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August 01, 2008
CARPE DIEM: Expired & canceled listings create "commission-free holiday" for buyers & sellers
Massachusetts home buyers, if you have been waiting for housing prices to slide into your acceptable range, this could be time to "carpe diem." As shown in the graph above (click for larger image) of MLS activity during June & June over the past 15 years (1994 to 2008):
- The number of off-market properties -- expired, canceled & temporarily withdrawn listings -- surged to a new record of 16,319 properties just after midnight.*
- In contrast, sales have fallen from a peak of 19,180 in 2006 to 12,335 in 2008 (as of 12:30am, August 1).
- That means that sales are down by about a third, while off-market listings have nearly doubled since 2005 when we first wrote that expired listings were a leading indicator of the real estate bubble.
- Over the past three years (2006-2008), more properties have been pulled off the MLS than sold during June & July. For every three listings closed in the past two months, four were pulled off the MLS statewide in Massachusetts.
What do these raw numbers mean to buyers and sellers? Think of expired and canceled listings as a two-sided window of opportunity, or the real estate equivalent of a "tax-free holiday." Sellers can accept an offer about 5% less than their last asking price and still net the same profit because they are no longer obligated to pay a traditional real estate commission.
Will this "commission-free holiday" be enough to motivate buyers to make offers, or will motivated sellers in Greater Boston begin making offers to well-qualified buyers as is happening in other markets?
The Real Estate Cafe is advertising buyers on Zillow to make it easier for motivated sellers, particularly those who have received pre-foreclosure notices, to find them. If none of our buyers wants to purchase your home, we offer seller services "a la carte" on a fee-for-service basis. If you'd like to learn more about how to sell your home "for sale by owner," we're organizing a FSBO support group and invite you to see our "FSBOs on Steroids" presentation. If you're not interested in selling on your own, we'd also be glad to do a Listing Agent Report Card to help you select a new listing agent and try to negotiate a reduced commission. Email for more details.
* Technical note: Includes all residential property classes in MLSPin: single family, multi-family, condominiums and land. Temporarily withdrawn listings available for 2008 only.
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Great point. In this slow market, there may be bargains that come off market. Buyers should remember that a property might still be available even if it isn't listed.
Keep the great information coming.
Posted by: Bob L. | Aug 1, 2008 3:16:09 PM
All this is rather discouraging, but think about it this way. The sliding homes prices and sales will cause the market to change in such a way that young people and other people who never could have afforded to buy homes can now begin building their wealth by owning property. It needed to balance out sometime. Nothing can go on or up forever. I talk about this and more on my blog http://web.mac.com/audrab/iWeb/savvyseller/Blog/Blog.html
Posted by: Barry | Aug 6, 2008 5:57:03 PM
Buying an expired listing is a great way to find a bargain. Just be careful - the listing agent may come after you for their commission if they can prove procuring cause.
Posted by: Michelle | Aug 27, 2008 12:03:40 PM
That's an important point to raise, Michelle. If one of our buyer clients sees a listing before it expires, at an open house for example, we explain that they should expect that the seller is still obligated to the terms of their original listing contract.
If our client learns about the expired or canceled listing AFTER the contract expires, buyer and seller should be free to correspond and negotiate directly without any fear of procuring cause claims. Correct?
If a listing is temporarily withdrawn, we advise buyers to wait until the property comes back onto the market or the MLS status is changed to expired or canceled listing. That avoid any questions about procuring cause and gives our buyer the opportunity to save the commission if the seller cancels the listing or the contract expires.
Over time, The Real Estate Cafe has developed a 10 step "recipe" for approaching sellers with expired and canceled listings. We currently limit distribution to paying clients, but welcome inquiries by phone or email.
Posted by: RealEstateCafe | Aug 27, 2008 1:53:51 PM
The night before our listing expired, an agent brought over a prospective buyer. The agent will not return our calls, but now the buyer came over on their own. Our listing is through a family friend, so not worried about listing agent. But, if this buyer sells their house, they can be free to buy ours. How long would we be obligated, if we are, to pay a commission to the buyers agent (since she showed it the night before it expired)? The buyers did not sign a Buyers Agreement but has received emailings for a few months from the agent.
Posted by: haler | Sep 27, 2009 8:05:06 PM
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