Schwartz Report | Patterson-Schwartz Blog

Contributing blogger Charlie Schwartz, II, shares industry insight and the importance of having the guidance of a true real estate professional in the July 2022 Schwartz Report.

The Federal Reserve’s Open Market Committee voted in June to raise the fed-funds rate* by three quarters of a point, the steepest single rate rise since 1994. Mortgage rates hovered around 3% at the beginning of the year but are now double that and likely climbing. Clearly, we are in a transitioning real estate market for the first time in more than a decade.

Expert guidance for a song?

I’ll start a bit tongue-in-cheek with the old joke about the fellow who goes into a pet store to buy a canary. He hears a beautiful song coming from one of the cages and goes over to investigate. He’s enchanted by the melody but notices after a bit that the bird with the beautiful song is missing a leg. So he calls the pet store owner over and says, “This bird has a wonderful song but look, it only has one leg.” The owner doesn’t miss a beat: “What do you want: a singer or a dancer?” Stick with me folks, I’m going somewhere with this.

We have seen the subject pop up countless times about whether it makes sense in any market to pay full real estate commissions to your real estate agent to manage the sale of your home. “Why should I pay so much to hire an expert when houses have been selling themselves and a mere posting anywhere will generate multiple and escalating offers?” Even the downtrodden buyers of late might ask, “why should I pay a fee to my buyer’s agent to find me the right home when everything is online?” The answer is straightforward but has gotten little attention lately —because you are depending on this person and his or her company to help you reach your goals in a sale or purchase. Going forward, you need an expert guide if you are traveling an unmarked and even dangerous road.

You see, selling or buying is not an event. It is a process. Frequently, it proves to be a long process. So when contemplating either a purchase or a sale, you’ll need a committed guide who has both product knowledge and process skill to get you where you need to go. Finding a buyer willing and able to pay market value at a time of mass uncertainty takes a true professional. A minor miscalculation in trying to time the market could cost thousands. Finding reasonable financing alternatives at affordable rates isn’t a walk in the park today either. A superior agent will be there working for you right up until the closing and will stay with you long after that as well.

“Shopping” for the right agent

So, choosing the right agent to represent your interests is definitely not like going to the pet store. There are many more choices than just singers or dancers. I’ll set down here four criteria to judge by and then one bottom-line question when making that choice in the upcoming market.

1. Product knowledge

What is your competition, where is it, and what is it selling for? Asking prices in the forthcoming market will mean nothing to prospective buyers. Future market activity will be a cross between a price war and a beauty contest. Your asking price and terms must be compelling not just competitive. The condition of your property will need to be sample-house ready. Buyers have always bought by comparison and a good agent will help them become as market-savvy as they can be. Sellers will need an agent with the courage of his or her convictions who will tell them what they need to know, not one who is telling them what they want to hear.

2. Process Skill

A real estate transaction has been likened to an iceberg floating in the ocean. Buyers and sellers only see the top tenth of what goes on in their transaction. The other nine tenths lurks unseen beneath the waves and is critical enough to sink the deal if you do not have a skillful pilot at the helm. Frankly, when the property sells is when the real work begins. Home inspection, appraisal, and mortgage issues will call for subsequent rounds of delicate negotiations.

3. NEGOTIATING SKill

As one fellow put it: “If they were mild-mannered when negotiating with you on price, condition, terms of sale, etc.; then how likely is it that they will turn into a super-agent when negotiating with the buyer or seller on your behalf?” So, in the coming market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars.

4. Marketing Plan

Most agents put this up front in their presentation, but there is a reason that I save it for last. No amount of hype will compensate for an noncompetitive price, poor location, or poor condition in a re-balancing market. Regardless of the mix of media employed, the plan should seek to know and take advantage of the methods that prospective purchasers are using to find the home of their dreams. Furthermore, you’d be smart to employ an agent who can be your ambassador to other agents and who has a reputation for doing good business. Because in the coming marketplace, nobody will have all the prospects.

Bottom-Line Question

When interviewing a real estate agent, ask them why they believe that now is a good time to buy a home or make an investment. They should be able to explain that simply and effectively. Buyers are becoming increasing nervous about buying as interest rates go up. They will want to know that they are making the right choice. You’ll need someone who believes that this is one of the best times in American real estate history to buy. If an interviewee gives you a song and dance on that, how will they be able to convince a potential buyer to buy your home or get that nervous buyer to take that leap of faith?

*The Wall Street Journal defines the fed-funds rate as the overnight rate on lending between banks. It influences other consumer and business borrowing costs throughout the economy, including rates on mortgages, credit cards, savings accounts, car loans and corporate debt. Raising rates typically restrains spending while cutting rates encourages such borrowing. The mortgage market will be negatively affected by the prospect of tighter money.

About Patterson-Schwartz

At Patterson-Schwartz Real Estate we are proud of our 60+ year legacy that proves we are prepared for any market challenge and only getting stronger. As Delaware’s largest independent real estate brokerage, we are represented by ten offices and over 550 highly-skilled sales associates and staff. Our full range of services include residential home sales and rentals, relocation services, and property management. We invite you to connect with us when you’re ready to partner with a local super-agent.

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Contributing blogger Charlie Schwartz, II, shares real estate insight steeped in family tradition in the January 2021 Schwartz Report

My father was fond of dispensing real estate bromides in the form of little parables that more often than not had snappy punch lines. They often left the receiver scratching their head trying to winnow out what he was intending. For example, take these two which are particularly appropriate to today’s inventory starved seller’s market: “You can’t sell fruit from an empty wagon”; or, “You wouldn’t go to Happy Harry’s if Happy Harry didn’t have anything on the shelf.” By which he meant to charge us with the need to urge more sellers to put their homes on the market NOW! For a buyer’s market when prices were too high and showing activity stagnant, there was this one: “Too much weight stops the freight.” That generates images of a little steam engine struggling to pull a heavy load up an impossible incline much like a seller trying to get more for his property than the current market will bear.

To a buyer, most appropriately to a first time buyer, there’s this gem: “Never buy a home on a road with a line down the middle of it.” This gets at the three most important things about residential real estate, location, location and location. Highway departments put lines on roads with significant traffic counts, don’t they? So stay away from them. Here’s one that will need some explaining. It gets to the subject at hand: “Never buy a home that is older than you are.” This seems like the most improbable dictate of them all. It might be difficult to follow especially in our three state market area where many homes date well into the last century and beyond.

photo scanned from “Houses, The Illustrated Guide to Construction, Design and Systems” by Henry Harrison

Here he was advising that you not take on more of a fixer upper than your age, finances, temperament and or experience will allow. A historic home, one full of “character”, which may have been the former residence of some important family, might just be a project that you take on at your peril, a bridge too far. The illustration above is one of 56 that appear in the first reference book that I bought after starting in the business. Houses, The Illustrated Guide to Construction, Design and Systems by Henry Harrison was published in conjunction with the National Association of Realtors in 1973 and many sections, particularly those dealing with classic home architecture, are still valid today. Want to know the difference between a Cape Cod Colonial and a Cape Ann Colonial or a Dutch Colonial and a Salt Box Colonial; it’s in there. You will find a Swiss Chalet and a Spanish Villa as well.

When you consider that European settlers began constructing homes on the Atlantic Seaboard in the early 1600’s and that many of those dwellings survive in one state of repair or another to this day, it’s not difficult to fathom the appeal of owning such a place. Perhaps fond memories linger of the This Old House show on WHYY where the team came to the rescue of a historic treasure.

But remember the lighthouse keeper is also responsible for the light house’s upkeep.

You will also meet an interesting and interested group of people who may at any moment become your not-so-silent partners in the endeavor. This is especially true if you have any changes in mind. Imagine something as simple as repainting the house in the exact same color that it has been for years and having to get someone’s approval to do it. A seller of mine who was the proud owner of a 200 plus year old farm house on the historical register referred to these preservationists as the “hysterical review committee”. That farmhouse is still there but the new owners started with not just “wide pine floors and cast iron latch door handles, horsehair plaster walls and antique wallpaper.” They also got “…windows that won’t close, sagging rafters and old water stains on cracked ceilings…” and “…an electrical system that consists of well-fed rats physically carrying tiny baskets of electricity to the lamps and appliances…” a reference no doubt to the knob and tube wiring. The preceding quotes are taken from Kris Frieswick’s “Historic Home Horror Show” that appeared in a MANSION section of the Wall Street Journal this past December.

Owning a historic home will make you proud but also be prepared to become the museum’s curator, the lighthouse’s keeper and as Kris Frieswich advises: “Put the following professionals on retainer: A master plumber, an electrician and a furnace specialist.” You might also throw in a master mechanic, carpenter and cabinet maker. And before you choose your team ask each of them, what is the oldest historic home they have ever worked on. If they can describe their experience positively and without breaking down they’re keepers.

About Patterson-Schwartz: A Sixty Year Legacy

Patterson-Schwartz Real Estate opened for business on December 1, 1961, when William D. Patterson, Charles E. Schwartz and a small group of associates left the firm of Hanby, Patterson-Schwartz, Inc., Realtors to form their own company. The fledgling group began business in a semi-detached house at 1013 Washington Street in Wilmington, Delaware, with a staff of just 10 people. Today Patterson-Schwartz has grown to a sales team and corporate staff of over 400 strong and has expanded to nine locations that stretch from Brandywine Hundred to the Delaware Beaches.

Category: Schwartz Report

Singer, Dancer, Super-Agent: Who do you want by your side?