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Jim Klinge
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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 List With Jim’

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

When to Sell Your Home

when to sellThinking of selling your home?

These items will have a direct impact on your ability to sell for top dollar, and make the sale more predictable too:

1. Sell When You Have Good Comps – There’s nothing wrong with letting a neighbor (or two) be the guinea pig, and sell their house first.  Once there are a couple of strong sales nearby, it is much easier to justify your top-dollar price.

Similarly, if there have been a couple of bad sales recently, wait at least six months after they have closed before selling.  Appraisers can’t use them if they are more than six months old, but buyers are known to have longer memories.

2. Sell When There Are Good Active Listings Nearby – Ideally you’d like to have recently-closed sales to help justify your case, but if you don’t have those, the next best thing is to undercut the unsold listings nearby. You will look like the ‘best buy’ only if you drastically undercut the competition….by at least 5%.  Buyers probably know the others are over-priced, so just under-cutting them by a few bucks isn’t enough.

3.  Sell Right After Home Improvements – Retail buyers (the ones who pay top dollar) don’t want the fixers, they prefer the cream puffs.  Shiny new improvements lose their luster quickly; so if you need to fix things, spend the money and then list your home the next day.

4.  Sell When New Tenants Move Out Nearby – Are you among the unfortunate owner-occupiers who have to endure tenants next door?  Did the renters with five kids and 14 yapping dogs just move out?  It’s a good time to sell!  Or conversely, if a great couple with no noise-makers just moved in, sell before they move out!

5.  Sell When You Go On Vacation – If it all goes right, dozens of strangers will be pouring through your house with little or no notice the first few days on the market.  If that idea bugs you, go on vacation the day your house goes on the market – especially if you have a lot of kids and pets.

6.  Sell Before You Get Old – You might chuckle, but it’s true.  For most sellers, moving means: a) having to sift through all the old junk that has been stored away for years and decide what is worth keeping, b) packing and unpacking, c) dealing with a lot of unknowns – strangers, moving, new home, getting settled again, etc., and d) making life-changing decisions.  Don’t underestimate how exhausting the transition can be.

7.  Sell Once You Know Where You Are Going – You have to be 100% committed to moving.  Why?  Because once a seller signs the purchase contract, you cannot cancel (only the buyer can).  In addition, if you don’t know where you are moving, you will price your home too high, and it won’t sell.

Many sellers need to leave town to make it worth it.  If you are thinking that you’ll just rent for a year or two and find a smaller place later for half-off, recent history has shown that it is very difficult to score a big discount in the great neighborhoods.  If you opt for that program, be prepared for the other option which is perfectly acceptable – you may rent the rest of your life.

8.  Sell in March or July – We are fortunate to enjoy a 12-month selling season in San Diego.  Everyone thinks that hitting the market during the Spring Selling Season is the most productive, but there is usually more competition too.

If you wanted to time your own move around spring or summer, then focus on March or July.  If you list in March, hopefully there were already 1-2 of your neighbors who were successful in Jan/Feb, and you can ride their coattails.  March is the safest bet, because April’s market has a lull due to taxes, May/June is graduation season, and summer is full of vacations.  Or wait until the last minute and list in July once all the good buys have been taken (and hopefully several of them sold for astronomical prices) and school is bearing down on the family buyers.

9. Get Good Help!  It was easy in 2013, but homebuyers are more particular now that we have much-higher pricing.  Spend a little more on sprucing up your home, be sharper on price, and don’t just hire any realtor off the street – get good help!

Posted by on Feb 21, 2014 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 2 comments

Handling An Off-Market Sale

off-market saleOff-market sales have a nasty reputation, and deservedly so because the sellers usually get screwed by their listing agent who spoons the sale to their own buyer.

A buyer for an off-market sale is typically found from pre-marketing done by the listing agent prior to inputting the property onto our MLS.  The trouble starts when the sellers, in their excitement about having an offer, don’t verify that the listing has been exposed to the open market.  If the listing agent doesn’t present that as an option, and instead enriches him/herself unjustly, then they should be held liable for the resulting damages.

Here’s how I inadvertenly found myself in this situation, and how I handled it:

Posted by on Jan 27, 2014 in About the author, Bubbleinfo TV, Listing Agent Practices, Realtor, Realtor Training, Why You Should List With Jim | 7 comments

More Move-Ups Wanted

I removed the ‘Foreclosure’ and ‘Short Sale’ buttons at the top of this website.

The distressed market around NSDCC appears to be over, and while there will be some stragglers, there won’t be any distressed sellers unless, and until, the banks start up the foreclosure machine again.

Literally, there has been zero NSDCC detached homes listed as short sales this year, and only one bank-owned house (which we saw).

move up buyersWith distressed properties off the list, we are back to the Big Three list of serious sellers; death, divorce, and job transfer.  These groups are a constant source of homes coming to market, and we know they aren’t just testing the waters.

Are there other serious sellers in play?

Others have said that the move-up market should be lively, and I poo-poo’d the idea just due to the difficulty of selling one to buy another.

But should the move-up-or-downers be considered as the new #4 on the list of motivated sellers?  Here are four groups with reasons:

Committed to Long-Term – The primary driving force in today’s market seems to be families looking for a house raise a growing family, and stay forever.  Even though I recommend that you should move every 6-12 months, nobody is taking me up on it any more! :)

Squeeze to Improve Quality – Anyone who finds themselves in an inferior situation – location, schools, etc. – will endure the inconveniences in order to upgrade.  Anyone motivated enough will find a way – and all you need is money.

Inheritance – Those who receive a windfall amount of money will consider upgrading their lifesytle by purchasing a new residence.  I’m convinced this has to be a segment of the demand, based on considerably-higher prices paid.

Combining Generations – With the folks getting older, it’s natural for them to consider sharing a residence with the kids to get extra support.

These four groups of potential buyers who need to sell theirs to buy the next house have the necessary motivation to endure the financing hurdles.  They would add to both supply and demand, and help build some sales momentum (which could be off to a sticky start here in 2014).

If you are thinking of moving up or down, and want some advice on how to handle the particulars, get a hold of me! jim@jimklinge.com

Posted by on Jan 21, 2014 in Jim's Take on the Market, Sellers Waiting For Comeback, Spring Kick, Thinking of Selling?, Why You Should List With Jim | 0 comments

Preparing Your Home For Sale

Are you getting ready to sell your home?

CarlsbadCurb appeal is what getts buyers out of the car, and it’s relatively easy and inexpensive to improve.  Let’s start with what you can do out front to improve your chances of selling for top dollar.

Curb Appeal Tips

  • Take a photo of your house and show it to other people for suggestions.  When you are driving around and see a great-looking front yard, you can whip it out your photo and visualize how your home would look.
  • Add medium-to-large pots with colorful plants near the front door.
  • Paint the front door and install new handle.
  • New light fixtures, especially outside the front door.
  • Fertilize your lawn 2-3 weeks prior to listing.
  • Repair or replace any brown spots in your lawn.
  • Trim the trees.
  • Power-wash the driveway and sidewalks.
  • Don’t over-water the lawns.

Once buyers are out of the car and up the steps, the excitement, and expectations, begin rising.  Buyers have usually seen so many average-looking houses that they’re hoping it will be different this time!  Capitalize on other sellers’ failure to prepare their home properly!

To sell for top dollar, the interior needs to impress a buyer, but you don’t have to spend crazy money.  Here is my list accumulatated over the years – do as many as you can!

  1. Rent a storage locker and remove everything not in use.
  2. Paint the main rooms with neutral color (light gray or crisp khaki).
  3. Install new high-grade neutral carpet – it smells ‘clean’.
  4. Paint wood surfaces with glossy paint (baseboards and doors).
  5. Clean all glass – windows inside and out, plus shower doors.
  6. Remove pets (get sitter for a couple of weeks) and all pet odors.
  7. Clutter patrol – remove distracting smaller items in particular.
  8. Replace burned-out light bulbs.
  9. If you have an older kiychen, at least install a new sink faucet.
  10. Add new towels and pillows, flowers, plus fruit in the kitchen.
  11. Tune up your mailbox.
  12. Improve storage capacity in garage.
  13. Make closets look large and inviting – mostly by removing stuff.
  14. Create computer stations.
  15. Plant trees to block neighboring homes.
  16. De-personalize.  Buyers can get nosy about sellers.
  17. Secure the office – don’t leave out any bills or real estate contracts.
  18. The master bath will make or break a deal – go all out.
  19. Hire the professional cleaners the week of hitting the open market.
  20. Hire a great realtor!

Most good realtors are willing to stop by and give free advice on what they think you need specifically.  Get good help!

Posted by on Jan 18, 2014 in Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim | 0 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

Inventory Dry Spell

There are areas where you can sell your house today for the most money ever – higher than the last peak.  Yet look how few sellers have been hitting the market lately:

graph (40)

The frenzy that erupted at the end of 2012 was boosted by ultra-low rates, but the lack of inventory drove buyers – and prices - crazy too.

There are still a few days left in 2013 to pad the total, but if this dry spell continues into 2014, we could see prices jump…again.  It would be a somewhat artificial bump too, because with low volume you can’t come to solid, reliable conclusions.

But that hasn’t stopped buyers recently – we’ll see if they dig in, or cut loose!

Posted by on Dec 27, 2013 in Inventory, Jim's Take on the Market, Why You Should List With Jim | 2 comments

Waiting Home Buyers

We have bantered about why sales have slowed down, and some are jumping on the affordability (or lack thereof) issue as a contributing factor:

http://www.car.org/newsstand/newsreleases/2013releases/Nov2013sales

LOS ANGELES (Dec. 17) – A run-up in home prices, coupled with higher interest rates, put downward pressure on housing affordability and led to the fourth straight month of sales declines in November, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

“Improving home prices are a double-edged sword for the housing market.  While welcomed news for homeowners and prospective sellers, diminished affordability is squeezing out many buyers and dampening their enthusiasm for home purchasing,” said 2014 C.A.R. President Kevin Brown. “Buyers are playing the waiting game and putting their home search on hold until prices stabilize and more inventory becomes available in the market.”

When you dig into C.A.R.’s own research, there is this graph from the 2013 Realtor Survey taken early this year:

CAR Memebr Survey

It appears that 50% of the potential buyers just need to find the right house.  The motivated buyers won’t let higher prices and rates stop them; they will just be more critical about what they are buying.

Sellers will be smart to do more home tune-ups prior to listing, be sharper on list price, and pick a great realtor to help create a more attractive package for buyers.  With higher prices and rates, they will want a better value now!

Posted by on Dec 18, 2013 in Jim's Take on the Market, Sales and Price Check, Why You Should List With Jim | 9 comments