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Category Archive: ‘Thinking of Selling?’

Trump Effect on Real Estate

Image result for trump

What is the consensus on the Trump impact on our local real estate market?

After speaking to agents on broker preview the last couple of days, I think we can divide the buyer pool into two camps:

  1. There have never been more reasons to wait-and-see.
  2. But some buyers will want to hurry it up, before anything else happens.

Yellen made it sound like the next Fed move is imminent, which hopefully means next month.  There is 1/4% (or more) already baked into the market, so if they do bump the Fed Funds rate, it should have a calming effect on mortgage rates – it did last time.  If we can stay around the current 4%, it should motivate people to buy before it goes higher.

But there is also the anxiety that comes with buying or selling that gets aggravated by uncertainty.  Have you ever felt more desire to hunker down??  The motivated buyers and sellers want to get it done.

I think we will see a very active selling season – and it already is!

NSDCC October Sales and Pricing

Year
# of Detached-Home Sales
Median Sales Price
Average Cost-per-SF
2012
297
$825,000
$388/sf
2013
266
$957,500
$495/sf
2014
244
$978,754
$467/sf
2015
216
$1,076,000
$473/sf
2016
263
$1,100,000
$532/sf

Our current momentum should carry us well into 2017. But look at the stumble in 2014 – I’m more worried about 2018.

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Posted by on Nov 17, 2016 in Jim's Take on the Market, Market Conditions, North County Coastal, Sales and Price Check, Thinking of Buying?, Thinking of Selling? | 3 comments

Homebuyer Turnoffs

smoke

Rarely do I smell cigarette smoke in houses for sale any more. H/T daytrip!

http://theweek.com/articles/659711/how-quitting-smoking-help-sell-home

Have you ever been touring a home as a potential buyer and known within a few minutes that the house was not for you? Something left a poor impression on you that nothing else about the house could overcome. Think about that experience when you are on the other end of the transaction, preparing to sell your house.

It can be hard to spot the weak points in your own home, so let this list of top buyer turnoffs help you realistically assess your home before you list it for sale.

Consider these turnoffs from a buyer’s point of view:

  • Dirt/mold — Many homebuyer turnoffs are a matter of taste, but absolutely no one gets a positive impression from a dirty or moldy house. Stained or moldy grout, unclean bathroom and kitchen fixtures, dirty walls and windows, musty/moldy basements and filthy floors all leave a terrible impression. Either give the house a thorough cleaning yourself, or pay somebody to do it professionally.
  • Pests — Similar to a dirty home, evidence of bugs or mice is an instant no-sale. Call an exterminator if you need one.
  • Odors — Smoking is listed as a top turnoff, because smoking odors are pervasive and very difficult to remove without professional help. Pet odors are a close second. It is very difficult to evaluate the odors in your own house objectively, so ask a friend for help (one who can give you the unvarnished truth). If you need to have the walls professionally cleaned and/or rip out carpet to get rid of the odors, do it. During the showing periods, you will need to refrain from smoking in the house and should consider relocating your pets for a short time… especially if they smoke.
  • Clutter/personal items — Buyers want to envision how they fit into the house and don’t need the distraction of your items, or the impression that the house is too small due to the evident clutter. Remove all unnecessary items before showing.
    This includes you. Nobody wants you hanging over their shoulder as they assess your house. Let the real estate agent do the work.
  • Outdated appliances — Any regular viewer of HGTV knows that buyers frequently reject million-dollar homes with outdated appliances, even if they could easily replace the appliances for the money they could save on the house. Buyers often can’t see past the aesthetics of the existing appliances. It may not make economic sense for you to replace appliances on a house you intend to sell, but for a higher-end home, it may make the difference. If you do replace appliances, stay generic but aesthetically pleasing. The homeowners are likely to replace it anyway, but they still need the initial positive impression to buy the home in the first place.
  • Outdated decor — Wallpaper, popcorn ceilings, shag carpet, or carpet over hardwood all tend to reduce appeal. As with appliances, these may or may not be worth changing prior to listing. If you don’t, be prepared for a lower price as buyers price in a renovation.
  • Bad landscaping — Make the best first impression possible by keeping the yard mowed, weeds pulled, and sidewalks edged. Fix any issues such as dirty or damaged brick and siding, peeling paint, or bent gutters. A daily spider web check is not a bad idea either (see pests).
  • Dim lighting — Dimly lit areas are not appealing. Open the blinds and deal with any poorly lit areas as best you can with floor lamps or other temporary lighting.
  • Specialized/converted rooms — Is your garage converted into a mancave? Has a spare bedroom been converted into a shrine to collectible plates or a likeness of Fenway Park? Any specialized rooms will have appeal to an extremely narrow group of potential buyers (and perhaps no buyers), but will be considered a conversion headache for most. Strip it down as much as possible to leave it as an empty template for the prospective buyer.

Who knows — perhaps after you do all this work, you may decide to keep your house! At the very least, you will have improved the likelihood of selling your house and reaping the rewards of your foresight and hard work.

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Posted by on Nov 12, 2016 in Jim's Take on the Market, Thinking of Selling?, Tips, Advice & Links | 1 comment

Higher Prices = Harder to Sell

harder-to-sell

As home prices increase, buyers get more picky – and it makes sense.

If they have to pay more, then they want more for their money.

This should have some lasting effects on the market:

  1.  The sellers who upgrade their home to sell will be rewarded.
  2.  The gap between the turn-key homes vs. fixers should widen.
  3.  The home-selling failure rate will increase.

The stats show that we’ve had more listings this year, but fewer sales:

NSDCC Detached Homes between Jan-Sept.

Year
Total Sales
Total Listings
Sales/Listings Ratio
2013
2,554
4,091
62%
2014
2,183
3,930
56%
2015
2,362
4,068
58%
2016
2,273
4,187
54%

Yes, the ‘re-freshing’ of listings does pad the Total Listings count, but it’s been a constant problem and helps to make the point – it’s getting harder to sell.

For sellers who don’t want to lower their price, there is an easy answer.

Do more to upgrade your home!

This is why financed buyers should consider a fixer – there is less competition, especially from cash buyers who have a better shot at the hot buys.

Posted by on Oct 18, 2016 in Jim's Take on the Market, Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim | 1 comment

Leased Solar Panels

Solar power is a great idea, but do you buy or lease the system?

If you purchase your solar panels, then when you go to sell the house, it should provide some extra value to the buyer.  Exactly how much is tough to estimate, but it wouldn’t be more than 50 cents on the dollar – it is a feel-good feature.

If you lease your system, there are pitfalls when selling:

  1.  The buyers have to assume the lease.  I don’t think the actual assuming of the lease is that big of a deal.  Buyers already have their financials handy to get their loan, and mortgage underwriters are tougher than solar-lease underwriters.  It is the additional hassle that can irk a buyer.
  2.  The seller and listing agent have to initiate the lease-assumption process.  The solar-lease company won’t talk to the buyers until the lease application has been submitted, which means the seller and listing agent need to request it. The leasing company has 10 days to respond, but the listing agent expects the buyer to release all contingencies within 17 days – which is only going to happen if the listing agent knows to request the lease application promptly.
  3.  There is a buyout.  This is where the fun begins.  On one hand, the buyer gets the benefit so the seller expects you to take the full package as-is. But the lease goes for 20 years, and the lease payments total around $34,000. Plus, there is a buyout on top of that?  Buyers don’t expect that additional buyout cost, and would like some negotiation.

Here is a typical buyout schedule:

buyout

4. The solar-lease company records a UCC-filing against the property, which prevents the seller from selling or refinancing without permission from the solar-lease company.

Do sellers fully understand what they are signing when they lease solar panels?  Probably not, and if they try to sell their house over the next 20 years, they will get a not-so-friendly reminder.

Below is a link to a general discussion about solar panels:

Solar Panels: Are They Worth the Cost?

Posted by on Oct 7, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim | 1 comment

More on Real Estate Disrupters

re

The latimes.com gave free publicity to a couple of real estate start-ups here:

http://www.latimes.com/business/la-fi-ditch-the-real-estate-agent-20161001-snap-story.html

Let’s examine piece by piece:

Real estate agents used to be privy to a lot of information that home buyers couldn’t obtain on their own.

But now property listings, photo galleries, historic sales prices, school ratings and neighborhood crime rates are freely accessible to anyone with just a few clicks. For some assertive buyers, that’s an invitation to bypass an agent and, in the process, cut out the pesky 5% to 6% commission that is traditionally split between the buyer’s agent and the seller’s agent.

To help buyers go it alone, or close to it, several real estate start-ups have emerged that promise an easier solution to a notoriously stressful and expensive purchase. By eliminating or limiting an agent’s role, customers save money and streamline the process.

Jim: New real estate companies have emerged every year, yet the landscape hasn’t changed.  Buzz words like ‘save money’ and ‘streamline the process’ sound sexy, but every agent can offer those.

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It’s also leading to tensions with the hundreds of thousands of real estate agents around the country, who say the companies are shortsighted and overlook the skills that a professional agent can offer.

Jim: Tensions?  Hardly – you aren’t even a blip on the radar yet.

We only get tense when a start-up is spending $100 million per year on advertising (like Zillow). It would take a huge investment in people and marketing to really disrupt the business – when you get to that point, let me know and we will revisit. Until then, you can nibble around the edges like Aunt Bea and most other small enterprises.

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When Wes and Laurel Duquette set out to purchase a home for the first time, the couple chose not to work with a real estate agent.

“We didn’t find an agent to be much of an advantage, yet they’re so heavily compensated for what they do,” Wes said.

Instead, they turned to Open Listings, a Y Combinator-backed start-up that replaces most of what agents do with an online platform. The Los Angeles company helps customers find a home on their own by creating a personalized feed of available properties that meet their requirements, and sending them emails of open houses.

It’s free for customers to use the service. Once a home has been purchased, Open Listings refunds customers half of the commission it receives from a successful transaction.

In April, the Duquettes purchased a three-bedroom, one-bathroom Manhattan Beach home for $1.34 million. Their refund from Open Listings was $16,000, which the couple put toward closing costs and bringing down their mortgage rate.

Jim: After this home was on the market for 28 days, Wes and Laurel paid $12,500 over list price for it.  When you aren’t willing to find a buyer’s agent who provides a real advantage, this is what happens – the listing agent will have his way with you.

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Real estate start-up founders say the industry is ripe for change.

Jim: Agreed, and with half of the realtor population near retirement age (median age is 58), the home-selling business could be completely redefined by anyone who is willing to spend $100 million or more on advertising every year.

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“Millennials expect things to be easy and transparent. They’re also used to making high-purchase transactions online,” said Shelley Janes, founder of SideDoor, an app that hopes to become the Ebay of real estate, where sellers can list their homes and connect directly with buyers.

Jim: More sexy talk that would work great as long as the buyer pays the seller’s price, there are no other competing buyers, and the house doesn’t have any issues with condition, financing, or appraisal.  P.S. Shelley Janes does not have a California real estate license.

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The recent wave of new real estate start-ups isn’t the first time the agent-assisted model has been challenged.

But shaking up the industry has been difficult. For one, the National Assn. of Realtors is an influential obstacle when it comes to change in the industry.

“It’s a powerful trade association, and its cohorts are brokerages, multiple listing services, real estate associations and individual agents. They all work diligently to keep a buyer and seller apart,” said Joshua Hunt, chief executive of Trelora, a full-service, commission-free real estate agency. He said those who are part of the outdated system fight to keep things as they are to preserve current commission rates.

Jim: The idea that N.A.R. and its ‘cohorts’ have any influence on commission rates is an illusion.  Not only is nobody within the industry fighting to ‘keep things as they are’ (I wish they would), no one within the industry is fighting for anything.  Ten years after Zillow began, we are just getting around to having meetings to discuss what we might want to do about it some day.

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

Commissions in the U.S. are especially high. In Britain, Singapore and the Netherlands, they usually fall between 1% and 2%, according to a report by the International Real Estate Review.

Jim: Those agents are paid by the seller to process the paperwork – they are transactional agents who don’t provide advice, and aren’t obligated to disclose anything.  It is a model that could catch on here, but buyers and sellers don’t mind paying for advice.  It would be more likely that real-estate consulting companies would evolve.  It’s where these disrupters miss the boat – good help is needed to get deals closed.

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Open Listings still uses real estate agents in the process, but in a limited way. No more driving prospective buyers around town, or keeping a lookout for the perfect house for clients. Those tasks all fall on the home buyer’s shoulders.

Jim: They are, in effect, transactional agents.  They employ eight agents in two offices – Los Angeles and San Francisco – and most are brand new agents (how much advice could they offer?).  The broker lives in Santa Barbara.

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“More resources and online tools are good for consumers —  they provide a good picture of current market conditions, but employing a Realtor to help find just the right home to purchase and to negotiate on your behalf is key to a successful buying experience,” DeSanctis said.

Open Listings understands this, which is why co-founder Judd Schoenholtz says the company hasn’t totally removed agents from the picture.

Jim:  I agree that it is difficult for consumers to appreciate the value of good help until after 1) they need it, and 2) they experience it.  P.S. Co-founder Judd has had a California real estate license for 19 months.

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The company is building tools to minimize the mind-numbing amount of labor that comes with home buying: viewings, forms and contracts, inspections. By saving agents time in the paperwork weeds, Open Listings allows its agents to concentrate on the piece where they can make a difference: getting an offer accepted.

“We’re able to refund that much of our commission because our agents only focus on the small but critical piece of the purchase cycle,” Schoenholtz said.

Jim: Just getting around to building tools?  You must mean robots and drones full of artificial intelligence, right?  In the meantime, who does the real work – providing advice each step along the way?

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He said the network answers a real need for some agents.

“We’re offering [agents] the perfect arrangement — buyers that will really buy and less of the paperwork,” he said.

Open Listings, which launched last year and became profitable last month, says it has saved California home buyers more than $1 million since its launch. Its revenue has also doubled every quarter, according to Schoenholtz.

Its independent agents work for $25 an hour, plus bonuses and a commission split between Open Listings. There are currently 12 independent agents in the start-up’s network.

Jim: Agents who can’t keep up will love this idea – and the hourly pay.

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

But there have been hurdles. According to Hunt, agents and brokerages will go out of their way not to show a Trelora home, or have lied about the condition or availability of Trelora homes.

Jim: It is a very competitive business – it can get nasty.

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Christian Redfearn, a real estate professor at USC’s Sol Price School of Public Policy, said another issue is the high stakes involved in home buying.

“I have access to all kinds of data, but I’ve still got to talk to a human. I don’t want to overpay for property. Given how large the investment is, if I’m off by 5%, that’s a huge amount of money,” he said. “A good broker would know the market well, and it’s hard to put that kind of quality on a website.”

That kind of personalized hand-holding is one that Daisha Versaw, 38, missed when she used Trelora to sell her five-bedroom, two-bathroom home in Arvada, a suburb of Denver. The company saved her family more than $16,000, but it was hard on her nerves in some key moments.

Though Trelora agents were responsive when she had reached out, it was still up to her to ask for updates and to stay on top of things. When the resolution deadline drew near for inspections, for example, it was Versaw who informed her Trelora agent of its expiration. “I hated that I was the one reminding him of the deadline.”

Her advice to would-be buyers wanting to skip an agent: “Be prepared to take more initiative and advocate for yourself.”

Jim:  Get Good Help!

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Posted by on Oct 1, 2016 in Jim's Take on the Market, Realtor, Realtors Talking Shop, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links | 0 comments

Smart Selling Tips

selling

When you’ve decided to sell your home, the last thing you want to do is spend money to spruce the place up. After all, whoever buys it is going to replace those outdated kitchen cabinets and grungy bathroom tiles anyway, right?

“We’re often asked why any money should be spent freshening,” said Mickey Conlon, an associate broker with Douglas Elliman Real Estate. “The answer has to do with the psychological effect of assessing a renovation on a prospective purchase. Buyers assign dollar values to repairs that typically exceed the actual cost of remediation.”

To get the best return on your investment — and avoid turning off potential buyers — you need to ensure your home looks its best when it hits the market. At the same time, you don’t want to waste effort or money on improvements that won’t pay off.

Read full article here – good tips:

http://www.nytimes.com/2016/09/18/realestate/preparing-your-home-for-sale.html

Posted by on Sep 18, 2016 in Jim's Take on the Market, Thinking of Selling?, Tips, Advice & Links | 3 comments