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I heard from a very reliable source that once interest rates went up there would be a flood of buyers in the market that would come in with their all cash offers.  Well, I think we are at that point.  I am busier than I have been in two years and yes, with the exception of one, they are all cash buyers, not that we have been hit like the rest of the state or country over the last year or two.  Our sales in Carmel and Pebble Beach real estate have been much more stable than other areas.  If anything, homes are staying on the market longer and are more price sensitive but we are not experiencing the short sales and foreclosures that other areas have been subject too.  The nice thing about purchasing real estate in Carmel and Pebble Beach is that most owners have the money to hold if they want, plus we have the constant influx from other areas that keeps our market moving, it’s not dependant solely on the local market in other words.  This in return provides for a much more stable investment than other real estate markets. 

For example, I have a Buyer moving here from the Sacramento area.  Unfortunately for her, she sold her home in Carmel Valley 8+ years ago in the $900,000- range.  That same home is now on the market for $2,500,000-.  She put the home she bought in Sacramento back on the market 2+ years ago for $1,999,000- and ended up closing on that home in December of 2007 for a mere $1,300,000-.  She is now trying to get back into this market but look at what she has lost in her golden years!  She lost the $1,600,000- she could have gained just staying put PLUS she lost the difference between what she purchased the home for in Sacramento and what she took for it in December.  So she is twice behind the curve ball.  Now she is worried that it is so expensive here but what I am explain to her is that she can’t afford to NOT buy here.  Look at what she has lost already.  She needs to protect what she has left for her future investments by purchasing in one of the most insulated areas she can purchase in and get her money to start working for her again. 

So even if she does not bite right now, there are plenty more buyers to take her place.  People are seeing this as a prime opportunity to buy at the best prices we’ve seen in years.  And even for those who need to get loans to purchase, the interest rates are still at historic lows.  So charge!  Let’s make it a banner year in Carmel and Pebble Beach real estate!

So it’s over, the Stimulus package is signed by Congress and President Bush so the economy is going to be just fine…Right?

Fortunately what is going on in most of the country regarding real estate trends is not what we are experiencing for the most part on the Monterey Peninsula.  However, there are pockets of our low end markets that are suffering greatly.  When you look at markets like Seaside, Marina and Salinas you will see a much different picture than what Carmel and Pebble Beach are experiencing.  In fact, I showed a house yesterday that was just reduced to $349,000, what a bargain!  Only the Sellers had paid about $650,000 for it just 3 years ago.  So there end lies my question about the Stimulus Package.  I almost felt myself having a Michael Moore moment, “So just who is this stimulus package helping?”  As part of the new Stimulus Package there is a new Conforming Loan Limit guideline for FHA mortgages.  This is obviously great for the new Buyers coming into the marketplace.  This will allow them to afford more or even just qualify for a loan.  The problem in the last year or so is that with the increased loan qualification process no one could qualify for a loan over a Conforming Loan limit of $417,000 in our area.  Therefore, homes that were selling in access of $500,000 were no more, the prices had to come down to accommodate the Buyer that was qualified in the Conforming Loan limit range.  And yes, this is good for them. 

The thing I don’t understand is that when I was at the CAR conferences in Indian Wells, CA this January they were all excited about passing this new Conforming Loan limit.  They said it would decrease the amount of foreclosures on the market by up to 210,000 in the State.  That is the part I don’t get.  The reason I don’t get it is because no matter what the loan limits are, if the house is not worth what the owner’s owe on it, they will still not be able to refinance it to save it from short sale or foreclosure.  Take for example the house I showed yesterday, they must owe more than $350,000 on it if they purchased it for $650,000 three years ago, so how would this new Conforming Loan limit help them? 

I am very optimistic about the real estate market this year.  I have been busier this year than I have in the last two years, but I think we need to be realistic about what certain tools will allow given the marketplace.  Obviously, given the fact that I’ve been busier than in the two years means that others are seeing this as a prime buying opportunity as well.  So let’s use these tools to our advantage, but not have any mis-givings as to their limitations. 

It may seem extravagant to some, especially if you are not from a coastal area, but this is a regular day at the beach for Gus and Reese who are my friend’s dogs.  Carmel beach is a mecca for dogs and is one of the few beaches in our area that does NOT have a leash law.  You may think this would lead to mayhem but it actually works out pretty well.  Most of the dogs love to come and see their friends, new and old. 

The Carmel Pine Cone even has an article titled “Sandy Claws” each week in their paper.  The author goes to the beach each week in search of a dog to write about and tells their story including their owner, any pet siblings, even where they sleep at night.  It’s really cute. 

You also have a variety of restaurants that have outdoor dining for pets.  The Forge in the Forest has a special Doggy Menu to choose lunch for your canine companion.  Or you can stay at Dorris Day’s hotel, The Cypress Inn, which not only accepts pets in their rooms, they have staff that will walk and babysit them (for a small fee) while you do you enjoy Carmel on a human level.

So if you are looking for a dog friendly place to visit or live Carmel should be at the top of your list.

Just when you think you’ve seen it all you absolutely know that you have not!  I am constantly surprised by the things that sellers or tenants think are ok to have going on while the listing agent is holding a broker tour or open house.  I cannot tell you how many times I’ve been on a broker tour and someone was asleep in a bed in one of the bedrooms.  What is that all about?  Why bother doing the open house?

I also have had the misfortune of walking into the wrong house during a broker tour.  It was in a small development where the houses were close together and the sign was in between two homes.  I went into the house that the garage door was open and all the lights were out, the house was a mess and there were shoes everywhere inside the front door.  I called out and no one responded.  I thought to myself, something is wrong here.  So I went back outside, unbeknow to the owner of the home that I was there and discovered that yes, I was in the WRONG HOUSE!  I felt so embarrased!  Thank God no one was around.  Just goes to show, no matter how safe the neighborhood, locking your doors while home even is not a bad idea!

The recent news about Countrywide being bought out by Bank of America is not surprising, I think we’ve all been expecting it sooner or later.  Even though Bank of America has a strong presence on the national mortgage scene they have been pretty anonymous in our local area on the Monterey Peninsula.  In fact, this past weekend I was visited at an open house by a Mortgage Consultant with BofA which surprised me-I did not know they were around much!  Come to find out they do have an mortgage office in Monterey that is shared with the Salinas branch.  I think they were probably anticipating the current buy-out plans and wanted to get their foot in the door on the Peninsula side before they got up and running. 

The other added benefit they will have is possibly being able to aquire the Countrywide mortgage consultants.  Our local branch of Countrywide Home Loans has some very experienced and qualified mortgage consultants.  If they are able to hang on to those consultants they will immediately have a presence on the Peninsula that they have not had in the near past.  My guess is it will also hurt other localish lenders such as Washington Mutual.  A number of years ago it seems like a lot of the mortgage consultants that B of A had moved over to Washington Mutual.  I wonder what they are thinking now…

John Juarez, a REALTOR with Prudential Realty in Fremont, CA states that this will help the competitiveness of the mortgage industry and makes a statement from B of A that they are in the mortgage industry to stay.

I know Sellers are out there looking for a magical solution to why their home hasn’t sold but it’s really not as complicated as it seems.  There are only two reasons homes don’t sell, it’s either marketing or it’s price.  It may seem that there are a lot of reasons that are not related to marketing or price but they really are.   Take the following reasons and I can relate them to price:

There aren’t as many buyers = Price

It’s a slower time of year = Price

We don’t want a lot of open houses = Marketing

We don’t want a lockbox = Marketing

No one has even made an offer = Price

It won’t help to chase the market = Price

 The bottom line is that if your home is priced appropriately for the market (not underpriced) it will sell.  Homes in our area are averaging roughly 93% to 96% of sales price depending on the particular market.    See the following graphs for a list of sales vs. list price over the last year:

Carmel

Pebble Beach

Monterey

So this is what you have to consider, if your home is being properly marketed and you are within at least a 4% to 6% range (in the Monterey Peninsula area) of what the actual sales price will be then you will be getting more showings, which will lead to more offers, which will lead to your getting the highest possible price.  Think of a price adjustment as a way of widening your market to build the offers and eventually the price upward. 

Look for more to come about what is comprehensive marketing vs. throwing money down the drain.

I’ve had the pleasure of living on the Monterey Peninsula for over 14 years.  I was transplanted here from the Mid-West as part of a job transfer at the “very aware” age of 21.  I figured what’s not to like…I’ll give it a year and if it doesn’t work I can always move back.  Well, here we are 14+ years later and the Monterey Peninsula feels more like home than the Mid-West.  However, that doesn’t mean I haven’t sniffed out other people and places with “Mid-Western values”.  Take for example my neighborhood, Deer Flats Park in Monterey.  You cannot get more suburban and neighborly than Deer Flats Park.  This neighborhood could be anywhere in the Mid-West (without the snow and humid summers!).  Not many people actually know of the neighborhood but those who do always say, “What a great place to live.” 

We have the benefit of larger homes (2300-3300 sq. ft.) and lots (8,000+ sq. ft.) compared to most of the peninsula, in a decent price range (currently about $1.0M-$1.5M), yet we are in a quiet location just off Hwy. 1 so I can get from my house to downtown Carmel in 8 minutes without having to pay Carmel or Pebble Beach prices.  And the best part of it is that we are in a sun belt so while other parts of the Monterey Peninsula may be socked in with fog it can be roasting in my back yard.  When summer starts to arrive I am absolutely dying to get home and sit in my back yard by 3pm!  And then the next best part is that there are deer runs and greenbelts throughout the neighborhood that create space and privacy from your neighbors.  So behind our house is a 50+ foot deer run that separates us from our neighbors to the back.  Plus everyone is so neighborly.  My immediate neighbors to the right couldn’t be better suited for us.  We have 3 dogs and they have 2 so they always watch our dogs when we go out of town and vice versa.  In fact, before we closed escrow on the house the Seller had a champagne reception for us and invited the neighbors on the cul-de-sac to come over to meet us.  What a wonderful way to become part of a great neighborhood and it’s been all that ever since!

10.  Pet odors; if you can smell it you won’t sell it!

09:  Food odors; ditto, if you like to cook extravagant dishes do it at someone else’s home!

08:  Moldy & musty odors; double ditto!

07:  Clutter; leaving personal effects and unnecessary furnishings around the house.

06:  Not cleaning the house and picking up everyday-you know the golden rule, that one day you don’t make the bed is the day an all cash buyer will come through.

05:  Lack of landscaping-keep it fresh and clean, get rid of pine needles, etc.  Oh yeah, if you have dogs pick up their ”cookies” too!

04:  Don’t let the Buyers in; not allowing your agent to hold the house open and easily show it eliminates buyers before they get there!

03:  Listing for a short period of time on the MLS makes you look like a not so serious seller and also scares buyers away before they get there.

02:  No photos or bad photos on MLS; make sure your agent has the opportunity to photograph the house at different times of day and while it’s actually clean.  Also, one photo is not enough, you need at least 7-9 photos plus a virtual tour or streaming video is preferable.

01:  (Drum roll please…)  OVER PRICING YOUR HOME will eliminate buyers before they get there as well.  Wishful thinking is not going to bring buyers clamouring to buy your home, they are looking for the deals in this market.

I knew the deal was in trouble when the Buyers asked for a $46,000 credit for repairs and updating when the house was only selling for $1,028,000!  As it turns out, the Seller should have negotiated with them on the credit to get it closed; however he was being stubborn and seemed to be looking for a way out of it.  He never did sell the house and his parents ended up bailing him out and buying it from him.  The thing the Buyers did not do in this situation is proceed with their loan application and appraisal, so at the same time they were asking for the credit they were also asking for an extension on the loan contingency because they had not proceeded with their loan process pending the credit for repairs.  This did not make them appear to be very serious Buyers and made it difficult for me to engage the Seller in the negotiation.  It made them appear to have just accepted the price until they could get into escrow when they had more leverage to negotiate the price down.  The Seller had reservations about the Buyer and this just justified them so as a result we gave them an ultimatum that they rejected.  So there seem to be two lessons here; Buyers, you need to perform on your own contingencies in order to have the respect of the Seller and Sellers, this may not be the market to make hasty decisions and let your pride get in the way of making the deal work.  We are all making up the rules as we go in this market.

You know the old saying, don’t go to the restroom during a meeting or you will be appointed to chair a committee or fundraiser by the time you return.  Well, this is kind of the same but different.  I feel like I left an office meeting and someone came in and told everyone to write the lowest low ball offers you can dream up!  Mind you I’m not actually complaining, at least there are Buyers willing to get off the fence, I just wonder how many of them are real Buyers that will step up to the plate when tested.  I have had two of the sort in the last couple weeks on listings of mine.  One we did get worked out and the other we scared away with our first counter, thus begging the question, is he a real Buyer?  Do Buyers just expect to bring the Sellers down dramatically in the first counter and how many counter offers should it take to get a deal worked out?   Better yet, if a Seller does come down significantly in the first couple counters, does it affect the value of the property to the Buyer?  In other words, is six counter offers enough to make the Buyer feel like they got a good deal and the house is worthy of the price?  Or do you run the risk of scaring the potential Buyer off by not making it too easy.  I had both situations but in opposite price ranges with the offers I was representing the Sellers for. 

The offer we did get worked out was offered at almost $2.3M, had been on the market a relatively short period of time (about 90 days when we received the offer) and took six counter offers but even then the Buyer wasn’t satisfied thus we ended up then fighting over the potted plants in the rear courtyard. 

The other offer was on a property in a lower end market on the Monterey Peninsula (asking $579,000), was listed in access of six months and had been reduced almost $100k in that time frame.  This is the one we scared off unintentionally but frankly I wasn’t surprised. 

I think the difference is the market segmentation that is going on.  The high end in our area is still going strong.  In one case you have the President of a company playing a cat and mouse game to see where he could get, but still wanting to buy the house.  In the other case, you have someone trying to see where the truly desperate and motivated Sellers were so he could get more for the money.  When it didn’t work he moved on quickly. 

My point is this, when people tell you who they are…listen!  Know who you are dealing with in each negotiation.  Diagram the negotiation to see where it will go and how many counters it will take.  Prepare the other agent to keep the ball rolling.  Decide if you think the other agent can manage the negotiation on their end if they have a difficult client and always present offers and counter offers!  This allows you to feed the other party the information you want without depending on the other agent to deliver the message in the manner you want it delivered in.  In this market especially you have to show up to win! 

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