Fritz Pfister

The Capital Area Association of Realtors (CAAR) MLS member brokers reported an increase in home sales for April 2007 compared to April 2006. The 380 closed home sales represents a 7% increase. The median sale price increased by $750 to $95,750. Days on the market for listings that sold was 78 days.

While national home sales continue in decline, this central Illinois community once again shows the stable historical nature of the local housing market. Granted the first four months saw a slight decrease in the number of homes sold by 3.7%. The harsh winter weather experienced in January and February is probably why home sales aren’t equal to or greater than the first four months of 2006 which saw record mild weather.

The home sellers served by the Realtors of CAAR do have their challenges this year. The inventory of homes for sale is at the highest level on record for this time of year with 1728 homes available for sale. The number of unsuccessful selling attempts is also at record levels with withdrawn and expired listings up 11.3% to 1112 the first four months of the year. Days on the market for sold listings has increased to 79 days. This does not include available listings for sale, sold pending listings, withdrawn, or expired listings that were on the market averaging over 180 days without selling.

This stable market has once again bucked national trends. The median sale price of a home fell 1.5% nationally while the local market is up by 2% through April to $94,900.

The challenge of competition for buyers remains for home sellers as 1 in 3.12 listings sold and closed through April. The homes in the best condition, priced fairly, and in desired locations will continue to sell. The problem faced by many sellers this year will be the sellers that paid premium prices (the polite way of saying they paid too much) in the sellers markets of 2002 through 2005. The ability to recover their investment in this buyers market is limited.

Too many buyers simply call agents off signs, work with the first agent they meet, work with an inexperienced Realtor (60% in Illinois have less than 3 years service), and fail to approach the home buying process as a business decision by obtaining representation from an established Realtor.

Many home buyers also purchased directly from for sale by owners without representation and paid far too much. Too many buyers believe for sale by owners are bargains because the seller isn’t paying a fee. In the real world of real estate the opposite is true the vast majority of the time. The for sale by owner wanted more money than what the agents they interviewed said it would sell for. Many of these buyers of for sale by owners are now the sellers of today that have their homes listed below what they paid in the sellers market.

To purchase a home without representation simply puts a home buyer at the greatest risk for making mistakes, and some are extremely costly. Home owners that don’t approach the sale of their home as a serious business decision, in this most competitive market in history, also are apt to make the most mistakes. Many costly, but none more costly than not getting sold, when there is a legitimate need to sell.

The value of a Realtor should not be underestimated. Back in the sellers market ABC ran a special where sellers in New York were selling by owner to unrepresented buyers, and selling tens of thousands above what the Realtors said the home was worth (see blog from Oct. 2005). ABC’s contention was that agents were underpricing in order to obtain a quick sale. I wonder how these buyers feel about that contention now that prices have dropped double digits? I wonder how those buyers feel living in a home worth far less than they paid? I wonder if they now wish they would have had representation from a professional? However, revenge may be sweet for those buyers. The sellers probably went to Florida to buy, probably unrepresented, and will now lose the ill-gotten money they obtained from the overpriced sale, as prices in Florida continue to fall.

My advice is to be safe rather than sorry when buying or selling a home. Hire the best Realtor you can find. An experienced, ethical, knowledgeable agent will always be the best investment you could ever make when buying or selling a home. Regardless the market, buyers, sellers, or level.