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

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

Evaluating Realtors Using the Internet

Are you accustomed to using the internet for all your shopping needs?  Those who prefer to research and buy products and services on-line will find it natural to do the same for agents.

Here are four ways to use the internet when selecting a realtor:

1.  Google their name.  Any realtor worth considering should have a decent web presence, and hopefully some evidence of their past performance.  Check the dates of their latest blog posts or featured listings.

2.  Check their license number.  Every piece of advertising has the realtor’s license number on it, including websites and business cards.

There are some new agents who are really good, and there are older agents that should be put out to pasture, so it’s not a perfect guide.  But at least you can easily tell how long an agent has been in the business with a simple glance at their license number.

The real estate licenses are issued with sequential numbers.  I just use my company’s broker number as a guide.  If they have a lower number than Klinge Realty, they’ve been around for more than ten years, and if they are a new or newer agent, then I need to check how many sales they have closed on the MLS.  Here are the months that these licenses were issued:

License Number Month Issued
01900000 June, 2011
01800000 April, 2007
01700000 June, 2005
01400000 Nov, 2003
01388871 (Klinge Realty) June, 2003

3.  Check their profile on Zillow.  The industry’s leader now includes both reviews of agents, and how many sales they have closed in the last twelve months.

An agent who has something to offer should have double-digit reviews and sales (good agents should sell at least one home per month on average).  Any agent who has more than 75-100 sales has a big team of agents who are all reporting under the leader’s name, which is somewhat deceiving.

4.  Look for videos.  Every agent worth considering should be using video in some fashion – at least a video of themselves on Zillow or their website, and/or real video tours of their listings with commentary.

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

Yelp used to be a reliable source, but they have been under fire lately.  They have deleted positive reviews from my actual clients, and here a Carlsbad dentist gets on TV with his experience:

http://www.nbclosangeles.com/news/local/Yelp-Under-Fire-for-Alleged-Pandering-to-Advertisers-232472381.html

Yelp hides additional reviews – check at the bottom of each Yelp page where you see this link: other reviews that are not currently recommended

Get good help!

Posted by on Nov 20, 2013 in Listing Agent Practices, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

Hotcakes

People are clamoring for more on the La Costa Town Square:

Arterro is the name of the Davidson tract. From their website:

Located off Rancho Santa Fe Road just east of La Costa Avenue, Arterro is a 22-acre residential element of La Costa Town Square, a planned 285,000-square-foot shopping center being developed by the Safeway division on 83 acres.

“A big plus for our homeowners is the ability to walk to several markets and other specialty services,” said Davidson, who noted that the anchor tenant is a 60,000 square foot Von’s store. La Costa Town Square is scheduled to open in mid-2014.

Arterro is on track for a Early 2014 opening.

la-costa-town-square

Posted by on Nov 14, 2013 in Bubbleinfo TV, Builders, Davidson, Thinking of Building?, Thinking of Buying?, Why You Should Hire Jim as your Buyer's Agent | 3 comments