We’re Not In A Hurry

rushing-image

I’m not sure why this is…but for a long time now, when I’ve had clients talk to me about their desire to purchase a place, their perspective at the start is that they want to make sure they get just the right place, not feel rushed into making a rash decision. They essentially feel like they have some leverage over the marketplace. I’ve been doing this awhile now and it’s been my experience that folks generally need some time to absorb just how little leverage they have as buyers in this marketplace. A phrase I hear every once in awhile is…We’re not in a hurry.

I’m honestly not clear what that means? I’m not sure what to do with that either? What I think it means (from their perspective) is ” We think the market is going to cool off and we’ll wait until the time is perfect for us”.  It could also mean “We feel like we need to see plenty of homes before we feel educated enough to make a serious decision here”.

Now, from MY perspective I think it means “we’re too scared to jump in right now and we’re hoping a miracle happens where market values are stable, but nobody pays any attention to the perfect home in a perfect location and we sneak in and get a fabulous deal without any competition”. There’s another word for this thinking…Fantasy Land.

There’s even a third perspective, and it’s the truth. The longer you wait the more money you’ll lose. I’ve said this before…the market is not a yo yo. It doesn’t go up and down during the same year and you can jump in during the downswing. Not being in a hurry just means you get less choice. At the beginning of this year I predicted townhouses would all be selling over $1,000,000 in FC. I didn’t think they would all be selling for over $1,100,000 and up to $1,315,000…as the 4 bedroom on Marquette just closed at. “We’re not in a hurry” really means “We’re OK paying a higher price later than we can right now”.

What Do I Know?

Lost and Confused Signpost

Kind of a long hiatus…but I’m back! Ready for the new era of Real Estate…sort of! So I put  nice listing on the market a couple of weeks ago on Pompano and I expected the same insanity with it as I had on my Beach Park listing a month or so ago. I knew in the first hour of the first open house that the market was a tad slower. We did fine of course, still had multiple offers but it just wasn’t as zany as it was just a few weeks before. Who knows why? Kids out of school? Folks on vacation? You’re guess is as good as mine. It could also been because  4 other 2 story 4 bedroom houses came on the market the same week?

Well, some of the other places out there had the same experience. Decent response but not crazy, not 10 offers. Not $300,000 over asking. What’s my assumption? The market is cooling off a tad. That probably means it’s a good time for some buyers I’m working with to, at least, have less competition.

What do I know? I know nada! Yesterday, after encouraging some folks to write an offer on a house in Belmont listed for $1,098,000 cuz of the lower level of activity in the market….we end up in a 10 offer frenzy. $1,098,000 turned into $1,400,000.

I guess the point is, this market is VERY strong. It ebbs and flows but often the ebbs don’t last too long. Last week we had an economist speak at our office and she’s of the opinion that this market has another 2 to 3 years of life left in it. That’s based upon the large number of Silicon Valley companies that are scheduled to go public in the next 18 months and the fact that the average cost per square foot here (1250) is so much less than it is in places like Hong Kong or Shanghai where it approaches $7000 per sq ft. What a scary thought, huh? Prices could go up another 25%? Sheesh.

 

 

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.

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!

Time Wasters

I’ve been real, real busy lately. Super busy actually, and its been sort of hard to stay consistent writing here. In the last week I’ve looked at offers on three different listings I have. All of them got a ton of interest and sold well over asking. The first one in San Francisco got 17 offers and sold for more than $500,000 over the asking price. A house I had listed in San Mateo…a 2 bedroom, 2 bath house as well, got 9 offers and sold for $270,000 over asking. The third one in Foster City sold for over $110,000 over asking. Two of the three were all cash and all of them had no contingencies of any kind.

While all of these scenarios are amazing maybe the most amazing thing to me in each situation is the fact that buyers in them stubbornly refused to accept reality now and went ahead and wrote their offers under the asking price with tons of contingencies. In the case of the SF building, I had handed out 42 disclosures and made it very clear to everyone that we were getting multiple offers. In spite of that I get an offer $100,000 under asking. To top it off, the agent drove to San Carlos to present it to me in person. Exactly why would both the agent and buyer do that? Who knows…but what a waste of time! In both other single family house scenarios the same thing happened. In Foster City, with full knowledge that we were getting 6 offers I have one party bring their offer under asking in 3 hours after the deadline when they knew they had a ton of competition. Again…why? Why waste your time? Plus, these crappy offers all have crappy terms! That makes it even more futile if you ask me. Weird, in fact.

Folks, don’t do that kind of thing. Not only is it wasting everybody’s time, but it’s actually contributing to the inevitable high overbid price. Plenty of agents wait to find out how much competition there is before they submit their offers. When a serious buyer hears 6 offers are coming in you have to assume that the competition is as serious as you are. You bid more because of it. When you write a crap offer you support these elevated prices you’re complaining about. Of the 6 offers in Foster City…3 of them were serious and good. The other 3 were awful and embarrassing….but I’m grateful for them because they assisted me in getting top dollar.

True Life

This pic is sort of what it’s like to be a buyer right now…isn’t it? It’s nothing short of amazing. Here’s a couple of horror stories: a 3 bedroom, 1 bath house on Edgehill in San Carlos came up a few weeks ago at $849,000. It had a small problem…actually not a small problem, it had a $250,000 foundation and drainage problem. I don’t think I ever saw a $250,000 foundation problem before. Is that enough to stop this insane market? HA! It closed yesterday at $1,200,500! Unbelievable! Once upon a time this kind of problem pretty much killed your deal. Not now!

You like that one? Here’s another. a 1770 sq ft house on Valparaiso just west of El Camino in pretty much original condition came up last week at $1,398,000. Because it’s on the north side of the street it’s technically in Atherton. Across Valpo is Menlo Park, which is crazy too of course. Valpo is a busy street for crying out loud! Anyway…3 offers came in yesterday over $1,900,000!!

I have a listing myself at 765 Sequoia in San Mateo. It’s a real nice 2 bedroom, 2 bath house in a great location. A couple of days ago I got a call from a buyer who essentially begged me to help her get the house. She told me that she and her husband had sold their townhouse over a year ago with the hopes of moving up. They’ve been staying with relatives for awhile now and are exhausted. She asked if I would work with her, as her agent, to help her achieve her goal of buying. Unfortunately I won’t do that dual agency thing so she’ll have to use an agent. Still..it’s the begging that surprises me.

There’s never been a market like this.

Changes

I continue to be astonished on a weekly basis now by the point of view of many buyers I end up talking to about the real estate market. What I see is denial. Lots of these folks seem to want to look at this market as a big storm that’s sweeping through the area. Sort of like Hurricane Katrina. OK, it’s going to wreak havoc for awhile and  cause some damage but ultimately the storm will pass and things will get rebuilt and eventually things will go back to the way they were before. Normal. I think that’s incorrect. I think there’s a new normal being created and that normal will leave lots of folks behind.

I’ve had so many clients that simply gave up over the years. They just couldn’t imagine spending $450,000 for a house…no way they could afford that they thought and certainly they weren’t going to offer ABOVE the asking price to get a place. No way! These folks are now spending well over that mortgage payment in rent…and providing for their landlord’s retirement too. I had a client late in 2012 and early last year who was qualified for about $625,000 with 10% down. We wrote offers on several places and got rejected in the multiple offer environment. Finally, I had a listing coming up myself that I thought might fit them. They didn’t feel good about the floorplan and didn’t go for it. They decided to continue to rent. They’re done with the home buying idea. I think that’s sad.

OK, you can live a perfectly good life and rent. No question. You can take your money and invest in other things and if you’re a combination of lucky and very smart you’re investments will pay off handsomely and will set you up for retirement. Of course those investments could just as easily be dubious and risky…seems like they always have been for me when I buy stocks! The other option is you get over the fear and buy a place. Look what it’s done for all the people that have done that around here. What happens is you just live life…just like you would in that rental place. As the years go by your investment keeps growing. It’s as simple as that. For many, many people in 2014 it’s now or never. Seriously. When this storm passes the landscape will be totally different. Don’t get left behind.

Grasping at Straws

There’s one thing that’s incredibly obvious to me about the market in the last year with the spectacular lack of inventory we’ve had…that is that it’s competitive. I mean INCREDIBLY competitive! I listed a house at 1431 Schooner on Saturday and as of today I’ve given out 18 disclosure packets. That’s pretty good. Great actually. I’m looking at offers on Monday so that number will certainly go up. There’s a few things I know at this point. 1) the house WILL NOT sell for the asking price. 2) there will be multiple offers. 3) the winner will have a nice clean offer. I have no idea who that winner will be but the pressure this market puts on buyers is astronomical. The winner on ALL of these derbies are writing shockingly good offers. Today, in fact, I heard that an 820 sq ft 2 bedroom, 1 bath house in San Carlos listed for $849,000 (a price that I thought was shocking) sold last night for $1,050,000! I nearly fainted when I heard that.

What REALLY shocks me though are the agents out there who have no clue about what bit takes to sell a house now. It seems to have escaped many of them that there’s only 2 or 3 houses on the market in many of these towns. They seem surprised that there might be competition even when they see 300 people at an open house. Go figure!

On Schooner I’ve received two really illustrative questions that prove my point. The first one came form an agent who asked “Will the seller pay for the pest work?” The other one was a comment about signed disclosures. Here it is straight from an email I got:

Just the standard offer pkg will suffice right?

 A recent agent made us sign and submit her entire disclosure pkg with the initial offer.  Haha.
I know, a lot of you don’t get this, but if you’re going to compete in this insane marketplace you need to write as strong an offer as you possibly can. If there’s multiple offers there’s no way in Hell that any seller is going to pay for ANY work done. Also, is it really that hard to sign the disclosures and submit them with your offer? Ummm…possibly that could indicate that you’re serious about your offer. Just saying. Here’s my prediction…every single multiple offer scenario in Foster City this year will end up with a winner who has signed the disclosures up front and is taking it As Is. Sorry to burst anybody’s bubble but that’s the fact. For the buyers who don’t want to accept that please let me make this simple point. You lost about 20% last year, how much will the market appreciate in 2014 before your decide to write a clean offer?

Note to Buyer…Do Not Do This

So I got an offer on the house I had listed in El Granada and it was so astonishingly bad that I can’t resist writing about it. Think of it as therapy…for me. Maybe think of it as an object lesson for you if you’re a buyer. Since the place was on the market for close to three months I sort of expected a low offer. That’s OK. We did indeed get a low offer…$75,000 under asking actually. Again…I get it, no problem. We also got an offer with 17 day contingencies for all categories and this part written in the “other terms and conditions” section of the contract:

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” All furnishings including, but not limited to: window coverings and related hardware, drape mounting hardware over the closet and the drapes themselves, refrigerator/freezer, stove, microwave, kitchen table and chairs, coffee pot, TV, coffee table the TV sits on and the bed frame and mattress”.

My internal response to this? “You’ve got to be f%$#&*O kidding me!” Nothing like insulting a seller. Of course we said no thanks. Oddly enough, 3 or 4 days later I get a call from another agent who is writing an offer too. The guy who had written the charming offer above calls and tells me his folks want to try again. Now after 90 days we have multiple offers. This time our friends come in with a full price offer but have the same terms and furnishing requests. The seller requested a rent back of up to 60 days but was willing to pay the Buyer’s principal, interest, taxes and insurance and put up a deposit. In other words they are willing to cover the buyers expenses during the rent back period. It’s worth mentioning that rent backs occur all the time. I’ve closed 25 escrows this year and I had a rent back on 15 of them. No big deal.

Not to the buyers who want the coffee pot though. These folks told us that they simply couldn’t allow a rent back. They said they didn’t want renters in their home. I asked the buyers agent to think through this process for a minute. The people they’re talking about are the homeowners who’ve made the place they like so much attractive enough for them to write an offer on it. What do these folks think is going to happen? This nice family with 2 small kids is suddenly going to host multiple toga parties as soon as escrow closes? Start throwing half full kegs through the picture window? That argument didn’t work. We ended up taking the other offer, even though it was less money, just because these folks seemed normal.

Folks, if you’re about to write an offer on a home…don’t write one like this. I guarantee you that you will offend the seller. Also…you’ll be looking at houses and writing offers for a LONG TIME!

The Swami Knows

There’s been this funny and somewhat new phenomenon that I keep experiencing. People, particularly those that I meet at Open Houses I’m holding seem to think I know stuff. Actually they probably aren’t too sure about whether I know stuff about the things that I really do know stuff…but they’re certain that I know things about stuff that I have no clue about. Make sense? Simple right?

I guess what I mean is that folks ask me questions about the market, or the property in question, or the project the property is in and even though I do indeed have the answers they’re sort of suspect of me. I’m a realtor after all. A salesperson. Obviously what I say is met with some suspicion? What’s funny though is this question that I seem to be getting a lot on my listings:

” How much do you anticipate this place is going to sell for?”

Over at my listing at 808 Volans in Isle Cove I had this question twice on Saturday alone. In answer to that I said:

” I have no idea”. To which the buyers look at me with incredulity and, after a pause, said “Oh, come on…you MUST know what this place will sell for!”

Umm…No, I don’t have a crystal ball and I’m not a Swami. I have no ability to predict the future or do I have any idea whatsoever what interested buyers that I don’t know are thinking about writing on my listing. Honest. I’ll say it again…I do not have supernatural powers that allow me to know these details. Sorry.

Maybe it’s my ever increasing gray hair? Maybe it’s because some folks in FC read this blog? Whatever it is some of these folks have some certainty that I know stuff like this. I really don’t. In fact I’ve had a bunch of listings this year and I think I guessed wrong on just about all of them. It’s kind of a nice thing when it’s your listing your wrong about…and the price goes way over your expectations.

Here’s something else I’m just about positive about. None of those other listing agents have any clue either. I’m reasonably safe in saying that the agent at 294 Devonshire in San Carlos didn’t predict her $998,000 2 bedroom listing would get an offer of $1,630,000. Everybody’s surprised by this kooky market.