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

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

JtR and Social Media

While we are at it, here’s another plug for my social-media outlets:

Facebook - Every bubbleinfo.com post gets uploaded here, but that’s about it.  If facebook is your thing, it might be easier to follow the blog here, but no comments though:

https://www.facebook.com/bubbleinfo/

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Bubbleinfo.com

Twitter – I love twitter and have 3,328 tweets, which is at least 1-2 per day.  You don’t even have to have a twitter account – you can follow them here at the blog in the right-hand column.  I usually include my synopsis in the first sentence – if it looks intriguing, click on the link for more.

My goal is to publish today’s current events in real estate – if you like maximum data input, watch the right-hand column, or click here to follow:

https://twitter.com/Bubbleinfo

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bubbleinfo mobile app

Bubbleinfo Mobile App – I think it works OK, though not many people are using it yet.  You can find it at the App Store or Google Play.

https://itunes.apple.com/us/app/bubbleinfo/id836149128?mt=8

https://play.google.com/store/apps/details?id=com.mobiloud.android.bubbleinfo

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Jim the Realtor/Bubbleinfo Youtube account - A complete audio/visual history of the local bust and boom that started when I began receiving REO listings from Bank of America in April, 2008. There are over 1,700 videos with 2,037,056 views – thanks for the support!

https://www.youtube.com/user/JimtheRealtor

This is recognized as the first video I did myself – it has 10,133 views:

https://www.youtube.com/watch?v=neY1P7UvNHw

The 1,091 subscribers get an occasional video that doesn’t make the blog, like this one:

http://youtu.be/UGMa4RoXnNU

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The Pinterest account doesn’t get constant attention, but it has a decent foundation of real estate-related stuff.  There are 1,359 pins on 32 boards:

http://www.pinterest.com/klingerealty/

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Instagram - I haven’t got around to Instagram yet, though Kayla should put some attention on it in the coming months.

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Thanks for participating – I’d love to assist you with your next move!

Posted by on Jul 23, 2014 in About the author, Drone, Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Why You Need Good Help

Price anchoringToday’s real estate market already suffers from having fewer sales to use when evaluating other properties.  We’ve seen how some buyers, particularly those using Big Cash are paying prices that are hard to justify using traditional methods.  As a result, the comps are more suspicious than ever as an accurate reflection of real value.

Now this article mentions the anchoring concept, and how the list price influences an evaluation.  Hat tip to reader JB who sent this in:

http://www.marketwatch.com/story/how-car-dealers-get-you-to-spend-more-2014-04-02?siteid=yhoof2

An excerpt:

Real-estate agents sometimes have outsized confidence in their ability to “price” homes that are put on the market, or to assess whether a price is too high or too low. In his great book “The Two-Headed Quarter: How to see through deceptive numbers,” Loyola professor Joseph Ganem described a study which proved that.

Real-estate agents were asked to appraise a home based on a 10-page packet of information where the only variance was the list price. When it was $119,000, the average appraisal was $114,000. When the list price was $149,000, the average appraisal was $128,700. In other words, simply by changing the first price suggestion made agents raise their perceived value of a home by $35,000.

Worse yet, the agents were blissfully unaware of the influence the list price had on their appraisal.

“Only 10 percent of the agents mentioned listing price as one of their top three considerations,” Ganem writes. “It is interesting that anchoring effects influence experts without their being aware of, or at the very least, willing to admit the influence.”

Get good help!

Posted by on Apr 7, 2014 in Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 3 comments

Taking The Plunge with JtR

An example of a recent bidding war, won by JtR’s buyer. Sales in the neighborhood have averaged $398/sf over the last six months, and his was bought at $362/sf, so it felt like a decent deal at the time.

We liked this one a lot because it was a larger one-story with 3-car garage on a good-sized lot with no HOA or Mello-Roos. It had several more-recent upgrades too, including roof, full kitchen, baths, windows, and sliders. Best of all, the location has good access, both walking and driving.

But you’ll only know if any house is a deal in hindsight – give it a go!

green flag is property location

Posted by on Mar 25, 2014 in About the author, Bubbleinfo TV, Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent | 1 comment

Dear Frustrated Buyer

Buyers are grabbing up everything in sight – what do you do?

dealing with insanityBe patient, commit to a price point, subtract up to $100,000 for repairs/improvements, know what/where you are willing to compromise, and buy the next good one!

It’s only sticks and stucco, you’re the one who makes it a home.

Let me help you!

Posted by on Mar 24, 2014 in Bubbleinfo TV, Encinitas, Frenzy, Jim's Take on the Market, Klinge Realty, Real Estate Investing, Why You Should Hire Jim as your Buyer's Agent | 4 comments

Bidding Wars

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bidding warsWhen there are multiple offers on one of my listings, I am happy to divulge the pertinent information to all parties – because transparency benefits the seller.  But most listing agents act like they are guarding Fort Knox, and won’t give any guidance on what it will take to win.

What do you do?

I ask these questions of the listing agent:

1.  “How many offers are there?”  To warm them up, start with an easy math question.

2. “How will you handle?  Will you request highest-and-best from each buyer, or just take the highest offer?”  In almost every case the agent hasn’t given it a thought, and is caught off-guard.  All that matters is how they feel about highest-and-best, and gauge whether they might just sign an offer.

3.  “Have you, or anyone in your office, written an offer?”  I have won a bidding war when the listing agent wrote an offer with their own buyer, but it takes guile and guts to pull it off.  But first, you need to know if that is the case.  P.S. If they hesitate, the answer is yes.

Secondly, rank the property.  Is it in the 95+ percentile of homes you have seen?  If so, big-cash and/or desperation could turn this bidding war into a freak show.  Determine an offer price that makes you uncomfortable, and then add some mustard.

If it is a nice home, but has some warts – then use this as a guide:

Posted by on Mar 9, 2014 in Bidding Wars, Frenzy, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Holdover Rent

There is an old-school habit in the home-selling business to give the seller a few days after the close of escrow to vacate.  Back in the day it would accomodate the cashing of checks, and closing escrows upstream – but with today’s standard of wiring funds and concurrent closings, the extra time isn’t always needed.

But some listing agents still insist on 3-5 days of occupancy for their sellers after closing – many times without any written agreement.  Usually it all goes fine, and they move out as planned – but I hate the potential liability for principals and agents alike.

Recently we had an example of what can happen when a seller doesn’t move.

An agent who works for me had a buyer who was getting their loan from an out-of-state mortgage lender (not recommended).  There was a delay, and all parties agreed to a two-week extension.

As the two weeks was coming to an end, it became obvious that closing in time would be tight, and the seller was asked to sign another extension fot an extra week.

He goes ballistic, and tells his agent to cancel the transaction, and put the house back at the market – at a higher price!  He thinks that, because the market is hot, he must have under-sold the property, and wants an additional $50,000.

The C.A.R. purchase contract says a seller must give a buyer a ‘Notice to Close Escrow’ that includes a time frame within which the buyer must close, or seller can cancel the deal.

He gave us one day to close escrow.

By this time, I am involved as broker/owner – all Klinge Realty agents know that I want to help determine our fate at the first whiff of a lawsuit.

I drive by the house and see that it is still occupied.  If we can close in a day, we still have a problem.  Miracles happen, loan docs get signed, and the lender goes to fund the loan the next day.

But the seller sends a letter to escrow demanding to stop the closing.  Even though we complied with his wishes, he still wants more money.

Everyone consults lawyers, and we give him a ‘Notice to Close Escrow’ and allow three business days.

His lawyer convinces him that he has to close this deal, but there is no movement at the house.  We are forced make a decision – either close with him still in the house, or cancel.

rockford1At this point, I haven’t met or talked to the seller – I’m discussing this with the manager of the other brokerage.  He tells me that they had to throw in their whole commission to try and make this guy happy – and he still isn’t.  But the message was clear – I’m on my own.

I do my best Jim Rockford impression and stake out the house.

When the seller comes back, I introduce myself and we discuss his troubles – he has work obligations. etc.  The C.A.R. form used for these situations is the SIP, seller-in-possession, and I am very familiar with it because I insist it be used on any of these possessions-after-closings.

The form calls for a rent and security-deposit amounts, but no provision for what happens if the seller doesn’t move – and without a specific agreement, this guy may never move.

We agree to give him five days free rent, and no deposit.  But I include a clause for holdover rent – if on Day Six the seller is still occupying, the rent is $500 per day.

Originally he objected, and suggested $200 per day.  But the holdover rent needs to include a heavy penalty for not moving to ensure compliance – and it doesn’t cost him a thing, if he moves out as agreed.

I stick to my guns, and he agreed.  He moved out on Day Five without fanfare, and buyers moved in.

But you have to add the holdover rent clause!

Posted by on Feb 27, 2014 in Listing Agent Practices, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 3 comments

Buyers’ Remorse…and Sellers Too!

buyers remorseBuyers’ remorse is a real event that gets ignored by those in the business.  Agents tend to focus on plowing through their checklists without recognizing the human elements that arise.

Sellers have remorse too.

With all parties focused on that ideal fantasy sale, there is a natural letdown once the deal is done - and more attention put on the reasons not to move.  Here is how wiki sees it:

http://en.wikipedia.org/wiki/Buyers_remorse

My thoughts on buyers’ and sellers’ remorse:

SELLERS

  • Once there is a signed purchase agreement, sellers cannot rescind – there is no cooling-off period.  Be 100% certain about moving before you list your home for sale.
  • Have a sound strategy to conduct a successful bidding war.  Uncertainty breeds anxiety.
  • Be prepared for Round 2 – the buyer will likely want another piece of you once the home inspection is completed.
  • Complete repairs prior to selling to minimize stress in Round 2.  The buyers will make a much bigger deal about repair items, and could cancel over what seems to be minor issues.
  • Know where you are moving, who is moving you, and when/how much.  Uncertainty about your move creates undue anxiety about other issues.
  • Move out before the closing date, just in case you need more time.
  • Avoid the “evacuation move”.  If you do the panic-move, it could take weeks or months to re-organize your new home.
  • Expect to think that you sold too cheap, too early, too late, etc., and when you do, laugh that you read it here first.
  • Happy buyers close escrow.

BUYERS

  • There are no perfect houses – or sellers.
  • Having doubts is a good thing – it means you are examining the choice carefully.  Work through them one by one.
  • Regardless of market conditions, it will always be a challenge to find a quality house in good location – just due to the competition among buyers.
  • Have a teflon memory – don’t get remorseful about the ones you lose.
  • Don’t fall in love with anything.
  • Most houses need repairs/improvements – $25,000 to $50,000 worth.  Develop a comfort level with repairs and improvements.
  • Have a bidding-war strategy.
  • Plan the moving/improving in advance.
  • Happy sellers select their favorites.

Remorse affects people in different ways.  Many people can move on quickly, while others can really get bugged by it.  Having second thoughts is healthy, just keep them in proper perspective.

Get good help!

Posted by on Jan 17, 2014 in Jim's Take on the Market, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Paying A Premium

It’s natural for home buyers to be leery about paying too much. Since the beginning of time, sellers have always pushed for a higher price, and buyers want to pay less. It’s the primary reason why agents have a job.

paying enoughBut the market’s recent resurgence has seen many buyers gladly pay full price – and higher.  The more-conservative buyers are reluctant to participate in such folly, yet the folks who got in to their house 12-18 months ago are thanking their lucky stars.  They probably paid what seemed to be a premium then – but now their house is worth more.

I’m going to do my best to get you a great price.  But if you are in for the long haul, don’t let a couple of percentage points stop you.  Add a little mustard to your offer price, and get it done!

How to Justify Paying a Premium Price

Only pay a premium price for a premium product.  If the home has obvious defects in condition, location, or suitability, then reject, rather than paying retail, or retail-plus.

Timing is everything.  With low inventory, you may not get another chance for weeks or months.  If you don’t have flexibility in your schedule, then make sure you get the next premium house that hits the market.

Know the value of upgrades.  Have a keen sense about the cost of upgrades, so you can pay the right price for an premium product – or know how much it will cost to upgrade a plain-jane.

Sniff Test/Days on Market.  After a few weeks on the market, the only way a seller can justify his high list price is that the market is catching up with him, which is verifiable.  Otherwise, just say no – at least for now.

Just cap it to 5% or less.  If you have to pay more than you think it is worth, try to keep the price paid to under 105% of its actual value.  The appraisers will live with that, and so will the bank’s underwriter – there is wiggle room.

Wait for market downturn.  No problem, it could happen.  But sellers won’t be convinced until 1-2 years into a decline or flattening, and the premium homes will be the last to feel it.  Get your easy chair and popcorn.

People have more horsepower than you.  People with more money are throwing it around, and the competition has been fierce.  Your best hope is to out-smart them, so be crafty.

Money isn’t everything.  Based on how fast prices have gone up, it appears that buyers think there are more important things than their money.  Real estate is becoming a highly-valued asset due to the intrinsic value – shelter in which to raise a family.

Never pay more than you are comfortable paying.  But with tight inventory and low rates, know that sellers are going to keep pushing higher, and many less sophisticated buyers and agents are going to jump – especially at the good ones.

Get good help!

Posted by on Jan 11, 2014 in Jim's Take on the Market, Market Conditions, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 10 comments