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Opendoor in San Diego

The other big ibuyer has begun operations in San Diego County.

How are they doing? The P is for pending sale, and the S is their first sold:

Three of the homes aren’t on the market yet, but let’s look at 14 properties that are.

They are happy to offer you a sales price that is close to the retail book value on paper, but then when they come out to visit in person, they find stuff wrong and have to deduct a big chunk to compensate.

The Zillow fee is 8.5%, and theirs will be similar. Let’s use the same:

Cash purchases: $9,418,000.  Their 8.5% repairs/commissions fee: $800,530.

Net proceeds to sellers: $8,617,470.

How does it compare to selling the old analog way? Let’s assume the sellers Got Good Help, and reap the benefit of the frenzy conditions (instead of the ibuyer) when their sales price gets bid up. Let’s apply the standard 5% over-list premium to the total of the list prices above:

$10,124,000 x 1.05 = $10,630,200. Our avg. 7% repairs/commissions fee: $744,114.

Net proceeds to sellers: $9,886,086.

Difference between selling to OD, and selling with me: $1,268,616/14 = average $90,615 more per seller.

How are they selling their properties?  The first few were listed with an Orange County broker, but now they have gone in-house and are listed with their Phoenix-based brokerage and agent – who got his California license less than a year ago.  Hey, it’s Frenzy-2021 so they don’t have to try too hard to get properties into escrow. They offer 2% commissions with a brief description and boom – off to escrow:

The frenzy is helping to accelerate the dumbing-down of the real estate business.

There are sellers who get a postcard in the mail that offers quick cash and because the price is more than it used to be, they roll over and take it, all in the name of convenience.

Get Good Help!

Listing Agents Handling Multiple Offers

The frustration among buyers on how listing agents handle their multiple offers is continuing to mount.  Because there isn’t any guidance from the industry, listing agents just make it up as they go – and in most cases, they just pick their favorite without any thought of other solutions available.

Here are more ways I’ve seen sellers leave money on the table lately:

Listing agents selling homes during their Coming Soon period, denying any other buyers.

Counter buyers for their highest-and-best, but then accept one within minutes before other responses are received.

Only countering some of the offers.

Off-market deals, which are great for the winning buyer, but bad for seller and other buyers.

The worst part is that sellers don’t have a clue – they are just happy to sell for more than expected.

When I’ve suggested my method to agents, they have trouble grasping the concept – that’s how deep the current snatch-and-grab mentality is ingrained in agents to make a quick deal.

What’s the solution?  List your home with me!

How We Do It

Peak efficiency in this insane market deserves more examination.

Specifically, the listings that have so many showings that some buyers get shut out, but then only a small minority of them submit an actual offer vs. quality presentation and pricing that gets a better mix:

Every buyer and buyer-agent should get a chance to compete.

Golf Course Frontage for $699,000

Part of the challenge of the low-inventory era is to find the hidden gems.  Travel into south Vista just two miles from Carlsbad and look how much further your money goes!

Here’s our new listing that overlooks the private Shadowridge Golf Club for only $699,000!

1990 Spyglass Circle, Vista

3 br/2.5 ba, 1,835sf

YB: 1988

HOA fee: $165/mo

The former model home ideally located above the 8th green has been beautifully remodeled and is better than new! Hardwood floors, new carpet and paint, newer kitchen and tuned-up baths!  Located in a highly-desirable community with low HOA and no Mello-Roos, plus community pool & spa.  Check it out!


Get Good Help!

It never occurs to agents to properly conduct a bidding war where the market decides the winner.

Instead, they choose the easy route and just collect offers, itemize them on a spreadsheet, and then point out a winner to the sellers. It is an ego-boosting choice that fares well around the brokerage’s water cooler, but is likely to leave loads of money on the table.

Agents who deny open bidding and just process one round of blind offers are clerks, not salesmen.

https://www.nytimes.com/2021/04/23/realestate/home-selling.html

By the time they got the last offer, Quinn and Daryn Shapurji had received 54 bids on their four-bedroom, single-family house in Fishers, Ind., in just three days. Ms. Shapurji said they felt totally overwhelmed — and a bit melancholy.

“We felt bad that we had to say no to so many people, because we got a lot of beautiful letters from buyers saying how much they loved our house and why they wanted to live in the area,” said Ms. Shapurji, 32, a closing coordinator for a home builder. “Some buyers had already struck out on five or six homes.”

Chris Dossman, the couple’s real estate agent, suggested they take a cash offer that was $25,000 above their home’s list price of $220,000. “It wasn’t the highest offer they received, but the cash buyer waived the appraisal, so we knew that we weren’t going to have an issue with the home closing from a financing perspective,” said Ms. Dossman, an agent with Century 21 Scheetz based in Indianapolis.

“Fifty-four offers is by far the highest number of offers that I’ve ever received for a listing,” added Ms. Dossman, who has been an agent for 15 years.

“We’re seeing an inventory crisis,” said Katie Wethman, a Washington, D.C.-based real estate agent at Keller Williams Realty. Indeed, total home supply at the end of March sat at only 1.07 million units, down 28.2 percent from a year ago, according to the National Association of Realtors. The association’s data also found that homes typically sold in a record-low time of just 18 days in March, down from a 29-day average in March 2020.

Still, sellers face a challenge: “Getting inundated with offers can be overwhelming, and it can make it harder for sellers to choose the best offer,” said Alicia Stoughton, a real estate agent and designer at Keller Williams Advisors in Cincinnati, Ohio.

Why? Because “the highest offer isn’t always the best offer,” Ms. Stoughton said.

Here are the factors sellers should consider, in addition to purchase price, when evaluating multiple offers.

“Cash is king,” according to Nancy Newquist-Nolan, a real estate agent at Coldwell Banker in Santa Barbara, Calif. “I often recommend sellers take a cash offer, even if it’s not the highest offer.”

Still, mortgage buyers aren’t completely out of the running, said Ms. Wethman. “If you’re confident in the buyer’s lender and their ability to get approved for a mortgage, there’s not a lot of risk taking an offer from a buyer who’s getting a loan,” she said. Her advice to sellers? “Do your due diligence on the lender who is providing the funds,” she recommends.

This is a step where sellers can lean on their listing agent, Ms. Newquist-Nolan said. “I call up the lender and ask how qualified the buyer is for their loan,” she said. Moreover, “some lenders are notorious for dragging their feet and missing key deadlines.”

The best approach that sellers can take when weighing offers, Mr. Lejeune said, is to compare them side-by-side.  His strategy: “I present offers to my clients in an Excel spreadsheet that specifics the offer price, loan amount, type of loan, contingencies, and other important metrics,” he said. “It’s basically a cheat sheet for sellers.”

Ms. Dossman is also a fan of presenting offers in a spreadsheet. As she puts it, “You want to have all the information in front of you when you’re making a decision.”

Many buyers attach personal letters with their offers to try to sway the sellers in their favor. But some real estate agents don’t even show sellers these letters when they present offers to avoid the possibility of unlawful bias against a buyer. But Ms. Dossman said she will share letters after vetting them to make sure there isn’t any information that could raise the potential for fair housing violations.

Read full article here:

https://www.nytimes.com/2021/04/23/realestate/home-selling.html

Solutions for Potential Sellers

The real estate market is red-hot, prices are higher than ever and buyers are begging for inventory!

Many homeowners want to take advantage of this opportunity but are worried where they’ll go next. It’s a tough market to be a buyer, but this shouldn’t discourage you from selling your home for the highest price ever – AND we can help! Here are a few solutions:

1. Longer escrow. Gives you time to secure your next home.

2. Rent back. In the past six months, we have arranged rentbacks of 3-6 months for our sellers!

3. Sell your home contingent upon buying. We can lock your home’s buyer and price, and then go shopping!

4. Move in with relatives for a bit. Nothing like some quality family time!

5. Buy your next home first – using a Compass bridge loan. Go for maximum convenience!

6. Find a short term rental in the area. Spending the summer in a beach house doesn’t sound that bad.

Don’t miss out on the GREATEST REAL ESTATE FRENZY OF ALL TIME!

Call or text Jim at 858-997-3801.

Staging in 2021

Staging and professional photos create the best first impression of a home, which helps to pre-sell the buyer. It makes them want to get there faster to confirm they’ve found the right house for them. How much does staging add to the price? Hard to put a specific number on it, but you should have more offers faster.  What drives the eventual price in this market is how the listing agent handles multiple offers.

WASHINGTON (April 6, 2021) – A new survey from the National Association of Realtors® reveals that home staging continues to be a significant part of the home buying and selling process.

The biennial report, the 2021 Profile of Home Staging, examines the elements of home staging, including the perspectives of both buyers’ and sellers’ agents, the role of television programing and the expectations of buyers.

“Staging a home helps consumers see the full potential of a given space or property,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “It features the home in its best light and helps would-be buyers envision its various possibilities.”

Buyers’ agents overwhelmingly agreed, as 82% said staging a home made it easier for a buyer to visualize the property as a future home.

These agents also said that visuals themselves are helpful, even more so in relation to buying a house during the coronavirus outbreak. Eighty-three percent of buyers’ agents said having photographs for their listings was more important since the beginning of the pandemic. Seventy-four percent of buyers’ agents said the same about videos, and 73% said having virtual tours available for their listings was more important in the wake of COVID-19.

“At the start of the pandemic, in-person open house tours either diminished or were halted altogether, so buyers had to rely on photos and virtual tours in search of their dream home,” said Lautz. “These features become even more important as housing inventory is limited and buyers need to plan their in-person tours strategically.”

Staging also increased the sum buyers were willing to spend for a property, according to the report. Twenty-three percent of buyers’ agents said that home staging raised the dollar value offered between 1% and 5%, compared to similar homes on the market that hadn’t been staged.

Coincidently, the response from sellers’ agents was nearly identical, as 23% reported a 1% to 5% price increase on offers for staged homes.

Eighteen percent of sellers’ agents said home staging increased the dollar value of a residence between 6% and 10%. None of the agents for sellers reported that home staging had a negative impact on the property’s dollar value.

Moreover, 31% said that home staging greatly decreased the amount of time a home spent on the market.

Exactly which parts of a home to stage vary, although living rooms (90%) and kitchens (80%) proved to be the most common, followed closely by master bedrooms (78%) and dining rooms (69%). As many workers were forced to work from home due to the pandemic, 39% staged a home office or office space.

Television programing played a noticeable role in how buyers viewed a potential property, according to Realtors®. Agents surveyed said that typically 10% of buyers believed homes should look the way they appear on TV shows. Sixty-three percent said buyers requested their home look like homes staged on television. Sixty-eight percent of Realtors® reported that buyers were disappointed by how homes appeared compared to those seen on TV shows.

In some cases, agents found that TV shows could influence a buyer’s perspective about a home. Seventy-one percent of respondents said that TV shows that depict the buying process impacted their business by setting unrealistic or increased expectations. Sixty-one percent said that TV programs set higher expectations of how homes should look, while 27% said that TV shows result in more educated home buyers and sellers.

“The magic of television can make a home transformation look like it happened in a quick 60-minute timeframe, which is an unrealistic standard,” said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and broker/owner of Prominent Properties Sotheby’s International Realty. “I would advise buyers and sellers alike that before house hunting or before listing, they connect with a trusted Realtor® to get a reasonable sense of what’s out there and an idea of what to expect.”

Eight-one percent of those surveyed said buyers had ideas about where they wanted to live and what they wanted in an ideal home (76%) before they began the buying process.

Forty-five percent of surveyed Realtors® said they have seen no change in the share of buyers who planned to flip a home in the last five years, while 42% said they had.

Also, 59% said they have seen an increase in the buyers who planned to remodel a home in the last five years, while 34% said they have seen no change. Agents surveyed said that typically 25% of buyers who plan to remodel will do so within the first three months of owning their home.

https://www.nar.realtor/newsroom/nar-finds-home-staging-helps-buyers-visualize-homes-sell-faster

Listing Agents & Bidding Wars

Let’s review how some listing agents have been handling their bidding wars in 2021.

  1. Ignored a $60,000 non-refundable deposit and took an offer that was $40,000 lower.
  2. Once they get to the highest offer, they insert their own buyer at the same price.
  3. Let an escalation clause determine the winner, and ignore the others.
  4. Counter for highest-and-best, then pick a winner before everyone responds.
  5. Not respond at all.

There are no rules. No guidelines. No laws.

The best our association can do is to issue a spreadsheet form.

Thus, anything goes.

Here’s how I handle it.

The home on Galena Canyon had originally listed for $1,599,000 and had 25 showings and six offers over the first weekend in March.  We had three buyers (one was contingent) who were willing to pay around $1,750,000, so I asked the two non-contingent buyers to make their second highest-and-best offer to determine the winner – which they did, and $1,770,000 won it. I changed the list price in the MLS to $1,770,000, and marked it pending.

Last Friday morning, the buyer had an unforeseen glitch, and we fell out of escrow.  We go back on the open market for Easter weekend, hoping for the best – knowing that the urgency is much higher when the listing is new and fresh.

I had added this to the confidential remarks:

Since we hit the market, these have happened: 16175 Deer Ridge 3,451sf closed for $1,775,000 on March 1st. 15288 Cayenne Creek 3,877sf closed for $1,800,000 on March 30th. 16342 Cayenne Creek 3,446sf pending, listed for $1,825,000. 9716 Wren Bluff 3,780sf pending, listed for $1,835,000. Plus Mark listed one for $2,795,000 around the corner. Built-in equity!

This time, we had six showings and three offers over list, which I thought was pretty good.

I had told the agents to make their highest-and-best offer, and while they were all competitive, I thought there might be more gas in the tank. So I politely asked all three to H&B again, and one emerged from the others by packing another $40,000 onto their first offer.

We are in escrow at $1,840,000, after starting at $1,599,000 a month ago.

Isn’t that the result you’d like to see for yourself, or someone you know?

It is not a given how listing agents handle a bidding war. Most agents just grab their favorite, and turn off their phone.  You deserve better.

If you, or someone you know, is thinking of selling, I’d sure appreciate a call!

Back On Market During Frenzy

Our 4S Ranch escrow fell apart yesterday on a quirk in the loan underwriting process.  The buyer had a glitch in his visa record with the government, where it showed as pending, not approved. Boom – bank wouldn’t give him a mortgage.

It is usually hard to re-ignite the original urgency, but this is 2021!

Our original list price was $1,599,000 on March 1st.

I raised the list price to $1,770,000 to help give guidance to everyone in the marketplace (it was our agreed-upon sales price). Since we got started, these four listings have happened:

  • 16175 Deer Ridge 3,451sf closed for $1,775,000 on March 1st.
  • 15288 Cayenne Creek 3,877sf closed for $1,800,000 on March 30th.
  • 16342 Cayenne Creek 3,446sf listed for $1,825,000, now pending.
  • 9716 Wren Bluff 3,780sf listed for $1,835,000, now pending.

We are 3,780sf and we’re sticking with our $1,770,000 list price. On Easter weekend!

https://www.zillow.com/homedetails/10541-Galena-Canyon-Rd-San-Diego-CA-92127/96742404_zpid/

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