Menu
TwitterRssFacebook
More Links

Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


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

Traffic Doesn’t Equal Offers 2

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.

Save

Posted by on Jan 17, 2017 in 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 | 0 comments

Traffic Doesn’t Equal Offers

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.

Get Good Help!

Save

Save

Posted by on Jan 16, 2017 in Bidding Wars, Jim's Take on the Market, Market Buzz, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

NSDCC 2016 Days on Market

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
0-14 days
1,126
37%
15-30
582
19%
31-45
342
11%
46-60
245
8%
61-75
169
6%
76-90
134
4%
90+
421
14%

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!

Posted by on Jan 15, 2017 in Jim's Take on the Market, North County Coastal, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 1 comment

Measuring the Start of 2017

Every prognosticator has released their cautious predictions for the year, but how will we know what’s happening in the meantime?

  1. How will buyers know if it’s safe to go back in the water?
  2. 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

Year
December
January
February
Totals
2013-14
211
182
180
573
2014-15
250
165
170
585
2015-16
253
168
144
565
2016-17
215

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

Year
January New Listings
January New Pendings
2014
307
176
2015
273
163
2016
320
140

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!

Posted by on Jan 3, 2017 in Jim's Take on the Market, Market Buzz, North County Coastal, Sales and Price Check, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Wait-And-See in 2017?

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:

  1.  Demand has been pent-up for 3-6 months; and buyers come out hungry.
  2.  Virtually all sellers come out greedy, and tack on the extra 5% or so.
  3.  But only the spectacular homes sell – those that deserve a price hike.
  4.  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

Home Sellers

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.

Home Buyers

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.

Get Good Help!

Save

Posted by on Dec 10, 2016 in 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 | 2 comments

Home-Price Negotiations

price-negotiations

When it comes down to the last 2% to 4% on price negotiation, why is there so much trouble putting a deal together?

It because the participants had no strategy going in – they just start making offers or counter-offers without regard to where it will lead.

Without a specific strategy, it’s too easy for either party to throw their hands up and say, “I don’t know how I got here, and I don’t like it!”.

This is another reason why we should adopt the auction format to home-selling.  The auctioneer has a very specific strategy on price, and the increments of change – all the buyers have to do is say yes or no.

Until the auction format takes over, what can we do?

My ideas on offer/counter-offer strategy:

  1.  Keep It Simple – Negotiate in 25-50-75-99 increments, they are easier for the receiver to compute the differences.  It also helps to give the other party a strategy for their response – if they are paying attention.
  2.  More Simple – If you can’t get on a 25-50-75-99 track, then sellers’ counter-prices end with a nine ($879,000), and buyers end with a zero ($850,000 or $860,000).
  3.   Buyers – Have your initial offer reflect the days on market. If you offer 5% under the list price on a house that has been listed for 3 days, you won’t get a response.  Make the same offer 3 months later and the seller should be happy to engage.
  4.   Velocity – Make a big price move with your first counter-offer to encourage the other party (heck, they might be so happy they just sign it), but then pull back on the second round.
  5.   Don’t Go Longer Than Two Rounds of Counters – Parties get tired of playing, and burnout sets in quickly.
  6.   Expect to Split the Difference at Some Point – it’s a win-win solution.
  7.   Know the Other Agent’s Level of Competence – If the other agent sells less than one house per month, they are likely to willy-nilly the process. Your agent needs to help them along.

If you are the buyer, it would be nice to pick up some signs along the way to assist with setting a price strategy, and lay out your expectations mentally.

Signs of seller motivations, and what a buyer can expect:

  1.   How difficult it is to see the home.  If the listing agent blows you off for a day or two, or wants to show the house at their convenience, not yours – then you can expect tough sledding ahead.
  2.   How quickly they responds to your offer/counter.  If the sellers doesn’t respond within 24 hours, it means they don’t understand buyer’s remorse – and don’t care.
  3.   How close they stick to list price.  The closer they stick, the more (over)confident they are.
  4.   Who the seller picked for a listing agent will tell you just about everything you need to know about your chances of success.  If they select a reputable, experienced agent, then you will know because the house looks sharp, it’s easy to see, and the price is attractive. If they picked a loser, then the photos are terrible, the house looks like crap, it’s hard to see, and the price is 10% higher than comps, or on a goofy range.

Remember that it takes four things to make a deal – the right house, the right list price, the right seller, and the right listing agent.  If any of those four are out of whack, then a deal is unlikely.

Get Good Help!

Posted by on Oct 11, 2016 in Auctions, 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 | 0 comments

‘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!

Save

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