Home buyers have access to all the comps, and follow them closely. They spend weeks and months looking at every new listing in their range, and they know the market better than anyone – because they’re the ones making it.
Sellers can judge their chances of selling by the number of people coming by, and number of offers.
If you get a great offer in the first few days, you nailed it on price. If you are getting lookers, but no offers, you’re about 5% to 10% wrong on price. If no one is looking, you’re at least 10% wrong on price.
Lower the price early and often to keep urgency high, and you’ll find what the market will bear:
Hat tip to Susie for sending this along, from thelatimes.com:
Scattered across 540 acres of San Diego County hills and ravines, the 235 opulent homes of the Bridges at Rancho Santa Fe flank a private golf course and country club with tile-roofed towers inspired by Tuscan villages.
The placid panorama belies decades of bruising battles among the project’s developers. The cast includes home-building titan Lennar Corp., a bankrupt La Jolla deal maker and, in an improbable late entry, con man-turned-preacher Barry Minkow.
The dispute ultimately led to a federal criminal conviction against Minkow and a continuing investigation by the Justice Department. But it all began here, at a classic Southern California home development that promised riches for its partners but ended up exacting a high price on the key players.
The court filings offer a rare glimpse into the inner workings of a high-end real estate deal gone bad.
Lennar, the venture’s main financier and manager, says it lost $50 million on the Bridges in spite of the custom-built mansions and expensive tract homes gracing its hillsides. Sales soared during the housing boom, but by 2009 the company was moving only one home every two months, San Diego real estate consultant Russell Valone said.
“Lennar did not go into this project thinking they were going to sell half a unit a month,” said Valone, the president of MarketPointe Realty Advisors. “There’s no way they planned on being there that long — they’re a public company and they want to get that money back and put it to work.”
At the center of the wrangling is Lennar’s partner at the Bridges: Nicolas Marsch III, 64, of La Jolla. A native of Chicago, where his family was in the construction business, Marsch took the helm of the enterprise in the 1970s and set out to make his fortune as a developer in California and Colorado.
Marsch ultimately set his sights on Rancho Santa Fe, 25 miles north of downtown San Diego. Described by CBS sportscaster and former resident Dick Enberg as “Beverly Hills in the country,” the very private suburb caught the world’s attention in 1997 when 39 cultists at a rented mansion poisoned themselves in expectation of ascending to a spaceship.
Marsch had purchased much of the Rancho Santa Fe land by the early 1980s. He launched the project he then called Horizon Country Club in 1985, in a partnership with a wealthy Northern California developer, Ronald Williams.
I get a constant barrage from realtors who want to argue their position on short sales. Back in September, I was ranting about the short-sale negotiator’s fee here, saying the listing agent should pay it if they can’t do the work themselves. But Tim disagrees – he left this comment yesterday:
Tim: “Sorry Jim, you have it wrong. Who benefits? I earn a paycheck. The buyer gets a house. As a listing agent I charge 6%. The buyers agent takes half of that. I pay my assistant & my brokerage. Negotiating with illiterate morons on another continent is specialized work, and it is not easy or cheap. Without it, most short sales fail, and MY client loses a home.
Why do you believe I should pay $1500 – $2500 when I am not on title, nor am I buying a home? It is a charge that has to be paid by someone. Maybe you are so well paid that you are eager to absorb that fee, but not me. It is legal to insist a buyer pays that fee, no different than an appraisal. They will not get the home without paying for both. There are no clear cut guidelines to address this issue, and it is a rather large amount to absorb. Until I am told otherwise, buyer pays it.”
Jim: You pass the job onto a short-sale negotiator who charges separately – what do you do for 3%?
Hopefully Tim is still reading, and he or other short-sale realtors can chime in. I agree, negotiating with illiterate morons is a specialized work. But he’s not doing it – he has hired an independent contractor to process the file, and making the buyer pay for it.
You say that you “earn a paycheck”.
How do you earn your 3% commission on short sales, when you farm out the work? You have been hired to provide professional services, what are they exactly? Meet the appraiser?
Two examples in Carmel Valley, 92130 to demonstrate how $1,000,000 doesn’t go as far as it used to:
For those who have access to the tax rolls, check what happened on the REO (second house in video).
It looks like the bank foreclosed once, which eliminated the second mortgage, then sold the house back to the same former owner, funding the purchase with a 97% LTV mortgage. Eighteen months later they foreclosed again?
A blog reader (who had a realtor before discovering us) wanted an opinion about this house. It has the plastic plumbing, which is a $5,000 to $10,000 repair:
Mortgage rates are great for now, and if QE2 goes quietly in the night, it could cause some potential buyers to stay engaged for the rest of the year.
Here’s the recent history of monthly detached sales:
We got off to a good start this year, but with the new pendings starting to drift, I think we can expect sales to trend downward for the remainder of 2011 – unless more sellers start drastically reducing their inflated list prices. BTW, July starts next week.
The average pricing has been steady lately:
Generally, I think people are willing to pay these prices, they just want more bang for the buck – are they getting it? It’s hard to measure, but the general consensus among buyers seems to be, “if I have to pay this much, I’m going to be very picky and push for top quality”.
There has been a slight upward trend in average square footage:
If bigger/nicer houses are selling in better-quality locations, but the averages stay about the same, will we notice? Let’s keep breaking down the stats into smaller increments, and see.
On September 6, 2006, John Mattes received national attention when he was attacked by two people while investigating an alleged real estate scam. He was injured with cracked ribs, bite wounds and cuts to his face. The attacking scene was caught on tape by his cameraman Dennis Waldrop.
While Mattes recovered, the couple that attacked him, Sam Suleiman and Rosa Barraza, faced multiple charges. One week after the attack, Mattes returned to XETV to do an investigative report on mortgage fraud.
Suleiman went on cable television and claimed he was the victim.
On September 12, the couple pled not guilty in a San Diego courtroom. Suleiman faced ten years and eight months for battery causing great bodily injury, assault with a deadly weapon, making a criminal threat and intimidating a witness.
Suleiman got a plea bargain and served less than one year in jail. His wife got probation.
They have never been charged in the massive mortgage fraud scheme Mattes uncovered. All the properties Mattes revealed as linked to Sulieman have been foreclosed and not a dime ever recovered from the losses. Today Sulieman works as a “mortgage modification expert”.
Since the attack, Mattes has investigated and reported on numerous consumer schemes all over the country. His investigations have uncovered health Insurance scams, banking swindles, and mortgage modification shemes that have left homeowners defrauded and foreclosed. His reporting has garnered numerous Emmys and other awards for his stories.
