This is the fifth major project that Mark Morris has completed for our different clients over the years, and he went all out on this one! This video tour is over ten minutes long, but feel free to use the pause button liberally:
Category Archive: ‘Why You Should Hire Jim as your Buyer’s Agent’
A year ago, I guessed our NSDCC sales would be down at least 5% in 2018, and it looks like it will be closer to -10%. While I’m confident that sellers will refuse to lower their price expectations much in 2019, I doubt that home buyers will just go along as they have in the recent past.
The disconnect will probably mean that the 2019 sales of detached-homes between La Jolla and Carlsbad will drop another 20%, which will change the landscape considerably from the robust sellers’ market we’ve enjoyed over the last nine years.
Homeowners waiting for the top of the market will move closer to the exits, and we will probably have 5% to 10% more listings early next year – with no let up in pricing. Potential homebuyers who are starved for quality guidance will be conservative and adopt the wait-and-see approach.
It guarantees a slow start to 2019, and a real standoff.
The worst part about the real estate industrial complex is that they provide no help whatsoever on how to deal with market conditions. They push Yunnie up to the microphone every month to report the latest sales counts, but that’s it.
Consumers and realtors are left to their own devices to figure out what to do.
Buyers will want somebody else go first.
Who will go first? With the rise in mortgage rates, we have already lost almost the entire move-up market. My rule-of-thumb is that if you want to stay in your same area, you have to spend 50% more than what your house is worth to make the move. In other words, if your house is worth a million, the houses you see listed for $1.1 or $1.2 million nearby aren’t enough of an upgrade – you only get, what, one more bedroom?
But if you bought that home for $800,000 with a mortgage rate of 3.5%, the thought of having to spend $1,500,000 with a 5% mortgage rate will send your head spinning:
Your home’s appreciation generated the bigger down payment, but you have to pay more than twice as much monthly, and it isn’t fully tax deductible either. How many people NEED to move that bad?
So if the move-up market is comatose, then who’s left?
Those who don’t own a house here yet – the first-timers and newcomers.
They are at a disadvantage from being new the area, and are probably somewhat unfamiliar to the game – so it’s likely that they will be conservative. But the 2019 market will be entirely dependent upon them paying what the sellers want, or close.
I doubt we’re going to see fewer listings next year, so if there are 5% to 10% more listings – all with optimistic prices – and buyers are waiting to see what happens, there will be many more for-sale signs around. That alone will cause buyers to pause.
Only the vastly-superior homes will be selling, and everyone will struggle to get the price gap right between the creampuffs and dogs. The fixers will need heavy discounts, but thankfully, there is a floor. I’ve probably taken 100 inquiries on my Brava listing – the flipper/investor action is still strong, though they are slightly more conservative about next year too.
Realtors could provide the solutions, but will they?
Here are the typical responses to taking a higher-priced listing:
SELLERS: “Let’s add a little mustard to my list price.”
TOP AGENT: “The market is soft, and virtually all active listings are priced above what the market will bear. An attractive price will help to set us apart, and our expertise will help to clinch the sale in a timely fashion.”
REGULAR AGENT: “Let’s try the value range pricing!”
NEW AGENT: “What the heck, we can always lower the price later!”
Will the home sellers be sufficiently motivated to price their home sharply? For those who have been waiting for the top of the market, the answer is no. They are only selling if they can get their price – especially if they plan to move up in the same area.
We’re headed for a showdown – who will blink first?
There will be a healthy market for for the well-location remodeled homes, but the rest will sit a while before they figure it out – and many will not.
Annual sales dropping 20%?
We’ve been here before, and survived it. We will survive this round too – we don’t have the shock of a market driven by no-qual loans all of a sudden shifting to qualifying-only, like we did in 2008:
Where will prices go? It will be a very soft landing, because without foreclosures and short sales, there won’t be desperate sellers dumping on price – they will wait it out instead.
Heck, they’ve waited this long, what’s a couple more years?
It will be case-by-case though. There will be a few great deals, some retail sales, and a lot of standing around. Welcome to Stagnant City!
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Below is the evidence put forth by a Bay Area realtor to show two things:
- Redfin home-value estimates are tied to the list price, and their estimates are increased as they gauge the traffic.
- Buyers are assuming the Redfin estimates to be accurate, and rely on them when making an offer.
In the beginning, zestimates were thought to be wildly inaccurate, and dismissed. But now that portals have been around this long, are consumers putting too much trust into the data received? It appears so.
Are buyers satisfied with internet values now? Are they subconsciously thinking that the estimates are close enough AND that everyone else does too?
Will future home values be determined by internet traffic?
Click below for his case:
This was listed on the range $13,888,000 to $14,888,000, and had been on the market since summer of 2016 (and refreshed several times). Then somebody came along and paid $15,000,000 cash:
Things that blow out deals are usually avoidable, and are easy to identify in hindsight. In this case, the agent let the buyers pick a roofer out of the book, which is a terrible way to do business. He gets paid the same whether he blows the deal or not, so of course he tells the buyers the house will fall down some day. No wonder he has great reviews – think of all the homebuyers he saved from buying a regular house, and are still renting!
But the most important lesson is how the agent handled the situation once a concern has been identified. Buyers are counting on their agent for expert guidance, which should include pointing out that there are no perfect homes out there, and let’s find a way to deal with the imperfections – because in this case, the house had far more positives than negatives.
But instead, the agent – who had been telling me that everything was fine – just sends over the cancellation form in the dead of night. She didn’t give me any more opportunity to address the concern (even though I has already provided ample evidence), or try to fix it herself. Instead, once her buyers objected, she just cancelled.
This is where we will see the last nine years of a bull market come back to haunt us. There are plenty of agents who got into the business since 2009 that not only consider themselves one-percenters, but have built teams and are riding a high horse. But they have never had to handle buyer objections.
Expect a long, stagnant, bumpy market ahead.
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What did I do? I went back to the second-place finisher and sold it to them.
Should buyers wait a while to see what happens to the housing market?
Are we just seeing the usual end-of-selling-season malaise when where all of the motivated sellers have succeeded, and just the OPTs are stacking up?
Or has the market shifted…..for good? Is this the peak?
I think it depends on your needs:
- Only buying a premium property – then stay in the hunt. In the last downturn, the prices of the premium properties held up well – most had less than a 10% decline in value, and that’s before people started hoarding real estate (not selling for any reason).
- Only buying a single story – then stay in the hunt. The one-story market is red-hot, with demand far out-stripping supply, especially in the newer-home or view categories.
- Willing to buy a fixer – be patient. Buy when you see the appropriate gap of 5% to 10% between the creampuffs and the ones that bark at traffic. If the home is in original condition, the gap should be larger.
- Only want to steal a property – very unlikely in the near-term. Sellers aren’t that motivated, and only a small minority might consider selling for less than 5% of list.
We should be in a stagnant state for months, as everyone waits to see what happens next spring. But I think buyers will be similarly picky then too.
We’ll see the same or similar psychology take over the whole country at the same time – which is the way it always happens. What needs to adjust is the sellers’ trend to expect more than what the last guy got.
Here is a discussion guided by our friend and realtor Tom Stone about the market in Sonoma County (follow the link) – and check the comment section too, where Tom mentions the solution. Hat tip Eddie89!Link to Full Article on Wolf Street
We might be seeing some whipsaw effect with today’s buyers being overly cautious. Either that, or we’ve ran out of the buyers who jump in too fast or too high, and just the deliberate ones are left:
Millennials aren’t exactly jumping for joy after purchasing their homes.
About four in 10 millennials are already homeowners, according to a new survey of over 600 millennials (age 21-34) by Bank of the West.
Yet it turns out that 68 percent of them are feeling buyer’s remorse — almost double the amount of Baby Boomers who say they have regrets.
“Millennials are so eager to become homeowners that some may be inadvertently cutting off their nose to spite their face,” says Ryan Bailey, head of Bank of the West’s retail banking.
Here are the biggest areas of remorse.
Overspending on the down payment
Roughly four in 10 millennials felt they made poor financial choices when it came to purchasing their home. Part of the problem seems to revolve around the down payment. The survey found one in three millennials dipped into their retirement accounts to pay for their homes — a trend Bailey calls “alarming.”
“Borrowing from your retirement may make sense in special circumstances, but it’s definitely not a recommendation,” Bailey tells CNBC Make It.
To keep from getting squeezed, think about what you can afford as a monthly payment, and don’t forget to include taxes and insurance in your calculations, Danielle Hale, chief economist for Realtor.com, tells CNBC Make It.
Use filters on home search sites and price alerts to make sure you’re not shopping for a home above your budget. “Don’t fall in love with something that’s already out of your price range,” Hale says.
Underestimating ongoing costs
When you buy a home, the expenses don’t stop once you move in.
Millennials understand basic costs, such heating and electric bills, but Bailey recommends also considering how much time and money it could take to mow the lawn, clean the house or deal with leaky faucet.
“When you’re a homeowner, you can’t call your landlord to fix things, so you want to make sure you have a little extra cash in the bank,” Hale says.
It’s a big transition going from renter to homeowner, so make sure to take some time to learn about the maintenance costs associated with potential homes.
Settling for something that’s not quite right
Finding the right fit is as important as having the right budget when it comes to home ownership. The survey found that about half of millennials had regrets about the home itself.
One in five said they were frustrated by damages they found after moving in, while others said they discovered the house didn’t end up working well for their family.
To avoid unexpected expenses, experts recommend getting a home inspection before finalizing the sale. “Especially if you’re a first-time buyer or new to home ownership, you may not even know what to look for, so you definitely want to have the expert on your side,” Hale says.
It can also help to nail down what you really need in a home. Make a list of your must-haves before you start looking and know what you’re willing to compromise on, Hale says. It’s currently a very competitive market, so chances are, you’re going to have to make compromises.
In fact, about two-thirds of home buyers reported compromising on some sort of home characteristic, according to a survey from the National Association of Realtors.
“The more targeted your search is,” Hale says, “the more chance you won’t waste your time or get distracted by homes that ultimately aren’t a good fit for you.” Follow this advice, and you can avoid purchasing a home that you regret.
The discussion about affiliating with Compass included trying to predict the future of the market, and realtors in general.
Historically, there has been a lack of widespread advertising because the realtor business was mostly mom-and-pop operations. But now that big money is here, the advertising has grown. Zillow has nailed it with their heart-felt messaging, which is appreciated by all.
But Purplebricks is running ads like this, and I think they are starting to have a negative impact on the industry in general:
Unfortunately we don’t have a truth meter or quality checker in this country, so people can say whatever they want, no matter how harmful to the consumer.
The problems with this series of commercials – they try to make you think:
- All realtors are the same.
- All houses sell for the same price, regardless of agent.
- You should shop for an agent based on cost.
These lies have been around for years, but this is the first time we’ve seen millions of dollars spent on TV ads to spread them.
I doubt they are going to make many consumers go to Purplebricks and pay up front for service (which is not mentioned in ad), but the damage to the consumer’s subconscious mind is being done.
- Realtors, and the services they provide, are all different.
- The sales price of a house depends on who is selling it.
- Consumers should investigate what they are getting for the money.
I’m hoping that Compass will assist us with spreading the truth about selling homes. Klinge Realty having a bigger corporate presence is a start, but some institutional advertising to re-affirm the truth would be helpful too. I haven’t seen any Compass TV ads yet, but an educational advertising campaign would be very helpful for us, and the industry.
Two things I found impressive in my first day at Compass:
- Compass has recruited 168 top San Diego agents since opening in January.
- The Compass CEO, Robert Reffkin, called me to welcome us aboard.
Selling homes is an individual sport, so I know that the benefits of being with Compass will be determined by what I do with them. Stay tuned!
Here are examples of some of the wacky stuff that happens in this business, and why it’s important to get good help:
We represented the buyers of House B, whose sellers were buying their listing agent’s personal residence (House A).
They had included in their listing agreement that the sale of House B would be contingent upon the successful purchasing of House A – but the listing agent forgot to include the contingency form in our documents. As a result, the sellers were locked into selling their House B to my buyers.
When the discussions of repairs and termite work of House A got testy, it was revealed that the contingency form had been omitted from our House B deal. The client called their listing-agent/owner, ‘unprofessional’, which set her off and she refused to do any repairs to her house. The clients backed out of the purchase – but she was still their listing agent on our sale of House B, and the sellers only had two weeks left to get out of their house.
The listing agent went quiet, so the seller of House B called me directly for help. Sorry, but my buyers wanted the house, and wanted to close on time. He offered us $20,000 to cancel, but because the house and timing was such a good fit, we declined.
But I came up with a package deal. We would give him a rentback for up to 60 days at market rate plus deposit, if he gave us a credit for $7,000 for repairs on House B. He took the deal.
2. When I’m the listing agent, I always meet the appraiser – no exceptions. If you don’t, you’re just asking for trouble. Another one where I had the buyers for a listing agent selling her own primary residence, and she doesn’t show up for the appraisal of the house she lives in! The appraisal came in $12,000 under the sales price.
3. We are experienced at handling difficult situations, many of which are regarding repairs. As the market slows down, the buyers will be more demanding about the condition of the home, and want things done their way (or the way their agent wants them done).
We sold a tenant-occupied condo that had a regular attic – how often does a tenant go into the attic? In this case, the answer was ‘never’, and even if he had, he might not have noticed that lint was building up because the dryer vent did not extend through to the exterior.
The buyer had a logical concern about it being a fire hazard, and because we were happy with the price he was paying, Donna went to work on getting it resolved. We needed HOA approval to go through the roof, and they insisted on having a longer warranty. Our roofer gives extended warranties because he has pride in his work, and the HOA was impressed. Our roofer will be getting more work there! The buyer’s agent appreciated the effort, and said most listing agents would offer a credit or shrug it off, which isn’t smart with fire hazards.
4. I was holding open house and a couple arrived who had been sent by their agent. I had received a phone from the agent that her buyers would be attending, and would I mind showing them around? As always, I said I wouldn’t mind at all, as long as you don’t mind if I talk them into buying the house! Not only did they buy it, they also told me that it was the first time in the five years they had been looking for a home that they thought they got real help.
5. I represented the sellers of a home that had undergone extensive foundation repairs. The buyer had concerns which were understandable, and he arranged for thorough inspections. Then we had the contractor who did the work come out for an on-site explanation, and discuss the one-year warranty. At the end, the buyer’s father came over to me and stuck his finger in my face and said, “What do you think?” Most agents can’t handle confrontations, and think their job is to dodge liability and be responsible for nothing. Not me, and not when the sale is probably riding on me delivering a solid response. I told the father that I had several previous experiences with the engineer and foundation contractor, and found them reliable and trustworthy. I also said that because the house had been extensively remodeled, the overall package was a good deal. They closed escrow (with 95% financing).
6. The first day on the MLS, a buyer’s agent asked what it would take to purchase a new listing of mine. Most agents would be satisfied with full price, and hurry off to their next deal. I told her $50,000 over list – and her buyer paid it.
7. Our seller moved out, and the buyer came to complete their final walk-through the day before closing. They discovered a water leak, and a dis-functional garage-door opener. We handled all of the above on behalf of the seller for less than $500, and closed as expected the next day – with no inconvenience to the seller, who kept their focus on their new home. While the event seemed minor, it was only because we were readily available and jumped right on it that no momentum was lost.
Every sale has hitches – some are smaller, and others can kill the sale. Your agent’s commitment to full service makes the difference on which is which!
Choosing the right realtor to sell your home is critical.
It’s not life-or-death critical. We’re just talking about the extra 5% to 10% that is available when effective marketing creates maximum urgency – and the agent’s skills and salesmanship creates competition between buyers to achieve a top dollar sale.
Here’s what I do:
- I conduct a thorough pre-listing inspection to determine the best improvements to make prior to hitting the market. Repairing the visual dings, doing ‘clutter patrol’, and implementing any staging where needed to maximize the appeal to buyers. I focus on bang-for-the buck; spending as little as possible with max results.
- I recommend an attractive price – one that is retail-based for the location and condition, and makes the buyers feel like it’s worth checking out.
- I have professional photos done and include my own video tour to help sell the buyers on the value of the home, instead of playing elevator music. I won’t include a Matterport 3D tour, which is the worst thing any agent could do for you. The buyers can view every nook and cranny in the house, so they keep looking until they find something they don’t like – and then give up. The goal of marketing is to get the consumer interested enough to jump in the car and check it out in person.
- Inquiries – I handle all inquiries myself, and I answer my own phone. My focus is to gauge the interest of the buyer or agent, and help to sell them on the house. Redfin and most big agent teams have showing requests handled by a separate and unrelated third-party called Showing Suite, and they miss out on a critical opportunity to pick up intel about the interested parties that I use later in the negotiations and bidding war.
- I conduct the open house extravaganza myself. We effectively advertise and have 25-100 people attend every open house. The crowds help to create the Fear of Loss; where interested parties realize they better step up quickly and pay more than they thought so they don’t lose it. Nobody does open house like I do.
- Once offers are pouring in, I qualify both the buyers and agents myself. Other agents can get swept away by sappy love letters, or by all-cash buyers and not give due diligence to every offer, or ignore the buyer’s agent and their critical role in getting to the finish line.
- Virtually all agents will ask for highest-and-best offers, and then help the seller to pick their favorite. It feels exciting, and all can say they played the game. But I create an auction-like competition where buyers participate in the final outcome, rather than passively hope their blind bid is enough. It takes aggressive salesmanship to accomplish this, and it’s where I pay for myself with a specific strategy to achieve a top-dollar sale (I am registered as an auctioneer with the State of California).
- Donna has been our troubleshooter-in-chief for the last twenty years, and is our secret weapon. She bird-dogs every sale to the finish line and beyond, and as a result, we rarely have an escrow fall out. Our clients feel informed and well-served, with every detail covered in advance.
My last thirty listings have averaged an SP:LP ratio of 99% (selling within 1% of list price), with an average of 20 days on market – and half of them sold in ten days or less. Commissions are described HERE, and you’re only paying a little more than Redfin to get the maximum service available.
I am happy to give you a free consultation in person, or by phone or email!