Sunday, March 29th, 2009 at 7:51 AM
Looking For The Bottom?
Are you looking for the bottom of the real estate market?
Full recovery will begin when homelookers feel confident that buying a house is a good idea, and that’s it’s safe and comfortable to proceed.
Price will fix that.
But there are other hurdles getting in the way, and either they need to be cleared up, or prices will have to adjust further to compensate:
The Powers That Be – Unfortunately there isn’t a single governing body in real estate that helps educate people. The national, state, and local associations of realtors think they are helping, but they aren’t.
The statewide MLS is currently in development, and soon Aunt Bertha from Eureka will be listing and selling homes in San Diego. Real estate is a local sport, why would realtors support a statewide MLS, and how does it better serve buyers and sellers? Would you feel comfortable buying a house that was listed with a Eureka agent, unless you knew the price was low, or at least very reasonable?
Short Sales – The short sale listings are ridiculous. The banks are overwhelmed, and processing takes months. As a result, the homeowners have no incentive to cooperate, because as long as the banks are dragging, the sellers get free rent. For buyers to endure, the agents would need to do a masterful job at managing the transaction in a timely manner…..or keep lowering the price.
It gets worse. Supported by Sandicor MLS guidelines that allow listings to remain active in spite of having an accepted offer, the listing agents are tempted to conspire with the sellers to find their own buyer, and double-end the commission.
This week I was contacted by someone looking to purchase a short sale. They had already spoken with the listing agent, and didn’t feel comfortable with her version of dual representation. I called the seller to arrange a showing, and was told that it’s no longer being shown. Because the listing agent had given the seller’s phone number directly to the buyer so he could set up his own showing, when he called to set-up, the seller said, “Sure, come on over anytime”.
Here’s another case where we were told that the short sale had been approved, and we went back to see how the house looked. Even though I called ahead, when we arrived, we were locked out:
Listing agents are allowing their sellers to game the system, rather than make an honest attempt to procure a timely sale – or if they can find their own buyer, then magically the sale all comes together.
Valuations Must Be Tough - With fewer sales to use, trying to pinpoint what a property is worth must be tougher than ever, or people just don’t care. Consider this:
Did I mention that the other model-match comp that backed directly to RSF RD. closed for $695,000 three months ago? It would be hard to convince anyone that prices have gone up that much in the interim.
The sales prices are scattershot all over the map, making it difficult for buyers to get a warm, fuzzy feeling that they are paying the right price. Websites like zillow complicate it further – the zestimate on lower house is $890,000!
Want to know when you’ve reached your own personal ‘bottom’?
It’s when you feel comfortable proceeding!
Posted on Sunday, March 29th, 2009 at 7:51 AM in Thinking of Buying? | 27 Comments » | 
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I’ve got a new MLS listing code phrase:
Rob Dawg | March 29th, 2009 at 8:19 am“Exhibits pride of non-ownership.”
If I am the guy who paid $750, I would be feeling like I got a good buy!
Local Boy | March 29th, 2009 at 9:27 am“Full recovery will begin when homelookers feel confident that buying a house is a good idea, and that’s it’s safe and comfortable to proceed.”
I don’t think that’s exactly right.
People will buy a house when the end calculation warrants a BUY rather than RENT. Namely;
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
“Price will fix that.”
Exactly. If prices fall enough to make buying more economical, people will buy. Otherwise, people will rent.
no bubble here | March 29th, 2009 at 11:03 am“If I am the guy who paid $750, I would be feeling like I got a good buy!”
______________________
I think that would be a temporary feeling…
RSS | March 29th, 2009 at 11:49 amTime will tell–It really depends on the supply and demand in the neighborhood. We know a family who bought 18 mos ago for about 20% below market value at that time (which was alrady 10-25% form the peak)–their low ball got accepted–no comps have came in at or below theirs–one exact model, inferior lot just closed $50K higher.
Local Boy | March 29th, 2009 at 12:31 pmI’m a future buyer, renting since Aug 2005 when some fool wanted to buy our house at 3 times what I thought it was worth. I was afraid I had missed the bubble in 2004 since it was late Sept before the house was ready to show. Fools seemed even more excited in 2005–almost panic buying.
There’s no sense even bothering to look until next Winter. It’s the same hog cycle as before. By next Winter the government will of exhausted its various price prop’up schemes and the ‘dry summer’ will drain the arrogance from those ‘self-entitled’ to live in houses beyond their abilities–somewhat reflected by their paycheck or lack thereof.
The price will be what it will be next Winter. I estimate down another 5% to 10% for low-end homes and 25% to %35 for at/above conforming limit.
Fortunately it will also finish off the weak brokers and agents, leaving guys like Jim and Chris Heller that actually know what they are doing.
Mike_S | March 29th, 2009 at 2:06 pmI recently read that in SD county over 30% of the Real Estate Agents have already turned in their license. Let’s see, 30% less agents, prices down 40%, but number of closings and commissions rates are up (I now see 4% CBB frequnetly-2.5% was the norm)–I am tired of hearing agents in SD crying that the real estate market sucks–someone is making money!
Local Boy | March 29th, 2009 at 2:36 pmNo crying here, just pointing out how tough it is to navigate when the indicators are so mixed. There are several areas where if you just looked at closed sales, the raw data makes it look like prices have stabilized.
Casual buyers and agents aren’t going to give it much extra thought if it appears safe. I had a buyer last week request a few days to review the loan documents before signing. The escrow officer told him that rarely do people bother to read them when signing in her office, let alone want to review for a few days.
If buyers don’t do a thorough examination of all pertinent facts, they are going to be prone to over-paying, and there isn’t much to slow them down.
Jim the Realtor | March 29th, 2009 at 2:41 pmJim:
Susan | March 29th, 2009 at 3:04 pmis that ok for you to just go in and shoot the video and bad-mouthing them? I assume the owners didn’t know that you went in the backyard.
I had an appointment with them to see the interior, and they didn’t care about blowing me off. They were inside, and wouldn’t open the door. It might be pushing it a bit to run a video, but somebody needs to do something.
Jim the Realtor | March 29th, 2009 at 3:12 pmSusan, “bad-mouthing”? Seems like he’s calling them exactly as he sees them.
Jim, I admire your moxie.
tj and the bear | March 29th, 2009 at 4:19 pmJim–The crying comment was CERTAINLY NOT pointed at you.
Local Boy | March 29th, 2009 at 4:22 pmGood job Jim,
Coconutz! | March 29th, 2009 at 5:02 pmYou found the bottom, well, Mr and Mrs. Bottom.
Susan wern’t you the agent featured in that famous commercial?
Coconutz!
“Full recovery will begin when homelookers feel confident that buying a house is a good idea, and that’s it’s safe and comfortable to proceed.
Price will fix that.”
Price will help, but it’s not going to do anything about peoples’ nagging fear that they won’t be employed here next year or the year after. I’ve lived through multiple boom and bust cycles where credit was a negligible factor compared to job loss and the feeling was similar, but this time around we have both as major factors.
Price will probably be enough for people buying investment properties they determine will have good cash flow, but people thinking about buying homes to move their families into will probably not feel “safe and comfortable” until the unemployment rate levels off and they start to see recruiting ads for the kind of work they do again.
GeneK | March 29th, 2009 at 5:02 pmThanks for the support – I’m still very cognizant of the sausage-making post a few weeks ago, and am doing my best to find the balance of reporting legitimate concerns vs. complaining about other realtors.
When realtors are more of the problem than the solution, something needs to be said.
The short-sale listing in the first video? The agent has had to lower the price to below what my buyers originally offered, because nobody wanted to play his game of having to ‘best-and-final’ after 3-4 months, as if multiple buyers were waiting.
We think that we were the only buyers left standing, and after the sellers blew us off, my buyers said “screw it, we’ll just rent”.
This is in 92078, where it seems like 4 out of 5 listings are short sales. If you are a buyer, tread carefully, extreme conditions are forecast.
Jim the Realtor | March 29th, 2009 at 7:51 pmI cannot fathom why an agent for a short sale listing would ever ask for a best and final offer. Its not as if the ultimate decision is the seller’s anyway.
Unless they are in cahoots with the seller who only wants to stall the bank from foreclosing by trying to convince the bank they are really trying to sell when in reality all the seller wants is free rent.
Maybe just contact the bank directly and offer to buy the note at a discount.
Kingside | March 29th, 2009 at 9:33 pmIt’s stupidity like this short sale BS that reinforces my belief that we’re far from a bottom. A bottom requires some semblance of normality.
tj and the bear | March 29th, 2009 at 10:14 pmJim, for the record. I have never seen anything on this blog that wasn’t motivated by your sense of service to buyers and sellers. Exposing people who are deliberately obstructing the buy/sell process is very much fair game. And don’t forget to keep us updated on any fines or actions by the association.
Rob Dawg | March 30th, 2009 at 6:28 am“Want to know when you’ve reached your own personal ‘bottom’?
It’s when you feel comfortable proceeding!”
Interesting…….
How comfortable were those who bought in 2003, 2004, and 2005?
Enthusiastically comfortable I’d say.
“Comfortable” may mean a bottom in sales volume.
It’s probably meaningless if your referring to the bottom in PRICES.
Average Joe | March 30th, 2009 at 7:31 amSince I live in an older neighborhood where none of the houses are really the same, I always find it interesting to see these direct house to house comparisons where there hasn’t been a lot of time to add on or make significant changes to the property. On the one hand it makes it easy. Same house, slightly different locale, roughly the same price. On the other hand, its apparently baffling when you have these wide swings in a short time.
Jim, you’re fearless. Walking around someone’s backyard when they aren’t cooperating? That’s a good way to get threatened. Takes me back to my days serving eviction notices on tenants. Survivied that gig with only one dog bite!
Former RB Resident | March 30th, 2009 at 8:03 amShort sales are clearly not clean, transparent deals. Why should the seller cooperate? I imagine they too are quite angry. And brokers gaming the system for their own benefit? Come on, that’s the nature of the business.
Buyers getting upset if a short sale doesn’t work and withdrawing from the market is probably more symptomatic of someone thinking they are entitled to an amazing low price for any house they want. They’ll be back with lower expectations later.
Mozart | March 30th, 2009 at 8:25 amVery interesting. I was looking at some condo’s and one of the sellers who had just confirmed the appointment a few hours earlier then would not open the door when we got there.
Also, another place did not have the key in the lock box.
I am using a buyer’s agent.
Nonetheless, I made bids on both as I have already seen the same style unit elsewhere in the complex. I can back out if they are destroyed.
I never thought that the seller’s agent may be preventing the sale, however.
How can I be sure the banks are getting the offers?
daveg | March 30th, 2009 at 8:28 amPricing in tract hoods should be pretty cut and dry. But its not. Like Jim pointed out
LaCosta Valley for example:
$215 to $338 per sq ft listing prices for 5 listings on the same street, Camino Serbal.
Circulo Sequoia in LC Oaks has 7 listings, same street, ranging from 221 to $341 per sq ft.
You cant be 50% higher per sq ft listing price and sell folks. Do your home work before wish listing!
doughboy | March 30th, 2009 at 9:34 amThe last sale on Circulo Sequoia sold at $347/sf foot–Others houses were listed as low as $260/sf back then–Go figure–it somehow worked for them.
Local Boy | March 30th, 2009 at 3:48 pmThe bottom will arrive at different times in different neighborhoods. Just make sure you know your turf.
Simone | March 30th, 2009 at 8:22 pmThere’s a pretty big spread in La Costa Greens on Azurite. Properties are 4 houses away from each other (2234 & 2242):
MLS # 086036056 – $271/SF
MLS # 080038945 – $204/SF
A 33% difference. Must be the “massive bonus room upstairs which owner’s had planned to use for ballroom dancing”.
SantaFeHills | March 31st, 2009 at 6:44 amYour Short-Sell video is spot on!!! I tried to buy a short-sell but gave up after a month. My phone calls where not returned, appointments forgotten, Home not available for viewing this week, etc….etc… Too many people are just “gaming the system” now.
Matt | April 4th, 2009 at 9:49 am