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

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

San Diego’s Pending Index Rises

pending index

Work with an agent who is well-versed in handling multiple offers!

http://www.car.org/newsstand/newsreleases/2016releases/may2016pending

Pending home sales in Southern California as a whole rose 5.6 percent from May 2015 and 2.4 percent from April, thanks to year-over-year gains of 6.9 percent in Los Angeles County and 6.2 percent in San Diego County. Orange County experienced a 1.8 percent decrease from the previous year.

In a separate study, California REALTORS® responding to C.A.R.’s May Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, reflecting slowing market activity. Despite the lagging indicators, the percentage of properties selling above asking price reached an all-time high and the number of offers per property rose.

• The share of homes selling above asking price in May increased to 38 percent, the highest level since the survey began, rising from 32 percent in April. Conversely, the share of properties selling below asking price dropped to 34 percent. The remainder (27 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price declined for the third straight month to an average of 9.4 percent, down from April’s 9.6 percent and up from 8 percent in May 2015.

• The 34 percent of homes that sold below asking price sold for an average of 10 percent below asking price in May, down from 12 percent in April and up from 7 percent a year ago.

• Nearly seven of 10 properties for sale received multiple offers in May, indicating the market remains competitive. Sixty-five percent of properties received multiple offers in May 2015.

• The average number of offers per property increased to 3.1 in May, up from 2.9 in April and 2.8 in May 2015. The increase in the number of offers was driven by a greater share of transactions that received three or more offers. Moreover, homes priced between $200,000- $399,000 and $750,000-$999,000 saw the greatest increases in three or more offers compared to a year ago.

• About one in four (23 percent) properties had price reductions in May, indicating sellers are pricing their homes more realistically. One-fourth of properties had price reductions in May 2015.

Posted by on Jun 24, 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

Buyer Tips in a Seller’s Market

buying

Hat tip to bode for sending this in, and noting the importance of #3!

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

The real estate market fluctuates often, making it tough to predict whether the market will favor buyers or sellers when it’s your turn to buy. If you’re shopping for real estate in a market that currently favors sellers, you need to know some tricks of the trade to help ensure you don’t make any mistakes.

Buyers in a seller’s market can get what they want, but they need to bring their “A” game — buying a house in a hot market isn’t for the indecisive. Here are six common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market.

http://www.trulia.com/blog/mistakes-buyers-make-in-sellers-market/

 

Posted by on Jun 11, 2016 in Jim's Take on the Market, Market Conditions, Thinking of Buying?, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent | 0 comments

Real Estate Disclosures

asis

The finer points about disclosures.  An excerpt:

When preparing the Transfer Disclosure Statement, the seller sets forth any property defects they know or suspect to exist. Defects to be disclosed in the TDS include any conditions known to the seller which might negatively affect the value and desirability of the property for a prospective buyer, even though they may not be an item listed on the TDS. Thus, disclosures to the buyer are not limited to classic conditions preprinted for comment on the form. [CC §1102.8]

Further, the buyer cannot waive the seller’s delivery of the statutorily-mandated TDS. Any attempted waiver, such as the use of an “as-is” clause in the purchase agreement, is unenforceable as against public policy. The words “as is” are never to be used in the context of real estate transactions.

“As is” implies a failure to disclose something adverse known to the seller or their agent, a prohibited activity. In contrast, “as disclosed” is the condition of the property as known by the buyer when the seller accepts their purchase agreement offer. [CC §1102.1(a)]

Thus, all buyers purchase property:

“as disclosed” by the seller, the seller’s broker and the broker’s agents; and

“as actually observed” by the buyer prior to entering into the purchase agreement.

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

Brokers and their agents who list one-to-four unit residential property have a duty to all prospective buyers, separate from the seller’s, to timely disclose any physical aspects of a property:

– observable by the broker or their agent on a reasonable inspection of the property; and

– affecting the property’s market value.

A buyer of a one-to-four unit residential property has two years from the close of escrow to pursue the seller’s broker and agent to recover losses caused by the broker’s or agent’s negligent failure to disclose observable and known defects affecting the property’s physical condition and value. Undisclosed and unknown defects permitting recovery by a buyer for the cost to cure the defect or loss of value are those observable by a reasonably competent broker during a visual on-site inspection. A seller’s agent is expected to be as competent as their broker in an inspection. [CC §2079.4]

However, the buyer is unable to recover their losses from the seller’s broker if the seller’s broker or agent inspected the property as a reasonable competent broker, did not observe the defect and did not actually know it existed. [CC §1102.4(a)]

For more on seller disclosures and case law, click here:

http://journal.firsttuesday.us/brokerage-reminder-the-as-is-clause-instigating-negligent-failure-to-disclose/52170/

Posted by on Apr 26, 2016 in Jim's Take on the Market, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 7 comments

From the Street

Klinge2015_0260

A few real-life occurrences this month – and it’s only February!

It happens regularly that out-of-staters will call me after arriving for a preliminary visit. They are respectful about being very early in the process, and really just want to drive around by themselves to get a feel.  I love the opportunity, because I am happy to give them some quick advice, and a handful of homes to drive by.  Call anytime!

Jerry called on Monday – we spoke for less than five minutes, and then he emailed me this response:

Great speaking with you yesterday!

Took your advice, was in and out of the car a great deal, did visit the house in Solana Beach, and then drove around South Carlsbad.

Your analysis is spot on. Really appreciate your honesty. As for me, I will have to rethink what I’m looking for. You were right, $1 million or so doesn’t really get you anything.

Continued success and best wishes!

A million dollars ain’t what it used to be!

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

When a listing agent was informed that her list price was 9% higher than the model-match comp that closed in November, she filed this response:

Hi, the seller has showed plenty of flexibility. But the buyer can not get it at last year prices. I hope we can work together.

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

Agents hate when sellers and buyers get together prior to closing.  Myself, I never minded much, because we’re all big boys and girls here, and if something went wacky, I’d find a way to resolve.

But I had a case where we were wrapping up our inspection that began at 8:30am in the morning.  The seller had agreed to it, but didn’t leave the house and is now rambling around in her bathrobe.

The buyer and us (Donna and I) are outside on the patio, waiting patiently for a sewer-pipe camera scan to complete.  The seller opens the glass slider and says, “I need to get ready for work, so go wait in your car”. The tone, and the attitude, were worse than the words.

It was more than insulting – it was downright rude, and worthy of cancelling the sale on the spot.  But because I think of every issue in monetary terms, I thought to myself, “that’s going to cost you $5,000.”

I reel in my buyer, and to compensate, we agree to request a $5,000 credit.

The listing agent witnessed the carnage, and knew there was a problem.  The sale negotiations had already been tough because the sellers wanted more from this sale to be able to purchase their next home out-of-state.  But home valuations don’t work that way.

Thankfully, the agent agreed, and when I told her that the $5,000 credit was life or death, she heard me.  Additionally, I told her that if this sale cancels, I felt sorry for her because trying to re-sell this house would be a nightmare.  The sellers would want more, and do less.

The sellers objected to the credit, so the agent threw in the $5,000 herself.

It was a very smart move – make a little something, and move on.

The agent understood that spending additional weeks or months on this case could be more time wasted, and it might never sell.  But rarely do agents consider all of the possibilities.  Instead, agents should make the deal.

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

This is the year that negotiations are going to matter again.

Get Good Help!

Posted by on Feb 9, 2016 in Jim's Take on the Market, Klinge Realty, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments