Paula Henry

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Archive for February, 2008

Do Increased Commissions Sell Homes?

February 22nd, 2008 categories: Indy Home Buyers, Indy Home Sellers

Does offering more commission to the buyer’s agent help sell a home? Several times this week, I have received flyers and info advertising homes for sale with an increased commission for the real estate agent who brings the buyer. One offered 6% to the buyer s agent on a home priced at $681,000. Almost $42,000. if I bring a buyer for this home. A similar one offered the same and boldly stated, $42,300 Commission  Another offered 5% plus $5000. on homes priced beween $299,000 and $350,000. One of these offers was from another city and two were here in Indianapolis.

There are two schools of thought about increasing the buyer agents commission to help sell a home. One school says it s the seller s equity and they can do what they want with their equity. I agree!

The other side says the commission is built into the price of the home and the buyer ends up paying the commission. On this, I also agree. Allow me to explain .

If a home is priced well and comparable to other homes and the seller offers an incentive for the buyer s agent, it is truly the seller s equity. If, on the other hand, a home is overpriced to begin with, the increased commisssion is a attempt to get buyers agents to sell the home. Then, it does become the buyers cost, because it is built into the price of the home, which the buyer will pay for.

Luckily, I know many honorable, trustworthy agents who would never allow their clients to pay more for a home than it s current market value, just so they can make an extra buck. These agents research and know the true value and will advise their clients about the recent sales and comparable properties in the area. These agents will be worth every penny when they are able to negotiate the price their clients should pay for the home.

Although I have had clients who have offfered an increased commission to the buyer s agent, I always tell them I do not believe increased commissions sell homes. Homes sell when they priced right, properly presented and well marketed. BTW marketing does include a buyer s agent commission. It just doesn t have to be excessive when all other factors are in line.

I personally believe there is a limit to the amount I feel comfortable accepting to represent my buyers. As a Fiduciary, I would not feel comfortable accepting $42,000 on the sale of a home priced at $681,000.

Disclaimer: Real estate commissions are not set by law and are negotiable.

These are my own personal opinions. ~ Paula

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Authored by Paula | Discussion: 10 Comments »

Simple Real Estate Definitions: Average Days On Market

February 12th, 2008 categories: Indy Home Buyers, Indy Home Sellers, Real Estate Terms

Calculate Days on MarketIn the world of real estate, Days On Market is the number of days between when a home lists for sale and when it goes under contract. 

It is often abbreviated as DOM.

Average Days on Market is a similar statistic but instead of applying to one home in particular, it applies to all homes in a given neighborhood, ZIP code, or city. Average DOM are most often different when broken down by price range within a city and zip code.

Average DOM is calculated by adding the number of days for which every listed home in an area was available for sale, and then dividing that number by the total number of listings.

In a buyer’s market, Average Days On Market is often elevated.  This is because homes don’t sell as fast as during a seller’s market when the Average DOM can be quite low.

For buyers and sellers of real estate, Average Days On Market can be a strong indicator of home prices.  When Average DOM falls, home prices tend to increase.

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Authored by Paula | Discussion: No Comments »

Indianapolis Real Estate Market Questions

February 9th, 2008 categories: Indianapolis Real Estate News, Indy Market Trends

I received a call today from a gentleman which made me think about questions I am routinely asked about the real estate market here in the Indianapolis area. Referring to a previous post, he specifically wanted to know about buying a home in Indianapolis.

Direction buying a homeHere’s a few of the questions I am asked and my response:

Q: Is it reasonable to expect to pay 10–20% less than the listed price?

A: It depends on the property and the area of town! Not every home on the market is overpriced and those which are priced correctly initially are still selling well. I have seen homes which have sold for less than 10–20% of the original listing price, but the formula does not apply to every home on the market.

Q: Will there be more homes on the market in a few months?

A: Yes and there will also be more buyers. Spring is the start of the busiest buying time of the year. Although you may have more selection – you will have more competition.

Q: Have we hit the bottom of the market?

A: Luckily, Indianapolis did not have the huge price increases some areas of the country had. Still, we have suffered the effects of a slow down in real estate sales. I personally believe this year will be the start of a turn around for the market in our city.

Q: Where’s the next hotspot(s) around the city?

A: My bets are on the Northwestern portion of Indianapolis, the western portion of Hamilton County, Boone County around Zionsville and Anson, as well as Plainfield and the area around the new airport.

These answers are in no way intended to be used as general investment advice. Your personal investment and home purchase should be based on an understanding of the local market conditions within the area you choose to invest or buy.

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Authored by Paula | Discussion: 6 Comments »

Did You Know : The Lifespan Of A Mortgage Approval

February 7th, 2008 categories: Real Estate Financing

Mortgage approvals don't last foreverMortgage approvals don’t last forever. 

A conforming mortgage approval from Fannie Mae or Freddie Mac has a shelf-life of 120 days.

After 120 days, the approval expires and a mortgage applicant must re-submit his application for consideration.

In addition, a mortgage approval can “expire” within the 120-day period for other reasons:

  • Change of job status or income
  • Newly-acquired monthly debt (i.e. car payment, student loan)
  • Change in asset levels

If your current mortgage approval (or pre-approval) is dated prior to February 3, 2008, it is now expired and your new approval may be subject to Fannie Mae’s new, more strict, underwriting guidelines.

Authored by Paula | Discussion: No Comments »