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Are short-term home sellers screwed?
21–30 of 49 posts
Re: Are short-term home sellers screwed?
#22There is massive selection bias here. You are not showing how many homes were listed but didn't close. This is measuring only successes, not all the failures to sell.
Also you need to factor in realtor fees on both the original purchase and then subsequent sale (I do not know what they are in the UK, but in Canada they can 3%-7% of the transaction, and this exclude lawyer fees and mortgage discharge fees) which means that you need to get a certain percentage of "gain" in the selling price compared to the purchase price to make any real profit at all. If this was Canada, a good percentage of these so called "profitable sales" would actually be breakeven or slight losses.
Assume realtor fees of 5% on both the original purchase and the sale, this completely wipes out the profit of $168M on the $1.5B of sales. Hmm...
Strange article. It is like the author is not at all knowledgeable at all about how realestate works, or maybe UK is very different than Canada.
Re: Are short-term home sellers screwed?
#23Homes that resell within 90 days are fix & flips. Yes, they sell for a higher price, but there is also more investment put into them than just the purchase price.
> Homes that resell within 90 days are fix & flips. That seems like an unwarranted assumption. How do you know any fixing was involved?
The article treats short-term sellers as though people are randomly choosing to sell their homes after 90 days.
But that defies all logic. It's almost impossible to turnaround in that time by accident.
People who sell after 90 days were almost inevitably intending to do so all along. Fix and flip is a more reasonable starting assumption.
Re: Are short-term home sellers screwed?
#24Homes that resell within 90 days are fix & flips. Yes, they sell for a higher price, but there is also more investment put into them than just the purchase price.
> Homes that resell within 90 days are fix & flips. That seems like an unwarranted assumption. How do you know any fixing was involved?
I guess it would depend if the first sale was brokered by a private individual or by a real estate agent. One would tend to think that most agents would price a home close to market (since they have more information of market pricing than the average person) and prices closer to market would be hard to flip for a large spread in a short period of time.
Re: Are short-term home sellers screwed?
#25A warning to those taking these numbers seriously. I had a go of Tenence service after reading and it's property valuation service gave Very dodgy results for my previous properties. For my last property it gave the wrong square footage and it's valuation method is ridiculous. For example, sold 2010 £200k sold 2017 £400,000 -> valuation £300,000? Valuing a property based on the average of previous sold prices regardl…
Sorry about that, will look into this particular case and fix. For square footage we rely on EPC certificates which sadly are not always accurate.
Re: Are short-term home sellers screwed?
#26There is massive selection bias here. You are not showing how many homes were listed but didn't close. This is measuring only successes, not all the failures to sell. Also you need to factor in realtor fees on both the original purchase and then subsequent sale (I do not know what they are in the UK, but in Canada they can 3%-7% of the transaction, and this exclude lawyer fees and mortgage discharge fees) which means…
Limited by data here unfortunately. The data source I'm using is Land Registry, which only shows successful deals. Regarding transaction costs, in the UK its around 1.5% for broker fees, plus moving and legal costs. There's also capital gains tax on profits generated on the sale, which is a complex mathematic, and applies if its 'not your first home'. And stamp duty (varies by price) which you pay on purchase.
I understand all of your points, and from what you're saying, with the fee levels you've described, it does sound like the UK is different from Canada.
Re: Are short-term home sellers screwed?
#27A warning to those taking these numbers seriously. I had a go of Tenence service after reading and it's property valuation service gave Very dodgy results for my previous properties. For my last property it gave the wrong square footage and it's valuation method is ridiculous. For example, sold 2010 £200k sold 2017 £400,000 -> valuation £300,000? Valuing a property based on the average of previous sold prices regardl…
Sorry about that, will look into this particular case and fix. For square footage we rely on EPC certificates which sadly are not always accurate.
Thats alright, thanks for taking a look at it. I can see why it is very hard to get a good reading of square footage. I was a bit too harsh in my last comment. The valuation algo however is concerning. Perhaps take a look at the Savills local house price indices, I know a number of valuation algos use that heavily alongside Land Reg data. Good luck!
Re: Are short-term home sellers screwed?
#28There is massive selection bias here. You are not showing how many homes were listed but didn't close. This is measuring only successes, not all the failures to sell. Also you need to factor in realtor fees on both the original purchase and then subsequent sale (I do not know what they are in the UK, but in Canada they can 3%-7% of the transaction, and this exclude lawyer fees and mortgage discharge fees) which means…
Limited by data here unfortunately. The data source I'm using is Land Registry, which only shows successful deals. Regarding transaction costs, in the UK its around 1.5% for broker fees, plus moving and legal costs. There's also capital gains tax on profits generated on the sale, which is a complex mathematic, and applies if its 'not your first home'. And stamp duty (varies by price) which you pay on purchase. I unde…
1.55B * 0.03 = 46M in realtor fees. This reduces the expected profit by 1/4.
Re: Are short-term home sellers screwed?
#29There is massive selection bias here. You are not showing how many homes were listed but didn't close. This is measuring only successes, not all the failures to sell. Also you need to factor in realtor fees on both the original purchase and then subsequent sale (I do not know what they are in the UK, but in Canada they can 3%-7% of the transaction, and this exclude lawyer fees and mortgage discharge fees) which means…
I for one paid a fixed sum which came to about 0.65% for the estate agent fees for my latest sale.
Re: Are short-term home sellers screwed?
#30Earlier quoted context omitted.
If you haven’t sold in 90 days, your price is to high. There is always a buyer at the right price. As a real estate investor, I specially target homes going unsold after long durations on the market due to unrealistic expectations.
> If you haven’t sold in 90 days, your price is to high Right. So it's selection bias. The people who can get a price 15% more than they paid manage to sell within 90 days, the people who can't dont.
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