The Broker's Record

It’s Curtains for the Skyview

November 17, 2007

In case you haven’t heard, the Skyview Drive-In’s days are numbered:

http://www.santacruzsentinel.com/story.php?storySection=Local&sid=44990

I’ve received a couple of e-mails from friends of mine, looking for signatures on a petition to save the Skyview Drive-In. I’ve gone to many a movie at the Skyview, and spent more than a few weekends browsing the aisles at the weekend flea markets they have there. And, I know that Drive-Ins are precious historical sites from a by-gone era, and that still having the Skyview further adds to the uniqueness of Santa Cruz.

Having said that, let’s look at the property from another perspective. There’s a little principal in Real Estate that we call “highest and best use.” The State of California kind of drums this idea into licensees when they are studying: land should be put to its highest and best use. That kind of makes sense, doesn’t it? When something is put to its highest and best use, though, this is always done in the context of the zoning ordinances which are applicable to the area where the property is located. Of course, one way to fast cash in real estate is to buy a property with one zoning, and work the city council or board of supervisors to have the zoning changed to allow for, shall we say, more profitable development of the property.

However, the Skyview Drive-In is already zoned C-2 – that’s for commercial use. So there it sits, in the middle of the county, on a principal traffic artery (Soquel Drive), near our freeway – 14.398 acres of prime, flat land – in a county with very little prime, flat land available. Now, you have to ask yourself – is a Drive-In the best possible use of this parcel?

Much as I have enjoyed the Skyview, and much as I will miss it when it goes – I have to say that it’s pretty clear that there could be much better use made of this property. Like, for example – Doctor’s offices? Medical Clinics? The new owner is the Palo Alto Medical Foundation, which runs the nearby Sutter Maternity & Surgery Center, as well as the Santa Cruz Medical Foundation. Whatever it is they will do with the property, a couple of things seem apparent:

1) It will provide much higher property tax revenue for Santa Cruz county than the Skyview did
2) It will provide many more, and much higher paying, jobs than the Skyview did.
3) It will, apparently, provide for improved health care in Santa Cruz county.

Given all of that, it’s easy for me to support the re-development of the Skyview as a medical campus. I’m sure the flea market will live on, somehow, somewhere. As for the Drive-In Theater – yes, it’s sad. But time marches on.

Posted by Administrator at 2:14pm
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When to Say No

November 12, 2007

Earlier last week, we got an offer on a home I have co-listed over in Campbell. This being the kind of market that it is, it was no surprise that the offer was a bit low. Well, I shouldn’t say a bit low – it was really pretty low. When my clients ask me, “Is this too low to offer?” I always counsel them that, generally speaking, if you offer at least 90% of asking price, you will get a counter offer and you’ll at least begin negotiating. Anything less than 90% of asking price and it’s more likely than not that a seller will not respond to your offer – unless, of course, the seller is highly motivated.

The offer that we received on our listing in Campbell was only about 88.5% asking price. However, the property had been on the market for about two and a half months, and this was our first offer. And, who knows – it could be that the buyers were just fishing. As it happens, though, our seller does want to sell the house, but the home is owned free and clear with a low property tax base, so she’s not losing a great deal of money per month.

I had just run the numbers the day before, looking at October sales for single-family homes in Campbell and also Willow Glen (just across the street in San Jose). I had recently transmitted that information to the seller and to my co-listing agent, so we all knew the state of the market – and it was clear that at the offered price, the buyer was going to be coming out way ahead on the deal. So, we came back with a pretty decent first counter-offer, meeting them almost half way between asking price and their offer price. It wasn’t long before they countered our counter-offer – offering just $5,000 more than their original offer.

It became clear just then that the buyers really were bottom-feeders. Not that there’s anything wrong with that – I’m all for bottom-feeding. Buying a house in this area is a big investment – and it’s best to buy as low as possible, especially in a market that may be heading for a decline. But for best results when bottom-feeding, it’s best to look for a property with a highly motivated seller. My client, the seller, does truly want to sell this property, but at the moment, she does not have a burning need to do so. It serves her much better to pass up low-ball offers at this point, and wait for an offer that better reflects the property’s true value.

I was counseled by some of my colleagues to keep working on this offer with my client, but I did just the opposite. Together with my co-listing agent, we advised my client not to make another counter-offer. We were just too far apart on price. The buyers were clearly looking to get a great bargain, and my seller is clearly looking to sell the home for full value (or close to it). So, I called up the agent who made the offer and gave him the news: thanks, but no thanks. He wished me the best of luck with the listing – what remained unspoken was, “Maybe this is the best offer you’re going to get.” Maybe so – I’ve said or implied the same thing to the listing agent when making low-ball offers many times. And, many times, the property did sell a few weeks later – never for full asking price, but closer to it than I’d been offering. I think that in order to provide the best service to my clients, it’s important to know when to say “Yes” – but it’s equally as important to know when to just say No.

Technorati Tags: low-ball, offers, real estate sales

Posted by Administrator at 5:30pm
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Buy Me Now at Auction

November 08, 2007

I was driving down the road this evening, out and about, doing some drive-by BPOs. I was out in North Monterey County, which if you’re not familiar, is pretty rural – farm country. Basically, it consists of rolling hills covered in farm fields, horse pastures – and, of course, houses. Everything from run-down mobile homes, to virtual shanties where the folks who grow our food live…to larger, newer homes – McMansions, or whatever you want to call them.

I was driving down Garin Road, to get over to Lewis Road. A few days earlier, I had seen a very visible bright green sign saying “Home Auction” pointing down Garin Road, but seeing as how I wasn’t going that way, I just kept driving. But today, since I was passing by, I saw the house and picked up a flyer. The flyer was short and to the point, printed out in black and white: “Auction this Saturday at 12 PM.”

Of course, there’s a web site to go to – TheAuctionHouseInc.com – so naturally I went and had a look. They’re auctioning off quite a few properties this coming Saturday – you can bid either on-line or go in person to the auction company in San Jose. On this particular property, the owner says it’s worth $1,400,000 – but they are allowing bidding to start at $599,000. Of course, there’s a reserve – but they don’t tell you what that is. But if the reserve isn’t met, the property doesn’t get sold. What’s the fun in that?

They also provide a handy Zillow link to the property. It brings up a nice page where you can see a picture of a lovely kitchen, granite counters and all. You have to look closely, though, to see Zillow’s Zestimate: $950,493. That’s more like it. See, the thing is, the neighboring houses are selling for lots less – there’s one just down the street, selling for around $750K. Granted, it’s not such a lovely house as this one – but it’s that darn principal of regression at work here. You don’t want to over-build in an area. That house might be worth $1.4 million somewhere else, but right there – I don’t think so!

Zillow might be right on this one. But don’t get complacent – Zillow is notoriously inaccurate, at least in these parts. I was doing a CMA on a property right on the border of Capitola (behind the mall), and Zillow said the place was worth $973K – zoinks! Even though all around it, Zillow reported sales prices in the mid-$700’s, and this house was remarkably similar to its neighbors.

But, I digress. There’s been a lot of (mostly cheap) talk about the coming of auctions as the predominant want to sell properties. From what I hear, it’s a fad – it comes, and it goes. It is the standard way of selling homes in, say, Australia – but even there, my understanding is that if the reserve isn’t met, then the home gets sold the old-fashioned way, like we do here in the good ol’ USA.

I think that the reason auctions haven’t really caught on is that people have found that, more often than not, they don’t end up getting the home any cheaper, but they do run the risk of getting caught up in auction fever and perhaps locking themselves in to buying a property they know little about. And for sellers, of course, there’s always the fear that unless they set a decent reserve, that they will get less (maybe a lot less) than they’re hoping to get for their house.

Anyway, it will be interesting to see if this sort of thing really starts to catch on – I have my doubts, but it’s a trend I’ll be watching.

Technorati Tags: auction, zillow

Posted by Administrator at 7:40pm
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