers who utilize an agent walk away with more money than those who choose the FSBO or iBuyer route.3,5 And buyers pay nothing out of pocket for expert representation that can help them avoid expensive mistakes all along the way from contract to closing.
According to NAR’s profile, the vast majority of buyers (91%) and sellers (89%) are thrilled with their real estate professional’s representation and would recommend them to others.1 That’s why, in terms of time, money, and expertise, most buyers and sellers find the assistance of a real estate agent essential and invaluable.
QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS
The best way to find out whether you need a real estate agent or broker is to speak with one. We’re here to help and to offer the insights you need to make better-informed decisions. Let’s talk about the value-added services we provide when we help you buy or sell in today’s competitive real estate landscape.
1. National Association of REALTORS -https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
3. National Association of REALTORS -https://www.nar.realtor/blogs/economists-outlook/selling-your-home-solo-to-save-money-you-ll-actually-make-less-than-you-think
When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented demand in the U.S. real estate market, which ended the year with increasing average home prices (up 13.4% from the previous year) and shrinking days on market (13 fewer than in 2019).(1)
Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.
At the beginning of the pandemic, fears of an economic recession and an ensuing mortgage meltdown were top of mind for homeowners all across the country. For many buyers and sellers, the two seemed to go hand in hand, just as they did in the 2008 economic crisis.
In reality, however, the conditions that led to 2008’s recession were very different from those that triggered the current downturn—and this time, the housing market is the source of much of the good news.(2) This is in line with historical patterns, as housing prices traditionally hold steady in the face of recession, with homeowners staying put and investors putting their money into bricks and mortar to ride out uncertainty in the stock market.
This time around, because of lessons learned in 2008, banks are better funded, homeowners are holding more accrued equity, and, crucially, much of the economic activity is focused on financial factors outside the housing market. As many industries quickly pivoted to work-from-home, early fears of widespread job loss-related foreclosures have failed to materialize. Federal stimulus payments and the Paycheck Protection Program also helped to offset some of the worst early effects of the shutdown.
A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops—and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.
By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do. In addition, experts predict a strong seller’s market throughout 2021 along with increases in new construction.(3) This should allow supply to gradually rise and fulfill demand, slowing the rate of inflation for home values and offering a gentle correction where needed.
Effects of low interest rates
According to Freddie Mac, rates are projected to continue at their current low levels throughout 2021.(4) This contributes to home affordability even in markets where homes might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.
Effects of low inventory
Continuing low inventory is another reason for higher-than-average home prices in many markets.(5) This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction increases to meet demand.(6)
One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban areas as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work-from-home policies that became permanent at some of the country’s biggest companies.
Speculation then turned to the death of cities and the end of the condo market. However, it appears that rumors of the demise of these two residential sectors have been greatly exaggerated.
With the first vaccine rollouts, renters have begun returning to major urban centers, attracted by the sudden rise in available inventory and newly discounted rental rates.(7) In addition, buyers who were previously laser-focused on a single-family home responded to tight inventory by taking a second look at condos.(8) While nationwide condo prices continue to lag behind those of detached homes, they’ve still seen significant price increases and days on market reductions year over year.
In addition to these improvements, the 2020 migration has spread the economic wealth to distant suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.
Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”
While Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020’s historic numbers, the outlook overall is positive as we embark on the 2021 spring selling cycle.(9) Duncan anticipates an additional lift in the second half of 2021 as buyers return to business as usual and look to put some of their pandemic savings to work for a down payment. Thus we could be looking at another longer-than-usual, white-hot real estate market.
Projected policy around housing promises to be a boost to the real estate market in many cases.(10) While some real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. In addition, Biden-proposed policy pinpoints low inventory as a primary driver of unsustainable home values and is geared toward more affordability through investments in construction and refurbishment.
Overall, according to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021 and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.
While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighborhood. Reach out to learn how these larger movements affect our local market and your home’s value.
1. Realtor.com - https://www.realtor.com/research/december-2020-data/
2. New York Magazine - https://nymag.com/intelligencer/2020/06/why-this-economic-crisis-wont-be-as-bad-as-2008.html
3. Washington Post - https://www.washingtonpost.com/business/2021/01/11/2021-housing-market-predictions/
9. Mortgage Professional America - https://www.mpamag.com/news/fannie-mae-chief-economists-forecast-for-us-economy-housing-market-in-2021-244045.aspx
Last weekend, I went out to see if I could find a Super (or at least fairly good) Bloom in Ventura County. I had heard about the hoards of "selfie" obsessed poppy peepers that have flocked to the Lake Elsinore area and was definitely not willing to endure that. I decided to see if I could find a less crowded alternative closer to home. The Acorn, our local weekly newspaper, offered several possible locations where California poppies and other wildflowers have been spotted in large numbers.
Saturday morning, I went to the first location, Rancho Potrero, just south of the Dos Vientos neighborhood in Newbury Park to see what I could find. As soon as I arrived at the trailhead, I could see patches of flowers off in the distance, and off I went. Alas, as I approached closer, the blooms turned out to be on private property, and I could admire them only from afar. Nonetheless, the hike was beautiful, with great weather and beautiful cloudy skies. There were more than enough wildflowers to enjoy and best of all, hardly any people!
On Sunday morning, my wildflower search started at the Conejo Canyons trailhead where I started down the fire road to the Hill Canyon Trail to connect to the Hill Canyon Trail and finally to the Peninsula Trail which runs roughly parallel to the Hill Canyon Trail and then reconnects with it. It was along this trail I was rewarded with a riot of yellow, gold and purple. I spent a good hour there taking photos (no selfies, though!) Then it was time to head back home. Hopefully next weekend, I'll get out and explore some more. Stay tuned....
I don’t know what took me so long but last week I finally visited the Mullin Car Museum in Oxnard. It’s been here since 2010 at 1421 Emerson Ave in Oxnard in the same building the late Otis Chandler’s car collection was housed. To be honest, I’m not a car enthusiast which might be part of the reason I hadn't seen it yet. It also takes a bit of planning since it’s only open to the public a couple of days each month. However, it is definitely worth the effort. The museum has a marvelous collection and it is beautifully presented. The building is in the Art Deco style, complementing the era of the cars. You don’t have to be a car aficionado to appreciate the sleek lines and sexy curves of these classic vehicles. I arrived about a ½ hour after they opened that Saturday morning and there were a surprising number of people already there.
I passed on taking the guided tour since I wanted to take photos before it became too crowded but I caught bits and pieces of what the tour guides were saying and will go back another time for the complete experience.
The photographic opportunities were fantastic because you can get right up close to these cars but there are some challenges as well. Tripods are not allowed and you can’t bring in a camera bag. Thank goodness I had the 16-35mm f/4L image stabilized lens on my Canon 5dsr camera that allowed me to handhold at shutter speeds as slow as 1/10 of a second. Even with that I had to shoot at ISO 800 and take several shots to capture one sharp image.
I spent the next couple of hours photographing the cars and museum starting with the touring cars on the ground level and working my way to the race cars upstairs. If I hadn’t had an afternoon appointment to show homes, I might very well have spent the entire day there.
For more information on the days the museum is open and to plan your own visit, see the Mullin Automotive Museum website.
Bugatti Type 23 Brescia
1937 Delahaye Type 145
Mullin Automotive Museum in Oxnard
Oxnard must have won the automobile car museum lottery having two world class car museums calling Oxnard home. Oxnard's other auto museum is the Murphy Auto Museum and it is less than half a mile south of the Mullin Auto Museum.
Under Proposition 13, the value of a home (for property tax purposes) is generally reassessed to its current value whenever a change of ownership takes place. If you are a senior who has owned your home for a long time and currently benefit from a lower Prop 13 tax valuation, the prospect of dramatically higher property taxes can be quite a deterrent if you’d like to sell your home and replace it with one that better suits your current lifestyle and needs.
I love Salsa. The beat and Latin rhythm of the music is addictive. If only I could dance to it myself! Alas, even with the numerous lessons I’ve never been able to achieve much more than a comedic parody of Salsa. And even if I’m not as bad as all that, I am very envious of the natural fluid movements of the Salsa dancers you’ll see competing at the Oxnard Salsa Festival on a huge dance floor with an impressive sound stage and musicians right behind them. They make it look so easy. With the Jumbotron screens you’re guaranteed to
About February, someone flipped the switch on the Ventura County real estate market and it has taken off like crazy. Since then it seems that everyone who has ever talked to me about buying a home in the last couple of years is ready to buy now! I’m not complaining….not at all, but all of this intense real estate activity has really cut into my photography time. So when I got an email last week that Grandma Prisbrey’s Bottle Village in Simi Valley would be open for a couple of hours on Sunday to a limited number of photographers, I jumped at the chance. My knowledge of Bottle Village was limited to a few
Ever since I first hiked the Chumash Trail in Ventura County to Mugu Peak last year, I've wanted to return for sunset on one of the incredibly clear days that Santa Ana winds brings us a handful of days each year and take photographs. It's hard to plan a hike like this because you never know in advance when the weather conditions will be right. When they are
Ventura is fortunate to be one of the locations along the California coast that discerning Monarch butterflies choose to spend the winter during their annual migration. Really, who can blame them for choosing Ventura real estate for their stay? Even though winter arrived last week we’ve had nothing but sunny 70 degree days since. The real question is why would they leave for the summer?
I’ve had a fascination with Monarch butterflies since I was a small boy but and yet never had a chance to visit one of their overwintering spots until last week when I drove over to Ventura’s Camino Real Park to check them out for myself. It didn’t look too promising as I drove through the park, sunroof open looking skyward for butterflies and seeing not a single one. I ended up just outside the park where Aurora Drive dead-ends at the park and got out of my car and walked along the stand of Eucalyptus trees growing there.
It was starting to look a little more