Posts Tagged 'selling price'

Experiencing a Purchase from a New Perspective

What I am leaving!  This is the hard part of moving.

What I am leaving! This is the hard part of moving.

In my last post I mentioned that I am in escrow on a home.   This is no minor perturbation to my life and I am having many mixed emotions.  I am excited – I am overwhelmed – I am scared!  The real description of me is I AM A CLIENT!

The process started when I realized that I could probably purchase a home this year.  I have the income substantiated by my tax returns and I have money for a down payment (as modest as it might be).   Fortunately my credit scores are up in the area that makes me a “good bet” for paying things off.   The banks are starting to lend money to normal people again and the interest rates are so low that it is hardly a factor.  The prices of homes are going up rapidly and I have seen people delay their purchase until they can no longer afford to buy.  Those were the easy things to see.  The time to purchase is now.   The difficult part is that I do love where I currently live.  However, it is pretty far from work and I do not have a garage, dishwasher or bathroom large enough to turn around in.

I struggled with the decisions that must be addressed.  I cannot afford to buy much and less in Sebastopol than if I went to Santa Rosa, Rohnert Park or Windsor.  But I decided that being close to my friends and the places I love is more important to me than the size of the home, size of the lot or about anything else for that matter.  So like a good client, I made my “must have”  list.  I must have a garage.  I must have a dishwasher.  I must be located in Sebastopol, Forestville or Graton.  (Sorry, Occidental.  It is just too much of a drive right now.)  I must have a normal bathroom with a vanity counter.  I must have two bedrooms and a second bath would be fantastic.   I want at least 1200 square feet of living space.

With my list in mind, I started my search.  Realization #1:  There are no detached  homes in my price range.  Ramification #1:  a townhome in Sebastopol is the best that I can do.  What is the difference between a townhome and a condo?  They look the same but the townhome has minimal liability from the homeowner’s Association and therefore has lower HOA dues.

I made an offer on a home off Bodega Avenue.  I loved the exterior space and could live with the interior.  I adjusted to Realization #2: I am going to have a two story home.  This home was in my price range and move in ready.  There were seven offers and it went for $55,000 over asking with an all cash offer.  Realization #3: I may need to spend more than I want to get my “must have” list.  This was very disappointing.

Then I told myself what I tell my clients.  There is something better for you out there.  You must be patient.  I reacted about the same way my clients do – Sure, Barbara, I will spend every spare minute on the Internet looking for something better.  Call me every day so that I don’t spend my down payment on a new car to cheer myself up since I will never be able to afford anything.

But within a week another unit came on the market.  The outside space is not as good – in fact it is a tiny yard and a pretty drab exterior – but the interior space is dynamite.  I could see where my furniture would go.  Not quite move in ready but close enough to make it possible.  Better location than Bodega Avenue.   I immediately wrote my offer and got it submitted.  I offered $5,500 over asking.  And then the wait began.  I gave three days to respond.  At three days, no response.  I am getting nervous.  The rooms are getting smaller.  The stove is getting older.  The floor plan is getting less desirable.  Day 4 and still no response.  By now I am thinking – I really don’t like this place after all.  It is dingy and miniscule.   When clients call me asking if there is anything they can do to get a response sooner, I tell them that they need to be patient as the only real options we have are to wait until the seller responds or withdraw the offer.  This usually elicits a sigh of disgust.  I am now sighing – heavily.  Day 5, I get my answer.  My offer is accepted.    To me it seemed over 10 days.  I now have so much more empathy for my clients.

Gal pals are great for letting you know if you are doing the right thing.

Gal pals are great for letting you know if you are doing the right thing.

I immediately asked if I could go back to see the house and take Gail and Katy – before I even have inspections.  Clients do this all the time.  We walked into the living room and it was WOW!  Other than painting and that I want different flooring, the place is move in ready.  The stove is just fine and my furniture will all fit.  I am delighted.

How did I get this home over the other many offers?  I offered a bit higher than asking (it has appraised at that amount), I took less than 10 days to remove my inspection contingencies (I have the best inspectors), I accommodated the tenant and have a long escrow (71 days to be exact) and I have a reputation of getting the escrow closed.  Whatever really made the difference, I don’t know but I believe that I was meant to move to Sebastopol and live in this lovely home.  I am now 33 days from home ownership and delighted with the prospects of settling in.

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Why I am looking for a home!

I don’t think I have ever posted someone else’s writing.  But this is so well said that I needed to post it for you.

me buyers face dilemma with shortage

Kathleen Pender
Published 3:28 pm, Saturday, March 9, 2013
  • The home at 2334 Clipper Street in San Mateo that received dozens of offers and sold for far above the asking price. Photo: Courtesy Claire Haggarty / NBT, NBT Realty Services

If you buy now, you might have to pay above asking. But if you wait, you could end up paying an even higher price and a higher interest rate if you need a loan. That’s because inventory won’t improve until prices rise enough to get more homeowners to sell and more builders to break ground.

The inventory shortage is especially acute in California. Of the 30 largest housing markets, the four with the biggest drops in homes listed for sale on Zillow in February compared with February of last year were Sacramento (48 percent), Los Angeles, San Francisco (41 percent) and San Diego.

Although listings are increasing on a month-to-month basis as the busy spring season gets under way, Trulia Chief Economist Jed Kolko predicts they won’t start rising on a year-over-year basis for a year or more.

An example of that: “In all of Millbrae, there was one listing two months ago. There are about a dozen now,” says Roger Dewes, a Coldwell Banker agent on the Peninsula. In a normal market, there might be 20. “We are not there yet, but going from one to 12 is quite a leap,” he says.

Experts cite five factors contributing to the inventory shortage:

— Fewer foreclosures are hitting the market. “California did a good job of disposing of its backlog” of distressed properties, says Zillow Chief Economist Stan Humphries.

In California, where most foreclosures are handled out of court, the process is taking about 11 months on average, according to RealtyTrac. In New York and New Jersey, where foreclosures go through a court proceeding, the process is taking 36 and 32 months, respectively.

— Many people still owe more than their homes are worth. If they sold now, they would have to come up with extra cash to pay off their loan. Although prices have rebounded from their lows, 23.3 percent of homes with a mortgage in San Francisco, San Mateo and Marin counties were still underwater in the fourth quarter of 2012, according to Zillow.

— Even if they are not underwater, many owners won’t sell for less than they paid. If they bought near the peak, it may take a while before they are ready to budge.

The median price paid for a new or resale home or condo in the nine-county Bay Area was $415,000 in January. That’s less than halfway between its low of $290,000 in March 2009 and its high of $665,000 set in June/July 2007, according to DataQuick.

— Many people, even if their homes are worth more than they paid, won’t sell because they are afraid they won’t be able to buy another house. “It becomes a game of musical chairs; they are afraid to get out because they can’t get back in,” Humphries says. This becomes “a self-reinforcing cycle” that keeps homes off the market.

— The housing bust put new construction on hold.

The shortage comes at a time when demand is rising in the Bay Area, not just from regular buyers but from investors, second-home buyers and foreign buyers, especially from Asia.

‘Heck of a wreck’

The result is stories like this: A 1,500-square-foot home on Clipper Street on San Mateo’s east side, advertised as a “heck of a wreck,” attracted 97 offers in the first eight days, says listing agent Claire Haggarty of NBT Realty Services.

The home was listed in mid-January at $375,000, which Haggarty considered “a little under market.” It sold for $510,000 in an all-cash deal with no inspections, no contingencies and a 10-day close.

At some point, prices will rise enough to shake lose more inventory, but it won’t happen immediately.

Based on what’s happening around the country, Kolko says inventory tightens fastest in the first 12 months after prices hit a bottom. “Everybody wants to buy at the bottom and nobody wants to sell at the bottom,” he says.

Real Estate Market in Sonoma County – Many Offers and Cash is King

On October 1 I entered 152 Firethorn Drive, Rohnert Park into the MLS.  After a week of constant showings and a well attended open house, I received 10 offers on October 8.  We accepted a full cash offer from a party that was willing to do inspections during the period of review for a preapproved short sale with Bank of America.  The sale closed on October 30 with no hitches.  This home was a fixer but was in a great location and had good “bones”.

Yesterday I learned that an offer we submitted on a major fixer in the Rincon Valley area of Santa Rosa was not the winning bid.  They received 17 all cash offers and ours was the only one for an owner occupant.  The asking price was $229,000.  I believe that the final contract price was around $255,000.  We will not know until the property closes.  What is a “major fixer”?  The roof was caved in at one spot and the floor boards underneath were rotted through.  Read the article below and you will learn that this is not an unusual scenerio.

Realtors’ 2012 Housing Survey:

Competition Is the Name of the Game in California

A highly competitive market pushed California’s housing recovery into high gear in 2012, forcing homebuyers into bidding wars for available homes and rewarding sellers with the strongest prices seen in years.

A new report — the California Association of Realtors’ annual Housing Market Survey — helps explain the dynamics of today’s market.

The survey found that 57 percent of home sales received multiple offers in 2012, the highest in at least the past 12 years, with each home receiving an average of 4.2 offers, up from 3.5 in 2011. Lower-priced homes – typically short sales and bank-owned properties known as REOs – attracted more offers than equity sales. Seven of 10 short sales and REO sales received multiple offers, while only half of equity sales received more than one offer.

Such a competitive housing environment has led to more properties selling at or above the list price, with 41 percent of homes selling without a markdown from the asking price, the highest since 2005 and up from a long-running average of 32 percent.

Additionally, homes sold faster in 2012, with equity sales selling in 32 days compared with 67 days in 2011. REOs took 30 days to sell compared with 50 days in 2011, while short sales took 90 days compared with 141 days in 2011, reflecting the still-difficult process.

Many regions in the Bay Area saw even tighter markets.

“San Francisco saw a higher percentage of multiple bids than the statewide average,” said Patrick Barber, president of Pacific Union International’s San Francisco region. “A solid majority of homes here are selling at or above the asking price.”

Chart showing the share of home sales with multiple offers.

The share of California home sales with multiple offers is the highest in at least 12 years.

In the East Bay, nearly 70 percent of home sales received multiple offers in the third quarter, and many homes went into contract within two weeks of coming on the market.

Across the state, the competitive market is being fueled by favorable home prices and record-low interest rates combined with pent-up demand and a severe shortage of available housing.

“Well-qualified buyers are recognizing the once-in-a-generation opportunity to purchase a home in California and are jumping into the market,” C.A.R. President LeFrancis Arnold said in a statement accompanying the survey. “However, the fierce market conditions have forced many buyers to compete with all-cash offers and investors, setting off multiple offers and bidding wars, making it even more difficult for first-time buyers to become homeowners.”

Other findings from the survey:

  • The percentage of homebuyers making all-cash purchases has more than tripled in the past 11 years, from 9 percent in 2001 to 30 percent in 2012.
  • Demand for investment properties and second homes remained strong in 2012, with investors accounting for 16 percent of sales and second-home buyers for 7 percent. The remaining 77 percent purchased homes as a primary residence.
  • International buyers accounted for 5.8 percent of sales in 2012, relatively unchanged from 5.7 percent in 2011. Buyers from China, Canada, India, and Mexico made up the vast majority of international buyers at 39.1 percent, 13 percent, 8.7 percent, and 8.7 percent, respectively.
  • Reflecting tighter lending standards, very few homebuyers have a second mortgage. The share of home sales with a second mortgage has fallen dramatically from a high of 43.4 percent in 2006 to 1.8 percent in 2012.

The C.A.R. report was based on a questionnaire sent to a random sample of 15,000 real estate agents  throughout the state.

 

Short Sale Senario in March 2012

It is mid-March and I am thinking, “Where did February go?”  I only managed to get three posts written and the last one was mid month.  I have not been vacationing or slacking – the real estate market in Sonoma County is on fire.

A great deal of my time these days is handling short sales – both as a buying agent and as a listing agent.  I get many questions about short sales and think it is time to write a primer for the uninitiated.

What is a short sale?   A short sale occurs when a home is sold that the sales price of the home is lower than the loans secured by that home.  In most cases today, the lien holders, usually banks, agree to take less money than they are owed instead of foreclosing on the home.  But the banks will do this only if they cannot get all of the money from the borrower.  The banks require a hardship and proof that the borrower cannot pay the loan amount.  If the borrower has sufficient assets to pay the loan down to where the sale will cover the loan, the bank will require payment in full.

How long does it take to get a short sale approved?  That depends.  And I really cannot tell you what it depends upon.  I have had a short sale approved in days and I have had one take over a year.  I recently heard that the average time for approval by the lenders on a short sale is three months.

Why does it take so long?   To the best of my knowledge, the process for a short sale starts either when the property is listed for sale or when an offer is accepted.  Different lenders have different guidelines as to if an offer is needed before they will accept a file.  If they do not accept files prior to receiving an offer, the process just starts later.  Once there is a file, it is put in a pile to be assigned to a loss mitigation officer.  This can take weeks.  Once it is assigned,  the loss mitigation officer examines the seller’s financial information and reviews the “hardship” letter.  Add at least a few more weeks for this to happen.  Most of these folks have hundreds of files on their desks so the first one in is the one they are working on.  If the seller is accepted as a short sale candidate, the file is passed on to someone else in the bank.  Again, it goes to the bottom of the pile.  When the file surfaces to the top, an appraisal is ordered which can take another few weeks.  The bank determines what they are willing to accept (this seems to go rather quickly) if it is the same person but if it goes to another department, it can take time to get to the top of the pile.  At some point during this process, the listing agent works with the escrow company to determine what the net proceeds will be based upon the offer accepted by the seller.  The document the escrow officer prepares is called a HUD-1.  The listing agent then prepares a package that includes the offer, the HUD-1, the seller’s financial information (updated), the buyer’s proof of funds to purchase and whatever specialized forms that lender may use including some government forms.  At this point, an acceptance can be issued.  After all of this waiting, the lender asks that closing happen in 30 to 40 days.  If there is a second lien, the whole process may need to be repeated with the second lender.

Why would I want to do this?  Good question.  With short sales becoming the preference over foreclosures, more and more homes are being sold short.  You may not be able to find the home you desire without considering a short sale property.  One benefit of purchases from an owner (other than from a bank after foreclosure) is that the seller must provide information on the home i.e. repairs made, nuisances in the neighborhood.  Banks are not required to provide this information.  There was a time that short sales were considerably lower priced than other sales but that differentiation has gone away.  Today the varying factor is the condition of the property.  Some short sale properties have not been maintained due to the financial hardship of the seller.  In those cases, you will find that the lower price is often below the amount it would cost to bring the property up to good condition.  This is why there is an active business of purchasing and remodeling homes – flipping is what it is called.

Who is the best buyer for a short sale?  The ideal short sale buyer is patient, can move quickly when the bank says to move and can is comfortable with not knowing what is going on.  If you are that person, you can have a great transaction.

Setting the Value of a Property

A Distressed Property that Looks Great

This last week has been a busy one in Real Estate.  I am asked many questions about the process of buying or selling short sales and bank owned properties (REOs).   I just listed a great home in Santa Rosa that is not a “distressed” property.   The question came up as to what is the pricing difference between “distressed” properties and those that are not.  I always respond that the prices are about the same for the same condition.  But often distressed homes are not in as good a condition as those regular sales.  Below is an article on appraisals that was sent to me by Ron Shaw of Paramont Equity.  I think that it gives a good description of the values given to different sales conditions.  Hope you enjoy it.

The Appraisal Institute recently released guidelines to instruct its members on how to deal with distressed sales and foreclosures when seeking comparables.
According to the Institute, some homeowners claim appraisers have undervalued their homes by relying on nearby foreclosed homes and distressed sales as comparables to their properties.
In a recent announcement about the new guidance, the Appraisal Institute states that qualified appraisers “know what adjustments to make, if any, when using distressed sales as comparables, for such methods are taught in basic coursework and updated seminar materials available to professional appraisers.”
Regardless, because the issue is “particularly crucial” in the current market where distressed sales are common, the Institute is offering additional guidance.
The new guide instructs appraisers to rely on less recent sales and broaden their geographic parameters when they cannot find an appropriate comparable within the traditional boundaries.
In general, “foreclosures and short sales usually do not meet the conditions outlined in the definition of market value,” the Institute says.
Short sales may involve “atypical seller motivations,” and foreclosed properties may be damaged or deteriorating. However, “appraisers cannot categorically discount foreclosures and short sales as potential comps in the sales comparison approach,” the institute states.
“As is always the case in selecting sales to use as comparables, appraisers must investigate the circumstances of each transaction, including whether atypical motivations were involved, sales concessions were involved, the property was exposed on the market for a typical amount of time, the marketing program was typical, or the property condition was compromised,” the guidelines state.
When using distressed sales as comps, appraisers must assess all aspects of the sale and decide whether it is appropriate to make an adjustment due to uncommon conditions.
 

So when you are deciding what to offer on the property, the condition is what is paramount – not the type of sale.

 

2012 Has Started with a Splash

510 Bohemian Highway, Freestone, CA

January is half over and I am only on my first blog of the year.  I plan to write weekly but things keep taking my time.  I returned home from Hawaii on January 10 at midnight and was answering text message at 8 AM.  There has hardly been an hour that I have not been scheduled in the last 8 days.  I don’t bring this up because I need to act busy and important.  No – I bring this up because real estate is very busy.

Kitchen of 510 Bohemian Hwy

Statistics of Single Family Homes for the first two weeks of the year in Sonoma County are:

237 New Listings of which 71 are short sales and 52 are bank owned.

314 Properties went into contract of which 143 are short sales and 72 are bank owned.

176 Homes sold with 34 being short sales and 49 being bank owned.

Notice something here?  Short sales are going into contract a lot faster than they are closing.  There are plenty of “regular” or “equity” sales – sales where the sellers have equity in the home and the sale is not due to a distress situation.   If you are looking for a great price on a new home and do not mind the uncertainty of a closing date, a short sale may be the answer to your dreams.

View from the Living Room

This week I listed 510 Bohemian Highway.  The address is officially Sebastopol but most people refer to it as Freestone.  Freestone is a very small town that is home to Wildflower Bakery and Osmosis Day Spa.  It is a wonderful place.

The home at 510 Bohemian Way is situated on 5 acres with a panoramic view of the Freestone Valley.  The land is a gentle down slope that holds a garden full of exotic and fragrant plants.  The house is 3 bedrooms and 2 baths.  The floors are wide planks and the counters are concrete.  This home must be sold in the next three weeks.  While this is a beautiful home much loved by the current owners, it is a distressed property that will soon be foreclosed by the bank holding the note.  My expectation is that the property will sell for around $700,000.  It is a steal at this price.  If you have any interest in living in lovely Freestone, please send me a message or give me a call.

Garden View

2011 Has Been A Wonderful Year

Happy American Canyon Buyers and Los Altos Sellers!

The last day of 2011 and what a year it has been.  When January 2011 came around, I had no idea where I was going or what the year was going to bring.  My first post was about the increased and difficult business of real estate.  Thankfully the volume continued and I am pleased to report that I closed more transactions than I have in any other year of my real estate career.  The year finished as it had begun with a flurry of activity.  Alas, the difficultly continues as sales are plagued with late appraisals, slow loan approvals and the hurry-up-and-wait process of short sales and bank-owned properties.  Home values have continued to decline except in those few areas where the prices fell so precipitously that there is nowhere to go but up – specifically Rohnert Park has seen some price increases in single family homes.  This December was a very busy month.  Not only was I working on Sonoma County real estate but I closed transactions in American Canyon (Napa County), Los Altos (Santa Clara County) and Lakehead (Shasta County).  These put a few miles on my car but I love working with great folks and these buyers and sellers were top-notch in my book.  I would go anywhere in the State of California for people like them.  And speaking of going – I only attended 8 parties in 14 days during this frenzy of work.  I needed a rest week after Christmas.

View from a Bedroom Window - No difference which one - they are all fantastic!

I am starting 2012 with a listing that I expect to be of great interest to anyone looking for a luxury weekend getaway.  Privacy, space and up-to-the-minute elegance is the best description.  This modern tree house is in a wonderfully sunny spot on Green Valley Road.  It will hit the market late January and you can be certain that you will see it on this blog.  There are many people looking for bargains in real estate and I am working to serve them.  But enough about 2012.  This post is about 2011!

The statistics for this blog were sent to me today.  Around 5,300 hits in 2011 with 35 posts.  I have made a New Year’s resolution that you will get a weekly update on Sonoma real estate.  This is something I follow and I should be sharing the information.  I was surprised to learn that my most read post in 2011 was the one I wrote in May of 2009 on our Redwood Empire Rose Show.  I guess that tells me that I should be more diligent about reporting on the Rose Society.   And, of course, I will continue sharing events around Sonoma County and my travels.  I don’t expect much traveling this year but then, one never knows.

Just a quick report on the Sonoma County real estate numbers.  Here are some numbers comparing November 2010 to November 2011.  The months of inventory (meaning – at the rate houses are selling, how many months would it take to sell all the houses on the market if no new ones were added for sale) has dropped significantly from 5.9 months to 3.3 months.  This is an indicator that buyers are taking advantage of these great prices and low interest rates.  Another interesting fact is that while the average list price has increased from $616,000 to $773,000 (about a 25% increase), the averages sales price has only increased from $374,000 to $386,000 (only a 3% increase).  This tells us that more expensive houses are coming onto the market as owners realize that holding out for better prices may not be a good idea.  The lower priced homes are not getting any lower and the higher priced homes are seeing a price compression.

Maike in Kauai

This last week I have spent on Kauai with my granddaughter – oh, and her parents and my friend, Katy.  What a great way to spend Christmas – no hassle, no clean up, no expectations.  We have had a wonderful time and I may get to reporting on our activities here.  But now it is New Year’s Eve and I wish the very best of 2012 to all my readers, colleagues and friends.

View of Bali Hai from the St. Regis Beach


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