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An Insider's Guide to North San Diego County's Coastal Real Estate
Jim Klinge, broker-associate
858-997-3801
klingerealty@gmail.com
Compass
617 Saxony Place, Suite 101
Encinitas, CA 92024
Klinge Realty
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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Why You Should List With Jim’

Carlsbad Affordable

Here’s our first listing of 2019 that is undergoing a full tune-up in time for open house this weekend – we can move quick but not in a hurry! (John Wooden)

On Sunday we won a bidding war between contingent offers, and one of the stipulations was to get this home on the market by today!

LP = $499,000.

Open 12-3pm Saturday & Sunday!

https://www.zillow.com/homedetails/4479-Gladstone-Ct-Carlsbad-CA-92010/16650732_zpid/

An affordable way to buy a quality one-story home in Carlsbad! Located at the end of the drive with tranquil views over the valley, this upgraded townhouse has the entire living area at the entry level (2brs&2ba), with only the loft being upstairs and nicely converted into third bedroom. New paint, newer dual-pane windows, central A/C, 2-car side-by-side garage, and one of the largest yards with plenty of privacy! Every comp in Tamarack Point over the last 12 months was higher priced – nice deal!

Posted by on Jan 17, 2019 in About the author, Bubbleinfo TV, Carlsbad, Why You Should List With Jim | 0 comments

Off-Market As A Strategy

It’s been widely accepted for years that off-market sales are part of the real estate landscape.  After the (fraudulent) short sales went away, realtors needed another sexy lure to attract new clients, and rather than crafting the high demand and bidding wars into an auction-like experience, we went the other way and are using restricted access as our ploy.

None of the industry players want to even talk about it, let alone do anything.

In the meantime, it’s the way the business is trending.

With no public objections and so many off-market deals happening right before our eyes, every agent and brokerage wants to take advantage and create an effective off-market strategy.

It restores control of the inventory to the agents – we decide who gets exposed to the listings, and when.   It will also turn the MLS into the website of last resort, used only when a listing agent can’t find their own buyer.  The real estate portals will suffer, and full access for consumers won’t be the same.

We might as well go back to the MLS books!

Many agents claim it’s just ‘pre-marketing’, but what happens if a buyer makes an offer before the listing hits the open market?  Are you going to turn it down? Or are you going to make a quick deal and move on to the next one?

The phase underway now is the building of realtor clubs.

There’s the PLS, as well as the Top Agent Network, which is operating in 31 markets and should be coming to San Diego soon.  They offer club membership to the top 10% of producing agents in each region so they can network and market their listings to each other.  I’m also a member of 4-5 groups on Facebook, where the focus is pre-MLS exposure of listings and ‘making deals’, plus there are several realtor meet-ups around town too.

The shift to private, off-market deal-making isn’t just coming soon – it’s here.

I think we should just admit it to ourselves and to the consumers, and then find a way to make the best of it – because it’s not going away.

Posted by on Jan 15, 2019 in Coming Soon, Jim's Take on the Market, Realtor, Why You Should List With Jim | 22 comments

More Contingent Sales in 2019

While some folks can’t make sense of a move up or down, there are others who have specific wants/needs, and are willing to forge ahead – if they can just sell their existing home and pour their equity into the next one.

I’m three for three this year with contingent sales already, and I wouldn’t be surprised if half of my sales in 2019 will involve contingent buyers.

The challenge gets more complex when multiple sales are contingent!  They stack up like dominoes, all dependent on sales on either side to be completed successfully – and risk all crashing if a problem pops up that can’t be solved.

Up to now, listing agents and sellers haven’t had to deal with contingent buyers because we’ve had enough non-contingent buyers to go around.  Not any more.

The #1 reason sellers and listing agents should consider a contingent offer?

Contingent buyers pay more.

They know they are asking a favor, and in effect, they are purchasing a favor.

Plus, their purchase is contingent upon them selling their house (read: getting the price they want), so everybody gets what they want. Win-win!

Contingent sales can be highly speculative, however, and our existing system doesn’t provide a safety net, so there is a risk that every seller could get left holding the bag.

How can we tighten these up?

  1. Have buyers obtain full loan approval.  At least if the buyers are fully approved by the mortgage underwriter, that concern is satisfied.  A pre-qual letter isn’t solid enough to tie up a property.
  2. Review the lender downstream.  If there is a chain of contingent sales domino-ed together, let’s take a good look at everyone’s lender letter – because we’re all in it together.
  3. Review the agents downstream.  Is everyone competent? If my sale is reliant upon an agent downstream finding and solving problems, then it’s not asking too much to know who it is.  What else have they sold lately?
  4. Supply comps and photos of contingent properties. Every agent involved should know – and get to render their opinion – on the price/value of the other homes in line.
  5. Bridge loans. Bridge loans are out there, and Compass should have a good alternative ready before too long. A fantastic option that solves everything.

There is another viable alternative that every contingent-buyer should consider: Selling your home first.  The immediate reaction is usually the same – I don’t want to be left homeless, or I don’t want to have to move twice, which is understandable.

But we do have the seller contingency that allows us to find a suitable buyer for your home while not binding the seller to move until they find suitable housing:

Our ability to master the contingent sale will probably make or break the market this year.  Without them, will there be enough buyers with the equity, desire, and ability to keep the party going?  It’s doubtful.

Most realtors, let alone buyers and sellers, are unfamiliar with contingent sales.  But this is where our creativity will pay off in a challenging market!

Posted by on Jan 12, 2019 in Jim's Take on the Market, Market Conditions, Realtor, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 3 comments

Home-Seller Consultation, 2019

This is advice I sent this morning to a potential seller of a 1970s-built home. He asked whether I thought pricing would increase in the next few months.

My response:

I wouldn’t be too optimistic about prices increasing – if it happens, consider it icing on the cake.

The sales price will be a direct reflection of the number and quality of the improvements made.  Buyers will be happy to deduct off the price the money you don’t spend – but it’s usually 2x for the inconvenience.

You should list for $X, and see what the market says in the first 1-2 weeks. We’ll know everything by then.

If we’re going to list for retail anyway, should we spend nothing, and take our chances?  No, because of the 2x factor, and losing those buyers who only want turn-key, or close.  Fix as much as you can in order to expand the buyer pool.

This market is tough on engineers because you’re used to facts and certainty.  You want to organize those in a way that predicts the outcome. But the biggest variable is what your neighbors do in the interim – and even if I survey dozens of them today, things change quickly and 2-3 months from now they could present a whole new set of challenges.

Yesterday I was talking about mortgage rates getting close to 4%, and boom, this morning we get hit with a ‘monster’ jobs report that’s going to cause mortgage rates to climb 1/4% in one day.

Spend as much as you are comfortable with, and I’ll do the rest to sell your home for top dollar!

Homes sell in a 5% to 10% range compared to those nearby, and the final sales prices is determined by location, condition, and who is selling them.

Get Good Help!

Posted by on Jan 4, 2019 in Jim's Take on the Market, Thinking of Selling?, Why You Should List With Jim | 2 comments

Mortgage Rates Have Improved

Mortgage rates have come down nicely – let’s hope they stick!

Higher rates are what keep buyers on the couch.  When they see rates go up, they expect sellers to lower their prices to compensate.

But if we can get rates back into the low four-percent range, or gasp, maybe under four percent (with some buydown), it might cool off the buyers’ demand for an offset.

The extra drama isn’t good for anyone.

If we can keep the focus on just one single thing – the price – we’ll be fine.

I think sellers are willing to be reasonable, it’s just a matter of when.

My Rule of Thumb for Sellers:

  • If you’re getting offers, your list price is about right.
  • If you are getting visitors, but no offers, then your price is 5% to 10% wrong – or yours is being shown to help sell the better-priced home down the street.
  • If you have no showings, your list price is more than 10% wrong.

Once we’re past the holidays and rates get reasonable, we’re out of excuses!

Posted by on Jan 3, 2019 in Interest Rates/Loan Limits, Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Brava Closed

Brava closed yesterday, after a whirlwind of activity – here are the MLS stats:

We received 13 cash offers, and went through five escrows to get one to stick.  Each time one would fall out, I went back to all of the other contenders to give them another chance to buy it.

Buyers would say that they had reviewed what’s needed (new kitchen, 3 bathrooms, windows, flooring, etc.), and were comfortable with the project.

Of the four that cancelled, three dropped out altogether once they did more extensive research.

Only one tied up the property, and then, after a few days, tried to work me down on price.  They are looking for the desperate sellers and agents, and hope to convince you to drop another $20,000+ just get it over with.

It was Mr. T who tried to get me to cave, and he had agreed to pay $665,000.  After further review, he wanted to drop the price down to $645,000.

But instead of just taking it, I went back around to all the other contenders and offered them another opportunity.

A different buyer agreed to pay $655,000, and Mr. T. held his ground, and backed out.  But then the $655,000 guy cancelled, and in the next round Mr. T wanted to drop again, this time down to $635,000.

I got another buyer to do better.

We closed at $650,000.

It’s more work to keep all the contenders engaged, and keep tempting them to buy the house during our five-week adventure.  But this is what I do for my sellers – I’m going to everything I can to get you that extra $15,000.

Posted by on Dec 11, 2018 in Flips, Jim's Take on the Market, Real Estate Investing, Remodel Projects, Why You Should List With Jim | 5 comments

Congrats Tom!

Tom’s house in South Oceanside was one of the homes that was picked up in that market surge about a month ago.  The weather was ideal, rates were rising, there was a bit of a lull before the holidays, and we compared favorably to the other houses for sale nearby.  When another market-surge happens, let’s see if we can determine the cause (hopefully there will be others!).

The two others that went pending the same week didn’t fare as well.

  1. The house that did close escrow looked like it had to dump on price to find a buyer – but it wasn’t as bad as it appears.  The owner/agent had it listed for $829,000, and it closed at $750,000, which looks like a dramatic 10% discount. But the buyer had gone direct, and the seller reduced the price by the amount of the commission.  It was noted as such in the confidential remarks, but future buyers won’t see those and will probably consider the $750,000 as the comp price in future valuations.
  2. The other house that went pending fell out of escrow, due to mixed signals that made the buyers uncomfortable, so they cancelled.

These demonstrate how the market has changed.

Previously, the first house would have had more interest, and owner/agents would have been more patient about working the price higher.

In the second example, buyers would have been more likely to put up with some mis-direction, but there is zero tolerance now.

We had Tom’s house listed for $989,000, and we closed at $975,000.

Get Good Help!

Posted by on Dec 4, 2018 in Jim's Take on the Market, Listing Agent Practices, Market Surge, Tom Tarrant, Why You Should List With Jim | 4 comments

San Diego is #1 for Price Reductions?

The local birdcage liner has an article on price reductions, and mentions that San Diego leads the nation this year.  This is how they introduced it:

This isn’t a sign that the bottom is falling out of the market. Instead, after years of rapid price increases, experts say the market is becoming more stable and for the first time in quite a long time, it is shifting in favor of buyers.

That shift is most evident when you look at the number of times sellers have reduced prices. The share of home listings with a price cut grew to its highest level in at least eight years, says a recent analysis from Trulia. San Diego had the most reductions — 20.5 percent — of the 100 biggest metro areas in the United States so far this year. (It tied with Tampa, which also saw 20.5 percent of homes with a price cut.)

The full article (linked here) included examples:

  • 7171 Terra Cotta Road — $545,000. The four-bedroom house (1,804 square feet) in the Bay Terraces area has had four price reductions, starting at $569,000 at the beginning of November.
  • 4225 Florida St., Unit 4 — $395,000. The two-bedroom condo (794 square feet) in University Heights has had three price reductions, starting at $425,000 in mid-October.
  • 3655 Ash St., Unit 2 — $322,100. The two-bedroom condo (824 square feet) in Fairmount Park has had six price reductions, starting at $330,000 in mid-September.

Listing agent April Khamphasouk said the tough thing about selling the house at 2873 Upas St. is that it is basically two homes in one (the property is 1,698-square-feet and has a guest suite above the garage).

She first listed the home for $1.1 million in early October. By mid-October, the price was lowered by $19,000. There were three more price reductions and by Nov.12, the asking price for the home had decreased by $55,900. It is still on the market.

Khamphasouk said the recent price reduction seemed to be greatly increasing interest. Still, she said a lot of the issues in the past month have been related to rising mortgage interest rates.

No mention was made about the Upas property selling for $775,000 in May.  The Terra Cotta house just had a model-match sell for $415,000 nearby, and the Florida St. condo is on the corner of El Cajon Blvd. and next to a paint store.  If these homes represent the types of properties that need to lower their price, then the shock is that only 20% needed a price reduction.

The real news was that nearly 80% of the listings didn’t lower their price!

Posted by on Nov 26, 2018 in Jim's Take on the Market, Market Conditions, Slowdown, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 4 comments

Rolling Into Stagnant City

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:

Purchase Price
Loan Amount
Mortgage Rate
Mo. Payment w/taxes
$800,000
$640,000
3.5%
$3,674
$1,500,000
$1,200,000
5.0%
$7,942

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:

Year
NSDCC Detached-Home Sales
Year-over-Year Change
2005
3,014
2006
2,626
-13%
2007
2,479
-6%
2008
2,037
-18%
2009
2,223
+9%
2010
2,461
+11%

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!

Get Good Help!

Posted by on Nov 21, 2018 in Forecasts, Jim's Take on the Market, Market Conditions, North County Coastal, Thinking of Buying?, Thinking of Selling?, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 7 comments

Which Home Sellers Might Panic?

Is there a chance our home values could drop 20% to 30% like we saw in 2009?

There aren’t enough homeowners who will sell for today’s market value.  If prices drop, wouldn’t there be fewer homeowners interested in selling?

Probably – unless there was a panic.

Who might panic?

Some think it would be the recent home buyers – they were the ones who paid too much, and would panic to get out while they could before losing money.  But this isn’t the stock market – they bought a home for the long-term, and like we saw during the last crisis, people don’t sell just because they are underwater – or heading that way.  They have to live somewhere, and they will hunker down.

It’s the long-time homeowners who could sell for substantially less, because they have a boatload of equity.  If they had to dump on price to sell their home, they could do it, and still make out fine.  But would they?

Will baby boomers wreck the future one more time?

We see articles claiming that 40% of boomers are broke or close, and they all can’t be renters.  But for long-time owners to finally capitulate and dump on price in a panic, other things would have to happen:

  1. They would NEED the money.
  2. Somebody else would have to go first (and second and third).
  3. We’d go back to cyclical real estate.
  4. Realtors encourage dumping.

Need the money?  They need to live some place too, and does anyone really want to move to Hemet?  Selling the long-time homestead and renting doesn’t sound desirable either.  But if older folks can cash out by selling the house and move in with their kids, they might do it – but do the kids want them?  It’s more likely that the aging will stay put, and have nurses live-in or visit, if for no other reason than to avoid the capital-gains tax on profits over $500,000.

Somebody else needs to go first – and it will take a few lower sales nearby to make it obvious that it’s time to panic.  Denial is more than a river in Egypt!

Previously there were real estate cycles.  In the 2000s, the exotic financing stretched out the up-cycle, but then the reversion was shorter than usual too – just a couple of years.  Why?  THEY CHANGED THE RULES, and stopped foreclosing.  This is the key fact – lenders always led the previous down cycles by dumping REOs for whatever they could get, and sucking down home values for all.  But now banks don’t have to foreclose on defaulters, let alone dump houses for whatever the market will bear.  Without banks being the catalyst to start the dumping, who else will do it?

Realtors could get the party started by telling sellers to dump and run.  But in reality, it works in the other direction.  Somewhat-desperate sellers would rather shop around for a realtor who will take the listing at their lofty price, than believe they’d have to sacrifice their hard-earned equity (not!) just to sell.  Desperation is so high among realtors that it’s not hard to find one who will take a listing with a price based on comps +10%.  For most agents, that’s all they’ve ever known, and they don’t read blogs.

Bottom Line: There may be a slew of negative soundbites, but unless homeowners see panic happening right around them, they won’t believe it.  Real estate ignorance is bliss!

Posted by on Nov 20, 2018 in Jim's Take on the Market, Listing Agent Practices, Market Conditions, Realtor, Why You Should List With Jim | 16 comments