I cringed at his thought of pricing your home 10% to 15% above comps, but with the hysteria over real-estate-entertainment TV, people will believe it just because it came from Josh. His other tips are HERE in the full article.
Category Archive: ‘Thinking of Buying?’
The La Costa Town Square is open for business, and nearby new-home builders should benefit from the easy access to new shops and restaurants:
The C.A.R does make some minor changes every year to our purchase contract, but according to Gov Hutchinson, the lead attorney for C.A.R., they haven’t made any wholesale changes in 12 years. Gov was in town yesterday to review the latest version.
Here are my notes:
1. The form is written by C.A.R. attorneys and is meant to protect realtors. There are 10x as many lawsuits filed today as there were thirty years ago, yet the State of California’s population hasn’t even doubled in the same time. Home buyers file more than 90% of the lawsuits against realtors.
2. Buyers used to have 17 days to release all contingencies, but now the new boilerplate gives 21 days to release the loan contingency. Most lenders can hit the 17-day mark, but it’s usually tight; so the 21 days is probably more realistic. But it does add a second contingency-release date, and more paperwork. We surmised that in the real world, all contingencies might drag to the 21st day.
3. The separate termite form was deleted, and its contents added to the ‘Request for Repair’ form. Previously it was customary to include the termite costs in the original offer (and assigned to the seller), but now they will be a negotiable item after the inspection, as is the custom in Northern California.
4. You regularly see these remarks, “Seller is exempt from TDS”, which applies if the actual seller is a bank, or a successor trustee who has in effect inherited the house. But they are only exempt from having to use our specific TDS form, they aren’t exempt from disclosing everything they know about the property.
5. There are times when the sellers will occupy the home for days or weeks after closing (a subject to which I will devote a whole post), but it is now stated in paragraph 9F that keys and passwords be delivered to buyer on the day escrow closes, regardless of possession.
6. The big-screen TVs have been excluded for a while, yet their brackets remain with the property. But this version added a second choice, if the box is checked – “[bracket] will be removed and holes or other damage shall be repaired, but not painted.” This is on the purchase offer that the buyer is submitting, so they will be guessing on whether the sellers intend to leave the bracket, or remove it and repair the holes or other damage.
7. If the buyer adds a phrase about intending to occupy the property for 12 months, it will negate the 60-day notice required to give a month-to-month tenant who has been living there more than a year. Instead, only a 30-day notice is required.
8. There are two stigmas that are required to be disclosed – death and meth.
9. Sellers have to disclose any insurance claims over the last five years – whether they owned it or not.
10. This is a first – they added verbiage about what happens when a party won’t sign off to cancel a sale. If either party fails to execute mutual instructions to cancel, the other party can demand that escrow release the deposit. Escrow shall promptly deliver notice of the demand to the other party, and give them 10 days to object. If they don’t object, escrow can unilaterally release the deposit to the other party. The form authors couldn’t resist adding a final paragraph that escrow companies can still require mutual cancellation instructions at their discretion, which we’re guessing that most will do.
11. This rarely comes up, but if a buyer cancels after releasing all contingencies, and the seller gets their deposit – he has to split the deposit with the listing agent.
12. It is in the boilerplate that every dispute goes to mediation. If both parties initial the arbitration agreement, then the dispute goes there instead of going to court. Arbitration is cheaper, quicker, and private, but it is binding – there is no appeals of an arbitration decision. If you don’t like that, then don’t agree to arbitrate. Small-claims court is excluded, so disputes under $10,000 can go there for resolution.
Once a seller has a signed agreement, there are no back doors – if the buyers can perform, then they are buying the house. Once the buyers release all contingencies, they are committed too – and will lose their deposit if they cancel later. There is always joking at these seminars that nobody reads the contract – including the agents. Get Good Help!
From PropertyRadar (ForeclosureRadar):
“Earlier this year we accurately predicted that 2014 would be a year of lower sales volume and flat prices because home prices rose too far too fast,” said Madeline Schnapp, Director of Economic Research for PropertyRadar.
“That’s exactly what’s happened and hopefully by next spring, prices will be more in line with what prospective homebuyers can afford.”
Read full report here:
In the last video, the presenter speculated that prices could go up 700% by year 2027, which would make homeownership all but impossible for regular folks.
Prices seem likely to rise over the long-term – what could keep a throttle on their gains? Building more homes could slow down prices, and this week L.A. Mayor Eric Garcetti suggested a host of ideas and changes in order to achieve 100,000 new housing units by 2021:
The two best ideas?
1. The permitting of more granny flats is a viable solution for homeowners with larger lots. An excerpt:
Dana Cuff, director of cityLAB at UCLA’s School of the Arts and Architecture, has spent years studying so-called backyard homes — or “granny flats” — that can house a renter, an in-law or a still-at-home 20-something. They exist all over town, often illegally, and regulations make them hard to build in many neighborhoods. Permitting more could go a long way toward helping L.A.’s housing shortage, Cuff said.
“There’s a half-million single family-houses in the city of Los Angeles,” she said. “If 10% of those added a granny flat, we’d be halfway [to Garcetti’s goal]. And it’s free land.”
2. The lack of available land located within driving range of San Diego is a real problem. If there was a concerted effort by governments to make it easier to change zoning from commercial/industrial to residential, they could unlock additional parcels for development – like this one:
It’s likely that any new developments would be higher density, which would provide an interesting choice for future homebuyers. Are you willing to live like sardines to get a new or newer home, or will older homes on bigger lots be preferred – and retain their value better?
Rob Dawg said in the beginning, “Forget all previous assumptions about real estate”. With the cost of living on the rise, will the newer, smaller, and less expensive homes topple the traditional SFR as the preferred choice of tomorrow’s homebuyer?
I don’t know anything about this guy, but here is a presentation on the trends of real estate over time – and why we will see the upward price trajectory continue. He has a couple of other related videos too; look for them linked at the end of this ‘tube:
This is probably the least-likely time to get a lowball offer accepted in the history of the world, due to the lack of pressure on any seller – but for the next 2-3 weeks you might have a sliver of a chance. Once we get into December, the next selling season will be within sight, so sellers will pack it in – either literally or mentally – and be reluctant to make any deal. Then they will wait until end of summer before thinking their price might be wrong…again.
I haven’t had any luck lately – so this is just theory. But these are the things I’m looking for on behalf of buyers looking to make a deal in November:
1. Vacant houses that have been on the market 2+ months. They need to be eating a mortgage payment to really be motivated, but anyone sitting on an empty house in November must be avoiding the thought of renting it.
2. Homes that have been on the market for months – and have a mortgage balance around 70% to 80% of list price. They don’t want to lower their price because they hope to get a decent chunk out of it, but the payment could be eating them alive. There is a very small minority of sellers in this category, because banks are so lenient these days. But those who are barely making their payments to keep their good credit might appreciate any offer at this point.
3. Homes listed with great agents. They know the score, and if they just had an offer they might be able to convince a motivated seller to make a deal.
4. Fixers are prime candidates. The sellers apparently don’t want to make improvements (or can’t), and you have ample evidence why they should consider a lower offer.
At least nine out of ten sellers and their listing agents will think you are crazy, but it’s worth a try. To save time, I get the agent on the phone and feel them out first, and listen for any hesitation before they scoff at me.
Sellers shouldn’t take it personal – if you are comfortable just ignore any lowball offers and keep waiting for the market to head your way. But for those who really want and need to sell, this is your chance to do so – and at least you won’t have to worry about what the market might do in 2015.
P.S. If this is a house you love, don’t risk a lowball offer. If the sellers get offended, they will sell the house to anyone but you!
Yesterday we wondered if there was a possible threat of a baby-boomer liquidation sale in the coming years, and we had a load of comments – thanks for participating!.
Can we get a feel for what’s happening now? Here’s a check of the 67 NSDCC houses that have sold between $750,000 and $1,000,000 in the last 30 days.
These are the years when the sellers purchased:
Only a couple sold for less than the price they paid, and there were 3 short sales too (no REO listings). The newer homes in Carmel Valley bolstered the more-recent stats too.
About 36% of the sellers bought their home prior to 2001, and are probably baby-boomers (or older). Most will at least be empty-nesters by now, and could be candidates for the ‘downsize and travel’ crowd. If their numbers increased, they would most likely be offering older fixers upon which flippers can feast, and eventually be sold to those looking for a substitute for new homes, which are in short supply.
The higher-priced new homes help to accelerate the values of existing homes. All sellers have to do is undercut the price of new tracts nearby – if there are any! HT to daytrip for sending this in from the latimes.com:
Builders have piled in to pricey ZIP Codes — bidding up land costs there in the process — and polished their projects to a high gloss to woo wealthy buyers with cash or good credit.
“Builders have been focusing very heavily on the move-up market as opposed to entry level,” said Bradley Hunter, chief economist at housing research firm MetroStudy. “There’s a simple reason: That’s where the profits are.”
Meanwhile, projects aimed at the middle of the market remain scarce, and overall home building is off about 60% from a decade ago. The shortage of new lower-priced product is one factor making Southern California among the toughest housing markets in the country for middle-income families.
New homes have almost always sold at a premium. They come with bells and whistles — including energy-efficient appliances and often a warranty — that a decades-old house can’t match. But that premium has hit new highs this year.
In January, the gap between median-priced new and resale homes in Southern California peaked at $151,000, a 41% premium for a new house. And although it has eased a bit since, it has been larger than $100,000 in nine of the last 10 months, compared with an average of $38,000 over the last 25 years, according to CoreLogic’s figures. The same trend is playing out nationally, though in less dramatic fashion.
Higher-end home builders see this dynamic too, and they’re gobbling up what land is left. Luxury builder Toll Bros. acquired 3,200 lots in Southern California this year when it bought Shapell Homes, part of its plan to expand from its East Coast base into higher-growth markets. Now Toll is working on five new communities, from Santa Clarita to Carlsbad, in prime spots with good schools. It will start selling homes next year, said Jim Boyd, head of Toll’s California operations, and expects to do well.
“I think the market is pretty strong,” he said.
Read full article here:
Nobody is dumping on price – just be reasonable. From the ocregister.com
Thomas and Wendy Lari made a pact.
Thomas wanted to rent out their old home. Wendy wanted to sell it so they’d have money to fix up their new one. So he gave her two months to sell it. If she failed, they would become landlords.
In the end, she met the deadline – just barely. But it took two price chops totaling $15,000.
“I was a little bit disappointed,” Wendy Lari said of the final price of more than $800,000. “We knew that (our original price) wasn’t overly realistic, but we thought we’d give it a shot.”
Reality is setting in for home sellers across Orange County.
Rather than holding out for the big price gains seen a year ago, most sellers are cutting their prices to get their homes sold.
The average price cut for homes under $1 million was $15,500 this summer, according to figures from Brea housing consultant Pat Veling of Real Data Strategies. A year earlier, the typical price cut was under $3,000.
Put another way, buyers are paying 97 percent of sellers’ original asking prices this year, vs. 99 percent – almost full price – in the summer of 2013.
“It seems like 80 percent to 90 percent of the sales are reductions,” said Bart Smith, an agent with Evergreen Realty in Orange. “(Sellers are) overpricing them. They’re looking at listings and not at closed sales.”
Wendy Lari thought she was in the ballpark when she priced her home at $850,000 last April. A similar home in the area had sold for $844,000 two months earlier.
Time was running out to find a buyer when she got an offer for $828,000. That deal fell through.
But just as it did, a real estate agent made an offer equivalent to $835,000. The agent wanted to pay $814,500, but would forego her $20,000 commission. That deal closed.
“I was a little bit bummed, but it wasn’t horrible,” Wendy Lari said. “If you go in thinking that you’re going to get 3 percent to 4 percent more than the last sale, that’s not going to happen.”
She listed April 29, 2014 for $850,000, and opened escrow on July 2nd for $814,500 with no commission to buyer’s agent? She didn’t give it away! (she had paid $460,000 in 2002). P.S. the realtor who bought her home has it for rent on Zillow, asking $3,500/month.
Read full article here: