Posts Tagged ‘home sales’
Friday, March 3rd, 2017
Home buyers these days have many hurdles to jump through in order to finally purchase a new home, from finding a home, to making an offer in possible multiple offer situations, to actually getting to closing without other issues. One such issue is appraisal – with inventory so low and prices climbing to meet demand it is not out of the ordinary for an appraisal to come in on the low side. But have no fear – there are a few things you can do to keep the sale moving along.
1. Renegotiate price/ compromise. If the home does not appraise there is always an opportunity to renegotiate price with the seller. Either the price can be negotiated down to the appraisal price, or the buyer and seller can agree on a compromise (for example, if the appraisal comes in $10,000 under contract price the parties can split the difference – buyer pays $5,000 more in cash and seller lowers the price by $5,000). However, if the seller had multiple offers there may be another buyer willing to pay that high price just to get into contract, so sometimes a seller will not renegotiate. It is always worth a try though, because if the other potential buyers are getting loans the seller could wind up in the same position.
2. Pay the difference with cash. Lenders are only concerned with the appraisal only because it affects the borrower’s loan-to-value ratio. The lender will only make a loan based on the contractual amount or appraised value.
3. Seller can carry a second loan. If you cannot lower the price and the buyer cannot pay cash over appraisal value, the seller can offer to carry a small second loan to make up the difference. The problem with this is that often the interest rate is higher than normal, but you can negotiate with the seller
4. Challenge the appraisal and ask for another to be ordered. Depending on the type of loan the buyer is obtaining this can be a possibility. If there is a good reason to challenge the appraisal with a conventional loan, say the appraiser was from out of the area or did not know the reasons why comparable properties sold for different prices (maybe your home is highly upgraded or has a better lot or view, etc.), then the appraisal can be challenged and you can ask for a second appraisal. Make sure that you provide comparables and an analysis of their sales to the new appraiser or to the lender – a job that the listing agent should have done (but even if s/he did there could still be other issues that did not bring in the appraisal value to the contract price). Talk to your agent and mortgage professional and figure out a plan that works best.
5. Cancel the sale. If there are no other options available the buyer has the right to cancel the sale without losing any deposits (unless otherwise agreed in the contract).
The bottom line is that there are potential solutions if your appraisal does not come in at contract value, so don’t panic. Make a plan with your agent and mortgage professional and see what you can do. Most of the time there will be a valid solution.
Sunday, February 19th, 2017
The real estate market in Carlsbad is strong but there is still a shortage of inventory. Although Zillow reports that market is currently a buyers’ market, I do not agree (at least not in certain price ranges), as we are still seeing multiple offers in some ranges. Higher priced homes seem to be accruing slightly longer market times than “starter” homes (condos and townhomes from about $650,000 and under).
The median attached home list price in Carlsbad is currently just over $549,000. Home sellers are in a great position at this time, as the market still favors a strong seller advantage, with no change in average asking price per square foot (average of $379). Average market time was 76 days and 22% of properties had a price decrease last week. From my position in the trenches with buyers I am finding though that many properties under $650,000 are literally going into contract in a matter of days, often with multiple offers.
Single Family Homes:
The median list price for single family homes is currently $1,049,900, and the 199 homes in Carlsbad (as of last week) have been on the market an average of 90 days. Pricier homes (those over about $1 million) seem to take longer to sell than those under $800,000 – one Carlsbad neighborhood that typically sells in the high $700,000-low $800,000 range can’t keep inventory on the market more than a week, and homes are selling over asking price with multiple offers in days. Although inventory and market action has been trending downward, inventory is sufficiently low to keep the market labeled a seller’s market.
Sale values have risen in some Carlsbad markets 7.5% over the last year and are predicted to rise 2.7% in the next year, according to a study by Zillow, making it a great time to be a seller.
Tuesday, January 31st, 2017
The new housing report was released yesterday by Case-Shiller, indicating that U.S. home prices are still rising. Of course this is really area dependent, but if you are a potential buyer or seller you might feel worried, and justifiably so. Keep reading for important information and advice.
The report covers major metropolitan cities and states that prices in these areas rose by 5.27% in November – above expectations of economists, and also up from the previous month of 5.1%. What does this mean for buyers and sellers? Let’s take a look at some important considerations.
Local markets: Of course these studies are general and tend to focus on big cities, so it is important that you contact an experienced real estate agent in your local market to see what is going on in the area. But, the thing to take away from this data is that prices are not easing up. Combine that with the next factor…
Inventory is still very low: Again, your local market must be studied to get an accurate glimpse and set expectations (your real estate agent can help with this), but using my local North San Diego market as an example I know that this is painfully true. I have buyers who simply cannot find homes, and multiple offer situations in some categories – like properties under $600,000 – are still the norm. With low inventory and prices staying put or rising, a buyer does not benefit from waiting to purchase, especially considering the next factor…
Springtime is coming: Traditionally the “hot” season for housing, spring and summer are just around the corner. But in my view we are already in the heat of things. Hopefully more inventory will pop up as we head into that “busy” season, but honestly I think the entire last year and especially this Fall and Winter, can be considered busy in housing – at least here in San Diego. Waiting until Spring could put buyers in even more of a quandry, bringing an increase in the buyer pool: more competition can drive prices up again.
The National Home Price Index also rose by 5.6% annually – up from 5.5% the previous month. High demand is causing these prices to continue on an upward trend. It is important to note, as some doubters or “bubble-talkers” as I call them, may believe, that these trends are NOT similar to those that occurred prior to the last housing crisis in the early 2000s.
How is this market different than that prior to the last crash?
1. Factors driving prices are not the same. Prior to the crash people were driven by speculation and anticipation of growth. Instead, healthy market factors like a strong job market and low mortgage rates are driving this market.
2. Lending is stricter. Lending requirements are not as loose as they were during the time prior to the last housing crash, so not everyone can qualify for a loan.
3. Demand is high but supply is not. Prior to the last market crash, there is a much lower supply of inventory in most areas. It is not so easy to find property to purchase. Many would-be sellers are afraid to sell, as they don’t know where they will move if there is such low supply and so much demand – so it’s a great time to be a seller if you have the time to wait it out on a subsequent purchase.
The moral of all this information is that if you are a potential seller you are in a great position. But if you have to buy after selling you need to have a “plan B” in place – e.g. stay in a furnished month to month apartment or temporarily move in with a relative or friend will put these people in ideal situations to sell and wait for the right home. But buyers have it a bit tougher – the best advice I can give is to BE PREPARED. Get preapproved, start looking at everything in your price range and desired area – even those homes that may not be as upgraded as you like or in the exact neighborhood you wanted. Do your homework and be ready to pounce once you find that “right” home.
Friday, October 7th, 2016
It has been an interesting time lately in the real estate market, and it is difficult to figure out exactly what is going on – is it slowing down, is it still hot…many people are confused. It really depends on your specific area, but there are some interesting things going on in my local markets…let’s take a look.
Multiple offers – still?! Yes! There are still some of those crazy multiple offer situations going on out there, and believe it or not they make it look like a seller’s market in the heat of summer. But this is not happening everywhere. It seems – at least in my neck of the woods in North San Diego – to be happening with condos and towhhomes that are very nicely upgraded, in good areas, and priced up to $550,000. Just last week I wrote an offer on a townhome for clients. The offer was super clean, priced over asking price, which was already stretching the appraisal potential, and a quick close in 30 days. We received a multiple counter offer asking us in essence to come up higher, remove the appraisal contingency at the outset, reduce all other contingency periods, and specifying that the sellers would make no repairs. We lost that one (I would never allow a buyer to remove an appraisal contingency unless they insisted, after being fully aware of the consequences).
Buyers are not jumping as high: Yes, this may sound like it contradicts the above paragraph, but it is true in most cases that buyers are not giving into inflated prices any longer. Most buyers (with the exception being the above scenario) are taking longer to find the right home, and then trying to negotiate the price. Much of the real estate news I read follows this position – after a crazy summer with prices inflating many buyers who missed the boat (or even those who intentionally waited out the crazy buyer storm) are finding that they can negotiate prices down and for that matter do not mind waiting until homes have some market time to make offers. This to me indicates the slow approach of a buyers market.
Fewer listings, fewer escrows opened: As is normal after the end of the summer season, listings are not as plentiful. But even after a fewer-than-usual-listings summer the Fall numbers continue to drop. Fewer escrows were opened in the last month compared to summer months. If this continues – fewer active properties, steady demand – it could spur the seller’s market to stick around for a bit…which means we could see prices rise. Interest rates will play a big part in this equation, as of course will jobs – people have to be able to afford homes.
In a nutshell the market is a bit hard to predict right now and doing so requires focusing on the specific community in which you are searching. For those buyers out there who are ready, willing and able to purchase my advice is to not rush into anything (unless you find your absolute “must-have it” dream home – but even then you need to be careful), consult with an experienced real estate agent to make a plan, stick to your budget and stick to your guns when negotiating price, repairs and other items.
Monday, May 23rd, 2016
If you are a real estate agent or a home buyer you may notice that the market is obviously low on inventory right now. Being that it is the “selling season” of Spring/Summer, and since there are a lot of buyers out there looking at homes, there are many situations involving multiple counter offers and homes selling for well over asking price…all great if you are a seller. However, there are also some fishy things going on out there and it is frustrating to agents and their buyers.
Let’s take a look at what is happening:
1. Homes listed well over comparable value. Many, and I mean a LOT, of homes in North San Diego are being listed over market value – some slightly and some way over. Buyers, who normally would avoid such homes until the price drops, are flocking to them and making offers anyway. No one seems concerned that the home likely will not appraise, and if one buyer walks there are many more who will step right in. This is pricing out first time homeowners and bringing prices up…you may think the latter is good, but it is dangerous because such inflation could create problems for the market – especially when there are many buyers who have incomes that will price them out of neighborhoods they should have been able to afford had prices reflected comparable sold values.
2. Many sellers are taking a long time to respond to offers – even very strong ones. If a buyer makes a very strong offer over asking price, many listing agents are waiting for 4 or 5 days to even respond, during which time they collect more offers. Many then submit multiple counter offers to all bidders asking for the best and highest price. This prices many potential buyers out of the running, and most already submitted an offer slightly over their budget.
3. Sellers are refusing to make repairs or pay for reports. In a seller’s market the seller knows s/he is in the driver’s seat, and many sellers are countering back stating the home is sold as is, and that they will make no repairs and pay for no reports – like termite reports. They want the cleanest offers possible with the least amount of money out of pocket. This means the buyer can get stuck with multiple repairs, termite work, etc. If the buyer is already paying top dollar for the home, s/he has to make sure those things are affordable. No one wants to see a new foreclosure wave hit in a few years.
4. Appraisals are not coming in at contract value – but that is not deterring sales. I have not had problems with appraisals on listings (I don’t market properties in the “insane” price category), but have heard from many agents who have. Even if the home does not appraise at contract value, there are plenty of buyers who are willing to pay the difference in cash if sellers will not negotiate prices down to the appraised value. They feel that is the only way to secure a home purchase in these crazy times. Does this sound like 2003/2004 – “pre-crash” – to anyone else besides me?
5. Overly aggressive listing agents seem to be multiplying, and they are not being cooperative. There are many listing agents who are ruthless and even rude. They don’t care that your buyers love the home and have been looking in that neighborhood for a long time, or that they wrote a very strong offer and submitted it first. To these agents, it’s all about playing the game and finding the highest bidder. Some agents do not return calls and emails, and some violate the Realtor code of ethics – a few may even commit fraud. It is extremely frustrating for buyer’s agents, who are trying to find a home for their well-qualified buyers.
6. Pocket listings and homes listed “off the MLS” are increasing. Many agents are marketing their listings on third party sites like Zillow, and not placing them on the MLS – the cooperative tool used by Realtors to benefit all parties looking in particular areas/price ranges. While it is their right to do so, it makes a problem for buyer’s agents whose clients may see these listings and want to visit them – but when their agent calls the listing agent to make an appointment she is often told that the seller is not paying a commission to buyers’ agents. Imagine you have been helping your buyers for months to find a home and now you cannot show them this one home because the broker will not cooperate with your broker. It puts buyer’s agents – who play an imperative role in protecting buyer’s rights – in a very sticky situation. You may ask why listing agents do this: the answer is so they can find buyers who will work with them, thus saving the seller from paying out a commission to the buyer’s agent. Hopefully the California Supreme Court will soon put an end to double ending sales and this will no longer be a problem.
I am a bit concerned and hope that we are not heading into trouble in the real estate market. I hope that agents keep in mind the spirit of cooperation that is inherent in our business – we all need to work together and be fair. If we do not then buyers and sellers will not be protected from future lawsuits, and many people will be priced out of the housing market – which could cause a domino effect with local economies and eventually the US economy.
Monday, October 26th, 2015
The latest data on home sales shows that there was a nationwide increase over the last year in the number of homes sold, with a 4.7% increase nationwide. California had a 6.7% gain. The western and northeastern states had the highest number of sales increases. Prices nationwide also rose 6.1%.
Existing home sales strongly rebounded in September after a decline in August, and have now risen year over year for 12 consecutive months, according to the National Association of Realtors. As we head into the holiday season it remains to be seen whether these numbers will continue to grow in what is usually a bit of a slower housing sale season.
Monday, December 1st, 2014
The chart below shows the latest existing home sale numbers for October, as well as median home prices, unsold inventory index, median time on market, and the housing affordability index. The National Association of Realtors reported a 2.5% increase for the homes sold in October, compared to the same month a year ago. This makes it the first month in 2014 to see a significant yearly increase in home sales. The reasons for the increase were cited as lowering of mortgage interest rates (which dipped under 4% in October) and the slowing of home price appreciation.
Interestingly, several reports I have read indicate that housing prices are not going down, and that this trend will continue into 2015, with many states hitting new all-time highs as the housing recovery continues. Of course, much will depend on inventory levels, mortgage rates and other factors that we cannot predict, but the positive note is that properties are definitely going into escrow. Most escrow agents, home inspectors and appraisers I have spoken with are busy.
Chart provided by the California Association of Realtors.
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: 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: 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, 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.
Thursday, September 4th, 2014
What is happening with the housing market? That is a big question right now all across the country. Of course, it is not truly possible to give an answer that will cover all parts of the country. Let’s look at San Diego County and focus on some of the things that are affecting home sales.
Prices are stabilizing. Prices soared across the county during the summer months. Now that summer is practically over most industry experts and commentators expect that prices will stop rising at such a quick rate and we will return to a more “normal” housing market. Many real estate agents, including myself, seem to agree. According to Zillow, San Diego home prices rose 9% in the last year and will continue to rise 3.8% in the next year.
Interest rates remain low. Rates are still very low, in fact they are the lowest in years (hovering around 4.1% this week on a 30 year fixed mortgage). Many factors contribute to this, including geopolitical instability, but the fact is that buyers can still take advantage of some great mortgage products. If inventory continues to increase this should stimulate sales.
Inventory is rising. Inventory this summer finally rose out of the doldrums. Currently San Diego County has close to a 4 month supply of inventory. As of mid-August, housing inventory had increased 14.3% since the same time last year, providing more choices to buyers.
Pending home sales show slight improvement. Pending home sales have been down year to year since 2012, but the decrease in July was smaller than the average over the last six months, indicating that pending sales may be on a slight increase, this according the the California Association of Realtors. Whether this trend will continue as we head into the holiday season is unknown, but there definitely are certain parts of the county where agents feel more homes are starting to go into escrow. Pending home sales are an indicator of future home sale activity.
Buyer’s market: coming soon? If rates continue to stay low and prices stabilize, the market will likely slowly shift to a buyers’ market. Some areas are seeing that effect already, and it seems pretty inevitable that we will move into that direction.
Of course there is no crystal ball for real estate, but all signs point to a market that is stabilizing and still in recovery. Indicators point to a more “normal” housing market moving forward, where sellers and buyers are on more equal footing.