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Category Archive: ‘Thinking of Buying?’

My Sellers and Buyers

moving

Long-time reader (and client!) Just-some-guy asked about some where-and-why on my clientele to give folks a feel for who is doing what.

Sellers

Reason for Selling
Number
Comments
Excess Property
7
Six of those 7 got big tax benefit
Downsized
5
3 in SD, 2 out-of-state. Four purchased
Moved Out-of-State
4
Three of the four have purchased a home
Moved w/i California
3
New jobs
Moved Up
3
I also sold them their move-up house
Divorce
1
Estate
1
Proceeds benefited the Ayn Rand Foundation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Buyers

Reason for Buying
Number
Comments
First-timers
4
Three of the 4 used 20% down payments)
Downsizing
4
Move Up
3
All were sellers and buyers
Relo from Outside CA
2
Relocating here from CA
1
Divorce
1

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Notes

A. One of the sellers who moved out of state took a job in Toronto.  The weekend we sold the house, the temperature in Toronto was 1 degree!  I told the seller to hang onto my card!

B. Four properties sold were dual agency – we represented both buyer and seller.  It sounds like a high wire act, but I am clear about my duty – I give advice based on what’s best for the person with whom I’m speaking with, and don’t disclose anything about the other party.  When you can keep it clear in your head, it’s not a problem.  None of them were ‘sold before processing’.

The commercial brokers do it all the time, and it’s likely enough to come to the residential side that keeping my dual-agency chops up will pay off someday.

C. Seven of the 24 sellers sold a house that I sold them.  I can’t rely on past clients as my only sellers – people aren’t moving like they used to!

D.  Two-thirds of the buyers expected to invest more than 10% of their purchase price into repairs and improvements.  Fixers provide additional inventory, and I think we did a good job to adequately discount the price paid.

E. All of my listings were featured here at bubbleinfo.com, and my SP:LP ratio was 99%.  Do the video tours and blog exposure help?  They must!

F.  A sign that the frenzy is over and the market is flattening out is the second negotiation – the request for repairs.  None of them go down easy.

Save

Save

Posted by on Jun 29, 2016 in About the author, Bubbleinfo Readers, Jim's Take on the Market, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Brexit Impact on Real Estate

June 27 rates

How is the Brexit going to impact the sales of real estate?

From MND:

There’s no telling how long this “initial reaction” period will continue and what the longer term effects will be, but for now, the short term effects have been strongly positive for rates.  The most prevalent conventional 30yr fixed quote is still 3.5% on top tier scenarios, but 3.375% gained a lot of ground today.  With just a bit more improvement, the average lender would be at 3.375% for the first time since early 2013.  This is also the lowest stably-maintained rate we’ve ever recorded (there were scattered instances of 3.25% back in 2012).

The Brexit will be great for mortgage rates, and we could – and should – see the lowest rates yet.  The 10-year closed today at 1.4377%, and we add 1.75% to it to find the target for 30-year conforming rates (3.18%).

Lenders are like gasoline companies, and reduce their rate slowly on the way down.  Hopefully, by the end of the week, we could see the 30-year mortgages being quoted around 3.25%!

But home buyers are concerned about overpaying, so lower rates will just keep them optimistic – they won’t make them want to pay more for a house!

There will be more turbulence, but never as a society have we had such teflon memories. We just swipe it all away!

Posted by on Jun 27, 2016 in Interest Rates/Loan Limits, Jim's Take on the Market, Thinking of Buying? | 1 comment

Making a Lower Offer

2016-06-25 07.26.42

It is rare in today’s market that you will find a truly motivated seller that will give it away (discount more than 10%).  Of the NSDCC sales closed over $1,000,000 in the last 30 days, the average sales price has been within 5% of the average list price.

Does it hurt to try?

Lightweight agents will warn you not to ‘offend’ anybody with a lowball offer.  But let’s assume that sellers have a thicker skin.  There is a tactical problem that makes it very difficult to come to terms when a buyer presents a low offer.

My rule-of-thumb is that we have two days or two counter-offers, whichever comes first, to make the deal.  If the initial offer is 15% or more below the list price, there is too much ground to cover.  You’re more likely to run out of time or counters, than to reach an agreement.

The biggest problem is that both sides become attached to their price once they put it on paper, and feel the need to defend it no matter how that price was determined.

Typical Example:

Buyer offers 85% of list price.

Seller thinks it is low, and counters 98% of list to send a message to the buyer that this house isn’t going to be stolen.

But the buyer becomes attached to his 85% offer, and he’s not going to be pushed around! The fight is on – and the buyer counters at 88% of list.

Seller thinks we’re going nowhere fast, and drops the negotiations.

Example that has a Better Chance:

The buyer offers 85% with low expectations, knowing the seller won’t be pleased.  The seller counters at his 98% number.

The buyer’s response to the seller’s counter needs to be at least 90% of list, for  two reasons: A) to impress the seller that a deal could be made here, and B) beat the clock.

Typically, the seller will then counter at 95% of list, and hope the buyer just signs it.  But the buyer splits the difference instead at 92.5%, and hopes the difference is small enough that the seller shrugs it off and signs.

The key is the buyer’s counter to the seller’s first counter – it has to be high enough that the seller stays in the fight.  If the buyer doesn’t come up much, it’s too easy for the seller to give up.

Tips:

  •  If you want to buy at 85% of list, then have the agents discuss it on the phone.  You have to convince both the seller and the listing agent, so you might as well start with the agent first – if they blow you off, just wait and see if they lower the price later.
  •  Determine a price strategy in advance, and respond promptly.  The egos on both sides will run out of gas within two days.
  •  Make a clean, crisp offer – include a solid prequal letter and proof of funds.
  •  Provide convincing data why your price is right, especially if there have been new comps since the listing began.
  •  Don’t justify your price by dogging the house, and all the repairs needed.
  •  Include other sweeteners like free rent after closing.
  •  Keep in mind that you are only fighting for the last 2% or 3%.

Having a strategy is important.  Too often a buyer will just throw a price out there, without having a path to follow – and the path is predictable!

The prevailing market theory employed by nearly every realtor is to wait until someone comes along to pay their price.  Your negotiations have to go perfectly to disrupt that belief!

Get Good Help!

Posted by on Jun 25, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments

Buyer Tips in a Seller’s Market

buying

Hat tip to bode for sending this in, and noting the importance of #3!

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

The real estate market fluctuates often, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. If you’re shopping for real estate in a market that currently favors sellers, you need to know some tricks of the trade to help ensure you don’t make any mistakes.

Buyers in a seller’s market can get what they want, but they need to bring their “A” game — buying a house in a hot market isn’t for the indecisive. Here are six common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market.

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

 

Posted by on Jun 11, 2016 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

733 Stratford Drive

733-stratford-dr-076

I love my new Encinitas Highlands listing at 733 Stratford Drive, which is at the top of the hill and offers some of the best ocean views in EH!  This is another property that is ideally suited for the multi-generational buyers because there are bedrooms and full baths on the ground floor plus a detached 1br/1ba cottage out back.

This is my first real tour of a house with the new camera (and because I’m trying to move slower and smoother), so this is the extended full version of the whole property:

http://www.zillow.com/homedetails/733-Stratford-Dr-Encinitas-CA-92024/16718577_zpid/

Posted by on Apr 14, 2016 in Boomers, Bubbleinfo TV, Encinitas, Klinge Realty, Listing Agent Practices, Market Buzz, Osmo, Thinking of Buying?, Why You Should List With Jim | 3 comments

Is It a Good Time to Buy A Home?

A twitter guy wants a yes or no answer to whether it’s a good time to buy.

He claimed that I said Yes, because of my post about it being a great time to buy if you’re selling a cheaper home and buying a more-expensive home. It’s because the higher you go price-wise, the colder the market gets.  Fred said it is a good time to buy as long as you don’t plan to move in the next five years.

It’s a question that deserves a full answer, not just yes or no.

The most common blog chatter is that history always repeats itself, and it will just be a matter of time before this cycle runs out.

The economic cycle will sputter again, but the housing market is different now.

Why?

Because distressed sales are well-managed. 

The California Homeowner Bill of Rights mandates that loan modifications be dangled in front of anyone in trouble.  The foreclosure process gets drawn out for months and years so we’ll never see a flood of trustee sales again.

As a result, making your mortgage payments has become optional.

If we have another economic downturn where homeowners can’t pay, then the government will insist that lenders give them a break.  The cast was set in the last crisis – the government will create bailout programs that allow everyone to kick the can down the road.

With distressed sales few and far between, the vast majority of home sales will be elective.  Sellers with the mantra – “I don’t have to sell, I’m in no hurry, and I’m not going to give it away!”

Prices will maintain a tight range of +/-5%, because the minute a seller thinks he is being forced to ‘give it away’, he will object.  Different neighborhoods will have periods of stall-out, where few or no buyers will pay what sellers want, and real estate loitering will be common.

But days of drastic price dips are gone.

The other buffers to a housing downturn include reverse mortgages, rampant flipper business, and baby-boomer estate distributions.

If today’s buyers have assurances of pricing protection, is it a good time to buy? Well, yes, if that’s all that matters.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

But for most, it is a terrible time to be a buyer, which is different.

If you are on the low-end of your market, you can forget about buying your “dream house”.  The competition is fierce, and compromise required – if you can even get your hands on something.

2022-cherokee-ln-004_web

My listing at 2022 Cherokee in Escondido – the one priced at $549,000?  We had six offers, and four of them were all-cash.  All were at list price or higher.

It was viewed 3,198 times on Zillow since Friday, and I received 100+ phone calls and texts from agents.  I had over 200 people visit the open house on Sunday, and it was probably shown at least 50 times between Monday and Wednesday.

http://www.zillow.com/homes/2022-cherokee,-escondido_rb/

Almost all of the lookers didn’t offer, so they will be competing against each other on the next one – literally hundreds of buyers floating from new listing to new listing, hoping for a miracle.

Was it a giveaway?  Agent comments included, “Price was fair and reasonable’, and ‘The defects were properly discounted’ (defects included no direct access from house to backyard, master suite downstairs and kids’ bedrooms up, and it backs to the I-15 freeway – the rear fence was the CalTrans chainlink).

Buyers have to endure bidding wars on anything decent, no rules about how to win, and shady realtor tricks that seem to favor insiders.  Buyers are quick to jump to that conclusion, but it is more due to a realtor’s incompetence that bidding wars are vague and hard to win.

If you can get a house into escrow, it almost always happens that it’s condition is worse than imagined.  But sellers are in the driver’s seat, and do little or nothing to assist. Buyers usually end up feeling like they are buying an over-priced turd.

But it will probably be your turd forever!

Posted by on Apr 7, 2016 in Bidding Wars, Frenzy, Jim's Take on the Market, No-Foreclosure as Banking Policy, Thinking of Buying?, Why You Should List With Jim | 5 comments

Reasons Why Parents Should Buy for Kids

house

Do you worry about your kids’ future, and this crazy world in which we live? What can you do?

REASONS WHY PARENTS SHOULD BUY A HOUSE FOR THEIR KIDS

A way to distribute the inheritance while you are alive to see it.

Senior care – You might need them to take care of you some day!

Affordability – If prices stay strong, buying a house could get out of reach for most. A salary of $100,000 can barely buy a $600,000 house with 20% down today – and you have to go to an outlying area to find a decent house for that money.

Appreciation – Even if price didn’t go up much, paying down the mortgage builds equity.

Rental income – Pay cash or low-leverage a house purchase and hand over to a property manager.  The resulting positive cash flow will help pay their expenses while searching for a high-paying job.

Help to establish an investment portfolio, and to diversify their holdings.

Create a cap on kids’ housing expense.

Safety Net for emergencies – Ill-liquid, but that ensures it’s only used for catastrophic events.

Help the kids grow up. Owning real estate is for adults, and it inflicts responsibility.

Relieve pressure on kids from having to marry rich.

Help determine where the grandkids grow up.

Ensures they live in a quality area with good schools.

Taking care of the kids and grandkids makes grandma happy.

If Grandma ain’t happy, then nobody’s happy!

Posted by on Feb 29, 2016 in Jim's Take on the Market, Market Conditions, Real Estate Investing, Thinking of Buying? | 9 comments

3D Home Tour

3D camera

Carlos Hernandez from www.touritnow.com did a 3D home tour of my new listing, using his Matterport camera.  Here’s how it turned out:

http://www.touritnow.com/3d-model/7249-ocotillo-street/skinned/

This technology will be the next step in selling houses from afar – do busy people really need to visit in person after seeing these video presentations? It helps to screen out the actual showings too, because there is no hiding anything – if a viewer sees something they don’t like, they can save themselves a trip.

Big picture?  Eventually, the Matterport company will have a library of every house in America….but wait, it’s my listing, and I paid for the tour!

Here is Carlos describing what he does:

Posted by on Jan 28, 2016 in Bubbleinfo TV, Jim's Take on the Market, Listing Agent Practices, The Future, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim | 6 comments

Downsizing/Multi-Gen

multi-gen

Not only are retirees trying to downsize, but the kids are hanging around longer too.  The excellent research by John Burns has put some numbers on the one obvious outcome – multi-generational living.

Percentages in the 40s and higher are more than a blip – the vast amount of downsizing and multi-gen households is a game-changer:

14% of all US households (16.5 million households!) now live multi-generationally, and the numbers continue to rise for three reasons:

A. Delaying marriage has increased the number of young adults living with parents.
B. Surging retirement has increased the number of retirees living with children.
C. Significant immigration from countries where multigenerational living is the norm has also helped boost the numbers.

Most of the US housing stock was not built for multigenerational living, providing a tremendous opportunity for home builders. According to our Consumer Insights survey of more than 20,000 new home shoppers, 44% would like to accommodate their elderly parents in their next home. Additionally, 42% of today’s shoppers plan on accommodating their 18+ older children in their next home.

This focus on providing housing to extended family or friends may also account for 65% of respondents desiring a bedroom with bath on the ground level and 24% wanting a suite with a kitchenette and small living area.

Click below for full article and designs:

http://realestateconsulting.com/multi-generational-households-on-the-rise/

Posted by on Jan 26, 2016 in Downsizing, Jim's Take on the Market, One-Story, The Future, Thinking of Buying?, Thinking of Selling? | 0 comments

Pride-of-Ownership Test

PoH

Anyone who has looked at homes lately can attest to the surprising conditions in which people live.  The lack of maintenance transcends all price points too.

But it’s nothing money won’t fix.

Buyers should surrender early on……and expect to spend at least $25,000 to $50,000 on any house they buy.  It’s easier than trying to find the perfect house that doesn’t need anything.

But looking at houses then turns into a job of making lists of the repairs required. Is there a way to short-cut that process, and just use one simple gauge to know if the house could be a money pit?

When I enter a house, I still walk straight to the backyard first.  It is there that you will find the items that are hard or impossible to fix; yard too small, road noise, neighbors looking in, over-sized pools, etc.

Once we’re past that test, and everyone is getting comfortable with the interior layout, I make my way to the place where you can find the most clues about the seller’s pride of ownership.

The Master Bath – a place where the sellers spend time every day.  The most extreme conditions exist too – high use of hot and cold water, steam and mold conditions, multiple plumbing functions, venting, several appliances in use, laundry processing, etc.  There’s a lot of action going on in the master bath!

With all the action, is somebody keeping up with repairs?

If any room is going to be well-maintained, it is the master bath.  It’s not that big, and the moving parts are simple – a towel rack, a toilet-paper roller, lighting, fan, grout, window, sinks – easy stuff.

Plus, every guy wants to keep his wife happy – so if he is going to fix anything, it will be here.

No need to get into any personal items – just checking the hardware:

  1.  Are the towel racks secure?
  2.  Toilet-paper roller intact?
  3.  Drywall outside the shower or tub wet or damaged?
  4.  Adequate electrical outlets?
  5.  Toilet secured tightly to floor?
  6.  Toilet works properly?
  7.  Sinks drain normally? (two sinks are a must)
  8.  Adequate water pressure at sinks and shower?
  9.  Fan is quiet? Window works well?
  10.  Any sign of biological discoloration?
  11.  Baseboards are dry and tight?
  12.  Mirrors look good?
  13.  Ample lighting?
  14.  Mineral deposits on glass doors?
  15.  Shampoo bottles have a home?
  16.  Solid coat of semi-gloss paint?
  17.  Crisply-applied caulk, especially around the shower faucet?
  18.  Solid and tight grout lines?
  19.  Door that locks easily?
  20.  Is the floor of the sink cabinet dry?

If you are in a hurry or tend to get caught up in the excitement of looking at houses, then just concentrate on what you see in the master bath.

If you check off every item above, then the rest of the house should be in good shape too.  But if the sellers aren’t maintaining this room that has complex features but simple fixes – especially when on the market – then they probably haven’t done much to keep up the rest of the house either.

Posted by on Jan 19, 2016 in Jim's Take on the Market, Repairs/Improvements, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links | 4 comments