When Is It a Good Deal?

Last night Lesley and I watched the movie “Date Night” with Steve Carell and Tina Fey. It was OK…not the funniest comedy I ever saw but for the most part enjoyable. Anyway, Tina Fey plays a Realtor and in one scene early on she’s showing a palatial mansion to some buyers and as they’re walking out of the place she tells them the house was originally listed for $1,850,000 but it’s been reduced since the market is slower and it’s now available for $320,000. She asks her clients if they want to write an offer. They respond by saying; “No, we think the market is going to go even lower”.

OMG…did that sound familiar! The question is, when is a deal really a deal? Or maybe another more relevant question could be…when do these rationalizations actually amount to inertia? My good friend and blog reader Michelle Kwok sent me a message the other day on facebook. Seems that she was chatting with a friend who told her she was looking to buy a house. She said: 

 ”I am not in a hurry. I want a good deal, like paying about 60-70% of the value of the house.” I asked her, “Value now, value in 2006?” Turns out, she wants to buy a house and pay 70% of the current value, in Redwood Shores, Palo Alto, Menlo Park.  And then she said, that she is patient, and is willing to wait for short sale/foreclosure.”

It’s funny because I had a guy I worked with, temporarily, about 5 years ago who told me roughly the same goal. Not sure what happened to him. It’s just, knowing what I do about the market around here, it’s hard to take seriously a buyer who states that they want to make an offer of $650,000 on a million dollar listing.  Call me zany…but me-thinks it’s a waste of time. Oh, and that story in “Date Night”? That reduction would amount to over 80%. Folks…that was a joke. It’s a movie…they were joking. You see, it’s a comedy and they joke like that.

It’s not that I’m saying the market doesn’t decline…of course it does. It’s just simply that courageous buyers who take a shot are the ones that make the market decline. One small detail…they’re not getting 40% discounts either. The buyer’s that wait, strategically, and re-enter the market place at exactly the right time (the literal bottom) and scoop all other competitors…simply don’t exist. Unless, of course, they’re characters in a romantic comedy.

I think it’s the buyers that write offers when they have no competition, under asking that get the best deals. It happened after 9/11/2001, it happened in the 4th quarter of 2008 and in most of 2009. Those folks bought when others didn’t. It’s that simple.

Funky Foto Contest Winner Week 119

It sure seems that a whole lot of you (me too) define this building almost exclusively by Baja Fresh. Everybody seems to know that one, huh? Great job to all of you for answering correctly on Friday and congratulations to first time winner Tony Tong who arrived first and wins the $30.00 gift certifcate to Lotus Garden. Also answering correctly was Debbie Yeung, Nicole, Shrikant, Deepa, Pak, Bill, Jim S, Artie, Archana, Monica Martines, Marianne, Michael, Nancy Haddad, Alex O, Nancy, Suresh, the great and powerful Mr. Toler, Chris Hsiung, Nancy Chang, Larry Shaine, Jeff Liu, Kavita and AR. Thanks also to Valerie Clear who answered on facebook. Great job guys! Thanks for playing…see you again this Friday!

Ellen Does Real Estate

Sort of like it is here!

Funky Foto Contest Week 119

I have no doubt that lots of you are familiar with this particular hallway, this week you’ll need to tell me the name of any one of the tenants (businesses…etc) that occupy these spaces. Not just the name of the buiding. If you’re first you’ll win a $30.00 gift certificate to Lotus Garden at Charter Square. Anyway, all the rules of the road are available to view on the left hand margin as well as on the bar above. The winner along with all other correct answers will not be published until Monday morning. Any and all silly jokes, snappy quips and all wrong answers will be published immediately if not sooner. Have a great weekend!

Avoiding The Trap

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In the almost 20 years since I’ve been a realtor, there’s one phenomenon that I seem to see happen over and over again. It goes something like this…The  Jones’s decide they want a bigger, nicer, better, smaller…whatever home. They then start looking, both online as well as at weekend Open Houses. It’s at that point that something strange happens…they kind of like a place! What follows typically is the inevitable phone call to either me, or to a lender I know who then refers them to me.

For some reason there’s this funny sort of common thread among these buyers who feel that they would like to make an offer on a new place before selling their existing place, usually via an offer contingent upon the sale of said place.  Why not? It’s logical and it sure seems less painful than the perceived alternatives…but what are those alternatives? Here’s a few:

1) The seller has plenty of cash on hand and doesn’t have to worry about selling their original place. There are certainly people like that out there…there just aren’t many of them.

2) The seller has a ton of equity in their original home which they can pull out and use for the new down payment and then sell the house later if they want to. This is occasionally possible but for folks moving up it’s difficult…particularly in this current lending environment. 70% loan to value is the rule now and often it’s hard to pay two mortgages as well.

3) You sell your house first. This idea seems to feel a tad intimidating to people because there’s always a fear that if and when they get an offer on their home they won’t be able to find what they want before it closes…and they’ll be rendered homeless.

Thus…the contingency offer. What this means is the buyer asks the seller to accept an offer that allows them to sell their original house before consummating the deal and closing escrow. The buyers feel safe because they feel like they’ve gotten the home they want. Herein lies the trap. The simple truth is that sellers don’t like contingencies…even the sellers who’re making the contingency offers don’t want a contingency offer on their place! There are just too many questions about the saleability of the buyers property! A seller who is willing to consider a contingency offer is certainly going to be far less flexible on price and terms than they would be with a non contingent offer. A buyer making this type of offer loses an awful lot of leverage by making this choice.

In my experience, selling your place first is the best, and most stress free choice. You’re not going to feel like a gun is at your head to have to sell in order to get the “dream house”. One of the biggest lessons most of us learned during the boom years was the fact that the “perfect house” comes up again…and again! In addition, once you receive the right offer you can always rent back after close of escrow, giving yourselves more time to shop for the new place. 90 days is not unheard of for an escrow and rentback combination and during that amount of time I’ve never seen a buyer be unable to find the right new place. Avoid the trap…be patient and sell first.

How Come?

Now, of course, I know this doesn’t apply to everybody reading this here. There’s plenty of you who I’m not talking about…that’s for sure. It’s just that I know that there are some of you who can probably identify with this and for you.. think of this as a gentle call out, a challenge of sorts. You see, I stand at lots of open houses and I talk to lots of buyers. Often I engage in a dialog with you, and in the midst of that dialog I ask a few questions. Sort of like this:

Me: So, how long have you been looking?

You (Buyer): Oh, about 6 months I guess.

Me: Have you written any offers during that time?

You (Buyer): We wrote one a couple of months ago when there was multiple offers and didn’t get it. Right now we’re thinking we’re going to wait for another 6 months or so because we think the market is going to go down some more.

Me: Oh, so you think you’ll re enter it after that’s happened?

You (Buyer): Oh, sure. We think it’ll be a better time then. Prices will be lower. All this negative news right now isn’t good…we’re going to wait.

At the end of the day, and this comes after 20 years of doing this,  here’s what I sincerely believe. The majority of buyers don’t really want or care if they get a good deal when buying a house around here. Oh, they’ll certainly say they do…but it’s all really just smoke. What buyers really want is the security of other buyers that will give them the courage to buy a home in this really expensive area. Most buyers would much rather write an offer $100,000 over the asking price when there’s competition than write one $50,000 under asking when there’s none.

I hope you don’t think I’m joking about this, because this is my sincere observation over all these years in real estate. When it’s soft like it is right now, buyers sit on the fence. They rationalize that they’re prudently waiting for the right time when they’ll re-engage with the market and get a good deal. The truth is that nobody has a crystal ball that will allow them to know when the “bottom” has occurred. These buyers will come back when the market has reignited. I promise.

The buyers who actually do write offers in markets like this one are the one’s that actually do bring values down. They accomplish that because they have leverage. They simply buy when others are fearful…to paraphrase Warren Buffett. Here’s what I know, I have two active listings in Foster City right now. I had probably 100 people through one open house last Sunday and at least 50 through the other. That one has been on about a month and overall we’ve had easily 250 people go through it. That is not a sign of a dead marketplace. It’s actually about the same numbers we had in the first quarter of 2010 when everything was getting multiple offers…folks are just more fearful of pulling the trigger right now. These buyers are not going to disappear…they’re all going to eventually engage. Probably all at the same time!

I don’t know…call me weird, but I think it’s a good thing to buy when you don’t have competition. You may even save money.

Funky Foto Contest Winner Week 118

OK, it was too easy. Still…it surely does show how much we all seem to use the Post Office Branch on Shell. Congratulations to Nancy Chang who answered correctly first and wins the $30.00 gift card to Chipotle. Also arriving correctly were Debbie (just seconds behind Nancy) Nicole, Kavita, Jeff, Kirk, Agnes, Jennifer Lo, Tony Tong, Nancy Haddad, Linda Atkins, Shrikant, Jim S, Edna, Suresh, Nancy, Hiro, Deepa, Anita Reiman, Bill, Roze Grant, Jodi, Jerome, Divine Dinulos, Larry Shaine, Asif, Jorge, and Paul Patron. Cudos also to Roger Haddad who answered on facebook. Good job you guys! See you all again on Friday.

A Way To Help Save For Down Payment!


Ford Unveils New Car For Cash-Strapped Buyers: The 1993 Taurus

Funky Foto Contest Week 118

It’s a rear end, a back door. The question is…who’s rear end and back door is it? If you’re first to tell me you’ll win a $30.00 gift card to Chipotle at Marlin Cove. Did you see Food Inc. ? I’ve been eating at Chipotle alot more since I did! Anyway, all the rules of the road are available to view on the left hand margin as well as on the bar above. The winner along with all other correct answers will not be published until Monday morning. Any and all silly jokes, snappy quips and all wrong answers will be published immediately if not sooner. Have a great weekend!

Condo/Townhouse Inventory-August

Street Address List Price Orig List Price DOM Status A Baths (F|P) Bldg SqFt
740 PROMONTORY POINT LN #3303 788000   7 P 2 2|1 2224
666 CELESTIAL LN 759000   19 P 4 2|1 1700
1103 LORD IVELSON LN 749999   42 A 3 2|0 1530
1045 GALLEY LN 748800   21 A 3 2|1 1530
1072 TILLER LN 748500 759000 70 P 3 2|1 1530
741 CELESTIAL LN 748000 780000 73 P 4 2|1 1920
1055 GALLEY LN 738800   13 A 2 2|1 1420
861 CARINA LN 719000 749000 64 A 3 2|1 1618
648 CELESTIAL LN 715500 740000 42 A 4 2|1 1700
1138 NIMITZ LN 709000 729000 49 P 3 2|1 1700
3 BINNACLE LN 699000   56 A 2 2|1 1620
677 PORTOFINO LN 699000   33 A 2 2|1 1780
707 RADFORD LN 699000   27 A 3 2|0 1350
841 COLUMBA LN 690000   4 A 3 2|1 1546
880 URSA LN 676000   1 A 3 2|1 1546
842 ANDROMEDA LN 668000   19 A 3 2|1 1546
1023 GREBE ST 668000   13 P 4 2|1 1760
225 BONITA LN 659888 695000 106 P 3 2|1 1630
659 BEACH PARK BL 659000   36 A 3 2|1 1340
155 ALBACORE LN 655000 719000 148 A 3 2|1 1630
648 PEGASUS LN 648888 688000 95 A 3 2|1 1470
720 PROMONTORY POINT LN #2109 640000   27 P 3 2|1 2264
715 GALLEON LN 629000 649000 73 A 2 2|1 1290
665 PORTOFINO LN 625000 675000 78 A 3 2|1 2140
143 E COURT LN 615000 625000 48 P 2 2|1 1410
861 BALBOA LN 600000 620000 148 A 2 2|0 1270
880 MERIDIAN BAY LN #309 599000 639000 196 A 3 2|0 1606
878 URSA LN 599000 690000 90 P 3 2|1 1618
844 BALBOA LN 599000 630000 37 P 2 2|0 1490
818 RIGEL LN 598800 688000 157 P 3 2|1 1470
1059 HULL LN 598000 625000 141 A 2 2|0 1240
1111 COMPASS LN #204 598000   29 A 3 2|0 1593
1021 LIDO LN 589900 624900 126 A 2 2|0 1490
831 RIGEL LN 579950 648950 41 P 4 2|1 1600
1061 BEACH PARK BL #312 579888   24 A 3 2|0 1593
851 CARINA LN 574900   22 A 2 1|1 1098
126 ALBACORE LN 572500 495000 91 P 2 2|1 1370
407 CUTTER LN 539000 575000 43 A 2 2|0 1240
880 MERIDIAN BAY LN #312 539000 539000 1 A 2 2|0 1350
860 MERIDIAN BAY LN #123 518000 580000 150 P 2 2|0 1245
2201 ADMIRALTY LN 500000   38 A 3 2|1 1505
671 PORTOFINO LN 499888 528000 49 A 2 2|0 1395
1206 ADMIRALTY LN 499000 559000 112 A 3 2|1 1505
1401 MARLIN AV 499000   8 P 2 1|1 960
1217 ADMIRALTY LN 498000 488000 174 A 3 2|1 1505
1151 COMPASS LN #201 489000   1 A 2 2|0 1286
815 SEA SPRAY LN #303 470000   2 A 2 2|0 1233
1131 COMPASS LN #204 468500   23 P 2 2|0 1349
1170 FOSTER CITY BL #104 467000   16 A 2 2|0 1349
780 SEA SPRAY LN #304 450000 450000 99 A 1 1|0 941
141 ALBACORE LN 449999 489999 34 P 2 2|0 1050
1067 SHELL BL #2 425000   1 A 2 2|0 994
1025 SHELL BL #7 410000 410000 22 P 2 2|0 1042
902 BEACH PARK BL #134 408888 408888 14 A 2 2|0 1060
926 BEACH PARK BL #1 390000   2 P 2 2|0 1060
1017 SHELL BL #6 379950   7 A 2 2|0 994
820 SEA SPRAY LN #114 379000 394000 190 A 1 1|0 953
3105 ADMIRALTY LN 350000   1 P 2 2|0 1247
8104 ADMIRALTY LN 329000   164 A 1 1|0 748
1191 COMPASS LN #210 329000   3 A 1 1|0 990
5102 ADMIRALTY LN 318800   174 P 1 1|0 748
5103 ADMIRALTY LN 299000 308000 73 A 1 1|0 748
7209 ADMIRALTY LN 299000   8 P 2 1|1 998
7211 ADMIRALTY LN 299000   10 P 2 1|1 998

 

Again, more inventory right now than at any other time this year. 42 properties actively for sale and 23 pending sale. That actually doesn’t seem like such a bad ratio to me because the condo/townhouse market sure seems slow. The darker listings above are the actives. Once again, high HOA dues have effected values in many projects and thus we’ve seen prices come down in them. Here’s a sampling of some newer listings that are really nice…and we’ll see if that makes a difference in their days on the market:

1151 Compass #201 listed by Liliane Cools of Cashin for $489,000. This is a really gorgeous unit at Marina Point, but the dues there are $477.00 a month. This one’s been on before and has been reduced from a high of $559,000. It’s going to be interesting to see what the magic number is that sells it.

841 Columba listed by Sue Dickey of Alain Pinel for $690,000. This is a wide waterfront 3 bedroom at Isle Cove where the dues are $488.00 a month. Once upon a time, (in 2006) a wide waterfront there sold for $999,000. This is a good price on this unit…we’ll see how it does?

1067 Shell #2 listed by the Wilkas Group at Prudential for $425,000. Really nice unit at Sand Harbor and the dues are a bit better there too…$375.00. It’s a very cute 2 bedroom place.

This has really been a very “ebb and flow” kind of year. Either super hot, or really slow. You know what? This is the Peninsula…it’s going to get hot again.