Archive for February, 2015
There is a big wave coming to Southern California and it will not be found in the ocean. Foreclosures have hit their highest level in two years and should begin to affect real estate inventory soon, at least for a short period of time.
According to new data released this month by RealtyTrac, one of the largest real estate data firms, the number of homes repossessed by banks in California in December reached the highest levels since December 2012 – nearly triple.
California’s Homeowner Bill of Rights, which is about a year old, has prolonged the foreclosure process for banks, who must now abide by the many protections provided homeowners under the bill, and now that the banks have had time to adjust to the new rules they are going after repossessions.
Notices of default, the first indication that a home is about to enter the foreclosure process, are currently at the same level they have been for the last six months, but will soon rise if all indications are correct.
Real estate agents and homebuyers will soon start to see more foreclosures and short sales popping up, just in time for the Spring selling season. But keep in mind that these sales are not the bargains they once were – even though banks want these properties off their books, they want to sell the homes for value as well. (click here for more information on the changing value of short sales).
Selling a home the right way can be tricky – you need to make sure the home is clean, clutter-free, shows well and is staged properly. You should have beautiful professional photos and the home should be inviting and bright…a lot to contemplate when preparing for sale. If the home is occupied by tenants these tasks can be even more challenging. Here are 5 things you can do to make sure your home looks great with tenants living there.
1. Make assessments with the tenants. Before listing you should walk through the home with the tenants and your real estate agent. Make a list of things that need to be done in order to get great photos and optimal showing results – is there any clutter that needs to be removed? Does anything need to be remedied? Make a list for the tenant and then offer to help them out to get those items resolved.
2. Include the tenants in the planning. Make sure you discuss with the tenants the ideal time(s) for showings – get them involved so that they do not feel their privacy is invaded. Find out if they would like to be notified by the agents themselves of potential showings, or if they prefer to have daily times where agents can just go and show (for example, if they will be at work). If there are any pets make sure to get instructions on what agents need to do to assure the pets are safe during showings. Consideration goes a long way and will make your tenant feel their needs are being addressed.
3. Pay for a cleaning service. Tell your tenant that you will be paying for the home to be cleaned. If your tenants are messy you may need to have the cleaning service come every week or bi-weekly during the showing period. Most tenants will like this because they do not have to clean themselves. Make a deal with them that you will do this if they promise to make beds, put away clothing and food items, and keep everything clutter-free. If the home is carpeted you should also have the carpets cleaned, as well as the windows.
4. Rent reduction. Many tenants have no desire to help you sell the property because it means they will need to move. In order to make sure they keep the house clean and show-ready you need to make it worth their while to do so. The best way to do this is to reduce their rent during the time the home is being marketed and shown. The tenant will agree to keep the home tidy and de-cluttered daily, in exchange for a reduced rent. This can be a win-win for everyone.
5. Last resort: termination of tenancy. Some tenants just won’t cooperate no matter how much you do to help them. Rather than try to show the home in a poor state, if all else fails you will need to provide your tenants with written notice to terminate the lease (if it is possible to do so according to the terms of your lease). If the lease is still in effect and cannot be terminated it may be advantageous to offer the tenants a monetary sum to terminate the lease early. Make sure you speak with a real estate/tenant and landlord attorney in your area to understand the law and your rights as a landlord, as well as those of your tenants – you should do this before listing the home if you have a lease that is still in effect.
Over the years I have sold properties with tenants – from cooperative tenants to those who lived in filthy conditions and made nasty comments to potential buyers about the home (those tenants started out cooperative and said they were going to keep the place clean – they had to be evicted eventually). In general it is easier to sell properties without tenants, but if you have people who are willing to help out it can be done and it can be a positive situation for everyone if you take steps to be considerate and plan everything out.
This is a very informative and helpful infographic showing that real estate is the best long term asset in America over time. Thank you to Jimmy Moncrief at Real Estate Finance HQ for the charts!
The best way to prepare for a move from outside of an area involves a bit of planning, and can start months or even years prior to moving…the more time you have to research and learn about the different cities and neighborhoods and what they have to offer, the better. I always advise taking time to go through the following steps so that when it comes time to find the right home you are not only prepared, but can feel confident that the neighborhoods you have selected are the right ones for you.
1. Find a great real estate agent. Yes, it is important to find an agent who is familiar with the areas you are considering, and to do so early in the process. If you do not know which cities or neighborhoods may fit your criteria an agent can help you narrow down areas. You may find properties online that look great, but a local agent will know things about areas and neighborhoods that you may not learn online. Use your agent to help narrow down the possibilities by creating a list of “must-haves” and a list of “desires.”
2. Start researching cities and important criteria. When planning a move the initial research will be tedious but should be done online. Before even looking at homes you should research areas – cities, specific neighborhoods. Look at maps and find out the proximity of neighborhoods to important places. If you do not know whether an area has homes that fit your budget it is a good idea to get help from your real estate agent. She or he may also be able to provide you with area maps that highlight different housing developments, so that you can see where they are in relation to important places.
Of course there are important criteria that you will insist upon, like being close to “good” schools, shopping, transportation or to your place of employment. Once you have narrowed down specific areas it is time to investigate these things. You can start online if you are not currently in the area, and when you visit you can of course expand your knowledge by driving around and visiting places that may sway your decision one way or the other. If schools are important to you then visit school websites, check out test scores and parent comments, and when you visit you can meet with school staff and even speak to parents to get feedback on the school.
3. Compare and contrast the differences in the areas that meet your needs. This is where your agent can help as well, especially if you live out of the area. Personally I like to put everything in writing, and I advise my clients make lists of each area they like. The list can be live, meaning that it may constantly change as more information is presented to you or as you visit. Make notes on different neighborhoods and even floorplans – whether you see them online or in person, and keep those lists updated as you move through the process.
4. Visit the areas and spend time driving around, checking out neighborhoods. I always recommend doing so well before you are ready to move, even it it may be far off, because the way you perceive different neighborhoods can of course be different in person. Drive by homes in neighborhoods in the areas you have identified. I suggest visiting neighborhoods that appeal to you several times – in the morning and afternoon – to check things such as noise levels, whether residents are home during the day, etc.
5. Make a list of your favorite neighborhoods and start visiting homes for sale. Even if your move is far off, it is a great idea to start looking at homes once you have narrowed your search down to a few neighborhoods. This way you will see what floorplans appeal to you and fit your needs. This makes it a lot easier when it does come time to purchase – you will be much more prepared and will be able to keep up with sale prices and comparables in the areas – all of which will benefit you when you are ready to purchase.
Buying a home should not be a rash decision, even if you need to move quickly. Use your time wisely to research and use your agent to help you. When it comes time to make an offer you will feel knowledgeable and confident because you did your research.
The latest CoreLogic report shows that home values rose 5.0% in December nationwide, compared to a year ago. This figure includes distressed sales. For the entire year of 2014 home prices increased 7.4%, which is down from the 11.1% increase in 2013.
This news is great for the housing market, and shows that the housing market was definitely on a healing path in 2014. Many wonder whether it will continue as we move through 2015, and there are many opposing views.
It is important to caution, as I always do, that to truly understand what is happening in the real estate market you need to study your own specific market, as of course the market will vary depending on area (for example, homes in the mid-west may not have the same trajectory as homes in San Diego, California). Looking at San Diego’s market as we head into February, it looks like the market remains strong and prices continue to either rise slightly or remain steady. Demand is definitely growing, and at least personally it seems listings are selling a lot quicker.
Below is a chart for the median price of homes sold in San Diego County up through January 1, 2015. You can see prices climbing back up after a (typical) seasonal dip during the holiday period.
Here is a chart showing San Diego County inventory since March of 2014. Again, after a typical seasonal dip over the holiday season, we can see inventory rates starting to climb back up as we head into February and toward the Spring season.
There are currently 5,373 active properties on the market today in San Diego County, and 3,634 pending properties. Since January 1, 1,595 properties have closed. During the same period last year (January 1 through February 3) 1,894 properties closed escrow. If you would like more data that is specifically tailored to where you live or would like to live, please contact me and I will be happy to send you detailed reports on your specific area.