How NOT to Do It

So I sold my listing on Burbank in San Mateo yesterday and in the process had quite an amazing experience. I had given out 17 disclosures to interested parties and, as you might be able to guess, we got multiple offers. The experience I’m referring to came after I met a nice couple at the last open house on Sunday. They requested the disclosures on Sunday night and I get a call from the guy at about 1:10 on Monday informing me that he would like to put in an offer. Offers were due at 1:00. He proceeds to tell me that he hasn’t quite squared away their financing and asked if he could get his offer to me by 7:00 or 8:00 that evening. Offers were due at 1:00. Naturally…some questions came to my mind.

1) Do you have an agent?

He answered that he didn’t but would be writing the offer himself.

2) Are you a lawyer? A licensed Real Estate agent?

He said no…but he bought another house once this way. Back east someplace.

3) How are you going to find the necessary forms to accomplish this offer?

He said he would be able to download some online someplace.

4) Have you read the disclosures?

He said that he hadn’t but he would have 2 weeks to do that inside his contingency and after he did his own inspections.

5) Are you completely out of your tiny little pea sized mind?

He said that he wasn’t. He also told me he wanted to write a full price offer and leverage the commission (he thought it was $50,000) toward making his offer more attractive.

Seriously…let’s summarize. Here’s a buyer with absolutely no experience at all in real estate in this area wanting to write his own offer in an environment that he knows nothing about. He wants to write a full price offer and leverage the commission which he thinks is 6%. It’s actually a total of 5% and 2.5% is mine…so he apparently wants me to sell the house for free so he can get the house. His offer would be written with long contingencies and a desire to do his own inspections (even though he doesn’t know any local inspectors…I guess he’ll find them online too). Since he doesn’t have access to the approved local contracts he’s going to write his offer on some generic document that may or may not apply to this area’s laws and customs.

I ended up with 7 offers on that house and all 7 were over asking. 6 were As Is with no contingencies of any kind. The house sold $135,000 over asking.

OK, this is rare…thankfully!! Real Estate needs one of those dangerous activity disclaimers posted at open houses. Such as:

Real Estate is an inherently dangerous activity and should be performed only with the proper instruction and supervision of an experienced person. The agent and seller of this home assume no responsibility for any stupid mistakes incurred by the reader!

 

 

All a Matter of Perspective

So I’m pretty much used to the mid Peninsula area and, obviously, Foster City so the escalation in prices this year (last year wasn’t anything to sneeze at either) is pretty amazing to me. By most standards anywhere this area is shockingly wild when it comes to values. My brother in law from Peoria, Illinois was out visiting last week and you can only imagine his expression when I took him to see a few houses. His 3 bedroom, 2 bath house there is worth about $85,000. Just for fun I took him to the listings at 676 Matsonia, 921 Haddock and 843 Grenada (Matsonia and Grenada have sold since) and of course he was appalled. I really think the new median price for a 3 or 4 bedroom rancher is $1,300,000 right now in Foster City.

Well, I have some clients who are looking in Los Altos and we’ve written a couple of offers down there and I have to say it makes Foster City seem like Peoria by comparison. Seriously. The last place was a 4 bedroom, 2 bath rancher in almost original condition that was listed for $1,995,000. It’s original kitchen had those nice dark brown cabinets and tile counter tops. It has brown shag carpet in the living room and large patterned brown and black rings on a white background for wallpaper in the entry foyer. It did have a big 11,000 sq ft lot though…typical for Los Altos. I think you could put $200,000 into it without batting an eye…just to make it look like 676 Matsonia did! Matsonia was listed for $1,098,000 and got a bunch of offers.

We offered $2,370,000 for this place…and finished 4th out of 8. It sold for more than $2,500,000. Here’s a link:

http://matrix.mlslistings.com/Matrix/Public/PhotoPopup.aspx?n=12&i=0&L=1&tid=1&key=12969608&mtid=1&View=G

These pics actually make it look a bit more updated than it is too. This place handed out 19 disclosures. As long as there’s this kind of interest in areas like Los Altos and Palo Alto and Menlo Park, Foster City will maintain it’s values. It represents a DISCOUNT versus what’s down there. Plus the schools are equally great. Paying $1,300,000 for a rancher seems like a bargain to me now.

And We Have a Winner….

Well, I predicted, and not that long ago, that we would see a townhouse in Foster City close escrow at or over $1,000,000. It’s June 18…and it happened today. Now I’m not talking about Promontory Point where that’s happened before…I’m talking about the other projects in town. Projects that were hard to sell just a few years ago.

Today we witnessed the closing of 1028 Gull at Bay Vista. Pictured above. It was listed for $949,000 and closed at $,1,035,000. It’s a 4 bedroom, 2.5 bath townhouse in 1757 sq ft. The dues at Bay Vista are $235 a month. To me that’s obviously a contributing factor. This unit previously sold in 2001 for $482,000. Not bad , huh? Now the question becomes…when will smaller 3 bedroom units go over a million? How does that effect waterfront units at Isle Cove or Harborside?

Remember…the market has slowed down a little. Still, we have this happen. What an amazing place this is!

 

Steve Toler

So it’s my blog and I can say what I like. Right? Today was Steve Toler’s last day as an employee of Foster City. Yesterday he got a ride home in a fire truck along with a police escort. This is an individual who was loved by many, many people in Foster City…and elsewhere too. Steve was the Assistant City Manager in FC…and before that he was Finance Director and before that he was Administrative Services Director. I think of him as simply Mr. Foster City. I don’t know anybody who has represented his or her community more diligently, honestly and with more integrity than Steve has all these years. The guy is simply amazing.

Steve took the Assistant City Managers job in Millbrae and to say that his leaving is a loss and will leave a big hole is the understatement of the decade. You see, Steve’s not a politician. He was never running around trying to find a butt to kiss to either get or stay elected. (No, I’m really not trying to indict politicians…sort of) . Steve is a legitimate public servant who loves Foster City and wants to be a part of it’s future. He’s a humble guy. For what it’s worth, it’s an enormous shame that the environment became conducive for Steve to entertain overtures from other communities. It’s a big gain for Millbrae and quite a loss for Foster City.

Over The Top

If there’s anything that will eventually hurt this market it may just be the unbridled greed that some sellers are showing lately.  Understandably, there are sellers out there that have heard all about the multiple offer, enormous overbid insanity that’s permeated the market this year and want that experience for themselves. I get that. What I’ve been hearing though takes things way over the top…in my opinion.

There are folks out there who put their homes on the market and feel entitled to a huge overbid. No matter how crumby their house is or how grossly overpriced it was to begin with. I heard an example of this the other day in San Carlos where a house came on the market on a small 400 sq ft lot, needing lots of work and only 1300 sq ft. It was listed for just under $1,200,000. Unfortunately for the sellers, they didn’t get the offers they were expecting. In fact they didn’t get an offer. When one eventually did come in it was $40,000 under asking (about what it was really worth!). The sellers wanted to counter at $1,300,000. After all…they were entitled to an overbid like that, right? I mean, how dare the market not anoint their house like it did with others.

I’ve heard this a few time this year. I’ve actually heard it in scenarios where there actually was multiple offers and the price went more than $200,000 over asking. The sellers were disappointed…because they expected $300,000 over asking!

If you’re thinking of selling…here’s some simple rules:

1) You are NOT entitled to overbids

2) If you’re lucky and you prepare correctly you MIGHT get them.

3) Your overbids may NOT be $500,000 over asking…be prepared.

4) The market is telling you what the house is worth…no matter what you get.

5) If you get a nice clean offer you probably did great.

6) If you sell your house for 20% more than the last comparable sale for your floor plan but the buyers don’t offer you free rent…that’s OK. You did great. Really.

Simple rules.

Buyer Fatigue

For the last few weeks I’ve been listening to agents in my office claim that the market is slowing down. Neighborhoods that were getting 15 offers in February are now getting one offer…or none. That’s according to the agents I hear talking now. The question I keep asking myself is whether or not Buyer Fatigue has set in and folks have stepped back from writing offers. I have a couple of groups of buyers myself that fall into that category. For whatever reason…they’re just not as motivated to go look as they were in the first quarter of this year.

What does all this mean? Who knows!!! Is this a sign of a prolonged trend or just a temporary aberration? I’m kind of thinking it’s the latter. Every open house I’ve hosted has been very well attended. There’s certainly no shortage of buyers out there. If the market was dying we wouldn’t see people out there looking on the weekend. Some price ranges are just high. Maybe some neighborhoods are at the top of their values? Actually in Belmont there’s about 12 houses priced over $1,300,000 that have been on the market for more than two weeks. Maybe $1,900,000 is a bit high for Hallmark in Belmont? Maybe folks are on vacation?

Meanwhile in Foster City…it’s still pretty warm. It seems. Today there are 8 single family houses on the market. 2 have location challenges, 3 have price challenges (I personally think they’re over reaching) and the other 3 seem poised to get multiple offers. In fact, the house at 920 Laguna is looking at them this afternoon. Here’s what the listing agent (Caroline Dinsmore) sent out yesterday:

 

We currently have 32 disclosure packages out and 7 confirmed offers.

 

That was yesterday. That kind of response isn’t exactly what I would categorize as a slowing market. Last week I got 8 offers with 20 disclosures out on 106 Williams Lane. The week before that 725 Marlin got 9 offers and sold 200k over asking. I guess the fact is that for houses in Foster City priced well are going to get multiple offers. More will be revealed.

 

Probates

So I spoke to a nice couple last week who have a house to sell in San Mateo and it was the house that the gentleman here grew up in. It’s in trust, but has a probate connection because of a brother who was on title and also passed. These folks explained to me that they’ve been inundated by real estate agents who have swooped down upon them…wanting the listing of course. I’m not sure why this surprises me, it’s just that I NEVER have sought out clients this way. Sort of feels like ambulance chasing to me but I realize that I do not hold the corner of the market on knowledge of how to find business. It’s just the stories they were telling me!

Agents just walked right into the house without knocking. Some brought contractors back to get bids for repairs…without asking. More than one told them they could happily sell the place for them…right now, to one of their clients for $750,000. It’s in an area that I just sold a listing last month for $1,460,000. “Folks why don’t you just forget about the hassle of fixing this place up and just let my buyers take it off your hands?” Great…at a SERIOUS discount! Just to watch it get flipped in about 2 months.

I guess the point is that sellers should beware. There’s nothing like letting a property be exposed to the market so that the market can determine it’s value. There’s also nothing like preparing a home for sale to maximize it’s return. Patience and planning really are virtues.

 

Pools

I have to say at the outset that I’m not a big fan of swimming pools. The statistics show that pools are the least valuable thing you can do to your house. If you put in a pool the chances are it’ll diminish the homes value. A nicely landscaped back yard is a much greater selling point than an in ground pool.  I’m right there with you on this pool topic…if you’re a pool hater. Just saying up front. Plus…it’s Foster City for crying out loud. How much would you even use one here?

Having said all that, I’m fascinated by the reactions I get from people when they see one at listings I have. Recently I had a listing with a big pool in the back yard and droves of people through the open house I held. This house needs updating in many places, it’s sort of dated and the roof is sort of on the downward leg of it’s journey. Never the less I heard comments like “Great house…but I just can’t take a house with a pool. I have little ones”. Or “It’s just not for us…we don’t like pools”.

OK, I get it. Like I said before. I also don’t like red and yellow shag carpet, or flocked wallpaper, or tile counters in the kitchen, or popcorn ceilings, or faux wood paneling, or glossy paint on interior walls. What I think I would do…is change those things. Can you imagine saying, “Love the house, but the furnace is old…so forget it!”

To the folks who expressed disdain over the pool I said “Why don’t you have it filled?” Each time I heard “Oh no thanks…too much work!” Or “No, we want a house with a finished yard.” Hmm, I kind of struggle understanding this. Isn’t it more work to refinish hardwood floors, paint, remodel bathrooms…etc? They’re all INSIDE too. You could fill a pool…and all the work is actually OUTSIDE. You can even watch TV in the family room while they do it. Think of it as landscaping. No? A couple of years ago I got a bid of $15,000 to fill an in ground pool. I’ve seen people spend $15,000 on new appliances.

I just don’t think there’s anything to be afraid of when you see a pool…get rid of it if you don’t like it. If you like the house don’t let that stop you from pursuing it.

Why Is Inventory So Bad?

Last week and blog reader asked why the inventory level is so bad. He mentioned that it’s been bad since 2012 and seems to be getting worse and wondered what the explanation could be. I used to do large charts here showing active, pending as well as houses that had experienced price reductions. Can you imagine that? Price reductions? I have a few reasons why I think this inventory issue is happening…and those really don’t make me think it’s going to improve a bunch either. At least in the short term.

1) Lack of Move Up Sellers

Way back when, you could list your house for sale, sell it and find a bigger house that fit your needs during the escrow of your first place. Right now you might be looking for months and not be able to find a replacement house. I wrote last month about a couple who sold their place a year ago and are still looking for the next home. I have some clients that I sold a 2 bedroom, 1 bath house to in San Carlos about 4 years ago for $650,000. Since then they have 2 little kids…it’s time for them to move up. Their house is worth at least a million right now. If they move up they very well might not find a replacement house in the 90 days they might get with their sale…and if they do it’s probably going to cost at least $1,300,000. Probably more. They don’t really want that monthly payment nor do they want that property tax burden. They’re sort of stuck right now as a result. Consequently, folks that are intimidated by the idea of not being able to find a replacement home, by the high cost they will incur are doing the next logical thing…they’re adding on to their smaller houses and staying. That’s an option…as long as you have a house! It’s not so great if you have 2 or 3 kids and you live in a starter condo! then it’s really problematic.

2) Inadequate New Housing

I don’t think this is much of a secret…there’s nothing new to buy around here. OK, there’s some condo projects here and there…but there really isn’t much. This isn’t Sacramento where there are large tracks of new and affordable single family houses. For all the spectacular demand around here there isn’t the kind of new construction that’s even kind of keeping pace with demand. If there was it would certainly reduce the burden placed upon the market by question #1.

3) Tons of Buyers

Making it all more dramatic is the sheer number of buyers out there. There’s simply WAY more buyers than available homes. Even if inventory quintupled there would still be more buyers than homes. The high price of rentals only helps people want to buy too. It’s a vicious cycle.

Outside of another financial catastrophe I can’t see how this stops. Maybe a steep rise in interest rates will slow it down…for awhile? As of right now, that doesn’t really help much huh? You can buy a house tomorrow after interest rates go up for less than you can today…and pay MORE per month since your rates are higher. Oh, boy.

A Window Into A Listing

As you all know…the inventory out there really stinks. I mean virtually NO inventory at all. Consequently, the sellers around here are holding a whole bunch of cards when it comes to marketing their homes and getting offers. The house at 381 Boothbay is a great example of that. It’s one of the few houses to come on the market in Foster City this year priced under $1,000,000. It’s listed for $989,000. Having said that, it’s a pretty cute little house on a big 7296 sq ft lot. It’s a really nice lot too. The house is cute and fixed up, but only 1440 sq ft. It’s right across from the park.

The seller has a tad bit of leverage and I’m sure there’s been a ton of interest already. I’m sure because I requested disclosures for a client of mine and got a response yesterday in the form of an email. Here’s what it said:

“Thank you so much for your interest in the property located at 381 Boothbay Ave. As of today, over 20 disclosures have been downloaded, or emailed to agents of potential buyers. 
I currently have 3 offers, rest assured no offer will be responded too until after 4/23/2014.
No inspection reports are being provided by the seller, buyer is encouraged to obtain their own inspections. The TDS and seller supplemental is informative.”
WOW. 20 disclosure requests and 3 offers sent in already. (I can’t imagine sending in an offer that far before the offer date…but hey, I believe it happens).  These are houses that were selling for $800,000 just a couple of years ago…and back then there would be complaining because it was right across the street from the park. Go figure.
I may have said this before…AMAZING!