The most frequently asked question I receive is "Is it a good time to buy?" The second most common question I hear, which ties into the first one is "Is it better to rent or buy now?"
The answer to this question has two parts that should be considered; social and economic. To answer the social part one needs to ask themselves do you plan to move in the next several years because of work or family? If yes then would you sell or rent your home when you move?
Taking a look at the economic part of the answer one needs to know is it less expensive to own or to rent. If it is more expensive to own is pride of ownership worth the additional cost?
There are many costs and responsibilities with homeownership but there are also some tax deductions. A simple rule of thumb I use is to divide the cost of the home by what the monthly rent would be. If the number is less than 200 then it is better to buy and if the number is over 200 then it makes financial sense to rent. For example, a house sells for $500,000 but one can rent the house for $3000 a month ($500,000 / $3000 = 167) so it makes more sense to buy in this scenario.
Trulia.com has created a nice national map that evaluates the Rent vs. Buy question, click here.
If you still have questions don't hesitate to contact me.
Tuesday, May 24, 2011
Sunday, April 10, 2011
Buyers’ Market vs. Sellers’ Market – 1st Qtr 2011
In December of 2009 I wrote a blog that took a look at the San Diego market so buyers and sellers would have a better idea on how to handle a purchase or a sell. The data gathered at that time was only useful for a short period of time because the real estate market is continuously changing. Since then I calculate this data once a quarter.
To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.
Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.
1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market
The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of April 1, 2011. First we look at San Diego County by geographic regions then break down the numbers by price.
All of San Diego County
Active homes for sale: 12,151
Contingent homes: 3701
Sold homes per month over the last three months: 2322
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.8
North San Diego County
Active homes for sale: 4893
Contingent homes: 1142
Sold homes per month over the last three months: 831
Absorption rate of active homes: 5.9
Absorption rate of active and contingent homes: 7.3
Central San Diego County
Active homes for sale: 3540
Contingent homes: 947
Sold homes per month over the last three months: 677
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.6
South San Diego County
Active homes for sale: 1736
Contingent homes: 1045
Sold homes per month over the last three months: 472
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.9
East San Diego County
Active homes for sale: 1276
Contingent homes: 476
Sold homes per month over the last three months: 254
Absorption rate of active homes: 5.0
Absorption rate of active and contingent homes: 6.9
Up to $200,000 Homes
Active homes for sale: 2186
Contingent homes: 1208
Sold homes per month over the last three months: 598
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.7
$200,001 to $400,000 Homes
Active homes for sale: 4315
Contingent homes: 1884
Sold homes per month over the last three months: 1039
Absorption rate of active homes: 4.2
Absorption rate of active and contingent homes: 6.0
$400,001 to $600,000 Homes
Active homes for sale: 2369
Contingent homes: 490
Sold homes per month over the last three months: 441
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 6.5
$600,001 to $1,000,000 Homes
Active homes for sale: 1950
Contingent homes: 192
Sold homes per month over the last three months: 238
Absorption rate of active homes: 8.2
Absorption rate of active and contingent homes: 9.0
$1,000,001 to $1,500,000 Homes
Active homes for sale: 725
Contingent homes: 34
Sold homes per month over the last three months: 62
Absorption rate of active homes: 11.7
Absorption rate of active and contingent homes: 12.2
$1,500,001 to $5,000,000 Homes
Active homes for sale: 896
Contingent homes: 25
Sold homes per month over the last three months: 47
Absorption rate of active homes: 19.1
Absorption rate of active and contingent homes: 19.6
$5,000,001 plus Homes
Active homes for sale: 126
Contingent homes: 0
Sold homes per month over the last three months: 2
Absorption rate of active homes: 63
Absorption rate of active and contingent homes: 63
Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.
It is easy to see that San Diego County is in a normal market for the majority of the categories, which has been the trend for about the last nine months. There is a noticeable increase in activity in North County from more homes on the market to more homes being sold. More comes are on the market for the high-end priced homes while more of the low-end priced homes are selling.
There are many distressed homes but the banks are not in a position to recognize the losses on their books as they will become insolvent. Expect a constant and continual flow of distressed homes coming onto the market for the next several years.
Here are reasons to start getting serious about buying.
Historically low interest still
Large inventory of homes
Cost of renting is going up
Depressed prices
If you want to know the absorption rate of a particular area do not hesitate to contact me.
Visit us at www.877homes.com
To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.
Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.
1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market
The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of April 1, 2011. First we look at San Diego County by geographic regions then break down the numbers by price.
All of San Diego County
Active homes for sale: 12,151
Contingent homes: 3701
Sold homes per month over the last three months: 2322
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.8
North San Diego County
Active homes for sale: 4893
Contingent homes: 1142
Sold homes per month over the last three months: 831
Absorption rate of active homes: 5.9
Absorption rate of active and contingent homes: 7.3
Central San Diego County
Active homes for sale: 3540
Contingent homes: 947
Sold homes per month over the last three months: 677
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.6
South San Diego County
Active homes for sale: 1736
Contingent homes: 1045
Sold homes per month over the last three months: 472
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.9
East San Diego County
Active homes for sale: 1276
Contingent homes: 476
Sold homes per month over the last three months: 254
Absorption rate of active homes: 5.0
Absorption rate of active and contingent homes: 6.9
Up to $200,000 Homes
Active homes for sale: 2186
Contingent homes: 1208
Sold homes per month over the last three months: 598
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.7
$200,001 to $400,000 Homes
Active homes for sale: 4315
Contingent homes: 1884
Sold homes per month over the last three months: 1039
Absorption rate of active homes: 4.2
Absorption rate of active and contingent homes: 6.0
$400,001 to $600,000 Homes
Active homes for sale: 2369
Contingent homes: 490
Sold homes per month over the last three months: 441
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 6.5
$600,001 to $1,000,000 Homes
Active homes for sale: 1950
Contingent homes: 192
Sold homes per month over the last three months: 238
Absorption rate of active homes: 8.2
Absorption rate of active and contingent homes: 9.0
$1,000,001 to $1,500,000 Homes
Active homes for sale: 725
Contingent homes: 34
Sold homes per month over the last three months: 62
Absorption rate of active homes: 11.7
Absorption rate of active and contingent homes: 12.2
$1,500,001 to $5,000,000 Homes
Active homes for sale: 896
Contingent homes: 25
Sold homes per month over the last three months: 47
Absorption rate of active homes: 19.1
Absorption rate of active and contingent homes: 19.6
$5,000,001 plus Homes
Active homes for sale: 126
Contingent homes: 0
Sold homes per month over the last three months: 2
Absorption rate of active homes: 63
Absorption rate of active and contingent homes: 63
Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.
It is easy to see that San Diego County is in a normal market for the majority of the categories, which has been the trend for about the last nine months. There is a noticeable increase in activity in North County from more homes on the market to more homes being sold. More comes are on the market for the high-end priced homes while more of the low-end priced homes are selling.
There are many distressed homes but the banks are not in a position to recognize the losses on their books as they will become insolvent. Expect a constant and continual flow of distressed homes coming onto the market for the next several years.
Here are reasons to start getting serious about buying.
Historically low interest still
Large inventory of homes
Cost of renting is going up
Depressed prices
If you want to know the absorption rate of a particular area do not hesitate to contact me.
Visit us at www.877homes.com
Saturday, March 26, 2011
Average rate on 15-year mortgage dips below 4%
What is bad for the global economy (unrest in the Middle East and the earthquake in Japan) is good for interest rates.
Fixed mortgage rates tumbled and the 15-year loan dipped below 4% for the first time in three months last week then increased to 4.04% this week. Rates followed the yield on U.S. Treasury bonds, which fell on worries that the crisis in Japan could slow economic growth.
Freddie Mac said last Tuesday the average rate on the 15-year fixed mortgage, a popular refinance option, dropped to 3.97% from 4.15%. The last time the rate was below 4% was in mid-December. It reached 3.57% in November, the lowest level on records dating back to 1991.
The average rate on the 30-year fixed mortgage fell to 4.76% last week from 4.88% the previous week the rate then increased to 4.81% this week. It hit a 40-year low of 4.17% in November.
Mortgage rates tend to track the yield on the 10-year Treasury note. Those yields have tumbled as investors sought safer investments.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
I know buyers want to buy when the real estate market hits bottom, but you should not be just looking at prices; you need to be looking at interest rates too since these will affect you if you plan to get a loan. A 5% decrease in price is more than offset by a 0.5% increase in the interest rate. For example, if you borrowed $100,000 at 5% interest rate on a 30yr fixed loan, your payments will be about $536. Now if you borrowed $95,000 at 5.5% interest rate on a 30yr fixed loan, your payments will be about $539.
What is more likely to happen: a decrease in price of 5% or an increase of interest rates of 0.5%?
Visit us at www.877homes.com
Fixed mortgage rates tumbled and the 15-year loan dipped below 4% for the first time in three months last week then increased to 4.04% this week. Rates followed the yield on U.S. Treasury bonds, which fell on worries that the crisis in Japan could slow economic growth.
Freddie Mac said last Tuesday the average rate on the 15-year fixed mortgage, a popular refinance option, dropped to 3.97% from 4.15%. The last time the rate was below 4% was in mid-December. It reached 3.57% in November, the lowest level on records dating back to 1991.
The average rate on the 30-year fixed mortgage fell to 4.76% last week from 4.88% the previous week the rate then increased to 4.81% this week. It hit a 40-year low of 4.17% in November.
Mortgage rates tend to track the yield on the 10-year Treasury note. Those yields have tumbled as investors sought safer investments.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
I know buyers want to buy when the real estate market hits bottom, but you should not be just looking at prices; you need to be looking at interest rates too since these will affect you if you plan to get a loan. A 5% decrease in price is more than offset by a 0.5% increase in the interest rate. For example, if you borrowed $100,000 at 5% interest rate on a 30yr fixed loan, your payments will be about $536. Now if you borrowed $95,000 at 5.5% interest rate on a 30yr fixed loan, your payments will be about $539.
What is more likely to happen: a decrease in price of 5% or an increase of interest rates of 0.5%?
Visit us at www.877homes.com
Sunday, February 13, 2011
San Diego Real Estate Market in the Last 30 Months
The following charts consist of data of sold homes in San Diego County over the last 30 months with the exception of the first chart, which is the monthly average of the 30 year fixed mortgage interest rate. Even though this information is historical it does provide some indication of the direction the real estate market is going.
To keep it simple I broke down the data into price ranges and tracked the “price per square foot” on a month-to-month basis.
Several things to note when looking at the charts: 1) There are insufficient sold homes in the higher price ranges to provide meaningful results without critiquing the information more. 2) The Federal First Time Buyer credit expired November 2009 but was extended to June 2010. 3) In the last 30 months the US stock market lowest point was in February 2009.
Click on Chart to make it larger.
All the data here was gathered and complied by me, so you can be sure it is accurate.
Ben Altman
(610) 890-1063
www.877homes.com
To keep it simple I broke down the data into price ranges and tracked the “price per square foot” on a month-to-month basis.
Several things to note when looking at the charts: 1) There are insufficient sold homes in the higher price ranges to provide meaningful results without critiquing the information more. 2) The Federal First Time Buyer credit expired November 2009 but was extended to June 2010. 3) In the last 30 months the US stock market lowest point was in February 2009.
Click on Chart to make it larger.
All the data here was gathered and complied by me, so you can be sure it is accurate.
Ben Altman
(610) 890-1063
www.877homes.com
Tuesday, January 18, 2011
Buyers' Market vs. Sellers' Market – 4th Qtr 2010
In December of 2009 I wrote a blog that took a look at the San Diego market so buyers and sellers would have a better idea on how to handle a purchase or a sell. The data gathered at that time was only useful for a short period of time because the real estate market is continuously changing. Since then I calculate this data once a quarter.
To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.
Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.
1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market
The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of January 1, 2011. First we look at San Diego County by geographic regions then break down the numbers by price.
All of San Diego County
Active homes for sale: 11,692
Contingent homes: 3135
Sold homes in last 30 days: 2177
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 6.8
North San Diego County
Active homes for sale: 4412
Contingent homes: 910
Sold homes in last 30 days: 792
Absorption rate of active homes: 5.6
Absorption rate of active and contingent homes: 6.7
Central San Diego County
Active homes for sale: 3512
Contingent homes: 825
Sold homes in last 30 days: 638
Absorption rate of active homes: 5.5
Absorption rate of active and contingent homes: 6.8
South San Diego County
Active homes for sale: 1770
Contingent homes: 932
Sold homes in last 30 days: 470
Absorption rate of active homes: 3.8
Absorption rate of active and contingent homes: 5.7
East San Diego County
Active homes for sale: 1317
Contingent homes: 387
Sold homes in last 30 days: 215
Absorption rate of active homes: 6.1
Absorption rate of active and contingent homes: 7.9
Up to $200,000 Homes
Active homes for sale: 2232
Contingent homes: 1101
Sold homes in last 30 days: 432
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.7
$200,001 to $400,000 Homes
Active homes for sale: 4437
Contingent homes: 1533
Sold homes in last 30 days: 1010
Absorption rate of active homes: 4.4
Absorption rate of active and contingent homes: 5.9
$400,001 to $600,000 Homes
Active homes for sale: 2248
Contingent homes: 391
Sold homes in last 30 days: 436
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.0
$600,001 to $1,000,000 Homes
Active homes for sale: 1581
Contingent homes: 160
Sold homes in last 30 days: 232
Absorption rate of active homes: 6.8
Absorption rate of active and contingent homes: 7.5
$1,000,001 to $1,500,000 Homes
Active homes for sale: 651
Contingent homes: 25
Sold homes in last 30 days: 57
Absorption rate of active homes: 11.4
Absorption rate of active and contingent homes: 11.9
$1,500,001 to $5,000,000 Homes
Active homes for sale: 844
Contingent homes: 22
Sold homes in last 30 days: 56
Absorption rate of active homes: 15.1
Absorption rate of active and contingent homes: 15.5
$5,000,001 plus Homes
Active homes for sale: 118
Contingent homes: 0
Sold homes in last 30 days: 3
Absorption rate of active homes: 39.3
Absorption rate of active and contingent homes: 39.3
Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.
It is easy to see that San Diego County is in a normal market for the majority of the categories, which has been the trend for about the last six months. The 1st and 2nd quarters of 2010 were on the boarder between a seller and normal market. I expect a slow increase in homes priced under $500,000 while homes over $800,000 will continue a slowly decrease in price. There are many distressed homes but the banks are not in a position to recognize the losses on their books as they will become insolvent. Expect a constant and continual flow of distressed homes coming onto the market for the next several years.
Here are reasons to start getting serious about buying.
Historically low interest
Large inventory of homes, but less than during the summer
Cost of renting is going up
Depressed prices
If you want to know the absorption rate of a particular area contact us at 877homes@gmail.com
Visit us at www.877homes.com
To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.
Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.
1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market
The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of January 1, 2011. First we look at San Diego County by geographic regions then break down the numbers by price.
All of San Diego County
Active homes for sale: 11,692
Contingent homes: 3135
Sold homes in last 30 days: 2177
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 6.8
North San Diego County
Active homes for sale: 4412
Contingent homes: 910
Sold homes in last 30 days: 792
Absorption rate of active homes: 5.6
Absorption rate of active and contingent homes: 6.7
Central San Diego County
Active homes for sale: 3512
Contingent homes: 825
Sold homes in last 30 days: 638
Absorption rate of active homes: 5.5
Absorption rate of active and contingent homes: 6.8
South San Diego County
Active homes for sale: 1770
Contingent homes: 932
Sold homes in last 30 days: 470
Absorption rate of active homes: 3.8
Absorption rate of active and contingent homes: 5.7
East San Diego County
Active homes for sale: 1317
Contingent homes: 387
Sold homes in last 30 days: 215
Absorption rate of active homes: 6.1
Absorption rate of active and contingent homes: 7.9
Up to $200,000 Homes
Active homes for sale: 2232
Contingent homes: 1101
Sold homes in last 30 days: 432
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.7
$200,001 to $400,000 Homes
Active homes for sale: 4437
Contingent homes: 1533
Sold homes in last 30 days: 1010
Absorption rate of active homes: 4.4
Absorption rate of active and contingent homes: 5.9
$400,001 to $600,000 Homes
Active homes for sale: 2248
Contingent homes: 391
Sold homes in last 30 days: 436
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.0
$600,001 to $1,000,000 Homes
Active homes for sale: 1581
Contingent homes: 160
Sold homes in last 30 days: 232
Absorption rate of active homes: 6.8
Absorption rate of active and contingent homes: 7.5
$1,000,001 to $1,500,000 Homes
Active homes for sale: 651
Contingent homes: 25
Sold homes in last 30 days: 57
Absorption rate of active homes: 11.4
Absorption rate of active and contingent homes: 11.9
$1,500,001 to $5,000,000 Homes
Active homes for sale: 844
Contingent homes: 22
Sold homes in last 30 days: 56
Absorption rate of active homes: 15.1
Absorption rate of active and contingent homes: 15.5
$5,000,001 plus Homes
Active homes for sale: 118
Contingent homes: 0
Sold homes in last 30 days: 3
Absorption rate of active homes: 39.3
Absorption rate of active and contingent homes: 39.3
Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.
It is easy to see that San Diego County is in a normal market for the majority of the categories, which has been the trend for about the last six months. The 1st and 2nd quarters of 2010 were on the boarder between a seller and normal market. I expect a slow increase in homes priced under $500,000 while homes over $800,000 will continue a slowly decrease in price. There are many distressed homes but the banks are not in a position to recognize the losses on their books as they will become insolvent. Expect a constant and continual flow of distressed homes coming onto the market for the next several years.
Here are reasons to start getting serious about buying.
Historically low interest
Large inventory of homes, but less than during the summer
Cost of renting is going up
Depressed prices
If you want to know the absorption rate of a particular area contact us at 877homes@gmail.com
Visit us at www.877homes.com
Thursday, September 30, 2010
12 Common Home Seller Mistakes
1. Getting Emotionally Involved
Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a home seller rather than as the home's owner. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of selling the property that you've undoubtedly created many memories in. Also try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state.
2. Setting The Price Too High
Setting the price too high is a classic seller mistake and unfortunately very common. This common mistake happens for a number of reasons. Sometimes the cause is pride of ownership, but more often the seller is setting a price based on what he or she needs out of the sale, as opposed to the market value of the home. If the price is set too high it will discourage offers and many times buyers won’t even take the time to look at an over price home. Moreover, in a down market, an inflated price on day one of the listing is even more inflated after a week or two have gone by. Not only is the asking price not tracking the market it's becoming more out of line as each day goes by. In sells your first goal is to get your foot in the door or in this case get the buyer’s foot in the door so a good strategy is to price the house slightly below market value.
3. Refusing To Lower The Asking Price On A Reasonable And Timely Basis
Sellers, who have set their asking price above the market value, will also invariably fail to adjust their price appropriately as the market declines if they get an offer. Instead of pricing to sell, these sellers will only grudgingly reduce their asking price and never by an amount large enough to make their home a worthwhile buy. As a result they find themselves chasing the market down - always priced too high and never getting a serious offer. In the end, this seller will loose more money than if they had simply priced their home correctly in the beginning. It may sound trite, but the market really does set the price.
4. Rejecting The First Offer
Too many times a seller will be suspicious of the first offer they receive. We've all heard statements like "I must have priced my home too cheaply" or "If I hold out I'll get more money." or "I just listed my property and I don't want to take the first offer." These reactions and others similar in nature, generally cause the first offer to be rejected. In down markets this is a clear mistake. Each day that passes the buyer's alternative choices are increasing and the seller's bargaining position becomes weaker. In times of rising interest rates the buyer's purchasing power is decreasing as times passes.
Assuming the home was priced correctly in the first place. The plain fact is the first offer is more often than not the best offer. Think about it this way. A home, which has just been listed, can more easily be perceived as a desirable "discovery" by a serious buyer than a home that's been on the market for weeks. The longer a property sits, the less desirable it appears. In fact, a buyer's first question usually is, "How much?" and the second question is "How long has it been on the market?" If you get a first offer, at or near your asking price, it's probably because you've priced your home correctly. If you feel the need, recheck the comparable sales, but don't reject the offer out of hand.
5. Becoming Offended By Low Offers - Refusing To Counter
It's surprising how many people will become so offended by a low offer they refuse to counter. There are a couple of good reasons why this is a mistake. If a seller has "an offer on the property" they are by definition in a stronger position with other potential buyers. The property is seeing action and there is the potential of getting a "buzz" started. Used properly, even "low ball" offers can instill a sense of urgency. Moreover, a low starting offer may be the buyer's way of testing the market and may not say anything about what the buyer is actually willing to pay. A seller is rarely hurt by responding to an offer.
6. Carelessly Selecting A Buyer
It's important to pay attention to the buyer's ability to make the purchase. The buyer should be pre-qualified by his lender, and should have a reasonable down payment. Between two otherwise equally qualified buyers, the buyer whose offer is contingent upon selling their own property represents more risk than the buyer without contingencies. This is especially true in a down market where the buyer may not be able to sell his home for the price he wants
7. Not Presenting The Home Effectively
A cluttered home or a home, which needs repairs or paint, fails to communicate desirability and in some instances can even signal to the buyer to reduce their offer. Fresh paint (neutral colors), clean windows and clean floors and carpets can work wonders. Cut the grass, and pull the weeds. A few flowers inside and out always seem to help.
When it comes to furniture, a little less may be better. Less furniture will cause a room to look and feel larger. That's a good thing. Using a home stager can do wonders so long as the stager has some talent and the cost is not too great.
8. Skimping on Listing Photos
So many buyers look for homes online these days and so many of those homes have photos that you'll be doing yourself a real disservice if you don't offer photos as well. At the same time there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest. Good photos should be crisp and clear, should be taken during the day when there is plenty of natural light available, and should showcase your home's best assets. A good agent will take care of this for you and if you have a luxury home a professional photographer is recommended as they have cameras that can capture the different degrees of light.
9. Trying to Hide Significant Problems
Any problem with the property will be uncovered during the buyer's inspection so there's no use hiding it. Either fix the problem ahead of time, price the property below market value to account for the problem or list the property at a normal price but offer the buyer a credit to fix the problem. Realize that if you don't fix the problem in advance you may turn away a fair number of buyers who want a turnkey home. Having your home inspected before listing it is a good idea if you want to avoid costly surprises once the home is under contract. A qualified inspector only costs around $400 depending on the size of your home.
10. Not knowing your rights and obligations
The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Have an experienced Realtor who knows the "ins and outs" fully explain the contract you are about to sign to you, or have your lawyer review it before accepting it.
11. Not Hiring an Agent
Although real estate agents command commission (usually 5-6% of the sale price of your home), trying to sell your home on your own, especially if you haven't done it before, is probably ill advised. A good agent will help you set a fair and competitive selling price for your home that will increase your odds of a quick sale. An agent can also help take some of the high emotion out of the process by interacting directly with potential buyers so you don't have to and eliminating tire kickers who only want to look at your property but have no intention of putting in an offer.
An agent will also have more experience negotiating home sales than you do, potentially helping you get more money than you could on your own. And if any problems crop up during the process--and they commonly do--an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly.
12. Letting the Selling Agent also represent the Buyer
The seller has little to gain by letting his agent represent the buyer. The selling agent will probably lower the overall commission but at what cost. There have been many instances when the selling agent never showed higher offers because a dual commission at a lower percentage is still higher than just half the commission.
Vist us at http://www.877homes.com/
Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a home seller rather than as the home's owner. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of selling the property that you've undoubtedly created many memories in. Also try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state.
2. Setting The Price Too High
Setting the price too high is a classic seller mistake and unfortunately very common. This common mistake happens for a number of reasons. Sometimes the cause is pride of ownership, but more often the seller is setting a price based on what he or she needs out of the sale, as opposed to the market value of the home. If the price is set too high it will discourage offers and many times buyers won’t even take the time to look at an over price home. Moreover, in a down market, an inflated price on day one of the listing is even more inflated after a week or two have gone by. Not only is the asking price not tracking the market it's becoming more out of line as each day goes by. In sells your first goal is to get your foot in the door or in this case get the buyer’s foot in the door so a good strategy is to price the house slightly below market value.
3. Refusing To Lower The Asking Price On A Reasonable And Timely Basis
Sellers, who have set their asking price above the market value, will also invariably fail to adjust their price appropriately as the market declines if they get an offer. Instead of pricing to sell, these sellers will only grudgingly reduce their asking price and never by an amount large enough to make their home a worthwhile buy. As a result they find themselves chasing the market down - always priced too high and never getting a serious offer. In the end, this seller will loose more money than if they had simply priced their home correctly in the beginning. It may sound trite, but the market really does set the price.
4. Rejecting The First Offer
Too many times a seller will be suspicious of the first offer they receive. We've all heard statements like "I must have priced my home too cheaply" or "If I hold out I'll get more money." or "I just listed my property and I don't want to take the first offer." These reactions and others similar in nature, generally cause the first offer to be rejected. In down markets this is a clear mistake. Each day that passes the buyer's alternative choices are increasing and the seller's bargaining position becomes weaker. In times of rising interest rates the buyer's purchasing power is decreasing as times passes.
Assuming the home was priced correctly in the first place. The plain fact is the first offer is more often than not the best offer. Think about it this way. A home, which has just been listed, can more easily be perceived as a desirable "discovery" by a serious buyer than a home that's been on the market for weeks. The longer a property sits, the less desirable it appears. In fact, a buyer's first question usually is, "How much?" and the second question is "How long has it been on the market?" If you get a first offer, at or near your asking price, it's probably because you've priced your home correctly. If you feel the need, recheck the comparable sales, but don't reject the offer out of hand.
5. Becoming Offended By Low Offers - Refusing To Counter
It's surprising how many people will become so offended by a low offer they refuse to counter. There are a couple of good reasons why this is a mistake. If a seller has "an offer on the property" they are by definition in a stronger position with other potential buyers. The property is seeing action and there is the potential of getting a "buzz" started. Used properly, even "low ball" offers can instill a sense of urgency. Moreover, a low starting offer may be the buyer's way of testing the market and may not say anything about what the buyer is actually willing to pay. A seller is rarely hurt by responding to an offer.
6. Carelessly Selecting A Buyer
It's important to pay attention to the buyer's ability to make the purchase. The buyer should be pre-qualified by his lender, and should have a reasonable down payment. Between two otherwise equally qualified buyers, the buyer whose offer is contingent upon selling their own property represents more risk than the buyer without contingencies. This is especially true in a down market where the buyer may not be able to sell his home for the price he wants
7. Not Presenting The Home Effectively
A cluttered home or a home, which needs repairs or paint, fails to communicate desirability and in some instances can even signal to the buyer to reduce their offer. Fresh paint (neutral colors), clean windows and clean floors and carpets can work wonders. Cut the grass, and pull the weeds. A few flowers inside and out always seem to help.
When it comes to furniture, a little less may be better. Less furniture will cause a room to look and feel larger. That's a good thing. Using a home stager can do wonders so long as the stager has some talent and the cost is not too great.
8. Skimping on Listing Photos
So many buyers look for homes online these days and so many of those homes have photos that you'll be doing yourself a real disservice if you don't offer photos as well. At the same time there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest. Good photos should be crisp and clear, should be taken during the day when there is plenty of natural light available, and should showcase your home's best assets. A good agent will take care of this for you and if you have a luxury home a professional photographer is recommended as they have cameras that can capture the different degrees of light.
9. Trying to Hide Significant Problems
Any problem with the property will be uncovered during the buyer's inspection so there's no use hiding it. Either fix the problem ahead of time, price the property below market value to account for the problem or list the property at a normal price but offer the buyer a credit to fix the problem. Realize that if you don't fix the problem in advance you may turn away a fair number of buyers who want a turnkey home. Having your home inspected before listing it is a good idea if you want to avoid costly surprises once the home is under contract. A qualified inspector only costs around $400 depending on the size of your home.
10. Not knowing your rights and obligations
The contract you sign to sell your property is a complex and legally binding document. An improperly written contract can allow the purchaser to void the sale, or cost you thousands of unnecessary dollars. Have an experienced Realtor who knows the "ins and outs" fully explain the contract you are about to sign to you, or have your lawyer review it before accepting it.
11. Not Hiring an Agent
Although real estate agents command commission (usually 5-6% of the sale price of your home), trying to sell your home on your own, especially if you haven't done it before, is probably ill advised. A good agent will help you set a fair and competitive selling price for your home that will increase your odds of a quick sale. An agent can also help take some of the high emotion out of the process by interacting directly with potential buyers so you don't have to and eliminating tire kickers who only want to look at your property but have no intention of putting in an offer.
An agent will also have more experience negotiating home sales than you do, potentially helping you get more money than you could on your own. And if any problems crop up during the process--and they commonly do--an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly.
12. Letting the Selling Agent also represent the Buyer
The seller has little to gain by letting his agent represent the buyer. The selling agent will probably lower the overall commission but at what cost. There have been many instances when the selling agent never showed higher offers because a dual commission at a lower percentage is still higher than just half the commission.
Vist us at http://www.877homes.com/
Sunday, August 22, 2010
Buyers’ Market vs. Sellers’ Market – 2nd Qtr 2010
In December of 2009 I wrote a blog taking a look at the San Diego market so buyers and sellers would have a better idea on how to handle a purchase or a sell. The data gathered at that time was only useful for a short period of time because the real estate market is continuously changing. Since then I calculate this data once a quarter.
To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.
Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.
1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market
The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of July 5, 2010. First we look at San Diego County by geographic regions then break down the numbers by price.
All of San Diego County
Active homes for sale: 13,151
Contingent homes: 3948
Sold homes in last 30 days: 2446
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 7.0
North San Diego County
Active homes for sale: 5311
Contingent homes: 1196
Sold homes in last 30 days: 954
Absorption rate of active homes: 5.7
Absorption rate of active and contingent homes: 6.8
Central San Diego County
Active homes for sale: 4030
Contingent homes: 1002
Sold homes in last 30 days: 685
Absorption rate of active homes: 5.9
Absorption rate of active and contingent homes: 7.3
South San Diego County
Active homes for sale: 1622
Contingent homes: 1186
Sold homes in last 30 days: 486
Absorption rate of active homes: 3.3
Absorption rate of active and contingent homes: 5.8
East San Diego County
Active homes for sale: 1371
Contingent homes: 475
Sold homes in last 30 days: 263
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.0
Up to $200,000 Homes
Active homes for sale: 2085
Contingent homes: 1429
Sold homes in last 30 days: 521
Absorption rate of active homes: 4.0
Absorption rate of active and contingent homes: 6.7
$200,001 to $400,000 Homes
Active homes for sale: 4120
Contingent homes: 1875
Sold homes in last 30 days: 1118
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.4
$400,001 to $600,000 Homes
Active homes for sale: 2811
Contingent homes: 506
Sold homes in last 30 days: 492
Absorption rate of active homes: 5.7
Absorption rate of active and contingent homes: 6.7
$600,001 to $1,000,000 Homes
Active homes for sale: 2365
Contingent homes: 200
Sold homes in last 30 days: 307
Absorption rate of active homes: 7.7
Absorption rate of active and contingent homes: 8.4
$1,000,001 to $1,500,000 Homes
Active homes for sale: 908
Contingent homes: 45
Sold homes in last 30 days: 85
Absorption rate of active homes: 10.7
Absorption rate of active and contingent homes: 11.2
$1,500,001 to $5,000,000 Homes
Active homes for sale: 1210
Contingent homes: 36
Sold homes in last 30 days: 40
Absorption rate of active homes: 30.2
Absorption rate of active and contingent homes: 31.1
$5,000,001 plus Homes
Active homes for sale: 184
Contingent homes: 0
Sold homes in last 30 days: 6
Absorption rate of active homes: 30.7
Absorption rate of active and contingent homes: 30.7
Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.
It is easy to see that San Diego County is in a normal market for the majority of the categories but compared to the 1st quarter data it is moving toward a buyers’ market. I don’t expect prices to rise as long as there are distressed homes on the market but once they are gone don’t be surprised to see prices jump 15% to 20% within a year. Also don’t be surprised if interest rates start to increase after the November elections.
Here are reasons to start getting serious about buying.
Historically low interest
Large inventory of homes
Cost of renting similar to that of owning
Depressed prices
If you want to know the absorption rate of a particular area contact us at homes877@yahoo.com
Visit us at www.877homes.com
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