Archive for October, 2014
Wednesday, October 29th, 2014
Not long ago someone commented that I have the ideal job, since I am able to take time off whenever I want and live a leisurely lifestyle. Good thing there wasn’t any liquid in my mouth at the time, as it likely would have spewed out all over the commentator (pardon the image). The misperception that real estate agents have “easy” jobs is not uncommon, since we do not have to punch a time card or physically sit behind a desk all day (although there are many days I do that…and nights too). But in reality working in the real estate industry is like riding a roller coaster, with the highs and lows, periods of being excessively busy and then dead, and periods where the paychecks are coming and then stop.
The career of a real estate agent has been glorified in these last few years by all the “reality” real estate television shows. Shows like Million Dollar Agent portray agents driving expensive cars, wearing high-end suits, spending long business lunches in top restaurants and listing (and quickly selling – with little negotiation I may add) million dollar plus properties. They really look like they are living the life!
Of course, those shows are heavily edited, not to mention scripted. You don’t see the nitty gritty – the money and time the agents spend on marketing the homes, the numerous showings, all the paperwork the agents need to handle, preparation for listing presentations and meetings, inspections and negotiations over things that may come up during escrow. So, if I knew absolutely nothing about the business I can see how it might look like an ideal career based upon the shows.
The truth is that this business is H-A-R-D. If you want to be successful, you have to work your tail off, and I know I work harder than many of my friends who have jobs in other fields. I can’t come home and escape my work, because it never stops. Most people who buy and sell homes expect me to be available after hours, when they are off work…and on weekends. Sure, I could decide not to answer my phone or work when I’m needed, but then I wouldn’t be successful. The key to my success is referral business, which I will only get if my clients feel I did a job that is beyond outstanding. Many of my clients have worked with other agents in the past, and the biggest compliment I get is when they tell me their experience with me, compared to the last agent, was like night and day. (To read more about what real estate agents do, read this article.)
Today I continued to work on a major issue that has arisen in a home sale that is in escrow. The time and energy I have spent on this issue is great, and it has been very stressful for all parties involved but we are finally making progress. This morning my client said to me, “I seriously don’t know how you do this!” Believe me, there are days when I ask myself that question, but ideally there are two things that keep me on the roller coaster:
1. I love my clients. I really do. Buying or selling a home is not only a big decision, but it is also an emotional one and it has legal ramifications. I feel good that I can offer advice and guidance to clients so that they can get through the process and feel great when it’s over. I love seeing them happy in the end, and that is my goal. It means I have to work hard to achieve the end result, but it also means that I end up with new friendships. I have met the most remarkable people working in this business, and it has been a pleasure to help them.
2. I have to keep making a difference in this industry. If you are a regular blog reader you know that I dish out frustration with the real estate industry and the lack of adequate training for agents. Sadly, there are a lot of agents who either don’t really care about their jobs, or do not realize that they need better training and skills to work in this industry. I know that my dedication and skills do make a difference, and if I can help improve this industry and the reputation it has, one client at a time, then I am making a difference. Like I always say, if you don’t like what you do, than do something else, because it shows. [As an aside, I have had other agents tell me they “hate” being agents…I wonder if their clients know that -?]
I think my ride on the real estate roller coaster will last for a while, and I hope that during that time I can make a difference in the lives of those I help, agents with whom I work, and the industry in general. If every other agent, or person working in any field, does the same then together we will make a big difference in the world.
Wednesday, October 22nd, 2014
The last few months have been very busy for the real estate market. Many areas seem to have corrected and although prices did rise through the summer it seems that now they have stabilized in many areas. The one thing that still seemed strong was demand, as buyers were still out there looking at homes and shopping. Until about a week ago.
I have noticed in the last week a drastic slow down in showings and phone calls, as well as new listings. When interest rates dipped under 4% last week I thought it would spur buyers and result in more pending properties, but that does not seem to be the case in my area. Here are some of the challenges that could be having an effect on the market:
Bond Market Collapse – Last week the bond market took a substantial nose dive. Did this create fear about the housing market? It is possible, but one has to consider that all markets are cyclical, and unless we are talking about a full blown economic crash it is doubtful that the one will affect the other.
Challenges in International Markets – There are still many European countries that are facing difficult economic times…could this create fear amongst US buyers? Possible, but again it is important to realize that our housing market just underwent a big correction and now is back on the track to normalcy, so fears about other markets outside of the US should not have an impact on whether or not a buyer purchases a home.
Time of Year – Typically the Fall-to-Winter housing market tends to be slower and include lower inventory. With the holidays and the end of the year many sellers choose not to list or take their active homes off the market. Many people are not thinking about purchasing homes at this time of year, except those who need to (and actually, if you can do it, it is a great time to sell…click here for more information)
Lack of Inventory – This definitely could be a reason why the market seems to be slowing. Summer did finally see an increase in inventory in many markets that had been in an inventory slump for a while, but there are fewer new listings now; this could be due to a variety of factors, most notably the time of year. Once the holidays have passed we should slowly start to see inventory creep up, as we head into the Spring and Summer.
Fear – There is still talk out there of a housing bubble, believe it or not. This could be creating fear amongst buyers, and in addition to any of the above categories could combine to make some think they’d better sit on the fence for a time and see what transpires. Personally and professionally, I do not agree with this viewpoint. I believe most markets HAVE stabilized, and that we have returned to a more “normal” housing market. I do not believe we will see more than a 3-5% annual price increase moving forward from year to year. Those who are in the market solely to make a profit won’t have much opportunity to do so, but conditions will be perfect for those who are purchasing with long term benefits in mind. There will always be issues and problems that could affect housing, BUT housing is still historically one of the most stable markets in which to invest.
The bottom line is that buyers need to feel comfortable when they are contemplating a home purchase. Sellers also need to feel comfortable in listing their home. Overpriced homes will not be sold in the current market; of course there are always exceptions, but in general we will not see this happen now or in the coming year, in my opinion.
The key for any buyer or seller is to get educated on the neighborhoods in which they are focusing their searches, and to really understand comparable values. Working with a skilled area agent is the first step in the right direction. Buying a home can feel scary, but in reality it should not be a difficult decision for those who understand the local market. Renting has been proven to be more expensive, but is also more risky -rents can be raised, leases can be terminated, and rental properties can be sold, leaving tenants to find another – which is no easy task.
Friday, October 17th, 2014
Most real estate agents who have been in the business a while know that not all termite companies are alike. My years in this industry have taught me a few things about termite inspection companies –
1. It is not uncommon to get reports with completely different findings from different companies
2. Although one company may find the same issues with a home as another, they may suggest different treatments and/or different prices
3. There does not seem to be any regulation in the industry when it comes to the cost of treatment
From a real estate agent’s perspective, the above facts can be very frustrating, especially when most buyer agents do not have any say in which company will perform the inspection, unless they request that in the contract and related paperwork.
One issue that has come up many times is the conflicting report scenario. Say the seller orders a termite inspection and findings indicate the home is infested and needs to be tented. For a second opinion, the seller then calls out another company and they say there is only infestation on some of the eaves, and it just needs to be replaced and treated with spray (not a tent). The seller is obligated to send both reports to you and your agent, but the seller can select which company will complete the work.
When a seller has two termite reports they are free to choose whichever company they want to do the work so long as that company will issue the clearance, with one exception: if the buyer writes into the contract that should a termite inspection reveal the home needs tenting it must be done.
It all comes down to who is responsible for the pest repairs. In California there is a California Association of Realtors (CAR) form called the Wood Destroying Pest Addendum. It specifies who is responsible – buyer or seller – for the termite inspection and any necessary repairs. It divides repairs into two categories. Section 1 reports damage caused directly by pests, such as the presence of live termites. Section 2 reports damage that is not related to actual infestation, such as wet wood that is the result of a leak under a sink. Typically most buyers’ agents check the boxes that assign section 1 responsibility to the seller and section 2 to the buyer.
One thing to keep in mind to ease any worry is that the company that issues a clearance will also provide a warranty, which usually is for one year and sometimes two. I highly recommend that the new owners call the company out before the warranty expires and have them do another inspection. This is a great way to prevent termite damage and protect yourself.
As for finding a reputable termite company, buyers can always have their agents specify which company they prefer the seller to use, or they can specify that the company be a mutually agreed upon company. This way the buyers can know that a reputable company is performing the work.
Monday, October 13th, 2014
If your home is on the market and there are no offers, it may be time to figure out why, and whether there is anything you can do to remedy the situation and get some offers rolling in. Let’s focus in on the key factors involved in selling a home – which could be reasons why your home is not selling.
1. Price: When homes do not sell, most people blame it on price. Oftentimes the assessment is correct, but don’t just jump to the conclusion that price is the culprit. Many markets these days will not support homes that are overpriced – buyers are too savvy and they have access to all the comparable properties at their fingertips.
If you have a reason to price your home above comps (amazing view, many upgrades, gorgeous yard, etc.) you need to market that so that it is justified in the eye of potential buyers. In today’s market it is always important to price your home appropriately – the first two weeks are the most important for marketing purposes.
2. Marketing: It is always important to create a marketing plan that will provide the most and best exposure for your home, and that plan should have a big online presence, as over 90% of buyers start their searches online. Find out how your agent intends to market your home, and have her/him explain why the chosen methods are best in helping get your home in front of as many potential buyers and their agents as is possible.
3. Local Market Conditions: This is one of the most important reasons a home may not be selling. It is important to truly understand what is going on in your local market – not only before you list your home but throughout the course of your marketing time, as things can change. Make sure you are working with an agent who is a local area expert – by that I mean someone who is in tune with what is occurring in your hyper-local market, and one who can keep her/his eye on any changes that could affect your sale. Some issues that could make a difference are homes that go into pending status, new listings, and listings that close escrow during your marketing time. The number of available similar properties will also be important to your plan.
4. Showing Condition: The way your home looks to potential buyer is very important – it is imperative to discuss with your agent what needs to be done before showings; sometimes it is hard to see our own homes from the perspective of one who has no emotions vested. Decluttering is a must, as is lighting and cleanliness. You may need to paint some rooms or plant some flowers – the idea is to make your home look its best. You should also have professional photography done before your home is listed.
5. Other Issues: If your home is priced well, properly marketed and shows well there could be other factors involved that make it challenging to sell your home. Some examples include negative views or issues (some I have dealt with in the past include power lines, freeway noise, neighboring buildings), and challenging floorplans or yard issues (such as size – too big, too small, etc). If you have an issues with your home that might be a challenge to a buyer, discuss that with your agent beforehand so you can take it into consideration when you price and market your home. Also, if you didn’t think you had any such issues but begin to hear comments from potential buyers, also discuss with your agent and make a plan for moving forward.
If all the above do not present any issues and your home is still not selling, chances are it is simply because the right buyer has not yet come along. Homes that are priced, marketed and shown in the best possible condition should eventually attract the right buyer. Make sure to discuss comparables with your agent throughout the marketing process, as properties may close escrow or list that may or may not have an affect on your sales price. It is also great to have your agent hold your home open on broker touring day, in order to get feedback on the home and all the factors above.
Tuesday, October 7th, 2014
I received an email from one of the preferred lenders with whom I work, telling me about a client of his who was having a difficult time deciding whether to purchase now or wait. She told him that her friends had advised her to wait to purchase, since home prices are high right now. He shared with her the report from CoreLogic that came out today, which details the rising market and demonstrates more than ever why now is a great time to buy.
CoreLogic, a leading data, analytics and global property information provider, reported this morning that home prices rose 6.4% year over year in August 2014 from August 2013. Furthermore, prices are expected to rise 5.2% between August 2014 and August 2015. According to the report, “this change represents 30 months of consecutive year-over-year increases in home prices nationally.”
The report predicts that home prices will increase .02% month over month from August 2014 to September 2015. California was named as one of the five states with the highest home appreciation value, at 9.2%. While the peak of appreciation is and will continue to slow down, the real estate market will balance out and future home buyers will have less pressure when it comes to affordability.
The data points to the fact that the market is still strong and now is a great time to buy. To sum it up, here are the reasons why buying now is smart:
1. Interest rates are still low
2. Prices are slowing down but still will continue to rise (albeit more slowly) moving forward
3. Many lenders are providing more products that will make it easier for buyers to get qualified, thus meeting the demand for loans
4. Inventory is still on the low side and market times in many areas are longer, but the majority of sellers need or want to sell so it is a great time to be a buyer.
To read the entire report click here.
Friday, October 3rd, 2014
First time buyers have faced challenges over the last several years – from qualifying for loans to finding inventory that meets their needs at the price that fits within their budgets. But the biggest challenge by far has been competition from investors.
Investors jumped back into the housing market in a big way in the last several years, often times buying up entry level priced homes for cash, thus beating out many first time home buyers who were qualified, since cash is usually a safer bet in the eyes of a seller. However, cash investors have slowed down this year, mostly due to the rise in prices.
The California Association of Realtors reports that in 2013 cash transactions dropped for the first time in seven years in California. Personally, only one of my many investor clients is still active right now, but slowing down, so this is accurate on a personal level as well.
The good news is that this offers some great opportunities for first time buyers. Although local inventory picked up slightly over the summer, it is still on the low side. Furthermore, many markets are becoming buyers’ markets, so that offers further opportunity to many buyers to be able to negotiate IF they can find a home.
The biggest challenge right now for buyers remains to be limited inventory. If you are a buyer it is imperative to find a skilled real estate agent who can understand your criteria, help you narrow down the areas and neighborhoods that you like, and be ready to view new listings and present offers as soon as they hit the market, in order to avoid competition.
First time buyers should get fully pre-approved by a lender and have a great agent on their side. They should understand the market(s) in which they are focusing, and be ready to go when the right home is found. For those who may be considering purchasing in the future, I highly recommend connecting with a real estate agent early – even up to a year early – in order to narrow down your criteria and start viewing homes and neighborhoods. That way, once you are ready to purchase you will be completely educated about the local market and the purchasing process, and you will be ready to act when the right property comes up.
Happy house hunting!