Archive for the 'Buyers' Category
Which of these is the killer real estate bargain? (See the answers below–these are true stories based upon real estate sales in Sonoma County over the last year–details have been eliminated for obvious reasons.)
1) an REO (bank-owned) home in Rohnert Park/Cotati that sells for $304,000 with 19 offers. Original asking price $256,000. Nearly 20% over asking price.
2) a country property in Healdsburg with two cute cottages that nearly sells for $137,500 under asking price.
3) a country property in Sebastopol that sells for full asking price ($1,750,000) with four cash offers.
4) an REO in Santa Rosa that sells for asking price with two offers.
5) a cute country property in Sebastopol that sells in a week for 95% asking.
6) a fixer (read:teardown) with a bad floor plan on a busy street that sells after a year on the market for 50% of the original asking price.
7) a cosmetic fixer on a great lot with good bones and multiple offers, sells 5% over asking.
8) property someone buys from a friend of a friend before it hits the market at 10% less than the supposed listing price because the seller doesn’t want the hassle of selling or to pay commissions.
1) A BARGAIN–Are you crazy? The buyers paid $48,000 over asking.
Yes but the bank significantly underpriced the property by not attributing enough value to the oversized, landscaped 1/3 acre lot with its own redwood tree and raised beds for gardening. A most unusual feature that attracted a horde of buyers. Fortunately my wonderful clients prevailed and bought a home for the price that was their target price all along. Now they have a house payment lower than the rent they were paying previously, before taxes. For their first home, a bit of country in a great commute location, with no repairs beyond their budget or skill set. It even appraised at full price.
2) A BUST: It seems like a bargain on paper, but what if the original sales price was about $175,000 too high and the property sits and sits and sits. Even with a $137,500/16% price reduction, the buyer might be paying too much. This property is still sitting on the market racking up interest and taxes.
3) A BARGAIN: A great retreat property that sold in about five minutes with a few offers in the dead of last winter. Clearly priced right to attract interest and a turnkey property with lots of staying power and redeeming value.
4) A BARGAIN: A perfect home for the buyer’s daughter and her family. The floor plan was perfect for them and the home had been largely remodeled before it went to foreclosure. Prices have moved up a few percentage points since then.
5) A BARGAIN; Gee, only 5% off list? But this property has such fabulous fundamentals: great setting, updated, close-in to town country location, privacy, it fits the buyers’ budget. Let’s face it, it is always going to be a desirable property. And the buyers will enjoy it for a long time.
6) Eventually, a BARGAIN: This property will always have the negative of being on a very busy street–but the eventual sales price justified the case for the investor who bought this property to rehab. Just don’t expect it to appreciate as much as something with better fundamentals. But it finally penciled out.
7) A BARGAIN again. This property was well marketed, the listing agent astutely priced it slightly under where she thought it might eventually sell–it inconvenienced the current owner a shorter amount of time due to the quick sale, and everyone was happy.
8) WHO KNOWS? What we do know is that the seller may have left money on the table by selling his property for less than it is worth, or the buyer may have overpaid. Maybe they hit it just right, but the market did not test the value of the property, so it is a bit of a gamble for both.
Maybe you get the point? A bargain is in the eye of the beholder, and not necessarily related to list price versus sold price. That says more about the skills of the listing agent then the negotiating prowess of the buyer. Sale prices of property seek the proper level when well exposed in the marketplace. Sometimes overpaying makes sense. Sometimes underpaying is still overpaying. If a property meets the buyer’s needs, fits their budget and they love the idea of owning it, then that’s a bargain.
Many of my clients this year have gotten $8,000 checks from the federal government shortly after purchasing their first homes. They have been able to pay closing costs (by borrowing money from a relative and repaying when the credit was paid to them) or do necessary repairs. In some cases it was enough of a difference to make it easier for them to accomplish the goal of buying their first homes. According to statistics only about 30% of people who took advantage of the credit were not going to buy otherwise but my clients specifically cited the credit as an incentive for them to buy this year, particularly in the more fearful market of the first half of 2009.
Now there is good news for others who might want to buy and even for people who want to sell their home and move up to a different one.
Just this afternoon both houses of Congress have approved an extension of the $8,000 first time homebuyer credit, and expanded it to include a $6,500 credit for move-up buyers who have been in their homes for at least five years. The bill will go to President Obama for his signature. Income limits have been raised to allow for more upper income buyers to participate fully and the credit will be available through April 30, 2010, and up to two months longer for homes in escrow as of April 30 of next year.
The expansion of the credit to existing homeowners is meant to spur sales activity in the critical move up market and may be enough of a push to get some sellers and buyers off the fence. In many markets the entry level homes are selling rapidly and prices have come up somewhat from the bottom. The mid-ranges have been slower. It will be interesting to see how this new aspect of the credit works for move-up buyers.
For more details and resources on who qualifiies and how you can take advantage of the credit, please contact me or visit the National Association of Realtor’s website for details and how-to’s.
I recently wrote about the low “Month’s Supply of Inventory” of homes for sale in Sonoma County and touched on our seller’s market, driven by homes for sale under $500,000. What does it mean to be a seller’s market these days? The best and most hilarious explanation I have seen lately was done by Kris Berg, of San Diego Castles Realty, in her movie directing debut. Scarily true.
So if you know me well, you know that I am a die-hard THIRD generation New York Yankees fan. (DISCLAIMER: Despite this fact, I have several clients, good friends and colleagues who are Boston Red Sox fans, but that is another story.)
How does Yogi Berra relate to the current real estate market in Sonoma County, Ca?
Well as current clients of mine will tell you-they thought they’d found a perfect house. We’ll call it “Park Place”. Great commute location, walking distance to shops and restaurants, and best of all a vastly over-sized, 13,000 square foot park-like back yard (complete with its own redwood tree and veggie garden).Â Unfortunately for them, 18 other buyers also thought it was a great property and the winning offer was not ours, even thought we went well over asking, my clients were extremely qualified first time buyers. In this case it wasn’t enough. But they gave it their best shot at a price that made sense to them and lived with the results.
After a four week break to take care of family obligations, my clients were ready to write an offer on another pretty interesting property. Â Meanwhile, I had told the listing agent for the first property to keep us posted if something happened to the original offer.
Also weÂ kept an eye on things.Â We don’t want to rely on an overburdened REO listing agent. To make this easy for everyone, I set up a private web site for my clients updated in real time with changes to the MLS (Real Estate Multiple Listings Service). You may not realize it but most public facing websites are not reliably up to date, so a property could be back in escrow and not available again before you know it.
In this client website, we can keep homes in “Newly Matched”, “Saved”, and “Rejected” Tabs.Â That way we are in sync and can both keep tabs on things so to speak. With my out of town clients, the “Comments” feature helps my get to know their preferences pretty quickly.
Back to the Yogi Berra situation: the same day we were writing on place number 2, I received a phone call from the listing agent on “Park Place” –the house of the 19 offers. Apparently the first buyer could not perform due to problems with their FHA financing.Â Â The 3`cash buyers had gone elsewhere.Â My clients were selected next by the bank who owned “Park Place” (bank as property owner-is an “REO” for real-estate owned).
Long story short, my clients are now in escrow to purchase “Park Place”.Â Of course, it ain’t really over till escrow closes.Â It is always wise for buyers of any property not to fall in love until they are moved in.Â But this one, given up for good a month ago, looks pretty good now.
So thanks Yogi, for the real estate wisdom.Â Â And I thought you were just a great catcher, hitter and 10 time World Series Champion!
The long days and sunny weather have taken me away from my computer–sorry it has been so long since my last post. I have a new iPhone (fun and without a doubt best new productivity tool in a long time–probably since my first Palm Pilot in 1996). I am available by phone or email or Twitter, Facebook, etc. if you have an immediate question, please feel free to contact me. And thanks to those of you who already have!
We are in the thick of a hot summer market here in Sonoma County. Buyers have been coming back into our market in increasing numbers since late last year. Now, nearly every property sold under $400,000 has multiple offers. First time buyers or conventional buyers with ten or twenty percent down should expect to have to write offers on multiple properties before they get “the one”. There is only 2-4 months supply of inventory available at the current rate of sales (at price points under a million dollars).
What about the new wave of “shadow” inventory of foreclosure properties being held back from the market by the bank? At this point, it would appear that the market of existing buyers (both first time buyers and investors) will absorb it fairly readily.
I have got to give credit where credit is due..Krisstina Wise is an Austin real estate broker, head of the Good Life Team. Earlier today she followed me on Twitter. I decided to check out the website of her self-described “hip” Austin real estate brokerage. I found it engaging, well-thought out, informative and professionally done. They use video judiciously and well and have some good tools for buyers and sellers. Their blog had a post on the new federal tax credit for first time home buyers. It wasn’t the feds who coined the “Property Virgin”, nor did I, so I MUST give credit where credit is due. Thanks to Krisstina and the Good Life team. Here is a bit of their post:
No joke. The 8,000 reasons to buy today are quantified in terms of real dollars â€” $8,000! Thatâ€™s right. As part of the stimulus package, Uncle Sam is offering â€œFirst-Time Homebuyersâ€ (Letâ€™s call you Property Virgins) up to $8,000 in the form of a tax credit for purchasing a home in 2009.
If you have been on the fence or if you are considering buying a home in the next year or so â€“ you must learn about the American Recovery and Reinvestment Act of 2009 â€“ The First-time homebuyer tax credit. This is a special opportunity that enables you, as a Virgin, to be one of the few who can BENEFIT from this crazy economy.
What is it? As part of the Stimulus package, a Property Virgin who purchases in 2009 is eligible to receive up to 10% of the cost of the house â€“up to $8,000â€“ in the form of a tax credit on their tax return (did we just use stimulus and virgin in the same sentence?). A tax credit means that the $8,000 is a dollar for dollar reduction in what you owe in taxes. This means that if you owed $8,000 in income taxes and you received the $8,000 tax credit, you would owe nothing to the IRS. If you are owed a refund of $1,000, after the credit you would receive a refund of $9,000! And no, you donâ€™t have to pay it back if you live in your new home for at least 3 years.
Actually both the term property virgin and first time buyer are not really accurate. Eligibility for this tax break really focuses on your property ownership status over the past three years, so you may be eligible even if you are not a true property virgin. There are some income restrictions and other guidelines here. This new incentive differs from the one offered last summer in that it is not repayable unless you move out of the home in less than 3 years.
I am not claiming to offer tax advice here, or in any venue for that matter, so be sure to talk to you tax professional to understand the ins and outs of this tax credit and how it might apply to you. And there is a sense of urgency as well. The credit, which can be claimed on your 2008 OR 2009 federal return, applies to homes purchased between January 1, 2009 and December 1, 2009, so maybe it is time to get off the fence! And please contact us if we can help you to find your first home!
The title of my last blog post was so upbeat I was a tad embarrassed on reflection.Â Was I just drinking the real estate Koolaid?
Â If you read the body of the post last week, you’d realize that my comments were a little more nuanced, but there was good reason for my optimism. I was in the midst of a multiple offer competition on a property in Healdsburg (my buyers are now in escrow and very happy), there were many properties going into escrow in the last couple of weeks in Sonoma County, and not just in the bottom end of the REO pool. Some really special country properties in Sebastopol and Graton that interested a number of my clients sold within a week of coming on the market before people could even get up here from out of town to see them. Open houses were packed all over the county. My transaction coordinator, Alise Posman, had 10 newly opened escrow files on her desk Monday morning and she is only one of several TC’s at our office.
It seems that there is a lot of pent up demand, and people with cash are deciding to invest in real estate here rather than stuff it under a mattress. Some are buying rentals, some are buying homes for the first time. Some are buyingÂ weekend homes, or rentals that will eventually become their wine country retirement homes. Some are searching for horse properties and there are some great deals at a variety of price points.
That said, I felt a little sheepish about the headline, given the brutal reality of current conditions in our country. The old title of Richard Farina’s 1966 book came to mind: “Been Down So Long It Looks Like Up To Me”. I guess we are taking these signs of life as encouragement where we can this spring.
No one has any illusions that happy days are here again but there are little glimmers of hope, kind of like the first bulbs coming up in the spring. It will be interesting to see how this year unfolds. But don’t believe if you are a buyer that you will be without competition for the best properties, well-priced and in good condition this spring. If you are a seller take heed, and do what it takes to be perceived as a deal right out of the chute. You might be pleasantly surprised.
You can take advantage of Cyrus’ two Michelin stars and have less than a 1/2 mile walk home.
…..Or Starbucks?….one half of a mile, the Tuesday night Farmers Market? …1/2 mile. The Raven Theater ?….only .32 of a mile.
These are some of the nifty facts you learn, for example, about my classic Healdsburg bungalow listing at 414 Piper Street when you visit Walkscore.com, one of the coolest real estate search tools I found in 2008.
Because their WordPress support for this template is lacking at the moment, you will need to plug in 414 Piper Street, Healdsburg to the widget in the upper right hand corner of home page of Wine Country and Horses to generate a map, walkscore and a true view of an addresses’ nearby amenities. I also use Walkscore to convey to country property clients how near (or far) shopping, schools and restarants are. Generally in Sonoma County wine country, people like to know that their lovely country home is still pretty close in to conveniences.
It’s another mashup–combining mapping technology with local directory services–the purpose?
To promote walking, health and help people to reduce their carbon footprint by choosing homes with high walkscores! I think you’d have to live in Manhattan, downtown Seattle, Boston’s Back Bay or Pacific Heightsi in San Francisco to have a higher walkscore.
The company is expanding it’s services to realtors by making a programming interface (API) available for custom use of the Walkscore engine. What a great tool to add to your real estate search portfolio (or if you are marketing a property,to add dimension to your listing promotion.)
Walkscore generates a map or street view of your targeted home and shows you the distance to all the local restaurants, shops, schools and other amenities. It can help you get to know a neighborhood you might be considering.Â I can’t imagine anyone looking for property who wouldn’t want to know their Walkscore. (and no, I don’t work for the company! )
There was no seasonal dip in newly opened escrows this December as brave (or desperate) buyers and investors sought a home for their cash, literally. Despite the horrendous news in the financial markets, the rate of sales actually increased and the number of new listings continued to decline over the most recent months. Maybe the 2 point drop in interest rates over the last three months has continued to spur buyer activity, and not just at the low end of the market (under $500K–or really under $350K).
I just got my hands on all sorts of juicy data and four major price points so you will hear more from me as I analyze the results. The steadily increasing sales continues a trend lead by low-priced REO properties we first noted in February and March of 2008. Meanwhile, here is the quick overview. (Thanks to my broker, Rick Laws, of Coldwell Banker, who is a data geek. He pulls Sonoma County real estate sales data from the local multiple listings service (BAREIS) via the Brokermetrics service.)
Since December 2006:
Pending Sales are up 96%
Closed Sales up 7%
New Listings up 48%
Given the short month, the holiday season and oh yes, the economic meltdown in the news, real estate sales are holding steady as viewed at the end of November, 2008 in Sonoma County California. I will have more detailed information by price points later in the month but here is a quick tidbit of post-Thanksgiving real estate stats. The number of units sold will increase with the final report since there is a several day lag on sales closed at the end of each month while the reporting catches up. This information is provided by Rick Laws, my broker at Coldwell Banker Santa Rosa, and is based upon sales reported via the MLS here by Brokermetrics.
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Nov 07Â Â Â Â Â Â Â Â Nov 08Â Â Â Â Â Â Â Â Â #Units ChangeÂ Â Â Â Â Â Â Â Â Percent Change
Under ContractÂ Â Â Â Â Â Â Â Â 206Â Â Â Â Â Â Â Â Â Â Â Â Â Â 455Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 249Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 120.9 %
SoldÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 242Â Â Â Â Â Â Â Â Â Â Â Â Â 320Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 78Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 32.2 %
New ListingsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 474Â Â Â Â Â Â Â Â Â Â Â Â Â Â 370Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -104Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -21.9 %
First thing that jumps out is that there were 120.9 % MORE brave souls who wrote offers on properties in this wild short month of November versus last year at this time.Â The number of closed sales is up at least 32 % year to year as well.Â Â The number of new listings has declined nearly 22 % versus last November, as many people hunker down.Â This makes for some interesting trend lines year over year, as well as expected seasonal declines in units sold as we head into the winter months.Â Â Anecdotally, the buyers are split about evenly between investors and first-time home buyers.Â Units sold are dominated by the low-end of our market, under $400,000.Â
Since the one point drop in mortgage rates just before Thanksgiving really was not much of a factor in November’s sales, it will be interesting to see how that boosts (or not) ourÂ real estate sales for Sonoma County in December.Â Â Stay tuned.
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