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(760) 434-5000

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Category Archive: ‘Thinking of Selling?’

Who’s Selling?

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:

Years Purchased
Number of Sellers
1965-1980
8
1981-1990
4
1991-2000
12
2001-2007
23
2008+
20

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.

Posted by on Oct 24, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Thinking of Buying?, Thinking of Selling? | 6 comments

Be Sharper on Price

Wendy Lari in her new home. After buying the home in Mission Viejo, husband Thomas Lari wanted to rent out the old family home of the past 12 years. But Wendy wanted to sell the old home so the family would have enough cash to fix up the new one. They reached a compromise: Give me 60 days to get it in escrow, said Wendy Lari. If it doesn't sell by then, we'll rent it out. The home went up on the market in late April for $850,000. As time began to run out, Wendy Lari decided she had to drop the price.

Nobody is dumping on price – just be reasonable. From the ocregister.com

http://www.ocregister.com/articles/price-637201-home-percent.html

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:

http://www.ocregister.com/articles/price-637201-home-percent.html

http://www.zillow.com/homedetails/27822-Trellis-Way-Laguna-Niguel-CA-92677/25552229_zpid/

Posted by on Oct 6, 2014 in Market Conditions, Thinking of Buying?, Thinking of Selling? | 4 comments

How Homes Are Sold

aussies

The purchase of Move, Inc. by News Corp could bring more change to how homes are sold in America.

Last summer, I described on camera how our market is moving towards a single-agency format, and have been mumbling about it ever since.  By the time the movie comes out, it will probably be a fait accompli.

News Corp already owns the primary real estate website in Australia, where the listing agents pay to advertise their properties on Rupert’s website, and buyers go direct.  The commission rates are 2.0% to 2.5%, and according to this article, buyer-agents are involved in only 1 out of 1,000 sales:

http://www.inman.com/2014/09/30/rupert-murdochs-australian-portal-thrives-in-country-with-no-mls-and-few-buyers-agents/

Currently we call this ‘dual agency’, where the agent has a fiduciary duty to represent the interests of both parties.  Eventually it will erode down to a ‘transactional brokerage’ format, where the agent’s role is reduced.

While sellers will marvel at the perceived savings, they won’t benefit much unless expert salespeople are manning the phones/emails/texts.  Listing agents – who now make 5% to 6% when buyers go direct – will reluctantly accept the lower commissions but won’t push for top dollar.

Why?  Because eliminating the buyer’s agent has always been the ultimate goal of listing agents, and the reward was double commission.  When the extra incentive is gone, it will feel like working for half price, and, as a result, agents will mail it in.

In this format, the most important ingredient when hiring a listing agent will be how they handle the inbound inquiries from the buyers directly.  Test them by calling their number – do you get a receptionist?  Voice mail?  Assistant?  Or the actual listing agent?

I answer my own phone, and I’m pushing the product – your home!

Posted by on Oct 2, 2014 in Jim's Take on the Market, Listing Agent Practices, The Future, Thinking of Selling?, Why You Should List With Jim | 13 comments

Wholesale-To-Retail Spread

Are you thinking of selling your home, and wondering how to go about it?

How you sell your house has an impact on the price, which is driven by the comfort level of the buyer.  There is typically as much as a 10% swing in pricing within the same neighborhood, depending on location in the tract, condition of the home, and how the house is sold.

Here is a general guide to sales-method-to-achieve-desired-price:

WHOLESALE PRICE – Stick a sign in the yard, and someone will come along.

WHOLESALE-PLUS – Stick a sign in the yard and an ad on Craigslist.

AUCTION – Hard to know if you’ll get wholesale or retail due to the limiting factors.  Qualified buyers may be turned off by their perception of the potential reserve price, the buyer’s premium, or slick-talking auctioneers.

RETAIL – You do your homework and hire an experienced, competent agent to sell your above-average home with good curb appeal in a popular area.  You agree to an attractive list price, and the agent conducts a mass-marketing campaign that generates an offer or two during the first week on the market.  You negotiate in good faith, and together you find a way to the finish line.

RETAIL-PLUS – You do your homework and hire an experienced, competent agent to sell your above-average home with good curb appeal in a popular area.  You agree to an attractive list price, and the agent conducts a mass-marketing campaign that generates multiple offers during the first week on the market.  Your crafty agent pits them against each other, and the ensuing bidding war causes an above-market sale.  But without a frenzy to drive the sale, buyers are more cautious, and look for any reason to cancel and get back on the fence, hoping prices come down. Here are the potential hurdles to closing a Retail-Plus sale:

  • Inspection reveals defects – The defects give the buyer a reason to try and clawback some of that retail-plus price.  How your agent handles this critical juncture will determine whether the retail-plus price – and sale – sticks.
  • Appraisal is a challenge – Your agent has to know the comps, and can present a compelling case that convinces an anonymous appraiser of the value.
  • Other agent is a ding-dong – The good buyer’s agents have already talked their buyers out of paying this high of a price, so you are left with the inexperienced/desperate realtors who don’t know, or don’t mind if their clients pay too much.  Somehow your agent has to find a way to get them to the finish line, usually in spite of the buyer’s agent.

You don’t need an agent to sell your house - and you could take a chance on beating the odds by short-cutting this list and still move up a notch.  But now that the frenzy is over, buyers are reluctant to throw crazy money at houses any more – unless you get great help!

Posted by on Sep 28, 2014 in Jim's Take on the Market, Listing Agent Practices, Thinking of Selling?, Why You Should List With Jim | 0 comments

More on the Wait-It-Out Plan

Easing up

I just noticed this article from Friday’s latimes.com:

http://www.latimes.com/business/realestate/la-fi-home-prices-20140912-story.html

An excerpt:

Silva said some of his clients are receptive to the idea of cutting prices to sell their homes. But some sellers — those with less motivation to move now — are pulling their homes off the market, said Steve Shrager, an agent with Coldwell Banker in Studio City.

Sellers who can’t get the price they want are choosing to rent their home, or try to sell again in another year.

“They feel the price can’t go anywhere but up,” Shrager said.

Buyers are choosier too, he notes. Though price growth has leveled off, many buyers still aren’t seeing bargains. And while the selection of homes has expanded, some aren’t finding any property they really want.

Some, he said, are choosing to stay put, or maybe try the market again next spring.

“I don’t want to use the word correction, but we’re in a bit of an adjustment period right now,” Shrager said.

Waiting for the spring selling season is fairly normal behavior for both buyers and sellers, Thomas said. But after a decade of boom, bust and boom again, many aren’t sure how to react to a normal market.

“People are not used to this,” he said. “That’s why you get some panic. Eventually these houses will sell. You just have to be patient.”

Most sellers and listing agents will opt for the wait-it-out plan, mostly because they are avoiding the price-might-be-wrong conversation.

Sellers and listing agents don’t know how wrong the current price is, and they don’t WANT to know.  All they want is for some nice young family to come along and love the house and price the way they do, and pay full boat.

But the wait-it-out plan doesn’t take into consideration the potential for selling for less, later – and delays the eventual conversation about how much less.

Look how it’s working for this guy – another excerpt:

Patience and price cuts are paying off for Joseph David, an investor and rehabber who listed a blue three-bedroom Craftsman in Highland Park in late June at $624,990. When it went on the market, his agent got a lot of phone calls. Dozens of people showed up at open houses. But none of them pulled the trigger.

“We got a lot of response, but we didn’t get any offers,” David said. “There were a lot of looky-loos.”

Before long, he knocked a bit off his asking price. Then earlier this month, he cut it more sharply, to $549,000.

Interest picked up dramatically. His agent started to get a lot more phone calls, making David confident he’ll get that offer soon.

The investor here is likely to end up at $100,000 under his initial list price, and leave him wondering if he should wait too, rather than taking such a “loss”.  But it was never worth $624,990, because the market in late June was healthy enough that he would have gotten offers if the price was close to being right.

The biggest problem is that sellers and listing agents are way too optimistic in the beginning, and are unwilling to adjust fast enough to get in the game.

Here is my list-price rule-of-thumb for sellers:

If you are getting offers, your list price must be within 5% of being right.

If you are getting showings but no offers, your price must be 5% to 10% wrong.

If you’re not having any showings, your price is more than 10% wrong.

Here’s an alternative plan for those sellers caught in this dilemma.  Reduce your price once by as much as you can endure (5% to 10%), and if it doesn’t sell by Halloween, then wait until next year.

To just cancel the listing now without a price reduction doesn’t give you any price-discovery data to use when listing next year.  Don’t be surprised if next-year’s comps will suggest starting at the lower price, and leave you wondering if you should have just bit the bullet in 2014.

Posted by on Sep 15, 2014 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 4 comments

Sell Signs?

2014-06-27 14.38.15-2

A flipper checked in yesterday:

I’m getting really bearish. Nothing makes sense. There’s going to be some flippers without chairs when the music stops. Hopefully we have another 2-3 years in this run. Putting fixers in the MLS has really been eye opening. So many big groups writing offers just to tie them up, impossible for the small guy to pick one off. It used to be that the hard part was the rehab, now the hard part is finding the deal and the rehab seems to be the no brainer, and construction guys are getting cheaper. Hard money getting cheaper too, just paid 1.5 points and 7.99% to buy a house I’m closing on next week.

The market has been logic-free for a while now, and it will come to a halt one day without notice.  Keep an eye on the sales count – it will be the first sign of trouble.

But the June count for detached-homes sold in San Diego County still looks in-line with a healthy-ish market:

SD County Detached-Home Sales, June

2011: 2,061

2012: 2,367

2013: 2,328

2014: 1,980 (-15%)

The late-reporters will add enough to get close to last year’s count.  The final tally will probably be within 7% to 9% of the 2013 count, which is pretty good considering how hot it was last year.

But if you are thinking of selling, there isn’t enough extra upside potential to wait any longer.

Posted by on Jul 3, 2014 in Jim's Take on the Market, Market Conditions, Thinking of Selling? | 2 comments

Big Ocean View

Clemens view

Thankfully the fire in Carlsbad has subsided, and we can get back to real estate.  Check out my new listing of the former model in Spyglass Hills that has the full 180-degree ocean view, big yard, 3-car, new carpet & paint, and loads of builder upgrades:

Come by the open houses Saturday and Sunday where we will be having the All-American BBQ and get your photo taken by the drone!

http://www.sdlookup.com/MLS-140026212-5212_Clemens_Ct_Carlsbad_CA_92008

5212-clemens-court-002_mls

5212-clemens-court-018_mls

5212-clemens-court-027_mls

5212-clemens-court-031_mls

The seller says that it is Catalina Island we see in the video – and he is a Naval officer, so he should know. Come by and see for yourself:

islands

Posted by on May 16, 2014 in Thinking of Buying?, Thinking of Selling?, View, Why You Should List With Jim | 10 comments

Sellers’ Optimism

Yesterday I was saying how we should be running into a glutty market by the end of summer – unless sellers are willing to adjust their prices in time.

Here is the recent history of list and sold pricing for San Diego County houses:

SD County pricing May 2014

You can see how the trends were rising quickly during the frenzy era – but for almost a year now, the solds have been in a fairly tight range. Yet the list pricing is starting to take off again.

Evidence has never stopped sellers from dreaming though.  In this latest survey, 40% say they will price their home above market value this quarter:

http://www.cnbc.com/id/101656130

An excerpt:

“I even hear them say that prices are skyrocketing,” said Jeremy Cunningham, a northern Virginia real estate agent with Redfin, a real estate brokerage. “When you ask them what their data source is or where they’re getting their information, it’s more of a vibe.”

Forty percent of sellers surveyed by Redfin said they are planning on pricing their homes above market value when they list in the second quarter of this year; that’s up from 33 percent at the beginning of the year. Redfin polled 1,128 active home sellers across 25 U.S. cities.

Confidence is behind it all. Fifty-two percent said they were confident that now is a good time to sell, versus just 37.5 percent three months ago.

We already saw how April was a bad month around here for average sold pricing, yet sellers keep pushing higher:

NSDCC
LP Avg $/sf
SP Avg $/sf
% diff
Jan 2014
$526/sf
$501/sf
5%
Apr 2014
$546/sf
$449/sf
22%

When there is more than a 20% gap between LP and SP averages, a glut of over-priced homes is soon to follow – unless the April dip in pricing was an anomaly.

Are you are thinking about selling your home? Contact me today at jim@jimklinge.com or (858) 997-3801.

pick a price

Posted by on May 9, 2014 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 0 comments

When to Sell Your Home

when to sellThinking of selling your home?

These items will have a direct impact on your ability to sell for top dollar, and make the sale more predictable too:

1. Sell When You Have Good Comps – There’s nothing wrong with letting a neighbor (or two) be the guinea pig, and sell their house first.  Once there are a couple of strong sales nearby, it is much easier to justify your top-dollar price.

Similarly, if there have been a couple of bad sales recently, wait at least six months after they have closed before selling.  Appraisers can’t use them if they are more than six months old, but buyers are known to have longer memories.

2. Sell When There Are Good Active Listings Nearby – Ideally you’d like to have recently-closed sales to help justify your case, but if you don’t have those, the next best thing is to undercut the unsold listings nearby. You will look like the ‘best buy’ only if you drastically undercut the competition….by at least 5%.  Buyers probably know the others are over-priced, so just under-cutting them by a few bucks isn’t enough.

3.  Sell Right After Home Improvements – Retail buyers (the ones who pay top dollar) don’t want the fixers, they prefer the cream puffs.  Shiny new improvements lose their luster quickly; so if you need to fix things, spend the money and then list your home the next day.

4.  Sell When New Tenants Move Out Nearby – Are you among the unfortunate owner-occupiers who have to endure tenants next door?  Did the renters with five kids and 14 yapping dogs just move out?  It’s a good time to sell!  Or conversely, if a great couple with no noise-makers just moved in, sell before they move out!

5.  Sell When You Go On Vacation – If it all goes right, dozens of strangers will be pouring through your house with little or no notice the first few days on the market.  If that idea bugs you, go on vacation the day your house goes on the market – especially if you have a lot of kids and pets.

6.  Sell Before You Get Old – You might chuckle, but it’s true.  For most sellers, moving means: a) having to sift through all the old junk that has been stored away for years and decide what is worth keeping, b) packing and unpacking, c) dealing with a lot of unknowns – strangers, moving, new home, getting settled again, etc., and d) making life-changing decisions.  Don’t underestimate how exhausting the transition can be.

7.  Sell Once You Know Where You Are Going – You have to be 100% committed to moving.  Why?  Because once a seller signs the purchase contract, you cannot cancel (only the buyer can).  In addition, if you don’t know where you are moving, you will price your home too high, and it won’t sell.

Many sellers need to leave town to make it worth it.  If you are thinking that you’ll just rent for a year or two and find a smaller place later for half-off, recent history has shown that it is very difficult to score a big discount in the great neighborhoods.  If you opt for that program, be prepared for the other option which is perfectly acceptable – you may rent the rest of your life.

8.  Sell in March or July – We are fortunate to enjoy a 12-month selling season in San Diego.  Everyone thinks that hitting the market during the Spring Selling Season is the most productive, but there is usually more competition too.

If you wanted to time your own move around spring or summer, then focus on March or July.  If you list in March, hopefully there were already 1-2 of your neighbors who were successful in Jan/Feb, and you can ride their coattails.  March is the safest bet, because April’s market has a lull due to taxes, May/June is graduation season, and summer is full of vacations.  Or wait until the last minute and list in July once all the good buys have been taken (and hopefully several of them sold for astronomical prices) and school is bearing down on the family buyers.

9. Get Good Help!  It was easy in 2013, but homebuyers are more particular now that we have much-higher pricing.  Spend a little more on sprucing up your home, be sharper on price, and don’t just hire any realtor off the street – get good help!

Posted by on Feb 21, 2014 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 2 comments