Category Archive: ‘Why You Should Hire Jim as your Buyer’s Agent’
An example of how I help out-of-town buyers preview a house – this sold for $1,850,000 in October:
I am fortunate and grateful to have a group of home buyers willing to make offers during the off-season. To give you a feel of what to expect ahead, here are the results of offers made since December 18th:
Purchase-offers submitted: 11
Bidding wars: 9
Bidding wars won: 3
My buyers tend to prefer the premium properties, so no surprise that other buyers would also be interested. But to have multiple offers on 9 out of 11 properties during a historically quieter time in the market probably means that the selling season will be raucous and highly competitive – and it starts Monday!
I usually have a better win ratio with bidding wars, but we strive to get the right discount for fixers. Today’s frustrated buyers make hasty offers without properly assessing the cost of repairs needed, and once the bidding war breaks out, they end up paying too much just to win a house.
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I had a buyer refer to our market as ‘ridic’, and the point is painfully obviously to anyone who has been looking to purchase a new home for months or years – the pricing seems to get more ridiculous every day.
Today’s goal is to buy the least-ridiculously-priced home!
In the last post, you could see that the government may have some ideas, but they won’t be implementing any effective relief measures for a while – if ever.
What can buyers do?
You have two choices:
- Go up in price.
For those who have resources, going up in price is probably the easiest way to solve the problem. Add more down payment, get a co-signer, have the seller buydown your rate, or buy more lotto tickets!
Tip for self-employed: You can qualify for a Freddie Mac loan with one-year’s tax return. You are getting ready to file your 2016 returns now – bite the bullet and don’t include so many write-offs this year!
The thought of compromise makes every buyer cringe – Chris Rock says that women don’t like to go backwards in lifestyle, but try to give it a shot. A smaller home, yard, garage, or fewer other features may be worth it to stay in the same area. Or widen the target area – consider going farther out.
There are elementary schools rated a 10 in several areas:
We know the elementary schools in the Del Mar School District (Del Mar and Carmel Valley) are all rated a 10, but they are among some pricey real estate. But there are other ’10’ rated elementary schools in the Solana Beach and Encinitas school districts, and here are four ’10’ rated elementary schools in Carlsbad too, where, if you don’t mind driving 5-6 more exits up the 5, you money goes further!
For those who prefer no maintenance, buying a pimped-out condo or townhouse might be a better choice than an older house!
I think we could see the move-up market come alive with people who bought a temporary residence. If you have more horsepower coming your way in a few years, buy something that will last you for now, and get the forever home later!
I’m happy to discuss your situation, and help you find solutions!
My cell phone is (858) 997-3801, call or text!
Donald J. Trump is president, and his 140-character tweets seem to be his preferred method of communicating with the public. Millennials prefer texting over phone calls, and could live without a phone if needed:
According to research released by Open Market in June 2016, 75 percent of about 500 millennials polled could live without the call function on their device as long as they were still able to text. Seventy-six percent prefer texting to talking, because it is convenient and fits with their schedules better. Sixty-three percent responded that texting is less disruptive to their daily lives than voice calling. And a startling 19 percent never check voicemail.
The world is fast-paced and attention spans are lower. Have you tried to have a conversation with a millennial lately? It probably didn’t last long.
But it’s not just the millennials who are in a hurry – everyone is having to process more data faster than ever.
Whether you are buying or selling, or both, you will most likely find yourself making snap decisions that could end up lasting you a lifetime. Those who lead a busy life want and need someone they can trust to assist them.
I am here for you, and I want to help you make the best decisions!
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.
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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Here we have the 3,019 NSDCC houses sold last year, categorized by how many days it took to find their buyer:
|Number of Days On Market||Number of Houses Sold||Percent of Total|
Buyers are frustrated and anxious, and they want to buy a house now. Last year, more than half purchased their home in the first month it was on the market.
Sellers should expect immediate action, and take advantage of it! If you don’t want to sell in the first month, then you should wait until you get closer to your preferred exit date.
This is also why the re-freshing of listings is so widespread – buyers want the fresh meat. Check the history of every new listing!
Every prognosticator has released their cautious predictions for the year, but how will we know what’s happening in the meantime?
- How will buyers know if it’s safe to go back in the water?
- How will sellers know if they can pack another 5% on to their price?
There are two ways we can get a sense of the initial enthusiasm, and by the end of January it should become more clear on which way the market is breaking. Last year, our start was already slightly slower than the previous two years, but close enough that there wasn’t any panic. Buyers kept buying, and for the most part, they paid what the sellers wanted.
NSDCC Monthly Sales
If we close 150 sales in each of the next two months, and hit 515 for our 3-month total, I think we can say our market is surviving. But we can dig deeper to see what will have caused those results.
January New Listings and New Pendings
Yes, there will be several old listings being ‘re-freshed’ this year – in the first week of last year, about 70% of the new listings had been re-inputted. But it is like that every year.
Keep your eye on the number of new pendings. If we can get close to last year’s 140, we should be fine, but the wait-and-see trend has been building.
The new listings will play a role – if there is a surge of fresh meat, it could cause rate-sensitive buyers to jump in now if they see something decent. But rates should moderate, keeping buyers picky. If there aren’t many current owners willing to sell, then we could have fewer pendings but healthy conditions. Let’s compare the two as we go!
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:
- Demand has been pent-up for 3-6 months; and buyers come out hungry.
- Virtually all sellers come out greedy, and tack on the extra 5% or so.
- But only the spectacular homes sell – those that deserve a price hike.
- 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
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.
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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