Archive for the ‘selling tips’ Category
Wednesday, March 14th, 2018
The reality of rising mortgage rates is of concern to home buyers and sellers. Normally interest rate increases alone would not be much of a concern but combined with continued low inventory and high prices many wonder if the housing market will be able to sustain itself; there are 3 – 4 expected rate increases remaining this year.
I feel it is safe to say that rising interest rates will have an effect on housing affordability and inventory. Here is how I see it:
1. Higher rates mean many buyers will not be able to afford the house they could afford today (if inventory was not an issue). Many people, especially the would-be first time home buyers, may choose to continue renting or live with parents. If there is less demand for the homes that are on the market, prices will drop.
2. Sellers may continue to withhold homes from the market for the same reason – if there is no inventory for them to move either up or down, selling may not make sense. Especially when you take into consideration the higher rates, plus property tax increases for move up buyers. With less homes hitting the market we will continue to see inventory shortages, BUT combined with higher rates, which could lead to lower demand, prices should start to come down.
3. Luxury markets will face even tougher challenges as rates rise. Combined with the new tax laws, which raise tax on purchases for loans over $750,000, many potential luxury buyers may decide to hold off. Luxury sellers will likely see longer market times and lower prices.
It is important to keep in mind that every market is different. Here in San Diego we have year-round desirable inventory due to weather and location – but the coming changes will affect us and could alter the second/vacation home market purchases as well. It is important to consult a local area real estate agent to understand what is going on in your specific area.
If the inventory rut continues on this path it could lead to a big problem in the real estate market. I feel, and many economists and real estate market watchers agree, that it will stall purchases, keep sellers in homes they would have otherwise sold, and have a deep effect on buyers currently in the market and future buyers. As we head into the Spring and Summer it is a good time to think about selling and purchasing, prior to further rate increases.
Monday, January 29th, 2018
A lot of homeowners have been wondering whether to sell now or wait until Spring. While Spring and early summer are typically the best times to sell, when a large majority of buyers are searching for homes, this year there is no reason to wait if you are a seller…and here is why:
Low Inventory – although picking up in some places, housing inventory is still low. The last year has been challenging for those who are ready, willing and able to buy, since they are unable to find homes that meet their needs or desires. This puts sellers in a great position while it is still a seller’s market.
Mortgage rates will continue to rise – rates have risen once already and will likely do so twice more this year. Combined with low inventory this double whammy will effect homebuyers, effecting their purchasing power and pricing some out of certain markets. If inventory picks up and the rates rise it will start to shift to a buyer’s market, and prices could come down in the long run.
Here is an example I read on a lender’s blog: If rates increase by 1%, from 4% to 5%, a buyer will lose 10% in purchasing power. This means that if a buyer can afford to purchase a $600k home today, but rates increase by 1%, she will only afford $540k using the same monthly payment.
Borrowing is still cheap – from a historical perspective it is still inexpensive to borrow money.
Prices will likely continue to rise – most economists and those who watch the real estate market predict that despite rate increases, prices will continue to rise in 2018. In the last year prices in San Diego County increased 9.1% – this was higher than the yearly increase of 4.2% in 2016. Again, this could impact homebuyers in many areas of the county.
New tax laws will likely effect high-end borrowers – those who are obtaining loans for high end properties will be effected from a tax perspective, as the new laws cap the mortgage interest deduction and the ability to deduct state and local taxes. Therefore the higher end market will be impacted this year, but we will have to wait and see the extent.
Based on the above it is an ideal time to sell. There is a great demand out there – I get emails from agents every week asking about whether I have any upcoming listings in certain neighborhoods. Many homes are selling before they even hit the MLS, and many agents are choosing to put their listings on sites other than the MLS first, in order to try to represent both parties in the sale (so some buyers may not even be aware of listings in neighborhoods they like).
Thursday, March 31st, 2016
Today I received an email from a home seller who found me online and wanted to know how much commission I would charge to sell his home, without meeting me or having me see his home. I have had this question before, and it got me thinking. Many sellers want an answer before an agent even meets them or sees their home, and this is a bit challenging. Of course, commissions are negotiable – some agents will lower them and others will not, and some may even have a set low number they’ll provide before seeing your home or meeting you.
While a low commission will save you money, here are some important points all home sellers should adhere to when selecting an agent:
1. Understand what the agent will do for you. Full service and partial service brokerages vary a great deal, so make sure you know what you are “getting” for the low commission an agent has proposed. Will your agent provide:
– Professional photography
– Custom color flyers
– Marketing – online, print, social media, etc.
– Showing tips and staging (if necessary), as well as referrals to service providers that may be needed
– Broker caravan tour
– Open houses (if desired)
– Take calls and show the property
– Vet potential buyers before accepting an offer
– Communicate with all parties involved in the sale – escrow, title, lender, buyer’s agent, inspectors, repair people
– Handle all paperwork, including disclosures, amendments, repair requests and contingencies
– Negotiate with the buyer – it is important to note that getting a contract accepted is only the beginning. There is still negotiating to be done (unless the buyer agreed to purchase as-is and has no contingencies). Many sales fall through because of a weak negotiator, so make sure your agent is going to be there to do so.
– Keep the buyer in the sale – this really is similar to the point above, but a little different. Sometimes a buyer may discover something that makes him/her uncomfortable, so it is important to have an agent who can think outside the proverbial box and lessen those anxieties.
2. Understand what the agent will NOT do for you. Make sure you have a clear idea of what will not be included in the commission – some low commission brokerages only list your home on the MLS and leave it at that. If you run into any negotiations – over price, repairs, etc. you need to have a strong negotiator on your side or the sale may fall a part. Make sure you know your agent’s role.
3. Understand YOUR role in the sale. Again, if you hire an agent who is pretty much just placing your home on the MLS, you need to understand it may be your responsibility to hold open houses, let agents in and schedule showings, and provide all required paperwork. Some people don’t mind doing these things, but others don’t have the time nor want to be bothered with them. Also, if during the course of the sale bumps arise in the road, it is important to have someone to rely on for advice. If your agent is not going to do so I strongly recommend having an attorney in your corner – of course this will cost you extra money so look into it first.
The bottom line is that pretty much everyone wants a “deal.” Since commissions are negotiable there is a good change sellers will find one if that is what they are looking for, but keep in mind that selling a home is a legal transaction, one for which there could be liability and potential lawsuits – even long after the home has been sold. Saving money is nice but when it comes to legalities personally I would rather know that I am protected in the best way possible, and if that means spending a bit more I wouldn’t mind – often in life you get what you pay for. You have to decide what you think is important.
Monday, November 30th, 2015
Winter is a busy time of year for people – the holidays are here and there are so many things to accomplish before the end of the year. You may wonder how people think about real estate at such a busy time, but believe me they do! Many wonder whether it is a “good”time to buy or sell a home now, so here are some things to consider.
Buying a Home at the End of the Year
1.Â Less inventory to peruse. There is typically less inventory to see at this time of year, as busy homeowners focus on holidays and accordingly wait to sell or take their homes off the market.
2. Serious sellers could = lower prices. Those who do have their homes on the market need or want to sell, and are not deterred by the holidays and slower traffic. This is a great situation for buyers, as they may be able to negotiate better prices.
3. Less Competition. With fewer buyers out looking at homes it makes it a great time to be a buyer.
Selling a Home at the End of the Year
1.Â Less competition inventory. There are typically fewer homes on the market during the winter/holiday season, so it is a great time to market your home.
2.Â More serious buyers. Unlike summertime, when there seem to be a lot of “looky-loos,(especially if you live in a beautiful area like San Diego where there are a lot of summer tourists) ” buyers out looking at homes at this time of year tend to be more serious and ready to purchase.
Buying a Home in the Spring/Summer
Buyers who wait until Spring to start their home searches tend to encounter:
1.More inventory to choose from
2. More buyer traffic, which could mean more competition and multiple offer situations
3. Prices tend to be higher
4. Shorter market times, which means less time to really look around and make a decision.
Selling a Home in the Spring/Summer
1. More inventory on the market, thus more competition
2. Prices tend to be higher
3. A larger buyer pool
The best time for you purchase a home will depend on many things. Make sure also to check with your accountant to see if there are any benefits for you that could affect your purchase window.Â Whenever you decide to purchase, make sure you do your homework and contact an experienced agent to assist you. Happy shopping!
Thursday, October 1st, 2015
Have you ever thought about your experience buying clothing, and compared shopping at say Nordstrom, to shopping at a discount clothing store? Did you notice the service difference – sure, the Nordstrom employee works on commission, but that is actually a benefit to you if you need help finding the right outfits. He or she will go out on a limb to pick the perfect shirt, slacks, tie or accessories to make you look your best.
Selling a home is the same. I always tell potential sellers when I meet them to discuss listing their homes that ANYONE can list a home – it is not rocket science. The part time mom/real estate agent who only works weekends, the new “green” 18 year old agent with his first client, or the experienced agent – they all can do it. But you have to make sure to ask the right questions and get the right information to assure that you truly get the best representation.
You may have noticed agents in your area who might boast that they will list your home for less than the competition – some for say a 1% fee, and others for flat fees. While this may sound great to you as a seller, make sure you interview a seasoned listing agent and compare what you will get from each – you may be surprised.
Here are the things you need to ascertain as a potential seller to make sure that your home will be marketed properly and survive the escrow process in order to close:
1. Responsiveness – Many discount brokers will take your fee and put your home on the MLS, but that is where the buck stops. If you have questions or concerns you may find it hard to ever reach them, let alone have issues responded to. Even “big” agents who list many properties have this issue – there are several of them in my area and I have helped clients sell homes who had worked with them before and were unsatisfied with their lack of responsiveness. This is important to you as a seller, because you need an agent who is your partner and can communicate both effectively and continuously throughout the entire process from listing to closing.
2. Marketing – Does the agent’s marketing budget mirror the commission you are paying? In other words, if the agent is taking a lower fee, is this going to cause your marketing to be less than superb? I can tell you that I get a LOT of real estate information in my mailbox, and about 90% of it is junk – poor quality, bad images/non-professional photography, grammatically incorrect/spelling errors. The way your home looks to potential buyers is what will drive them to want to see it – it is a feeling and a lifestyle that you are selling, not just a house with walls.
3. Communication with other agents and parties: Your listing agent needs to be able to effectively communicate with other agents, loan officers, lenders, escrow and title representatives throughout the sales and escrow process. This includes following up with showings and alerting agents of potential buyers of any changes or new developments with the property. Problems always come up that need to be addressed in order to stick to the time frames identified in the contract – make sure your agent knows how to do so and is willing to stay in touch on a daily basis.
4. Negotiations – This is a big one. Your agent must be a strong negotiator. Unfortunately many real estate agents are not strong in this regard, and many contracts do not come to terms or fall apart after agreement. Negotiation skills are needed not just at the start when a contract is received, but throughout the entire escrow period. Getting an offer is just one part – keeping those buyers excited about their new home until closing is another issue.
5. Paperwork – if you work with a discount agent/brokerage, make sure that your agent explains how the paperwork will be handled. Real estate transactions contain a LOT of paperwork, and they are all LEGAL documents! There are many consequences to filling out paperwork incorrectly, including law suits years after your home sells. You need to make sure your agent knows how to properly handle the paperwork and how to coach you in filling it out correctly so as to avoid legal ramifications.
The bottom line is that you usually get what you pay for – like comparing Nordstrom quality and service vs. Walmart quality and lack of service. Unlike buying a shirt however, selling a home comes with many legalities. Make sure you are protected and find an agent that will work hard for you to keep you informed, compliant and safe.
Wednesday, December 10th, 2014
It never fails – every year I always think I will have a quiet holiday season and be able to catch up on personal errands and have extra family time. But every November things always start to heat up in my real estate business. Offers on listings tend to increase (often multiple offers), there tend to be a flurry of showings, and buyers step out in force to see properties.
I hear many real estate agents say that the end of the year is accompanied by a slow down in the real estate market, but I have not yet found that to be the case. Those agents who decide to not work as hard or to take a break miss out on the plethora of opportunities at this time of year. But for those who continue to work hard with existing clients, answer their phones and tap into their client base, this time of year can be lucrative.
Busy Time for Sellers
As for sellers, I have written blogs over the years as to why the holiday time is a great time to sell. The main reason is that there is not a lot of competition, so the buyers who are out there searching for homes (and believe me, there are many) don’t have as many options. If you list your home at this time and it is priced and shows well, you may be surprised at the amount of interest you get… and of course there is the potential for multiple offers. If you are a seller, make sure to speak with your agent about the best way to market and stage your home during the holidays, because that will have an impact on its selling potential.
The other reason it is a great time for sellers is because interest rates and inventory are still low. This makes it an optimal time for buyers who may have otherwise decided to wait until Spring.
Finally, it is fair to say that the majority of buyers who are out there looking at this time of year are very serious, not just looky-loo buyers. Many people would rather not focus on purchasing a home during the holidays, so as they say “the early bird gets the worm.”
Busy Time for Buyers
The end of the year/holiday season is a great time for buyers, for many of the same reason outlined above. There is less competition, the listings that are active are usually placed there by serious sellers who need to sell, and right now interest rates are still very low. In my opinion many properties are priced more accurately at this time of year than say in the Spring, when many sellers test out the market to see how high they may be able to list above comparable sold properties.
Buyers, sellers and agents can all benefit during the last quarter and during the holidays if they continue to work extra hard into the New Year. Happy buying and selling, and I hope everyone has a prosperous and happy holiday season!
Friday, November 21st, 2014
Today on Twitter a follower made a comment about the benefits of having a home pre-inspection prior to listing a property. There are some agents who recommend doing so and it can be a good idea. However there are also agents who would not recommend doing so because it could open up a can of worms for the seller. I thought it would be a good idea to look at the benefits and disadvantages of having a pre-inspection.
Issues with the Home that the Seller may not Know About Could be Revealed in a Pre-Inspection
Benefit:Â A pre-inpsection gives sellers an opportunity to repair/remedy any defects or problems that are discovered, in order to present a home to the buyers that has been well cared for and has no deferred maintenance. This means there will not likely be any surprises when the buyers have their inspection. Oftentimes inspectors discover issues of which the sellers were not aware. Most buyers will ask the seller to repair such issues or credit them through escrow so they can do so after closing, or even reduce the price because of any issues. A pre-inspection could eliminate any surprises, but keep in mind that the buyers still may have their own inspection (something I always recommend), and it is possible that their inspector may discover other items.
Disadvantage:Â There could be some major issues discovered that the sellers did not know of, that could cost a lot of money to fix. If the sellers do not have the funds or do not choose to repair such issues prior to sale, they now are aware of these problems, which means they must disclose them to buyers. Disclosure of know factors affecting the property is required by law. One could argue that no matter whether the buyers are told via disclosures that there is a problem, or whether they discover it themselves through a home inspection, they will still likely seek repairs or a credit, so it may not matter either way.
The one problem I see with having a pre-inspection is that if something major is discovered, meaning the seller has to disclose it, it could affect the value of the home (depending of course on the issue). For example, say there is a crack in the swimming pool, or the roof needs to be replaced. These could be costly issues to fix, and could detract from the value of the home. The seller can turn it into a positive and deduct the repair costs from the value right off the bat if aware of issues, OR if not aware of such issues and presented with a repair request by the sellers, it is possible the seller may be able to negotiate a price under full repair costs.
A Special Note About Termite Inspections
It is important to note that this month there will be a big change to the California Residential Purchase Agreement (RPA) regarding termite inspections. The current contract has an addendum called the Wood Destroying Pest Addedum (WPA), which normally specifies that the seller is responsible for Section 1 items – damage caused by pests. This would include dry rot on wood and fumigation, which could be costly. The new RPA eliminates the WPA, so it will now become a repair issue. This means that the buyer will be responsible for paying for a termite inspection, and any issues discovered will need to be negotiated with the seller, along with any other non-termite repair issues.
Keep in mind that a buyer can write something different into the contract, such as sellers are to pay up to a certain amount, if necessary, for any termite work discovered. If sellers have a termite inspection prior to listing and discover any issues, they can inform the buyer up front in disclosures so that the buyer can negotiate those repairs or decide what action to take. I will be suggesting to my sellers to have termite pre-inspections, as I feel it could eliminate potential problems. It also allows the seller to choose a reputable termite company.
I suggest always to discuss the above with your agent before listing your home so that you are aware of your rights and can make an informed decision.
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,Â 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:Â 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.
Thursday, September 25th, 2014
Real estate information sites like Zillow, Trulia, Realtor.com and others have changed the real estate industry in many ways, most notably by their ability to provide instant information to consumers about home sales and statistics, neighborhood data, and other community information. When such sites start analyzing home value, however, the consumer is not getting accurate data in most cases, so beware and read on if you are a buyer or seller, or plan to be either in the future.
When such sites use estimates to tell potential homeowners or buyers what a home is worth, it is undoubtedly a poor attempt to create a Comparative Market Analysis – a tool which real estate agents use to assess value. Site valuation systems have created problems since inception and continue to do so.
The problem with such estimates is that in the majority of situations they are completely inaccurate. Why? Here are the reasons:
1.Â Third party site estimates only measure comparable sales in the immediate neighborhood, so if there are no recent sales or if there are sales in similar neighborhoods that make good comparable properties, those are not used to calculate the value of your home.
2.Â Third party site estimates cannot take into consideration key factors that are used in determining value, such as upgrades, view, location in the neighborhood (you may have a lot that is in a better area than the most recent sale, for example). They do not compare and contrast specific features of a particular property. If you put in a gorgeous built in BBQ and spa in your yard and upgraded the kitchen, bringing up the value, and the neighbor’s identical floorplan home with no upgrades just sold, your estimate will likely reflect the price of the neighbor’s home. This is a problem for buyers who are looking online for homes to possibly purchase.
3.Â Third party site disclaimers often are ignored:Â Most buyers and sellers using such tools view them as real estate gospel – or at least believe them to be accurate. Once they see such an estimate for a home they may be contemplating viewing in order to purchase, they may decide not to bother because according to the estimate it is priced too high. I get comments like this from potential buyers on my listings all the time.
Zillow, for example,Â specifically states on their site that “the Zestimate is a good starting point as well as a historical reference, but it should not be used for pricing a home.” Not many people likely get to that page (you have to click on the question mark in the fine print when you hover over the asterisk by the “Zestiimate,” and then click for more information, which brings you to another page).
Real estate agents face many challenges because of these inaccurate analyses. Case in point: I have two listings on the same street; both nicely upgraded and about the same size and with similar views,Â but very different floorplans. Zillow has them listed with a $40,000 price difference. The model match of one of them (also nicely upgraded) is currently in escrow at a price that is not even close to the “Zestimate.” Because of this people viewing the other home, which shows a lower “Zestimate,” think that home is priced too high. But based on the upgrades and amenities and other factors the site cannot take into consideration, it is not.
The important lesson here for both buyers and sellers is to find an experienced real estate agent in the areas in which you are looking to buy or sell. Have that person prepare a detailed market analysis. Only then will you truly know the value of any property in your search area. Do not rely on third party websites that do not have the ability to take into consideration all the factors that an appraiser would look at when appraising a home – comparable prices, upgrades, amenities, location and view.
Friday, June 13th, 2014
When the real estate market heats up, so do the number of lawsuits against real estate agents and their brokers. Many buyers and sellers of real estate do not often pause to consider that they are involving themselves in a legal transaction, which can have severe consequences if not handled properly. Many agents, whether intentionally or by mistake,Â unfortunately do not understand the ramifications of contract law.
Here are the main areas for which agents and their brokers are sued in real estate sales-related cases:
1. Failure to advise on a contract. Real estate agents have a duty to make sure buyers and sellers understand the contacts they are signing. If there are any problematic issues or clauses in the contract the agent needs to make sure her clients understand them before signing. It is important to remember here that there is a fine line for agents – only attorneys can give legal advice (see below). An agent can explain a contract clause but should always defer to her broker and an attorney if further clarification or if advice is needed.
2. Giving legal advice. Only an attorney is licensed to give legal advice. Unfortunately there are many agents who provide legal advice, whether intentionally or not (most just have no clue they are doing so). I have seen it happen. The golden rule for agents is to not provide any advice on the contract that could be considered legal advice…when in doubt tell them you cannot give legal advice and refer the question to a broker (or if an agent is a broker he can refer directly to an attorney).
3. Misrepresentation of property features. This is a leading cause of real estate sales litigation. The key to avoid litigation is to be honest. Exaggerating features of a property or claiming it has features it does not can land agents in the hot seat.
4. Failure to disclose defects. Real estate agents have a duty to disclose any known defects of a property, or any that they see that are obvious (think big wet spot under a sink or in a ceiling, or an HVAC system that does not come on when started, for example). It is important to remember that a real estate agent is not held to the same standard as a home inspector, but here in California most agents complete an Agent Visual Inspection Disclosure, in which they document any known or observed faulty conditions.
When in doubt, always disclose (this is the same thing agents should tell their sellers when they fill out their disclosures – disclose everything). This is especially important if a listing agent has an escrow fall out and has been given a home inspection or other reports from a previous buyer – at that point the agent and homeowner are considered to have knowledge of the issues that were discovered and reported, and must disclose those items and provide the report to any new buyers.
There have been rumblings in past years about allowing only licensed attorneys to obtain broker licenses, but that has never been implemented. It may help reduce lawsuits, but the problem is that mistakes will still be made by agents, and brokers will often not catch them (especially brokers who oversee large numbers of agents).
The best security for buyers and sellers is to work with an agent who is also an attorney. In many states only attorneys can be the closing agents in real estate sales (here in California we have escrow officers instead, but attorneys can handle them as well, although this is rare). Working with an agent or broker who has a legal background offers peace of mind for both buyers and sellers of real estate.