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

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(760) 434-5000

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


Category Archive: ‘Why You Should List With Jim’

Auction Questions

David from Louisiana sent this in:

Jim,

I just watched your first attempt at the auction and must say that you did a fine job as the auctioneer. I have been a real estate auctioneer/realtor for 30+ years and have often recommended an auction to fellow realtors in high demand situations such as yours. Of course, it usually falls on deaf ears as the realtors usually feel that they don’t need the service nor do they want to share the fee.

I hope you don’t mind the questions but I have been trying to work with realtors for many years and it seems to be a constant struggle.

I’m curious about what made you suddenly decide to utilize an auction when you could have easily achieved more than the asking price without it?

JtR:  Because there were multiple people at the open house that said they would be interested in purchasing the house, I thought this would be the best way to determine the winner fairly, and create maximum urgency.  The agents involved were willing, and so was the seller, so it worked out.  We did close escrow with the winning bidder at the price determined by the open bidding.

What was the seller’s opinion when you told them you were having an auction?

JtR: She was motivated to sell, so that made the difference.  Sellers who aren’t that motivated are suspicious of selling too quickly, thinking that this is like most jobs in the world where you work hard for weeks or months to achieve the desired result at the end.

But selling real estate in this low-supply, high-demand environment is the exact opposite – you stand the best chance of selling for top dollar in the beginning when the property is a hot new offering, and has max urgency. Buyers think something must be wrong with houses that aren’t selling in a hot market.

Did you consider actually marketing the property as an auction for a longer period of time and possible having more bidders?

JtR: No, because the highly-motivated buyers are there first.  There could have been other people interested later, but if they aren’t interested enough to come to the open house, then they probably weren’t willing to pay 4% or more over list price.  Yes, there could always be two in the bush, but our environment has trained buyers to race to hot new listings that might be a perfect match for them.  Not only will they be the most likely to pay more than others, but they are more likely to close escrow too.

I consider the quality/suitability of the property too.  This was a 1,541sf two-story house with a steep slope behind, so it wasn’t for everyone.  There were 3x as many people who didn’t bid.  Sellers and listing agents should consider how many people who came and didn’t offer.

Will you consider using the auction method in the future?

JtR: Absolutely, it is the best way to achieve top-dollar sales.  The animal spirits are driven when competing with your opponent eye-to-eye.

But auctions aren’t commonplace yet, so when I have multiple offers on a listing, I create a similar experience by pitting bidders against each other to increase the price.  I tell them the price to beat, which nobody does. Realtors want you to think it is better to bid blindly, but buyers are much more likely to go higher if they have a number to beat.  I take advantage of the competitive spirit, which you don’t have with blind bids.

For those who might think an auction format would only work for lower-priced properties, let’s note that there have been three sales in Rancho Santa Fe that utilized the no-reserve auction process, and closed for more than $10,000,000.

Those three are the ONLY sales over $10 million in the last five years in the Ranch, and there are 30 for sale today.  Let’s give auctions a try!

Of course, I would be happy to answer any questions that you may have.

Thanks, David

JtR: David, if a trusted name-brand company brought a slick and easy auction process to home sales and advertised it properly, do you think they could succeed?  Do you think they could change everything, and potentially eliminate realtors as we know them today?

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Posted by on Feb 21, 2017 in Auctions, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop, Why You Should List With Jim | 6 comments

Real Estate Kiss of Death

How do you know when your offer isn’t going to go too far?

When the listing agent tells you, “I sent your offer to my sellers”.

Come on Jim, don’t you expect the sellers to read it?  Yes, I do, but it would be nice if the agent also offered some advice.  I always include my own opinion on why they should take the offer, because I know the other agent probably won’t.

As a result, this is the phone call the following day:

Agent: Did you receive the offer?

Sellers: Yes.

Agent: What did you think?

Sellers: We didn’t like it.

Agent: OK, thanks, have a nice day!

Of course, they didn’t like it because it was less than full price.

After all the showings during the first week on the market, the sellers were telling all their friends and family that they were going to have a bidding war, and sell for over list price.

But nothing materialized, and a few days or weeks later this snot-filled punk has the audacity to offer less than list price?

It reminds me of the Realtor Facts of Life.

It is best to be:

  1. The first-born child
  2. The second spouse
  3. The third realtor

Once sellers hear the same thing three times, they might start believing it.

It is easy to forget or ignore the truth about real estate.  A property’s value is defined by what a ready, willing, and able buyer will pay for it.

Instead, we convince sellers that they determine the sales price.

I might have a solution though – stay tuned!

Posted by on Feb 19, 2017 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 5 comments

Best Seller Tip

What can a home seller do to help make a sale?

Respond to an offer in less than 24 hours.

Here’s what happens if you don’t:

  1. Once a buyer signs a contract, buyer’s remorse starts to set in. If allowed to fester for a day or two, buyers will talk themselves out of buying just because of the anxiety.
  2. There are just enough other new listings coming to market that the buyer’s wandering eye gets distracted easily.
  3. The longer it takes to get an answer, the lower the buyers want to counter.
  4. After about three days of waiting, buyers give up altogether.

On the other hand, when a seller does respond quickly, it gives the buyer the impression that the seller cares, and wants to make a deal.  Buyers respond more favorably to those!

I had buyers make an offer on Monday that was within 4% of the new list price (sellers raised their list price – our offer was $250,000 over their original list) and here we are on Friday with no answer.

In a different case this week, my buyers offered more than twice what the seller paid in 2002, and three days later it wasn’t good enough – the sellers had to have another $10,000.  This is a house that has been on the market for 100 days with no offers.

In both cases, we were sick of waiting around, and even a more favorable response wouldn’t have gone over that well.

Listing agents are notorious for not preparing their sellers on how to respond to offers.  You can predict the chances of a deal coming together purely by how quick the sellers respond.  If they are adequately motivated and the listing agent has their act together, you will get a response within 24 hours.

If not, there probably wasn’t much of a chance of buying it anyway.

Posted by on Feb 17, 2017 in Jim's Take on the Market, Listing Agent Practices, Tips, Advice & Links, Why You Should List With Jim | 2 comments

My Speech

Donald J. Trump is president, and his 140-character tweets seem to be his preferred method of communicating with the public.  Millennials prefer texting over phone calls, and could live without a phone if needed:

According to research released by Open Market in June 2016, 75 percent of about 500 millennials polled could live without the call function on their device as long as they were still able to text. Seventy-six percent prefer texting to talking, because it is convenient and fits with their schedules better. Sixty-three percent responded that texting is less disruptive to their daily lives than voice calling. And a startling 19 percent never check voicemail.

The world is fast-paced and attention spans are lower.  Have you tried to have a conversation with a millennial lately?  It probably didn’t last long.

But it’s not just the millennials who are in a hurry – everyone is having to process more data faster than ever.

Whether you are buying or selling, or both, you will most likely find yourself making snap decisions that could end up lasting you a lifetime.  Those who lead a busy life want and need someone they can trust to assist them.

I am here for you, and I want to help you make the best decisions!

Posted by on Jan 20, 2017 in Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

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.

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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!

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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

Selling Early in the Season

The N.A.R. economist/cheerleader gives his reasons on why sellers should list early this year.  Like Yunnie, I don’t think Smoke consults with realtors, instead he just shoots from the hip.  It’s not a bad thing, but it leads to lightweight, obvious answers – see article here:

http://www.realtor.com/news/trends/sellers-in-2017-may-benefit-from-listing-early/

I’ll add my reasons why sellers should get started earlier:

  1.  With few other choices and with the school schedule allowing some latitude on timing, buyers have been tolerant about sellers renting back the house.  Selling earlier and renting back the house enables sellers to bank their equity and make non-contingent offers on their replacement home.
  2.  Motivated buyers have been anxious for months to see the selling season arrive – and those are the buyers you want!
  3.  Some day we could see a surge of boomers looking to cash out of their lightly-maintained, long-time residences. With loads of equity, they (or their heirs) could undercut you on price for a quick sale.
  4.  Historically, demand has been known to turn on a dime.  Currently there is little evidence of that, but if the season gets off to a slow start, the psychological ‘animal spirits’ could recede quickly – especially on price.
  5.  San Diego weather allows buyers to hit the street earlier.
  6.  Trump!

The best time to sell?  When no one else is!

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Posted by on Jan 14, 2017 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 0 comments

Highest-and-Best Counters

Here we are in the second week of January, and I found myself in the middle of four competitive situations already this week – and it’s only Thursday!

My listing on La Costa Avenue has been shown regularly over the last 67 days, and we had a deal previously until the home-inspector saw the lumpy carpet and thought the home was falling down.

It must have been our turn as an attractive offering this week, because we received three offers, and two other threats.  I always want to counter for their highest-and-best offer, because that’s what is fair.  I want to give every buyer an opportunity to compete, because nobody knows how much they might pay until they are faced with the fear of loss.  I also want to give the agents the chance to earn a paycheck – hopefully they will do the same when the roles are reversed.

The three offers came in at $400,000 and under, and we ended up at $427,000.  All three buyers and agents had an equal chance to win, and my sellers are much happier with $427,000 than just taking the highest offer.

The highest-and-best process should be a standard in the business, but sadly, it is not.  I had buyers in the other three contests, and none of the three listings agents countered for highest-and-best.

Why don’t listing agents do what it right, and counter for highest-and-best?  Are they just fat, lazy, and stupid? No!

They haven’t been on the other side of the table enough and gotten burned to recognize how unfair it is to all parties involved – especially their own client, the sellers.  THEIR SELLERS DESERVE BETTER!

You can’t blame buyers for offering less than list price just a week or two into the new year.  It is typical for a buyer to mentally deduct repair costs, or base their offer on other comps they’ve seen when they think there won’t be any competition.  But when faced with the threat of losing the property, they might be willing to pay more – and they deserve the chance to do so!

Get Good Help!

Posted by on Jan 12, 2017 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 1 comment