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The Broker's Record

News and Views about Life, Liberty, and the pursuit of Real Property in Santa Cruz, California

Archive for March, 2008

Discount Broker = Caveat Emptor

March 31, 2008

I was hanging out in my office today, talking to one of my colleagues about a short sale listing we’re working on. Another colleague wanders in and says, “Hey, a woman just called in on floor, and she wants to know what’s up with your listing on Peace Drive. She said she put in an offer but hasn’t heard anything back.”

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I was a bit nonplussed by that. Wait wait – I’ve got a confession. This is the very first time I have ever used the word nonplussed . I must be getting old!

But anyway, there I was, all nonplussed and all, but I finally managed to say, “Really? I called every agent who put an offer in and let them know that we had accepted another offer!” To which my colleague replied that well, this lady hadn’t heard anything, but that she’d been using a discount broker up in San Francisco.

Ahh. Gotcha. I know who her agent is. This is the guy who sent me an offer, and after I received it, I called him to let him know I’d be e-mailing him a “multiple offer disclosure” which I would need to have him get his client to sign and return to me by the end of the next business day, along with what his client’s “highest and best” offer might be.

At the end of the next business day, I hadn’t received back his signed disclosure, so I called him up. “Hey, I didn’t get back your signed multiple offer disclosure!” I told him. “Oh, I never got it!” he said. Hmm. Well, that’s possible, we all know that e-mail isn’t 100% reliable, but even so, you think he would have followed up with me when he didn’t receive it. “No problem,” I said, “I’ll send it right now.” Which I did – I sent it to the very same e-mail address I’d sent it the day before, because my e-mail program auto-completed the e-mail address for me. “Got it,” he said. We agreed he’d get his buyer to sign it that day and get it back to me. I got his cell phone number from him so that I’d be able to stay in good communication with him.

By 9 PM, I hadn’t received anything back from him, so I called his cell. No answer, so I left a message. I called the next morning at 9 AM on his cell phone – no answer, I left a message. I called again in the early afternoon, this time on his office phone, and left a message, still wanting to get back the multiple-offer disclosure, even though we were past the deadline.

By the next morning, the seller had accepted another person’s offer. Later that afternoon, I called up all the agents who had submitted offers, and I let this agent know that a different buyer’s offer had been accepted, but thanks for putting his offer in. Again, he didn’t answer, and he never called back.

Well, it looks like he never called his client back, either. I guess this guy figures his being a “discount broker” allows him to cut some corners on his fiduciary responsibility to his clients. I don’t think that the Department of Real Estate would look at it that way.

I’m not saying there’s anything wrong with being a discount broker. I myself offer discounts to my clients, through my Buyer’s Reward Program. When a buyer does participate in my Buyer’s Reward Program, do I work any less hard for them? No, of course not. I don’t believe the amount of compensation an agent receives should reflect the amount of diligence that is employed during the real estate transaction. I am sure there are many discount brokers out there who work just as hard for their clients as I do, whether I’m rebating a portion of my commission or not.

I think the lesson here is not necessarily that you should avoid discount Realtors. I think there are two lessons here – one is an axiom we’ve all heard a thousand times: you get what you pay for. Another is this: don’t be penny wise and pound foolish by entrusting one of the biggest financial transactions of your life to someone who hasn’t earned your trust.

Profound, I know. But sometimes we all fail to see the forest for the trees. Ever the optimist, I feel that every dark cloud does indeed have a silver lining. It may work out such that my colleague, who is not a discount broker and who works very hard to fulfill his responsibilities to his clients, will pick up a new one as a result of this other broker’s negligence. I’ll say Ommmmmmmm to that!

Posted by Administrator at 7:52pm
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Second Annual Santa Cruz Housing Expo

March 31, 2008

I hope they ramp up the PR effort on this soon, because the 2008 Santa Cruz County Housing Expo is set for April 12. I didn’t make it last year, but I hope to make it this time around. My brokerage, Thunderbird Real Estate, is going to have a booth, we’ll be talking about Green Building. And I’m not just talking avocado tile in the bathroom and psychedelic shag carpeting.

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You can view the Santa Cruz Association of Realtor’s page about it here:

Santa Cruz Housing Expo 2008

There are four “tracks” to this event, with multiple presentations per track:

The Path to Home Ownership

Invest for Success

“Green” Real Estate

Foreclosure (avoidance)

The Housing Expo is free to attend, and is being held at the Twin Lakes Church, 2701 Cabrillo College Drive in Aptos, from 10 AM til 2:30 PM.

Posted by Administrator at 7:45am
1 Comment »

Advice for Santa Cruz Home Sellers in 2008

March 29, 2008

You may have noticed I’ve been writing a lot about home buying lately. True that. It is, after all, a buyer’s market like we haven’t had in a good 15 years. Tis the season, you know. But for every buyer out there, there’s a seller. Actually, for every buyer out there, there’s like 10 sellers. That’s kind of the problem.

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There’s a large school of thought that says one reason why home prices have not slid more than they have already is because many folks who would like to sell realize that now is not a good time to do so, and are holding off. If you’re of a certain age and know even a modest amount of people, you probably know a number of people like that – or perhaps, you’re one of those people yourself.

Generally speaking, my advice for people who are considering selling this year is: don’t. Now is not a good time to sell your house. Of course, I need to qualify that six ways from Sunday – actually, now is a fine time to sell your house, if you need to, and if you have one of the few houses that are in hot demand at the moment, which is pretty much limited to fine homes with ocean views or near the beach. If that sounds like your house, don’t worry – it should not be too hard to sell your house. I still don’t think that this is the best time to sell your house even so – but at least these types of properties remain perennially popular, or so it seems.

On my web site, I have a whole section with advice for Santa Cruz homeowners who want to sell their house. To be honest, it’s loaded with articles I got from, I think, the California Association of Realtors. It does have a link to my 30 Day Marketing Plan for Santa Cruz Real Estate, and it also points you to a page where you can go and sign up for my special report, “Insider’s Guide to Selling your Home in Santa Cruz.”

My Insider’s Guide is very good – maybe even great, if I do say so myself. It does go beyond those trite articles you can read anywhere like on MSN House and Home or About.com – yes, it’s true, you really should remove the clutter and put it in the garage or in self-storage. Yes, definitely, mow the lawn and generally speaking, maximize curb appeal. At the very least, your home should be clean and tidy and smell nice.

I’d like to point out a couple of other interesting tidbits, though, which you may not have heard about. Like this article in the Seattle Times, from last year:

[From New study shows which words sell, and which don’t – the Seattle Times]

Words matter. Wars have started over them. Civilizations have collapsed because of them. And it appears the speed with which a house sells might be determined by them.

It is actually a fantastic article, and I suggest you read it. I know what you’re thinking – the “listing remarks” are your Realtor’s responsibility, why should you care? You should care – a lot. Many Realtors put little or no care whatsoever into the remarks, but even if they do put a lot of effort into the remarks, this study shows that what they say really could lower the selling price of your home. No matter which Realtor you chose to help you sell your home, make sure you see every bid of advertising copy, and get your Realtor to fix anything that doesn’t represent your home in its best possible light.

Here’s another interesting thing I came across – it’s an NPR Podcast episode, but here are the show notes:

[From Study Shows Precise Pricing More Enticing to Buyers – NPR]

Researchers at Cornell University say they’ve discovered something strange about the way consumers absorb price information. They say when the price of an item is in a round number, people perceive it as higher than an odd number. In other words, people think a $3,000 car is more expensive than one priced at $3,129.50. The finding has implications for people trying to sell their homes.

When you come right down to it, it’s really all about the price. People often say things like, “My house didn’t sell because it doesn’t have a garage.” Let me ask you this – if the house cost $1, would it sell, even though it didn’t have a garage? Probably, it would have sold for $1. How about $100, or $1,000? Yes, and yes. The problem is not that it doesn’t have a garage. The problem is the asking price was too high for a house that doesn’t have a garage.

Really, it’s all about the price, given the condition, amenities, location, and buyer demand. Getting the asking price right the first time is very, very important. It is much better to set a realistic asking price the first time around, rather than set an optimistic price and “see what the market does.” That may be an OK strategy in an appreciating market (the market may catch up to you), but it’s a really bad play in a depreciating market (the market can easily pass you by on its way down).

Here is an interesting article from NJ.com (yes, New Jersey!):

[From Real estate study finds low list prices work – New Jersey Local & Small Business News]

The study by Otteau Valuation Group measured and analyzed more than 15,000 transactions annually over a period of several years. The same pattern emerged in every price range, regardless of whether the properties in question were entry-level or luxury million-dollar homes: Sellers who priced their home below the market from the beginning, often received a higher price and a faster sale.

So there you have it. OK, New Jersey isn’t Santa Cruz (although, really, New Jersey does have some pretty nice places to hang out, have you been?). But I believe that many of the same principals apply when it comes to pricing strategy. In this market, if you need to sell your home, bite the bullet. Price it right the first time, or you may be find yourself chasing the market downwards for months on end. And that’s not a fun race to run.

Posted by Administrator at 9:39am
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Another Massive Real Estate Auction

March 27, 2008

If you’ve been reading my blog recently, you may recall that a month ago I went up to San Mateo to check out the big Home Auction put on by REDC. It was a good time had by all, even if I didn’t manage to stick around until they actually auctioned off the Santa Cruz properties.

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If you missed it last time, fear not – it’s baaack! Check out the properties that are being auctioned off this time:

Santa Cruz County Properties at the REDC Auction

There are a couple of cabins up in the San Lorenzo Valley (one of which is a complete wreck), and the rest of them are in Watsonville. They rope you in with the starting bid, but in reality, most of these (especially the desirable ones) will go for a much higher price – closer to market price (whatever that is).

Posted by Administrator at 7:30am
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Is it safe to buy a house in Santa Cruz yet?

March 26, 2008

I get questions like that all the time. Are we near the bottom? Have we hit bottom? How low will prices go? When will the market turn around? Good questions. Where to go for answers?

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There’s just so much contradictory information, isn’t there? For example, our good, reliable, always-faithful friends at the California Association of Realtors (C.A.R.) report:

C.A.R. reports sales decrease 28.5 percent, median home price falls 26.2 percent in February

LOS ANGELES (March 24) – Home sales decreased 28.5 percent in February in California compared with the same period a year ago, while the median price of an existing home fell 26.2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

But then we have this little tidbit which I saw splashed on the front pages of various newspapers the other day:

U.S. Economy: Existing-Home Sales Rise, Prices Fall

March 24 (Bloomberg) — Sales of existing homes in the U.S. unexpectedly rose in February as prices fell by the most in four decades.

There are other data points we can look at – for example, check out this entry from the Countrywide Foreclosures Blog:

14,413 REO’s Offered For Sale on Countrywide Financial’s Website

Total REO Asking Price: $2,976,805,967
(As of March 24, 2008)

Sounds like a lot of REOs – but look at the chart – the inventory is going down.

If you’re ever in need of a good a laugh, I recommend stopping by the Calculated Risk blog. It’s always a riot. They’ve got a bit of input on the New Home Sales numbers as reported by the Census:

[From More on New Home Sales – Calculated Risk]

There are actually two pieces of good news in the report. First, inventory levels (even accounting for cancellations) are clearly falling….The second piece of good news is revisions. During periods of rapidly declining sales, the Census Bureau routinely overestimates sales in the initial report – and then revises down sales over the next few months. In this report, sales were revised up slightly for November (from 630K to 631K), December (605K to 611K) and January (588K to 601K). This is actually a positive sign that New Home sales might be nearing a bottom.

So, what, exactly, does it all mean? The honest answer is, nobody knows. I’ll tell you what I think, though. I think that, barring any major, protracted recession, we are at or near the bottom of the market. I think Watsonville and the south county area is at the bottom and may already be heading up a bit – North Monterey county, too. I think that in the rest of Santa Cruz county, prices may have a bit to fall yet, but not much.

In short, I do think it is now “safe” to buy real estate in Santa Cruz county. We may not be at the bottom of the market in every nook and cranny of our diverse area, but I believe we’re close. My feeling is that anyone who buys today will not lose their shirt (and hat, and coat, and…), as many people did who bought in 2005 and 2006. I think worse case, if you buy today, you might lose a sock. Maybe a shoe, too. However, barring any calamity in the economy, I think now is a great time to buy in Santa Cruz. Mark my words. Unless I’m proven wrong, of course, in which case, forget everything I just said. 🙂

Posted by Administrator at 6:07pm
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