Buying a Home in Salt Lake City, UT

Nearing the end of April I am pleased to report that there has been an increase in listings that are priced at or near market level.

This will be a good thing for home values overall. (And for both Buyers and Sellers).

My clients have also been able to tell the difference and it is nice to be able to work with Sellers who have some realistic expectations.

My experience in the first 3 months of this year (2007) is that there were many Sellers (whether of their own initiative, or based on advice from their listing agent) who were putting their homes on the market as if the market was still appreciating at a 20% appreciation rate (which I believe it is not). My clients and I have seen many of these Sellers resort to price reductions of $10,000 or more, some multiple times.

Still, we have seen homes that were reasonably priced for today's market conditions and we have seen those homes sell quickly, often within days of listings.

Although the market has slowed down (in terms of appreciation rate), our understanding is that the Salt Lake area is still achieving positive appreciation somewhere between 5 and 10% (But not 20%) yearly.

The market was also slower during the winter, but the Spring and Summer could easily create renewed activity and more action in the market, possibly reviving the slowing appreciation rate.

My concern is that there may be too many listings on the market that are overpriced. This presents only two possible foreseeable options:

1. Buyers decide to pay the premium on these homes.

2. Seller's decide to not be so aggressive by overpricing their homes.

There is still demand in the area for housing. The homes that are priced well (as mentioned) do see some fierce competition for them and sell very quickly. So I get the impression that we aren't the only ones out there who have been waiting patiently for Seller's to come back to the reality of what the market will bear. The more reasonably priced homes that are put up for sale, the more their sales will contribute to market stimulation and activity and, perhaps, appreciation.

The dilemma is this:

Who is either willing or motivated to sell now? (which would create that stimulation), and

Who would rather wait, hoping to take advantage of the busier marketplace and the higher sales prices? (Once the Buyer's decide that they must buy something soon).

Right now, Seller motivation seems to be the key. Most Buyers have all Summer before they NEED to be in a home. Most of my current Buyers who have moved from other states have easily found temporary housing they can stay in on a month-to-month basis.

Those who must sell are selling at a reasonable amount (based on a 9-19% appreciation factor for comparables, based on area and considering how long ago the sales took place). They are also moving somewhat quickly because the competitive active listings are overpriced, making the reasonable listings look like such good deals.

Those who do not have to move, and will only move if they are able to pick up the premium value may hold out, slowing down the market as a whole, but still inspiring fierce competition among the homes that are properly priced.

Has anyone else ever been in a market like this? What happened? I'd like to hear some different outcomes.

Thanks! 

©2007 Homebuyer Representation, Inc.

This is sure to spark some debate.

I am in the camp that believes that broker's fees and/or commissions are paid "from the proceeds of the transaction."

On the one hand, the Seller often contracts with a Listing Brokerage to pay a specific commission. Often, that commission includes a co-op fee for a Buyer's Agent.

At Settlement, the Seller is often charged those fees.  But in most cases, it was the Buyer who paid the Seller an agreeable price allowing the Seller to cover those fees. So, it could be said that it is the Buyer who gives the Seller the money to pay those fees.

Then again, consider the Seller who has enough cash or possibly equity, that they pay those fees without using the Buyer's money.

And, for example, there may be a For Sale By Owner who is unwilling to pay any fees to any agent. The Buyer may then pay those fees themselves.

Who do you believe ultimately pays the fees? How does it work in your state? As a Buyer's Agent, do your clients ever pay you directly? If so, what happens to the co-op fee being offered by the Seller?

When representing a Buyer on a For Sale By Owner purchase, do you discount the market analysis to show the Buyer what the market value of the home should be without real estate fees?

Would you consider market value to be a discount of the total amount of fees from both sides of the transaction, or just the amount that your client would be responsible to you for?

Since this is an active network, I thought I would throw this one out there to see the different responses.

An article in the March 2007 edition of Kiplinger's Personal Finance shares some of the benefits of hiring an Exclusive Buyer's Agent. The point of the article (and it's title) was: Hire your own AGENT

Just as two sports teams would not use the same coach, and two parties with conflicting interests would not use the same attorney in a court of law, there are real differences of interest between a Buyer and a Seller in a real estate transaction and I believe that each party should seek independent representation.

Exclusive Buyers Agents work exclusively for the Buyer. My job is to protect the Buyer's interest at all times, even if that means I will work to help the Buyer get out of a transaction that has turned sour. There are agents who believe that their job is to see the transaction through to closing... If it is in my client's best interest to take a deal apart, and protect them in the process, that is what they hired me to do and I will do it.

For those Buyer's who feel they would like an agent 100% on their side, they can seek out an Exclusive Buyer's Agent (EBA).

Homebuyer Representation, Inc. is a Real Estate Brokerage that services Salt Lake City, Utah and surrounding areas. Agents are Exclusive Buyer Agents (EBAs) and represent BUYERS ONLY. For Free Reports or a Free Consultation, contact Homebuyer Representation at (801) 969-8989 or click the highlighted links in this paragraph.

©2007 Homebuyer Representation, Inc.