The Broker's Record

Real Estate Auction in Monterey: November 13, 2008

October 25, 2008

There’s a public “ballroom” auction coming up in Monterey, on November 13 at 7:00 PM. The auction is being held at the Hilton Garden Inn and they will be auctioning off properties from the Salinas-Monterey area.

As it happens, one of my own REO foreclosure listings is going up on the block – 6 Minto Road in Watsonville. The current asking price is $297,000 – I do not know what the opening bid will be, but I would imagine it will open up at something like half that price. There may be a reserve bid, but they usually keep that secret.

Interestingly, this is the only property in Santa Cruz county that is being auctioned off in this particular auction series. They do have some houses out in King City, Salinas, Hollister, and Gilroy, though. Also, the auction company is doing a whole series of auctions – for example, on November 15 at the San Ramon Mariott, they are auctioning off Bay Area properties (there are quite a few) and on November 16, they are auctioning off a good selection of properties from the Sacramento area at the Radisson Hotel Sacramento.

The auction is being put on by Hudson and Marshall, and they gave me a little F.A.Q., which I think applies to all Hudson and Marshall auctions, and is similar to auctions put on by other companies, e.g. REDC.

Q: Can anyone attend?

A: Yes! It is a live auction, open to the public.

Q: Is there a fee to attend/register?

A: No – it is free to register.

Q: What am I required to bring to bid?

A: You must have a photo ID, cashier’s check or cash in the amount of $5,000

Q: How much earnest money must I put down if I am the winning bidder?

A: You must put down at least $5,000 per property, which must be paid in the form of cash or a cashier’s check.

Q: What is the buyer’s premium?

A: This is a 5% fee that will be based off your high bid and added to it, which will then become the purchase price. For example, if the winning bid is $100,000 you will actually pay $105,000 for the property.

Q: How long do I have to pay the balance?

A: You have 30 days to pay for the property. (You should already have financing in place)

Q: Can I use my own real estate agent?

A: Yes, you can attend with your agent, and your agent will be paid at least a 2% commission.

Q: Do I have to pay back taxes or liens?

A: No, the properties are sold with free and clear title.

Q: Who pays the owner’s title insurance?

A: The seller will pay for and provide owner’s title insurance to the property.

Posted by SantaCruzBroker at 7:39am
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Santa Cruz is #6 Foreclosure Capital Nationwide

October 22, 2008

The smell of freshly brewed coffee wafts through the house, as I peruse my trusty RSS News Reader, skimming over news articles and blog entries the world over, from a variety of different sources. Even though I am up to my neck in this foreclosure business, selling foreclosure real estate in Santa Cruz county at a pretty good clip this year, I was surprised to see this:

Santa Cruz at #6 on the Forbes Foreclosure Capital list

When you click on that link, you have to look fast – it’s a slide show, and will only stay on the Santa Cruz frame for a few moments. You can also view the full article here.

Zoinks. It seems Forbes has put together a list of the Top Ten Foreclosure Capitals for 2009. This is a national list – it is not just California, although, perhaps not surprisingly, half of the ten are in California.

The news isn’t all bad, though. Both the Wall Street Journal and the good ol’ San Jose Mercury News are running pieces about reviving home sales in California and the bay area – of course, the reason people are buying is that prices, in many cases, have dropped to the level where they are affordable.

Posted by SantaCruzBroker at 7:46am
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Blue Light Special Turns Red!

October 17, 2008

A month ago, I wrote a blog entry about a homeowner in Soquel who was having a blue light special on the sale of his home.

I guess it didn’t work out so well – his Soquel home is now back on the market – for $829,000, or about $79,000 more than it was on for sale about a month ago. Zoinks – swap that blue light for a red one – hold on, kids!

In a market like this, I can tell you one thing – increasing your asking price when your property hasn’t sold is not a winning strategy. The blue light special, that was a clever marketing gimmick, but it didn’t sell the house.

It should have been a good lesson, though – even at $749,997 the home is, apparently, over-priced in today’s market. The median price is now down to $475,000 in Santa Cruz county. Of course, this home is in Soquel, which is considerably more expensive, but the median there is only $610,000 (although the average is $843,000).

This time around, rather than trying to catch the buyer’s eye with a lowered price, the seller is trying to catch the Realtor’s eye – with a juicy 4% commission to the buyer’s real estate agent. That’s a healthy $33,160 the buyer’s agent would get to share with his broker and the tax man. A strong incentive, to be sure – but of course, we Realtors are duty bound to hold our clients’ interests above our own, and persuading your client to over-pay on a real estate purchase in exchange for a healthy commission seems like a breach of fiduciary responsibility to me.

Not that a licensed Real Estate agent would ever put his own financial interests over the best interests of his client. Of course not. That 4% commission just helps to bring about a few extra showings, by Realtors who think, hmm, maybe my client won’t really like this place, but since it’s paying a bigger commission, maybe it’s worth a shot.

If we extend that logic a bit further, it means that all these sellers who are offering just 2.5% or 3% to the buyer’s agent are missing out, leaving tens of thousands, maybe hundreds of thousands, of dollars on the table – they should really be offering 5%, or 8% – or more! – to the buyer’s agent; after all, that’s a lot cheaper than lowering the asking price of the home by 12%, which is what the market is telling them they need to do.

Why has nobody thought of this yet?

Have a good weekend everyone!

Posted by SantaCruzBroker at 4:03pm
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Santa Cruz Median Home Price: $475,000 in Sept. ‘08

October 12, 2008

My Santa Cruz sales numbers for September 2008 are in, and they are nothing less than shocking. The median home price in Santa Cruz county in September 2008 was $475,000. This is compared to $702,500 in September ‘07. That is a drop of some 32%. You can get the complete scoop in my monthly newsletter.

Of course, a big reason for this is the amount of bank-owned real estate being blown out in Watsonville, and to a much lesser extent, the San Lorenzo valley and the rest of the county. There were 37 sales of houses in Watsonville in September, and just 29 sales in the city of Santa Cruz. The median home price in the city of Santa Cruz was $675,000 – that’s down just 8.7% from last year, and down only 5.5% from August, the month before.

Still, though – if you have a house in Santa Cruz, you’re looking at it being worth about $58,725 less than it was this time last year, if your house is something like the median house. That, combined with recent and staggering losses in the Stock Market, adds up to greatly diminished (paper) wealth. Of course, don’t we all buy houses with some kind of paper? Exactly.

In looking at these numbers, you might be thinking one (or perhaps both!) of two things: now that prices are this low, is this a good time to buy – and – will prices drop much further?

Those are some good questions! I’ve been telling folks for a while that Watsonville has already dropped really far really fast, I don’t see it dropping much more. For the past several months now, the median price has been rumbling along around $350,000 – give or take $10-$20K. So let’s assume that Watsonville has found its footing, and that this is the bottom, the trough if you will.

So I think it will be interesting to look and see where Watsonville and the rest of the county were at in the Summer of ‘99 (them were the good ol’ days, eh folks?), and compare it to where we are today. This is a completely unscientific study, of course, because I just used the MLS (most, but not all, sales go through the MLS). I looked at Sold Single Family Residences:

Median Price of Sold Houses in June & July of 1999

Watsonville: $247,000 (1.0)
East side Santa Cruz: $390,500 (1.58097)
West side Cruz: $395,000 3/2 1486 (1.59919)
Capitola: $360,000 (1.457489)
Soquel: $379,000 (1.5344)
Felton: $310,000 (1.2551)

What this says is that back in the summer of ‘99, the median-priced house in Capitola cost about 1.457 more than the median-priced home in Watsonville.

Now, let’s look at sales data from September 2008:

Watsonville: $352,000 (1)
East Side Santa Cruz: 615,500 (1.74857)
West side Santa Cruz: 702,500 (2.0468)
Capitola: $711,000 (2.01988)
Soquel: $610,000 (1.73295)
Felton: $486,500 (1.3821) (* August 2008)

You’ll notice that compared to the 1999 ratio, the sampled areas in the county appear considerably higher relative to Watsonville than they have been historically. If we use the same ratio from the summer of ‘99, here’s what prices in the rest of the county should look like today:

Watsonville: $352,000
East Side Santa Cruz: $556,501
West side Santa Cruz: $562,914
Capitola: $513,004
Soquel: $540,108
Felton: $441,795

What does all this mean? Probably nothing, because I’m not a statistician or an economist. But from my armchair analysis, it looks to me like either a) Watsonville is cheaper than it should be, or b) the areas I sampled are still too expensive, or c) both A and B to some extent.

It does make me feel better about something I’ve been saying for months, though: buy in Watsonville. Prices there are low, and even if you don’t want to live there, with a reasonable down-payment, the properties will break even on a before-tax basis.

These sure are interesting times we are living in!

Posted by SantaCruzBroker at 9:15am
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Redman House Apple Annual 2008

October 08, 2008

There’s a property I’ve long been fascinated with – the so-called Redman House, just off Highway 1 outside of Watsonville, down by the Red Roof Inn. It’s a historic old Victorian farmhouse that has fallen into a sad state of disrepair, and a group of concerned citizens has banded together to save it.

They’ve got big plans for the house and the acreage, of course. You can read all about it on their web site, redmanhouse.com. It’s a really fascinating project (to me, anyway!) – Santa Cruz has a number of historical structures, and we owe it to our children’s children to do what we can to preserve them.

The Redman House Foundation is putting on its “Apple Annual 2008″ – a food and wine tasting event plus, of course, the de rigeur silent auction. It costs $50 to go, and you must be 21 or over to attend. They have a special page on their web site where you can buy tickets for the Apple Annual 2008.

Posted by SantaCruzBroker at 7:50am
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