Monthly Archives: January 2020

Invert the Dominant Paradigm

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The traditional paradigm of real estate teaches young Realtors how to sell homes. But the longer I do this work, the more I realize it’s never just about selling homes. That’s really the smallest part of the job. And thanks to an astonishing market these days, also the easiest.

Real estate is really more about the profound life transitions that lie behind each sale. The all important “whys” that shape someone’s pivotal decision to move.

No one sells their home for fun, or decides to pick up and move on a lark. Never has that been more true than now. The average time people spend in their homes has risen to a record 12 years, almost twice what it was in 2006.

On a basic level, selling a home simply means getting from Point A to Point B. Perhaps going from a two bedroom, one bath bungalow to a three bedroom, two bath ranch. Or from a larger executive home on a few acres to a single-level house near the beach.

On a deeper level, it’s about moving the whole of you from Point A to Point B in life. Taking the next step in your personal journey. Whatever that “why-thing” is that’s driving your change. Maybe it’s getting married or having kids. Get- ting older or losing a partner.

Directions for getting from Point A to Point B in life are always fuzzy. There aren’t any road maps or GPS coordinates. You can’t put that kind of change into your Waze app and wait for a voice to tell you what to do.

The hardest part of the job these days isn’t selling houses. The greatest degree of difficulty comes from trying to figure out how to help the people selling the houses get over their own resistance to the very change they seek. So they can move forward in life.

Here’s a healthy meditation for anyone selling: draw a timeline of your life stretching from earliest childhood to now. Place all the homes you’ve ever lived in on it. Then take a long mental walk through each, remembering favorite rooms and the things you loved the most.

Then pull your focus back. Look at how old you were when each move happened. Recall those decisions and what was really difficult about them. See all the ways your life changed with each move. Up until the last one, when you became even more of the person you are today.

Your home isn’t your life. You are the force that animates the container within its four walls. Like one of those crabs moving slowly along the ocean floor, you are just looking for the next shell that will house your life.

It’s Not Rocket Science

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It goes without saying that real estate should never be confused with rocket science. The basic principles about how the market works are pretty straightforward. Especially if you’re a seller who’s selling in a Seller’s Market, like the one local sellers have enjoyed for the last five years.

Even when frustrated buyers get a little crazy and express anger over the “unfair” results of one of the latest multiple-offer fiascos they’ve lost out in, sellers typically remain calm and rational, secure in their knowledge about the inherent truths of the marketplace.

But what happens when the market starts to change? And some of those listings don’t sell as quickly as people thought they would? Suddenly, those same tried and true elements of wisdom and logic, so apparent before, no longer seem to apply.

Since we could be heading into one of those transition times in the market, let’s review a few simple rules that are true in every market:

A house is worth what someone will pay for it, and a house isn’t worth what someone won’t pay for it.

At the right price, every house sells. At the right price, all objections disappear.

There’s no such thing as an unsellable house. Only one listed at an unsellable price.

Definition of market value: the price a willing buyer and willing seller agree on. Every sale is its own best comp.

An appraisal isn’t an analysis of market value, more a justification of the price already agreed upon.

What you bought your home for ten years ago has nothing to do with its present value.

Every seller has the right to hold out for that one right buyer who will pay what they are asking. They just shouldn’t confuse this approach with having anything to do with market value.

Just because the market isn’t telling you what you want to hear, that isn’t the same as the market not telling you anything. When no one comes to look at your house, the communication is actually loud and clear: the price is too high.

The longer your house is on the market, the less it will sell for.

Death and Taxes

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Death and Taxes. Everyone’s heard those words. They’re part of a quote that originated with Benjamin Franklin:  “Our new Constitution is now established and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

Here we are more than 240 years after Ben made his pithy observation. A lot has changed since then but as of today, death is still at the top of the short list of inevitable facts we all have to face. (Until Google achieves The Singularity and starts transforming brain waves into algorithms uploaded into the cloud so we can live forever.)

Meantime, lesser mortals at Real Estate of Mind are working on that other most inevitable thing – taxes. More specifically, real estate taxes. Something so many people around the age of 55 are thinking hard about as they head into the last third of their lives wrestling with questions about downsizing, cash flow and leaving legacies for their kids.

Here’s a quick cheat sheet (reference guide, not an actual suggestion for cheating on your taxes,) for those trying to figure out how to avoid substantial increases in their property taxes if they sell their house and buy another one somewhere else in California.

The good news? California seems to be dedicated to the “proposition” that all people should try to avoid more taxes when possible. Here are some of those propositions:

Prop 13 (1978): The original granddaddy proposition reducing existing property taxes and significantly limiting increases in the future.

Prop 58 (1986): Allows parents to pass homes on to their children without a reassessment of property taxes. (See the fine print, folks.)

Prop 60 (1986): Offers homeowners the opportunity to sell and buy a new home (of lesser value) in the same County, while transferring a lower property tax base. (Not to be confused with the other, more recent Prop 60 having to do with condom use in the porn industry!!!)

Prop 90 (1989): Allows homeowners to transfer their existing property tax base to other participating counties in California. Only 11 counties currently qualify. (Call or email for the list.)

Prop 110 (1990): Extended Prop 60 to disabled homeowners of any age.

Prop 193 (1996): Extension of Prop 58 allowing grandparents to transfer property to grandchildren (provided their children are deceased) without reassessment of property taxes.

In the meantime, while continuing our quest to cheat both death (via Google) and taxes (via Proposition), I invite any and all of you who are wrestling with the numbers to give me a call to discuss how these Propositions can assist in your planning.

Blame It on the Gods?

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Today’s question: In a market where everything sells quickly and for more money…how does the unthinkable happen? As in: Why are there still places that don’t sell quickly? Ones that languish on the market for a long time before reducing their price?

I’m thinking about a Westside listing that came on recently. The kind of place that checked all the boxes: four bedrooms, single level, large yard. Plenty of buyers were lined up for the first open house, pre-approval letters clutched in their hands. Warm and fuzzy “seller letters” already written in their heads. This one was supposed to fly off the market!

But then? Nothing happened. Lots of showings. Tons of calls. Hundreds of hits online. But no offers. By the second week, the dynamic shifted. By the third it was completely different. Traffic dwindled to a motley collection of curiosity-seekers, looky-loos and low-ballers starting to smell blood in the water. Finally, a month later, the price came down $100,000 and it sold.

So what happened? Why didn’t it sell in a market where everything sells? What dark and mysterious forces conspired to create a less-than-hoped-for outcome for the unfortunate seller? More importantly, how can someone else avoid the same situation?

A wise Realtor once said the story of every listing could be written as a Greek play. Each, a real life drama embodying elements of irony, pathos, tragedy and humor. The fickle gods of fate testing the frailties of the human condition. Wait a minute…I said that. And it is still true!

Hubris is the tragic flaw responsible for the downfall of most listings that don’t sell. Too much ego and too much pride make some sellers think it’s possible to succeed without really trying. Doesn’t matter what the price is, they figure. Or how a house is prepared for sale. Why fix it up or stage it? All those buyers are lining up out there.

But everything sells only until it doesn’t. And that’s when it really costs you. Despite how it looks, those buyers aren’t really tripping over themselves to pay more for your house. They always want to pay less. And if you give them the chance, that’s what they’re going to do.

Think of it this way: everything sells. But not everything sells for the most money possible. That’s why you should hire a good agent and resolve to take their advice. If your house doesn’t sell in this market, you can always blame it on the gods or bad timing or a bad agent. But in the end…it’s your own fault.