Virtual Open Houses

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Selling a home is expensive -- especially after agents take their 5% or 6% cut. But as we reported on March 20, some Realtors have started charging commissions of as much as 8% to make up for the time and expense involved in finding buyers during the worst housing market in years.

Sellers who agree to pay the hefty agent fees are sometimes given premium services, such as home staging, media blitzes and guarantees that the house will be sold within a month or two. But the higher commissions are intended primarily to give agents an incentive to direct buyers to the property and to play up the pros and play down the cons.

So, does it work?

Sellers typically pay up to 6% in commissions, about 3% of which goes to the buyer's agent. But a new study of 2007 home sales in King County, Wash. by online real estate brokerage Redfin says that sellers who paid exactly 3% to the buyer’s agent sold their home faster than sellers who paid either more or less.

It took an average of 68 days for a home to sell when the buyer’s agent was given a 3% commission; it took 89 days when the commission was below 3%; and it took 129 days when the commission was above 3%, according to Redfin.

Of course, as Redfin points out, sellers offering extra-large commissions might be doing so for a reason.

“Is it the doing of the seller’s agent, who offers a lower commission on a property he knows will sell, and a higher commission on a property he thinks will be difficult to move?," the Redfin report says. "Or was the high commission itself a signal of desperation that encouraged negotiating?”

How to get top-shelf looks without spending top dollar on popular home-improvement projects.

We’re a victim of our own success. A little less than three years ago I wrote an entry to this blog, titled “Washington DC Bubble?” that was fueled off of a return visit to D.C., where I lived for nine years (’89 to ’98). We were visiting old friends over Spring Break, and one of the houses next to my old place was on the market – for more than $500,000! (We’d sold our house for $228,000 in late 1998.) I went through the Nine Levels of Sellers Remorse, unable to believe how much money we’d “left on the table,” but after I calmed down, and did more thinking and more research about the DC housing market, I came to this inescapable conclusion: The Washington market was a big soapy bubble that at some point would pop.

I penned that entry, was quickly taken to task by Washingtonians who didn’t agree with my view, and the battle was joined. That thread became the most followed in the history of Hot Property – with, as I type this, nearly 1,300 entries! But we’ve gotten complaints from some followers of the thread that it’s become too unwieldy – that it can take forever for the full page to load. We consulted with our programmers to see if they could chop the thread’s comments into three different entries, but they couldn’t. So there’s only one solution: I’m starting a new thread, “Washington DC Bubble? The Debate Rages” and ask that you post comments here.

And here’s my latest two cents on the DC market: Several weeks ago I posted a new entry that my old house was on the market, with the current owner asking $529,000, which was well above what I’d sold it for but below the latest valuation estimates from Zillow et al.

As I noted at the time, in my view that price was still way to high. I now have news that the house sold after just a few days on the market, but first a big confession and concession on my part:

Neil Gronowetter, real estate professional and attorney, has joined Eastern Consolidated as a director, the firm has announced.

A new study by the Initiative for a Competitive Inner City says that inner cities are being harmed even worse than other parts of the country by the foreclosure crisis. In 2007, 0.63% of residences in inner cities were taken over by banks, vs. 0.31% of residences in the rest of the country.

Here are ICIC's results for the inner cities with the highest rates of properties entering banks' "real estate owned" (REO) portfolios:

Detroit 3.7%
Cleveland 3.0%
Atlanta 2.6%
Indianapolis 1.9%
Akron 1.8%
Stockton 1.7%
St. Louis 1.6%
Toledo 1.6%
Sacramento 1.6%
Kansas City 1.6%

Only one California city is on the 2007 list, but ICIC says "based on the number of properties in early stages of foreclosure in the last months of 2007, we expect that in 2008, California inner cities will figure much more prominently in the foreclosure crisis than they did in 2007."

When homes become vacant they tend to deteriorate and attract crime.
ICIC's conclusion: "the current crisis could undermine decades of hard-won gains in inner city neighborhoods across the country."

Approximately three months after having formed a special committee to explore options for enhancing stockholder value, including a potential sale, Los Angeles-based Maguire Properties Inc. has announced that no desirable offers have come to the fore and that the pursuit of a buyer will no longer be part of its consideration of possible alternatives.

Approximately three months after having formed a special committee to explore options for enhancing stockholder value, including a potential sale, Los Angeles-based Maguire Properties Inc. has announced that no desirable offers have come to the fore and that the pursuit of a buyer will no longer be part of its consideration of possible alternatives.

Forest City Ratner Cos. has announced the closing of $680 million in construction financing for its mixed-use Beekman development in lower Manhattan.

A decision by the owners of Madison Square Garden to renovate the 40-year-old arena rather than move it as part of the $14 billion Moynihan Station development in Manhattan may derail the project, at least temporarily.