Archive for the 'Sellers' Category
In the last two years the median home price in Sonoma County has increased a combined 36-38%. Each individual home has not appreciated at the same rate but home are selling more quickly and for more money than they did two years ago. Inventory continues to be low. At the current rate of sales through December, 2014, all the existing homes on the market would be gone in less than TWO MONTHS. Historically the market would be considered balanced if there were 4 to 6 months of inventory. A market favoring buyers would have more than six months of inventory–we have not seen that condition since 2009 to 2011. Here is a look at the Month’s Supply of Inventory for the last year.
This graph looks at the inventory supply for “Pended” homes–that is, newly opened escrows. That is a more current view of activity than “Closed” sales which looks at sales that were new escrows a month or so ago. If I look at Months Supply of Inventory for Closed Sales then supply would be 1.2 months. So if you are a buyer the more current view might be slightly more encouraging.
What does this mean for me if I am a seller? It is safe to say that now may be a very good time for you to put your home on the market at a strategic, enticing price and have it showing in top condition. You may attract multiple offers, sell quickly and for more than your asking price. Great news for sellers, right?
What does it mean if you are a buyer? Should you fold your tent and go hide somewhere? NO! My buyers who won out in multiple offer situations last year set a limit as to how high to go over asking and stuck to it. This year those houses are worth on average 12 percent more. Prices are rising. List prices are not an indication of value but if chosen wisely will get the seller maximum exposure and the best true indication of market value–that is determined by the actual number a willing buyer and a willing seller will meet on. More buyer advice in my next post…
Happy Holidays everyone! 2013 has been a great year–a return to “normal” (whatever that is) in the real estate market for 2013. If December’s activity is any judge, I suspect that early 2014 is going to be a very strong market. My gut tells me we will see more appreciation again this year, with many moveup buyers within the county and many continuing to relocate or buy second homes here in 2014. We will see more “chains” of linked transactions as a seller sells and becomes a buyer on the next transaction and so on along the tree of real estate life. I hope you take advantage of the holidays to be with your loved ones and to have a respite from our busy world. We will be taking a short break and will be back in the office on Monday January 6, 2014! See you then!
Five Years Later A Shift of the Tides in Sonoma County Real Estate
In case you are wondering why I have a video of the San Francisco Bay Model embedded here–it is a throwback nod to my first blog post in 2007, when I used the Bay Model as an analogy to explain Sonoma County’s relationship to the Bay Area Real Estate Market. Well, just as our market seems to have a fresh start–so does the Bay Model–which completed a two year refurbishment earlier this year–you can take a look above! As I said in that earlier post, the Bay Area real estate tide eventually floats Sonoma County’s real estate market boat. We used to say that our market was about 18 months behind the Bay Area market but I believe that is changing for certain marquis properties–country estates in Healdsburg and Sonoma for example, or very stylish homes in walking distance to the Plazas of either of those towns. That is where the Facebook effect is being felt here, as multimillion dollar homes or vineyard and equestrian properties are being snatched up by cash buyers.
What does this mean for you as a home buyer today?
You must have your ducks in a row to be competitive in this market. There are multiple offers at most price points and thirty percent of buyers (also at most price ranges up to millions of dollars) are cash buyers. That means full pre-approval if you are applying for a mortgage. Proof of funds if you are paying cash. If you need a referral to a good lender, I know some great lenders that I trust who can work with you to understand your options. Let me know if I can refer you. You cannot write a serious offer to buy a property without pre-approval from a lender and proof of the funds needed to close.
What does this mean for you as a possible seller?
The market for your home may be stronger than you think. While prices are not what they once were, you will find a much more active market to sell in to, and you will find great values for the next home you wish to purchase. We are seeing significant overbids for strategically price properties and prices may be coming up a few percent. Activity is strong at all price points. Million dollar plus properties that might have sat on the market for months last year are selling quickly this year. Days on market are half of what they were last year. Even if you get less in the sale of your property than you might have at the peak, it is a lot more pleasant to sell quickly and minimize the stress of showings. Please feel free to email or call. I can help you to determine the value of your home and what your priorities should be for preparing it for market, either now or next spring. It makes sense to get a head start on preparations.
What if Your Home is Underwater?
If you owe more than your home is worth, there is better news now as well. It has taken years, but most lenders are far, far better at working with you and your agent to sell your home in a “short sale”, so the options for you are better than they have been in some time. Please check in with me to discuss your options. I have listed and sold several short sale homes and it is far easier now than it used to be. Most experts feel that the number of actual foreclosures will continue to decline as more and more lenders have improved their short sale processes. They can realize more on a short sale than in a foreclosure. As property values increase of course fewer homes will be underwater. And that is good news.
The San Francisco Bay Model is a 1.5 acre scale model of San Francisco Bay from the Golden Gate to the Delta. It is definitely worth a trip to Sausalito in Marin County to see. I had the good fortune years ago to visit when it was operating and to listen to a talk by a well known yacht racer from San Francisco Bay as he discussed the tactical use of the tides in sailboat racing on the bay. Very cool stuff–before I got back in to horses I spent my weekends racing sail boats on the bay and off shore on the coast, so the tactical tide tips came in handy.
Over the last year we have seen a broader range of quality wine country properties for sale in Sonoma County, with sellers who are more realistic about pricing. That combination, and ultra low interest rates, have brought out of the area buyers out in force. In 2011 and 2012 alone I have worked with people from the East Bay, San Francisco, France, the UK, Idaho and Texas for a start. There is a lot of competition for the best properties, and as a smart buyer you will want to do your homework to find the best spot and country package for you!
That said, it is possible to find a special property within an hour’s drive of the Golden Gate Bridge (more or less) that can give you years of pleasure and rejuvenation. So where do you begin in your search for a wine country home?
Begin with the End in Mind!
(with a nod to Steven Covey in “The Seven Habits of Highly Effective People.”)
When I first start to work with new clients I spend a lot of time learning what they hope to accomplish in working with me–what are their ideal outcomes, where would they like to be six months from now? In that way I can learn more about their values and how to serve them most effectively.
With buyers in particular, I often offer a visualization exercise to help them envision their ideal home. For people coming from outside California this really feeds in to their “w00-woo” image of us! But I have worked with doctors and lawyers and other very left-brained individuals and couples and found that this exercise serves them as well as it does all the right-brained folks who are ready to jump on board. With country property or horse property, we are not only talking about types of homes but types of grounds, terrain and microclimates. (Disclaimer: this could be a huge post but I am going to try to break the topic in to bitsized pieces!)
To get back to Stephen Covey:
Habit 2 is based on imagination–the ability to envision in your mind what you cannot at present see with your eyes. It is based on the principle that all things are created twice. There is a mental (first) creation, and a physical (second) creation. The physical creation follows the mental, just as a building follows a blueprint. If you don’t make a conscious effort to visualize who you are and what you want in life, then you empower other people and circumstances to shape you and your life by default.
Why is this step so important to purchasing a second home or a new main home in Sonoma County’s wine country? I was discussing this with clients (now friends) the other day at Sunday brunch. During the week they live in San Francisco’s Noe Valley. In 2007 we found them a second home in the countryside of Northeast Santa Rosa. The other day they said to me, “we had no idea we could find the perfect country property in Santa Rosa! All we knew were Napa and the Russian River area”. When we met they had already looked at property in Napa County to the east and Lake County to the north. Lake County was too far from home in SF and in Napa they could not find the “wine country experience” they wanted to have at a price that made sense for them.
They each had a sense of what they wanted to acheive in a second home and we worked to clarify that vision. They wanted a certain experience of peace and privacy, to be surrounded by nature and inspiring views, to have a pool and home where they would enjoy entertaining friends and family. They wanted a complete get away from it all experience that was still accessible, ie only a maximum one hour drive from SF.
They both have pretty high power jobs that entail a lot of travel so it needed to be easy to get to enough that they would be there regularly. It didn’t really matter what Sonoma County town it was in so long as it met their criteria. NOTE: This is an important point to consider in your property search! To find the right combination of terrain, vegetation, house and views, there are a dozen or more areas you can consider, and should consider, to find the right package for you.
As Jeff and Brian told me, most of their friends and colleagues in the Bay Area did not know much about specific Sonoma County towns so we looked in a variety of communities–“West County” aka Sebastopol, Occidental and Graton, Northwest Santa Rosa and Forestville and Northeast Santa Rosa, where we finally found their home. With other clients we have expanded that list to include Healdsburg, Windsor and Guerneville, Sonoma, Kenwood and Glen Ellen and other parts of Santa Rosa.
As a country property specialist, I make it a point to search out the best listings in a wide area to meet my clients’ needs. It is very difficult in our market of a collection of charming small towns and countryside to focus only on one community. I recall from my own search for my country home covering a very wide swath of ground till I found the right setting and home for the horses. I ended up buying in a place I had not even considered initially and am very happy with the choice. Later this month we will look at other aspects for finding your wine country home.
(HINT: If you are a seller of such a wine country property, please call me, we need more inventory to sell, and that is a topic for another post soon!)
A winter chill seemed to come early to Sonoma County’s real estate market. Sales were at their lowest level for October since 2007. Sales also dropped from September of 2010, which makes me wonder if the news of robo-signing of foreclosure documents just put a huge wet blanket on already skittish buyers.
Inventory was up only slightly, and newly pending sales maintained a very good pace, belying the drop in closed sales. It is possible that all the concern about the possible risk of buying foreclosed properties put a damper on sales. In that case short sales might be marginally more attractive to buyers. (Editor’s Comment: it is hard to make a short sale (they are anything but short) attractive to a potential buyer, but if it is the only game in town then I guess they look better, more about that in another post.)
The median home price dropped about 9% to $342,500. It has been bouncing around in the mid-$300,000 range for over a year.
I have been tracking home sales on this blog since mid-2007. This is the first big (non seasonal) drop in sales volume since late 2008. One month does not a trend make however. It will be interesting to see if is a temporary reaction to the headlines, or represents a more sustained trend.
What does this mean for you if you are a Buyer? If your income situation is stable (a big if for a lot of people), then this winter could present an excellent buying opportunity. Rates have dropped even since the summer to a decades low. Bottom line if you are a buyer now and the numbers work for you, this may be a great chance to buy with less competition at very low cost.
If you are a Seller? Without a doubt the drop in sales has got to give you pause if you are a seller. However, to whatever degree there is uncertainty about foreclosure inventory, your “normal” home is going to look a lot more attractive, but not if you overprice it.
I can think of any number of “normal” homes that are not priced in line with the competition and are just sitting, getting stale. If you are considering selling within the next two to three years, then you will want to be aggressive and pro-active about how you approach your sale, given the circumstances. It is better to be ahead of the market trends if you are a seller, not behind them.
Your home is not going to sell at a good price if it doesn’t show in tip top condition, and not if your listing agent does not know how to market it online. (Hint: talk to me about what it will take to get your home sold in this market!)
Anyway–for a closer look at the sales data and trends, visit the document below. You can find previous sales data for Sonoma County there as well.
And if you have any questions about Sonoma County real estate, and what these numbers mean to your real estate situation, please email or phone me.
I stepped away from the office to admire the sun streaming through a
very large Japanese maple in the back yard. It is brilliant red orange
sorrounde by the lemon yellow leaves of two adjacent mulberry trees.
This was shot with my iPhone.
As I head off to Thanksgiving dinner in Sebastopol, I want to say how much I appreciate all of you who visit this blog, and of course I want to thank all my clients for entrusting me with the important business of selling or buying your homes, as well as your referrals to your friends and family. I am privileged to work with some wondeful people–thank you so much!
A Photo of a Google Tricycle scanning a neighborhood for Google Street View
And I am not talking about the weather. Increasingly, information about US homes lives in the cloud, served up over high speed internet connections. For example, the National Association of Realtors is rolling out its own real estate database (directory) called Residential Property Resource–its goal is to provide comprehensive data on 150 million homes in the United States. (For a description and first take to the recent announcement, click here.)
Google has been moving in this direction for several years. I recently wrote about Google Map’s 3D Modeling Tool, Sketchup, and the ability to search real estate listings in Google Maps. Also, Google Street View in Google Maps simulates a 2D drive-by of many properties. Google Maps gives satellite views of most properties and their goal is to have a place page for individual structures.
So even before your home is on the market–there is already a lot of data about it on-line.
As a practical matter, if you are selling your home, make sure your agent knows how to take advantage of these tools and at the very least, is aware of how your property presents online already and that it is accurate.
I have used Google Maps to look at aerial views of country property for example, and sometimes the pin indicating the property address is literally a mile or more away from the actual location and put it in the middle of a flat vineyard rather than a scenic hillside. I know that but a potential buyer may not. Or on one country property listing I had, the pin gave a very misleading view of the house’s location in relation to the neighbors. I was able to relocate the map pin to the home site, which gave a more accurate view of the home in relation to the acreage surrounding it.
Google Street View adds a whole other dimension, literally, to the cloud view of your home.
Google actually sends people out in cars (lots of hybrids supposedly) and on tricycles to photograph neighborhoods, as in the photo above. Kind of creepy actually. Unfortunately, sometimes the photos on Google Street View are not very current, as a I discovered on one of my listings earlier this year. The home had be re-roofed and painted a year earlier but the Google Street view was a before picture which prominently featured the garbage cans and dumpster in front of the house. The listing flyer software we were using automatically included a Google Street View of the property, but it was very misleading. I was able to tweak it slightly, and chose not to link to it in my marketing materials since ultimately it was giving the wrong view of the property.
Every buyer I work with, especially the ones who are from out of town, from Marin to New York to Piedmont and Palo Alto, studies Google Maps to learn about properties that they are interested in. If they don’t like what they see, they move on. That is why it is important for you and your listing agent to know how your home looks out in the cloud because these tools will either be working for you or working against you.
Stephen Fells of Agency Logic, a real estate marketing company in the East Bay, has been blogging up a storm lately, and he recently drew my attention to some amazing new tools by Google. Recently a FREE 3D modeling tool called Google SketchUp made its debut–this will allow anyone to create a 3D model of any image. Imagine a 3D flyby of your home for sale, or a virtual fly by of the town you want to move to! Check out the tour of LA and San Francisco, below. (The song is great too!) And oh! Imagine your home for sale here!
(Note: the second video talks about the community effort involved in rendering the images. I wonder how much of these were done with the free tool and how much with the Pro Version?)
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.
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