When the internet took over the real estate business 20+ years ago, the dumbing-down of the valuations began. Now that we are making life-changing decisions based on split-second exposure to imagery from a hand-held device, the process has gone binary – a quick yes or no, without much other consideration.
It’s not just the buyers – realtors do it too.
When searching my new listing in Carmel Valley, the first comparable sale that pops up is this model-match that sold for 16% less in May:
The possibility that somebody got a deal in Carmel Valley doesn’t even occur to us, and because we’re accustomed to making snap decisions, just the price disparity alone will cause most to swipe to the next listing – and not give it another thought.
Let’s look deeper, shall we? There are three ways to evaluate what happened:
What is the neighborhood history? We’ve been having record-setting prices everywhere this year, and in most neighborhoods, the last sale is the highest sale ever. Is the $1,880,000 the highest sale ever in the Lexington tract? The answer is NO. There have been 15 sales higher than $1,880,000, including the previous $1,900,000 sale on Shannon Ridge that was across the street, on the non-view side. Nine sales have closed above $2,000,000, with the highest being $2,350,000. My list price of $2,250,000 is within reason.
What was the condition of the comp? Those who are used to examining the MLS photos will notice right away that the condition of 5414 Shannon Ridge was all original, which are the homes that struggle to sell these days.
What was the listing history? Shannon Ridge first listed for $2,195,000 in June, 2019. The listing agent refreshed the listing three times will gradual price reductions, and in April, 2020 the price was down to $2,095,000. According to the listing agent, they had shown the home 190 TIMES, so they had to think they were close, but the covid had just hit and they had to be exhausted from so many showings. They lowered the price to $1,995,000, and the next day took $1,880,000 – a drop of $215,000 within 24 hours.
There we have a good explanation of why they dumped on price (original condition and covid freak-out), and why it’s a one-off.
Will buyers today be willing to look deeper than one bad comp?
I think so – we received the first offer last night!
I’m lucky to have such great clients who do the most effective and popular upgrades that turn their home into a premium showplace! Ideally situated on one of the best view lots in CV, this fully-renovated masterpiece has everything – TWO bedroom-suites downstairs, wide-plank hardwoods, designer kitchen, low fees, no road noise and no power lines!
Enjoy one of the best views in the 92130 too!
5278 Brittany Forrest, San Diego, CA 92130
6 br/5.5 ba, 4,687sf
HOA + MR fees = $156/month
LP = $2,250,000 (we represent the sellers)
Tomorrow is the grand opening of the last PHR tract, and the base models are going out at $1,939,000 to $2,649,000 and add more $$ for window coverings and landscape (plus HOA + MR = $500+). Wait for months until they are done, or buy in the Del Mar school district on a quiet, private culdesac with premium view and without the congestion!
Toll Brothers is wrapping up in Carmel Valley’s Pacific Highlands Ranch. They listed this model home for $4,098,000 and it went pending in the first seven days on market (currently pending). I did end up selling lot #218 seen at the end:
Are you looking for something similar for about half the price? Stay tuned!
The production homes were selling for $1.9M to $3.5M, so those new residents have to be elated to see that all three models are priced in the $4-millions. And don’t be surprised if they sell quickly!
The Plan 2 is priced on the range $4,398,000 to $4,698,000 – here’s my tour from 2018:
P.S. The grand opening was September 22, 2018. They are going to sell 69 of these between $2 million and $5 million in less than two years, all while Pardee sold 100+ homes across the canyon for $1.5M to $3.0M!
Here’s a reminder of the last crisis (this video is from February, 2011), when we all thought foreclosures would last forever. We listed for $709,000 and it sold for $675,000 in July, 2011 after 39 days on the market. It resold in August, 2018 for $980,000:
The office portion of One Paseo is the last to be completed and met its target to turn over the interior spaces to tenants this spring for build-outs. The two office buildings are over 80% leased and depending on the stay-at-home order, occupancy could begin this summer through the first quarter of 2021.
Of the over 600 residential units at One Paseo, a section had yet to be completed when the pandemic hit. Construction on the last phase of 145 units, which includes townhomes along the frontage of Del Mar Heights Road, looks to be completed this summer.
Little said they have over 210 signed leases of the 450 units that are available and Kilroy has increased its offering of virtual tours for potential tenants.
Our listing in Carmel Valley is still getting hundreds of views – the chart above are two-day totals. I love when a new listing hits the market nearby, because it gives buyers some perspective, and in this case we are almost identical in cost per square foot ($507 vs $509) so the analytical buyers will be pleased.
The graph at the top shows the importance of the first few days on the market.
It’s virtually impossible to re-ignite the same buzz later, even with a price reduction, so we try our best to make the first deal stick. In this case, our first buyer was doing a 1031 exchange with tight timelines, but then the IRS extended everyone to July 15th, so like most buyers he figured he could get a better deal later, and cancelled on us.
The talk about how opening up the country will affect the real estate market seems simple enough to me. The more-motivated buyers will be the first ones to venture out, and that’s who drives the market anyway.
Our reader elbarcosr agreed that it’s easy to get page views with everyone sitting at home on the computer anyway these days. Here are today’s counts of our Winstanley listing:
Facebook ad: 1,451
The Facebook ad was responsible for 840 of the YouTube views, which means the MLS and the blog accounted for 486 views. The blog views have been running around 100 per video, so almost 400 views of the video tour came from potential buyers who saw it in the MLS remarks or on one of the search portals.
It makes you think potential buyers don’t mind previewing a home by video!
We had about 15 showings in person, and three written offers.
The three original bathrooms were enough for most buyers to pass altogether in a very conservative environment these days. I think I could have sold it 3-4 times if the house was completely turnkey. But you can only sell it once, so balancing the investment vs return is a critical step.
These results are about what I was expecting before the covid-19.
Mostly-renovated houses in desirable neighborhoods on the lower-end of the range are still going to attract significant interest. Play your cards right, and you can still sell in the first five days on the market.
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