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Notice to Buyer to Perform

Buyers have become more reluctant about executing the terms of the contract – and the NBPs are back!

Here is the explanation on how they work:

Q. My buyer was sent an NBP on Wednesday. My question is does the NBP expire 48 hours from delivery/reception, or at 11:59:59 Thursday night?

A. The Notice to Buyer to Perform (“NBP”) provides for a two-day notice to performance (it is not calculated as forty-eight hours – there is a difference).  For example, if the NBP was issued on Wednesday, day one is Thursday, and the deadline for performance would be Friday at 11:59pm. The seller may issue a Cancellation of Contract (“CC”) at 12:01am Saturday.

Conversely, if the NBP was issued Thursday, then day one is Friday and day two would end at 11:59pm on Saturday BUT the last day for performance cannot land on a weekend or holiday.  In this example, the buyer would have until 11:59pm on Monday (assuming Monday does not land on a legal holiday)  to perform (except under the  the San Francisco Purchase Agreement).

Remember the NBP can be issued no earlier than two days prior to the Scheduled Performance Day in order for the NBP to be served in accordance with the purchase agreement. If the NBP is served improperly it would have to be sent again thereby extending the timeline for performance.

Another Listing Strategy

When it comes to selling your home, there are a few strategies to consider – and the most important point is to select one, any one!

  • There is the old traditional PPP plan – Put it in the MLS, Put a sign in the yard, and Pray.
  • My favorite is to spruce it up, price it right, and have a great realtor sell it promptly.

But a third option is available that is sort of a hybrid of the two.

If you worry that pricing attractively might leave some money on the table (mostly because you lack confidence in your realtor’s ability to conduct a proper bidding war), and really want to start at your aspirational price and hope for the best, then consider this plan.

List Your Home With Two Planned Price Reductions Built In

Generally speaking, the problem with price reductions is that sellers and agents don’t make them big enough to impress the buyers, and hence, you’re just throwing money away.  Dropping the price in any amount does get you back on the realtor hotsheet for the day, but we are more annoyed than impressed with sellers who are dinking around over a few thousand dollars when we’re trying to sell a house today.

The amount of the perfect price reduction is 5% of the list price.

It follows my regular guideline of knowing when your list price is right:

List-Price Accuracy Gauge

  1. If you are getting showings and offers, your price is about right.
  2. If you are getting showings, but no offers, then your price is about 5% wrong.
  3. If you’re not getting any showings, your price is at least 10% wrong.

It’s just common sense.  If no one is coming around, it’s because buyers think that the price is way off, based on how the home is being presented.  There is a glimmer of hope that improving the presentation might get some lookers, but in this market, once buyers take one look at the listing, they will cast you aside and forget all about you unless there is a drastic change in price.

I’ll understand if you don’t want to commit to any price reductions today – heck, you haven’t even signed the listing agreement yet.

But hear me out.

There will be an initial burst of activity once the listing hits the MLS – everybody jumps on the fresh meat, and hopes they are reading the presentation/price combo correctly.

But after 7-10 days, it will be crickets. Showings dry up like an old peach seed!

Plan for two price reductions in advance as a strategy to re-energize the urgency.  Put it right in the listing agreement that the price is to be reduced by 5% on Day 14, and another 5% on Day 24.

As long as the initial list price wasn’t more than 10% crazy, then this strategy will get you into escrow within 30 days. If you let the listing languish for more than a month, it will only invite the lowballers, and they will be hacking off more than 10%.

Pick a plan that gets you into escrow early!

Revised Estimates of Value

Just a quick reminder of the constant grift in real estate.

Before the listing was entered onto the MLS:

After the MLS listing was inputted – at least they didn’t recreate the history graph…..yet:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Before the listing hit the MLS:

After MLS input:

Why does it matter? Because too many people – both buyers and sellers – are relying too much on these to be their accurate value estimators. People are moving too fast, they don’t want to spend much if any time investigating, and it’s too hard to get good help. Everyone just wants to grab and go!

The second set says they are based on recent home sales? How can it fluctuate 20% in one day? These revised real estate values aren’t a result of an algorithm; they are purely derived from the list price.

You are being manipulated by the Corporate Warlords – watch yourself!

Horrifying Home-Decor Trends

Every year, there are new and evolving home design fads that should “scare” you to death. Last year, there were moss-covered accent walls (gasp!), acrylic furniture (shriek!) and Tuscan-style kitchens (yelp!). This year, it’s the “cloffice”—a pandemic-era closet-turned-office—and many others.

With Halloween around the corner, Styled Staged & Sold presents its annual countdown of the top 10 home trends of 2022 that are haunting our nightmares:

https://www.nar.realtor/blogs/styled-staged-sold/10-horrifying-home-design-trends-2022-edition

Seller Home Inspections

All of the home buyers who were willing to purchase a house ‘as-is’ with no repairs are sitting comfortably in their 3% golden handcuffs contemplating what else to fix.

None of today’s buyers – which is a whole new set of people – are going to tolerate that program.

It would be smart for home sellers to get in front of it. Completing a home inspection before going on the open market is an idea that’s been around for years, but the industry has been slow to adopt – we were always happy to take a chance!

But paying a few hundred dollars for an inspection report and then fixing the defects prior to going on the market provides significant benefits to the sellers:

  1. It gives the buyers confidence that they aren’t buying a money pit when making their offer.
  2. It demonstrates that the sellers have respect for the current marketplace.
  3. It helps to avoid having to sell the home 2-3 times, each at a lower price.

Sellers and agents can do everything right and get into escrow with a buyer, only to have buyer’s remorse kill a deal over one stupid little thing. You know that the buyer’s family and friends have been telling them that they are making a big mistake, and that prices are going to drop – and at this point the buyers are looking for any reason to cancel.

Don’t give them one – even if you have to fix everything on the list!

Biological Discoloration

We were discussing the “mold” found by a home inspector, who wasn’t qualified to comment on the subject – though that didn’t stop him from trying to scare the daylights out of the buyer just so he could CYA.

I suggested that it was the garden-variety mildew that could be removed with a squirt of bleach and a wipe of a cloth. After all, it tested ‘dry’ and the minor stain under the kitchen sink looked like it was years old.

Of course, they asked, “What do you know about mold?”

Plenty, lady…..plenty:

Mortgage Rates Heading for 6%

I picked a great day to start the mortgage-rate tracker in the right-hand column! >>>>

Mortgage rates haven’t been in the 6% range since 2008:

How many agents have operated in a 6% environment? It will be less than half of the active agents today. To check, their license number would have to be around 01850000 or lower (real estate license numbers in California are sequential).

Wondering how to cope? Here are my tips:

  1. Sellers – Offer to Pay Points. Even if the buyer won’t use your lender, offer to pay 1%-2% of the loan amount to buydown their interest rate. If their lender keeps the money instead of giving a lower rate, well then, heck, at least you tried. But the buyers should appreciate the effort, and two points should reduce the rate by at least 1/4%.
  2. Sellers – Carry the Financing. If the seller carries all or part of the financing at a reasonable rate, it will help the buyers. Plus, sellers only pay capital-gains taxes on the money you receive, so you’ll get a break there. The big bonus will be if the buyer stops paying – you’ll get your house back too!
  3. Buyers – Get a Short-Term Mortgage. We call them ARMs, or adjustable-rate mortgages which sounds scary after the neg-am debacle last time. But they offer a fixed-rate for the initial term – just get a seven-year or ten-year loan and refinance once we go into recession and the Feb has to back off again (because they owe $30 trillion themselves, it will probably happen sooner than later).

While the impact on the buyers’ monthly payments is real, it’s the market psychology that will make it worse. Buyers will be expecting lower prices, so instead, consider one of my tips above as an alternative.

Real Estate Reality Shows Are Lies

Hat tip to CB Mark for sending this in!

A few years ago, some friends appeared on a house-hunting reality TV show. They had a blast, but afterward, they revealed something that surprised me:

It was all staged. They’d already purchased a house when they filmed the episode, and that house wasn’t featured on the show at all. The houses they did look at weren’t even for sale.

Like any normal person, I accept that so-called “reality” TV is scripted to a certain extent, but I’d previously assumed there had to be some truth to those real estate shows: that the information they presented was somewhat reliable, and that you might be able to pick up at least some basics about real estate and home renovation from watching them.

The actual reality is: Nope.

Whether it’s a house-hunting show, a home renovation show, or a house-flipping show, the only thing you can rely on is that you’re probably being lied to. Buying or selling a house is more complicated than looking at three homes and having a conversation over a glass of wine, buying a fixer-upper probably isn’t a bargain, and the Property Brothers are not going to spend weeks in your house personally hanging drywall and grouting tiles.

But it’s worse than mere fakery—a lot of the information these shows give out is completely wrong. If you base your life decisions on what you see in real estate shows, you’re going to be very sorry. Here’s why.

Read the full article here:

https://lifehacker.com/real-estate-reality-shows-are-lying-to-you-1849028260

CV Listing Closed Escrow

Our Carmel Valley listing closed escrow yesterday!

It was the 3br/2.5 ba, 1,804sf home built in 1989 that we completed about $60,000 worth of upgrades in preparing for market (it had been a rental for years).  The before-and-after photos were featured here:

Previous Blog Post

The house looked great and it was vacant but this was when I did the blog post about spring break interrupting the market’s momentum. We decided to forge ahead, and I inputted the listing onto the MLS on the Thursday morning before spring break with immediate showings available that day – in hopes of catching any buyers that might be leaving for vacation the next day.

We had six showings on Thursday and Friday, and 100+ people came to open house over the weekend.

In January, I predicted that we would list for $1,750,000, and sell for $1,900,000.

On March 31st, we hit the MLS priced at $1,750,000, and closed for $1,875,000.

We received one offer.

Thankfully, the only offer included a $125,000 premium to incentivize the sellers to take the deal, instead of waiting for two in the bush. But we were already on Day 4 of open-market exposure, so I knew we were at peak market and our chances of selling for over list price would start dropping .

We contemplated whether we should counter-offer on price, or extend the two-week escrow period because we wanted the extra time for the sellers’ 1031 exchange. But given the fact that we only had one offer, the sellers signed it.

We had already completed a home inspection in advance, and thought we had fixed everything.  The buyers did their own home inspection – which we always recommend to our buyers as well, and here’s why.

Their inspector noted that the water-meter gauge was running, even with all faucets being off.  It’s the sign that a leak had developed, and the hot-water heater was operating the entire time too.  The sellers checked their history of utilities and found their costs spiked on March 31st.

We have a ‘slab leak’, and we knew it was the hot side!

Just the thought of a slab leak causes grave concern and panic for most people. But we’ve handled them before, and know that they can be fixed with money like any other home repair.

Donna’s vendors jumped on it, and we closed in 16 days, instead of fourteen.

Here’s the video:

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