Hottest and Coldest Real Estate Markets

Now that subprime has left the front pages of the newspapers, media outlets everywhere are looking for the new "it" thing to worry about. With inflation always a concern it seems that housing and inflation are going back and forth as the things that CNBC sound the alarms about most frequently. So what markets are on fire and which are making sellers nervous?

According to Yahoo Finance the best buyer's markets are:

1. Tampa, FL
2. Minneapolis, MN
3. Miami, FL
4. Kansas City, MO
5. Chicago, IL
6. Phoenix, AZ
7. San Diego, CA
8. Milwaukee, WI
9. New York, NY
10. Atlanta, GA

The best seller's markets are:

1. Raleigh, NC
2. San Francisco, CA
3. Austin, TX
4. San Antonio, TX
5. St. Louis, MO
6. Houston, TX
7. Portland, OR
8. Dallas, TX
9. Denver, CO
10. Baltimore, MD

Links
Yahoo! Finance Top Real Estate Markets
Flickr ericskiff

Buying a House? Here's a Way to Save a Fistfull of Cash

Hot on the heels of Iggy's House (previous post Iggy's House) trying to shake up the real estate market on the seller's side, it's sister company BuySide Realty is trying to mix it up on the buyer's side. It's a pretty radical approach and something that I can guarantee will be fought tooth and nail by brokers everywhere.

Here's how it works. John is selling his house, he hires an agent, Bob, to show his house to people, list it on the MLS and negotiate. John's paying the broker a commission of probably around 5 or 6% for his services. What a lot of people don't know is that commission gets cut in half if another agent comes along representing a seller in the transaction. No so good for Bob, but John doesn't care because his house is getting sold at the same price and the more people out there looking for buyers the better. This buyer's agent commission fee is the reason why real estate agents love for you to sign that form that says they are representing you looking for a home.

BuySide Realty (and I'm sure as I write this other people are drawing up similar business plans), lets you keep the majority of the buyer's agent commission fee, 75% to be exact. Let's do a hypothetical. Say you are in the market for John's home which is selling for $250,000 and he is paying his broker a 5% commission. The total commission John pays is $12,500 and Bob will keep that if you aren't represented by an agent yourself. If you were represented, your agent would get around $6,250 for their services. If you do a little more legwork and find the home yourself then you can keep 75% of the buy side commission or $4,687.50. I don't know about you, but sounds good to me.

I know that I will get at least a few emails about the indispensable services that real estate agents provide and how buyers using the service will be left unprotected. I don't dispute the fact that agents offer valuable services, but the market has changed. I think the service and others like it are valuable because 1) there is a lot of market research out there now even if imperfect like Zillow (previous post Zillow) 2) real estate agents can't warrant the habitability of homes or conduct inspections for the buyer 3) the buyer is doing the leg work finding properties 4) BuySide provides an agent for the process even if the agent provides reduced services.

Link

BuySide Realty
Image: Creative Commons Karen Apricot

Subprime, Foreclosures and Second Chances

Home foreclosures are up dramatically across the country as part of the subprime fallout, but has spiked especially high in certain areas (see my post on subprime data and heat maps). If you are one of these people who is getting close to foreclosure and wondering what to do, Clark Howard (Clark Howard - Wikipedia) is suggesting that you call your lender and try to work out a deal. He reporting that to avoid foreclosures some lenders have recently began agreeing to extend loans to 40 years. While not a huge amount of relief (usually about 5%) it may be enough to help you ride things out for a little bit. Clark is saying that foreclosures rates have risen astronomically and are up 1,100% in Ventura Co. California, 900% in Orange Co., and 700% in most other Southern California counties and speculative areas in the southwest. Knowing that your lender likely has a lot of other people in the same situation might give you a little big of leverage when negotiating.

Links
Clark Howard - Apr 17, 2007 Foreclosures Up

Selling Your Home? Here's a Way to Cut Broker Fees

Typical real estate broker fees fall in the range of 5-7%. Of course you can list the house for sale by owner and potentially cut out the sell side commission, but how do you attract buyers. One of the cards that real estate brokers hold over potential sellers is the ability to list property on MLS services. That left people interested in selling their homes by owner with the option to go it alone and hope a sign in their yard did the trick, or pay someone to list their house on the MLS.

The internet might change that. If you are looking to buy or sell your home you have the good fortune that two recent internet services are trying to level the playing field. If you are a seller you can head over to Zillow to see how much houses are going for in their neighborhood. You can take that information and determine what your home should be priced at (or how much you should offer if you are a seller). Zillow has received some flack for not having the most accurate data, although I'm not sure anyone has been able to back up these claims. I still think it is better than nothing.

Zillow Screenshot

Next, you can head over to Iggy's House and list your home for FREE on the MLS. Yep, FREE. I don't have a house to sell, so I can't vouch for the service but that seems like a heck of a deal. The site lets you post pictures, a description and most everything else a typical broker would. I have heard there is a couple day lag before your home makes the listing from when you submit, but if you can avoid a 3% commission that seems worth it to me. If anyone has tried out this service please send me an email or post in the comments.

Iggy's House

FYI: You will more than likely not avoid commissions completely selling your home by owner. You could conceivably, but it isn't very likely. If a broker brings you a buyer you will have to pay the buyer's agent commission which runs around 2-3% if my memory serves me.

Links
Zillow - Home Price Data

Iggy's House - Free MLS