Since March usually represents the beginning of the "Spring Selling Season”, I will tackle a topic that seems especially appropriate - how to properly price a home. Let me start by saying that it is about 75% facts and figures and 25% gut instinct. Put another way, "25% art and 75% science.” It is for that reason that all of the great internet websites that are out there can only give a ballpark as to the real value of a specific home when it is put on the market. Even with tract homes, where we literally have exactly the same square footage from one home to the next, there can be huge differences in ultimate sales price, both LOWER and HIGHER than what Zillow or other sites suggest. Why is that? Let me give 2 examples to illustrate. A few years ago, I had a "Brighton Village” home in Valencia listed as a short sale. It was highly upgraded and the offer we had for $390,000 was higher than any other Brighton Village that had sold. The bank should have been thrilled with the offer
Neal's Blog
I have spoken to a lot of potential sellers in the last 6 months that think that 2012 might be the year for them to sell. In almost all cases they think that the market will be better than last year. It is understandable to hope for that; the news these days for Real Estate is far more positive than it has been for the last 4 years (foreclosures at lowest numbers since the crisis, low interest rates for the next few years, affordability of Real Estate and buyer confidence the best it has been in a decade). I mean, why wouldn't prices stabilize or go up?? The answer as to why they won't, or maybe I should say "can't" lies in the competitive listing that keeps the market from appreciating - the short sale. Because I spend so much time on short sales, I can forget that the public often doesn't understand how they work and why they keep prices from rising. To review, a short sale is where the seller owes more than the home is worth and they are getting NO MONEY when it closes.
HARP - Home Affordable Refinance Program Remember when you were growing up and your parents or teachers said, "IF you do this, THEN you can have that?" In Real Estate it might be something like, "IF we get rid of all the distress sales, THEN we can have price stability and the eventual return of appreciation again." That is the way life is supposed to work, right? We like to know that if we do something, something else will naturally follow. IF I eat right, THEN I stay in shape; IF I follow the rules, THEN I stay out of trouble; IF I treat my clients well, THEN they tell their friends, etc. Well for 6 years now I have been commenting on a Real Estate business that has not been at all predictable. Starting with the Bush Administration, the thinking was IF we make short sales easy to do, THEN sellers will use them as a way out of being upside down. Wrong! Lenders will tell you that 60% of people in default never even speak to their lender about options. They
I have suggested in my last few posts that there is so much information available about statistics and trends in Real Estate that we should be clearer on where the market is going than ever. I have also stated this is not the case because for every story with something positive (foreclosures at lowest numbers in 4 years, prices up in May and June), there is an equal negative (unemployment unexpectedly higher, closings off 30% from 2010). Because Real Estate is about numbers, and numbers can be easily manipulated, I like to share what I know is happening right now in Santa Clarita and what I think we will continue to see for the next few years. Hopefully this explanation will eliminate confusion for buyers and sellers alike so that they can buy or sell with confidence. Or at least I hope it does. I call it the "20-60-20?rule of Real Estate, and understanding which group the home you are thinking of buying or selling falls in, explains a lot. 20% of the homes
I sold my first house in May 1991, 20 years ago. The business then was in many ways easier to understand and predict, especially with respect to values. In California for example, when we go up we go up a lot and when we come down, the same has been true. Appreciation of over 20% or depreciation of over 20% in a single year happens more here than any other state. So you can see why being able to look at trends and make value predictions is important for a good agent when advising clients. In 1991, the business was also much more labor intensive – offers were presented in person, cell phones were rare, and the internet and email didn’t exist. If a buyer wanted to see property, they relied 100% on the agent to pick the homes to view, often from a book published every 2 weeks. Think about it! Still, with all the tremendous improvements in the amount of information and statistics, it is amazing to see just how difficult it is to fully understand what is really going on in the
For 15 years I have started the New Year with a review of the past year in Real Estate and offered some suggestions on what we might see in the year(s) ahead. Reviewing a year like 2010 may be harder than any year before it. The first half of the year had unexpectedly strong buyer demand (fueled by government incentives) and the second half was much slower than expected as the stimulus ended and inventory rose every month from June on. I would describe 2010 as "confusing." As I have suggested before, I have never read so many news reports on Housing that would seemingly contradict each other. Many well respected analysts have published convincing articles explaining why housing in many areas is "undervalued." Could that include Santa Clarita? Yet, in the very next article I would read that there are over 7 million homes in some stage of foreclosure which will keep values down until 2020. 2020? That would be the longest slide in home