There’s something I’ve been meaning to write about for some time now: low-ball offers. Last year we didn’t see too many low-ball offers. The market was just too hot for sellers – properties were being snapped up in wild feeding frenzies, with just about everything going for over asking price in a matter of days. In such an environment, what chance would a low-ball offer have? A snowball’s chance in H-E-double toothpicks, that’s what! Things have changed considerably of late – and much for the better, if you’re a buyer. Multiple-offers are still happening – for prime properties that are well priced. By and large, though, properties are sitting on the market longer – much, much longer – now than they were last year. What does this mean for you, the prospective real estate buyer? It means that there are a lot of anxious sellers out there! Examine these listing remarks I stumbled upon recently: GREAT HORSE PROPERTY- 2 BEDROOM 1 BATH ON 1 ACRE OF LAND. CHERRY FLOORING, STAINLESS STEEL APPLIANCES, HOME HAS BEEN UPGRADED, NEW COMP ROOF, SOLD AS-IS. OWNER ANXIOUS, MAKE OFFER. Hello! It says right there that the owner is anxious and you are invited to make an offer. By all means, do the owner a favor and put in an offer. Go ahead and offer $50,000 or $100,000 less than asking price. What can it hurt? The pain of rejection? It’s business, don’t take it personally! And if you do offer much much lower than asking price, do not be surprised … Read More
Was that some crazy storm last night or what? Thunder, lightning, rain just bucketing down – I haven’t seen anything like that here in Santa Cruz since I don’t know when – maybe never. And this morning, when I left my house, I had to be extra careful going down the steps – for they were covered in hail-slush-ice. My car, too! Later that morning, I went out to the Larkin Valley area to check out some homes, previewing them for clients. All along the way, I could see that there was what looked like snow all along the sides of the freeway. I got off at the Larkin Valley exit, and I saw a line of cars parked there. I thought “Wow, Larkin Valley road must be blocked!” – but no. Instead, folks had just stopped by the side of the road to stop, build snowmen, go sledding, and throw snowballs. ¡Que wow!
Well folks, many of you have been waiting for the shoe to drop, and right now it may be getting ready, finally, to do so! Check out this report that says interest rates have reached a 2.5 year high. For years now, the pundits (and everyone else!) have been speculating that rising interest rates will pop the real estate bubble – that the rapid rise in values that we’ve seen these past several years have been due to low rates and exotic financing options. Every time the rates rise a couple of weeks in a row, the doom-sayers start coming out of the woodwork to announce that the party’s over, and, like latter-day Chicken Littles, that the sky is falling. But now we’ve hit a 2.5 year high! Of course, even 2.5 years ago they were saying that rising interest rates would put the damper on rising home prices – but the thing is, rates never really rose all that high – but home prices continued right on rising, until last year when they started to plateau, and, in some markets, to decline. So now we have housing prices that aren’t rising (and in some cases falling, a bit), and the interest rates are rising. So, about that shoe – is it about to drop? Probably not. The consensus is that prices will be stay flat (not drop precipitously) in the event of a modest rate increase. If rates climb much over 7%, the consensus seems to be that this will negatively affect home prices. But … Read More
One of the great things about being a Realtor is that you get to meet many interesting people. A couple of days ago I set an appointment to meet a man at Caffe Pergolesi. We’d been in communication for several months about the real estate market – somewhere down the road, he’d like to buy a home here in Santa Cruz. This guy has done a lot in his life. I’m still not quite sure about what he does, exactly – some kind of engineer, and worked on a variety of diverse projects. Now, he’s taking a break from all of that and he’s pursuing a PhD at UC Santa Cruz. While he’s working on his PhD, though, he is looking for contract jobs. You can check out his resume on line. If you’re looking to hire a engineering wünderguy, give his portfolio a look! You might want to take a look, anyway – he’s living proof that Santa Cruz has become, in fact, a diverse community; it’s not just for surfers and hippies anymore. 🙂
I wanted to make sure you all knew about my Annual Real Estate Report! It’s available on-line, and you can download it here: http://santacruzhomebroker.com/newsletter_yearly.pdf It should be a pretty interesting read: it contains lots of market statistics for what happened in 2005, and shows how the market performed in comparison to the predictions that were made for 2005 – for the nation, for California, and for our local market. It also contains forecasts for 2006. Bottom line? A further decrease in sales – but a further increase in prices! Interesting – a seeming paradox, but that’s how it was in 2005. I encourage you to download the report today!
The other day, I went in for a haircut. Now, hold on, I know you’re asking, “What’s a haircut got to do with real estate?” Hey – EVERYTHING has got something to do with real estate! As it happens, I went to the JiffyCutz or whatever it’s called right next door to my office. I’m a busy guy, and I just couldn’t make it over to Los Altos to my normal stylist. I got in at a good time – I only had to wait but a moment. I like getting my haircut, it’s kind of relaxing. Many stylists are chatty folk, and the time often just seems to fly by. My stylist that day began by asking where I worked. “Oh, I work at the real estate office right next door.” “You’re a Realtor, eh?” she asked, with a bit of suspicion in her voice – like maybe I was going to try to sell her something. So of course, I replied, “Yes, I am! Do you want to buy a house?” Snappy rejoinder, wasn’t it? “No thanks,” she replied – “I’ve already got a townhouse in San Jose. And, besides, I just can’t see paying these prices! I’ve love to live here in Capitola, but I don’t see how these prices can be sustained.” I get that a lot. I hear it time and again. The thing is, I’ve been hearing these same things for years – all my life, it seems. It’s something I’ve thought a great deal about. “Let me ask you … Read More
I can hear some agents in my office muttering about how their buyer clients are hesitating to purchase in this market. It seems that many folks feel that home prices are soon to come down a bit. As you know, real estate is cyclical – prices rise, and they fall – so yes, one day, the prices will come down. The question is, when? And by how much? I’ve been telling people for years, throughout this recent boom in prices, that if they’re buying now under the assumption that they can flip the property in a year or two, without doing anything to it, and expect make a profit that way – that this is highly speculative and therefore risky. Of course, if you bought two or three years ago, your gamble would have paid off. Will the same gamble pay off if you buy today? Maybe, maybe not! It’s all speculative. Many folks say no, that the market is due for a “correction.” But they have been saying that for years. It could be we’ll have another couple-few years of home price growth before we see the next downturn. Or, it could be a decade before prices actually drop – many “experts” are predicting that we’ll hit a plateau that will last a long time, with home prices not moving too much up or down. So if you’re looking to buy a home and you’re thinking that you’ll save money by waiting…you might want to think again. Freddie Mac has just released the quarterly Conventional … Read More
Yesterday I met with a client for “The Big Day.” In most real estate transactions I’ve been a part of, there are several big days, but for me, the biggest day is the release of contingencies date. You see, in a standard C.A.R. (California Association of Realtors) Purchase Agreement, which we mostly use here in Santa Cruz, the buyer is given an inspection or contingency period – by default, 17 days – in which to inspect the property and make sure that it is acceptable. During this time the buyer may, for instance, order a home inspection, termite inspection, etc. Until the 17 days are up (or however long the contract states that the inspection period shall be), the buyer is free to back out of the transaction with absolutely no risk of losing the deposit. It’s great for a buyer, not so great for the seller. Once the seller agrees to the purchase, the seller can’t legally back out, but the buyer can, up to the end of the inspection period. What’s nice also is that there’s no arguing – the seller can’t say, for example, “Oh no, there’s no mold!” – the buyer can back out for any reason whatsoever (“I don’t like the way the sun hits the deck”) and really, the buyer doesn’t have to give a reason at all. When the inspection period is over, and if the buyer wishes to proceed with the purchase, there’s a document to sign called the Release of Contingencies form. There are two sets of … Read More
And now…the rest of the story! To get the lot split that I wanted, it was known that I’d have to get an easement granted from the neighbors. Rumor had it that at least one of the neighbors was interested in doing something along those lines. So, I called that neighbor first..and he claimed to be interested in no such thing. Then, I asked, “So you’re not interested, not for love or money?” Ahh, well – for money? How much money? Let me get back to you on that one, I told him. I contacted the other neighbor, and asked if she’d be interested in doing some kind of easement…it turned out, she had lived in her property for 50 years, and had no interest whatsoever in seeing the adjacent parcel, the one I wanted to buy, split up. She was pretty adamant about it, and I completely understood where she was coming from. So what did that leave? It left the possibility of doing just a two-way split: split off the back portion of the property, but do it in such a way as to facilitate a further split some years down the line, were something to change with the neighbors. Enter the land use planner. A land use planner is a professional consultant who helps people plan the development of property. If you want to build a house on a piece of land, you need to present a plan to the county. A fairly extensive plan: where the house will go, what the house … Read More
For those of you who haven’t yet heard, I have a Santa Cruz Fixer-Upper e-mail list. People who are looking for fixer-upper properties here in Santa Cruz County can subscribe to this list, and every week or so they’ll receive a group of listings via e-mail that look to me like they have good upside potential – that is, the buyer can quickly add value to the property by making repairs and other improvements. All kinds of properties go out on this list – condos, multi-residential properties, single-family residences…anything except for raw land. I have a separate list – Hot Land Deals in Santa Cruz – for that. A couple of weeks ago, I put out a property on the fixer upper list that seemed like an incredible deal (aren’t they all? 🙂 ). I was working some floor shifts after I sent the listing out, and I was getting a lot of calls on this property. Again, I was struck by what an awesome value proposition the property had. The property in question was a 3 bedroom, 3 bathroom house on a 34,000 square foot lot. The exciting part is that the area is zoned for 6,000 square foot parcels. In theory, this one property could be split into 4 separate properties. If a build-able lot in that part of Santa Cruz county is worth somewhere between $300K and $350K…that’s $1 million or so for the three other lots, plus you can sell off the original house for pretty close to what you would pay … Read More