Interview A Realtor

Here’s the annual diatribe questioning the existence of realtors:


If you ask most realtors why they exist, you’ll hear about the “maze of paperwork” and “litigation and liability” – big words meant to intimidate.

But consumers don’t buy and sell houses enough to be naturally comfortable with the process.  Once they meet a few random realtors at open houses, they become more convinced that they should get somebody on their side.

realtor_logoIt’s how they select a realtor that needs examination.

The industry leaves it up to the individual agents to promote themselves as they see fit, which leads to hype and propaganda – and not a lot of factual evidence.

The trend towards “reviews” by past clients on Zillow or Yelp is a good idea, but that can always be gamed.  Checking the agent’s website and googling their name will supply more data, but rarely do you find specific evidence of their expertise.

It’s one of the biggest moves of your life – you should invest an hour over a cup of coffee to make sure the agents are what they seem.  Ask them to provide evidence of how many homes they have sold recently, and what is their specific involvement in the process (specifically, once you sign on, do they pass you down the conveyor belt of assistants?).

I’m available anytime – and I’ll buy the cup!

Conforming Rates Near 5%

Mortgage rates were higher again today, extending yesterday’s movement following the FOMC Minutes.

This morning’s Jobless Claims report showed a slightly higher number of initial unemployment filings, but rather than help push back against yesterday’s weakness, this did more to help rates level-off.  Had the data been stronger than expected, the damage would have been worse.

Conventional 30yr Fixed  quotes are most prevalent at 4.75% (no points) with 4.875% being the next closest level for ideal scenarios.

The world of interest rates is in a precarious position right now.  Uncertainty and speculation are high.  Staffing levels are low.  News and events between now and Labor Day will move markets and cause ups and downs for rates, yet the news and events arriving after that are incontrovertibly more important.

Read full story here:


(It’s a good time to sell!)

Nick Lowe

Imagine a few veterans gathering around to play some old tunes – and how in this case, Nick takes over on his biggest hit:

Tom “T-Bone” Wolk, a long-time member of the H&O band and vital contributor to Daryl’s show, passed away on February 28, 2010 at age 58. If you have time to take in his tribute show, it is a classic: CLICK HERE.

Summer Inventories

Let’s examine the summer’s new listings of NSDCC detached homes – are more properties coming to market this year, and if so, at what price points?

These are the new listings between June 1st and August 15th:

2012#/LP $persf
2013#/LP $persf
% diff

Several thoughts:

1.  The frenzy, and resulting price increases, have been primarily isolated in the lower-end markets only.

2.  More sellers are pushing higher on price, but the excess supply is keeping list prices in check in the higher ranges.

3.  The frenzy could keep cooking 1n the lower-end markets.

4.  The higher-end markets could go down in price.

The market softness increases exponentially as sellers push higher. Comps are harder to come by, there is more competition between other unsold listings, and buyers can be pickier.

How do you see it?

Ferrari Beer

ferrari sale

My mother-in-law saw the big Ferrari sale and sent me this conversation:

Critical Thinking At Its Best!

Woman: Do you drink beer?

Man: Yes.

Woman: How many beers a day?

Man: Usually about three.

Woman: How much do you pay per beer?

Man: $5.00 which includes a tip.

Woman: And how long have you been drinking?

Man: About 20 years, I suppose

Woman: So a beer costs $5 and you have 3 beers a day which puts your spending each month at $450.

In one year, it would be approximately $5400 …Correct?

Man: Correct

Woman: If in one year you spend $5400, not accounting for inflation, the past 20 years puts your spending at $108,000, Correct?

Man: Correct

Woman: Do you know that if you didn’t drink so much beer, that money could have been put in a step-up interest savings account and after accounting for compound interest for the past 20 years, and you could have now bought a Ferrari?

Man: Do you drink beer?

Woman: No

Man: Where’s your Ferrari?

Frenzy Surprises

There are a few surprising factors contributing to the meteoric rise in prices:

A.  Cash offers might get you the win, but not a deal.  

Back in the day if you offered cash, you sought a hefty discount – and usually got it.  Over the last 60 days, 25% of the NSDCC detached-home closings were cash sales, and the average SP:LP was 97%.   Of this group, 24 of 148 had to pay over list price to win – a group whose avg. sales price was $1,542,105.

B.  There appears to be no reluctance to reward flippers.

Everyone used to despise flippers, and both buyers and appraisers would throttle their valuations.  These days flippers are being rewarded six figures for new carpet and paint, and many who have added real improvements have gotten $250,000+ without any trouble.

C.  Tight credit hasn’t slowed price increases. 

The San Diego Case-Shiller Index for May was +17.3% year-over-year (latest available).  The average pricing of NSDCC detached homes sold in May was only +9% year-over-year, but in Oceanside the average pricing in May was +19%, and in Vista it was +37% year-over-year – areas where financing is more prevalent.

D.  The internet doesn’t create instant appraisers.

Glenn from Redfin said HERE that even though he keeps coming up with new gimmicks, people viewing his website just want to know bed & bath counts, and square footage.  Buyers get the feeling that they are more educated – but are they using it wisely?  Judging by some of the crazy prices being paid, they are ignoring the readily-available data.

Things of no surprise?  NAR isn’t making a difference, generally realtors have very little to say publicly, and sellers keep pushing the envelope:

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