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Contractors are Busy!

For those who are thinking of selling next year and plan to do some improvements, don’t wait to begin.

In fact, start today!

Yesterday, I contacted three different flooring contractors, and all were booked into December.  Our GC is currently booked for two months, our pool-repair guy has work scheduled for the next FIVE MONTHS, and our plumber gave up and suggested that we find someone else.

If you want us to provide an initial consultation and give opinions of what repairs/improvements would be smart to complete prior to selling, feel free to contact us – now. We can call in favors if needed – the pool guy got started within two weeks!

It made me wonder how many homeowners were in the hunt for a new house over the last 1-2 years, and have since given up on moving and decided to remodel instead.

No matter how small the percentage, it means the demand for homes for sale will be increasingly more dependent upon the out-of-towners who don’t have a house here yet.  Their desperation level is higher than our current homeowners here who are comparing to what they already own……and who are finding it more difficult every day to justify a move.

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More slides from the C.A.R. forecast:

They are forecasting a 5.2% YoY drop in sales in 2022, after we will likely set the all-time record for sales here in 2021.  They are probably considering the slowdown in pending sales:

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They also showed how 70% of the business is done by 30% of the realtors….and the rest of the agents are barely in business with less than two sales per year:

Get Good Help!

Easier to Go Up Than Down On Price

This is a repeat of the 2br house featured on my tour a few weeks ago, with the resulting sales price.

The agent admitted they priced this 2br house low on purpose to attract a crowd, and it worked. The list price was $699,000, and it sold for $1,100,000 cash. Meanwhile, the two other listings around the corner priced at $1,149,000 and $1,200,000 are still unsold.

Sellers are resistant to price attractively, but look how well it works when you Get Good Help!

Sold for 57% above list!

https://www.compass.com/listing/2725-glasgow-drive-carlsbad-ca-92010/842339809239950025/

We Must Have More Frenzy

I said the other day that it will become hard to sell.  But wait – isn’t the demand overwhelming?  Yes, but it’s a price thing.

It will be harder to sell…..at your price.

Think of the pressure on sellers now.

It was bad enough when the seller’s ego had to endure the actual or perceived pressure from friends and family about getting your price. It was probably more subconscious, than conscious, and nobody really had to say a word.

Sellers just think that their family, friends, and neighbors are all watching, and they want to show them.  As a result, once a home goes on the open market, the seller’s ego wants all the money.

But then over the last year, sellers have been in this bonanza zone where bidding wars erupted out of nowhere and sellers got more money than they ever thought was possible. Way more than their ego needed, and sellers couldn’t wait to tell everyone how great it turned out.

But as the frenzy settles down, will sellers be able to cope without a tale to tell? Will their ego survive not having a bidding war?

In their mind, their opinion of their home’s value is built on top of the frenzy sales, plus a little extra.

Are sellers motivated enough to price sharply from the beginning, and/or lower their price early and often when it counts?

Probably not.

Hence, the frenzy environment has to continue, just so sales will happen.

Agents who have been in the business for 12 years or less only know a strong sellers’ market.  They will continue to offer half-baked listings with 60-80 photos, no video, and a crazy price – and expect buyers to pay it.  Throughout their history, buyers always have.

Sellers will now expect 5% over comps AND a bidding war to push it higher!  Anything to the contrary will not go over well, and sellers and listing agents will be slow to react.

First you’ll see listings not selling, and inventory starting to stack up.  Then sales won’t be as brisk as they have been over the last year.

Sales will suffer, before pricing does.

Keep an eye on sales.  They are your leading indicator.

This is how the frenzy will end, it’s just a matter of when.

“Commissions As Low As 2%”

Let’s discuss the TV ads that are running by this company:

https://idealagent.com/

Home sellers have a sneaky suspicion that they should hire a great agent, but they don’t want to pay 6%. These ads combine these two pain points beautifully, and offer to pair you with a Top 1% agent for only 2%!

Their fine print seems to back it up too:

*Our agents will list for 2% and offer the typical Buyer’s Agent commission in your market ranging from 2% to 3%. The average Buyer’s Agent commission nationwide is 2.5%. If a buyer calls on your house directly without an agent, our agents have agreed to do the entire transaction for only 2% total. Homes under $150,000 will have a minimum list side commission of $3,000.

Let’s get to the real truth. Several points:

  1. They say their service is FREE. But they are running national TV ads?  Who pays for those?  The realtors pay for those!  They have to give a split of their commission to the advertising company. Do you think the Top 1% of realtors are jumping at the chance to work for 2% and then give up 20% to 30% of that to the lead source?  No way.  They have enough other retail business that they don’t have to discount their commission.
  2. The commission is ‘pre-negotiated’, but that only means that the realtors have to offer 2% as one of the commission options.  Because the listing agent will also have a 6% commission option, they get paid LESS with the 2% plan.  Because the best agent-teams have buyer-agents who get a spiff too, the 2% option will only rarely get implemented – there’s not enough $$ to go around.  The home’s listing goes onto the MLS/open market, which means the chance of an outside agent selling the home is at least 90%, and because of the dis-incentive, it’s probably more like 98% chance of not being a 2% commission plan.
  3. The listing agent may normally offer a 5% commission plan.  But because he has to pay the 20% to 30% to the lead source, it will get passed on to the seller in the form of a 6% commission.
  4. Because of the seller’s zest to only pay the 2%, they will sign up after a spectacular listing presentation that doesn’t reveal the truth about the chances of the 2% commission being so unlikely.
  5. The sale will go smoothly, and the sellers will be on their merry way. If they happen to glance at their closing statement, they might notice that they paid 6% in the end, but hey, it’s over and they shrug it off.

There is one revelation of truth at the bottom of their website:

Full Service Moving

The moving industry is ripe with fraud and deceit. Consumers who are shopping for moving companies will inevitably come across what amounts to move-brokers who are making promises on behalf of third-party subcontractors. Previously, I’ve seen the subcontractor arrive onsite and immediately demand an extra $5,000 to do the job, and in this case, they didn’t show up at all.

After a swift 25-day escrow that closed on time, we had to help the sellers – who had already left town – make sure their stuff got on the truck and hit the road!

Curb Appeal

A home’s outward appearance plays a big role in whether potential buyers want to tour the interior.  Here are ways to give the home’s curb appeal an instant makeover:

1. Update the light fixtures

Updated light fixtures can change the way the front of a house looks but has an added benefit of making it safer when you use brighter bulbs too. Most outdoor lighting fixtures are much smaller than they should be. (That may had been intentional on the builder’s side; smaller fixtures are less expensive.)

Tip for choosing the right fixture: When you’re choosing a new light fixture, take cues from the home’s architecture, color, and your location. For the size, choose a fixture that’s one-third of the height of the door if you have only one light and one-quarter the height if you have a light on both sides of the door.

2. Upgrade windows and doors

Updating your windows and doors are a great way to improve the overall look of your home while also being energy-efficient. Consider adding window boxes, shutters, or even painting the trim for an added pop of color.

When upgrading the front door, choose a new door that matches the home’s style. Or you could follow the latest front door trends for 2021–glass elements, custom hardware, wood stains, or darker paint colors.

3. Paint

Painting your house is a huge task, but it can pack a huge punch! Just imagine the statement you’d make by ditching the boring beige, dulled white, or dated yellows. If you want to modernize your house, consider painting the house black or navy blue. Or, if you want to achieve that comfy-cottage look, try a light shade of gray or even a very pale shade of pink.

4. Add wood and/or stone elements

Adding wood or stone elements to the exterior can help give a home a “wow” factor. Even if you don’t want to put stone veneers on the exterior, you could add stone and wood elements in other ways, like by using stone to line the walkway, a wooden fence, or even stone or wooden lawn ornaments.

5. Hire a professional landscaper

There’s a huge difference between do-it-yourself landscaping and landscaping that’s completed by a professional. A professional landscaper can make your lawn a luscious green carpet that’ll make you want to kick off your shoes. They’ll know which native plants to choose to make a yard warm and inviting. They can also create water features, intricate flower beds, build retaining walls, and more.

6. Refinish walkways and the driveway

The walkways and driveway get a lot of use, and all that wear and tear will need an update over time. A professional landscaper or hardscaper also can upgrade your driveway and walkway by using stone, brick, or cement. But if you’re on a budget, a good power-washing may also give a curb appeal boost.

https://www.nar.realtor/blogs/styled-staged-sold/6-tips-to-bring-your-curb-appeal-back-to-life-this-summer

Waiving the Appraisal Contingency

If you find a hot buy that is likely to have multiple offers, you will be confronting the uneasy choice of waiving the appraisal contingency in your offer.  It’s likely that the other buyers will do it too, so it’s become a part of the minimum package needed just to compete.

If the appraisal comes in below the sales price and you have a 20% down payment or less, you will be forced to make up the difference in cash (or pay mortgage insurance, if possible).

In an unfortunate frenzy effect, because the appraisal contingency has been waived, listing agents don’t show up to help substantiate the value to the appraiser.  It used to be one of the vital jobs of the seller’s agent to provide recent sales to the appraiser to ensure the appraisal came in at the sales price – so the sellers wouldn’t be faced with potentially having to lower the price to appease the buyers.

But these days, the listing agents couldn’t care less.

So now when we have the buyers, I meet the appraisers.  I want to make sure I do everything I can to persuade the appraiser to hit the sales price so my buyers don’t have to bring in more money.

I just had one where, two days before our appraisal appointment, a new listing of a model-match but inferior condo hit the open market priced at 10% UNDER our sales price in an obvious ploy to start a bidding war.  I already had a big challenge with the comps because there had not been a sale in the complex all year – and appraisers don’t like using sales from complexes that were 3-4 miles away.

But I convinced him, and the appraisal came in at our sales price!

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