Boise Real Estate Blog

Meridian, Idaho Real Estate Stats For November 2008

Here’s a snapshot of November’s real estate activity for Meridian, Idaho:

December 7th, 2008 Posted in Meridian Market Stats |  Print This Post | No Comments »

Eagle, Idaho Real Estate Stats For November 2008

Here’s a snapshot of November’s real estate activity for Eagle, Idaho:

December 7th, 2008 Posted in Eagle Market Stats |  Print This Post | No Comments »

How Are Boise Real Estate Agents Doing?

We have about 3,300 real estate agents in Ada County.

Those agents closed a total of 5,350 residential transactions in the past twelve months, which works out to an average of 1.6 closed transactions per agent per year.

But, those numbers don’t even begin to tell the story.

If you take our median sales price of roughly $200,000 X 3% each (assuming a 6% total commission shared by two agents), that works out to about $8,400 gross commission per agent.

But the buck doesn’t stop there.

Most agents split their commissions with their broker and a typical commission split is around 50/50 to 60/40 for all but the most experienced agents.

If their broker is generous enough to let them keep 60% of their earned commissions, that works out to $5,040 in net earnings for the agent over the past twelve months.

From that, the agents get to pay their own expenses including auto, telephone, advertising, insurance, etc.

By the time they’re done, they didn’t even break even let alone come close to a poverty level income.

There are only 1,728 agents in Ada County who have closed one or more transactions in the past twelve months, leaving about 1,600 agents who haven’t closed even one transaction in the past year.

Then there’s the fact that about 10% of the agents (the really competent, established ones) are doing about 90% of the business that’s being done.

Winter is just around the corner and we all just received our annual dues statements.

This is the time of year when many of those agents are asking themselves if it’s worth it to remain in real estate.

I have been through many markets worse than this during my 36 years in real estate, including times when interest rates were 21%.

I will still be around when the dust settles.

I actually do better in difficult markets like this one because my clients want/need someone who knows what do do when the going gets tough.

Data pertains to Ada County single-family homes on lot/acreage for the period of 12/1/07 to 12/1/08.

December 3rd, 2008 Posted in Inside Real Estate |  Print This Post | No Comments »

How I Failed In Boise Real Estate

I achieved a milestone in Boise real estate on October 31^st that I would rather forget about.

I failed.

My failure was my first expired listing since in the past eight years in the Boise real estate market.

I have always prided myself on selling every listing I take and I will not take a listing unless I’m sure I can sell it.

Contrary to popular real estate practices, I have never felt that a listing was a prize to be won.

(amazingly, some real estate companies conduct listing contests to see how many listings they can accumulate in a month, regardless of salability).

I have always felt that listings are a huge responsibility for the listing agent; not a casual undertaking.

With this particular listing, I had willing, motivated, cooperative, referred sellers with little equity who couldn’t reduce their price in a declining market.

And, the market for that property declined by about $10,000 during the time I had it listed.

The good news is that this was my one and only expired listing out of the 103 listings I have taken in the past eight years.

That works out to more than 99% of my listings selling over the past eight years – a record I will proudly claim.

So, no need to worry; I am not suicidal over this failure.

It simply proves that I am human.

It also proves that both sellers and listing agents must do everything right to achieve a sale in this market.

November 29th, 2008 Posted in Inside Real Estate |  Print This Post | No Comments »

Anatomy Of A Boise Real Estate Short Sale

I closed my worst escrow in 36+ years of real estate this past Wednesday.

And (surprise!) it was a short sale!

Here are the details:

• Property was worth $210,000 to $215,000 at the peak of the market in 2005-2006.
• $106,000 1^st loan with Countrywide.
• $90,000 HELOC with Washington Mutual (WAMU) after seller stripped equity to buy another home.

(the above loan amounts mean that Countrywide would benefit by foreclosing and thereby wiping out WAMU’s 2^nd position, and that WAMU has no negotiation power whatsoever unless they want to pay off Countrywide and try to sell the property themselves).

• Seller turned subject property into rental with $600/month negative cashflow.
• Seller had to evict tenant who abandoned property in poor condition, costing seller $2,000 in lost rent and repairs.
• Listed the property @ $184,500 in June when the seller stopped making payments.
• Reduced the price to $165,000 in July after no activity at $184,500.
• Sold the property @ $165,000 and submitted sale to WAMU for approval.
• Seller unable to contact anyone at WAMU except for “Kumar” in India who didn’t speak English
• Buyer withdrew offer because WAMU didn’t respond to offer after more than 30 days.
• Sold property 2^nd time to investor for $165,000.
• Nervous investor withdrew offer when three major wall street investment firms collapsed.
• Reduced price to $149,900 in August.
• Sold property for 3^rd time to first-time buyers and agreed to pay $4,500 of buyer’s closing costs.
• Resubmitted offer to WAMU.
• WAMU finally approves the deal, but misses the fact that they are to pay $4,500 of the buyer’s closing cost, which results in requiring another two weeks to “rework the file” (WAMU’s national short sale manager e-mailed me, saying “we don’t have time to read all the contracts we get” when I pointed out that the $4,500 of buyer’s closing costs were spelled out in the contract).
• WAMU unilaterally reduces the commission from 6% to 5%, a clear violation of Idaho law covering interference in an existing business relationship; not to mention that my listing agreement is between me and my seller, not WAMU, but I have no choice but to agree to their “commissionectomy”.
• Home inspection is completed with only minor repairs noted.
• Property appraises for $157,000.
• Buyers run clock, stalling to close, because they need to “give 30 days’ notice” to their landlord despite my warnings to the buyer’s agent that Countrywide could file foreclosure and kill the deal.
• Buyers are working with a mortgage broker who changes companies in the middle of the deal and buyers fail to lock their loan, thereby risking rising rates in a tumultuous financial market.
• Countrywide files foreclosure on 11/22 ~ four days before closing and five months after the seller stopped making payments.
• Countrywide orders locks changed and property winterized on 11/25; I tell winterization contractor they will be prosecuted for illegal entry and trespassing if they set foot on the property.
• Seller contacts Countrywide about not winterizing the house, no one at Countrywide can tell her what’s going on or who to talk to, and that they don’t know if they have begun foreclosure proceedings.
• Miraculously the contractor calls and says the winterization order has been cancelled.
• After days of calling Countrywide to get a final payoff amount, my escrow officer gets it at 11:00 a.m. on 11/26 and learns Countrywide has added on $3,300 in legal fees to file the one-page Notice of Default that officially starts foreclosure proceedings (gee, I wonder if Countrywide owns the company handling the legal paperwork and makes a profit from foreclosing on their own loans?).
• Seller brings a cashier’s check to escrow to cover the additional legal fees so she can avoid a foreclosure on her credit report.
• Escrow closes, no contact from the buyer’s agent, and this five-month long saga is over.

Some title companies are now charging extra to handle short sale escrows.

The word on the street is that only 1 in 4 short sales closes escrow, and the typical short sale often takes months to close.

Now you know why very few real estate agents will go near a short sale and why they languish on the market.

November 28th, 2008 Posted in Inside Real Estate |  Print This Post | 4 Comments »