Category: Indulge me

Good Deal

Every now and then, I have a well meaning prospective buyer say to me, “I’m already working with an agent, but if you find a good deal, let me know and I’ll use you.”  Sometimes it’s someone I meet at a social event or someone that inquires from my blog.

I think the buyer’s mentality is understandable.  Their intention is twofold: (1) get the feelers out about what they are looking for in the housing market (2) to let me know that I will be compensated if I find them that coveted ‘good deal’.

My response is the same every time:  (1)”Do you feel you are getting good support from your current agent?”  (2) “If so, I would continue to work with them.”  I won’t be calling with the inside scoop on a new listing.

Why, you ask?  Several reasons:

  • Is it reasonable and fair to preempt another agent’s hard work?  As a buyer, if you have an agent that is working diligently and consistently on your behalf, it seems reasonable to reward that agent with your business.
  • As agents, we often have access to the same data.  Is it simply a matter of who makes the call, or sends the email, fastest and brings you the ‘great deal’?
  • If I’m listing a ‘great deal’, I would still want you to be represented by your agent.  It’s always my preference to have a buyer represented by their own agent.
  • Let’s say I did come across a screaming deal before it hit the market – Who would I call first with that ‘good deal’?  The clients that are already committed to working with me in their home search, or the person that may work with me if I find the ‘good deal’?
  • As a buyer, you may have signed a Buyer Broker Agreement committing you to utilizing your existing agent.
  • And lastly, the agents working in the area, comprise an almost small town-like atmosphere.  Those actively working in the business know one another and complete real estate transactions together – often more than once.  Reputation is crucial and undermining agent/client relationships is a career killer.

And one more quick side-note – if there is a ‘good deal’ to be had today, it WILL have multiple offers.  No one calls me asking for a ‘nice overpriced home’ these days.  Everyone is looking for a deal.  The good news, compared to pricing as far back as 2003, it’s all a good deal.

The best strategy, find a home you love, that fits the needs of you and your family, and your budget.  If an agent calls you with the deal of the century, if it’s not in your budget, and not going to support what you really need in a home, it doesn’t matter what kind of deal it is.

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I launched this blog in May of 2008 in an effort to bring information to present and future clients that was the truest representation of what I could provide about the Orange County real estate market.   The constant drone of the Realtor community – “It’s a great time to buy” was making me feel a disconnect with my colleagues.  In early 2007, it was a tough market to sell a home and buying made sense for a handful of clients.  This became a place for me to share information about locations and internal markets within South Orange County specifically.

In the Beginning

When one launches a blog such as this, you go into it knowing that what you write initially falls on deaf ears.  I didn’t mind really.  I love the writing, I love the authenticity of it, and I love the platform.  Information about the vast changes in real estate to share with readers was easy to come by….and over time readership grew.

So What Happened?

The last three months have posed challenges and sadly, I let the distractions get in the way of my beloved blog.  I admit that I abandoned my blog as of late.  With a friend’s passing, an increase in very active buyers, and summer with my kids, I let it get the better of me.

When someone first starts a blog, the hardest part is starting.  It’s the momentum that keeps you engaged once it begins.  I have found that starting up again is just as hard.  But today is the day!

So Welcome Back!

For my readers (if you’re still there) and for those just coming on board, I’m back in the saddle again.  Back to the stuff that connected us before, back to the OC real estate voice.  Thanks for continuing to come back.

The other day, I mentioned my astonishment at the Housing Affordability and Stimulus Plan and how it really leaves California (the most troubled housing markets in the country) out in the cold.istock_000001823153xsmall

Then the announcement came regarding an $8,000 tax credit.  Forgive me, but whoop-dee-do.

While this may be meaningful in the lower price points, we aren’t having trouble there these days.  Market time in the under 500,000 range is running around 4 months, and 30 days if it’s not a short sale.  Clearly, that is a strong seller’s market.

Where do we need help?  The higher price points are hit hard by tight financing, consumer confidence, and high inventory.  And frankly, in those price points, the value of a home could potential fall $8,000 while you are in escrow.  Not to mention, first time buyers that qualify for the tax credit, aren’t generally buying in that price point – so I guess that doesn’t excite me much.

Most recently, plans were announced to cut mortgage deductions for those in the higher income tax bracket.   Now, if you live in Orange County and you are making $208,850 or more, you are living a lifestyle that is a far cry from someone living in the Midwest on the same income.

Example:

You may have purchased a home in 2006 that you are affording (barely because your bonus didn’t come through this year), and you may have lost 30% of the value since you purchased.  Since you are considered part of the ‘wealthy’ in the country, you are now on the verge of loosing some of your mortgage deduction.  You know – the mortgage you’ve been trying to hang onto, even though you owe more than the house is worth….

I’m waiting for the part of this plan that impacts California.  Maybe I wasn’t clear last time I mentioned this – one that impacts California in a positive way.

The Homeowner Affordability and Stability Plan was recently released.  It attempts to address some of the issues that the current housing market is struggling with and I have been through some of the details and as it currently is written, I’m disappointed.

Near the end of December last year I posted the article about about the top 10 worst housing markets in the country, according to CNN.  Unfortunately, 8 out of 10 were in the state of California.  Now keep in mind, California is a massive factor in our national economy.  Our Gross Domestic Product is larger than all but 8 countries in the world.   You will not fix this housing crisis if you don’t address the state of California.

The plan that came out has one elemental problem (there are others but this one is a deal breaker) – it only applies to Fannie Mae/Freddie Mac backed loans.  Translation:  if the loan is over $417,000, no deal.

Let’s examine this just a bit.  In most parts of Orange County, in 2004,  2005, 2006, and 2007, you couldn’t get much more than a very small condo for $417,000.  You couldn’t buy a single family home in most parts of Orange County for under $600,000.   The people that are most at risk are the people that purchased during that period of time- and the big Affordability Plan – doesn’t apply to them.

Look at the numbers for the big California markets – Los Angeles, San Diego, the Bay Area – it doesn’t change.

So call me crazy, but I don’t get it.  Hell, I’m happy for the folks in the midwest that this has an impact on.  I’m happy for the people that will benefit from it.  But I’m not sure this solves the problem at hand.

You can solve this for the folks in Kansas, but if you leave out 8 out of 10 of the worst housing markets in the country, are you really addressing core of the problem?  Just sayin’.

One of the things that I constantly talk about on OC Voice, is the need to be an educated buyer or seller.  My goal is always to provide information that helps to educate my readers about what trends we are seeing – without putting you to sleep.  Heck – I still want you to keep reading and I know statistics are boring.

So today – I had an interesting conversation with an agent regarding her philosophy about showing buyers property.  I’ll be honest, I’m a little shocked by the philosophy.  She shared with me that she shows her clients homes that are up to $50,000 outside their budget because of course, ‘in this market, there is room to negotiate.’  Okay, fair enough.  This isn’t the strongest market, but I’m not biting.  Let me explain why….

  • In the price range her clients are in, there is very little inventory.  In addition, if they are hoping to avoid a short sale purchase, and want a bank owned home or an equity seller, that accounts for approximately less than half of what is on the market.   There is competition for the quality product.
  • The closed sales in the area are selling at 98.65% of list price.  In this instance, the buyer’s agent is hoping to negotiate 17% off list price.  Based on local numbers, I think it’s fair to say that it might not be a realistic method of searching.
  • Average time on market in this area, at this price range, is 60 days.  This is a far cry from a buyer’s market.  However, going into the higher price points – then it becomes more of buyer advantage.
  • This strategy has nothing to do with value.  What if the home was listed 10% below current market value?  Isn’t that already a good deal?  What if the home were $50,000 overpriced?  That certainly isn’t the good deal that they are hoping for.
  • Lastly, why show a buyer a home that is out of their price range?  Long term, this isn’t fun for anyone.

The key is to understand the details of the market you are buying or selling in – not just an overview.  All of Orange County is not the same.  Each city is different and each price range is different.  It is critical to understand the market within the larger market.

Again, the message is to be educated about your market.  Don’t let mass media, your friends, or even your agent be your sole source in your decision making process.  Let the numbers speak to you because without fail, they’re telling you a story.

I love variations in weather and believe it or not, 75 degrees and sunny, day-in-and-day-out bores me.  But Santa Ana winds are never a welcome sight.

Windy Day

Last night, my youngest woke with a fever.  We knew she had come down with something yesterday during the Charger/Steeler game (yeah Steelers! – but that’s another post), but last night she awoke with nearly a 103 degree fever.   Poor thing.  It’s awful to be sick like that, and to hear that wind howling with such force was scary.  We were all up for a while listening to those winds.

What are Santa Ana Winds?  We usually experience them in Orange County from October to March.  Some folks believe they’re due to desert heat, but in actuality it’s the converse.  It’s due to cold temperatures in the desert – thus the fall, winter season.

It’s an odd thing.  They are usually warm, even hot, and very dry.  It sounds as if it will be freezing outside and I had to explain to my 10 year old that his thick jacket would be wasted on a day like this.  He refused to believe me until he stepped out into the hot wind.

We are always leary of the risks posed by the Santa Ana winds – potted plants overturned, falling trees, and the worst – fires.  The impact of these winds can be felt from Los Angeles, through Orange County, and down to San Diego.  The first Santa Ana Wind can be an odd, even unnerving experience, for someone moving into the area.

Today, my daughter stayed home.  I’m monitoring her fever and listening to the howling wind – waiting for both to subside.

I have to say that I’m not too devastated to see that 2008 has come to an end. There was so much turmoil this year in the housing and financial markets, politics, world events and it’s psycologically comforting to have a fresh start.

A lot has changed for me this year. I launched this blog, OC Real Estate Voice and another blog, Why Didn’t My Home Sell? Both have had a wonderfully warm reception and I thank each of the readers that allow me the privilege of speaking to you. Thank you for your comments and feedback.

I also was recently honored to be invited to write for Agent Genius, which is ‘the first multi-author real estate blog designed by and for real estate agents nationwide’.

Business has been much stronger as demand has increased in 2008. This has definitely not been an easy real estate year but there have been promising things in my personal business and I’m looking forward to a great ‘09.

Thank you for reading and I wish you a wonderful, happy, healthy, and prosperous 2009!

This may not be the most politically correct piece that I’ll write but that’s never been my goal here on OC Voice.  So here goes….

One of my clients sent me a link to an article published online on CNBC about ‘Mortgage Re-Defaults Rising with No Sign of Slowing’.  The article states that, “…after 6 months, nearly 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent,”  and goes on to say that, “after three months, 19 percent were 60 or more days delinquent or in the process of foreclosure.”

There is no question that watching a family lose their home is beyond heartbreaking.  The article did point out a small piece of good news in this fiasco – 9 out of 10 home loans are current.

The article has me thinking about a few things.  Why does someone default?

The rates on the adjustables are actually lower in recent months than they were a year ago.  In addition to that, some of the Interest Only notes have yet to adjust at all.  Payments in many cases are the same, or even less than they were one year ago.

I’ve seen that in some instances, people frankly are not interested in paying $500,000 for a home that is now worth $375,000 and decide to walk away from the property.  Does a loan modification make sense for those owners?

Lending restrictions were way too lenient up until recently.  Some folks were approved for loans that they never would have qualified for under the strict requirements of today’s lending standards.  Does a loan modification make sense for those owners?

Temporarily reducing the interest rate, tacking on the arrears to the back-end of the loan may provide immediate relief but is it only delaying the inevitable?  Do loan modifications like this make sense?

Maybe it’s time to be honest and say that current levels of home ownership are higher than they’ve ever been, and just maybe, that isn’t a good thing.  It’s not good for the homeowners that aren’t really qualified, and it’s not good for the housing market.

Maybe it’s time to really help those homeowners get out from underneath the homes that they cannot sell for what they owe.  Maybe it’s time to let this market run it’s course without trying to fix it with band-aides and superglue.  Maybe it’s time to get a really efficient and effective short sale process to assist these distressed homeowners.

Bailout plans that focus on loan modifications and saving the homes may not necessarily be the answer.  As I’ve said before, where is a Bailout plan that really deals with the heart of the crisis?  Where is a plan that is effectively dealing with the real issues on Mainstreet?   I’m waiting…and not patiently.

When I was a kid, and while in college as an adult, it was not unusual to get bundled up, carry hot cocoa in thermoses (might not have been cocoa in college….but I digress), and head out into the woods to cut down our Christmas Tree.  Although I was born in Southern California, I moved to Oregon when I was 11.

I moved back to Orange County in 1998.  I still miss having real seasonal changes – yes, including the rain.  This is the time of year that I struggle living in Orange County just a bit.

When we moved back to the OC, my father promised me and Michael (my husband), that we would in fact, go pick out our tree and cut it down.  We did – sans thermos and winter coats.  It was a tree farm off the 133 and the 5 freeway.  You weren’t allowed to cut it down yourself either, but you did get to watch them do it.  Close, but not exactly the same thing.

Christmas OC Style

This year was like many recent years – the Home Depot parking lot.  Nearly every year we skirt around a marital encounter as I pick out trees for Michael to hold up so I can judge the fullness, symmetry, and the like.  He has the patience of a saint as I stand back, analyze the choice and ultimately decide that isn’t the one.  He assures me he’s happy to help me find just the right one that I like.

So today, I looked around at guys holding trees for their gals and for a moment I swear it was a ‘Saturday Night Live’ skit.  Those poor husbands and boyfriends nodding to one another, a show of understanding and encouragement, and the ladies analyzing the tree as if it’s a fixture in their home for the next 3 years instead of 3 weeks, and I knew it was time to go.  At that moment the one Michael held, became the one. “That’s it, let’s go!”

I packed my 3 thrilled kids into the car, Michael loaded the tree on top, and I turned on the A/C – it was a little warm, ya know…

I noticed the tree has a pretty significant hole, but we have that part facing the wall.

Last weekend, I went into an Open House with one of my buyers that is really struggling with the ‘Rent versus Buy’ decision.  The listing agent handed us an article by Orange County Register’s Jonathon Lanser that shared the good news that home sales was up nearly 60% from a year ago.  In the words of the listing agent, ‘things are turning around’.

As I’ve said before on OC Voice, I’m not convinced that this is necessarily  the turnaround I’m looking for.  Most of this increase in sales is in the most distressed parts of our market.  In addition, 60% increase in sales over the historic lows of 2007 is good,  but clearly not great.  We are still about 50% off in sales volume from 2003 numbers and we are back to 2003 pricing.

Do I think we are approaching a bottom?  I do.  Am I ready to tell my buyers, ‘Hurry, before it’s too late?’  Not necessarily.  I think it may be time for some buyers to take the leap, however there are a lot of factors that go into that decision (stay tuned for my post about renting versus buying in today’s market).

But, I find it insulting when my colleagues reprint articles with a glimmer of hope, so that they may spread them far and wide with a ‘Hurry and Buy Now’ approach.  Consumers are smart.  Information is everywhere.  My clients understand that sales may be up, but prices are down.  My clients all have been watching the market, local trends, and values.  To suggest that if they don’t pull the trigger today, they’ll ‘miss the boat’ insults their intelligence and frankly, it continues to diminish the level of professionalism of the industry as a whole.

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