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Does Tilt Matter?

During the inspection of the fixer in Olde Carlsbad, it was determined that further investigation was warranted due to the slope in the floor.

A geologic engineer came out with his fancy altimeter and found that there was a 5-inch difference between the foundation height from one side of the house to the other.

Here’s how it looked. When you have seen me do this, I have set the ball down and let it go where it goes.  In this case, the buyer rolled the ball in one direction, only to have it make a U-turn and go the other way…..and it picked up speed:

In the course of the discussion, I asked, “What is the worst you have seen?”

The engineer said, “A nine-inch differential.”

I said, “Ok, so this is kinda in the middle”.

To which I added a solution. Install the popular wood-tile, and have the installer add some extra mortar to help make up the difference. It doesn’t have to get to zero – if it was down to 2-3 inches it wouldn’t be as noticeable.

The buyers asked for a $50,000 reduction in price, and the seller agreed.  It could have been worse – cancelling this sale and finding a new buyer who would pay more than $1,050,000 seemed unlikely.

Our sale closed on Tuesday, a couple of days after this closed nearby:

https://www.compass.com/listing/2992-elmwood-street-carlsbad-ca-92008/881820694284113633/

On the same day we closed, the model-match flipper directly behind us RAISED their list price from $1,299,000 to $1,510,000 and went pending:

https://www.compass.com/listing/1801-ratcliff-road-carlsbad-ca-92008/909359166289330529/

Not only does it appear that the tilt didn’t matter much in this case, it also seems like prices in the area just went up 10% to 20% in a month!

San Diego is #1

Going into Thanksgiving. let’s summarize the current market conditions…….

San Diego’s -51.5% (above) is still #1 on Bill’s list of local housing markets for the largest decline in active inventory in October.  The active inventory reflects the velocity of new listings coming to market to replace those going pending every month.

When the active inventory is in decline, it means the supply isn’t keeping up with demand!

How do the raw number of October listings compare to last year?

San Diego’s decline is #1 again:

But how do those October listings compare to previous years?  Wasn’t the end of 2020 the hottest market of all-time? It turns out that new-listings count last October looked a lot like the previous ones, and this year is the most unusual in recent memory:

Yet sales have barely felt the dropoff of supply. The -4.7% YoY drop in sales is a flesh wound, relatively, when you consider that we had more sales than new listings:

Where do people go who have the money to live anywhere? San Diego!

Everybody wants to live here, and nobody wants to leave!

Our market should thrive for years, and could end up being the most expensive real estate in the country.

Bidding War – Other Details

Because I wanted to make the competitive bidding all about price, I was willing to live with the other terms in each buyer’s offer.

The winners included a $50,000 good-faith deposit in their full-price offer – which was a little light.  Typically, the deposit is 3%, which would have been $101,850. But every buyer can blow out of escrow during their contingency period, regardless of their deposit amount, and once they do release all contingencies, they must be satisfied enough that they intend to close.

I’m not going to give them a reason to walk away from $50,000, so it would take a catastrophic event for them to cancel after releasing all contingencies.  Would they walk away from $50,000, but not $101,850?  It’s possible, but if it’s a catastrophic event, then the extra $50,000 probably wouldn’t matter.

When you treat people right, they don’t cancel.

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We spent the six weeks preparing the home to be spectacular, which included repairing the water leak that happened right as we got started. The master shower faucet leaked inside the wall, and it went straight down to the family room fireplace and TV niche. We had our mold remediation guy handle the re-construction, plus did a mold test that came back clear. Everything gets disclosed to the buyers, so you might as well do it right the first time.

The buyers reviewed the information, and were satisfied.

When you treat people right, they don’t cancel.

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The house is 18 years old.  When the seller bought it, the home inspection noted that the HVAC was nearing the end of its useful life, and that there were several fogged windows.  We expected that the home inspection by these buyers would reveal the same.

Buyer’s remorse is real, and it gets magnified in a bidding war. When paying above the list price, it is natural for buyers to want to claw back some of it.  We expect it, and are prepared for it.

The previous seller gave us a credit for the fogged windows, so it was just a matter of getting them done, and we knew the approximate cost of a new furnace and air conditioner.

We discussed whether we should replace the HVAC and windows in advance, but decided against it – and left them for the buyers to claw-back instead.  Once requested, we were happy to oblige – unlike most agents who want to start World War 3 over every repair request.

When you treat people right, they don’t cancel.

Get Good Help – Hire Jim the Realtor!

Encinitas Ranch Bidding War – Closed!

On February 27, 2019, our seller purchased 1463 Paseo de las Flores for $1,950,000.  At the time, it was one of the top four highest-priced sales EVER in Encinitas Ranch, with two of the higher sales being $1,970,000 and $1,975,000 (plus a $2,100,000 back in 2005).

I have always kept an eye on a house further down the fairway because its first owner was Jill Kammerude, a close friend and fellow realtor.  We had shared her Padres season tickets from 1998 to 2009 when she unfortunately passed away.

Her 4,612sf house on the golf course had sold again on April 8th of this year for $2,405,000:

https://www.compass.com/listing/694-cypress-hills-drive-encinitas-ca-92024/729228750807813929/

I had been to this house a few times, and though it had more of the older look, it was comparable to the home we sold on Paseo de las Flores.  I sent the link to my client, and congratulated him on picking up a cool $500,000 in appreciation in just two years.

I asked if he would consider moving, to which he said, ‘Maybe’.

We began talking regularly about where to move, taxes, repairs, etc., and in mid-September he committed to selling.  We began our 6-week tune-up, and on October 21st, we hit the open market listed for $3,395,000, because there had been a flurry of $3,000,000+ sales nearby.

I told the story previously……that I had received two solid cash offers during the open house, and was telling attendees that I was going to sell it that day. Both buyers were anxious, so once I left the open house, it was time to determine the winner.

I do take pride in utilizing sophisticated high-tech tools, and this day was no exception.

I pulled out my Super-Duper Bidding-War Bonanza sheet, and went to work:

I went back and forth between the agents on the phone, telling them the price to beat – and they filed the bids above.  Buyer #1 delivered the knockout blow with their $3,760,000, and we had a winner – and Buyer #2 went right over to Lynwood and bought it instead.

How I handled the communication was critical – it takes more than a fancy notepad.

In particular, because we did the bidding verbally on the phone, I had to get the buyers to commit to their price in writing before they cooled off – which I did, and it closed today for $3,760,000.

Keeping the buyers happy for a month, helping the seller move, and delivering the house in excellent condition was all part of the process too. Thank you Donna!

It would have been easy to discard the first cash offer of $3,395,000 because the buyers saw the house via FaceTime, and instead taken the $3,500,000 cash offer from the buyer who saw it in person.  Almost all other agents would have done so. But with me at the helm, my seller made an extra $260,000.

It sold for $700,000 more than the model-match that sold on October 25th, one block over.

It sold for $992,100 more than the zestimate!

It sold for $1,360,000 more than its approximate value in April, which is a 56% pop in six months!

It sold for $1,810,000 more than the seller paid, which is a 93% return in 32 months!

Get Good Help – Hire Jim the Realtor!

Inventory Watch

There have been more new pendings than new listings for four weeks in a row.

This week’s 54 new pendings is the highest weekly amount since the end of August!

There are more pendings than actives today (232 vs. 229) and it’s the week of Thanksgiving!

At this time last year, there were 520 actives and 426 pendings.

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(more…)

Encinitas Ranch – The Comps, Part 2

Will my sale end up being a fluke, or are these prices sustainable? It will depend on how the homes are sold.

This is another pending sale that will likely close above $3,000,000 too:

https://www.compass.com/listing/819-jensen-court-encinitas-ca-92024/891355227122800457/

It will be the sixth sale over $3,000,000 this year in Encinitas Ranch!  With a solid foundation of six sales, the next peak to climb is obvious – potential ER sellers will be wondering if they can get $4,000,000!

Buyers will cringe at the thought, and be reluctant to be the first to pay it.  Everything will have to go perfectly for a $4,000,000+ sale to happen.

Let’s identify what could impede such a sale:

  1. Coming Soons – Advertising the property to the public before it’s ready to be shown just diminishes the urgency. By the time a buyer does see it, their dwindling enthusiasm and disappointment has already set in.
  2. Value-Range Pricing – As we head into the post-frenzy era, the gimmicks and sideshows only wear out the buyers. They want the truth, and an easy path to purchasing the home.
  3. Poor presentations – Professional photos and videos will be a must – buyers want to swipe! Once they get into the home, it better look like a top-notch model home to warrant $4,000,000.
  4. Hard to show – Having to clear hurdles like submitting financials just to see the home, having tiny windows of time to see the home, and having the listing agent follow around the buyers like a hounddog only create anxiety in buyers.
  5. Unattractive High List Price – The list price will need to start with a three, to get to a 4-handle. Otherwise, the gap will seem too large, and buyers will be tempted to wait it out.

But even if the sellers and listing agent handle all of the above correctly, it will still come down to how they handle the offer(s) once received.  If days go by and then the typical counter-offer is returned with several demands like free rent for 60 days after close, buyer must waive appraisal (or all contingencies), and a higher price than offered, it will be easy for buyers to back away.

Get Good Help!

Encinitas Ranch – The Comps

When my listing of 1463 Paseo de las Flores hit the open market on October 18th, there had been three other properties that were providing guidance on price.

The monster 7,277sf home at 519 Samuel had been in escrow for almost two months, and 628 Lynwood had been languishing unsold for 110 days. On September 27th, a model-match to my listing, 820 Jensen, came on the market at $2,899,999, which was devastatingly-low compared to our anticipated list price of $3,395,000.  I called the owner/agent to suggest that she may want to raise her price, and sent her the six comps that were outside Encinitas Ranch but all over $3,000,000.

Her response? “We’re comfortable with our price”.

I called her a couple of weeks later right before we went on the market to inquire about her sales price.

Her response? “You’ll see it in the MLS when it closes”. Great, thanks.

(The eventual buyer’s agent told me that she received four offers – three at her list price, plus his cash offer at $3,060,000.  The sellers took his cash offer.)

I was undeterred, and we hit the market at our $3,395,000 on a Thursday afternoon.

The next day at noon was the first showing, done virtually by an assistant.

Any buyer who responds that quickly must be highly motivated, so I didn’t hold it against them that the principal agent didn’t come or that it was a virtual showing. It would be hypocritical for me to have an objection since I’ve sold multiple houses virtually.

They made a full-price cash offer by the time I got to open house at noon on Saturday.

Greg and I entertained a big crowd at the open house, and one of the first attendees was a woman who brought her mom and her best friend, which I took as a good sign. She mentioned that she knew the previous owners, and had been to dinner parties at the house!  They stayed for an hour, during which I told her that I had received a full-price cash offer.

Before the open house was finished, I received her cash offer for $3,500,000.

Every other agent would have taken her offer.

It was a whopping $105,000 higher than the first offer, she was charming, and she had spent serious time inside the house.  It would look like a no-brainer choice to every other agent.

But I’m not like every other agent.

I called the first agent as I was leaving the open house, and told him I had received the $3,500,000 cash offer.  I asked if he wanted to beat it, and if so, that I would go back to the second buyer and give her the same chance to beat his.  We would go back and forth until a buyer prevailed.

We went five rounds before the second buyer passed at paying $3,800,000, and – armed with this insider information – she ran over to Lynwood and bought that house instead for $3,550,000 and a 10-day escrow. It still shows as a pending listing today, but I know what happened because the listing agent is advertising his good fortune all over Facebook.

The sellers of 820 Jensen? They were the buyers of Samuel, and they paid full price, $3,599,000.

We are closing on Monday – more stories to come!

Seller Optimism Is Up

The frenzy has been making headlines for so long that potential sellers are much more optimistic now.  The 2022 Frenzy could look a lot different (i.e., list prices that start too high with sellers expecting even more). Bold added:

Realtor.com’s survey of 2,583 consumers, which was conducted online by HarrisX in September-October 2021, found that:

The majority of prospective sellers plan to list before the end of the year or in early 2022.

  • Among homeowners who indicated they will enter the market in the next year, 65% expect to within six months, including 19% who have already listed their home.
  • Compared to the spring (76%), more of today’s prospective sellers (93%) have already taken steps toward listing their home, including working with an agent (28%).
  • More than one-third of prospective sellers, at 36% each, have researched the value of their home and others in their neighborhood, as well as started making repairs or decluttering.

Consumers’ top reasons for selling reflect the rising influence of more time spent at home during COVID.

  • Compared to the spring (15%), nearly two-times as many prospective sellers (33%) have realized they want different home features after spending more time at home.
  • With more sellers having children at home this winter (65%) than in the spring (43%), family considerations are a top reason behind homeowner decisions to enter the market: 37% of prospective sellers say their home no longer meets their family’s needs and 32% want to move closer to friends and family.
  • The rise in remote work is also a key driver this winter: 23% of sellers are looking for a home office and 19% no longer need to live near their workplace, up from 6% in March.

Sellers have greater expectations of the current market this winter than in the spring.

  • Over one-third of today’s prospective sellers are eager to take advantage of the current market and think they can make a profit (35%), up from the spring (24%).
  • When asked how the current market impacts the terms they will ask for, top responses included asking for above what they think their home is currently worth (42%) and asking for a quick close (29%).
  • Compared to the spring, more of today’s prospective sellers anticipate that buyers will compete in bidding wars, offer above asking, forgo contingencies like inspections and appraisals and more.

Today’s prospective sellers plan to list in relatively affordable price ranges and are potentially more willing to compromise if their expectations aren’t met.

  • Sellers with homes at the core of the market ($351,000-$750,000) remained the same over March (29%). However, more sellers plan to list in the $500,001-$750,000 price range, which overlaps with recent median listing prices in increasingly popular first-time buyer cities like Riverside, Calif. ($540,000), Austin ($546,000) and Denver ($600,000).
  • More than three-quarters (77%) of prospective sellers would be willing to accept a lower offer to close quickly versus just over half in March (54%).
  • Compared to Spring sellers, a higher number of today’s prospective sellers plan to take alternative routes like moving in with family (19%), as well as temporarily renting their home back from the buyer (29%).

“The right time to sell your home is a deeply personal decision that has to be right for you and your family. For homeowners who do feel ready to sell, getting pricing right from the start is key to a fast and successful home sale in any market – take the goldilocks approach,” said Lexie Holbert, Home & Living Expert at Realtor.com.

https://news.move.com/2021-11-11-Low-Temps,-High-Expectations-Realtor-com-R-Survey-Shows-65-of-Prospective-Sellers-Plan-to-Enter-the-Market-this-Winter

More on Open Bidding

We are wrapping up our sale in Encinitas Ranch, so I thought it would be a good time to comment more on the unconventional and remarkably transparent open-bidding process I employed to determine the winner.

Here’s where I described how it went down:

https://www.bubbleinfo.com/2021/10/25/bidding-war-part-3-auction/

Because nobody else does open bidding, some may question it’s merits.  Here is why it is so much better than the current blind-bidding used throughout the nation:

  1. Every buyer has a fair chance to win.
  2. Buyers know when losing is imminent, and can raise their offer.
  3. Buyers determine their own fate.
  4. Winners are determined promptly – within hours.
  5. In the end, everyone feels like it was a fair and honest selection method.

Compare my method to the features of blind-bidding:

  1. There’s no specific process.
  2. How the winner will be determined is unknown.
  3. Buyers don’t know anything about the competition – if any.
  4. It always drags on for days with no communication.
  5. Losers walk away feeling like something is wrong with realtors and process.

The messy non-transparency of blind-bidding makes you want to go take a shower.

Unlike the black hole that is usually presented by listing agents, I explain rules of engagement in advance to the agents involved – specifically, that they will always have a fair chance to win, which is welcomed!

Will I change the real estate world with my method?

Maybe – if enough sellers list their home with me.  I’m available – contact me today and we’ll get started!

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