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Category Archive: ‘Market Conditions’

Sunday Report

red1

Another steady stream of lookers today at open house, and roughly the same as yesterday which makes for a total of 120+ visitors for the weekend.

Most came with knowledge – online presence is critical!

Though no one complained about the price, everyone is being very deliberate in their investigation – and being somewhat conservative.  It seems that being able to embrace the full set of variables is what matters.

Buyers making logical decisions – it feels like a normal market!

One good offer is in, and a potential for 1-2 more!

redfavs

Posted by on May 15, 2016 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Open House | 0 comments

Handling Multiple Offers

offers

 

Our listing on Cherokee closed yesterday.

It was the 2,527sf three-story house that backed to the I-15 freeway – the one where we had 200+ people attend the open house.

The final tally at the Zillow page was 3,745 views, and 77 people had saved it as a favorite home, which are both extremely-high counts. (Josh was the seller)

2022-cherokee-ln-004_web

Yesterday, we marveled at how the bidding war ended up.  The listing had hit the MLS on a Saturday, we had the open house on Sunday, and by Monday we had six offers.

Because not every bidder knew there was competition, we gave everyone the chance to submit their highest and best offer by Tuesday at noon.  I like to keep a tight timeline and promise buyers that we’ll select a winner promptly in order to retain as much urgency as possible.

The list price was $549,000.

At the end of the highest-and-best round, we had a $565,000 financed offer, a $570,000 cash offer, and a verbal $571,000 cash offer (the other three stuck with their $549,000 or $550,000 original offers).

The agent who wrote the $570,000 offer was 80 years old, and was using forms from five years ago.  I actually had to hand-write his original offer for him, but thankfully he was able to scratch out a one-sentence H&B.

Because I had concerns whether he could make it to the finish line, I pressed the $571,000 agent to get his deal in writing.  But he called back with bad news – his buyer, a savvy, multiple-property owner, decided it was too rich.

I called back the $570,000 agent, knowing that I’d be carrying his luggage for the next three weeks.  But he had more bad news – he took his buyer’s family to the house, and they vetoed the sale.

With the other three bidders unwilling to budge, we signed the $565,000 financed offer…..before they changed their mind!

Most people would have been tempted to hold out.  Yes, it would have been sexier to close escrow in 2-3 weeks with a cash buyer. But after 200+ open-house attendees and 50+ showings, are there two in the bush?

Though my phone hasn’t rang like this since back in the REO days, there was no disputing the facts – most people didn’t make any offer, and those that did weren’t in love enough to go crazy.  It was a trend that was likely to continue.

In spite of casual observers telling me we were giving it away, or it was too cheap, the actual results were telling.  The duty of the listing agent is to check the ego at the door, and focus on the facts.

We made the deal at $565,000, and it stuck.

Posted by on May 10, 2016 in About the author, Bidding Wars, Frenzy, Jim's Take on the Market, Listing Agent Practices, Market Conditions, Thinking of Selling?, Why You Should List With Jim | 3 comments

Selling a Tenant-Occupied Property

realtor assualt

Back in the day when things used to be civil, you could sell a home that was occupied by a tenant.

But in today’s environment, it is better to wait until they vacate, and then put the house on the market.  Here’s why:

  1.  The elevated urgency of today’s market causes a whirlwind of activity during the first week.  A rash of showing requests and realtors stopping by without appointments shuts down any tenant cooperation quickly.
  2.  Then the tenants start looking around for a replacement home, and realize how hard and how expensive the next move will be. They are mad, and want to blame the sellers.
  3.  By the time they leave, the condition of the home isn’t what it could have been either, if they had left happily.

Staging is a critical component too, and unhappy tenants aren’t going to leave the home in great condition for the few showings that do take place.

Fewer or lower-quality showings means fewer offers, which isn’t good for the seller.

Our policy today is to vacate the property first, make it look spectacular, and then put it on the open market.

Posted by on May 10, 2016 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Real Estate Investing | 4 comments

Strategic Price Reductions

We’re about halfway through the spring selling season!

The Zillow Group said that it is best for San Diegans to sell their house in March.  But a few years back, I wrote this article suggesting that May is also a good time, because you can pick up on the momentum of others who have already sold around you:

When to Sell Your Home

But it’s also the time of year when active listings may start stacking up.  What happens when houses aren’t selling? Sure, you can just lower the price, but are there more variables to consider?

We were faced with that problem in Santee with the big-view house.

7249-ocotillo-st-008

Though the single-level floor plan and extensive upgrades were desirable, we weren’t getting any bites while listed for $1,199,000.  A bigger two-story house on the other side of the street had closed for $975,000 on March 1st, and the general perception was that the westerly view was preferred (even though obstructed by roof tops at ground level).

But another factor was that there have only been two houses in the history of Santee that sold for $1,000,000 or more.  One of those was in 2008 – not exactly a usable comp.

The house directly across the street was also listed for sale, at $1,228,000 for a two-story that was 12% larger.   With us at $1,199,000, it was a standoff – neither stood out as the obvious buy.

The key point?

A standoff means somebody has to go first.

When there are multiple houses for sale that are all priced about the same, it’s too easy for buyers to go into paralysis – and wait for the sellers to go first.

So after 30 days on the market, we lowered our list price by $80,000 to $1,119,000.  At $109,000 under the neighbor, we looked like the better buy on paper.  We had been keeping a steady open-house schedule, and the following weekend I found our buyer.

After we went pending, the house across the street did lower his price to $1,149,000, and he found a buyer a couple of weeks later (still pending today).

Who won?

Both sellers won, in my opinion.

We consciously took the more-certain route by being the first to lower our price, and dropped it enough that the gap between us helped to make us look more attractive.  Then once we were pending, someone took comfort in knowing they wouldn’t be the only buyer on the street over a million, and bought his house.

A secondary point is how quick we moved. After 30 days we didn’t have any significant action around our $1,199,000.  Rather than keep waiting and hoping for more weeks or months, we agreed on the more aggressive plan.

If we hadn’t, we’d be sitting around today with about 100 days on the market.  At that point, potential buyers got you – they know your price is wrong, and the first price reduction might get ignored.  Then sellers are chasing down the market as the selling season starts to run out of gas – don’t get in that position!

Get Good Help!

Posted by on May 4, 2016 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Spring Kick | 0 comments

Buffett Says No Bubble

warren

For the vast majority of Americans who just skim the real estate headlines, a quote from Warren Buffett should keep the party rolling.  But does he qualify as a cheerleader now that he owns one of the biggest realtor companies? And this photo they used – is that a perp walk?

http://fortune.com/2016/04/30/warren-buffett-there-is-no-bubble-in-real-estate/

An excerpt:

Warren Buffett says now is a good time to buy a house, though not as good as it was four years ago. Still, Buffett says he thinks the chances of housing prices collapsing are very low.

“I don’t see a nationwide bubble in real estate right now at all,” says Buffett.

Buffett made remarks at the annual meeting Berkshire Hathaway, which took place on Saturday in Omaha. “In Omaha and other parts of the country people are not paying bubble prices for real estate,” says Buffett.

Earlier in the day in response to a question about banks, Buffett said he did think derivatives are a “ticking time bomb.” But when it comes to housing and mortgage loans, Buffett said, while real estate was certainly a problem in 2008, he didn’t think that would be the source of the next problem for the financial system. “I don’t think we will have a repeat of that,” says Buffett.

Posted by on May 2, 2016 in Forecasts, Jim's Take on the Market, Market Conditions | 1 comment

Celebrity Realty

lopez

A former sports agent turned realtor:

http://www.bloomberg.com/news/articles/2016-04-29/meet-the-jerry-maguire-of-real-estate

An excerpt:

On the brokerage side, cultivating a list of private listings is key.

“There’s a fair share of purchases and sales that are off-market transactions,” Weiner says. These are high-profile people who might not want their names in the papers or pictures of their homes splashed across the Internet.

Weiner estimates that 20 percent of his transactions are whisper listings, and he employs former executives in the NHL and NFL, a former MLB pitcher, and a fashion model, among others, to maintain an inside track.

He also thinks long term—very long term. These clients may buy and sell over and over again. Weiner’s business is far more about the people than it is about the properties.

“Three years later, they may need you again,” says Weiner. “We don’t just try to make a big buck.”

The typical brokerage model includes a buyer connecting with local agent. “This industry is very hyper-local and fragmented,” says Weiner, so the network includes agents across the U.S., Canada and the Caribbean. The local agent may change, but the agency won’t.

And most of these clients come with teams of their own, teams that need to be included in the unfolding history. “One thing we really work on and have a lot of experience in is working with their advisers, wealth managers, and attorneys,” says Weiner.

In the end, pro athletes and those in the entertainment industry need to plan for what you can never really plan for: the unexpected. You could be traded, your show could be canceled, you could get injured, or your life could erupt in some kind of scandal that suddenly dampens your career.

“It’s not just a transaction. It’s a long-term plan,” says Weiner. “If there’s one thing we really try to instill in their heads, [real estate] is an exit strategy.”

http://www.bloomberg.com/news/articles/2016-04-29/meet-the-jerry-maguire-of-real-estate

Posted by on Apr 29, 2016 in Jim's Take on the Market, Market Conditions | 0 comments

High Rents Keeping Lower-End Hot

rent squeeze

Do you wonder why the lower-end markets are so hot?

I spoke to a potential buyer yesterday who said he wanted to buy because his rent was so high.  He is paying $2,100 per month to rent a 2br apartment in Shadowridge.

He has lived there for less than a year, and the landlord just gave him notice that they are already raising it to $2,400 per month!

Are you kidding? $2,400 per month for a 2br apartment in Vista???

Here are the median monthly house rentals being advertised in the MLS:

Carlsbad: $4,495

Encinitas: $4,500

Carmel Valley: $4,600

Del Mar/SB: $6,400

La Jolla: $8,800

Rancho Santa Fe: $10,250

The landlords will have to endure more turnover, more repairs, and more all-around hassle as they keep pushing rents higher, but they will keep a fire lit under any tenants who can find a way to buy!

These higher rents should keep the lower-end of each market hopping!

Posted by on Apr 28, 2016 in Jim's Take on the Market, Market Conditions | 3 comments

Price Forecasts Move Higher

risingprices

The hustle to move up the housing ladder is something people did when they were younger – and prices cheaper.  Those move-ups have gotten you here, and hey, it’s not so bad – especially if it means that to replace your home, it costs two or three times more than you paid! 

Expect the housing-inventory stalemate to continue, regardless of how high prices get – people have no better place to go, they don’t want to bother moving, and taxes plus expenses are outrageous.

http://www.realestateeconomywatch.com/2016/04/price-realities-are-blowing-away-forecasts/

This was supposed to be a year of “moderating” prices and a “return to normalcy.”  Instead, upward price pressures have not abated, and red-faced economists are scrambling to crank up their forecasts as price trends at the outset of the buying season knock their protections into a cocked hat.

The culprit? Most forecasters predicted three years of rising prices would encourage more owners to sell, and supplies of homes for sale would catch up with demand, which is increasing as a result of the improving economy and continued low interest rates.

Posted by on Apr 25, 2016 in Forecasts, Jim's Take on the Market, Market Conditions, Sales and Price Check | 1 comment

Roam Around

roam

We could use more inventory, for several reasons – to slow price increases, to provide more opportunities for first-timers and newcomers, and to keep realtors busy!

But people don’t want to move, and that’s unlikely to change.  We’re probably in the best climate in America, and enjoy a relatively-perfect lifestyle – why would you give that up?

Most aren’t going anywhere, and that’s fine.

But for those who might consider taking the money and running, where can you go?  As time goes on, the options are getting more creative.

I’ve long thought that we will see communal living and tent cities as suitable options for some baby boomers.  Others sell their house and buy the big RV and cruise the country.

Did you catch the idea mentioned in the nytimes.com article called roam.co?

You pay $500 per week and live in psuedo-communal living at different locations around the world.  They are just getting started, so the locations are few, but the idea could catch on:

http://www.roam.co/about

Posted by on Apr 21, 2016 in Jim's Take on the Market, Market Conditions, The Future | 5 comments

NSDCC Spring Kick Report

2016-04-16 15.56.17-2

We’re well into the spring selling season (May 1st is twelve days away), and soon the talking heads will be touting fewer sales this year, compared to 2015.

It is short-sighted though, because 2015 was a great year, statistically.  When you consider that prices are still strong, and any softness in the market is at the high-end where hopefully sellers can endure, it’s hard to complain!

NSDCC Detached-Home Sales between March 1 – April 15

Year
# of Sales
Median SP
Avg. $/sf
2012
345
$813,500
$367/sf
2013
438
$873,250
$406/sf
2014
351
$1,030,000
$494/sf
2015
419
$1,100,000
$496/sf
2016
365
$1,142,331
$525/sf

Whether the demand is getting more picky or just taking a breather, to still have 365 sales after a 40% price hike in four years is phenomenal.

Posted by on Apr 19, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal, Spring Kick | 2 comments