When is the "Best" Time to List Your Home For Sale?

"When is the best time to list my home?" I get asked this question on a pretty regular basis throughout each year. My answer is usually, "It doesn't matter when you list your home as long as it's spruced up and it's priced well." It's true that real estate listings and sales follow yearly trends fairly consistently, e.g. more homes are listed in April and May than in November and December. But consider the following argument for listing your home in November instead of May.

Listing your home in April and May can statistically hurt your chances at getting top-dollar for your home due to the increasing spring inventory and stiff competition. There is also the added inconvenience of having a large number of unqualified buyers traipse through your home with an unsuspecting agent, aka "tire-kickers" and "looky-loos." Alternatively, listing your home in November and December, a time when many sellers take their homes off the market if it didn't sell over the summer, can increase your chances of a quick sale due to decreased competition. Not to mention that buyers who take the time to look at homes around the Thanksgiving and Christmas Holidays are typically very qualified buyers.

As you can see, there are pros and cons no matter what month of the year you choose to list your home. But the fact remains that homes in all price ranges sell all year round...when you hire the right agent, that is. Happy selling!

The Death of the Dreaded "Z" Sale

Since I began in the real estate industry back in 2003, there has always been a huge debate regarding the dreaded "Z" sales price. For those of you not familiar with the real estate jargon, a "Z" sales price means that the true sales price was not disclosed in the MLS. Area brokers and appraisers would see the last list price of the home with a "Z" next to it; therefore, no one in the real estate industry would be able to use that sale as a reliable comp.

The impact of this little letter will never affect approximately 99% of the real estate market areas throughout North Texas. However, in some of the higher end neighborhoods, such as the Park Cities, Preston Hollow, and Turtle Creek, "Z" sales could account for up to 20% of all the sales. This meant that agents and appraisers would never be able to use any of those sales when running market analyses for their respective clients. Since Texas is a "non-disclosure state" there was a question of whether or not our local MLS could prohibit area brokers from using the "Z" sales price and require them to disclose actual sales prices.

Well it looks like this debate has finally come to an end...for now. Feel free to read the full release from the MetroTex Association of Realtors below. (Link provided here) In short, as of October 15th, 2012 brokers will no longer be allowed to utilize "Z" sales in the MLS. I'm happy this rule is being abolished. It will mean more accurate appraisals for agents, appraisers, and the city of Dallas. Of course, this will also mean some of the more expensive purchases will have to pay more property taxes. For example, I once looked at a home listed at $10M; the Dallas County Appraisal District had it valued at $3.95M. It turned out that the last few times this home had sold, the price in the MLS had been "Z'd out;" therefore, the county had no way of knowing what the home was truly worth. I'll save my paying-your-fair-share debate for another blog post, but for now let's just say that I'm happy with this change. I also hope the commercial real estate sector will jump on board. (See my post about Dallas Country Club for my thoughts on that)

Newly Revised NTREIS Rules have received final approval from NAR and among the changes is new language that removes the “Z sale” provision and clarifies mandatory reporting of sales prices to the MLS.  MetroTex has adopted an enforcement policy that includes a period of time to educate MLS subscribers about the rules change and allow for existing contracts with a non-disclosure requirement to close.  We will include announcements at the area MLS meetings as well as in this publication and other written notices from the association with information about the Rules change and we will not accept any non-disclosure requests dated after October 15, 2012.

Why this change and why now? 
The NTREIS Rules and Regulations have always required that MLS Participants disclose the sales information for listings and that listing agreements with your Sellers include provisions for including this information.   However, since the State of Texas is one of a few states that does not require the sales price be included in the publicly recorded Deeds,  there was always some question over whether a purchaser had the right to demand that their purchase price not be reported to the MLS system.  For that reason, our Rules inserted a provision that allowed a purchaser to make this request and, if all parties agreed, the Listing Participant could report this as a “Z sale”.  This was always intended to be an exception for the rare circumstance where a purchaser made the request and the “Z” was a placeholder beside the last list price so that these “Zero” sales would not significantly affect our statistical reports by including a “$0” sale within a sampling of comparables.  A last list price would be reasonably close to the actual purchase amount and would be on an insignificant number of sales, thus having little effect on comparables.     For example, in 2005, “Z sales” were less than 1% of overall sales in the system, though even then we were seeing over 10% in some neighborhoods.   By 2010 we saw a 150% increase to over 2% of the market being non-disclosed sales and close to 20% in some neighborhoods.  This begins to have a significant impact on comparable sales available and hinders the ability of real estate sales professionals to accurately advise clients on home values.  The inability for Appraisers to provide accurate comparables negatively impacts the lender’s loan approval process.  MetroTex began an educational process on the Rules requirement to report sales information and to enforce the “failure to report sales” provision of the Rules against MLS Subscribers that had a high level of non-disclosed sales and to closely scrutinize the documentation to support such sales to ensure that the requests were being initiated only by purchasers and in compliance with the Rules.   We also began discussing with our neighboring MLS Providers and with NTREIS possible rewording of the provision in the Rules that allowed for nondisclosure requests.  These efforts did result in a reduction of non-disclosed sales to approximately 1 ½ %,  but there still remains a significant impact in some neighborhoods.

At the same time, an unrelated challenge in another market area over the requirement to report sales information in a “non-disclosure” State* resulted in a legal opinion and a Rules clarification in the National Association of REALTORS MLS Policy and Model Rules clarifying that an MLS, which is a private subscription based service, can require its Participants to report all sales information, including sales prices.   In a “non-disclosure” State,  this requirement can still be made as long as the information is reported to the MLS service and the MLS service does not publicly distribute that sold information to 3rd parties  (with a few exceptions for academic and statistical reporting).  Mandatory adoption of this new language from NAR  removed any question of reporting sales prices, allowing NTREIS to remove the exception that allowed for non-disclosure.

A common reason given for a purchaser to request non-disclosure has been privacy.  This is often the case for a high profile government official or celebrity and accounted for the reason the “exception” was added to Rules many years ago.   In today’s world of social blogs and tabloid news,  locations and prices paid are now public fare.  We have seen several cases over the last few years where this information was not disclosed to MLS Participants and Subscribers  (who pay a fee for their services), but was front page “news” in tabloids and gossip blogs.   The information reported did not come from the MLS then and will not come from the MLS in the future -  the MLS Rules include specific provisions on how Participants and Subscribers may use sold information and specifically prohibits distribution of this information to the public.   For more information on how to address questions over reporting of sales information, see our FAQ’s.

*non-disclosure State:   In most states, the Deed recorded in the Public Records states the amount paid for the property being deeded.   In a “non-disclosure” state  (like Texas),  there is no legislative requirement that the amount tendered be included in the recorded Deed, thus most Deeds in such states include “$10 and other consideration” in place of the actual amount tendered.    In Texas, there is no law prohibiting the amount tendered being included, it simply is not legislatively required.

Buyer Incentives Are Pointless

But perhaps one of the most ridiculous incentives I've seen recently is a $1,000 buyer's agent bonus for this home listed at $800,000...wow. $1,000 extra bucks. Great idea Ms. Listing Agent.

P.S. You're an idiot.

Best Use Of For Sale Sign. Ever.

This is absolutely one of my all-time favorite real estate pictures. According to my friend Sean, who sent me this picture via Facebook, this picture was taken in the Park Cities this week. So, is the house for sale or the car? I'm confused.

Sales Statistics For January thru May: A year-over-year comparison

I wanted to see how the YTD (Jan. - May) sales numbers for 2011 compared with last year's sales numbers. And since we all know there was that little "Buyer's Tax Credit" thing that falsely inflated our sales numbers for 2010, I went back to 2009, as well. So take a look and let me know what you think.

The first thing that sticks out to me is the 9% drop in the number of sales for Area 12 from '09 to '11, yet during the same time Area 12 has seen roughly a 25% increase in average sales price. This is intriguingly coincided with an almost 20% increase in DOM. I'm at a loss as to how to explain this. So perhaps some of you stats geeks out there can help out.

Area 12 (East Dallas/Lakewood/White Rock Lake)

Year # Sales Sales $ $/sf DOM

'09 707 $221,465 $118 98

'10 751 $229,455 $124 93

'11 648 $276,756 $134 117

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Area 11 sales have increased over 50% during this same time period in 2009, yet from '09 to '10 the sales prices dropped 14%, only to increase slightly in 2011. Maybe this means North Dallas and Preston Hollow hit the bottom? If so, aren't you mad you missed out on some great deals?

Area 11 (North Dallas/Preston Hollow)

Year # Sales Sales $ $/sf DOM

'09 152 $842,824 $217 137

'10 217 $728,165 $187 162

'11 232 $761,022 $192 146

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Sales in the Park Cities have increased a stunning 80% since '09, with a modest 8% increase in average sales price. This seems like a solid upward trend. This seems much easier to interpret than the other two areas.

Area 25 (Park Cities)

Year # Sales Sales $ $/sf DOM

'09 161 $1.049M $292 136

'10 275 $1.072M $298 143

'11 291 $1.133M $309 127

Short Sale vs. Foreclosure: What Are Your Options?

Let me give you a very common real estate scenario, one I have encountered more frequently in the past several years.

Mr. Seller paid $350,000 for his home in 2006. He now wants to sell his home because he [got relocated/got married/wife had their 4th child]. As a real estate agent, I now have the awkward responsibility of telling him his home is currently worth $315,000 in today's real estate market. He then tells me he owes $340,000 on his mortgage and that he doesn't have the cash to bring to closing and asks me what his options are.

If the above scenario sounds familiar, you're not alone. So, here are your options:

1. Bring enough money to closing to cover your remaining mortgage, plus closing costs. For example, you owe $340,000 on your mortgage but you can only sell your home for $310,000. You are responsible for the $30,000 difference, plus closing costs.

2. If #1 isn't an option, then you need to consider staying in your home until you are in a position to sell your home without bringing money to closing. Or, if you have to move you can choose to rent out your home until you're in a better financial position.

3. If neither of the above options sound good to you - you don't have much cash but you HAVE to sell your home and don't want to rent it out - then you need to consider a short sale. Meaning, you need to negotiate with your mortgage company and ask them to cover any shortage in paying off your mortgage after your home sells. Basically, this is like option #1, except you're asking the bank to cover the $30,000 shortage, plus your closing costs. This will negatively affect your credit, and most short sales are huge headaches and can take many months to close, but you will be able to move on to the next chapter in your life without taking a huge financial loss.

4. Just walk away. Many homeowners have chosen to simply walk away from their home and let go into foreclosure. This will negatively affect your credit more so than a short sale, but you won't have to deal with the headache of a short sale, or the ensuing months of paying a mortgage on a home you can no longer afford - or no longer want. This option is very attractive to the rich. e.g. 'Why keep paying on a home that is depleting my bank account and has lost over 50% of it's value since I bought it? Let the bank deal with that headache!' Having enough cash to get them through the next 7 years while their credit score recovers is also helpful.

Our real estate market will continue to force many people to choose between the scenarios I have outlined above. And every one's situation is going to be different. You need to decide what works best given your current financial situation. Talking openly and honestly with your real estate agent is the best advice I can give you. I make decisions based on the information my clients give me. If you tell me you're not in a hurry to sell and you're financially comfortable, then my advice will be much different than if you told me you needed to sell in the next 45 days or you will no longer be able to pay your mortgage, car payment, etc. Unfortunately, people tend to tell me the former, when the truth looks more like the latter.

Vote For Me And Win $100!

Ok, so you won't really win $100. But you should still vote for my blog anyway. DREB has been nominated by Zillow.com as one of the Best Real Estate Blogs in Dallas and I need your support!

You can vote once a day, every day, up to August 11th, 2010. And don't even pretend you don't have time at work to play around on the internets and the Facebooks. I know you better than that.

Now go vote!

(P.S. Thank you for your support.)

The Dirt In Highland Park Has Appreciated Over 500% Since 2006

4311 and 4321 Lakeside Dr., both listed at approximately 1.17 acres, have just been hoisted on the market for a mind-boggling $16,225,000 and $15,100,000, respectively. Something about this new listing just isn't adding up. Literally. Nearly everyone knows the piece(s) of land I'm talking about. The gorgeous treed corner lot where Lakeside Dr., Preston Rd., Oaklawn Ave. and Armstrong Ave. all meet. Or some of you many know it as the piece of land across the street from where Dallas Cowboys owner, Jerry Jones, lives.

So, the short history of these lots is they were both comprised of 4310, 4311, 4320 and 4330 Lakeside Dr. and they were all four listed for sale together in the MLS back in 2004 under one address, 4311 Lakeside Dr., for $7,500,000. The entire property eventually sold after a whopping 673 days (almost 2 years) on the market for a meager $6,025,000. While the property's owner is listed in the tax rolls as the Town of Highland Park, I seem to recall chatter that a neighbor who lives on Armstrong purchased the property to make sure the property sold to a nice individual that would want to build a HUGE single family residence on the property, as opposed to a church or some other commercial development. But who knows if that's true or not. I certainly don't.

Anyway, a few days ago I saw a couple new lots listed for sale in Highland Park with the addresses 4311 and 4321 Lakeside Dr. And then I see the redonkulous list price! I quickly whipped out my trusty TI-82 calculator to discover that the appreciation rate from $6,025,000 in 2006 to over $31,000,000 in 2010 is a nonsensical 520% appreciation rate over 4 years.

Sure this piece of land is desirable, but $6M to over $30M in 4 years for the same exact piece of dirt? Am I missing something here?

HGTV's "My First Sale" Is Coming To Dallas!

Yesterday I got a phone call from a casting director for HGTV's show "My First Sale" asking me if I wanted to apply to be a part of the show (and also to share the press release to other area agents). Here is the press release:

SELLING YOUR FIRST PLACE? Then HGTV is looking for you! MY FIRST SALE, the popular primetime HGTV show, is looking for first-time home sellers (and their real estate agents!) in the Dallas/Fort Worth and Washington DC/Arlington VA areas.

We are looking for fun, high-energy people who are just starting the process of selling their first place! Our cameras will be there to capture all the trials and tribulations, stress and success of prepping for sale, pricing, negotiating, and ultimately selling a home for the first time.

Taping will begin in Spring 2010 and will continue through Winter 2010. Ideal candidates will be motivated, financially candid people who want to share the experience and the purchase details with HGTV and their audience. Singles, couples and families are all invited to apply!

If selected to appear on an episode of My First Sale, home sellers will receive a DVD copy of the episode to enjoy for years to come. Real estate agents will also receive a DVD of the episode. If this sounds like fun, first-time sellers should apply now for immediate consideration!

According to the show's page on HGTV.com the show is billed as follows:

Think buying your first place is tough? Try selling it! My First Sale takes the proven and successful docudrama format of My First Place and turns it upside down — telling the story from the seller's point of view. Selling your first place means the stakes are even higher than when you purchased. More pressure, more jeopardy, more to gain — and potentially thousands to lose. For HGTV viewers, My First Sale has even more drama and, most important, more valuable takeaways to help viewers make top dollar on their own sale.

I personally haven't seen any episodes but it sounds like a great idea. Hopefully it won't be the equivalent of House Hunters where the buyer sees 5 homes and makes an offer on one of them. Then the buyers get a phone call while they're having a picnic in the park with their 2 and a half children and - POOF! - instant happy homeowners! That ain't how it works folks.

So if any Realtors or homeowner's out there are interested shoot me an email. I'll be happy to send you the application and contact information.

Gotta run and go get my hair did for my casting video!!!

Having Problems With Your Appraisals?

This is a pretty good article explaining how appraisals are killing more deals in today's real estate market. It's not the appraiser's fault...every time. And yes, listing agents will resort to begging in order to get their listing sold. Something we shouldn't be proud of but it happens all the same.

Consider an example where a home has been listed for 280 days and they finally get the home under contract. Until the appraisal comes in at $50,000 below the agreed contract price. If the seller doesn't drop the price by $50,000 then the buyer must come up with the $50,000 difference or else the deal falls apart. Guess what happens 98% of the time? The deal falls apart. It's heartbreaking for both buyer and seller and the lender. But how do we know if the appraiser really knows what they're doing? They're human and can make mistakes, right?

Fortunately, I have not had any appraisal problems but I have certainly had a few appraisers call me and ask for extra comparables. But the article points out a big problem and that is the lender will sometimes hire an appraiser not familiar with the area in which the subject property is located. Appraisers are similar to real estate agents in that both tend to have areas of focus. Most Dallas agents can't speak elementary about Ft. Worth real estate and vice versa. So then why is an appraiser any different? Yet Ft. Worth appraisers appraise Dallas real estate all the time. And there are many disagreements.

It's also odd that an appraiser will ask for a copy of the contract and, therefore, see the agreed sales price, before they've stepped foot in the property? Isn't this like cheating? I've never understood this practice. Aren't appraisals supposed to be unbiased reports? Wouldn't seeing the sales price before seeing the property make the report biased?

Whatever. My buyers get good deals and don't have appraisal issues and neither do my sellers. I guess that means I'm doing something right.

New Marketing Technique Using "Artistic" Photos?

Nope. Just another poor seller who is not getting their money's worth. Or maybe they are? Either way, this is poor form and should never be acceptable to any real estate agent or their clients. At this time, there is only 1 photo. And this is the one they picked? Hopefully the seller speaks up about this.

The Best Dallas Photographer in Dallas. Maybe the Country.

Sublime Red Line
Originally uploaded by the urban fabric

So I'm being cheeky in the title. But if you haven't heard of Justin Terveen or seen his work then you are seriously missing out. His photos are nothing short of jaw dropping. Check out his Flickr page.

Amazing stuff.

Home Sales Increase by More Than 10%

But don't go popping corks on the Veuve just yet. While it may be true home sales have risen to their highest level in 2.5 years the experts accurately state that this jump in sales was due to many buyers having already been under contract before the first time home buyer tax credit was extended to April of 2010. That being said, we are likely to see stagnant sales over the winter and then they will ramp up as we near the April 2010 tax credit deadline. From the omniscient experts,

Experts forecast that prices will fall again. Most say they will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

I've already expressed my concern about the threat of rising and/or continuing foreclosures. And it looks like the experts agree.

A record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September, the Mortgage Bankers Association said last week.

What this means to you, Dear Reader, is that if you are in a neighborhood full of short sales and foreclosures, you may have to wait until 2011 before you see a turn around in prices. If your neighborhood doesn't have that many short sales or foreclosures your home value will still feel the indirect effects of a lousy economy laden with foreclosures. So sit tight. Update that kitchen or the master bath, beef up your landscaping and enjoy your home. And if you get relocated and have to sell then at least your home will be in great selling condition.