When to Consider a Price Reduction

Now that we are entering summer there has been a sharp increase in available homes for sale. July is traditionally the biggest month for new listings in San Diego. So now that sellers are facing more competition to sell their home, pricing correctly is even more important. The market will tell you if you are over priced, no more having to listen to that pesky agent. What are the clues?

1. Your home isn’t getting seen.

Buyers are really smart these days and have tons of tools to help them research their purchase. Buyers know when they are seeing a price that is over the market. An over priced home isn’t worth their time. If your home isn’t getting seen it can’t sell. Buyers are telling you that your price is turning them off.

2. You are getting a lot of traffic but no offers.

You will get the highest traffic during the first 14 days your home is on the market. But if all that attention isn’t resulting in an offer, buyers are telling you something. Either the condition of the home is turning them off or your price is. Most buyers understand that they will have to pay something close to asking price for a great home, but if your home is over priced, they won’t even bother trying to negotiate you down to market.

3. Your home has been on the market longer than similar homes.

As I mentioned, buyers are smart and if a home has been on the market for 30 or 45 days when other homes in the neighborhood have sold in 15 days, buyers notice. The first question I get from my buyer clients is “What is wrong with the house that it is still available?” There can never be a good answer to this question from a seller’s perspective. A close examination of why you are still sitting while everyone else is selling is often price related.

4. You have a deadline.

We are finding more and more “motivated” sellers on the market. In real estate speak “motivated” means the sellers need to sell for some reason. Yesterday I saw a home and the agent told me the sellers were very motivated. I have to question just how motivated the sellers really are as the house is at least $25,000 over priced in my opinion. Remember a home is only worth what a qualified buyer will pay, not what a seller thinks it is worth. Your deadline means nothing to a buyer, your price does speak volumes to a buyer.

5. You can’t make upgrades or repairs.

Chances are sellers are tapped out when it comes time to sell their home. Many homes have differed maintenance or are a bit out dated. Sellers are putting their money into a move, another house, retirement or any of a huge number of other pots and don’t have the time, energy or desire to do even basic updates. If this is you as a seller then a price adjustment is in order. I met with a seller recently who told me all about the price of homes selling in his neighborhood in hopes his would sell as high. Problem, his house needed a ton of work to match those sold homes. Condition still matters and if you don’t have the money to make the upgrades be prepared to adjust your price accordingly.

6. Competing homes in the neighborhood have changed.

If your home was listed 45 days ago and since then, 4-5 other homes have come on the market, it might be wise to reevaluate your home and price against these new homes. Real estate is constantly evolving and smart sellers use that evolution to make necessary adjustments.

If you are thinking about selling your San Diego home, contact me for a complementary market analysis so you can see how you stack up against the competition.

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What a Difference a Year Makes

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Sellers Are Feeling Good About Home Prices

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How Did Home Sellers Handle Multiple Offers?

How Did Home Sellers Handle Multiple Offers

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California Spring Home Buying Season 2014

California Spring Home Buying Season 2014

There is a lot of good news for home buyers as we enter the Spring home buying season.

Interest rates have recovered from the first of the year. Historically interest rates rise at the beginning of every new year and then settle down about 6 weeks later. 2014 was not different as home buyers watched interest rates drop almost 1/2% from January to February. While rates are still almost 1% higher than this time last year, they have remained in the 4%’s since last June.

The inventory of available homes for sale is increasing. Home owners have seen nice increases in home equity over the last 2 years and many can now make that move they have been putting off. California in general has risen 1 full month since February, 2013. In February, 2014 California saw a 4.7 months supply of available homes. Some very popular areas are still struggling but the trends seem positive.

Lenders are again offering a mixed bag of financing options. During 2011-2013 just about every lender was offering only 30 year fixed mortgages as the safest instrument available. We are now seeing lenders offering adjustable rate mortgages with attractive rates. Adjustable rate mortgage can be very attractive if you know you will be moving within the locked rate period. Many first time buyers typically live in their first home 5-8 years. For these buyers an adjustable rate mortgage with a lock period of 5-7 years can be a nice option. Be sure to check with your lender for all of the disclosures associated with these mortgages.

The California Spring Home Buying Season in 2014 looks brighter for home buyers.

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FHA to offer Mortgage Insurance Discount to First-Time Buyers

FHA to offer Mortgage Insurance discount to first-time-buyers

Carol Galante, FHA commissioner, announced on Tuesday that FHA would offer discounts on mortgage insurance premiums to first-time buyers who completed housing counseling.

FHA mortgages have been an important sources of loans for many low-income and middle class home buyers for years. During the housing meltdown, FHA became the preferred lender when traditional banks pulled back on mortgage lending. However, the FHA target market also were some of the most at risk home owners and many lost their homes during the meltdown. FHA came under fire from Congressional leaders for poor lending standards, as millions of Americans lost their homes during the meltdown. In an effort to shore up their financial base, FHA raised mortgage insurance levels over the last few years and now carry the highest insurance levels in the market place. This rise in mortgage insurance premiums has caused many buyers to abandon the program for more conventional financing.

During her speech on Tuesday at the NCSHA The Affordable Housing Opportunity conference, Ms. Galante told the audience that first-time buyers who complete HUD-approved home buying counseling will get a discount on their mortgage insurance. According to HUD Secretary, Shaun Donovan, evidence is showing that home buying counseling actually lowers the risk of default for borrowers.

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Are you the right seller for my buyer clients?

Are you the right seller for my buyer clients?

I read a survey recently published by the National Association of Realtors in which buyers were asked what were the most important aspects of deciding which was the right home for them. National surveys interest me, but I find personal surveys much more informative. So, I asked some of my current buyers what helped or hurt them in their home searches. I found the results mirrored what the NAR survey came up with, with a few differences.

One of the things my clients said they wanted was market priced homes. They were immediately turned off by homes that were over priced. These clients spend a lot of time, I mean a lot of time, researching homes on-line. They get information from me but they also search other websites as well. These are smart, sophisticated people who can spot an over priced home quickly. They can’t understand, and neither can I, why a seller would over price their home when it is so easy to find similar homes in the same neighborhood with better pricing.

Another issue is actually viewing homes. I had a couple recently view a nice home in my area that was properly priced but when we arrived for the viewing the home owner was there. The owner then proceeded to walk my clients through the home giving running commentary about everything he had done to the house. They felt uncomfortable opening closets and cabinets with the owner standing there. When I had shown them other homes, where the owner wasn’t present, they spent time engaging each other in what worked and didn’t work about the house. In this case, I got almost no feedback from them about the house and they left quickly after the owner left the room.

Photos, or the lack of photos, is a hot button for my buyers. If they see a home for sale and there are only a couple of photos of the property, boy do I hear about it. My clients need to see photos of the kitchen, bathrooms, backyard, living spaces and exterior of the house. It is almost impossible for me to interest them in homes with few photos available.

Homes for sale in As-Is condition. In California, our purchase agreement speaks to the condition of a home several times. The agreement specifically states that the home is purchased in as-is condition but it also provides the buyer the opportunity to have physical inspections done so the buyer can be satisfied of the condition of the home. If a listing says the home is only for sale in as-is condition or that the seller won’t make any repairs, my buyers become hyper-critical of everything they see. They also suspect there are problem with the home they can’t see. I know that in short sales, as-is condition is the norm, but if we are talking about a traditional sale, having a seller say “I won’t make any repairs” is a real red flag to my clients.

Having limited showing times is another issue for some of my clients. All of my current clients work for a living and their employers expect them to be at work during working hours. Recently one couple was interested in a home but it could only be viewed Monday-Friday 10AM-4PM, excluding nap time 1PM-3PM. No matter how much we tried to negotiate a showing outside those hours, the answer was always no. I had another couple a  few years ago interested in a house. I called to set an appointment with the owner and was told their daughter was sick. No problem, nursing a sick child puts extra stress on any parent but when I asked if I could call back in a couple of days to see if the child was better I was told no. The owners would call me when it was convenient, I never did get a call.

If one of more of these scenarios describes you as a seller, then you probably aren’t the right seller for my buyer clients.

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It Pays to Use a REALTOR

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