Helping Family Buy A Home
Cost of Convenience
Part of this story is how the buyer-agent compensation played a role in the outcome. It is a sore subject that I detest – the agents should not be a party to the transaction, but because of the botched lawsuit by NAR, the commission rate not only varies, but the buyers who pay their own agent and don’t ask for any seller participation can end up being the net winner even with a lower offer. It’s not right.
We ask buyers to submit their highest-and-best offer, and this was a case where the best offer wasn’t the highest offer, in the minds of our sellers.
Rather than whine on about the commission unfairness, let’s focus on what made a lower offer the best – and attempt to identify the cost of convenience.
Three offers were submitted after the first open-house weekend, and we respectfully requested that all buyers submit their highest-and-best offer.
Two non-winning offers minus buyer-agent commission paid by seller:
- $1,274,000 with 40% down payment and 1% deposit.
- $1,287,925 with 55% down payment and 3% deposit.
Both requested a 30-day escrow.
The winning offer, with NO buyer-agent commission paid by seller:
- $1,260,000 cash and 3% deposit.
They requested a 14-day escrow.
The money differences between the winner and non-winners:
- $14,000
- $27,925
The Question? How much money is a 14-day escrow worth?
My sellers were the original owners of the home for sale, it was free and clear, and in their mind, the home “had been very good to them”. They purchased a home in Washington state that they financed, and moved in successfully. They intended to pay off the the mortgage on their new home with the net proceeds from the sale here, and have a nice chunk leftover.
The difference between a 14-day and 30-day escrow was around $4,000 in interest paid on their new loan
Subtract $4,000 from the non-winners and here are the net differences:
- $10,000
- $23,925
If the sellers wanted the most money, they could have taken Offer #2 and made an extra $23,925. But they didn’t take that deal, nor the +$10,000 deal either.
Why not?
We sent out the highest-and-best requests on April 29th, which was four weeks after Liberation Day. It had been a wild four weeks by then! Our sellers (who had lived in this home since 1998) had left behind a vacant house and moved into a highly mortgaged house out of state. The discomfort was already riding high, and then the tariffs were the last jolt.
We had discussed how happy buyers were during the frenzy and how we would receive several offers over list and every escrow closed without a problem. But now, every deal is uncertain while sellers wait for nervous buyers to perform.
These were the other two ingredients from the financed non-winners:
Buyer #1 didn’t go up on price in their highest-and-best round, and didn’t shorten their escrow period even though I told them how important it was to the sellers to close quickly. Their only term in their highest-and-best response was to change their deposit from 1% to 2% when we asked for 3%. You got to be kidding – it’s a three-offer competition, and that’s your best shot to win it?
Buyer #2 included in their offer that they wanted the patio room removed prior to the close of escrow, due to an unusual popping sound. Click here for video.
I made sure that all three buyers knew about the unusual popping sound before submitting their highest-and-best, which was critical. There was no way I was going to spring that on them later, and give them a great reason to cancel.
If you were the sellers, what would you do?
My sellers were happy to leave 1% to 1.5% on the table to get it over – quick!
Here’s an example of the wacky things that can happen during the escrow period these days. The house was fumigated, which means SDG&E gets involved to make sure the appliances are turned off during the tenting. The fume tent comes off, and the SDG&E guy goes back to inspect the appliances. He can’t figure out how to turn on the dryer left in the garage, so he orange-tags it and insists on it being fixed before he signs off. We closed escrow anyway, and he’s going back tomorrow to verify that our guy fixed it. But he could have held up the closing over a dryer that might not be working???
Get the deal closed!
A tour of the home:
Frenzy Monitor, YoY
NSDCC Actives and Pendings
We looked at the somewhat-gloomy San Diego County stats, so let’s also examine the individual areas around the north county coastal region.
Comparing year-over-year, it looks a little gloomy here too.
The areas in red have worse numbers (more actives and/or fewer pendings) than on May 15th of last year…..and only one area in green, which is the least-expensive area on the chart.
The SE Carlsbad and Carmel Valley numbers aren’t as hot as they were last year, but both have better than the 2:1 ratio of actives-to-pendings so they will be fine.
Encinitas and La Jolla have 20 and 19 more actives than last year, but their pendings counts are about the same. Encinitas is huge, physically (20 square miles) and La Jolla doesn’t have for-sale signs so it’s doubtful anyone will notice 20 extra actives laying around.
Rancho looks alarming but they don’t care what we think – they will wait it out.
Today there are 35% more actives and 18% fewer pendings, year-over-year.
This is the surge I was talking about last year:
First blog post about a 2025 inventory surge from October 22nd:
https://www.bubbleinfo.com/
I issued a red alert on October 29th:
https://www.bubbleinfo.com/
By December 13th, I was up to ten reasons why the 2025 inventory was going to surge:
https://www.bubbleinfo.com/
Not bragging, just noting that the market conditions are predictable – and anyone who is paying attention could have called it.
Here’s another prediction. It going to get harder to sell your house. Get Good Help!
Coastal-Home Touring
Here’s a look at three new listings that were on broker preview today:
More Classic Rock
From #1 to Flat City
Do you remember that stretch in 2023 when the San Diego-Chula Vista-Carlsbad metro area had the best appreciation in the country? It wasn’t that long ago!
Look how it’s changed since:
Widespread housing market softening
49 of the nation's 50 largest metro area housing markets have a weaker year-over-year home price shift this spring than a year ago
Analysis via @ResidentialClub
Article: https://t.co/xQxH5X3A0w pic.twitter.com/6OeuSWNIYW
— Lance Lambert (@NewsLambert) May 12, 2025
Real Estate Downturn?
Hey Jim – you’ve been around. Tell us stories about previous downturns!
You don’t see them coming because they usually arrive without notice, and they tend to sneak up on you! After a few weeks of nothing, everyone starts to realize that the buyers have dried up.
But let’s be careful about the discussion.
Are we in a downturn now?
Let’s look at the definition:
YELLOWS – Yes, these are factors today, in varying degrees.
ORANGES – They might be factors, and we’ll see. The initial tariffs were a shock, but receding now.
Two key facts: Sales are holding up, and sellers have considerable equity.
- The NSDCC sales this month are running at the same pace as last May. We can have excess supply, but as long as sales are holding up, we’re not in a downturn.
- Home sellers have never had this much equity. It’s scary that homeowners have so much equity that it could enable any of them to dump 10% or 15% on price to just to get out if needed! We’ve never been in this position before where a whole neighborhood could lose 10% to 20% in value in just a few short months – and freeze up the market for the remaining homeowners (who would justify waiting by declaring that it’s not a good time to sell).
Downturn isn’t the right word to describe the current market conditions.
Instead, I’ll call it The Big Wait.
Here’s an example:
We listed this home on Birdie on April 16th.
The tariff chaos was underway, so we lowered the price early – just 12 days into the listing.
The next day, a buyer called me directly. He said he had seen many price reductions in the marketplace lately, so he was just waiting to pounce on a good listing once they did their first price drop.
We opened escrow the next day, but his dreams of building an ADU dwindled quickly and he cancelled after five days of investigation. Boom – we’re back on the market on May 5th.
This home had been a rental for the last 17 years, and it was rough when we came on board. The seller spent $130,000 to get it back in selling shape, and it stood out among the active inventory.
By Monday, we had received two more offers. We countered for highest-and-best.
I’m in charge of sales, and all inquiries come to me. Even when we have multiple counter-offers out, I’m keeping the door open. Our deadline was 5pm yesterday, so there was still time for other offers.
Here are the three people who checked in yesterday:
A lady had sent a text on Friday night about seeing the house, so I invited her to attend the Saturday open house, and she came. She had already sold a rental property, and is doing a 1031 exchange which means she needs to re-invest into another rental. She calls back yesterday with interest, so I send her the disclosures – but then she ghosts me. I guess she is going to wait for another one? But her 45-day clock is ticking.
A broker from Orange County looked at it yesterday for himself. I love when buyers come from behind the orange curtain because everything here looks cheap. He says he wasn’t surprised to hear we have two offers, but he doesn’t answer my question about whether he wants to buy it. Another wait-and seer.
A local buyer-agent who showed the house to her buyers on the first weekend wants an update. She has been stalking the property since she first saw it – saying her buyers really like it – but no offers are made. More buyers waiting for something.
Buyers are comfortable with waiting – because it is comfortable on the fence. You’ve probably noticed that the sellers are comfortable with their pricing, and the vast majority of them are waiting too.
It’s The Big Wait.
It’s not a standoff, because that would imply interaction. It’s a cordial, friendly waiting that looks more like loitering because you know people want to do something but just not now. Waiting is more comfortable.
I don’t think they know exactly what they are waiting for, but it is ‘something’.
We will probably see spurts of sales occasionally as ‘something’ comes along. Maybe even a surge of sales at the end of summer as time runs out?
Let’s hope the Big Wait doesn’t turn into a lengthy disease!
Full Blown Glutty
Bill’s charts give us a good feel for the San Diego market.
Sales are doing great – April sales were better than last year:
The new listings are in check too. About the same as last April:
But here’s the problem. The supply is overwhelming the demand:
The number of 2024 listings in San Diego County was 22% higher than they were in 2023. Because the inventory had been historically low, I thought we could endure another 15% to 20% increase in the number of homes for sale this year.
But now the active inventory is 40% above last year? Yikes!
It means there is going to be massive disappointment among sellers. Of the detached and attached homes for sale around the county, 73% of them have been on the market for more than two weeks.
If they don’t make drastic changes in price and/or condition quickly, they won’t sell…at least not this year. The home buyers are on to it, and their patience is paying off. You may see an occasional crazy sale (six offers over list), but it isn’t a trend – anywhere.
It means there will be thousands of sellers carrying their hopes into 2026.
The Lowball Season is going to start earlier this year – probably by September. It means today’s sellers have 1-2 months to do more to improve their home and get sharper on price. Or face an unprecedented surge of 2026 listings, beginning in January. And there won’t be enough buyers then either.
The word is getting out too:
Cardiff $6,900,000
Check out Kelly Howard’s new listing!
Welcome to a modern masterpiece at 417 Warwick, Cardiff, where luxury meets innovation in this expansive 5-bedroom, 5.5-bathroom home. Spanning 5,710 square feet on a generous 20,295 square foot lot, this property is located in the heart of Cardiff’s composure district, overlooking the picturesque Rossini Canyon.
Enter into a bright and open space that sets the tone for the entire home. On the main floor, you will find a versatile office space, an inviting bedroom with an attached bath, a media room perfect for movie nights and entertainment, and a stylish powder room for guests. The open-concept design features a high-end kitchen equipped with premium appliances, seamlessly connecting to a spacious living area and family room. This layout is ideal for both intimate gatherings and large celebrations.
The design of the home facilitates a harmonious flow between indoor and outdoor dining, leading to a backyard oasis. Here, you’ll find a sparkling pool, a rejuvenating spa, and a built-in BBQ area, perfect for alfresco dining and entertaining under the beautiful Cardiff skies.
Upstairs, explore three additional bedrooms, each with its own attached bathroom, ensuring comfort and privacy for family and guests. The generous primary suite is a true retreat, offering a luxurious space complete with all the amenities needed for relaxation and unwinding.
This residence is more than just a home; it’s an embodiment of sophisticated coastal living, offering a blend of luxury, comfort, and style in a desirable Cardiff setting. Living in Cardiff means embracing a laid-back coastal lifestyle. Enjoy sunny days and cool ocean breezes while being close to everything this vibrant community has to offer. From the stunning beaches to local dining and shopping, there’s always something to explore.
Experience the elegance of this exceptional property, where every detail is crafted to enhance your lifestyle!
Tariffs Behind Us?
The tariff talk is settling down, the stock market looks fully recovered, we got a new pope, and the President is getting a new airplane.
Can we get back to selling homes now?
Usually we consider a ‘healthy’ market to have a ratio of 2:1 actives-to-pendings.
Above is a chart of local areas showing their number of active listings today, and the number of listings that went pending since April 2nd.
A ratio of 2:1 might be a little stiff, so let’s consider any market that has a 3:1 ratio or better to have survived Liberation Day, and is back on track.
GREEN: Areas that have a 3:1 ratio or lower.
RED: Areas that have a ratio higher than 3:1.
For the most part, buyers and sellers are back to transacting, and others can wait!
