With no real surge in inventory (yet), we are entering the hyper-frenzy phase now.
It’s an environment where most listing agents are ill-equipped to handle the pressure because they’ve never done this before. The only time we’ve been close to having insanity like this was at the bottom in 2009 when the bank-owned properties were getting 10-30 offers on every property.
How many REO listing agents are left, besides me? Yep, I can’t think of any either.
As a result, sellers are leaving money on the table all over the county. Why? Because inexperienced agents get inundated with requests and offers, and instead of handling them professionally, they just shut it down instead. Examples from this week:
They stop answering the phone, or returning calls/texts.
They direct you to automated services.
They mark the listing as pending or withdrawn before accepting an offer.
They accept an offer before showing appointments are completed.
Basically, they blow you off.
While they may think that it is their prerogative, they aren’t upholding their fiduciary duty to their seller by limiting the showings. Furthermore, they have an obligation to their fellow agents to allow them the opportunity to sell the listing. Yes, broker cooperation includes letting every agent have a chance to sell your listing – it’s how the system works. You sell my listings, and I sell yours.
It’s gotten so bad that another agent was joking with me that when he sees a hot new listing come up, he just books the first appointment available, and then looks for a buyer.
If we are going to abandon the traditions, let’s take it a step further to solve all the problems at once.
There have been misguided attempts previously that have probably sent us backwards, so there’s work to do to convince people. But auctions are the answer.
Conducting a live auction where all participants can witness the process (to keep it honest), and let the transparency drive the Fear Of Losing is the most effective way to get buyers to pay top dollar.
Will the jacked-up Covid-19 era finally cause auctions to emerge as the answer?
It doesn’t have to be anything fancy – this one worked great:
Will auctions be implemented by the old guard? It’s doubtful. While the hottest bidding wars are primarily on the lower-end properties (under $2,000,000), we can learn a lot from an auction company who only works the higher-end. They have a designated showing period where buyers are welcome to tour the home with their inspectors, then attend the live auction where a lucky bidder will likely buy a house that day.
Think of their benefits:
Showing dates and times arranged in advance.
Day of sale (Auction date) set in advance
10% commissions (known as ‘premiums’ which sounds friendlier)
Commissions are PAID BY BUYER and tacked onto the winning bid.
Sellers and agents will love that program, and we’ve already seen buyers be ready, willing, and able to pay 10%+ over list price these days – so they end up in the same place anyway.
The industry should convert to this auction format today and solve everything!
It looks like this home would have sunset views year-round plus be able to see up and down the coast too. The video is about the right length to pique your interest if you’re in this price category.
This scenic and recognizable home sits on a 1.1-acre +/- gated parcel in Laguna Beach known as Moss Point and is permeated by a sense of peace and true stillness. Ocean breezes sweep across gardens and stone paths lead to two spectacular view points, as staircases chiseled into the coastal bluff give direct access to sandy coves and a naturally-occurring pool. Crisp white siding and a covered porch create a picturesque scene where it’s easy to imagine President Woodrow Wilson lingering during his visits to this place, once under consideration to become the “Western White House”. The 4,325 +/- sq. ft. residence with 5 beds and 6 baths has been modernized, while preserving the character of its 1917 roots.
Showings are already 20.2% higher than they were during the first week of January, which is double what they were last year. But the NSDCC listings in January are going to be at least 20% fewer, year-over-year.
Last January we had 354 NSDCC listings, and today we have 239, month-to-date. We going to end up about 25% below last year’s count.
More demand and less supply = max frenzy conditions!
We can hope that the magical April-1st-date-when-seniors-can-take-their-tax-basis-with-them, combined with lower Covid-19 counts will unleash a surge of new supply.
Could it be that potential sellers are purposely waiting for prices to go up higher?
Here’s one example:
I sold this 2-on-1 property for $400,000 in 2002.
My client and I had begun chatting about selling early last year. At the time, my quote was in the $900,000s, and by the end of summer I was up to $1,200,000. He said he’d think about it.
He ended up listing with a different agent for $1,395,000 in November.
It’s only one example, but it makes me think that buyers might have some attachment to reality, and that starting with an attractive price in the beginning is the best way of getting it bid up to the moon.
Excerpts here from an article yesterday about the Fed’s involvement. The rapid run-up in home prices is brutal on home buyers, but for home sellers, realtors, and the overall economy, it is great news. Expect that the Fed will be very accommodative for longer than it takes to get employment on track, which means we should have low mortgage rates – and higher home prices – for at least the next year.
But what if the run-up in home prices is temporary?
Does Powell expect home prices to come down when rates go up? I hope not, because sellers get a vote – and we know they will be VERY reluctant to sell for less. Either we will have low rates forever, or once they go up (back to 4-something), the bubble created won’t pop or crash – instead it will ooze like slime while participants grapple with an unprecedented marketplace with little or no help:
Powell explained that the Fed has had to use its extraordinary policy to help the economy with still more than 9 million people out of work.
“It’s very much appropriate that monetary policy be accommodative,” he said. Powell also said with regard to financial stability, the Fed considers asset prices, leverage in the banking system and nonbanking system, as well as funding risk.
“I would say financial stability vulnerabilities are overall moderate,” he said, adding the Fed’s goals are also to prevent long-term damage to the economy and make sure the financial system is resilient to shocks. He said he believes the run-up in housing prices is temporary, and the pandemic has created a surge in demand because of people working from home.
“I think he’s reluctant to talk about specific stocks and even when he was asked about the housing market, he feels as though some of that is specific to the idea that supply was constrained, and there was pent-up demand and it’s temporary,” said Michael Arone, chief market strategist at State Street Global Advisors. “I wouldn’t expect the Fed chairman to acknowledge that Fed policy helps create bubbles.”
The Fed’s zero rate policy has helped fuel a mortgage boom with record low lending rates. Home prices were up 9.5% in November from a year earlier, the strongest annual growth rate in over six years, according to S&P CoreLogic Case-Shiller Home Price Indices. It is one of the strongest annual gains in the 30-year history of the data.
Powell, during the briefing, said the latest run-up in asset prices was not due to monetary policy but due to news on vaccines and fiscal stimulus. “He’s overstating the ability of the Fed to help the economy and understating its ability to help markets,” said Peter Boockvar, chief investment strategist at Bleakley Global Advisors. “He keeps deflecting.” Boockvar said the Fed’s policy impact is clearly felt across markets, including junk bonds where yields are at historic lows and some prices are at record highs.
“They’re solely focused on the virus and they don’t care what the side effects are of what they’re currently doing. Buying $80 billion of short term Treasurys, how does that translate to better economic growth?” he said. “Powell was so nonchalant about these hikes in home prices. It’s just temporary. Tell that to the first time homebuyer who is trying to buy a home and keeps getting outbid.”
Rupkey said the Fed is more concerned about other problems and does not see an issue yet.
“This Federal Reserve is not going to respond to asset prices unless they go up another 100%. This Fed is more concerned than ever about maximum employment,” Rupkey said, “helping those on the very fringe of the labor market.”
Located on a culdesac in a gated community in Robertson Ranch, this home lives like a single story w/ master suite & additional bedroom suite on the 1st floor. The great room is surrounded by glass with abundant natural light and the cantina doors open wide to the outdoors. Stunning kitchen w/ high end appliances, large wine fridge, custom island, and designer lighting & paint. Two bedrooms plus huge bonus room upstairs which is perfect for all home activities! A real showplace – wow!
Facing an upsurge in housing demand across the country, many home buyers are finding themselves in bidding wars for the limited inventory on the market. To win, buyers are trying to find ways to entice sellers beyond price—and at times are taking it too far, real estate professionals say.
Mary Lou Wertz of Maison Real Estate in Charleston, S.C., talked to The Wall Street Journal about one couple relocating from New York who fell in love with a $1.2 million, four-bedroom home online. The seller had already accepted another offer, however. The New York couple offered to pay $10,000 more than the other buyers as well as offer their competitors $25,000 to walk away from the home. They also told the seller that they would make a $30,000 donation toward a hospital for cancer research since the seller had recently lost his wife to cancer.
Ultimately, the New York couple’s offer was not accepted. The offer seemed “a little over the top” to the seller, Wertz told the Journal.
Another couple shared with the Journal how they toured 50 Los Angeles homes, submitted 16 offers—sometimes above the asking price—and were outbid every single time. But they weren’t about to lose out on a three-bedroom home listed for $735,000 in the Northridge area. “We were turning up at showings, and there would be a line of people who were there before us,” Andrea Kissling of Los Angeles told the Journal. “These houses were getting 30 or 40 offers and going $100,000 over asking.”
The buyers noticed memorabilia around the house of the Harry Potter films. So they produced a Harry Potter-themed video for the sellers (one of the buyers provides design services for Warner Bros.). The video fawned over the home and showed the couple reading Harry Potter books to their children. The couple also offered to buy the sellers VIP passes to The Wizarding World of Harry Potter at Universal Studios Hollywood.
Despite all the work, the couple still lost out to a higher offer for the home.
Chris Furstenberg of Nourmand & Associates in Los Angeles told the Journal that one of his clients—a filmmaker—once made an offer that came with the promise of tickets to the Academy Awards. Still, the seller went for a higher offer.
Furstenberg says such enticements often only work to settle a tie in a bidding war. But if there’s a higher price, that usually always wins out in the end—no matter how much buyers try to sweeten the deal with other offerings.
Top Jimmy & The Rhythm Pigs had a residency playing “Blue Mondays” every Monday night at the Cathay de Grande nightclub at the corner of Argyle and Selma in Hollywood, California for three years, and was an important part of the Los Angeles rock scene. Top Jimmy & The Rhythm Pigs concerts often featured guest appearances by such artists as Tom Waits, David Lee Roth, Stevie Ray Vaughan, members of X, The Blasters, The Gun Club, The Circle Jerks, The Plugz, The Fabulous Thunderbirds, and many more.
D.J. Bonebrake, who appeared on Pigus Drunkus Maximus, was a member of X. The band was saluted in the Van Halen song “Top Jimmy”, and mentioned in “The Call of the Wreckin’ Ball,” on the The Knitters album, Poor Little Critter on the Road and the X album, Live at the Whisky a Go-Go.
Live, Top Jimmy & The Rhythm Pigs usually consisted of Top Jimmy (James Paul Koncek): vocals, Carlos Guitarlos: guitar and vocals, Gil T.: bass and vocals, Dig The Pig: guitar, Joey Morales: drums and either Tom Fabre or Steve Berlin on saxophone. On their only record, Pigus Drunkus Maximus, released in 1987 (Down There Records, distributed by Restless), D.J. Bonebrake and Tony Morales contributed drum parts, while Gene Taylor added piano.
Top Jimmy got his nickname because he at one point worked at a fast-food stand called “Top Taco”, located across the street from the A&M Records studios in Hollywood. At some point, he got a job working as a roadie for X. At the end of a soundcheck, he sang a version of the Doors “Roadhouse Blues”, which garnered the attention of the band and Doors member Ray Manzarek, and led to Top Jimmy performing an encore version of the song with X and Manzarek, during a May 1980 X show at the Whisky-A-Go-Go.
Koncek died in 2001 in Las Vegas, Nevada from liver failure.
Agree - and if buyers back off, the worst thing that will happen is a prolonged stagnation. Because future sellers are going to want these prices or more, and they will be willing to wait until they get them.
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