Inventory Watch

Of today’s 156 pendings, there are 100 of them that are priced Under-$3,000,000, which would make you think the inventory struggle might be a higher-end thing. But as you can see below, the number of active listings Under-$3,000,000 keeps climbing and is well ahead of last year’s counts too.

No changes are expected.

Sellers will let it ride and hope to get lucky. Buyers wonder if prices will drop.

The graduation season is underway, which is a welcome distraction for many. Then people will start going on vacations. Mortgage rates will stay high, and might go higher.

Creating any momentum or urgency will be exceedingly difficult.

The Big Wait is upon us, and likely to stick around!

(more…)

Buyer-Broker Agreements, 2025

J-Opp owns and runs a brokerage so he has to say buyer-broker agreements are mandatory, but the Coldwell Banker and two Compass agents aren’t as committed.

I think the buyers will prevail here and not be signing contracts with buyer-agents much until they find a house to buy – nobody else sees it until then! It helps demonstrate how the only thing worse than being a buyer in the enviroment is being a buyer-agent.

Zillow Offer Advice

I saved the clip above from the Zillow ad of my Escondido listing.

I appreciate them trying to do something to nudge buyers closer to making an offer. Their suggestions are just common sense – if you offer close to the list price, you’ll probably get it!

But I hate the bait-and-switch they do underneath it.

The ‘advice from an agent’ is a licensee who is paying 30% to 40% of their fee to Zillow – which means the buyer-agent fee will be higher (which the buyer is paying one way or another). The advice comes from an agent who hasn’t seen the house, or knows anything about the situation.

I really hate their promise to show the home ‘as early as today at 3:00pm’.

They haven’t run that by me or gleaned it from the listing. It’s when they might have a licensee available – maybe – and yet it makes you think you could see the home within an hour or two. It guarantees disappointment when the buyer finds out they can’t see it that fast, which reflects badly on the home – and it’s likely the buyer will just skip it instead.

We should insist on better treatment of buyers. It’s tough enough on them already!

YouTube History

Like most empty-nesters, I spend a little more time on the internet. Last night, I dug up my history on YouTube, which started almost 20 years ago!

Having over 2 million views is incredible, and I appreciate the recent resurgence.

But I only dream about getting the thousands of views like during the foreclosure days.

This was the video that ran on February 8, 2009 that got over 10,000 views that day and caused the purple spike above. Two months later I was on the front page of the L.A. Times and then on ABCNews Nightline! Those were the days!

I’ll keep them coming!

U. S. Small Towns

What makes a town beautiful? The answer is, naturally, subjective.

Perhaps you have a penchant for windswept coasts. Or, maybe you love historic architecture. Do you favor human-made elements or natural scenery? To offer a glimpse at a variety of gorgeous places around the U.S., we considered destinations from coast to coast.

Here are 20 of the most beautiful small towns in America, all with a population under 20,000.

https://www.travelandleisure.com/most-beautiful-small-towns-in-the-united-states-7099980

Cost of Convenience

Part of this story is how the buyer-agent compensation played a role in the outcome. It is a sore subject that I detest – the agents should not be a party to the transaction, but because of the botched lawsuit by NAR, the commission rate not only varies, but the buyers who pay their own agent and don’t ask for any seller participation can end up being the net winner even with a lower offer. It’s not right.

We ask buyers to submit their highest-and-best offer, and this was a case where the best offer wasn’t the highest offer, in the minds of our sellers.

Rather than whine on about the commission unfairness, let’s focus on what made a lower offer the best – and attempt to identify the cost of convenience.

Three offers were submitted after the first open-house weekend, and we respectfully requested that all buyers submit their highest-and-best offer.

Two non-winning offers minus buyer-agent commission paid by seller:

  1. $1,274,000 with 40% down payment and 1% deposit.
  2. $1,287,925 with 55% down payment and 3% deposit.

Both requested a 30-day escrow.

The winning offer, with NO buyer-agent commission paid by seller:

  1. $1,260,000 cash and 3% deposit.

They requested a 14-day escrow.

The money differences between the winner and non-winners:

  1. $14,000
  2. $27,925

The Question? How much money is a 14-day escrow worth?

My sellers were the original owners of the home for sale, it was free and clear, and in their mind, the home “had been very good to them”. They purchased a home in Washington state that they financed, and moved in successfully. They intended to pay off the the mortgage on their new home with the net proceeds from the sale here, and have a nice chunk leftover.

The difference between a 14-day and 30-day escrow was around $4,000 in interest paid on their new loan

Subtract $4,000 from the non-winners and here are the net differences:

  1. $10,000
  2. $23,925

If the sellers wanted the most money, they could have taken Offer #2 and made an extra $23,925.  But they didn’t take that deal, nor the +$10,000 deal either.

Why not?

We sent out the highest-and-best requests on April 29th, which was four weeks after Liberation Day. It had been a wild four weeks by then! Our sellers (who had lived in this home since 1998) had left behind a vacant house and moved into a highly mortgaged house out of state. The discomfort was already riding high, and then the tariffs were the last jolt.

We had discussed how happy buyers were during the frenzy and how we would receive several offers over list and every escrow closed without a problem. But now, every deal is uncertain while sellers wait for nervous buyers to perform.

These were the other two ingredients from the financed non-winners:

Buyer #1 didn’t go up on price in their highest-and-best round, and didn’t shorten their escrow period even though I told them how important it was to the sellers to close quickly. Their only term in their highest-and-best response was to change their deposit from 1% to 2% when we asked for 3%. You got to be kidding – it’s a three-offer competition, and that’s your best shot to win it?

Buyer #2 included in their offer that they wanted the patio room removed prior to the close of escrow, due to an unusual popping sound. Click here for video.

I made sure that all three buyers knew about the unusual popping sound before submitting their highest-and-best, which was critical. There was no way I was going to spring that on them later, and give them a great reason to cancel.

If you were the sellers, what would you do?

My sellers were happy to leave 1% to 1.5% on the table to get it over – quick!

Here’s an example of the wacky things that can happen during the escrow period these days. The house was fumigated, which means SDG&E gets involved to make sure the appliances are turned off during the tenting. The fume tent comes off, and the SDG&E guy goes back to inspect the appliances. He can’t figure out how to turn on the dryer left in the garage, so he orange-tags it and insists on it being fixed before he signs off. We closed escrow anyway, and he’s going back tomorrow to verify that our guy fixed it. But he could have held up the closing over a dryer that might not be working???

Get the deal closed!

A tour of the home:

Frenzy Monitor, YoY

NSDCC Actives and Pendings

We looked at the somewhat-gloomy San Diego County stats, so let’s also examine the individual areas around the north county coastal region.

Comparing year-over-year, it looks a little gloomy here too.

The areas in red have worse numbers (more actives and/or fewer pendings) than on May 15th of last year…..and only one area in green, which is the least-expensive area on the chart.

The SE Carlsbad and Carmel Valley numbers aren’t as hot as they were last year, but both have better than the 2:1 ratio of actives-to-pendings so they will be fine.

Encinitas and La Jolla have 20 and 19 more actives than last year, but their pendings counts are about the same. Encinitas is huge, physically (20 square miles) and La Jolla doesn’t have for-sale signs so it’s doubtful anyone will notice 20 extra actives laying around.

Rancho looks alarming but they don’t care what we think – they will wait it out.

Today there are 35% more actives and 18% fewer pendings, year-over-year.

This is the surge I was talking about last year:

First blog post about a 2025 inventory surge from October 22nd:

https://www.bubbleinfo.com/2024/10/22/inventory-surge-in-2025/

I issued a red alert on October 29th:

https://www.bubbleinfo.com/2024/10/29/jtrs-red-alert-for-2025/

By December 13th, I was up to ten reasons why the 2025 inventory was going to surge:

https://www.bubbleinfo.com/2024/12/13/reason-10/

Not bragging, just noting that the market conditions are predictable – and anyone who is paying attention could have called it.

Here’s another prediction. It going to get harder to sell your house. Get Good Help!

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