Monthly Archives: March 2013

A Mini-Bubble or More?

Bubbles_3D_wikimedia-commonsWhere were we?  Oh yeah.  Coming to the close of another multiple offer frenzy on a new listing of mine that was still getting prepped and ready to go on the market less than three weeks ago.

Crazy.  1999 or 2005 all over again.  Buyers and Agents and friends and family and friends of friends of family all tripping over themselves and each other to buy.   Open houses with wall-to-wall people. Milling around, Scratching their heads.  Doing all those rapid-fire internal calculations about how to make it work.

All the while looking out of the corners of their eyes at all the other people doing the same exact thing.  Eavesdropping on conversations. Mentally noting the hundred plus Realtor cards piling up on the kitchen counter.  Peering into the attic.  Ringing the doorbell.  Turning on the kitchen faucet. (House hunting equivalents of kicking the tires.)  Speed reading the home inspections on the table. A scene that would have been unfathomable just a year or three or five ago.

But here we are. A Buyer’s market that somehow morphed into a Seller’s Market overnight.  However unfair it seems to Buyers wishing they’d summoned up the courage to go for it last year. Or better yet, the year before when so few other people were “going for it.”

Now?  There’s a huge release of pent up…demand?  Somehow that just doesn’t sound like the right word.  Demand sounds so definitive. So lacking in restraint. Devoid of ambivalence.

This market feels different.  But I think we’re stuck with the term for the time being. I’m open to suggestions.  Don’t hesitate to e mail or text your thoughts.

The cautious conservative in me (some call the contrarian) still says the jury is out.  Who knows if this is going to last? Maybe it’s like what they call a false recovery in the stock market.  What happens when lots more inventory is coaxed onto the market by rising prices and even more multiple offer frenzies?   Will that automatically slow things down?  With more listings – will it seem so imperative that Buyers buy now?

Will this turn out to be a little mini-bubble along the larger continuum of a much slower, bumpier climb out of the hole of the housing crisis? What happens when interest rates inevitably rise? Will that stifle enthusiasm by making it clear there’s a huge gap between simple demand (everyone wants a home) and effective demand (not everyone can afford a home just cause they want one.)
Of course, if they can figure out a way to start giving out free mortgage money again in the form of No Income No Asset Verification Loans,  or 100% Subprime Loans with a 10% HELOC  thrown in like a cherry on top, anyone who wants wants a home will be able to buy one.  But…I don’t see that happening anytime soon.

The rational exuberant in me says go for it.   Jump into the fray.  Quit holding back.  Lock in your future with a 3.75% 30 year fix.  Gird your loins and get ready to compete because this isn’t going to stop anytime soon.  Real estate is stepping up and back into its traditional role of leading the Country’s economic recovery.  Don’t wait till next year cause you’ll be even sorrier than you are now.

But this is still a selective madness.  It’s not happening in all price ranges yet.  If you are looking between $400,000 and $800,000  – better roll up your sleeves and prepare to duke it out with lots of others.  Above that?  There’s more interest. More activity.  But it hasn’t risen to a ground swell in those upper echelons…yet.

So, the listing I put on?  $649,000 list price.  19 offers. 10 multiple counter offers. A steel cage wrestling match between buyers and other buyers. All jockeying for position.  Participating in a blind poker game where the Seller is the only one who knows the cards of all the other players sitting at the table.

The winner in this case?  A no contingency offer with a seven day close. Recorded yesterday.  More than $100k over list price.  Not the highest offer in the bunch. But never underestimate the power of short timelines. Or even better – no contingency timelines.

Important piece of information.  A higher price is a good thing. But it’s not the only thing.   Let’s talk about navigating more effectively through the multiple offer process next week.

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Tips for Weathering the Perfect Storm

stormWhere did we leave off last week?  Oh yeah. Right in the eye of a perfect storm. “Perfect” in a good news or a bad news kinda way depending on whether you are a Seller or a Buyer in this suddenly transformed marketplace of ours.  You know- a market where the volume has cranked past decibel level twelve and the artist formerly known as Prince is partying again like it’s 1999 and there’s no tomorrow.

My newest west side listing went “live” exactly 12 days ago. Calls began. People rushed the gates.  Madness ensued.  Buyers continue to lay siege while curious neighbors continue to look on, scratching their heads, wondering what all the hubbub is about.  Perhaps somewhere deep inside starting to get the tiniest notion that maybe now wouldn’t be a bad time to sell their homes either.

Let’s tabulate up the results.  Some simple metrics might provide a snapshot of what’s going on in the larger marketplace.  Specially when it comes to properties “in the zone”.  The special sweet spot that includes anything and everything listed between $500k and $800k.

Take an average $649,000 listing.  Add a decent sized lot or location. Toss in some curb appeal or a little touch of soul or upside potential. And voila – the price is right.  Whatever it is.  That’s what buyers can afford.  That’s what buyers are looking for in bunches.

In 12 days there were: 150 phone calls, 97 separate showings,  80 Realtors through a Brokers Open, 436 visitors through two weekend opens, 682 flyers taken,  275 e mails sent,  19 offers received (18 over list price), 10 multiple counter offers issued.

And hopefully, by the end of the day today…we’ll have the 1 right Buyer for the property.

Great for the Seller right?  But what if you are a Buyer? And what if this is your price range too?  How do you compete with the crushing tide of other like-minded buyers that are crowding each other into and out of contention?

Complicated stuff. A grueling test of patience and perseverance with a little bit of luck, fate, synchronicity, kismet, karma and divine intervention thrown in for good measure.  Buckle up. It’s going to be a marathon and a hundred yard dash all rolled into one.

So what do you do? Where do you start?  Here are just a few suggestions culled from the experience of the past 12 days. Read em and weep. Or read em and begin to reap a better perspective.

⁃    Accept the fact that you will be competing. Don’t fight it. Embrace it.
⁃    Be prepared. Then be more prepared. Just when you think you couldn’t be more prepared, prepare some more.
⁃    Get a local Agent. Get a local Mortgage person.  The quality of the people representing your offer makes a huge difference.
⁃    Don’t call the listing agent and ask them to show you the property if you have your own Agent.
⁃    If you have your own Agent don’t pretend you don’t.
⁃     Don’t stiff your own Agent – it sends a message about who you are as a person.
⁃    Don’t wander onto someone’s property without an Agent. Don’t harass or call the Seller of the property. Don’t drive by 26 times and stalk them.
⁃     Don’t try to cut a deal with the listing Agent to represent you by offering veiled bribes.
⁃     Don’t ask for a Sellers Home Warranty or a Termite Clearance when you are competing against 10 other offers.
⁃    Two words: Short timelines.
⁃     Don’t try to negotiate the price before making an offer. Criticizing a property to the listing Agent  telegraphs the fact you’ll probably come back and grind for more.
⁃     As soon as you walk through the door of an open house you are auditioning for the role of buyer. Impress the listing agent with your sincerity and the win-win nature of your personality.

Just the tip of the iceberg folks. There’s so much more to know.  Hopefully your Agent knows it and can instruct you. And hopefully you are willing to listen.
Next week: Two Multiple Offer Strategies:  The “Pre-emptive Strike” or “What do I have to do to make the first cut?”

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Launching Wormholes in Hyper-Space

wormholeI timed it.  Exactly 6 minutes and thirteen seconds after I put that new listing on this week for $649,000, the first phone call came in.  It would prove to be the tip of the iceberg.  The beginning of a flood of calls that would soon turn into a full-fledged tsunami.

The day started out quite normally.  First I checked the boxes on the MLS data entry form, loaded the pictures, clicked the enter button on the screen.  Then I sat back figuring I’d just be patient.  Wait to see if the universe was in the mood to respond over the next week. How would the fickle fates feel about what was being offered for the price it was being offered at?

Contrary to what most people think,  listing agents rarely know for sure what something is going to sell for in advance. We may have our suspicions,  expectations, desires and fears about what a home may be worth in the open marketplace but in the end – we don’t really know.   Regardless of what any Agent says or how emphatically they say it.

True, some of us are better than others at predicting the end results of their educated guesses  – depending on their experience,  time in the business and their overall success rate. But when it comes down to it – we are just as much at the mercy of market as everyone else is.   Puppets controlled by the string of the invisible hand moved by thousands of big and small fingers of decision manifested in tens of thousands of lives.

There’s no listing agent on the planet who hasn’t felt totally blindsided when something they put on thinking it would sell in a heartbeat as a no brainer, slam-dunk, sure thing kinda deal – ended up languishing on the market as the days dragged by like the slow drip, drip, drip of a Guantanamo torture test.

There’s also no listing agent on the planet who hasn’t felt like they were the beneficiary of some miraculous intervention by the divine.  An immaculate reception at over list price – on a house they figured would probably be sitting forever and a day.

Folks I’ve been doing this a long time. Trust me on this.

So there I was,  I entered the listing. It disappeared quickly into the ether.  Hunting for those wormholes in hyperspace (a.k.a the world wide web) that would catapult its virtual realty into the laps of all those laptops out there in the global village. Or get scooped up into the palm of its hands  via I Phone. (Not to mention the ubiquitous You Phone, He, She and It Phone, We Phone, You Phone, They Phone as well.)

The listing was launched.  That first phone call was soon followed by a half dozen more in short order.   Listing Agent held hostage Day 1. Besieged by Buyers and their Agents trying to get a leg up and jockey for position.

“When’s the lockbox going to go on?  How do I show it? Can my client just go by and walk around the house?  What’s wrong with it?  Are the sellers motivated?  What’s their story? Is it a short sale?  Do you have inspections?  Anything terrible in the inspections?  Do you think it will go for over list price?  How many offers will you get? Do you have anything in yet? Will you accept an offer today?  When will you be taking offers? Is there any Seller financing?  Do you think it will appraise? Is it an as-is sale? Where did you get that price? “

And so on.  Non-stop. From 7:30am to 10pm at night.  To date,  I’ve had more than 60 phone calls. Eighty e mails.  Thirty requests for inspections/disclosure packages.   And many more actual showings.  Yesterday when I went over to check on things at the house at 8:30am, there were 6 different parties there already.

Text book. A perfect primer course for any new Agent or Buyer that wants to better understand how it works in a market walking the tightrope of the tightest inventory I’ve ever seen.

Let’s use the good, the bad and the ugly of the experience to observe and learn a little something shall we?  Next week:  What Buyers Should Know in a Multiple Offer Marketplace.

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Midwifing a New Home

nurse-midwife-hubStay with me on this one folks. It sounds a little crazy – but what else is new when it comes to my or anyone else’s real estate of mind. It’s all stranger than fiction.

The process of buying a home is similar to being pregnant.

There I said it.  I can hear those pregnant pauses now. Groans are welling up from today’s studio audience. On a gender-related note of apology, I promise to pass a large kidney stone in the future to make amends.

First, there’s the obvious. Timing is right. Stars are aligned.  The seed of an idea issues forth out of a gleam in the eye.  Suddenly it takes hold.

Out of the blue you are on the cusp of one of those great journeys in life.  A transition both exhilarating and a little scary.  Part of you tries to grasp the whole notion of what it means to leap into this particular version of the unknown.  There’s an inkling that things are going to change in ways you can’t even imagine but it’s all a bit abstract.

The inception of the idea is followed by a long gestation period as that initial spark of desire grows.  No one conceives of buying a house one day and simply runs out to make it happen the next.  Real estate isn’t designed to work that way.  Most people need time to adjust to the idea of buying a house. What will it look like? Will it be a boy? Girl? Ranch style?  Victorian? Buyers, just like future parents, imagine a million scenarios in their heads before what actually comes to pass, comes to pass.  There are stages of development along the way everyone has to go through.

The obvious aside, here’s the way that buying a house is most like being pregnant…  Expectant mothers and expectant buyers will all recognize the phenomenon.  Moms, remember how, when you were quite pregnant, total strangers seemed to think nothing about coming up to you in the middle of a public place, completely ignoring whatever sense of boundaries or personal space you might have,  in order to reach out and feel your belly?

In addition to the physical intrusion, most of these same people were incredibly eager to launch into their own detailed accounts about the good, the bad and the more than you ever really wanted to know, of their birth experiences.

It happens all the time. Well-meaning people just can’t help it. There’s some deep archetypal connection they feel that makes them blurt things out without considering the appropriateness of what they are saying.  Does an expectant mother really want to hear about 36 hours of grueling labor and all the things that the delivery doctor should or should not have done.

Now step into the metaphorical maternity shoes of a buyer going through the growing pains of  looking for the right home, making an offer,  being in escrow, having inspections, wrangling with the lender  – “ the full catastrophe” as Zorba the Greek might have put it .

See if you recognize a variation on a theme.  Announce to the world that you are buying a house and suddenly friends, relatives, cube-mates, acquaintances and a boatload of imperfect strangers pop up everywhere. Coming out of the woodwork. Insisting on offering their own unsolicited Jeckyll and Hyde stories ad infinitum ad nauseum.

They view themselves as kindred spirits.  They are well-meaning people, who feel a deep, misguided sense of  shared experience that gives them unspoken permission to recite chapter and verse and tell you all about it.   Dig in Buyers. There’s going to be a deluge of unsought opinion, un-sage advice, out of context comment and rampant recommendations coming your way.  It’s going to make your head spin until you think you are on the verge of doing a Linda Blair.

If you let them.  What’s the best advice for buyers trying to birth a new home? Don’t tattoo it on your forehead. If it gets out, turn down the sound. Tune out the armchair quarterbacks.  Just say no to all those that want to relive their buy-gone, home-buying days through you.  In the end, if you really want to own your own home you have to start by owning your own process.  After all, it’s going to be your baby.

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Selling Sea Shells by the Seashore

SellingSeashellsThe gossip mill is alive and well.  Part of the stirring that’s happening in real estate hearts and minds as the market awakens from its slumber and tries to make up for lost time.

Yep. The real estate grapevine is thick.  Each week ushers in another fantastic round of wild stories about how crazy the over the hill market is.  The kind of stories everyone loves and love/hates at the same time.  The ones we can’t resist hearing about or repeating again and again.

You know the drill:  Stories of homes selling with so many multiple offers in hand, totals could only be expressed exponentially in factors of ten.  Stories of sales measured in minutes on market rather than days.  Stories of homes selling with overbids large enough to put dents in the foreign debt of some emerging nations.

Somewhere over the hill and over the rainbow.   Where an endless pot of gold, silicon and venture capital resides.  A mere 26 miles away from Santa Cruz. In mythic realms of exotic-sounding real estate places like Los Gatos, Saratoga, Los Altos Hills.  Where everyone with a big hat also has the cattle to back it up. And all the top dogs know how to hunt.

Think Woodside – where the highest US real estate sale ever recorded recently took place –  $117,000,000 plus change.   Or Palo Alto where the infamous story about the $1 million overbid back in 1999 and the sound of all those champagne glasses clinking still resound through the annals of Bay Area real estate lore.

When it comes to real estate, our mouths are conditioned to water Pavlovian-style whenever we think “over the hill.”

Over the hill is too close at times to be sure. We don’t really want to be like “them”.  Perish the thought. We don’t want to be a bedroom community – we just want those jobs. God knows we aren’t big fans of day visitors clogging our beaches on the weekend.  If they’d just send their money and keep the empty beer cans that would suffice.

At times like this, over the hill feels so close yet so far away.  Is there anyone thinking about selling a home in Santa Cruz that doesn’t have visions of sugar plum buyers dancing over the Summit to drive up our prices?  How soon are they going to get here?

Could they buy our properties but just come over once in a while to visit? And if they actually do move over here,  can we do deprogramming by osmosis and convert them to a Santa Cruz mindset?

On that note, I’ve composed a letter to Silicon Valley buyers on behalf of all Santa Cruz Sellers.  Here it is:

Dear BUYERS:

All addressed up with no where to go? Frustrated by the lack of listings in the super-heated South Bay real estate market? Burned out by all the competitive offers and dog-eat-dogfights arising around each new listing.


Perhaps its time to adjust your latitude and expand your horizons a little further South. To miles and miles of glorious sun and surf that the Santa Cruz Coastline affords. Suffice to say that we have alot more to sell than sea shells by the sea shore. We have some truly outstanding properties at prices that will seem remarkably low compared to those you are used to seeing.


Here in Santa Cruz we’ve got a simple philosophy….If you are going to work hard, you might as well play hard too. It’s OK to become Chairman of the Board as long as you don’t become Chairman of the Bored in the process. Learn to commute your Sentence. After surfing the Silicon Sea all day long, return home and get a healthy dose of the real thing.


Consider the alternatives. Alternative air. Alternative lifestyle. Alternative prices. Let us put a little of more of our sand in your hourglass before you are really over the hill. You’ll be glad you did.  Life’s a Beach and Then You Buy!


 
Sincerely,
Santa Cruz Sellers

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