Thank You, Clients!

I just want to take a moment to thank my clients – many of whom have become friends! – for helping me achieve an Emerald Elite Award at Better Homes and Gardens.

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I just want to take a moment to thank my clients – many of whom have become friends! – for helping me achieve an Emerald Elite Award at Better Homes and Gardens. Our parent company gives out awards based on how successful each realtor is in a given year. I am proud to receive this award for 2023.

My colleagues and support staff have also been instrumental in my success, as has Better Homes and Gardens. I love working in the East Bay and helping everyone buy or sell homes here. It is worth all the long hours and hard work to have educated and happy clients who know they are well-represented.

Cheers to my clients, to being a trusted advisor, and to more success in 2024!

A Reflection On The Real Estate Market

Back in March, the owner of 4791 Laura Dr. in Concord found herself facing a dilemma. She yearned to move as soon as possible, but a looming shoulder surgery in May cast doubt on her ability to prepare her home for sale. The decision was whether to list the property in September or wait until the new year. With months stretching ahead, there was time to transform her home into a market-ready gem.

The first step involved bringing in a professional stager to assess the property’s potential. Together, they determined what would stay and what had to go. Carpet bids, inspection quotes, and even a talented artisan to repair sliding doors were lined up at reasonable prices. The owner carefully selected which repairs to undertake, fully aware that potential buyers might request credits for some items.

By May, her life had taken on a minimalist hue. She had sold, donated, or packed away all but the essentials, embracing a simplified lifestyle. August marked a turning point, with a fresh coat of paint adorning the walls and new carpets gracing the family room and upstairs bedrooms. The stagers worked their magic, creating an inviting atmosphere. It was time to settle on a final asking price.

In March, market comparisons supported a price of $975,000, but the Spring season had seen prices surge. A bold decision was made to aim for $1 million. However, it soon became apparent that the initial price might have been a tad ambitious. Rising interest rates had discouraged potential buyers, and open house traffic remained disappointingly sparse.

Within days, the price was pruned to $990,000, a modest concession aimed at slipping below the million-dollar mark. A month rolled by with little traction, prompting another price adjustment down to $975,000. The owner quipped that this was, in fact, their original target.

With more showings from other agents a glimmer of hope emerged. Within two weeks of the price reduction, an offer materialized. Initially, I was told it was coming the next day, but it took over the weekend to get the offer. While it fell slightly below the asking price, it was a VA offer with a request to address some remaining repair issues, totaling around $11,000. Over the weekend, two more agents came knocking. Once I had the offer, I called the ones who had just shown up, mentioning I had an offer, and asking if there was any interest from their buyers. One agent said he was writing it up as I called and was hoping to be the sole contender.

Thus, they presented a full-price offer at $975,000 with a $20,000 credit for closing costs and rate buy-down. The owner gladly accepted, finding peace with the fact that these buyers were a perfect fit for her cherished home. Ironically, they had come by the first open house, continued to look, but kept commenting on the yard and comparing it to other homes. In the end, the seller had bittersweet emotions, as she bid adieu to the place filled with countless memories and love, but also embarking on the next chapter of her life.

Key Takeaways for Sellers and Buyers:

1. Preparation is key: Getting your home ready can feel overwhelming, especially after many years of living there. Engage a resourceful agent early, plan meticulously, and allow ample time for decluttering and organizing.

2. Trust your agent: A skilled real estate agent will manage expectations and communicate effectively throughout the process. Markets can shift, and their guidance can be invaluable.

3. Act swiftly: If you’re considering making an offer, don’t delay. Timing can make a significant difference in securing a property, as waiting may invite competition.

4. Revive interest: Sometimes, a home that has lingered on the market just needs the right nudge. An astute agent will reach out to potential buyers who have shown interest in the past, often leading to successful sales in a competitive market with limited inventory.

Are home values really inflated?

For the 71st month in a row, the housing market experienced year-over-year gains. As of January, the median existing-home price for all housing types was $240,500, which was a 5.8 percent increase from January 2017 ($227,300). According to Bob Schwab from Finance of America, this may lead many to believe that home values are overinflated.

Schwab, and Zillow, disagree with that common opinion. Zillow says: “If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

I’ve pulled some information and graphs from Schwab’s article to help demonstrate why home prices are exactly where they should be. First, a graph showing actual median home sales prices from 2000 through 2017:

By itself, this graph shows home values rising early in the century, then tumbling down, and now climbing back up. This may give off the impression that a pattern is emerging, and another tumble is coming. But, if you look at this second chart, indicating where prices would naturally go with the market had there not been a boom and bust, you see something different:

The blue bars represent where prices would have been if they increased normally, at an annual appreciation rate of 3.6 percent. By adding that percentage to the actual 2000 price and repeating for each year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit lower than where they should be right now!

All in all, thanks to Bob Schwab for pointing out that we should be comfortable with current home values, and understand that the market actually isn’t overinflated, based on historic appreciation levels.

How to get your offer accepted in a crowded market

Our friends at JVM Lending shared a Redfin link recently that had a ton of great information on how to get an offer accepted. I currently have two homes on the market and the amount of offers on each are on opposite ends of the spectrum; I have one with 21 offers, and the other with 6. It’s funny to see that disparity between the two, and strategies to get an offer accepted and/or a house sold, can vary greatly because of it.

Here are some pro tips from the Redfin piece:

Nearly 1 in 4 (23.6%) homes that sold in 2017 went for over asking price, up from 21.8% in 2016. This means that buying a home has become more difficult and expensive in a hot, crowded market. You can’t simply offer the highest price and expect to be selected by the seller. Instead, try other strategies like offering all cash, waiving the inspection, or writing a personal cover letter to the homeowner. Above all, make sure you talk to your agent to create the right combination of strategies for the home you’re bidding on, or for the seller you’re trying to woo.

Here is some information from the Redfin article that breaks down data on thousands of offers written over the last two years, to see how effective these other strategies can be in improving a buyer’s chance at winning a bidding war:

Rank Strategy Improves a Competitive Offer’s Likelihood of Success by… Improves a Competitive Offer’s Likelihood of Success in the Luxury Market (Top 10% by List Price) by…
#1 All-Cash Offer 97% 438%
#2 Waived Financing Contingency 58% 76%
#3 Personal Cover Letter 52% No Significant Gain
#5 Pre-Inspection No Significant Gain No Significant Gain
#6 Waived Inspection Contingency No Significant Gain No Significant Gain

Cash is king, as you can see above. That’s because it allows for smooth, fast transactions without the hassle of loans or appraisals. If you don’t have the means to make an all-cash offer, you can always waive your financial contingency, which means you won’t have to wait for a loan approval. That will still increase your odds by 58%, according to Redfin! However, I find that the cash offers – especially if they are investors – will not be the highest price. On the home that had 21 offers, the key to the winning bid was who removed a portion of their appraisal contingency as the offer was so high we all knew it wouldn’t appraise, but that means the buyer has to have extra cash. That can be tough when it is an entry-level condo.

All this said, sometimes it just takes a personal touch to win over a seller. Writing a letter to the seller can be effective and increase your odds in a bidding war. Fortunately for most buyers, cash is not the only way into a seller’s heart.  Often these letters can forge a powerful connection between the buyer and seller, highlighting shared hobbies or interests, earning a seller’s compassion or trust, or ensuring that the home will be loved and cared for in the years to come.

So, whether you are offering all cash, waiving contingencies, writing a personal letter, or trying any number of other strategies to win the bidding war on the house of your dreams – especially in a saturated market like the Bay Area – always remember to consult your realtor first. He or she will have great insight into the market and what extra touches it might take to get the home, but at the end of the day the buyer has to be comfortble with the offer they are making!

Why Are the Interest Rates So Low?

buy a houseThere have been a lot of articles about interest rates and the stock market recently. First, the German 10-Year Government Bond Yield has hit negative territory. In layman’s terms, this means that Germany gets paid interest to borrow investors’ money, the same thing is happening in Japan. Thus, Germany and Japan are getting paid to borrow money.
On the surface, this seems silly. Why would investors take a negative yield or pay somebody to borrow their money? Because it’s safe. Investors will put money wherever they can in order to ensure they can safely recoup it in the future.
How does this help the real estate market? First, the demand for bonds keeps rates very low, making real estate leverage much cheaper (The Brexit will also have an impact, which will be a different post). When investors have a lot of cash and are looking to put it somewhere, real estate investing becomes a good place to do so.
According to the National Association of REALTORS®, the number of homes that went under contract to be sold in April was the highest in more than a decade. It was also the strongest month in more than eight years for new home sales – with a 16.6% jump from the previous month. We do tend to see a bit of a lull in the summer as families head off for vacation.
If you are a buyer, it might be a great time to jump into the real estate market! Give me a call if you would like some help.