| Appraisal Dramas | August 7th, 2009 |
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There are fresh reports each day about how a low appraisal throws a monkey wrench into a deal. Here’s one published yesterday in “Credit.com.” |
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The real estate market is facing challenges because of new laws and guidelines affecting how properties are appraised. Across the nation sellers and buyers who go into contract are faced with low appraisals that can’s support their agreed upon price. When that happens, a transaction can fall apart because the lender won’t lend the buyer enough money to close. Our industry is working hard to get the appraisal process back on track so that all buyers can buy the property they want, and all sellers can sell for their property’s true value. For more information on how new laws are creating flawed appraisals, you can Google “HVCC” and get the full scoop.| When Compulsive Disclosure is a Good Thing. . . | May 20th, 2009 |
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Seller Disclosure Forms for a real estate transaction take serious time and energy to complete. And the the number of questions can seem absurd, along with the questions themselves. Because of their length and tedium, some uneducated Sellers are inclined to cut corners on the answers. For instance it doesn’t seem necessary to mention the leaky roof they repaired four years ago, since it hasn’t given them a day of trouble since. To a question about criminal activity in the neighborhood, they might skip the part about the time the bicycles got stolen out of the garage. And in the section that asks about permits, they might omit the fact that they never got the final approval on the permit they pulled for the kitchen remodel. I always recommend that my Sellers go into as much detail as possible when disclosing about their property to a potential buyer. Going into excessive details about disclosures can be a good thing for many buyers, who feel reassured by the knowledge that they most likely know everything they need to about the property they’re buying. Buyers like this are far less likey to back out of the deal, especially if the disclosure is passed on to them in advance of their even writing an offer. |
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California law requires disclosure of material facts that affect the value or desireability of the property. A big chunk of what gets disclosed is covered in the Seller’s “Real Estate Transfer Disclosure Statement” (RETDS) and the “Supplement to the RETDS.” These Seller questionnaires are provided to a buyer to help them make a decision on whether they want to buy the property.| How NOT To Sell Your House | March 13th, 2009 |
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I’ve been thinking lately of all the weird things sellers do without thinking to put buyers off when they go to look at houses. If your house is on the market or you are thinking of selling, here are some do’s and don’ts (mostly don’ts): 1. Don’t think we can’t smell your pets. I’ve walked into homes where the first thing I thought was, “Cat.” Then I go into the bathroom and think, “Oh man! So Cat!” And then, in the tub behind the shower curtain, (always) is the kitty litter box. Pet odor is also a substantial liability: I’ve heard that buyers sue over cat pee more than anything else. 2. Don’t cook a big Indian meal right before your open house. Or eggs and bacon. Or something with lots of garlic. 3. Don’t think people won’t open your drawers. I was at an open house once where I opened a drawer in a television cabinet and found it loaded with porn videos. I was terribly embarrassed, and walked around the rest of the time with my arms plastered to my sides. 4. Don’t leave your furniture arranged as it is so people can see how much you can fit into a room. When I’m in a hurry touring property on a Tuesday, I don’t want to run an obstacle course around your stuff. When our Sellers need to remain in the home during the marketing period, we usually recommend putting half their furniture and accessories in storage. 5. Don’t leave all your very favorite art up on the walls. I showed a home once where the entire living room wall was covered with snapshots of male body parts. It was highly entertaining, but a day later I couldn’t remember anything else about the house. 4. Don’t leave a joint and roach clip on your bedside table. This is another house where I remember hardly anything except that the guy’s bed had a great sunset view of Twin Peaks. 6. Don’t play your favorite Madonna music on a boom box in the kitchen. Some people might think this gives their house a cool aesthetic, but I’d go for something a little more neutral, like classical. Boring, I know, but very safe. 7. Don’t make sure everyone knows your cultural and political preferences. You may love your Obama poster. I may love your Obama poster. But we’re trying to appeal to the masses here, and you don’t want your place to be remembered by a Republican as the ‘Obama Poster House.’ So I came up with these seven Don’ts without even trying. Anyone want to add some? Then add to the comments section. |
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How NOT to Sell Your House| What Properties Go Fast And Why | February 21st, 2009 |
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How did these properties beat the statistical odds? Most likely because they were priced right and showed beautifully. 2191 34th Avenue, a small Sunset District house was small but aggressively priced at $649,000 with beautiful staging and professional quality photos that made the home stand out online. Some of these properties were on the market at the end of last year at higher prices. 2354 9th Avenue, also in the Sunset District, was listed for $100K more last year. 384 Bradford, a modest 1960s home in Bernal Heights was on last year for $530,000. It came back on as a bank-owned property for $499,000. A reduction from $530,000 to $499,000 doesn’t seem significant, but pushing the price below the $500,000 threshold drew fresh buyer attention to the property. Another well-priced property listed right below a psychological price threshold was was 2586 Clay, at just under $2M. This Pacific Heights single family home in a premium location, was a pristine Victorian just steps away from Alta Plaza Park and the Upper Fillmore Street shops. In the condo market, most of the properties that sold were listed just under certain price threshholds– like 55 Lapidge in the Mission, listed just under $650K; 1945 Washington #304, listed just under $720,000; and 3250 Broderick, a gorgeous top-floor condo flat on a prime Marina District block listed just right at $1.15M. |
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Here is a pdf link to some | An Exclusive Seminar From an Industry Pro | November 24th, 2008 |
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I’ve never seen anyone synthesize information and deliver it in a more entertaining way than Carole. She’s whip-smart and very funny. And she’ll leave you informed about what’s really happening with local real estate in a way that no talking head can ever equal. Carole’s brief seminars are usually only offered to industry professionals, but for the first time she will be presenting a quickie course in ‘Real Estate Economics’ for Buyers and Sellers. Topics presented at warp speed will be: The Theory of Real Estate Economics: Add a “0” every 30 years. Date: Wednesday, December 3 If you go, you could make evening of it and follow up with dinner at Greens or somewhere on Chestnut Street. Cost is $10.00 (I swear this is better than a movie), but I have a limited number of free tickets available. Call me if you want one. 415-577-0809. |
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Carole Rodoni is a rare combination – a real estate industry veteran with on-the-ground experience as a real estate sales person and investor. She’s an addict to any and all information about the economy. She lives and breathes CSPAN and CNN. And she’s sharp as a tack.| Tax Savings Can Help Pay For Seismic and Solar Upgrades | November 18th, 2008 |
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Proposition N will increase the real property transfer tax rate to 1.5 percent for the sale of real estate selling for $5 million or more, and extend the transfer tax to real estate lease of 35 years or more. This part of the proposition is mostly aimed at sales of large commercial pieces of real estate, although it will also affect the upper-end luxury housing market. More significantly to Sellers of SF residential property, Proposition N will reduce the transfer tax for your property by up to 1/3 if you have installed a solar system or made improvements ot increase earthquake safety. On a $1M sale, this would equal a savings of $2,266.00. On a $5M sale (investment property owners, take note!), this could equal a $25,000 savings! It’s unlikely that for a small property owner these savings would pay for an entire solar system, but they could cover some simple seismic upgrades. If San Francisco follows Berkeley’s lead about which upgrades qualify (Berkeley has incentivized owners to retrofit since 1992), then credit will be given for foundation repair or replacement, mudsill repair or replacement, wall bracing in basements, foundation-to-mudsill bolting, shear wall installation, water heater anchoring, and securing of chimneys. If you are planning on doing any of the above listed work, keep your receipts and check about getting permits. The City may not allow simple handyman jobs to qualify without proper documentation. |
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Two real estate related propositions passed this month. Proposition M set up new categories and descriptions of tenant harassment by landlords, and clarified what harrassment meant with | Why Words Matter - Writing Ad Copy for Real Estate | November 15th, 2008 |
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Buyers go for style over substance: words like “curb appeal” or “beautiful” made homes sell faster than cut-and-dry terminology like “value” and “price.” Homes described as “beautiful” moved 15 percent faster and for 5 percent more in price than the benchmark. A home pitched as a “good value” sold for 5 percent less than average. Another dead-in-the-water phrase is “must see!” which had a statistically insignificant effect on the number of days homes took to sell. If you’re selling, it’s important to think about how words that sound good can be misunderstood. Here are some commonly used ad words and how buyers and/or their agents often interpret them: Motivated Seller - Please low ball ************************************** When I write about my listings, I try to help someone imagine living there. I also focus on the lifestyle a property offers and use words that will draw in the appropriate buyer- for example, copy for a SOMA loft should differ significantly from copy for a Noe Valley single family home. When moving into details, I like to augment my descriptions with language that helps a buyer picture the space. ”Big walls for art” and ”Rooms you can roller skate in” are two examples of how words can offer affect a home buyer’s experience of the property. To learn more about how I write about my listings, please visit the ‘featured properties’ section on my website. |
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Researcher Paul Anglin, who teaches real-estate and housing trends at the University of Guelph in Ontario, Canada, studied the wording of more than 20,000 Canadian home listings from 1997 to 2000. His aim was to see how the language of the ads affected the speed and price a property sold for. Here is some of what he learned:| The Dangers of Dual Agency | July 1st, 2008 |
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Dual agency, when a Realtor represents the buyer and seller, creates relationships with clients and customers that aren’t that clear-cut. A Realtor who chooses to become a dual agent can no longer advocate on behalf of either party because each client has opposite goals. She is also unable to disclose some types of information from each party, like how much the buyer is prepared to pay and how low the seller is willing to go. And she is also not allowed to offer specific negotiation strategies to either party. A different kind of dual agency is created when two agents from the same company represent the two parties. This happens with a fair degree of regularity at Paragon because we have so many productive sales people. Some buyers and sellers get confused when Paragon represents both sides. They worry that our company will place its own interests above theirs. It helps them to understand that as independent contractors we individually represent only the interests of our client — and that their is no personal economic incentive for us to do a deal “in-house.’ Sometimes we list a property for sale and have a buyer ask us to represent them in the transaction. Their hope is that by having us represent both parties we will be able to either reduce the selling price or a cut our commissions. My practice has always been to reject requests for dual agency. I’m not comfortable representing both parties because it limits my ability to advocate for either side. And even the appearance of not acting in my seller’s best interests is not worth the extra money to jeopardize my relationship with them. This tactic is also unfair to other agents with buyers interested in the property who won’t have the advantage of a level playing field when competing with other offers. If I do meet a buyer who wants to make an offer on my listing and they need representation, I refer them to another agent in my office. If there are multiple offers on the home, I ask that they are all submitted at the same time so I can be sure not to give my associate an unfair advantage. Again, this is to assure all parties involved that no one is getting inside knowledge on what price and terms to offer. The best agents build their reputations one deal at a time. While I always guarantee my clients the best representation possible, I’ve also always make sure to treat all parties fairly on every sale I handle. |
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The most common legal arrangement in the business of buying and selling real estate is for a listing agent from one company to represent the seller and a buyer’s agent from another company to represent the buyer. The advantage to this scenario is that each party their own representative acting in their best interests.| Dear Buyer/Dear Seller | June 4th, 2008 |
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A few years ago, when multiple bidders would show up at a real estate open house, the truly desperate resorted to writing love letters to the sellers, dripping with compliments for the property and ended with a plea for mercy (and a signed contract). Today’s real estate market calls for a different kind of letter, less a fuzzy valentine and more like a cold splash of water. . . Dear Seller: I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs. But given that my offer is well below your asking price, I also feel I owe you an explanation. First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index. That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent. Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply. So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique. Few homes are. I know this may be hard to hear, since you’ve spent years creating memories here. But you may be waiting a long time if you hope to find a buyer with the same emotional connection that you have. My mindset is hardly unique. We’ve all been reading the headlines. The accompanying articles appear prominently in major newspapers and sit on the Web pages where people check their e-mail every day. Everyone sees them, and the psychological impact is real. Has your real estate agent laid any of this out for you? Maybe so, and you didn’t want to believe it. But it’s also possible that your agent, afraid of offending you and losing the listing, simply doesn’t want to initiate that sort of discussion. It may be worth sitting down for a candid reassessment. It will be tempting to view my low bid as an insult. Please don’t make that mistake. Your home is genuinely appealing, and I wouldn’t have written this note unless I was serious about buying it. Getting a firm offer in this market is an accomplishment. So congratulations! Oh, and one more thing. You presumably need someplace to move. My guess is that you’ll find these same points compelling when it’s your turn to buy. You just might succeed in buying for a better price, too. I look forward to hearing from you soon. Yours Truly, The Realist Now for the Seller’s response: Dear Bidder: Thanks so much for your note. I’m truly glad that you like our home as much as we do. You’re right that my family and I have many great memories of this place, and we hope someday you will, too. And I just want you to know that I’m not insulted in any way by your offer. The fact is, none of us are very good at buying and selling homes. We don’t do it often, and as much as we know we’re not supposed to let emotions get in the way, it’s hard not to. After all, few people buy or sell anything else as expensive as a home in their lifetimes. That said, your offer disappointed me. You seem to believe that I’m not aware of how bad things are out there or that I’m in denial. But I do read the headlines, and I priced the house accordingly. I knew I might have to wait awhile to sell it. I should point out that your data draws on what has already happened in the housing market. Instead, I’d ask you to consider what’s about to happen. One big reason for the falling prices is that it’s harder to get mortgages. Lenders went from giving money to anyone with a pulse to demanding higher credit scores and larger down payments. All sorts of buyers simply couldn’t make the numbers work anymore. That may now change. Starting June 1, Fannie Mae and Freddie Mac, which buy mortgages from lenders and help make it possible for them to lend more money, are loosening restrictions on the sorts of loans they’ll buy in many markets. That is supposed to make it easier for people to buy a home with a down payment of 5 percent, or even less. Many more qualified buyers should mean more bids, and I’m willing to wait to see if it turns out that way. I know you talked about having choices, but presumably we wouldn’t be engaging in this correspondence unless you liked my home best. Given that, I’d ask you to think about something: How often do you find a place that you can actually imagine living in? Sure, there are a lot of other properties out there. But an increasing number are in foreclosure and probably have problems lurking within the walls. So don’t let fear of a falling market keep you out of a home that you truly want. It’s probably obvious by now that I’m not going to counter with a particular number. This doesn’t mean that I do not want to negotiate. I’d just like you to consider what I’ve said and see if you find it convincing. In the meantime, other shoppers who are interested in my home now have a price to beat. So thanks for helping me out with that. Just one more thing. Please take another look at whatever mortgage calculator you’re using and see how your monthly payment will change if you brought your price up a bit. It almost certainly is not going to be enough to break you. But it may be enough to get us to a deal. I look forward to your reply. Yours, The Undaunted The Seller’s best points are scored with asking the buyer to calculate mortgage payments at a slightly higher price. At 6% interest only, each $10,000 increment costs $50/month. But thanking the Buyer for offering a ‘price to beat’ sounds a little snarky. I’d leave it out if I sent a letter like this. |
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This is a synopsis from the NY Times– two realistic views of the market, both quite valid:| Study Proves That Weird Asking Prices Work Better Than Normal Ones | January 18th, 2008 |
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An article in this month’s Atlantic Monthly suggests that because we tend to use precise numbers for small amounts and round numbers (lots of zeros) for large ones, sellers can make buyers perceive a price as smaller by replacing zeros with other digits. A study from Cornell University has concluded that precise prices like $391,534 were seen as cheaper than round ones like $390,000 even though the round prices were actually lower. The authors examined more than 27,000 real estate transactions in South Florida. At its conclusion they found that having three zeros at the end of the list price lowered the final sales price by about .73 percent compared with houses listed at a similar price [without zeros]. Each additional zero lowered it by another .39 percent. While seemingly small, this effect can add up to thousands of dollars. In the SF neighborhoods we work in, with median prices averaging $1m or more, the effect can add up to $7,000 – $10,000 and up. |
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