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Category Archive: ‘Frenzy’

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/

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

NSDCC Months of Inventory

Market conditions are favorable throughout the NSDCC.  Here are stats on the individual areas:

Area
Zip Code
ACT
PEND
SOLDS – April
Months of Inv. (A/S)
Cardiff
92007
19
11
9
2.1
Carlsbad NW
92008
38
37
18
2.1
Carlsbad SE
92009
75
78
52
1.4
Carlsbad NE
92010
15
33
11
1.4
Carlsbad SW
92011
27
25
26
1.0
Del Mar
92014
69
19
15
4.6
Encinitas
92024
95
56
40
2.4
La Jolla
92037
180
44
29
6.2
RSF
67+91
246
49
27
9.1
Solana Bch
92075
24
16
12
2.0
Carmel Vly
92130
85
82
30
2.8
All Above
All
873
450
269
3.25

It used to be that 6 months of inventory was considered normal. Can we say the new normal is more like 3.0?  Areas that are performing very well are 2.0?  Those on fire are 1.0?

Posted by on May 16, 2017 in Frenzy, Jim's Take on the Market, Market Conditions, North County Coastal | 0 comments

The Future of Selling Homes

The onslaught of new-fangled ways to sell homes is getting bogged down in their own zeal – there are so many choices now, which way do you go?  You have the sexy off-market package driven by celebrity realtors above, or the typical new-age mobile app at a discount below:


Find Home from Reali on Vimeo.

The Winners?

  1.  The widget that spends $100 million/year on advertising.
  2.  Single agency.

The scarcity of sales should drive more agents out of the business, and the those agents who remain will be increasingly focused on putting their own buyers and sellers together.

We have the listing agents who hold listings off-market in order to find their own buyer, but there are also agents who will do ‘sold before processing’ with an outside agent. This happens quite frequently.

If a listing agent isn’t going to round-trip the commission, and instead let a second agent represent the buyer – why wouldn’t you do what is best for your own client (the seller), and expose it to all agents via the MLS?

An old veteran agent told me that he hoped he would sell his new listing before MLS input, and he did – and an outside agent represented the buyer.  The house had been vacant for years so there wasn’t an occupant who held up the showings – all he had to do was install a lockbox, take a few photos with his phone, and spend 15-30 minutes doing the MLS input.

He did input the listing onto the MLS after he found the buyer, so was it the installing of the lockbox and taking a few photos too much of a burden?

Why wouldn’t he do what is best for his seller?

He must either be flat out lazy, or he wanted everyone on the MLS to see that he was the latest to breach his fiduciary duty.  It is like a badge of honor!

The realtor business is slowly eroding right before our eyes.

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Posted by on May 15, 2017 in Frenzy, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training | 0 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

Seattle!

Yesterday it was Seattle that had the highest increase in their Case-Shiller Index, rising 12.2% Y-o-Y.  You know that frenzy fever is high when the quotes barely make sense:

LINK

Andrea Conway’s home selling story has become the norm for Seattleites. She bought her Ballard home for a little under $500,000 around Easter 2014 and just sold it for more than $750,000

From the time they listed to the time they sold, the Conways, who are moving to California, had multiple offers and closed within a week. Realtors say that is very common right now for Seattle sellers. The buyers paid in all cash.

“Sellers are putting houses on the market, and it’s just normal for things to sell above list price and in some cases well above list price,” John L. Scott Realtor Carl Shaw said. “In a lot of cases, you’re seeing anywhere from four-to-eight, up to 15 or 20 offers on houses.”

The Conways say they may move back to Seattle in a few years, but right now they have decided to leave the city.

“We love it. We love the Seattle vibe, but the real estate market is so hot right now that we’re not comfortable, and we really can’t afford to put our money in this market right now,” Conway said.

She has this advice for buyers.

“Be prepared to spend considerably more than the asking price, especially if it’s in one of the hot neighborhoods like Ballard, or Fremont, or Wallingford, or West Seattle,” Conway said.

Shaw told us that buyers should be prepared to have as much cash ready as possible or have complete loan approvals.

Shaw has been doing this for 28 years and says the only other time when he saw this hot of a job and housing market was in 2006.

“In that market (2006) we had a ton of inventory, we had builders with a ton of inventory, and the difference now is that we have really strong job growth and next to no inventory,” Shaw added.

Next to no inventory is a tough reality for buyers, but for the Conways it is a blessing.

“We’re thankful, and we’ll see what the next adventure holds for us,” Conway said with a smile.

Posted by on Apr 26, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 10 comments

Burbank!

http://www.cnbc.com/2017/04/24/spring-housing-strongest-sellers-market-ever.html

Spring homebuyers are pounding the pavement at a furious pace, but the pickings are getting ever slimmer.

Even as more homes come on the market for this traditionally popular sales season, they’re flying off fast, with bidding wars par for the course. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver’s seat.

“I’ve been selling real estate for 25 years and this is the strongest seller’s market I have ever seen in my entire real estate career,” said David Fogg, a real estate agent with Keller Williams in Burbank, California. “A lot of our sellers are optimistically pricing their homes in today’s market, and I have to say in most cases we’re getting the home sold anyway.

Fogg listed a three-bedroom, two-bathroom, 1,240-square-foot home in Burbank for $789,000 and had three offers before the first open house Sunday. In the Los Angeles-area market, that is considered an entry-level home. The open house drew more than 100 potential buyers, most of them already weary of the competition.

“It’s very tough. Most of the listings are intentionally listed a little low to get a lot of attention, and it’s not uncommon to get 12 to 16 offers on one property,” said Jilbert Mosessian, who has been renting in the neighborhood but wants to buy. “In three properties recently, we did our best, we went considerably over the listing price, and we were told that there were still five people above us and they were only going to deal with them.”

Mosessian said he will have to try another neighborhood and cut his expectations.

Posted by on Apr 24, 2017 in Frenzy, Jim's Take on the Market, Market Conditions | 1 comment

Freeze-Dried Frenzy

The market is sizzling, and it could kick up to another level if there were just more homes to sell! Here is a comparison of today’s inventory to previous years (the lower-end is selling fast!):

NSDCC Active Inventory – Second Week of April

Year
$0-$800K
$800K-$1400K
$1400-$2400K
$2400K+
Total
2014
97
233
233
349
912
2015
65
220
218
346
849
2016
37
235
260
447
979
2017
28
168
235
386
817

NSDCC Pendings Today

PEND
$0-$800K
$800K-$1.4M
$1.4M-$2.4M
$2.4M+
Total
4/10/17
38
202
126
69
427

Without more homes to sell, it’s like a freeze-dried frenzy on the lower end – very dry but it’ll keep you alive!

From cnbc.com:

Anyone eager to buy a home this spring probably has reasons to feel good. The job market is solid. Average pay is rising. And mortgage rates, even after edging up of late, are still near historic lows.

And then there’s the bad news: Just try to find a house.

The national supply of homes for sale hasn’t been this thin in nearly 20 years. And over the past year, the steepest drop in supply has occurred among homes that are typically most affordable for first-time buyers and in markets where prices have risen sharply.

In markets like San Diego, Boston and Seattle, competition for a dwindling supply has escalated along with pressure to offer more money and accept less favorable terms.

“Sellers will have the edge again this year,” said Ralph McLaughlin, chief economist for Trulia, a real estate data provider. “Homebuyers are really going to be scraping the bottom of the barrel as far as housing choice is concerned.”

The intensity of the competition this spring has surprised even sellers like Kathleen Mulcahy, a 37-year-old product manager in Seattle.

Within a week of listing her one-bedroom, one-bath condo, Mulcahy received 21 offers – all above her asking price of $398,000. Most of the offers came with built-in triggers to automatically rise in case a rival bidder sweetened a bid. In the end, she accepted an offer of $500,000 – all cash.

“A lot more than I expected,” Mulcahy said.

Yet the changed landscape cuts both ways: Facing higher prices and competition herself, Mulcahy has decided for now to put off buying another home.

“There’s very little available, and it’s just too expensive right now, so I’m going to wait,” she said. “I’ll probably rent for two or three years.”

About 1.75 million homes were for sale nationally at the end of February, according to the National Association of Realtors. That’s down 6.4 percent from a year earlier and only slightly up from January, when listings reached their lowest point since the association began tracking them in 1999. All told, the supply of homes for sale has fallen on an annual basis for the past 21 months.

Read full article here:

http://www.cnbc.com/2017/04/10/mission-nearly-impossible-this-spring-finding-a-home-to-buy.html

Posted by on Apr 10, 2017 in Actives/Pendings, Frenzy, Inventory, Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 0 comments

Results from Bidding-War Video

The only thing harder than getting a listing is helping buyers win a house.

Last week I mentioned how there still isn’t any uniform process to sell a residential resale home – it is the wild wild west!  Even when a listing agent tells you what they are going to do to you, it is always subject to change!

We found this fantastic video by a Colorado guy who outlines the best ways to handle a bidding war.  Because I know that hardly any agents actually have a bidding-war strategy beyond spreading out the offers on the dining-room table, I have since been sending the video along with my offers.  Because the video is done by a third-party guy, hopefully it is viewed as a powerful new solution by agents who tend to think they know it all just because they’ve sold a few houses in their life.

Here are my results:

  1. The first listing agent who saw it took it well – he was the guy who asked if I utilize the same method (which I affirmed), and then proceeded to at least tell me what the other offers were.  They were too high for us, so my buyers surrendered.
  2.  The next try was to send the video along with our full-price offer (different buyers) into what we knew was going to be a dog fight.  There were at least 50-70 people at the open house when we were there, and the older house oozed with charm and character.  The listing agent insisted that to present our offer, we first had to state in writing that we would not ask for any repairs.  I replied that I’ve never heard that one before, but we complied just to see how crazy it would get. She didn’t respond to my second inquiry on whether she watched the bidding-war video.  She said they would pick a winner on Monday, which came and went with no seller response.  On Tuesday, she emails the buyer-agents stating that she had double-digit offers, and wanted everyone to submit their highest-and-best offer.  Obviously she didn’t watch the video – in which he compared her strategy as being the same as telling race drivers to just keep circling the track and we’ll tell you when the race is over.  My buyers loved the house on Saturday, but by Tuesday were fed up and we didn’t respond further.
  3.  On Monday afternoon a new listing hit the MLS which looked like a good match for a third set of buyers, and we were there on Tuesday morning to view. It met our criteria, and we knew it was hot, so we made a full-price offer that day with no appraisal contingency, no termite, no home warranty, and a month’s free rentback for the sellers if they needed it.  The next morning, the listing agent said he had received four offers in the first 24 hours – and ours was the lowest!  He watched the video but it was too late – the sellers had already signed the offer that was $50,000 over list.

Wouldn’t every party be better served if there was a uniform process?

Wouldn’t a live auction be the best solution for sellers and buyers?  It would take all the uncertainty out of the equation, and allow all bidders to compete face-to-face, and be driven by the animal spirits to pay what it took to win!

A side note, and fourth example: Buyers who are moving here from out-of-state put their current multi-million-dollar home on the market last week in a town that has had a similar frenzy environment as San Diego.  They were impressed with the immediate buyer traffic, and on Sunday an agent reported that he had a buyer who wanted to make an offer.  He, like me and every other buyer’s agent, was inquiring how the listing agent was going to handle the process, to which she responded, “We’ll be reviewing all offers on Wednesday”.  The buyer didn’t like that response, and went away. Here we are on Thursday, and no offers have been received.

While I need to keep getting listings just to maintain my own sanity, I will always have time for buyers who are blog readers here!  Congrats to our frequent commenter Eddie89!  We made offers on five houses before finally succeeding on the sixth.  We offered 9% under list price – a daring low offer on a new listing – and when the sellers countered 3% below list it was close enough – we’re in escrow!

Posted by on Apr 6, 2017 in Frenzy, Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 7 comments