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Category Archive: ‘Why You Should Hire Jim as your Buyer’s Agent’

‘Soft’ Market

I showed 20-25 properties to buyers over the weekend, which always makes me cringe because I know what will follow – those incessant ‘feedback’ requests.  In a hot market, they come by email – listing agents don’t care what you think then, because they know the property will be selling any minute.

But these days you get phone calls.

The calls usually come from assistants, and, for the most part, they don’t care what the feedback is, they just need to write something down.

But occasionally the actual agent will call, which hopefully means somebody has some real motivation over there.  I like to turn these into two-way conversations and ask questions to see if the agent might be realistic.

Agents love to gush about how many showings they’ve had, and as a result, how a sale must be right around the corner.  You and I know that a lot of showings but no offers means a lot of buyers not interested – at least not at this price.

But most agents are slow to accept that reality, so I’ll follow it up by suggesting that the market must have turned soft and see what they say.  You can’t assume that it’s obvious to everyone, even those in the business.  Besides, after the run we’ve had, most realtors think the market is soft if they don’t get multiple offers in the first week!

But what is a ‘soft’ market?

From Investopedia:

DEFINITION of ‘Soft Market‘ – A market that has more potential sellers than buyers. A soft market can describe an entire industry, such as the retail market, or a specific asset, such as lumber.

This is often referred to as a buyer’s market, as the purchasers hold much of the power in negotiations.

The market will feel ‘soft’ to sellers and agents who are getting showings but no offers.  They will blame the ‘market’, as if the problem is outside of them.

But we know what the real problem is – sellers got a little too enthusiastic about their list price, and buyers are now balking.  For example, see below.

sept

Most agents are reporting no offers on their listings, and you can see why.  There isn’t enough pricing momentum to propel buyers to keep paying more.

How soft is it?

Probably 5% to 10% – but do you deduct from today’s lofty list prices, or from the last comps?  Results may vary!

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Posted by on Sep 8, 2016 in Jim's Take on the Market, Market Buzz, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Fall Buying Season

Image result for fall leaves color

The last third of 2016 starts on Thursday!

From Trulia:

http://www.trulia.com/blog/best-things-about-fall-real-estate/

For the first time in recent history, October surpassed June as the most popular month to get married. And these autumn-loving brides may be on to something: Although the spring months are notoriously the best time to buy real estate (as well as have a wedding), fall may be the new ideal season to buy a home.

Here are seven insights on why you should buy a home during the fall season:

1. There’s less competition

Competition for houses drops off in the fall, a time many people consider to be off-season in real estate. But there are still homes for sale — and in some cases, there’s just as much inventory as there was during the spring and summer. “[Fall] means new inventory and repositioned old inventory that did not sell in the prime season,” says Wesley Stanton, a New York, NY, agent with The Stanton Hoch Team.

This puts you in a great position to negotiate. “Fall homebuyers should consider making lowball offers, followed by more aggressive negotiation,” says Brian Davis, a real estate investor and director of education at Spark Rental. Davis points out that many sellers are very motivated to sell before the holidays. If possible, buyers should let these sellers know that they can close before Thanksgiving or before the school winter break.

2. Sellers are worn-out

Some sellers who put their homes on the market during the prime selling times of spring and summer might have been a tad overconfident by listing their homes for more than buyers were willing to spend. After months of no action, these sellers are often ready to make a deal.

“Sellers who were unrealistic earlier in the year about price will now be more willing to reduce the price come fall,” says Thomas Miller, a Washington, DC, real estate agent. “Because there [are fewer buyers] and because the sellers are now eager to sell, they are more inclined to take the low offer than wait another six months for spring to come around.”

3. Sellers are serious

Not all homes on the market in fall are summer leftovers. Some people need to sell in the fall because the timing is right. Maybe they were having a home built, and it’s now ready. Maybe they need to move because of a job. “The sellers with houses on the market in the fall tend to be serious,” says Sam Heskel, president of Nadlan Valuation, an appraisal management company in Brooklyn, NY. “That means sellers could be more open to negotiating and accepting a lower offer.”

4. You can take advantage of tax breaks

First-time homebuyers, take note: Although you can’t escape paying income tax, you can make a dent in what you owe when you become a homeowner. “Property tax and mortgage interest are both deductions you can take for your whole year’s worth of income, even if you closed on your home in December,” says David Hryck, a New York, NY tax adviser, lawyer, and personal finance expert. “Any payments that are made prior to the closing of the loan are tax-deductible. This can make a serious difference in the amount you owe the government at the end of the year.”

5. Fall is a safer time of year

Did you know that burglars have peak seasons? They do, says Sarah Brown, a home safety expert for SafeWise.com. “July and August are prime months for burglaries to take place,” she says. “Waiting until the fall [to buy] gives you an advantage when learning about a home and the neighborhood.” You’ll be settled in your home and can take precautions — like setting up that new alarm system — before the next burglary season rolls around.

6. You’re the center of attention

Because spring and summer are ideal times to buy a home, real estate agents are usually busier then. And that could mean you might not always get the attention you want. This is also true for other professionals you’re working with to buy a house. “Service providers, such as mortgage lenders and title companies, are moving out of the summertime sales swamp and can often respond more quickly,” says John Lazenby, president of the Orlando Regional Realtor Association in Orlando, FL.

The same goes for movers. “Because summer is peak moving season, people often experience more delays and service issues, such as moving companies reaching capacity and running out of trucks to pick up shipments,” says Jack Griffin, president and chief operating officer of Atlas World Group. “The probability of experiencing a delay goes way down in the fall season.”

7. You can take advantage of end-of-year sales to outfit your home

There are bound to be improvements you’ll want to make after buying a house. You’ll also probably need to buy items to maintain your home, and if appliances weren’t part of the deal, you’ll need those too. Wouldn’t it be great to coordinate your home purchase with sales on items you’ll need? According to Consumer Reports, the calendar determines when it’s a good time to buy all sorts of consumer goods. In particular, September is a great time for buying carpet and paint. October means lawn mowers go on sale, and appliances and cookware are cheaper in November.

http://www.trulia.com/blog/best-things-about-fall-real-estate/

Posted by on Aug 29, 2016 in Jim's Take on the Market, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Buyer Survey – May 2016

buyer survey

Here are Zillow employees discussing with realtors their May survey of homebuyers.  Because Zillow depends on realtors buying advertising, their presentations are increasingly centered around why consumers need realtors.

I only made it to the 25-minute mark – the material is dry and somewhat dubious; maybe it gets better?  But the stat above was note-worthy.

Seven homes?  That’s it?

Posted by on Aug 6, 2016 in Jim's Take on the Market, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 0 comments

More on Millennials and Home Buying

tt

The lightweight reporters who nibble around the edges don’t ever get to the point.  It doesn’t matter who wins the election, rich people are taking over.  Millennials and others will have to find a way to buy a home, or be at the mercy of rich people for the rest of their lives.

http://www.npr.org/2016/07/26/487470787/fewer-young-people-buying-houses-but-why

Trevor Burbank is single, 27 years old, and has been house hunting in Nashville for the last year.

“My rent’s going up in August, so I have to figure out what I’m doing,” he says.

The last time Burbank looked for a place was five years ago. He decided to use his down payment to start a business instead.

“There was a house that I really liked that was going for $60,000, and I saw the house being sold in the past few months for just shy of $300,000,” Burbank says.

There’s a big debate in real estate over where home ownership rates are headed, and whether Millennials — people who came of age around 2000 — will get into the housing market the way generations before them did.

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Posted by on Jul 27, 2016 in Jim's Take on the Market, The Future, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 7 comments

Lowball Strategy

typical agent

Have you seen a home sale close at a surprisingly-low price, and you said,

“Geez, I would have paid that!”

Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.

The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”.  A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.

With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.

If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.

Let’s see who else is out there!

Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties.  It isn’t enough to change the market, but a notable strategy.

You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.

Posted by on Jul 20, 2016 in Ideas/Solutions, Jim's Take on the Market, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

One-Story Premium

cabela

On June 11th we noted two single-story homes for sale in Carlsbad.

This 2,726sf single-story house in SW Carlsbad listed on June 9th for $1,149,999 – and it had the extras like a good yard and view.

They received multiple offers, and it closed for $1,165,000, or $427/sf!

http://www.sdlookup.com/MLS-160031583-6678_Cabela_Carlsbad_CA_92011

How do two-story homes compare?

This is asking $278/sf nearby and unsold:

http://www.sdlookup.com/MLS-160022454-1365_Cassins_St_Carlsbad_CA_92011

Asking $299/sf with ocean view:

http://www.sdlookup.com/MLS-160030800-6393_Ebb_Tide_Carlsbad_CA_92011

Base-grade tract house at $286/sf:

http://www.sdlookup.com/MLS-160026464-1672_Fisherman_Dr_Carlsbad_CA_92011

Get Good Help!

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Posted by on Jul 18, 2016 in Jim's Take on the Market, One-Story, Why You Should Hire Jim as your Buyer's Agent | 0 comments

Wait to Buy?

sd2016

A potential buyer mentioned that the market was feeling bubbly, and they were wondering if they should wait to buy until things settle down later this year.

First, let’s describe what we need.

We need to find the right house at the right price with the right sellers and the right listing agent.

Any of the four can screw up your chances of securing the right buy.  If the price is right, but it’s not the right house, would you buy it?  Probably not.  If the rest is good is good but the sellers need a 90-day rentback and prefer that their 8 dogs and cats never leave the house, you may not buy it either.

Getting all four to line up is a formidable challenge.  As a buyer, you need to keep looking 12 months out of the year just to have a shot.

Other notes:

  1.  In the off-season, the selection isn’t as good.  But you only need one, so keep looking!
  2.  Stay in the game just to keep your chops up.  If you stop looking, but then come across a house that might be a fit, you may not recognize it because you haven’t been watching lately.
  3.  Being active in the marketplace keeps you analyzing where and what you are willing to compromise.  You don’t want to make a mistake here.
  4.  Generally, the pricing isn’t going to change.  We will see more than 90% of the sellers using today’s comps and tacking on the usual 5% or so to determine their list price.  If there was a downturn, it wouldn’t be obvious until sales decline for an extended time.

Keep plugging – it’s only takes one!

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Posted by on Jul 2, 2016 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 4 comments

My Sellers and Buyers

moving

Long-time reader (and client!) Just-some-guy asked about some where-and-why on my clientele to give folks a feel for who is doing what.

Sellers

Reason for Selling
Number
Comments
Excess Property
7
Six of those 7 got big tax benefit
Downsized
5
3 in SD, 2 out-of-state. Four purchased
Moved Out-of-State
4
Three of the four have purchased a home
Moved w/i California
3
New jobs
Moved Up
3
I also sold them their move-up house
Divorce
1
Estate
1
Proceeds benefited the Ayn Rand Foundation

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

Buyers

Reason for Buying
Number
Comments
First-timers
4
Three of the 4 used 20% down payments)
Downsizing
4
Move Up
3
All were sellers and buyers
Relo from Outside CA
2
Relocating here from CA
1
Divorce
1

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

Notes

A. One of the sellers who moved out of state took a job in Toronto.  The weekend we sold the house, the temperature in Toronto was 1 degree!  I told the seller to hang onto my card!

B. Four properties sold were dual agency – we represented both buyer and seller.  It sounds like a high wire act, but I am clear about my duty – I give advice based on what’s best for the person with whom I’m speaking with, and don’t disclose anything about the other party.  When you can keep it clear in your head, it’s not a problem.  None of them were ‘sold before processing’.

The commercial brokers do it all the time, and it’s likely enough to come to the residential side that keeping my dual-agency chops up will pay off someday.

C. Seven of the 24 sellers sold a house that I sold them.  I can’t rely on past clients as my only sellers – people aren’t moving like they used to!

D.  Two-thirds of the buyers expected to invest more than 10% of their purchase price into repairs and improvements.  Fixers provide additional inventory, and I think we did a good job to adequately discount the price paid.

E. All of my listings were featured here at bubbleinfo.com, and my SP:LP ratio was 99%.  Do the video tours and blog exposure help?  They must!

F.  A sign that the frenzy is over and the market is flattening out is the second negotiation – the request for repairs.  None of them go down easy.

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Posted by on Jun 29, 2016 in About the author, Bubbleinfo Readers, 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 | 3 comments

Making a Lower Offer

2016-06-25 07.26.42

It is rare in today’s market that you will find a truly motivated seller that will give it away (discount more than 10%).  Of the NSDCC sales closed over $1,000,000 in the last 30 days, the average sales price has been within 5% of the average list price.

Does it hurt to try?

Lightweight agents will warn you not to ‘offend’ anybody with a lowball offer.  But let’s assume that sellers have a thicker skin.  There is a tactical problem that makes it very difficult to come to terms when a buyer presents a low offer.

My rule-of-thumb is that we have two days or two counter-offers, whichever comes first, to make the deal.  If the initial offer is 15% or more below the list price, there is too much ground to cover.  You’re more likely to run out of time or counters, than to reach an agreement.

The biggest problem is that both sides become attached to their price once they put it on paper, and feel the need to defend it no matter how that price was determined.

Typical Example:

Buyer offers 85% of list price.

Seller thinks it is low, and counters 98% of list to send a message to the buyer that this house isn’t going to be stolen.

But the buyer becomes attached to his 85% offer, and he’s not going to be pushed around! The fight is on – and the buyer counters at 88% of list.

Seller thinks we’re going nowhere fast, and drops the negotiations.

Example that has a Better Chance:

The buyer offers 85% with low expectations, knowing the seller won’t be pleased.  The seller counters at his 98% number.

The buyer’s response to the seller’s counter needs to be at least 90% of list, for  two reasons: A) to impress the seller that a deal could be made here, and B) beat the clock.

Typically, the seller will then counter at 95% of list, and hope the buyer just signs it.  But the buyer splits the difference instead at 92.5%, and hopes the difference is small enough that the seller shrugs it off and signs.

The key is the buyer’s counter to the seller’s first counter – it has to be high enough that the seller stays in the fight.  If the buyer doesn’t come up much, it’s too easy for the seller to give up.

Tips:

  •  If you want to buy at 85% of list, then have the agents discuss it on the phone.  You have to convince both the seller and the listing agent, so you might as well start with the agent first – if they blow you off, just wait and see if they lower the price later.
  •  Determine a price strategy in advance, and respond promptly.  The egos on both sides will run out of gas within two days.
  •  Make a clean, crisp offer – include a solid prequal letter and proof of funds.
  •  Provide convincing data why your price is right, especially if there have been new comps since the listing began.
  •  Don’t justify your price by dogging the house, and all the repairs needed.
  •  Include other sweeteners like free rent after closing.
  •  Keep in mind that you are only fighting for the last 2% or 3%.

Having a strategy is important.  Too often a buyer will just throw a price out there, without having a path to follow – and the path is predictable!

The prevailing market theory employed by nearly every realtor is to wait until someone comes along to pay their price.  Your negotiations have to go perfectly to disrupt that belief!

Get Good Help!

Posted by on Jun 25, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments