Last week, the NAR reported that their Pending Home Sales Index for the west was down 11.7% month-over-month, but we are beating the odds. Today there are 144 NSDCC pendings, which is the same number as there were in the first week of September!
It’s likely that the local market will mellow down easy now that we’re into the holidays. Whichever way the data goes, it will be easy to write it off to year-end malaise.
Our good friends Gary and Cindy sold their house in Carlsbad and moved to Scottsdale in 2020. The house they bought in Estancia at Troon North was a super-custom 6,580sf ‘elegant-rustic’ that was painstakingly-built over five years. Somehow, the visionary original owner wasn’t that good with finances and he got foreclosed. Our friends bought it for $1,759,000 from the bank on April 9, 2020 – just as covid was getting started.
Sensing an opportunity, they put the home on the market in July of this year for $4,725,000. They got a lowball offer right out of the gate for $3,000,000. But after plenty of showings, a spry 81-year old man paid $4,150,000, plus another $125,000 for the furniture, in the first month on the market. It closed on August 25th.
https://www.realtor.com/realestateandhomes-detail/27555-N-103rd-Way_Scottsdale_AZ_85262_M14974-04285
The biggest fear for the North San Diego County coastal region is a meltdown in Bay Area prices.
It’s been estimated that 50% or more of the buyers who were bidding up homes here during the frenzy are from the Bay Area, and Silicon Valley in particular. If prices were to drop 23% to 30% there, it would impact how much they would be willing to spend on replacement homes here.
This is only one example but we can say that this sold at the peak of the market, or close.
This was my uncle’s girlfriend’s house, and when I was there in November to pay my last respects, I told them that my guess at the current value was high-$2,000,000s.
They hired a good agent who spruced it up and staged it, and they listed for $3,195,000 on March 2nd.
A month later, it closed for $3,710,000 for 1,763sf.
How does it look today?
Today’s zestimate is within 1% of the sales price in April, which had been bid up $515,000 over the list price at the time. What are the comps that Zillow says they used to determine the value?
Four recent closings:
It is only one example, and certainly, not everyone from Los Altos is moving here. But just looking at those four recent sales, it seems like that area is holding up pretty good.
https://www.zillow.com/homedetails/1200-Brucito-Ave-Los-Altos-CA-94024/19620416_zpid/
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BOTH THE AVERAGE AND MEDIAN SALES PRICES ARE -23% SINCE MARCH.
We saw that the difference needed to fully compensate for the higher rates is -30%. We’re almost there, and the full effect should be built in by springtime!
Please note that I didn’t say home prices are down 23%.
The median sales price is 23% lower than it was six months ago.
How bad was it back in the day? Will it ever get this bad again?
This was my first REO listing in 2008.
For comparison, the home next door sold for $482,000 about a year ago.
The classic Desperado, dedicated to realtors everywhere, plus the obligatory hotel-trashing conversation.
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!
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
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!
If you are on the fence about how to sell your house, and you don’t really need to sell anyway, here’s one reason to go all in and sell on the first try.
You remember our sellers who decided to rent their house, rather than be victimized by the blunder up the street. I warned them that on the day my listing shows up as expired on the MLS, there would be 100s of realtors descending upon them.
Their phone number was unlisted, and it was never mentioned in the MLS, but it doesn’t matter – any phone number can be found. Around 7am that morning, the calls started, and as you can see above, he was getting one about every five minutes.
Check the agent who called him three times in one minute!
You don’t ever want to be an expired listing. Your phone will melt down, and you will seriously consider getting a new phone number. The mail you’ll receive killed several trees, and the in-person hounding at your door will be offensive too.
I apologize on behalf of the realtor industry in advance.
Another reason to make sure you sell the first time around!
