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Category Archive: ‘Tips, Advice & Links’

Verifying the Comps

Mustard

It is very typical to see new listings priced higher than the comps.  If sellers keep adding a little mustard to their list prices, why do buyers keep paying it?

1.  Buyers are payment shoppers.  With rates this low, the mustard is cheap. If a buyer has to pay an extra $20,000 to beat out other bidders and win a house, it adds less than $100 per month to his payment.

2.  Cash buyers have gone nutty.  It used to be that cash buyers always drove the hardest bargains, but these days the craziest sales prices are almost always paid by a cash buyer.  The money must be coming easier these days with the real estate and stock market run-ups, because it’s being spent willy-nilly.

3.  Listing agents expect buyers to just pay their price, whether it is justified or not.  Buyers concede due to mounting frustration, and end up surrendering.

4.  Buyers are looking forward, not back.  If they don’t pay this price for this house, somebody else probably will, and then it ends up being the comp for the next sale.  The trend of rising prices makes buyers want to hurry up and get it done now, before it gets any worse.

The result is – or should be – less confidence in the valuations.  If you see cash buyers throwing crazy money around, it’s difficult to consider those as legitimate comps.  But in a fast-moving environment, logic and common sense get left by the wayside.

Buyers and sellers both can check the validity of comps by researching the neighborhood’s sales history at the last peak, and by factoring in the price reductions, days-on-market, and the buyer’s agent’s sales history.

Get Good Help!

Posted by on Mar 4, 2015 in Jim's Take on the Market, Tips, Advice & Links | 3 comments

Zestimate Tune-Up?

z

When they first rolled out the improve-it-yourself feature, it turned out to be no more than an opportunity to list your upgrades – because little or no value was added to your zestimate.  I received this by email today:

Hi Jim,

Today Zillow announced enhancements to the Zestimate® home value that allow homeowners to edit their home facts on Zillow and, depending on the new information they provide, potentially see an immediate impact on their Zestimate. For instance, if the square footage of a home is out of date on Zillow, the homeowner can correct this information and see an adjustment in their Zestimate.

Can listing agents use this feature to affect the Zestimate?

We encourage you to work with your seller prior to placing the home on the market to ensure all information on Zillow is accurate. If your seller is concerned about the Zestimate, check the home facts and make updates where needed. We suggest you communicate that the Zestimate is an estimate, not an appraisal.

We continue to iterate on our existing offerings to improve how buyers, sellers and homeowners use the resources available on Zillow. Should you have any questions about the Zestimate, visit www.zillow.com/zestimate.

Sincerely,

Greg Schwartz, Chief Revenue Officer, Zillow Group

I’ll believe it when I see it!  In the end, the zestimates will likely be more inaccurate as sellers fluff their values to the moon.  But Zillow is learning the ways of the industry, and is now siding with the sellers.  Get Good Help!

Posted by on Feb 27, 2015 in Listing Agent Practices, Market Buzz, Thinking of Selling?, Tips, Advice & Links | 12 comments

Homebuyer Tips 2014

808 Minnesota St UNIT 354, San Francisco, CA 94107

The son of a past client scored a good job in San Francisco a few years back, and is looking at 1-bedroom condos going for $700,000 – $800,000.

They wondered if I had any tips.

Good golly, at that rate I better come up with something!

HOMEBUYING TIPS

1.  Get a good realtor.  These high-dollar areas pay big commissions and thus, attract plenty of real estate licensees.  But you need a great agent who knows more than you do, and brings extra value to the equation.  Ask how many times they’ve talked someone out of buying a home recently.

Not only will a great agent make you feel comfortable about the price/value equation, but their market cred will help too – because good agents want to work with good agents.  It happens regularly that my personal relationship with the other agent makes a difference in the outcome.

How do you find a good agent? The best luck I’ve had is searching for agents at Zillow, but you have to read through sales histories and testimonials (in that order) of each agent to find the right fit.  Also check their recent sales history to see if they have been selling similar homes and/or working your area.

I don’t care what company an agent works for, because real estate is an individual sport.  I’m not impressed by the big realtor teams either – I want individual attention.  I reviewed the first two pages on Zillow for San Francisco agents, and found this one:

http://www.zillow.com/profile/Deborah-Nguyen/

An agent’s recent sales is the best measure, and not only is she selling 3-4 per month but she also lists her annual production too – and she was consistent during the downturn.  She has been a realtor for 20 years, and has over 300 closings submitted to Zillow.

She has three listings, which, in this market, is about right – if you are good, they should be selling, not sitting.  Plus she has a 1-bedroom listing for $735,000!  I don’t know if she  passes you off to an assistant, but if not, she’s a qualified possibility.

The agents input their own listings and sales history, and Zillow provides a form for them to email to past clients to solicit their testimonials.  But all of her client ratings were the full five stars, which is exceptional.

2.  Buy For the Long-Term.  You may get stuck with this one for a while, so make sure you get what you want and need.  Keep exploring other areas for alternatives you haven’t thought of yet.

3.  Know the Inventory.  You may only have minutes to make decisions, be prepared.  Get auto-notifications of new listings to stay up on the market, and go to open houses – not just to find a home to buy, but also to study the market patterns.  You may not buy this one, but when you see it go pending, know why somebody else found it attractive.  If nothing else, at least be an online expert that follows the data closely – and don’t be surprised if you keep seeing crazy sales; they are almost always attributed to buyer frustration and lousy representation.

4.  Get Pre-Qualified.  Once you select a realtor, get pre-qualified for a mortgage using their recommended lender – they might bring some street cred too.  You either use a 20% down payment or you don’t, and either is fine.  If you don’t want to use a 20% down payment, you can do an 80/10/10 (1st and 2nd loans) that will at least lock you in to a low-rate 1st mortgage for the duration.  If you end up with less than 20% down and only want a first mortgage, you need PMI – private mortgage insurance. But if you get lucky, you can have the seller pay the entire premium up front (around 3%), so it won’t cost you anything monthly.

5.  Know the Contract. With Docusign, the electronic-signature process, signing a contract goes a little too fast.  Instead of reading the contract together with your agent in the corner booth at the local coffee shop, today you just rapid-click on your phone or PC to imprint your initials and signatures and whoosh, off it goes.  Know what you are signing!  The two most important paragraphs are 3K and 14.

6.  Time is of the Essence.  It is likely that most buyers will lose at least one property because they don’t react fast enough.  I just had a case where I called the listing agent of a house that my clients had just decided to buy.  The listing agent told me that she had been working back-and-forth with a buyer and other agent, and had just received a counter-offer that was acceptable to her sellers – and she was about to send it to them for final signature!

In these moments, your agent has to say the right thing.  In this case, not only did I stop the agent from signing a cash offer, I got her to accept my financed buyers’ offer instead!

This is a fast-moving environment and each day the best deals get picked up – if you like a home, chances are somebody else does too.

7.  Consider Fixers.  Be picky about location and floor plan, because you can’t change those.  But most buyers shy away from homes that need work, which can open up opportunities.  Get comfortable with the costs of fixing in advance, and know what you are looking at.  You can get a full evaluation and cost estimate during your contingency period.

8.  Make Offers.  Once your first salvo goes over the bow, the comfort level improves greatly.  Include a love letter that tugs at the sellers’ heartstrings.

9.  What to Offer.  The price to offer is directly related to the time on market.  If it is the first week of the listing and you recognize it to be a good value, you will probably have to pay all the money. But I hate to offer full price, because in the first week the sellers want to dicker, and full price doesn’t give them anywhere to go.  If you know there aren’t any other offers, then come in $20,000, $30,000 or $40,000 under the list price so the math is easy for the seller to split the difference.  If you hear subsequently that there are other offers, re-submit your offer with a higher price so you don’t get forgotten.

10.  Use Bubbleinfo.com as a Resource – You may not get any local-SF specific data but general information is available by using the Search feature at the top of the front page here.  For example, I typed in ‘Bidding Wars’ and got this link to a wide-ranging set of blog posts about winning a bidding war:

http://www.bubbleinfo.com/?s=bidding+war&x=0&y=0

You and your agent need to be bidding-war experts.  The low-end is what’s moving the fastest, and though $700,000-$800,000 sounds insane for one-bedroom condos, it is what it is.

Plan on devoting time and energy to this project.  The more invested, the better the results!

Posted by on Aug 3, 2014 in Jim's Buyer Representation, Jim's Take on the Market, Market Conditions, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 2 comments

Move-Up Tips

not for sale

Hat tip to Susie for sending this in from CNNMoney:

http://money.cnn.com/2014/05/20/real_estate/home-sales-fear/index.html?iid=s_mpm

An excerpt:

Tim Trampedach, a 36-year-old business owner who lives in San Francisco, has seen his home’s value soar from $1.2 million to $1.6 million in the past three years. He and his wife want to move into a bigger place, but there are simply no homes within their price range in their Portrero Hill neighborhood.

“My wife and I are effectively locked into the house,” he said. “We can’t sell because we can’t afford anything else nearby.”

They would probably struggle to buy their existing home at its current value of $1.6 million, let alone buy a more-expensive home that would make it worth it to move.  If you just bought at $1.2M, jumping up to $2,000,000 or more is a big stretch.

But if you can make the jump financially, then how do you pull it off?

Here are more excerpts from the article:

In fact, demand is so high that real estate agents are actively seeking people who are willing to sell. “You get letters in the mail asking if you’re interested in selling,” said Jackson. “People knock on your doors.”

In mid-April she got an enticing, unsolicited offer on the house, which Zillow estimates to be worth $420,000.

“My husband and I talked it over,” she said. “We hemmed and hawed. It was too good to be true, but we worried: Would we find a house we wanted?”

The buyer agreed to give the couple until October to find a new place, so they took the offer.

One way sellers can protect themselves is to make the sale of their home contingent upon their ability to find another one to move into.

Patrick Matson and his fiance, Margarita Munoz, insisted on such a clause when they put their Anaheim, Calif. home up for sale. Up until last Friday they had an offer on their home, but their own search did not go well.

The couple had made offers on two homes in La Mirada, where they liked the school district for their four-year-old son. But both offers were rejected.

The homes they looked at were between $430,000 and $480,000, but were no bigger or better than their current place, which they listed for $415,000.

Discouraged, the couple decided to reject the offer and take their home off the market.

“It was not an easy decision to make, provided that we knew the folks who had an offer in on our home were going to be disappointed and it wasn’t what we wanted either,” said Matson.

The couple plans to make some upgrades to their current place and will try again in a year or two, he said. “Hopefully the market won’t be so competitive by then.”

You have to be able to buy high enough to make it worth it – my rule of thumb is 50% higher than the old house – AND be able to convince the seller that you aren’t submitting an offer contingent upon finding a buyer for your old house.  Having your buyers do their inspection and appraisal and then release their contingencies would go a long way to making your offer look non-contingent.

You may have to help your buyer with some costs to get to that stage, but to pull it off the move-up, you have to make bold and decisive moves, work with a great agent, and hope for some luck!

Posted by on May 20, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions, Tips, Advice & Links, Why You Should List With Jim | 2 comments

Buying-Difficulty Gauge

downtown-san-diegoLast week we saw that San Diego was #1 in the nation for least affordable housing compared to the renter’s median income.

This article ranks the Top 10 cities in America by median list price, with the highest eight cities all located in California (San Diego is #7):

http://www.housingwire.com/articles/29729-california-dreaming-be-prepared-to-pay-up

The data is from realtor.com, which not only tracks the median list prices, but they also log the inventory counts for each city.  The MLS coverage may not match up exactly to the metro areas, but let’s compare inventory-to-census populations to gauge the potential competitiveness:

Metro Area
Population
Active Listings
Pop./Actives
Median LP
San Jose
1,892,894
2,023
936:1
$699,000
Oakland
2,632,217
3,082
854:1
$499,000
San Francisco
1,566,101
2,140
732:1
$867,280
Seattle
2,740,536
5,339
513:1
$369,950
Denver
2,697,476
5,586
483:1
$335,000
New York City
8,405,837
17,560
478:1
$377,500
LA-Long Beach
10,017,068
16,238
477:1
$459,990
San Diego
3,176,138
8,569
371:1
$469,000
Houston
6,313,158
19,817
319:1
$225,000
Orange Co.
3,114,363
10,072
309:1
$599,999

Seattle and Denver don’t get mentioned on the highest-priced lists, but the difficulty of buying a home there is duly noted. The actual San Diego residential inventory today is 6,709, or a 473:1 ratio, which would push us up into the same group, and we’d have the highest median LP of those five areas.

Interestingly, the Orange County inventory is 64% higher now than it was a year ago, while the San Diego inventory is only 15% higher Y-O-Y.

http://www.realtor.com/data-portal/realestatestatistics?source=web

Posted by on Apr 21, 2014 in Inventory, Jim's Take on the Market, Sales and Price Check, Tips, Advice & Links | 7 comments

Research Your Realtor

biFrom 10 Things Before Opening Bell yesterday:

Below is a Q&A with Jim Klinge, the head of San Diego-based Klinge Realty and the creator of BubbleInfo.com, a realty blog.

***

BUSINESS INSIDER: What is the most underreported story in housing?

JIM KLINGE: The health of the real estate market. We’re back to peak pricing – and higher – around coastal San Diego during the toughest mortgage underwriting in the history of the world.

BI: What is the biggest change you’ve seen since the bust in terms of the typical buyers’ profile?

JK: No change – almost all are owner-occupants.  Surprisingly, having direct access to recent sales via the internet hasn’t made buyers more critical about price.  Over the last 12 months, it’s been the opposite – people are paying prices that are 5% to 10% higher than recent sales.  Because they are so familiar with the values, you’d think they would be more discerning, but the fear of loss supersedes all – they just want to buy a house, and are tired of losing.

BI: What is the biggest mistake buyers are making these days?

JK: Not researching realtors.  They think we are all the same, so they just grab one.

BI: What is the biggest mistake sellers are making these days?

JK: Not researching realtors.  Many just grab the one who mails them the most propaganda.

BI: How much higher can the Sun Belt markets climb?

JK: The prime markets could easily rise another 10% to 20%, price-wise, in the next 2-3 years.  But it will be on very thin trading, which makes you question how legit it is, and whether it will sustain.

http://e.businessinsider.com/public/2537853

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

How/where do you research realtors?

Sellers:

  • Check the agent’s online presence – specifically, how do they present their other listings?  Are there vivid photos and actual video tours?
  • Search under ‘Find A Pro’ on Zillow, and check their number of sales, and client testimonials.
  • See if they are a Zillow Premier Agent – if they aren’t, then Zillow will advertise other agents on your house’s listing.
  • Does the agent use open houses to maximize the exposure?
  • If they have sold a few listings this year, then they have had multiple offers.  What are their specific bidding-war strategies to ensure top dollar?
  • Does your office expose and sell listings at the office meetings? (trick question here because most will answer yes, when ethically the answer should be no).
  • Who answers the phone? Excellent phone service is still preferred.

One question to ask: Can you tell me about your last bidding-war experience?

Buyers:

  • How many buyers have they represented in the last 12 months?  Getting buyers to the finish line in this hotly-competitive environment takes real skill, and the number of buyer sales demonstrates their ability.
  • Are there other agents involved – do you get passed around? If they answer yes, it isn’t a bad thing – you’d just like to know who the others are and what their skill set is.
  • Are they available 7 days a week? The market is cooking 24/7.
  • How do they position their buyers to win a bidding war?

One question to ask: “Based on my wants and needs, do you know of a couple of listings that would match?”  Not imperative, but if they can talk about actual homes for sale off the top of their head, you know you are dealing with somebody who is very active in your marketplace.

Posted by on Apr 3, 2014 in About the author, Jim's Take on the Market, Listing Agent Practices, Market Buzz, Tips, Advice & Links | 0 comments

Selling Early

In the previous video, Brandi mentioned that sellers enjoy a real urgency early in their listing period.  Today’s market is a good example – because every decent buy gets snapped up right away, all new listings get immediate attention.

The North SD County coastal region has been hot up to around $1,400,000 – homes priced above that have a much different supply-and-demand curve.

Here are the current active and pending listings of NSDCC detached homes:

Price Range
# of ACT
# of PEND
A/P Ratio
PEND Median DOM
UNDER $1.4M
256
235
1.09
15
OVER $1.4M
527
106
4.97
52

On the lower end, literally half of the pendings found a buyer in the first 15 days on the market.

This dynamic can be used by both sellers and buyers.  Sellers who price sharply from the beginning can help create a fever pitch, and have a bidding war push the sales price higher.  Buyers who see homes on the market for more than 15 days know that something might be missing.

Posted by on Feb 19, 2014 in Actives/Pendings, Jim's Take on the Market, Thinking of Buying?, Thinking of Selling?, Tips, Advice & Links | 0 comments