No Savings in FSBOs

The December 24^th edition of Banker and Tradesman features an interesting page-one article on the FSBO market. The percentage of For Sale By Owner properties in Massachusetts has remained steady over the last 2-3 years. That might be surprising given the growing number of companies that offer limited marketing for FSBOs and the amount of shared information online.

The Massachusetts Association of Realtors believes it’s found the “fly in the ointment.” Though homeowners save on the typical 5-7% commission, there is a dramatic difference in sales price: in a MAR 2006 survey, the median sale price for FSBOs was $312,000, compared to agent-assisted sales at $385,000. The math shows a net gain for homeowner’s using agents:

$385,000 – median agent-assisted sale

- $19,250 – agent commission (5%)

$365,750

After the commission is paid, the agent-assisted homeowner got $53,750 more than the median FSBO sale!

What are the reasons for the discrepancy? The Banker and Tradesman article points to a number of tools that agents have: greater marketing exposure, proper pricing, expertise in negotiations and proper disclosures. The article also sites that these tools are more important in a market such as this.

Source: http://www.bankerandtradesman.com/pub/5_316/residential/198256-1.html

For more information, email us at gibsonSIR@sothebysrealty.com or visit our website at http://www.gibsonsothebysrealty.com/ .

Gibson Sotheby’s Celebrates Its First Year Anniversary

Local firm finds remarkable success in global affiliation

“We never dreamed that we could achieve this kind of success in our first year. It is like an early holiday gift,” said Larry Rideout. He and his partners, Paul McGann and Michael Hansen, acquired Boston’s largest independent real estate company in November of 2006 and brought it into the Sotheby’s International Realty network one month later. “Sotheby’s international reach and high standards were just what Boston homeowners were looking for and they have welcomed us into their homes in the most remarkable way.”

In the months following that landmark announcement last December, the partners absorbed a Westwood office to reach out to suburban homeowner’s and then merged with Back Bay’s luxury powerhouse, Dickerson Real Estate. Then, the most successful Waterfront office joined them, followed by Lois R. Kunian Real Estate, a 27 year veteran of the business. They further enhanced their portfolio of services by building a relocation division that has now placed more than 400 referrals around the world, winning an award in October at the Who’s Who in Luxury Real Estate Fall Conference in Vancouver. Gibson Sotheby's was one of only 8 award winners within the network of over 450 luxury real estate firms.

“While many other companies have been downsizing, we’ve been growing,” said Owner, Paul McGann. “After acquiring the top company in the city and bringing in the centuries old Sotheby’s name, other agencies began calling us. We completed our 3 year plan in the first 10 months.” Gibson Sotheby’s International Realty more than doubled their agent base in first year, upgraded their offices and opened a new space at 69 Newbury Street. They exceeded last year’s sales volume by the end of August and raised sales by more than 36% over last year. Since January, their firm’s ranking has been boosted from number 16 to number 10 in the state (source: MLS). Their Rental Division, the largest in the city, was up 33% over last year. So what about the down market? “We haven’t seen it,” said Hansen. “We’ve been helping more people purchase homes this year than I can remember. We’ve seen the real estate market slow down a bit around the country. But, in and around Boston, homes are in high demand.”

The company has also participated in several events around the world to see how they might find new ways to service their clientele. “In the last year, we’ve been to New York, Connecticut, Scottsdale, Colorado, California, Grand Cayman, Canada, England…” said John Ranco, Gibson Sotheby’s Sales Manager. “In fact, we just got back from Las Vegas for the National Association of Realtors Convention. Last week I had the opportunity to visit our office in London & toured the Auction House at New Bond Street. Each trip is an opportunity to develop as individuals and as a company, knowing that local homeowners benefit from our professional growth and our personal investment in our service.“ Ranco notes that Sotheby’s global ties allow his Boston firm to reach out to the influx of international investors who are taking advantage of the powerful Euro.

The growth plan for Gibson Sotheby’s International Realty in 2008 is under wraps. “We have some very exciting plans in the works,” said Rideout. “Don’t be surprised if we complete our 5 year plan in the next 12 months.”

For more information, go to http://www.gibsonsothebysrealty.com/ or call 617.426.6900.

Contrary to News Reports, Boston Luxury Market Remains Strong

By Larry Rideout

Recent news articles are celebrating Boston’s thriving luxury real estate market (“Hub’s Condo Market Enjoys Life of Luxury” in Banker and Tradesman and “Finding a windfall in their walls” in the Boston Globe). This may seem inconsistent with the “Chicken Little” syndrome in the media for the last 18 months. You might wonder how the sky could be falling while the luxury market is booming. There are a few reasons for this phenomenon:

1. The sky isn’t falling… in Boston – While much of the nation has seen a major market correction, Boston has remained strong. My real estate colleagues in beleaguered markets like Las Vegas and Miami have battled falling prices and rising inventory levels. By contrast, Boston and Manhattan have experienced a relatively small correction. For the months of January-October, there was a 27% increase over 2006 in homes sold for $1 million or more. There was a 17% increase in homes sold at all price points. (Source: Boston’s MLS for Back Bay, Bay Village, Beacon Hill, Leather District, Midtown, North End, South End, Waterfront).

2. Boston was less affected by the recent drama in the mortgage industry – The national media rallied around horror stories of 13% mortgage interest rates and a shocking increase in foreclosures. However, the most dramatic hikes and salacious stories took place in California; a state that has been historically less stable than the New England states.

3. The luxury buyer is unaffected by recent changes in the mortgage industry – Many luxury buyers do not utilize loans to purchase homes. Some are cash buyers or are utilizing the 1031 exchange process.

4. The falling dollar makes this market more attractive to foreign investors – One UK pound buys $2 and one Euro buys $1.50. This means a higher value of investment for foreign buyers. Local real estate companies with global ties are seeing a rise in the number of international buyers for properties in major metro markets, like Boston.

The good news for Boston homeowners is that our properties continue to be desirable to buyers and investors, alike. Invest in Boston with confidence – after all, the city has earned it!

_________

Larry Rideout is the CEO and Owner of Gibson Sotheby’s International Realty in Boston. Mr. Rideout has more than 20 years of experience in real estate, including 15 years with the nation’s largest real estate firm, as Senior Vice President of Realogy. Contact him at Larry.Rideout@SothebysRealty.com or his website http://www.gibsonsothebysrealty.com/ .