Ringing The Bell

Last year, a large 4 bedroom, 3200 sq ft house on Gloucester in Whalers sold for $610,000 over asking. Remarkable for sure, but it’s a big house, it was priced low to begin with…and it’s on the water in Whalers. It closed at $2,010,000. A couple of days ago a 3 bedroom, 2 bath house in Plum Isle at 934 Aruba, in all of 1810 sq ft closed at $1,750,000. $462,000 over asking. That’s simply astonishing. To add some perspective…the most money ever spent on this floorplan in Plum isle was $1,160,000. That place closed on July 22 of this year! 10 days ago! OK, the Aruba place is nicer than the other one on Grenada…but WOW!

Real Estate is a lot like baseball. You never really know what you’re going to see every day you go out. Amazing!

 

Long Term Appreciation

I saw this chart on Paragon’s website and thought it was terrific. Of course it’s about San Francisco’s market, but it’s pretty much the same numbers here as well. I actually have seen this same chart before that encompassed all the way back to the end of World War 2. Same story, pretty much. Interestingly, this period sort of is the time I personally have been in this business. I started in 1990 right after the earthquake and right before the first Gulf War. It was a recession, but I didn’t realize that…I didn’t have any clients anyway. I was new!

I clearly remember the market heating up in 1995. I had this goofy client who predicted the market’s acceleration because of technology that year. I thought he must have been crazy…but he was right of course. What I really see when I look at this chart is that we had 21 or 22 years of escalating prices out of the last 30. I think it’s very hard to deny that. The little blip this chart calls the dotcom bubble in 2001 didn’t exist at all to me….with the exception of the stalled market following the events of 9/11/01. That lasted for 3 months until January of 2002 when it went off again.

That means that the market slowed a bit in 2007 and early 2008 and then plummeted in September of 2008. It sucked in 2009, rebounded somewhat in 2010, dipped in 2011 and then took off again in 2012. 2009 was really the only market I remember where multiple offers were rare and buyers had nice leverage. The rest of the time it’s been highly competitive for buyers.

I know there’s been tons of ridicule about realtors touting their particular market as being “different” from everybody else and how our values don’t plummet like everybody else’s…but look at this history! Our’s don’t. This brings me back to renting again. Why? The MLS history goes back to 1998…a 4 bedroom 2 bath rancher sold then on Shad for $473,000 (It got multiple offers…it was listed for $450,000!). That same floor plan sold on Marlin this year for $1,300,000. Did anybody who chose to rent over those 16 years earn that kind of appreciation. While doing nothing other than living in a place?

How much do you want to bet that the people who bought Shad in 1998 for $473,000 felt they overpaid…and that the market would fall apart since they just bought. Sort of just like buyers feel right now.

Staying or Going?

About 10 days ago now I had a condo listed at 143 Albacore in Marina Green. It’s a very cute 2 bedroom place and was listed for $599,000. I had the usual amount of interest…in other words lots of people went through there and I eventually handed out 8 disclosures to interested parties. A gentleman came in the first hour of the first open house and expressed interest. Actually…a lot of interest. He was there for at least an hour. He told me he and his family have been renting in Foster City for years and he never could get around to making the plunge into a purchase. This was going to be the time, he said. This was the right property! He came back later and spent another 15 minutes or so there…then the next day he came back with his daughter. She liked it too. He asked a lot of detailed questions about offers and disclosures. he told me his agent would contact me and get the disclosures. During the week we marketed this place he called me 3 times to ask questions…his agent called a couple of times too. I’ll bet he told me 5 times he was going to write an offer. During the second weekend he came back with his wife and together they spent about a half hour in the condo. Offers were due on Monday by 1:00PM  and he called me himself at about 10AM to see how much competition he had. Keep in mind, his agent was doing the same thing.

I really liked this guy and was rooting for him! We ended up with 3 offers and his turned out to be lower than the other two. We countered him to help him out and he agreed. We ratified that evening! Yay!!

At 10AM the next morning his agent called and told me that he was backing out. I couldn’t believe it. After all that time and effort…he got cold feet. He didn’t want to use his savings on the down payment, the commitment was just too big, said his agent. He’s going to continue renting. OK, no problem…except I think that’s a mistake of course. We didn’t have any problem finding a buyer…we had two great backups. An hour later we ratified again. In 5 years this condo will be worth $750,000. In five years this gentleman will be paying $4000 a month to rent a similar size apartment. At least. OK, OK…I’m WAY invested in this real estate thing, but I think it’s crazy to rent instead of buying. Especially to choose to rent vs buy in a case like this. I see all those online comparisons too “RENT vs BUY” on Facebook or wherever. I’m never going to believe renting is better than buying. I don’t have to look any further than my own family. If it wasn’t for the fact that my parents and my Aunts and Uncles bought property way back when we would just flat out be screwed in our generation. That’s a fact. Real Estate investment was the best thing that ever happened to us..and will be the best thing that happens to my kids too for that matter. I’m going to expand on this in more posts going forward. I just feel bad for that nice guy who could have had Albacore.

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!

 

 

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!

 

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.

The Million Dollar Townhouse

The title above says it…but I’m sure plenty of you (me too!) can’t quite wrap our heads around it. That’s the prospect of townhouses in Foster City selling routinely for $1,000,000. Surely you jest you say! I clearly remember selling a townhouse on Juno Lane in Isle Cove that we listed for $395,000 and got the astonishing price of $402,000 for. We were absolutely amazed and I recall a neighbor being sort of annoyed with me because he thought we were crazy to be asking such an outrageous sum as $395,000 in the first place. I was clearly an idiot in his eyes.

Now we’re seriously looking at those same townhouses approaching the 1 million dollar mark…and I don’t think it’ll be long until that happens. Of course they’re already there at Promontory Point…but I’m not talking about Promontory Point! I’m talking about Winston Square and Bayfront Court and Bay Vista and Treasure Isle. Don’t believe me? Since the first of 2014 two units have gone over $900,000. A waterfront at 1115 Lord Ivelson sold for $930,000 (but the waterfront thing is sort of expected) and a unit in Treasure Isle at $728 Chebec that was listed for $868,000 sold for $955,000. That’s NON WATERFRONT townhouses.

Right now we have pending sales at 845 Balboa (Water…listed for $899,888), 391 Catamaran (No water…listed for $865,000) and 881 Cabot (no water…listed for $858,888). They’re all going to close over asking. I can’t wait to see where. It might not be this month or next…but sometime this year we’ll see a closing at or over a million for one of these townhouses. That’s absolutely freaking unbelievable! What’s more incredible though is the fact that we’ll get used to it and the standard for townhouses will be a million dollars. Just like the standard for single family homes is now about $1,300,000 in Foster City. You can be sure I’ll report on the first one that does…and don’t be surprised if it’s sooner rather than later.

 

Hitting Them Where They Ain’t

It’s an old baseball expression. Willie Keeler played from 1892 to 1910 and had an amazing career batting average of .341. When asked to offer advice to young hitters Keeler said “Hit em where they ain’t”. Simple huh? Easier said than done too.

So yesterday I started to think about the transactions I completed this year and I can’t tell you how grateful I’ve been to have had a good number of listings in 2013. 14 out of the 24 deals I had were listings. Lots of agents I know that didn’t have listings had a terrible year. Of the 24 sales 18 of them were in multiple offer situations. That leaves 6 that weren’t and the more I thought about that…and those clients I realized that in 5 of those 6 cases the buyers who got them hit them where they ain’t. In other words they had no competition and just by staying on top of the market and it’s inventory these buyers won the day. There were many circumstances, deals that had fallen apart leaving the listing back on the market again, a better house a few blocks away that drew buyers attention to this not quite as good house and just plain luck in the seller didn’t want to wait to look at offers. The point is that there ARE homes out there selling without a feeding frenzy, in decent locations and that are good deals…if you’re diligent, patient and ON TOP OF THE MARKET.

I think that’s a very important point. You need to be constantly analyzing the inventory and market data to accomplish this. Obviously a good agent can help you with this, but don’t get frustrated an quit because you’ve written 17 offers in competition and missed on them all. It’ll happen…look for ways to hit en where they aint.

 

What a Business!

This real estate thing is such and amazing business. Sometimes it seems that anybody can do it, huh? Well, almost anybody. One who doesn’t seem able to do it is actually on the market now on Tiller in Bayfront Court. It’s a short sale priced at $775,000…which is interesting since the most money paid for this floor plan came earlier this year at $828,000. Another unit sold for $800,000. Since short sales are such a huge pain $775,000 doesn’t seem like a big discount to me…but what do I know. To make it more fun there’s a few more details of it’s listing salability that I couldn’t help notice and remark on.

1. It’s listed as a single family home instead of a townhouse…which it is

2. The listing is offering a total of 1% commission to the buyers agent

3. There’s only one photo in the MLS and it’s of the open garage doors

4. It’s tenant occupied and there’s no lock box

5. The listing agent is in Los Angeles

A short sale with all of these marketing features. Oy! This is really going to be interesting to watch.

Reversion

Well, we’ve actually regressed. OK, the year is winding down and all that but as it’s gotten a little slower I would have expected that the level of inventory would have risen. Fat chance! This doesn’t bode particularly well for 2014 by the way. As of tonight there’s a whopping 4 active single family houses listed in Foster City. The lowest priced one is the place pictured above at 508 Gibraltar. It’s 3 bedroom, 2.5 bath house listed for $1,188,000. Offers are tomorrow. It’s almost unimaginable to me that we’ve gone so long now with such little inventory. Making it even weirder, there’s 5 condo/townhouses on the market. Huh?

Even with the market ebbs and flows there just doesn’t seem to be any way for values to flatten or fall if there’s this low amount of inventory consistently. If you’re a homeowner considering selling this is pretty good news for you. It’s not particularly great if you want to move up and stay here but it’s still better than buyers moving in here. It’s most likely going to continue to be competitive.