Selling your home


Heart of Real Estate

This afternoon as I took a listing, I had finished explaining the agreement to the seller and was showing him where to sign, when he paused, pen raised, sadly stating, “This is the first time I’ve done this alone.” He had lost his partner of 40 years to cancer last September and now needs to sell their home.

In that one moment, the enormity of his loss and the task ahead of him seemed to come into focus and he struggled as he signed the agreement. I asked him if he would like to wait, but he insisted that he needed to turn the page and move on with his life. Selling their home was the first major step.

I put the rest of the disclosures aside, and asked him about his morning. He had taken a drive earlier in the day to explore some different neighborhoods that he is considering as a good area to meet new people. He brightened-up and spent the next 15 minutes telling me about how pleased he was with what he had discovered and seemed genuinely excited. We talked about what he would be looking for in a rental, and I of course told him I would be happy to help him in his search. We chatted about the logistics of actually moving and downsizing and he asked if I could help him locate a good moving company. I smiled and told him that I would do whatever I could to make this transition as smooth as possible.

Sometimes in the flurry of our dollar-crazy real estate world, I think that it is easy to lose sight of the fact that a home for most people is not only a financial investment, but a huge emotional investment. It’s the place where babies are raised, birthdays are celebrated, and loved ones are nursed. When a house has to be sold in a short sale, or because of divorce or death, or sometimes even relocation, I think there is a process of grieving that is often overlooked. Home is our stage, the backdrop for our lives. We paint it, decorate it and instill a little, or a lot, of who we are into the house, which makes the home distinctly ours.

As we walked around and I took photos, he shared little stories about the house and their time there and seemed to relax just being able to talk. I’m sure there will be several moments in the sales and moving process when he needs to stop and take a deep breath. I can’t be his therapist or his best friend, but I’ll do my best as his Realtor to provide a smooth transaction, support him by being responsive to his questions and needs, and most importantly, honor the real significance of his moving on.

SGR-for-sale

Over the past 12 months, we’ve seen single family home prices increase by as much as 20% in some parts of the country. This is the most rapid increase since the housing bubble collapse, and largely driven by supply and demand. According to Zillow CEO Spencer Rascoff, nearly 44% of homeowners with a mortgage still owe more than their home is worth, thus even if they would like to sell they are unable. This, combined with fewer foreclosures, has created a scarcity of available homes on the market and helped push up prices.

So with home prices on the rise, if you do have equity in your home and have been considering a move-up, why sell now? Wouldn’t it make more sense to wait another year or so and take advantage of even higher prices?

Not necessarily. While low supply has been a factor in the recent price increase, it has been driven by demand created by historically low interest rates. However, mortgage interest rates are on the rise. Yesterday, in the fifth consecutive week of gains, the rate for a 30 year fixed mortgage rose to 3.91%. That is 18% higher than the lowest rate of 3.31% back in November 2012. According to chief economist for the National Association of Realtors, Laurence Yun, in an interview with Forbes magazine, “the rate will probably go up to 5% by the end of next year.”

The result of higher interest rates is likely to be a decrease in demand, especially in the higher priced areas of the country, such as coastal California, Boston and New York. Rascoff provided the following example in an interview yesterday on CNBC. “Imagine yourself buying a $300,000 home today, and in four years you may want to trade up to a $500,000 home,” he said. “That home is not just that much more expensive—but because mortgage rates are going to be higher—it’s significantly more expensive. So the trade-up market is going to be very troubled in a couple of years.”

So looking down the road a year from now, it is likely that interest rates will increase which will slow the demand, which in turn will put the brakes on home price increases. Thus, if you are considering selling your home, now may be the best time while demand is high and supply is low.

For more information about what this might mean for you and your San Diego County property, please give me a call.

Okay, I admit to being a total wimp when it comes to cold weather. Waking-up to frost on the roofs and going out for a walk with gloves and a hat is not my favorite part of living in San Diego in January. But I have to tell you that my heart is warmed as soon as I turn on my computer, look at my emails, my transactions, and the MLS and realize that the San Diego real estate market is hot, hot, hot!

This is due to 4 primary factors:

1) Employment in the County in October was up by 1.9% over October 2011*
2) Consumer confidence (Pacific West) is up by 36%*
3) Interest rates remain at record lows
4) Inventory is approximately 50% of what it was a year ago*

The lack of homes to sell in San Diego County is clearly illustrated in these two graphs, which show unsold inventory at lowest point since 2005, and that homes in the $750 – $1000K range are the most scarce. However, as there are fewer people able to buy in that range the impact is less dramatic. The price range where we are feeling the greatest impact is the $300 – $500K range. If you’re a seller, you love it as you will likely have multiple offers within days of listing. If you’re a buyer, not so much, as it’s likely you’ll be in a bidding war with several cash buyers.

unsold inventory 10.12 sm

unsold inventory 2 10.12 sm

This of course has driven down the length of time homes stay on the market from approximately 60 days in January of last year to just 40 days in October.

time on market10.12 hero 2

The net result of all these factors is that prices in the San Diego real estate market are increasing at a steady rate, up 10.7% this October, over October 2011.

Median price 12

So is it a good time to buy or sell in San Diego? Absolutely! Barring any economic catastrophe I believe we’ll continue to see a strengthening real estate market throughout 2013. So if you’ve been considering a real estate investment, best to get in the game now as I predict prices will continue to rise. Please give me a call to discuss the opportunities available in America’s Finest City!

* Graphs and statistics courtesy of the California Association of Realtors®. All statistics reflect sales activity for detached homes.

Home Depot DIY 

 

 

OK. I’m admittedly a bit of an HGTV junkie, and I personally love painting, refinishing furniture, sewing  and gardening. But, have you noticed that for some folks DIY home projects are just about as successful as DIY dentistry or representing yourself in court?

Just because you own the tool, doesn’t mean you should use it.  Let’s start with a chop saw. You want to install crown molding, but somehow figuring the miter cut involves math and angles that were obviously discussed that week you were absent in 7th grade. Walk away from the saw. Do not nail those pieces of molding to your walls and then patch all of the corners where the wood doesn’t meet.

Faux finish is a faux pas.  No matter what the brochure indicates, results are not typical. Dapping paint and layered finishes on your wall with a sea sponge is probably not a good idea unless you actually have a few artistic bones in your body.

Color me wonderful!  Who doesn’t like color? Hosting the entire rainbow in your 3 bedroom house might seem like fun, but when selling, the purple bedroom and red bathroom have to go.

So you don’t want to color within the lines.  Love your sense of expression and freedom, but please don’t pick up a paint brush! Wall paint should be on the walls; ceiling paint on the ceilings; trim paint on the trim; no paint should be on the floor. These little paint groups shouldn’t get together. They really like to have their own place. And oh, one coat is not enough.

New flooring can change the look of your home.  Yep. And I know that the tile in the entry isn’t quite level and the laminate in the family room has a little gap around the edges. Probably not a big deal though.

Love your attempt at curb appeal.  However, the plants are not happy to be lined up like little soldiers in straight rows parallel to your house and sidewalk.  Those annuals are also concerned about your plans for when they pass on…..

Do I sound mean?  Yes! I am!  That’s because I want to sell your home, not make excuses for it!  Do I believe that people can learn to improve their DIY project skills with practice? Absolutely, but please, not while trying to sell your home. When in doubt, call a professional. Stay away from Home Depot. Trust me; it’s cheaper in the long run.

Termites are a fact of life in California.  Nearly every home I sell, when inspected, shows evidence of some form of termite damage or active infestation – no matter how new the home might be. 

In a traditional sale, the buyer generally requests that the seller pay for the inspection and any necessary repairs.  In a short sale however, the seller, who doesn’t have enough money to pay his mortgage, is generally not in a position to pay for any repairs, and I have yet to see a bank pick-up the cost.  So who pays?

Generally, it is the buyer who is responsible for paying for any termite damage, which could mean thousands of dollars.  The cost to tent and fumigate a 3 bdrm/2 bath home is roughly $1300, plus the cost to repair or replace any damaged wood.  It is not uncommon for total costs to exceed $5000.  This unexpected expense can cause a real problem in the transaction, and often the buyer simply has no choice but to walk away.

So how can a seller avoid losing buyers over termite issues?  Start by selecting an experienced short sale agent to list your home!  An experienced agent will have the inspection done prior to putting the home on the MLS and will make the report available to any agent and buyer writing an offer.  The agent should also make it clear in the listing that any repair costs will be the responsibility of the buyer.   In this way, the buyer knows what costs will be involved, and the offer price can reflect the anticipated expenses.  The report should also be submitted to the lender so that they understand the costs that the buyer will incur to purchase the property and will (hopefully) take that into consideration in the approval process.

Buying or selling a home “As Is”, whether it’s a short sale or foreclosure raises many disclosure issues.  If you have questions, please don’t hesitate to contact me.

A new law goes into effect today requiring the installation of carbon monoxide detectors in all single family homes in California.  However, there seems to be some confusion about the exact requirements and how the new law applies to rental homes and apartments, so here’s what you need to know.

A carbon monoxide detector is required in all single family homes that have fossil-fuel burning appliances such as a gas heater, water heater, or stove, fireplaces, and/or an attached garage.  If you are the owner of a qualifying home that you rent to others or plan to sell, you must have a detector installed immediately.  If you rent a single family home, please contact your landlord or property management company to make sure that your home is protected.  All multi-family rental units have until January 1, 2013 to have the detectors installed.  Installation of the detectors is now required prior to close of escrow on all single family home sales transactions.

According to the Chimney Safety Institute of America, carbon monoxide poisoning kills approximately 200 people every year.  It is called the silent killer as the gas is colorless, tasteless, odorless and otherwise undetectable.  Most carbon monoxide accidents are caused by faulty LP and natural gas heating systems. 

The detectors cost $10 – $50 each and must be a model approved by the State Fire Marshal.  Like smoke detectors, they should be mounted high on the wall or ceiling and there should be one on every story of your home.  Some homes with alarm systems may have the detector connected to their existing system, so please check with your security company provider.

Symptoms of carbon monoxide poisoning include:

  • Shortness of breath
  • Nausea
  • Vomiting
  • Dizziness
  • Unconsciousness

If you or a family member has these symptoms, or the alarm on the detector goes off, get everyone outdoors, and then call for help. 

Please don’t leave yourself and your family unprotected.  Make sure your detector is installed today!

No secret, actually.  The success of your short sale all comes down to your listing agent.  Really.  Negotiating a short sale is one of the most challenging jobs in real estate today. An agent representing a short sale client is responsible for helping them get out from under a huge financial burden and save their credit, and responsible to the new buyers for closing the deal in a reasonable length of time.   Without the right agent representing your interests it’s easy for the deal to fall apart and your home go to foreclosure. 

Here are some important questions to ask a perspective agent before listing your home as a short sale: 

1)      What is their short sale experience and what percentage of attempted sales have they successfully closed?  This is not the time to hire an inexperienced agent as short sales are an intricate process that requires an understanding of lender procedures and requirements.

2)      Do they do their own negotiation, or do they work with a professional negotiator?  An experienced, professional negotiator may be a real plus as that leaves the agent with more time to focus on marketing your home and finding a qualified buyer.  Also, a professional negotiator will have established relationships with a greater number of lenders which can often help expedite approvals.

3)      Will the agent pre-qualify you for the short sale?  Although the lender will have the final word, an agent should be familiar with all required documentation and be able to pre-qualify you for a short sale.  If economic hardship cannot be proven it is unlikely that the bank will approve a short sale.  They should also be able to let you know if you might be eligible for HAFA.

4)      How will the agent determine the list price of your home?   Listing your home too low may get you a quick offer, but it’s likely the bank will counter and you may lose your buyer.  Remember, the bank needs to recoup as much of the loan amount as the market will bear.

5)      What is the process?  An agent should be able to explain the entire process and timeline and describe exactly how and when you will be updated on progress.  They should also be able to provide information about the pros and cons of moving early in the process or staying in your home until closing.

6)      How will they market your home?  Over 90% of buyers begin their home buying search online.  Make sure your agent can provide an extensive online presence for your listing.

7)      What is the outcome that you can expect?  The agent should be able to discuss the potential outcomes including 1099s and deficiency judgments. They should also make recommendations to you about seeking the advice of other professionals, such as a lawyer and accountant.

8)      And finally, can they provide you with references of past short sale clients?   Hearing from a satisfied client can go a long way to easing your concerns.

A short sale is a complicated transaction, but it needn’t be stressful.  Please don’t hesitate to contact me with your questions or concerns.  I have a 100% short sale success track record and look forward to hearing from you.

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