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Spencer the iBuyer

Spence has gotten involved with Offerpad, joining the other disrupters who lead with lies and insults about traditional realtors.

He said, “The real competition for Offerpad isn’t Zillow or Opendoor, it’s the fact that 99.5% of the time people sell their home the old analog way.”

But at the same time, these consumers are also relying more and more on services like Uber, Instacart and Amazon.  “They’ve become conditioned to wanting an ease of use,” Rascoff said. “They’ve been conditioned to pressing a button on their phone and having some magic happen.”

His magic costs 7.5%.

They don’t mention their percentage, but even analog people have a calculator handy.  To offset, they pack their Traditional Offer with concessions and costs that add up to 9%, which makes theirs look like a deal.

But the worst part for any seller who makes their home-selling decision based on the cost is that they assume that everyone will sell the home for the same price. Offerpad will try to convince you that their ‘team of real estate experts’ will pay the full retail value for your home, and then hit you with the testimonials:

Will consumers go for it?

Will people ignore the math, not speak to a traditional realtor, and not know the real value of their home – and instead just press the button to have some magic happen?

P.S. They aren’t the only ones using that photo, though not sure who went first:

Peter B, RIP

I have honored four legends in these pages – my Dad, Doug Harwood, Gary Thompson, and John Wagner. Today we add a fifth.

Peter Buehrle, affectionately know to all of us as Peter B, passed away on Sunday.

He was gregarious and good natured, always bringing levity to every situation. An accomplished realtor (he sold over 1,200 homes) and a committed golfer, he had friends everywhere he went. The last time I saw Peter in person, I was standing on the curb when he drove up in his car.  As we chatted it up, I noticed that he had a real estate training CD on the passenger seat. When I pointed it out, he said, “Hoping to learn something new every day, and do better for my people”.

Kayla and his son Houston were in the same class at CCHS, then he went on to graduate from USC. Houston then became one of the greatest successes to ever come out of Cathedral when he started his own company and landed on Orpah’s Favorite Things List in 2018.  Here’s his story:

http://sdvoyager.com/interview/meet-houston-max-buehrle-bindle-bottle-encinitas/

The intro on Houston’s facebook page is simply this:

Peter Buehrle’s son.

Peter was known for his Sunday Funday videos on Facebook. Let’s play his last one here:

https://www.facebook.com/pb4real/videos/10158011718692469

Rest easy Peter, you will truly be missed.

When Will the Frenzy End?

Let’s call it the Big Confluence:

  1. Covid concerns keep diminishing over the next few months.
  2. More sellers feel safe to put their home on the market.
  3. More sellers find a way to hurry up and get their home on the market.
  4. Buyer skepticism rises.
  5. Agents get too cocky.
  6. Prices reach their limit.

All the above will cause inventory to increase, and buyers to relax. Then what?

This is my craziest theory of all-time:

SD Realtor Productivity

Thanks to the readers who sent in the recent WSJ article that mentioned that the national inventory is so bleak that there are more realtors than homes for sale (1.04 million homes vs 1.45 million realtors).

Let’s check the local productivity.

The graph above shows 29,600 real estate professional in San Diego County. (SDAR states that they have 20,000 members, NSDCAR says they have 6,000 members, and there is the PSAR which doesn’t have their member count on their website).

Last month we had 2,680 homes sold, including all property types – such as condos and mobile homes.

It means that 90% of the realtors in San Diego didn’t sell a home last month – in the hottest February ever.

It’s not as easy as it looks.  Get Good Help!

Johnny Cash

This was filmed at Johnny’s 13,880sf house in Hendersonville, Tennesee where he and June lived until their deaths in 2003 (shortly after this was filmed). Trent Reznor wrote the song while living in Sharon Tate’s old house – yes, that house – and after he watched this video, Trent said, “that song isn’t mine any more”.

Link to story about the song: https://ig.ft.com/life-of-a-song/hurt.html

Link to story about the house: https://www.seattletimes.com/entertainment/famous-lakeside-home-of-johnny-and-june-cash-burns-down/

Link to Trent Reznor and David Bowie’s live version of the song: https://youtu.be/fhhEHuChFck

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Working-From-Home Buyers

Those with good-paying jobs who’ve discovered the benefits of working from home are the ones who are most-likely fueling the ferocious demand – especially in what’s now the $1,000,000-$2,000,000 starter-home range between La Jolla and Carlsbad (can’t believe that I just said that).

Evaluating the economic impact of “social distancing” measures taken to arrest the spread of COVID-19 raises a fundamental question about the modern economy: how many jobs can be performed at home? We classify the feasibility of working at home for all occupations and merge this classification with occupational employment counts.

We find that 37 percent of jobs in the United States can be performed entirely at home, with significant variation across cities and industries. These jobs typically pay more than jobs that cannot be done at home and account for 46 percent of all US wages. Applying our occupational classification to 85 other countries reveals that lower-income economies have a lower share of jobs that can be done at home.

https://www.nber.org/papers/w26948

Number of Offers

To provide some transparency on the deal-making on the street, here’s a review of properties that have gone pending this week.  I didn’t intend to make a blog post out of it, but I had inquired about the availability of these listings, and for my own knowledge I like to ask how many offers the listings agents have received.

 

They had FIVE OFFERS on 1833 Willowhaven, and another similar home that listed on the same side of the street for $1,299,000 also had multiple offers.  A good example of how a few more listings in the lower price ranges should all get picked up.

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They had SEVEN OFFERS on this one.  Any of the one-story homes listed under $1,000,000 should attract a crowd for the foreseeable future.

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They had SIX OFFERS on this one.  Newer Davidson homes are always going to be popular, and though the yard was brief, this has a pretty good view.

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They had TEN OFFERS on this one, and you can see why. Houses on a culdesac with a backyard this big will draw a crowd in any market.

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They had EIGHTEEN OFFERS on this one, because it checks most of the boxes. Well-priced single-level with nice private yard that’s been tastefully renovated.  The 17 other buyers will be battling it out for months on these!  I commend the listing agents for providing enough access to accommodate that many people and offers.

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Payment Adjusted for Rate & Inflation

 

Thanks to just some guy’ for sending in this article comparing prices, rates, and inflation:

https://awealthofcommonsense.com/2021/03/what-if-housing-prices-arent-as-high-as-they-appear/

It’s a feel-good idea that inflation and lower rates can ease the pain of higher prices.  But recent pricing has been really painful for buyers!  Let’s apply the data to our local action (using 80% of MSP):

NSDCC Detached-Home Sales, February

Year
# of Sales
Median SP
Mortgage Rate
Monthly Pmt
2006
137
$833,000
6.25%
$4,103
2015
171
$1,110,000
3.71%
$4,092
2018
166
$1,289,005
4.33%
$5,121
2021
226
$1,736,000
2.81%
$5,714

It’s a nice idea, and higher rates did cool things down a bit in 2018. But today’s market is so explosive that we are blowing through all the usual stop signs – look at the number of sales!

My guess is that there will be additional sellers pulled forward from future years, just like with buyers – it’s too lucrative and tempting to find a way to sell now. Might it mirror the covid-recovery trend line?

“Everything is Hot”

Highlights from the CB CEO:

20% of all homeowners are considering selling in the next 12 months.

40% are thinking of upsizing.

30% want to cash out (probably the downsizers).

30% would move because they can work from home, and 40% to 60% would leave their city or state.

I think we can say that virtually every homeowner has considered selling – all we need is about 10% to 15% to do it over the next two years!

Perma-Squatters

Thanks to the many folks who sent in this article about a seller who stayed in his house after escrow closed. In this raging market, it is customary for listing agents to suggest seller rentbacks as one of the sweeteners to get an offer accepted, and will deliver a nice rental agreement but if the sellers don’t move, what are you going to do? In the more affluent areas, a lawyer’s monthly retainer fee is less than the rent, so the squatter can delay until you pay enough lawyer fees to reach a deal – and it probably won’t include paying the back rent. I know of one landlord who hasn’t received one penny of his $5,000+ rent since covid started!

When Tracie and Myles Albert purchased a beautiful four-bedroom house in Riverside, California they never realized that at the end of escrow the seller would suddenly refuse to give up the keys and leave.

“It’s just draining, emotionally and financially,” says Tracie.  On January 31, 2020, the couple purchased the home. More than a year later, they still haven’t been able get inside their property. Chris Taylor is the Real Estate Agent who sold the house to the Alberts from a man who wanted to sell immediately.

“He needed $560,000 from the sale of his house in two weeks and he called me on a Sunday, so in traditional real estate there’s no way of doing that unless the buyer’s a cash buyer,” says Taylor.

Since the house was free and clear and worth more than $560,000 the Alberts felt it was a great deal.

“It took us scrambling to get everything we had, our life savings put together and a hard money loan on top of it to make that happen,” Myles stated.

During escrow they discovered there was a $30,000 tax lien on the house which slowed things down, but in the end, all parties signed on the dotted line and the sale was completed.

“We own the house, outright. That’s our house and it’s all in a contract, written, legal, done. He’s been paid the money in his account. How could we have no rights to go into our home,” asked Myles.

Taylor says, “It’s genuinely unfathomable to me that we live in a state where something like this is even possible. They closed escrow on this home January 31, 2020.”  The Alberts and Taylor have contacted authorities and tried to get the seller evicted but because of the pandemic, they’ve gotten nowhere.

“They have this case under a COVID tenant situation, of no evictions when it doesn’t fall under that at all. This transaction went through in January 2020 before any of that, it isn’t a renter who was getting thrown out. It’s the guy who collected all of this money,” stated Myles.

Eviction Attorney Dennis Block says, “This year alone, we’ve handled at least 7 maybe 8 cases of this exact type of situation.”

He says people purchasing homes need to be extremely cautious, especially if they notice any red flags during the process. Block says what’s happening to the Alberts could happen to anyone.

“This person is not a tenant, it’s a previous owner who is enjoying the benefits of the money that was transferred to his account but of course doesn’t want to move out of the premises that he no longer owns,” Block stated.

The Alberts filed an unlawful detainer but because of the California eviction moratorium, the case has been stalled. Time is simply passing by and the immaculate house they fell in love with is now becoming an eyesore.

Tracie says, “I tried watering the lawn one time and he came out and ripped my sprinkler lines, ripped all the wires. The Palm trees are dying, everything was beautiful and everything is dying.”

Her frustrated husband says when he contacted law enforcement, they told him, “If you were in Arizona, if you were in Nevada, this wouldn’t be a problem, you would just go take your house back. But in California, like our hands are tied, even though we’re on your side, there’s nothing we can do.”

https://www.foxla.com/news/couple-buys-riverside-dream-home-but-seller-refuses-to-move-out-in-eviction-moratorium-loophole

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