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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Bidding Wars’

Operation Transparency

This is the fourth installment of my essay on the future of real estate sales.  I’ll send this along to Brad Inman, who is gathering thoughts for a leadership conference at the end of March, so they have my perspective from the street.

In summary:

The unconscious desperation among agents is ripping apart the formal agreement between brokers to share listings.  The environment is going the way of commercial brokers, where exposing listings to other agents is a last resort.

We see it happening – there is the occasional article – but without vigorous intervention by realtors themselves, the MLS will slowly disintegrate and be picked apart by outsiders.

Sadly, the sharing of listings is what is best for sellers, buyers, AND realtors, but the greed and desperation among agents gets in the way.

What Can Be Done?  What Are The Choices?

  1. Individual agents can adopt a full-transparency program, starting with publicly describing the specific services they offer, and their commission rates.  If consumers took the time to educate themselves about the differences between agents, at least they would make better decisions than they do now.  It’s unlikely that this will happen, because agents are lazy and won’t bother, unless forced to do so.
  2. We can hope that N.A.R., C.A.R., big brokerages and other industry titans will address this specific problem, and implement changes to save the MLS and broker cooperation out of a commitment of doing what’s best for consumers.  Probably the least likely of these five to actually happen.
  3. We can have big leadership conferences where outsiders will speculate how the disrupters will pick us apart, piece by piece.
  4. We can wait for the government to intervene.
  5. We can do nothing, and watch the broker cooperation via the MLS – which is the best thing for everyone involved – die a slow but certain death.

We can hope that somebody will find an answer.  But it would have to include ways to eliminate agent shenanigans, invigorate consumers, and be a forward-thinking solution that benefits all.

The inquiry might start with creating a national MLS, or electing a real estate czar, or encouraging agents to keep their word and quit cheating their own customers out of what’s best.

But what if a thing was the answer?

The solution is LIVE AUCTIONS.

We can easily incorporate them into our regular business as the process to select the winning bidder.   All other selection processes used today are subject to the listing agent tilting the table – with a live auction, all participants will be watching, and able to determine the actual winning bidder.

Could there be shill bidders who run up the price?  Yes, but let’s insist that every buyer is represented by a realtor – that way, at least the agent’s reputation is on the line.

Live auctions would keep listing agents and buyer-agents employed, though the fee structure may be in flux.  But our commissions are already under attack, so let’s take a chance that consumers will agree to pay a reasonable fee for these live auctions, and the other additional benefits provided by realtors.

A live auction doesn’t have to be a showy, champagne-filled soiree with a fast-talking auctioneer.  They can be as simple as gathering the buyers around the living room, in a rather informal setting.

I am offering the live-auction strategy to my sellers as the fairest and most effective way to select a buyer, and let the full transparency be the best way to reach top-dollar.

Here’s an example – catch the winning agent’s comments at the 9-minute mark:

Posted by on Feb 19, 2018 in Auctions, Bidding Wars, Jim's Take on the Market, Operation Transparency, Realtor, Realtor Training, Realtors Talking Shop, The Future | 21 comments

The Buyers’ Struggle

When you find the right home, don’t lose it. Get Good Help!

NAHB regularly conducts national polls of American adults and home buyers in order to understand new trends and preferences in the housing market. This is the third in a series of posts highlighting poll results, as presented during the 2018 International Builders’ Show in Orlando, FL.  See previous posts on tiny homes and driverless cars.

A recent poll revealed that most prospective home buyers actively involved in the search for a home have been looking for a significant amount of time. In fact, 61% have been trying to find a home to buy for three months or more, while the other 39% have been looking for less than three months.

The natural follow-up question to those who have been unable to find a home after searching for three months or longer is why?

Forty-two percent say they ‘can’t find a home at a price I can afford,’ 36% ‘can’t find a home with the features I want,’ 34% ‘can’t find a home in the neighborhood I want,’ and 27% were able to overcome all these obstacles but ‘continue to get outbid whenever I make an offer.’

This result shows there are several important reasons why prospective buyers haven’t been able to pull the trigger, but the most important one is lack of affordability – not being able to find a home at a price point they can afford.

Link to Article

Posted by on Feb 14, 2018 in Auctions, Bidding Wars, Frenzy, Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 1 comment

Multiple-Offer Season

The graph above shows that we’re heading into multiple-offer season, and whether you are buying or selling, you should work with an agent who is an expert in handling a bidding war.

In a monthly survey of REALTORS®, seller’s agents who closed a sale are asked “How many offers were received for the most recent property you sold in the past month?

Among seller’s agents who closed a sale in December 2017, the respondents reported they received 2.2 offers (which means sellers received between two to three offers) on their most recent sale, according to the  December 2017 REALTORS® Confidence Index Survey.The number of buyer offers on a home has remained unchanged in the past two years. Why so?

On the one hand, an improving job market tends to prop up the number of buyer offers, assuming the same level of homes listed for sale. Yet in reality, the number of homes being offered for sale have fallen to their lowest level since January 1999 (3.2 months’ supply in December 2017), and this has pushed up prices, dampening demand. Since January 2012, the median home price of existing homes sold has increased by 60 percent.

The number of buyer offers exhibits a seasonal fluctuation, with the number of offers tending to peak in April through June, as households plan their move/relocation around the school opening in August/September.

Link to Article

Posted by on Feb 13, 2018 in Bidding Wars, Jim's Take on the Market | 0 comments

Way Over List Price

Here we only have to pay 5% to 10% over list….if at all!

It is no secret the housing market is on fire. Last year, almost a quarter of all U.S. home sales were above asking price, according to real-estate listings website Zillow. But the average premium over asking for those homes was $7,000—not $700,000. Even in the hottest real-estate markets, where there is a severe shortage of inventory, the highest bid typically isn’t more than a couple hundred thousand dollars over asking.

What often distinguishes the houses that go way above asking—half a million or more—is a feature that the other homes in the neighborhood just don’t have, says Toby Lumpkin, a real-estate broker with Realogics Sotheby’s International Realty in Seattle. That can be a better view, more southern exposure, an especially tasteful renovation, a three-car garage in a parking-challenged city, or a side yard, which is what set apart Mr. Malcolm’s house. It’s also often a price low enough to attract attention.

When Kerry Bucklin saw a house for sale on Mercer Island, Wash., on the waterfront, he thought its price of $1.995 million was too low. The Midcentury Modern home, built in 1959, needed updating and shared 210 feet of waterfront with five other houses. But it was the closest of the houses to the shore, offered unobstructed views in a parklike setting and allowed him to go paddling on Lake Washington without having to load a canoe on his car. At the same time, the property was close to the freeway, shaving 6 miles off his commute to work.

Mr. Bucklin, 55, a real-estate lawyer, had been looking for a couple of years to replace the large family home mid-island, where he lived alone since becoming an empty-nester. He bought the home in June by paying just over $500,000 above asking, beating seven other offers.

Read full article here:

Link to Article

Posted by on Feb 9, 2018 in Bidding Wars, Frenzy, Jim's Take on the Market | 0 comments

Are Bidding Wars Legit?

Another reason we should sell homes by live auctions…..Hat tip SM:

A local developer and prominent real estate agency conspired to prey on Chinese nationals and inflate luxury home prices on the Eastside for their own profit, according to a lawsuit filed in Seattle on Thursday.

Two plaintiffs who bought adjacent newly built homes in Kirkland allege that their broker at Realogics Sotheby’s International Realty was actually working on behalf of the builder selling the homes.

Jie “Gabby” Jiao and the married couple Maoqi Zhang and Wei Fan hired Realogics Sotheby’s broker Connie Blumenthal to buy their first homes in the United States in spring 2015.

Realogics has aggressively targeted luxury homebuyers in China and is one of the top brokerages for foreign buyers in King County, and Blumenthal has a glitzy website where she boasts her connections in Hong Kong and million-dollar home sales locally. The company and Blumenthal call the claims “baseless.”

Both buyers relied heavily on the expertise of Realogics Sotheby’s and Blumenthal to understand the local market. They were told there were multiple offers on the table and that they needed to bid more than $2 million each to buy the homes, west of Big Finn Hill Park, the lawsuit says.

But when they arrived in the area after the deals closed, they discovered the homes weren’t as promised, and later found out there was no evidence that other buyers were interested in the homes — suggesting they had badly overpaid based on their agent’s advice, the suit says.

One of the buyers, Jiao, was so dissatisfied with the home’s condition — among other things, it did not have the promised backyard or bedroom lake views — that she put the house back on the market. Even with her new broker aggressively marketing the home and offering a free Mercedes to a potential buyer, she wound up selling it for $1.67 million last June — a $338,000 loss over a two-year period, despite the region’s red-hot real estate market.

The other buyer’s home is assessed at $1.46 million, or about $745,000 less than the couple paid.

The Chinese nationals’ attorney, Dave von Beck of Seattle, said he found “what looks like collusion” between Blumenthal and the seller of the home, Alex Dudko of homebuilder Unique Design & Construction Co.

After issuing subpoenas in discovery, according to the suit, the attorney found emails and check stubs showing Blumenthal — the buyers’ agent — was actually working directly with Dudko, the seller, at the time of the sale.

One check showed Dudko paid Blumenthal $20,000 after the sales for “services,” according to the suit. The suit calls the payment a “kickback” for Blumenthal bringing the buyers to the developer.

In an email to Dudko around the time one of the sales closed, Blumenthal referred to a “bonus just between you and I.”

“Let’s meet for dinner and margarita’s again when I get back!” Blumenthal wrote to Dudko. “I need a new handbag :)”

Read full article here:

Link to article

Posted by on Jan 5, 2018 in Auctions, Bidding Wars, Jim's Take on the Market, Market Buzz | 9 comments

Treehouse Vibe

It’s only money!

LINK

San Francisco’s housing market is so out of control, the new owners of a cavernous hillside home in the city offered nearly $1 million over asking in order to pre-empt a bidding war.

1 Miguel Street went into contract after just two days on the market, closing for $2.6 million. The out-of-state buyers made the deal before any other bids were placed, according to the realtor.

This kind of over-bidding shows the extent of the housing bubble in San Francisco, where a perfect storm of demand, speculation, and exuberance drive real-estate prices sky-high.

Built in 1957, the mid-century modern home sits on an oversized lot surrounded by trees in the Glen Park neighborhood. Featuring three beds, two and a half baths, and roughly 2,040 square feet, 1 Miguel Street offers panoramic views through the floor-to-ceiling windows. Wood-paneled walls, exposed beams, and a wrap-around deck give it a distinct treehouse vibe.

The residence was a custom commission from local architect Worley K. Wong. The kitchen and bathroom went through a renovation before hitting the market, according to the listing.

Glen Park is a southern enclave of San Francisco that draws wealthy buyers because of its seclusion, picturesque streetscapes, and suburban feel. The median list price in the neighborhood is $1.8 million, and homes typically sell for 124% of the list price.

Posted by on Oct 25, 2017 in Bidding Wars, Interesting Houses, Jim's Take on the Market, Listing Agent Practices | 0 comments

Frenzy Fever

As the national drought in home supply dragged into its 21st straight month, competition among buyers drove prices up once again.

And the fiercest competition was in the Bay Area.

A new report from Redfin shows that 73.7 percent of homes sold above the listing price in the San Jose metropolitan area in June. That was the highest percentage in the nation, followed by the San Francisco metropolitan area (70.6 percent, second highest in the U.S.) and the Oakland metropolitan area (69.8 percent, third highest). They were followed by Seattle (62.3 percent) and Tacoma, Wash., (52.6 percent).

“Every record in market speed and competition that was set in May was broken again in June,” the report stated.

The Redfin report comes two days after the Mercury News reported on a rash of over-asking home sales in Sunnyvale and Cupertino. In the last month, more than 50 homes in those two cities sold for at least $200,000 over the asking price. One modest Cupertino house — 1,046 square feet — sold for $660,000 above its listing price.

According to Redfin, San Jose had the nation’s largest decrease in housing inventory, falling 42.2 percent in June from one year earlier. The second largest year-over-year contraction of the home supply was in Rochester, N.Y., where inventory fell 29.7 percent. The third largest shrinkage happened in San Francisco, where inventory fell 26.6 percent.

Read full article here:

http://www.mercurynews.com/2017/07/13/new-report-bay-areas-rocketing-real-estate-market-leads-nation-in-over-asking-sales/

Save

Posted by on Jul 13, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market, Sales and Price Check | 0 comments

Price Coaching

A friend is trying to buy a house on the east coast, and finds himself in…..guess what…..another bidding war.

He was hoping the listing agent would give him some help.

He asked, “What will it take to win?”, which is a logical question. But of course, the agent told him that she couldn’t answer that question, and for him to make his best offer and let the chips fall where they may.  We’ll call that blind bidding.

But isn’t it in the seller’s best interest to administer the most effective process in order to achieve a top-dollar sale?  If buyers have a price to shoot at, or some pricing hints, it is more likely they will respond favorably.

An open auction is the ideal solution.  The competing bids are out in the open, and animal spirits take over.  The environment changes from buyers wanting to pay their price, to doing whatever it takes to win the contest.

We have a long ways to go before open auctions become routine.  In the meantime, listing agents can be transparent and help both buyers and sellers.

But agents are only familiar with blind bidding, and just hold out hope that a buyer might go crazy and submit a bid way over the list price – which could happen if the property was deliberately under-priced.  But the vast majority of properties are priced at retail – on those, there are multiple offers submitted due to the lack of other quality choices, not because the price is too low.

With blind bidding, offerors will only bid a little higher and hope to keep the purchase price in line with comps.  If they don’t know what the other offers are, and are bidding blindly, it is natural for them to be conservative – especially when you consider we are probably in the later stages of our bull market. Buyers are miffed at the lack of transparency, and only add a little extra mustard to their original offer.

As a result, with blind bidding, sellers are leaving money on the table.

Why do we allow this?  It’s because it’s the way we have always done it.

Listing agents should provide transparency to buyers, and let the animal spirits take over.  Buyers would appreciate the candor, and bid with abandon to win the property.

It’s an old wives’ tale that we aren’t allowed to share the other offers with every buyer. But I challenge anyone to show us where it says that sharing offers is forbidden.

This is at the bottom of our required Form PRBS:

We disclose to every buyer that their offer may not be confidential, and they agree.  Why, then, do agents insist that they can’t share the information?

It’s because they aren’t comfortable with conducting a slow-motion auction.

They’ve never done it before, they’ve never heard of it, and it is too easy to just take a blind bid that might be slightly over their list price.  That’s good enough, isn’t it?

No, it’s not.

Of course the sellers deserve top dollar, yet we refuse to employ the best strategy to achieve it. Don’t get me started on how many properties we see that are “Sold Before Processing”, where the listing agent tilts the table to avoid any bidding war.

But it is also not fair to the buyers.

How many buyers have you heard say, “I would have paid that much”, after a sale closes.    Both sellers AND buyers deserve better…..but are agents going to put in the extra effort?

Get Good Help!

Posted by on Jun 13, 2017 in Bidding Wars, Jim's Take on the Market, Listing Agent Practices, Realtor | 3 comments

SW Carlsbad

My buyers offered full price for this house on the first day, and we were fifth out of five offers. One buyer included the escalation clause, which meant he was willing to pay $1,000 over the highest bid.

It’s not a great way to determine the winner if you look at it logically – wouldn’t any buyer pay $1,000 over?  Instead, the sellers decided to sign a $1,230,000 offer the first night, which was literally $51,000 over list price.

These sold in the high-$400,000s when new in 1998.

Posted by on May 30, 2017 in Bidding Wars, Bubbleinfo TV, Carlsbad | 11 comments

“You Do Whatever It Takes”

It’s one thing to offer above the list price, but would you waive all contingencies too? 

I think a judge would be reluctant to have a buyer lose a deposit.  Listing agents who might keep a deposit should do a pre-listing home inspection, and give a copy to anyone making an offer with no contingencies, just in case.

LINK

Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.

Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.

“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.

To win a home, buyers are putting in aggressive offers.

“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.

When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.

“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”

The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.

Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.

Posted by on May 11, 2017 in Bidding Wars, Frenzy, Jim's Take on the Market | 2 comments