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Category Archive: ‘Why You Should List With Jim’

Existing Home Sales, July, 2016

nar

Our N.A.R. head cheerleader does his best at fabricating a believable story behind the 3.2% drop in existing-home sales:

Lawrence Yun, N.A.R. chief economist, says existing sales fell off track in July, after steadily climbing the last four months.  “Severely restrained inventory and the tightening grip it’s putting on affordability, is the primary culprit for the considerable sales slump throughout much of the country last month”, he said. Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.

He needs to follow me on twitter.  I’ve already pointed out twice that there were 9% fewer days in July than in June – and sales only dropped 3.2%?  Sounds like a positive to me.

But instead he feeds his typical bather to America, and leaves it up to the consumers what to make of it.

He should also point out that 2015 was a hot market, with summer sales exceeding those during the super-frenzy of 2013.  Yet sales over the last four months have been close or surpassed those in 2015!  Even with the two fewer days, look how July, 2016 compares to previous years – it was better than 2013!

Yunnie needs say, “Remember, real estate is local”, to end all of his speeches.  This national data and his blunder of an explanation shouldn’t have any impact on local market conditions.  But they could make a difference if casual readers just grab a headline and decide to pack it in for the year.  Thanks Yunnie – you’re supposed to be on our side!

The local scoop:

Detached-Homes
July, 2013
July, 2014
July, 2015
June, 2016
July, 2016
NSDCC # of Sales
297
271
313
298
262
NSDCC Median SP
$930,000
$1,018,000
$1,025,000
$1,204,500
$1,125,000
SD Co # of Sales
2,401
1,992
2,437
2,360
2,151
SD Co Median SP
$480,000
$513,750
$550,000
$565,000
$562,000

NSDCC detached-home sales in July dropped 12% compared to June, with 9% fewer business days. With higher prices, sales should be declining – and for them to drop a net 3% sounds good to me. House sales in San Diego County dropped 9% month-over-month – let’s call it even.

P.S. Regarding his comment that realtors are reporting diminished traffic, it’s because you are sitting on over-priced listings. Lower the price and get in the game, or go get another listing!

Added later – looks great:

months supply

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Posted by on Aug 24, 2016 in Jim's Take on the Market, North County Coastal, Sales and Price Check, Why You Should List With Jim | 3 comments

Avoiding the BOM

When thinking about selling your home, do you have concerns that a sale could blow out and leave you hanging?  Have you heard stories from others like that?

It is a real concern.  If a deal blows out, the sellers have to go through the hassle of showing the house again, and the listing agent has to find a way to re-ignite the urgency.

What are reasons for a cancellation?

  1. Buyer didn’t like being worked over by the seller and listing agent during the negotiations, and is looking for any reason to cancel.
  2.  The house is in worse condition than expected.
  3.  Sellers won’t do enough to satisfy the buyers’ request for repairs.
  4.  HOA docs reveal conditions that are overly-restrictive.
  5.  The buyers’ family squashes the deal.

Our contracts create a legally-binding agreement, and the sellers are locked in – you can’t cancel.  Wouldn’t you want to do as much as possible to lock in the buyer before signing?

There are two easy things for sellers and listing agents to do to drastically cut down the chances of a sale cancelling:

  1. Have buyers also qualify with your lender of choice.  Deals can cancel later from lending factors that were unknown in the beginning, but typically those were unknown because the lender was inexperienced and didn’t see them coming.
  2. I love the new practice of sellers providing a pre-listing home inspection report.  Include the HOA docs, termite, and title report too – up front!

About the only thing left is the appraisal, but because you had an attractive price from the beginning, the value shouldn’t be too hard to substantiate.

I just had one where the inspector drove up in a $500 car, spent seven hours doing his inspection, and finally produced his written report a week later!  Of course, he says the house is falling down!

This sale hasn’t cancelled yet – we are busy on supplying our own reports and demonstrations to offset the inspector’s findings.  I should have gotten my own report in the beginning!

We’ve been doing it backwards all these years – supplying the due-diligence materilas from the start is a great way to avoid cancellations!

Posted by on Aug 3, 2016 in Jim's Take on the Market, Listing Agent Practices, Tips, Advice & Links, Why You Should List With Jim | 3 comments

Comps Are Tricky

comps

Summer is wrapping up, which is a tricky time of the year to estimate the value of a home using comps from the last six months.  Sellers and agents are happy to tout that they “have comps”, but those sales from the hot spring selling season may not translate the same in the off-season.

Here are the concerns with using springtime comps in the fall:

  1.  More competition = slightly higher prices in spring.
  2.  Buyers expect softer prices in the off-season.
  3.  Buyers have seen the comps – have you?
  4.  Any newer comps will offset, and be more important.

Besides……if you ‘have comps’, then why isn’t it selling?

At first, most sellers are addicted to getting more than the last guy.  But as weeks or months go by, you have to re-calibrate – ‘having comps’ isn’t enough.

Greed can be blinding though, and sometimes it’s just a matter of a few percentage points.  Here’s a recent example:

A house was listed in the high-$900,000s, for which the sellers had paid in the $500,000s a decade ago – and their loan amount was lower.

The listing agent boasted that not only did they have comps, but they had already received four offers, the highest of which was $950,000.

At that price, the sellers could have walked away with their $500,000 in equity tax-free, but that wasn’t enough.  Instead, they are holding out for that extra $10,000 to $20,000, because they ‘have comps’!

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Posted by on Aug 2, 2016 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 3 comments

Long Listing = Inflated Price

code

How about the agents who deliberately over-price their listings?

It’s not the mean and nasty ‘deliberate’; it’s more of a friendly wink and a nod. Sellers want more money, not less, and it’s irresistible for them to hire the agent who quotes them the highest price.

Agents who ‘high-ball’ to get the listing leave a tell-tale sign.  They insist on 6-12 month listings, which means they have no confidence in the price today, and are just praying they get lucky.

But let’s check the N.A.R Code of Ethics:

  • Standard of Practice 1-3

REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.

The key word is ‘deliberately’, and here is the definition:

Carefully weighted or considered; studied; intentional

Agents who intentionally high-ball their price to get the listing leave evidence.  They insist on a long listing period.  But if you had confidence in your price, why the long listing?

Is high-balling a problem?

Yes – if the Code of Ethics means anything.  Agents should be ethical and rely on demonstrating their skills to get the listing, and not buffalo the sellers by deliberately quoting an unrealistic price.  But agents get away with it because there is no enforcement, and as long as prices trend upward, eventually the market catches up with their price.

How can we inflict the Code of Ethics on agents? If there was a limit to the maximum number of days (90-120) of a listing, then all agents would have to be sharp on price.  The quoted prices would all be about the same, which would shift the sellers’ focus to who has the best skill set to achieve a top dollar sale.

As the market enthusiasm wanes in the second half, this will matter more as the tide goes out on the high-ballers.

After months of trying, they will blame their failure on the ‘market’, and then push for a price reduction.  But the buyers have caught on by then, and it will take a bigger drop just to get their attention.

Everyone believes that it takes a long time to sell an expensive house.  Really?  Have you checked the stats?

The 176 NSDCC houses priced over $2,400,000 that sold in the last six months had an average DOM of 80 days, and a median DOM of 58 days!

Let’s compete on a level playing field and see who wins!

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Posted by on Jul 21, 2016 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 2 comments

My Sellers and Buyers

moving

Long-time reader (and client!) Just-some-guy asked about some where-and-why on my clientele to give folks a feel for who is doing what.

Sellers

Reason for Selling
Number
Comments
Excess Property
7
Six of those 7 got big tax benefit
Downsized
5
3 in SD, 2 out-of-state. Four purchased
Moved Out-of-State
4
Three of the four have purchased a home
Moved w/i California
3
New jobs
Moved Up
3
I also sold them their move-up house
Divorce
1
Estate
1
Proceeds benefited the Ayn Rand Foundation

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

Buyers

Reason for Buying
Number
Comments
First-timers
4
Three of the 4 used 20% down payments)
Downsizing
4
Move Up
3
All were sellers and buyers
Relo from Outside CA
2
Relocating here from CA
1
Divorce
1

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

Notes

A. One of the sellers who moved out of state took a job in Toronto.  The weekend we sold the house, the temperature in Toronto was 1 degree!  I told the seller to hang onto my card!

B. Four properties sold were dual agency – we represented both buyer and seller.  It sounds like a high wire act, but I am clear about my duty – I give advice based on what’s best for the person with whom I’m speaking with, and don’t disclose anything about the other party.  When you can keep it clear in your head, it’s not a problem.  None of them were ‘sold before processing’.

The commercial brokers do it all the time, and it’s likely enough to come to the residential side that keeping my dual-agency chops up will pay off someday.

C. Seven of the 24 sellers sold a house that I sold them.  I can’t rely on past clients as my only sellers – people aren’t moving like they used to!

D.  Two-thirds of the buyers expected to invest more than 10% of their purchase price into repairs and improvements.  Fixers provide additional inventory, and I think we did a good job to adequately discount the price paid.

E. All of my listings were featured here at bubbleinfo.com, and my SP:LP ratio was 99%.  Do the video tours and blog exposure help?  They must!

F.  A sign that the frenzy is over and the market is flattening out is the second negotiation – the request for repairs.  None of them go down easy.

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Posted by on Jun 29, 2016 in About the author, Bubbleinfo Readers, 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 | 3 comments

Newer One-Story with View

Richard has a new listing in the Stone Canyon gated community high in the hills of San Marcos.  We’ve contemplated just being one-story specialists, but there aren’t enough of them coming up for sale!

We also have it as a Coming Soon listing on Zillow.

http://www.zillow.com/homedetails/913-Bridgeport-Ct-San-Marcos-CA-92078/60326309_zpid/

Even though I’m not a big fan of the practice, I like to try things out at least once a year to see if I can learn anything new.

One of the problems with the Coming Soon listings is that agents don’t have a game plan once the listing hits the internet.

Are they willing to show it prior to MLS input?

Are they willing to sell it prior to MLS input?

Apparently these questions don’t occur to many of the agents employing the Coming Soon strategy, because when I call on them, rarely do they have an answer. They just hope a buyer calls and they can round-trip the deal.  The seller deserves better! (we are happy to show while the seller puts the finishing touches on the house)

If you like this one, call Richard Morgan at 619-200-3844.

Posted by on Jun 26, 2016 in Bubbleinfo TV, Jim's Take on the Market, Listing Agent Practices, Richard Morgan, Why You Should List With Jim, Zillow | 0 comments

Making a Lower Offer

2016-06-25 07.26.42

It is rare in today’s market that you will find a truly motivated seller that will give it away (discount more than 10%).  Of the NSDCC sales closed over $1,000,000 in the last 30 days, the average sales price has been within 5% of the average list price.

Does it hurt to try?

Lightweight agents will warn you not to ‘offend’ anybody with a lowball offer.  But let’s assume that sellers have a thicker skin.  There is a tactical problem that makes it very difficult to come to terms when a buyer presents a low offer.

My rule-of-thumb is that we have two days or two counter-offers, whichever comes first, to make the deal.  If the initial offer is 15% or more below the list price, there is too much ground to cover.  You’re more likely to run out of time or counters, than to reach an agreement.

The biggest problem is that both sides become attached to their price once they put it on paper, and feel the need to defend it no matter how that price was determined.

Typical Example:

Buyer offers 85% of list price.

Seller thinks it is low, and counters 98% of list to send a message to the buyer that this house isn’t going to be stolen.

But the buyer becomes attached to his 85% offer, and he’s not going to be pushed around! The fight is on – and the buyer counters at 88% of list.

Seller thinks we’re going nowhere fast, and drops the negotiations.

Example that has a Better Chance:

The buyer offers 85% with low expectations, knowing the seller won’t be pleased.  The seller counters at his 98% number.

The buyer’s response to the seller’s counter needs to be at least 90% of list, for  two reasons: A) to impress the seller that a deal could be made here, and B) beat the clock.

Typically, the seller will then counter at 95% of list, and hope the buyer just signs it.  But the buyer splits the difference instead at 92.5%, and hopes the difference is small enough that the seller shrugs it off and signs.

The key is the buyer’s counter to the seller’s first counter – it has to be high enough that the seller stays in the fight.  If the buyer doesn’t come up much, it’s too easy for the seller to give up.

Tips:

  •  If you want to buy at 85% of list, then have the agents discuss it on the phone.  You have to convince both the seller and the listing agent, so you might as well start with the agent first – if they blow you off, just wait and see if they lower the price later.
  •  Determine a price strategy in advance, and respond promptly.  The egos on both sides will run out of gas within two days.
  •  Make a clean, crisp offer – include a solid prequal letter and proof of funds.
  •  Provide convincing data why your price is right, especially if there have been new comps since the listing began.
  •  Don’t justify your price by dogging the house, and all the repairs needed.
  •  Include other sweeteners like free rent after closing.
  •  Keep in mind that you are only fighting for the last 2% or 3%.

Having a strategy is important.  Too often a buyer will just throw a price out there, without having a path to follow – and the path is predictable!

The prevailing market theory employed by nearly every realtor is to wait until someone comes along to pay their price.  Your negotiations have to go perfectly to disrupt that belief!

Get Good Help!

Posted by on Jun 25, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments

San Diego’s Pending Index Rises

pending index

Work with an agent who is well-versed in handling multiple offers!

http://www.car.org/newsstand/newsreleases/2016releases/may2016pending

Pending home sales in Southern California as a whole rose 5.6 percent from May 2015 and 2.4 percent from April, thanks to year-over-year gains of 6.9 percent in Los Angeles County and 6.2 percent in San Diego County. Orange County experienced a 1.8 percent decrease from the previous year.

In a separate study, California REALTORS® responding to C.A.R.’s May Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, reflecting slowing market activity. Despite the lagging indicators, the percentage of properties selling above asking price reached an all-time high and the number of offers per property rose.

• The share of homes selling above asking price in May increased to 38 percent, the highest level since the survey began, rising from 32 percent in April. Conversely, the share of properties selling below asking price dropped to 34 percent. The remainder (27 percent) sold at asking price.

• For the homes that sold above asking price, the premium paid over asking price declined for the third straight month to an average of 9.4 percent, down from April’s 9.6 percent and up from 8 percent in May 2015.

• The 34 percent of homes that sold below asking price sold for an average of 10 percent below asking price in May, down from 12 percent in April and up from 7 percent a year ago.

• Nearly seven of 10 properties for sale received multiple offers in May, indicating the market remains competitive. Sixty-five percent of properties received multiple offers in May 2015.

• The average number of offers per property increased to 3.1 in May, up from 2.9 in April and 2.8 in May 2015. The increase in the number of offers was driven by a greater share of transactions that received three or more offers. Moreover, homes priced between $200,000- $399,000 and $750,000-$999,000 saw the greatest increases in three or more offers compared to a year ago.

• About one in four (23 percent) properties had price reductions in May, indicating sellers are pricing their homes more realistically. One-fourth of properties had price reductions in May 2015.

Posted by on Jun 24, 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