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(760) 434-5000

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

No Excuses

Recently a seller (through their listing agent) was justifying their full-price counter-offer with a pending model-match that they said was in escrow at $15,000 OVER its list price.

The pending listing was in an inferior location and had no obvious features that would compel someone to pay over list price.  It had been on the market for almost 3 months, was ‘re-freshed’, and then still took another month to find the buyer.

Last week it closed for $42,000 UNDER the list price.

Three thoughts:

1.  If it ain’t closed, it doesn’t count.  There could have been an excited buyer in the beginning who got suckered into paying over list, but when the market is getting a little crumbly around the edges, buyers are more likely to come to their senses a few days later.  However, that seller had likely told his neighbors about his good fortune by then, and the braggadocio spreads quickly.

2.  There are a lot of new agents.  Since the frenzy began, over 50,000 real estate licenses have been issued in the state.  These agents have only known a frenzy condition, and are used to telling their buyers to offer over list.  But they haven’t had much experience with keeping a deal together.

3.  Revelations about the sale are not required to be disclosed in the MLS.  There is a ‘Concessions’ box in the MLS for listing agents to complete when marking a listing sold, but it’s a suggestion, not a requirement.

Regardless of what actually happened, once the sales price is published, it becomes the #1 fact that buyers will use to make decisions about what to pay for the next house.  Zillow and the other portals don’t have an ‘excuse box’ for anyone to clarify what happened in a sale – and if they did, buyers would still want to shrug them off.

Putting a value on an house is an inexact science, and everyone has a different opinion.  Future buyers will always look to skew down the value of the comps – even if there was a good explanation for a low sale, it won’t get full traction.

Get good help!

Posted by on May 18, 2015 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

National MLS and The Future

There has been a movement within the industry to create a broker-owned MLS to compete with Zillow/Trulia.  I’m not sure they see it as competing with Zillow/Trulia – but that will be the eventual contest, unless they can co-exist.

The cost to create and maintain such a website is one issue. But the other is the advertising of other agents on my listings.  Unlike Zillow, the new National Broker MLS website will only allow the listing agents to be displayed on each listing – see the discussion here:

http://www.notorious-rob.com/2015/04/30/the-national-broker-public-portal-not-for-everyone/

Whether the big brokerages recognize it or not, buyer representation is being elbowed out, and we are barreling towards single agency.

Eventually there will just be the big listing teams that dominate the portals, and buyer inquiries directed to the in-house ‘buyer agents’.  But with those being mostly newer agents who work for the listing agent, there won’t be much actual ‘representation’ delivered to the buyer.

Buyers will be instructed to pay the seller’s price, or hit the road.  The end result isn’t much different than it is now, with so many sellers today willing to wait for their price.

With less-rigorous pricing and agents pulling for the sellers only, buyers will be left to their own devices.  Will the National MLS, Zillow, HGTV, or other sources give buyers enough to be comfortable without representation?  Probably, because buyers don’t know what they don’t know.

Zillow and the other portals are helping to take the place of real buyer agents.  As a result, buyers will just hunt for houses that make them feel good, confirm online that the price is within a reasonable distance of the last comp, and place their order with the listing team.

The environment will favor the flippers, and anyone else who pours fix-up money into their house before selling.  How many times do you see a flipper or a turn-key property get an extra bump in price just because they look so good?  It happens a lot today, and it should keep going in that direction.

In the meantime, the buyers will be under-represented, if at all.

Posted by on Apr 30, 2015 in Listing Agent Practices, The Future, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments

I’m Here to Help

Blog reader ‘just some guy’ mentioned today that when he first thought about buying a house, he assumed I would be too busy to help, or that I just work the upper prices ranges.

He found out different – we stuck together for more than a year until he and his family found the right home.

If you are thinking of buying or selling, I have plenty of time for you.  The phone number you see here is my cell phone – call or text any time, and let’s at least have a conversation!

Posted by on Feb 2, 2015 in Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 4 comments

Primer for Out-Of-Town Buyers

Holiday visitors to San Diego might take a liking to our fair city, and wonder about our real estate market.  They may want to see a few homes for sale to sample the local fare.

A few thoughts for the unfamiliar:

1.  The local inventory has been picked clean.

Market conditions here have been excellent, and buyers have snatched up anything that resembled a decent buy.  All that is left are the OPTs (over-priced turkeys).  Any home for sale that has been on the market more than 30 days is probably 10% too high in price, or more.

2.  It probably won’t get much better.

We are due for a surge of inventory, but the prices on new listings will be influenced by the lagging OPTs.  Experienced home shoppers have given up on getting a deal, and instead are looking for the premium properties – only.

3.  New listings are likely to be rehashed.

We suffer from lax enforcement of the MLS rules here, and as a result, agents will ‘refresh’ (cancel and re-input) their listings – usually without changing the price.  Frustrated buyers and their agents think it is a hot new listing, and pay all the money; when in reality it’s been sitting on the market for weeks or months.  A few of these go pending each week – it works.  Buyer beware.

4.  Not many off-market deals.

Every time I check, the off-market deals only amount to 10% to 15% of all sales, which means you need to work with a good agent to snag one of the 85%.  Normal home-sellers demand the open-market exposure in order to achieve top dollar, so the off-market sales are typically the estate sales being sold by out-of-town heirs who want fast money.

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

School quality is a big driver of real estate demand.  The following are different areas of the North San Diego County’s Coastal region, with the scores of the elementary schools from  www.greatschools.org, which isn’t a perfect measure but it’s all we got:

carmel valley map

Carmel Valley, 92130

The hot bed of local real estate action, due to the excellent schools and proximity to local employment centers.  All nine elementary schools are scored a 10; Sage Canyon, Ocean Air, Torrey Hills, Carmel Creek, Carmel Del Mar, Ashley Falls, Sycamore Ridge, Solana Pacific, and Solana Highlands (Solana Ranch not scored yet).  Decent houses start at $1,000,000.

La Jolla

All three public elementary schools in La Jolla are ranked a 10; Torrey Pines, Bird Rock, and La Jolla Elementary.  If you can find a decent house under $2,000,000, grab it.

Del Mar

Del Mar Heights Elementary scores a 10, and Del Mar Hills is a nine.  Expect to spend $1,500,000 for a decent house in the 92014.

Solana Beach

All schools score a 9 in Solana Beach proper, where you can buy a decent home in the low-$1,000,000s.

Rancho Santa Fe/Fairbanks Ranch

Those living in the RSF Covenant area can enjoy K-8 at the R. Roger Rowe School, and those around Fairbanks go to Solana Santa Fe – both schools score a 10.  Expect to spend at least $2,000,000 for something decent.

Encinitas/Cardiff

Three elementary schools rank a 10; Cardiff, Flora Vista, and Olivenhain Pioneer Elementary.  You can find decent houses in the $800,000s – only 48% of the homes sold this year closed over $1,000,000.

Carlsbad

Carlsbad is the most populous town in the coastal region, and the furthest north, which plays a role for those who need to fight traffic daily going south.  There are five schools that score a 10, and all are in South Carlsbad; Pacific Rim, Aviara Oaks, Mission Estancia, El Camino Creek, and La Costa Heights.  You can still find a decent buy in the $700,000s, and 80% of houses sold this year closed under $1,000,000.  Carlsbad is split into three different school districts, which means getting to high school might be a trek.

All the high schools from La Jolla to Carlsbad rank 8s and 9s.

Yes, you can find houses for sale for less than mentioned here, but you really need a good agent – and I can help! jim@jimklinge.com

Posted by on Dec 17, 2014 in Why You Should Hire Jim as your Buyer's Agent | 13 comments

COE + 3

be on your way

Realtors tend to use industry jargon in their contracts, and regularly you’ll see the term, ‘COE + 3′ in a counter-offer coming back from a seller.  It means they get to occupy the home for three more days after the close-of-escrow date, at no charge – and usually no other written agreement.

Agents are very casual about these arrangements, because everything usually goes fine and the sellers move out as agreed.  They’ve never seen one go bad.

For buyers, it’s a nightmare waiting to happen.

An example: The seller (who was a realtor) was buying another home that was virtually brand new.  The buyer of her house agreed to the COE + 3 days, figuring that was plenty of time for them to move out.  But once the seller closed on the new home, she found that it needed modifications/improvements to suit their needs.

She hung out the buyer for two weeks, without compensation.

If it is a hot property and fresh on the market, the buyers don’t have much bargaining power and get stuck with COE + 3, whether they like it or not.

What can you do?

1. Don’t agree to COE + 3 days, especially if tenant-occupied.

2. If you do agree, then bargain with the listing agent that it’s in everyone’s best interest to complete our SIP form that spells out the terms of tenancy.

3.  If the listing agent refuses to include the SIP, then he/she is crazy – if the sellers don’t move after their three days, then the agent will get sued for damages too.  But how hard can you press them if they are threatening to take another offer?  Make the deal, and hope for the best.

4.  If you can include the SIP, be careful about the terms.  Use the form to ensure they move out as agreed, not to make a couple of extra bucks on 3-days’ worth of rent.  Sellers get bugged about renting their own house, and asking for a security deposit really sets them off.  I’ll forego both, and instead add a note at the bottom that any holdover rent past the three days be at least double the norm as an incentive to move.  Sellers always object to the amount, but I’ll point out that it doesn’t cost them a dime if they move as agreed.  The form covers other specific terms too; including maintenance, insurance, utilities, and buyer entry.

5.  Do your final walk-through at the last minute, and if you don’t get a warm fuzzy feeling that the sellers are about to move, then don’t close escrow.

Back in the day, we used to hand-carry a sellers’ proceeds check from one escrow company to the next for their closing – and they weren’t cashier’s checks.  It took an extra day or two to get the next escrow closed, so it was natural to give the sellers the time to close and move into their new home.  But today there is no reason to COE + 3, because we wire funds, and close concurrently every chance we can, even with different escrow companies involved (has to be the same title company).

Listing agents who insist on adding COE + 3 are just being tough guys and wanting to show everyone who the boss is – or on brain-dead automatic.  Unfortunately, they must be ignorant to the liability they are forcing on their sellers and themselves.

If you get stuck having to accept a COE + 3, be cautious about making your moving plans for an exact date.  If the sellers don’t move in three days, keep track of your expenses/damages and prepare for small-claims court – where you will win 100% of the time.  If you have to evict, it’s not the end of the world – it’s a three-month inconvenience for which you should be reimbursed.

Posted by on Dec 9, 2014 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 | 5 comments

Variable-Rate Commission

bounty

A listing that just closed escrow had this in the confidential remarks:

Seller will pay 6% commission if property is sold at $735,000 or higher; seller will pay 5% if property is sold for less than $735,000 – commission to be split 50/50 between listing and selling brokers.

In this case, the home sold for $715,000, but the agents can still say they made a decent living – and the seller can say he got a break on the commission for accepting a lower price (the list price was $735,000).

I love the idea of our pay being performance-based.

If listing agents promise to deliver a certain price, and they don’t, then sharing the pain with the seller would be a fair proposition.

Likewise, if a seller wanted to incentivize agents to sell the house for retail (or retail-plus), then the paying of an additional reward, or bounty, could make a difference.

The new purchase contract we were discussing?  Yep, the buyer-agent’s commission is still not disclosed anywhere – buyers will never know if their agent got a bonus.

P.S. There is a category on our MLS to specify ‘yes’ or ‘no’ to a variable commission, which serves as an alert to the buyer-agents that the listing agent has an incentive plan, and/or a dual-agency discount.

Posted by on Dec 8, 2014 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 | 2 comments

New Purchase Contract

gov

The C.A.R does make some minor changes every year to our purchase contract, but according to Gov Hutchinson, the lead attorney for C.A.R., they haven’t made any wholesale changes in 12 years.  Gov was in town yesterday to review the latest version.

Here are my notes:

1.  The form is written by C.A.R. attorneys and is meant to protect realtors.  There are 10x as many lawsuits filed today as there were thirty years ago, yet the State of California’s population hasn’t even doubled in the same time.  Home buyers file more than 90% of the lawsuits against realtors.

2.  Buyers used to have 17 days to release all contingencies, but now the new boilerplate gives 21 days to release the loan contingency.  Most lenders can hit the 17-day mark, but it’s usually tight; so the 21 days is probably more realistic. But it does add a second contingency-release date, and more paperwork.  We surmised that in the real world, all contingencies might drag to the 21st day.

3.  The separate termite form was deleted, and its contents added to the ‘Request for Repair’ form.  Previously it was customary to include the termite costs in the original offer (and assigned to the seller), but now they will be a negotiable item after the inspection, as is the custom in Northern California.

4.  You regularly see these remarks, “Seller is exempt from TDS”, which applies if the actual seller is a bank, or a successor trustee who has in effect inherited the house.  But they are only exempt from having to use our specific TDS form, they aren’t exempt from disclosing everything they know about the property.

5.  There are times when the sellers will occupy the home for days or weeks after closing (a subject to which I will devote a whole post), but it is now stated in paragraph 9F that keys and passwords be delivered to buyer on the day escrow closes, regardless of possession.

6.  The big-screen TVs have been excluded for a while, yet their brackets remain with the property.  But this version added a second choice, if the box is checked – “[bracket] will be removed and holes or other damage shall be repaired, but not painted.”  This is on the purchase offer that the buyer is submitting, so they will be guessing on whether the sellers intend to leave the bracket, or remove it and repair the holes or other damage.

7.  If the buyer adds a phrase about intending to occupy the property for 12 months, it will negate the 60-day notice required to give a month-to-month tenant who has been living there more than a year. Instead, only a 30-day notice is required.

8.  There are two stigmas that are required to be disclosed – death and meth.

9.  Sellers have to disclose any insurance claims over the last five years – whether they owned it or not.

10.  This is a first – they added verbiage about what happens when a party won’t sign off to cancel a sale.  If either party fails to execute mutual instructions to cancel, the other party can demand that escrow release the deposit.  Escrow shall promptly deliver notice of the demand to the other party, and give them 10 days to object.  If they don’t object, escrow can unilaterally release the deposit to the other party.  The form authors couldn’t resist adding a final paragraph that escrow companies can still require mutual cancellation instructions at their discretion, which we’re guessing that most will do.

11.  This rarely comes up, but if a buyer cancels after releasing all contingencies, and the seller gets their deposit – he has to split the deposit with the listing agent.

12.  It is in the boilerplate that every dispute goes to mediation.  If both parties initial the arbitration agreement, then the dispute goes there instead of going to court.  Arbitration is cheaper, quicker, and private, but it is binding – there is no appeals of an arbitration decision.  If you don’t like that, then don’t agree to arbitrate.  Small-claims court is excluded, so disputes under $10,000 can go there for resolution.

Once a seller has a signed agreement, there are no back doors – if the buyers can perform, then they are buying the house.  Once the buyers release all contingencies, they are committed too – and will lose their deposit if they cancel later.  There is always joking at these seminars that nobody reads the contract – including the agents.  Get Good Help!

Posted by on Dec 5, 2014 in Realtor Training, Realtors Talking Shop, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments

Truthful Home Reviews

The real estate industry favors sellers, and buyers are under-represented.  Here at the blog I’ve done my best to help educate buyers, and give you a fighting chance.  Here’s someone who wants to take it further:

http://blog.launch.co/blog/rfp-request-for-prototype-brutal-real-estate-reviews.html

An excerpt:

No one is fighting for the people buying houses. Everyone in the business is driven by one thing and one thing only: closing sales.

If houses get sold, brokers on both sides get paid and the world keeps spinning. Ads flow to listing sites, inspectors get paid, mortgage brokers get commissions and home improvements continue.

No one is incentivized to STOP you from buying a home.

No one is trying to PROTECT the buyer from making a bad decision (I know, brokers are supposed to … but they don’t get paid unless you buy!).

This becomes super apparent when you look at the descriptions of homes.

Everything is “charming” and a “compound” and “gorgeous” in the descriptions, but when you go see them they are “depressing” and “dark” and “small”!

So here’s a super simple idea: reviews that tell you, in brutally honest fashion, if you should move into this house or not.

If it’s a fair price.

If it’s a horrible block, if it has a bad landlord, or if the methadone clinic is hopping at 3pm when your daughter gets home from school!

Read full article here:

http://blog.launch.co/blog/rfp-request-for-prototype-brutal-real-estate-reviews.html

Posted by on Sep 3, 2014 in Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 11 comments