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(760) 434-5000

Carmel Valley
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Category Archive: ‘Thinking of Selling?’

Traffic Doesn’t Equal Offers 2

Don’t feel bad for that last seller – somebody will come along and pay him what he wants.  Many homes are sold to buyers who are represented by one of the new-age realtors fresh out of real estate school who work for a team.

The good veteran agents are so sick of the frustration that they’re scrambling to build a team of inexperienced agents who will do the grunt work.  There isn’t much oversight on whether the price paid is fair; instead, there is more pressure to get another sale on the board.

New and inexperienced agents get so excited about showing a new listing that if it has any shiny stuff, they go berserk and puke all over the listing agent, giving the impression that the buyers will pay anything for the house.  When I’m showing a house, people think that I’m just a boring old dude because I don’t say much.  It never occurs to them that I’m protecting my fiduciary duty to my buyer by NOT spewing superlatives.

The problem starts when listing agents don’t properly prepare their sellers for the initial onslaught – instead, they get caught up in it too, and think that all the jumping around means that offers will be pouring in any minute.

It used to be that way, but not any more.

If lookers don’t make an offer within 24 hours, they usually don’t make one.  It’s too easy to play it safe, and wait for the next one.

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Posted by on Jan 17, 2017 in 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

Traffic Doesn’t Equal Offers

By now, the low-inventory/fast-market has trained the motivated buyers to be on red alert.  If a new listing pops up that looks remotely interesting, those buyers know to get over there quick for a peek.

This presents a major problem for the sellers and listing agent.

Once the parade of lookers descends upon the new meat within hours, it is irresistible for the ego to go wild, and it causes sellers and listing agents to have visions of lottery-type money.

It is so much fun, they want it to last forever! They are so excited!

Savvy buyers know that if this is THE house, they need to make an offer promptly.  It makes the equation quite simple – sellers will receive offers from the motivated buyers within the first 2-3 days.  All you have to do is counter for every buyer’s highest-and-best offer, and by Day Four the buyer who will pay the most will emerge.

But what usually happens?

The overly optimistic buyer-agents get all giddy and tell the listing agent that they think they will be making an offer.  But a funny thing happens to buyers once they roll down the street for a couple of blocks – all the reasons NOT to buy that house come up, and most buyers talk themselves right out of it.  At least half of the people who threaten to make an offer never do.

What if you are a motivated buyer, and make a great offer in the first 1-2 days?  It happens regularly that sellers and listing agents will pooh-pooh a great early offer, and hope that there are two in the bush.

What can buyers do?  You only have one option, and that is to walk away if you don’t get a response by the time the offer expires.  At least if you threaten to quit, it should hopefully get their full attention.

Sellers and listing agents think that lots of visitors = lots of offers.  But most visitors don’t offer – they’re just visiting.  In virtually every case, the no-offer rate is at least 90%, but sellers ignore that and are convinced there has to be two or more in the bush.

Here’s today’s example:

The seller paid in the low $700,000s in late-2012, and didn’t add anything but lipstick since. We initially offered $1,275,000 last week, and sure got the feeling that we were getting shopped around – the listing agent kept reminding me that there were other offers expected.  So we put a deadline of 1:00pm today to accept our $1,300,000 counter-offer.  Two hours after our deadline, the seller countered $1,339,000, which was just $6,000 under their first counter.  They called it their final offer, and it wasn’t a multiple-counter, so no other offers were on the table.

The sellers paid low-$700,000s, and couldn’t live with $1,300,000 – they had to have an extra $39,000, or the deal was off.

My buyers stuck to their guns, and instead we were off to a new listing that was priced well under this one.

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Posted by on Jan 16, 2017 in Bidding Wars, Jim's Take on the Market, Market Buzz, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Selling Early in the Season

The N.A.R. economist/cheerleader gives his reasons on why sellers should list early this year.  Like Yunnie, I don’t think Smoke consults with realtors, instead he just shoots from the hip.  It’s not a bad thing, but it leads to lightweight, obvious answers – see article here:

http://www.realtor.com/news/trends/sellers-in-2017-may-benefit-from-listing-early/

I’ll add my reasons why sellers should get started earlier:

  1.  With few other choices and with the school schedule allowing some latitude on timing, buyers have been tolerant about sellers renting back the house.  Selling earlier and renting back the house enables sellers to bank their equity and make non-contingent offers on their replacement home.
  2.  Motivated buyers have been anxious for months to see the selling season arrive – and those are the buyers you want!
  3.  Some day we could see a surge of boomers looking to cash out of their lightly-maintained, long-time residences. With loads of equity, they (or their heirs) could undercut you on price for a quick sale.
  4.  Historically, demand has been known to turn on a dime.  Currently there is little evidence of that, but if the season gets off to a slow start, the psychological ‘animal spirits’ could recede quickly – especially on price.
  5.  San Diego weather allows buyers to hit the street earlier.
  6.  Trump!

The best time to sell?  When no one else is!

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Posted by on Jan 14, 2017 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 0 comments

2017 Market Conditions


Our Carmel Valley sale closed yesterday, with two notable lessons for me.

Note #1 – We had seven offers, but couldn’t get anyone to pay 1% over list – the list price was $729,000, and it closed for $735,000.  Usually when there are multiple offers, one or two of them will break out and pay 5% to 10% above the list price because they gotta have it.

But the willingness to pay over list was subdued.  It was probably a function of it being a two-bedroom, 1,410sf two-story home, so the demand is specific, but these are the least-expensive detached homes in Carmel Valley!

It has been the trend in the neighborhood though.  There have been 6 sales over the last six months, and they have all closed right around list price.

Note #2 – When homes are selling for a record prices, buyers expect more.

We’ve seen it all year now.  The lists of repair requests have grown longer, and more detailed – and buyers are checking to make sure the work was done to their satisfaction.

Yesterday, I was over there installing a new door knob myself!

In our hot seller’s market, listing agents were able to blow off any buyer requests, and the deal closed anyway.  Not any more.

We’ll see the same in 2017 – buyers are going to be more reluctant on price, and they will expect a house in better condition.

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Posted by on Dec 23, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Buying?, Thinking of Selling?, Why You Should List With Jim | 8 comments

Wait-And-See in 2017?

It’s easy for me to say our local real estate market should get off to a fast start.

It’s what we do every year!

Let’s theorize why the pricing pops in Spring:

  1.  Demand has been pent-up for 3-6 months; and buyers come out hungry.
  2.  Virtually all sellers come out greedy, and tack on the extra 5% or so.
  3.  But only the spectacular homes sell – those that deserve a price hike.
  4.  The inferior homes don’t sell, and clog the inventory.

You can see in the graph above that in the last two years, the cost-per-sf has jumped early.  But buyers only buy early if they see a spectacular house – it is too tempting to wait-and-see, rather than buy a fixer that’s priced retail-ish.

As the selling season matures, the inventory swells with inferior homes that don’t deserve the new pricing premium.  As buyers keep passing on anything that has been on the market for more than 30 days – figuring there must be something wrong if nobody else bought them – the demand intensifies around each of the occasional creampuffs that come to market

Home Sellers

Creampuffs – You can sell your well-appointed, attractively-priced home for a premium all year round. But this year, waiting until summer didn’t get you any more money than you could have gotten in April, according to the graph above.  The San Diego Case-Shiller Index has risen only a cumulative 1.3% over the last five months, reflecting sales data back to March.

Inferiors – Those selling homes with partial or no remodeling/upgrading, bad locations, hard-to-show, or listed with bad agents will face increasing competition as time goes on – and they’ll be piling up by May-June.  Most importantly, the pricing will be more suspect the longer that yours and others are lingering unsold.  List early, and get it done.

Home Buyers

Creampuffs – Buy early.  The competition for the well-appointed, attractively-priced homes will increase as the season rolls on.

Inferiors – Buy late.  Hope that fixer pricing is crushed by supply overload.

It will probably get harder to tell the difference between the creampuffs and inferiors as the selling commotion starts rumbling down the road.

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Posted by on Dec 10, 2016 in 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 | 2 comments

Fast Money

We’ve touched on the new disrupter OpenDoor, which is currently operating in Phoenix and Dallas (places where home values might be easier to determine):

https://www.opendoor.com/homepage

They are willing to pay cash for your house and close in three days, which sounds enticing for those sellers looking for instant cash.  But they offer to buy your home at a below-market price based on algorithms, and fees range from 6% to 12%.  They are glorified flippers.

The length of time it takes to close escrow should have improved by now.  It still takes 30-45 days to process a sale, which might be advantageous for sellers who occupy the home – they usually need time to pack it up.

But for those sellers of vacant homes, or those who want to use their proceeds to purchase another home, a quick escrow might be preferred.

Thankfully, there are new alternatives.

Quicken is offering the Rocket Mortgage, and yesterday Caliber Home Loans rolled out their new product that can close a regular sale in 10 days or less:

http://www.housingwire.com/articles/38710-first-look-caliber-home-loans-new-fully-digital-mortgage-will-close-in-10-days-or-less

These options should stop sellers from getting their head tore off just because they want a fast closing. These mortgage products could also really help the move-up market by alleviating the struggle of making offers contingent upon the sale of your current residence.

The regional VP of Caliber told me that their process is very innovative.  They do not require the buyer to bring in the usual documents.  Instead, they are getting them directly from the institutions themselves, which will help ensure accuracy.  The IRS will furnish Caliber with income documentation, and the funds for closing will be verified directly with the banks themselves.  The appraisals will be computer-generated in areas where you have easier valuations, like in Carmel Valley and Carlsbad where there are newer tract houses that are very similar.

We are close to being able to get a mortgage with the swipe of your ID card!  It could invigorate the move-up market in 2017 – and Trump will get the credit!

Posted by on Dec 9, 2016 in Flips, Jim's Take on the Market, Mortgage News, Thinking of Selling?, Why You Should List With Jim | 12 comments

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