Prescott AZ Real Estate -- MyPrescottHome.com from Gretchen Blankenship, REALTOR®, GRI

Is It Time to Throw in the Towel on Real Estate?

Area Activity

January thru December 2006

	Prescott		Prescott Valley		Total
Jan 1 - Dec 31	New Listings	Homes Sold	New Listings	Homes Sold	New Listings	Homes Sold
2006	2,658	1,096	1,881	815	4,539	1,911
2005	1,748	1,466	1,345	1,149	3,093	2,615
% Change	52.1%	-25.2%	39.9%	-29.1%	46.8%	-26.9%
Current Active Listings	965		581		1,546
	Dec 2006	Dec 2005	Dec 2006	Dec 2005	Dec 2006	Dec 2005
Median Price (3-Bedrm)	$400,000	$399,600	$241,500	$265,000	$285,000	$269,900

tatistics, statistics, statistics! While researching the housing data for 2006, I found a variety of Statistics. One source reported that 2006 saw the biggest decline in home sales in 17 years. Another source said it was the biggest in 24 years. But regardless of the statistics, it was apparent that the housing market was definitely in a slump this past year. And new home builders were particularly hard hit.

FAQs About Real Estate

Doesn't the real estate agent always represent the seller?

• Realtors in the state of Arizona have a fiduciary duty to represent their client (whether that client is a buyer or a seller) to the best of their ability and agree to put their client's interest ahead of their own.

Who pays the agent's commission?

• Generally speaking, the seller pays the realtor's commission. He initially contracts with a real estate agent to represent him in the sale of his property. If the agent successfully sells the property, then a commission is paid out of the seller's closing funds. Ex. The Seller hires Joe Blow of ABC Real Estate to sell his home. Jane Snow of XYZ Realty brings an offer from her buyer that the seller accepts. At the close of escrow, the commission is paid to ABC Real Estate and XYZ Realty (usually split 50/50, but not always). ABC Real Estate then pays a portion of their commission to Agent Joe Blow and XYZ Realty pays a portion of their commission to Agent Jane Snow. In other words, the commission usually gets split (unequally) four ways.

Do I still have to pay a commission if my home doesn't sell?

• No, if the home does not sell, the agent does not receive a commission unless the seller has breached the terms of the listing agreement.

As a buyer, will I have to pay a commission to my realtor?

• Generally, a buyer never pays a commission unless he has entered into a contract with a buyer's agent for exclusive representation and has agreed to compensate that agent. (Not all buyer agents ask for compensation from the buyer.)

As a buyer, won't I get a better deal if I call the agent whose name is on the "For Sale" sign?

• No, the agent whose name is on the "For Sale" sign represents the seller of that home. That agent has a fiduciary duty to represent his client, the seller. At the very least you will enter into a "limited representation" situation where the seller's agent will not be able to give full and complete representation to either the buyer or the seller. If you would like complete representation, you should choose a realtor that does not represent the seller of the house that's for sale. The agent that you choose to represent you will likely show you some other homes in your price range, and give you information about the fair market value of the home you choose to make an offer on.

In researching the data, I did find it interesting that some areas such as Oregon, Utah, and New Mexico had significant increases in home sales. And while experts had predicted that California and Arizona would have huge double-digit price declines, the West had only a 0.9% decrease in prices. In Arizona, Phoenix prices fell 0.6% while Tucson prices actually increased 0.6%. Meanwhile, prices in many Midwest cities (which have much lower median home prices than those in the West) had significant price declines. I guess that just goes to show that it's all about "location, location, location" even when it comes to choosing a city in which to live. People will always want to relocate to areas that have a lot to offer. Here in Arizona, Phoenix and Tucson have jobs, while Prescott has wonderful weather and that “small town” charm.

There is, however, one statistic for Arizona that I thought was particularly significant and seems to apply to our Prescott market, too. While the median price of a home did not decline dramatically in 2006, the number of homes sold dropped by 38% in Arizona. And if you notice the chart, Prescott/Prescott Valley sales dropped by almost 27%. (I might also mention that while median home prices for all of 2006 as compared with 2005 were about 3.7% higher, keep in mind that home prices at the beginning of 2005 were substantially lower than they were by the end of 2005. Thus if you compare December 2006 median home prices with December 2005 median prices, you will see only a slight increase in the median home price in Prescott and a 8.9% decrease in price in Prescott Valley.)

So what do all these statistics mean for Ordinary Joe Homeseller and Average Joe Homebuyer? If you're a homeseller, it means patience is a virtue. There are many homes for sale right now, and it's taking longer for them to sell. However a lot of hard work to get that winning combination of pricing, marketing, and condition will still get a home sold. But be prepared to wait four to six months for a good offer. If you're a homebuyer, good news! You can by picky. You can make a reasonable offer and expect to have it accepted. And you can still take advantage of low interest rates!

"Experts" are predicting the market to return to normal by midsummer. In our area, if some of the excess investor inventory is sold, then a mid-summer pickup would appear to be plausible. In reality, this slower past year is closer to a "normal" real estate market than the crazy multiple offers and double-digit appreciation of 2004 and 2005. It will be interesting to see how 2007 shapes up.

And remember I'm available to answer all your real estate questions throughout the year!

For more information click on the Current Reports tab to request a free copy of these reports: 5 Important Questions to Ask When Interviewing an Agent and 10 Tips for Staging Your Home. And of course, I'm always available to answer your questions at 928.533.3698. Or click here to send me a message.

The Real Estate View