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Long Listing = Inflated Price

code

How about the agents who deliberately over-price their listings?

It’s not the mean and nasty ‘deliberate’; it’s more of a friendly wink and a nod. Sellers want more money, not less, and it’s irresistible for them to hire the agent who quotes them the highest price.

Agents who ‘high-ball’ to get the listing leave a tell-tale sign.  They insist on 6-12 month listings, which means they have no confidence in the price today, and are just praying they get lucky.

But let’s check the N.A.R Code of Ethics:

  • Standard of Practice 1-3

REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.

The key word is ‘deliberately’, and here is the definition:

Carefully weighted or considered; studied; intentional

Agents who intentionally high-ball their price to get the listing leave evidence.  They insist on a long listing period.  But if you had confidence in your price, why the long listing?

Is high-balling a problem?

Yes – if the Code of Ethics means anything.  Agents should be ethical and rely on demonstrating their skills to get the listing, and not buffalo the sellers by deliberately quoting an unrealistic price.  But agents get away with it because there is no enforcement, and as long as prices trend upward, eventually the market catches up with their price.

How can we inflict the Code of Ethics on agents? If there was a limit to the maximum number of days (90-120) of a listing, then all agents would have to be sharp on price.  The quoted prices would all be about the same, which would shift the sellers’ focus to who has the best skill set to achieve a top dollar sale.

As the market enthusiasm wanes in the second half, this will matter more as the tide goes out on the high-ballers.

After months of trying, they will blame their failure on the ‘market’, and then push for a price reduction.  But the buyers have caught on by then, and it will take a bigger drop just to get their attention.

Everyone believes that it takes a long time to sell an expensive house.  Really?  Have you checked the stats?

The 176 NSDCC houses priced over $2,400,000 that sold in the last six months had an average DOM of 80 days, and a median DOM of 58 days!

Let’s compete on a level playing field and see who wins!

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Lowball Strategy

typical agent

Have you seen a home sale close at a surprisingly-low price, and you said,

“Geez, I would have paid that!”

Usually the house has been on the market for months, and everyone else has forgotten about it. The seller doesn’t want to lower the price, but tells his agent, “Just bring me an offer”.

The agent revises the MLS remarks, adding gems like ‘Extremely Motivated’, and ‘All Offers Considered”.  A buyer who saw it earlier with another agent decided to approach the listing agent directly with an offer 20% below list – take it or leave it.

With visions of two commissions twirling around in their head, the agent tells the seller this is the best they could do. The seller really is motivated, so after months of failure at a too-high price, frustration sets in and he signs it.

If any seller is tempted to take a lowball offer – more than 10% below list – they should instruct the listing agent to immediately lower their list price to the midpoint between the offered price and current list price.

Let’s see who else is out there!

Watch how many you see that close at 15% to 20% below list and the listing agent represents both parties.  It isn’t enough to change the market, but a notable strategy.

You shouldn’t burn your old agent though – there are enough listing agents who are wimpy about dual agency and prefer that you have your own agent anyway. It is the same net to the seller, so he won’t care either.

Republican Platform – Housing

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If the Republicans sweep in November, Fannie/Freddie will be under siege – but it’s very unlikely that they would go away.  If they did, it would cause the big banks to dominate mortgage lending, leading to that Too Big To Fail thingy.

From HW:

Lost amid the uproar over Melania Trump’s supposed plagiarism of Michelle Obama on Monday night, the Republican Party actually conducted some official party business during the first night of its convention, when it approved its 2016 party platform.

And if the Republican Party sweeps November’s elections, the world of housing finance could be in for some significant changes, as the 2016 Republican Party platform calls for seriously cutting the government’s role in housing, potentially abolishing the Consumer Financial Protection Bureau and ending the use of disparate impact to enforce fair lending laws.

According to the Republican Party platform, which can be read in full here, one of the GOP’s goals for 2016 and beyond is to “advance responsible homeownership while guarding against the abuses that led to the housing collapse.”

The GOP platform states that the party believes in the importance of homeownership and wants to do more to help more people achieve it.

“Homeownership expands personal liberty, builds communities, and helps Americans create wealth. ‘The American Dream’ is not a stale slogan. It is the lived reality that expresses the aspirations of all our people,” the Republican Party platform states. “It means a decent place to live, a safe place to raise kids, a welcoming place to retire. It bespeaks the quiet pride of those who work hard to shelter their family and, in the process, create caring neighborhoods.”

And to return to healthier levels of homeownership, instead of the current near-record lows, more needs to be done, but not by the government, the Republican Party argues.

According to the Republicans, the government has already done more than enough.

“The Great Recession devastated the housing market. U.S. taxpayers paid billions to rescue Freddie Mac and Fannie Mae, the latter managed and controlled by senior officials from the Carter and Clinton Administrations, and to cover the losses of the poorly-managed Federal Housing Administration,” the Republican platform states. “Millions lost their homes, millions more lost value in their homes.”

To remedy this problem, the Republican Party believes the government should play far less of a role in housing than it does currently.

“We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders and avoid future taxpayer bailouts,” the Republican platform states.

“Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices,” the platform continues. “Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.”

The Republicans also call for a “comprehensive” review of federal regulations, “especially those dealing with the environment,” that make it “harder and more costly for Americans to rent, buy, or sell homes.”

But much of the Republican animus towards the government’s (and the Democrats’) role in housing is centered on the ongoing conservatorship of Fannie Mae and Freddie Mac.

And the Republicans’ message on Fannie and Freddie’s ownership structure should give pause to the Fannie and Freddie shareholders fighting for the recapitalization and release of Fannie and Freddie.

“For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them,” the platform states.

“Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all losses,” the Republicans continue. “The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home buying.”

The Republicans also call for the FHA to end its “support” of “high-income individuals,” and state that the public “should not be financially exposed by risks taken by FHA officials.”

The Republicans also state that they will “end the government mandates that required Fannie Mae, Freddie Mac, and federally insured banks to satisfy lending quotas to specific groups,” adding that “discrimination should have no place in the mortgage industry.”

The Republicans also state their opposition to the Obama Administration’s Affirmatively Furthering Fair Housing program, which the administration heavily touted last year as a way to ensure that all children are given a “fair shot.”

The Republicans argue that the Affirmatively Furthering Fair Housing program is an attempt by the government to “seize control” of the zoning process away from local governments.

(“The Affirmatively Furthering Fair Housing program) threatens to undermine zoning laws in order to socially engineer every community in the country,” the Republicans state. “While the federal government has a legitimate role in enforcing non-discrimination laws, this regulation has nothing to do with proven or alleged discrimination and everything to do with hostility to the self-government of citizens.”

The Republican platform also echoes several points of the recently released Republican-crafted plan to repeal and replace the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Part of that plan involves changing the structure of the Consumer Financial Protection Bureau to replace the agency’s director, a position currently filled by Richard Cordray, with a bipartisan commission and changing the CFPB’s funding mechanism to bring the agency’s budget under Congressional oversight.

One-Story Premium

cabela

On June 11th we noted two single-story homes for sale in Carlsbad.

This 2,726sf single-story house in SW Carlsbad listed on June 9th for $1,149,999 – and it had the extras like a good yard and view.

They received multiple offers, and it closed for $1,165,000, or $427/sf!

http://www.sdlookup.com/MLS-160031583-6678_Cabela_Carlsbad_CA_92011

How do two-story homes compare?

This is asking $278/sf nearby and unsold:

http://www.sdlookup.com/MLS-160022454-1365_Cassins_St_Carlsbad_CA_92011

Asking $299/sf with ocean view:

http://www.sdlookup.com/MLS-160030800-6393_Ebb_Tide_Carlsbad_CA_92011

Base-grade tract house at $286/sf:

http://www.sdlookup.com/MLS-160026464-1672_Fisherman_Dr_Carlsbad_CA_92011

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Inventory Watch

Manarola

Last year, the high point of the Over-$2,400,000 inventory was 423 houses for sale on September 28, 2015.

In 2014, the high was 427 on August 25, 2014.

Today there are 476 houses for sale over $2,400,000, and it’s only mid-July!

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

(more…)

Multi-Gen Paradise

Lakeside isn’t far – it is centrally-located in San Diego County, and is a straight shot down the 52 and 67 from La Jolla.  It might be a reasonable compromise for those multi-gen buyers who would treasure two houses on a quarter-acre lot with citrus and avocado trees.  This property has been lovingly-maintained and owner-occupied for the last 30 years!

lakeside

Here is a feature-length YouTube video tour:

Pueblo Road satellite photo

2016 Renter Survey

rentsurvey

Worried we might run out of buyers? Plenty are waiting in the wings – and working with their parents to achieve!

Current renters value homeownership and want to buy a home but many are encountering affordability and financial obstacles that prevent them from buying, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2016 Renter Survey.”

Nearly half of renters (48 percent) plan to buy a home in the future, with 10 percent saying that they plan to buy within a year. For those not planning to buy, an improvement in finances, lower housing prices, and saving enough for a downpayment would motivate them to buy now.

Of the 28 percent of renters who don’t plan to buy in the future, 50 percent said they can’t afford to buy, 20 percent will not buy because they prefer to rent, 19 percent said they can’t qualify for a mortgage, and 15 percent lack a downpayment. Job uncertainty (9 percent), economic uncertainty (12 percent), and housing market uncertainty (6 percent) were among other reasons renters cited for not buying a home.

Homeownership remains important to renters, with nearly half (45 percent) rating it 8 or higher in importance on a scale of 1-10, with 10 being extremely important. The average was 6.8. Nearly all renters (95 percent) see advantages to homeownership; freedom to do what you want with your home, building equity, and having permanence and stability were the top benefits mentioned by renters.

One of the surprising findings of this survey is that more than one in four millennial renters said they plan to purchase a home that will accommodate their parents, and about one in five millennials indicated they plan to pool funds with family members to buy a home.

Other key findings from C.A.R.’s “2016 Renter Survey” include:

  • Forty-six percent of renters claimed they currently rent because they can’t afford to buy, and 13 percent said they have poor credit and can’t qualify for a loan. The remaining renters choose to rent because they like the flexibility, freedom and ease of renting, are concerned about the maintenance costs of owning a home, or are not interested or aren’t ready to buy.
  • Nearly four in 10 renters (39 percent) indicated they plan to purchase a home in the same county where they currently reside, and 23 percent plan to buy in the same neighborhood.
  • Fifteen percent of renters plan to buy a home out of their current area, with 7 percent planning to move to another state, 7 percent to another county in California, and 1 percent to another country.
  • Of the renters who are planning to leave the area where they currently reside, 27 percent are moving to find lower housing prices, 24 percent are moving for a better neighborhood, 14 percent want to be closer to family, 9 percent want a shorter commute, and 7 percent are moving for a better school district.
  • Two in three renters have made some kind of preparation to buy a home: 25 percent have searched for homes, 16 percent have searched online for information about the homebuying process, and 12 percent have spoken to a REALTOR®.
  • Thirty-one percent of renters previously owned a primary residence, and 9 percent currently own real estate. Of those who previously owned a home, the reasons for selling included family reasons (37 percent), financial difficulties (28 percent), and work (13 percent).

survey
http://www.car.org/newsstand/newsreleases/2016releases/2016rentersurvey/?view=Standard#

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