Thursday, December 27, 2007

7 Ways Sellers Can Compete in Today's New Market

Ever wonder what it really takes to compete against the other homes that are available? I hope so as that is what this post is all about. Not so long ago it didn't take much to sell a home as there weren't that many sellers were competing against. Now as sellers face greater and greater competition it takes a little bit more to sell the home. These 7 Tips have helped clients and others sell their homes within the average time a home stays on the market in Long Beach, which is just under 70 days before an offer is received.

  1. Stage the home - Professional staging is great (expect to pay about 1% of the price of your home) but if you can't afford it get advice from your real estate professional and use it. take the time to repaint rooms, remove clutter, and remove personal items.
  2. Work on your curb appeal - first impressions are everything right? You want people to drive by and want to walk in your door. Make sure the grass is green and fresh flowers or bark is in the front planters.
  3. Make sure it smells nice - have a trusted friend tell you if your home smells like the family pet. Make sure that it is pleasant to be in for all.
  4. Make it easy to show - nothing is worse for an agent who has a motivated client and then he or she has to schedule around the seller. Make sure you and your agent agree to use a lock box that allows real estate professionals access.
  5. Make sure your friends know - Your friends may not buy your home but they may know someone who will. Craft an e-mail with your real estate professionals information in it and a few pieces of information about your home and send it out to your friends. Ask your friends to e-mail it out to their friends. You never know who is going to read that.
  6. Entertain all offers - Instruct your agent to make sure they tell anyone interested to write an offer. Don't reject anything until you see it in writing. You want to start a dialogue with a buyer and not turn them away too quickly.
  7. Price it below your competition - Homes sell for more the quicker they sell. Create urgency by pricing your home at least 5% below the homes that are available in your area. This may sound drastic but homes that are "under priced" are still receiving multiple offers even in today's market. Make sure you are pricing your home against active properties and not properties that sold 6 months ago.

Remember that in today's market you want to work together with your real estate professional to make sure that your home gets the best chance to sell for the best price possible. We recommend speaking with your real estate professional once a week for an update and have a discussion about the price of your home every 14 days to make sure you are where you need to be.

Wednesday, December 26, 2007

5 Ways to Protect yourself in a Short Sale

Did you ever think that you needed to protect yourself in a short sale? If you didn't we hope you will after this post. A short sale is really just like any other transaction except that you have a bank that needs to approve the price you offered on the home. So in order to make sure things go smoothly you need to make sure a few things happen.

  1. Make sure you are THE offer that is submitted to the bank - some agents, incorrectly, submit multiple offers to the bank and let the bank decide. Let's be very clear about this. The bank doesn't own the property in a short sale. They may decide the terms and they will certainly determine what price they are willing to take but it is not their decision to decide which buyer to work with. The seller still owns the home. If the listing agent says they are going to submit multiple offers, not open escrow, or submit offers as they come in find a new home to submit an offer on.
  2. Use the C.A.R form SSA (Short Sale Addendum) - this is for California short sales. This form provides the buyer protection in that the buying contingencies do not start until after the buyer receives written approval from the bank. It doesn't make sense for a buyer to spend time and money on a property that the bank may not approve the price so wait (patiently) for the bank to perform their process so you can do yours.
  3. Make sure the listing agent has done this before - We are all for people getting experience but it is critical to make sure the listing agent has experience in this process as it is a complicated one for the listing agent as there is far more to do than a standard sale for them.
  4. Have preliminary title pulled for the property - your buying agent or the listing agent can supply this for you from their title representative. This will show you liens on the property and give you a clear picture of what has occurred (in a title sense) with the property.
  5. Make sure the escrow company is familiar with short sales - It is important to have an experienced escrow company that embraces the short sale process and doesn't charge the buyer cancellation fees. Make sure you read all of their documents and interview the escrow officer before you open escrow.

We hope that these 5 Tips make sure that you have a successful short sale and help you protect your time and your money.

Thursday, December 20, 2007

How Long Does a Short Sale Take?

In case anyone has missed previous posts a short sale is when a bank works with an owner to take less than a property is worth. In other words they are going to take a loss on the property. Today I wanted to cover how long a short sale takes to get approval from the bank. Now each bank is different but in general most have a very similar process.

Before a bank can even begin their process they must have certain items from the owner and the real estate agent that they are working with. I am going to list just a few that are required by all banks.

Required documents

  • Fully executed offer - In order to begin the process you must have an offer from a buyer who is willing to buy your property. Most banks require that the buyer not be a relative.
  • Hardship Letter - Why you felt behind. We will write a post on what should be included in a hardship letter.
  • Financial form - Each bank tends to have their own form that they want filled out.
  • Authorization form - if your agent is calling them, and they should, they need permission to speak with the bank.

The approval process begins once these required items are received by the bank. It can take at least 3 days for a bank to get the items via fax. They can take between 4-8 weeks if the bank is moving quickly on their approval process. At the end of the 4-8 weeks they may or may not need additional information from you or your agent. This process can be sped up by regular checkups with your bank rep once it gets assigned.

At the end of 4-8 weeks the bank will do one of three different things.

  • Accept the offer
  • Counter the offer with a different price
  • Reject the offer completely

Most banks are doing one of the first two items. This process will be repeated if there is a first and a second loan.

Monday, December 17, 2007

Los Angeles County Condo Sales for October 2007

Homes and condos are two different types of real estate products. As such they often have different sales figures as far as percentages to report.

By far there are no where near as many condos in Los Angeles County as there are homes. Some cities have very few while others have a large amount. Cities such as Long Beach, the second largest city in Los Angeles County, have a large number of condos available. Santa Monica, Torrance, and Los Angeles also have a large number of condos. So let's take a look at the numbers.

October Sales

  • 2006 - 1,944
  • 2007 - 1,092

So what does this all mean? Condo sales are down just over 44% across all of Los Angeles County. Now we said this in the home report as well that prices are not down the same percentage and that of course is always reassuring. Condo sales are down less than home sales. We believe the reason for this is condos tend to be more affordable than do single family homes. The programs that are available for first time home buyers are still fantastic and many more people can afford the price of a condo than that of a single family home. It will likely be awhile before we return to the sales numbers of 2007 for condos but they are still a very nice real estate choice.

Saturday, December 15, 2007

3 Realities of the Long Beach Real Estate Market you haven't heard

"If it bleeds, it leads" is the famous saying of the newspaper/media industry. It's no surprise then that some of the events in the Long Beach real estate market are not getting attention. Here are some occurences that you may not have heard of from the mainstream media.

  1. Multiple Offers - A memory for many in the "hot" market. Multiple offer still occur on well priced properties. On one property that was dropped 20% in 1 day to elicit offers, it ended up fetching 5 offers! This was small condo in Downtown Long Beach.
  2. Back-Up Offers - When a property goes into a status of "back-up" that means the property is in escrow, but the buyer has not removed their contingencies. In the hot market, no one looked at these, but now with limited inventory of prime choices, many buyers and agents are visiting these properties and submitting back-up offers in the hopes that the buyer can't qualify.
  3. Foreclosures - Although they exist, they are less than 3% of the Long Beach real estate market. There are more "short sales" than foreclosures at this point.

Whether you decide to purchase or sell is up to the consumer, but it is important to arm yourself with information!

Friday, December 14, 2007

Los Angeles County Home Sales for October 2007

It is winter here in southern California. Now I don't think anyone in any other part of the country is going to sympathize with what we call winter but never the less that is what it is around here. Home sales take a back seat to Thanksgiving dinner and to Christmas shopping. Let's take a look at what is happening for the entire county for October of 2007. Countywide sales stats are available late which is why it is December and we are reporting on October sales information.

This chart shows only home sales for Los Angeles County and does not include the sales of condos.

  • Sales in October 2006 - 5,599
  • Sales in October 2007 - 2,638

So what does this mean? Well it means that sales are off about 53% of what they were in 2006. So are prices down 53%? The answer to that is no. Are interest rates up 53%. The answer again, no. Overall the pace of sales has slowed however the median price of homes has actually gone up and interest rates, while they have rise, have gone up modestly. In fact interest rates are still at very low levels when you look at them in a historical context.

We still believe that there is plenty of opportunity out there for buyers to find the right property. While sales are down there are still plenty of willing sellers anxious to work with a buyer who would like to purchase their home.

Wednesday, December 12, 2007

Long Beach Real Estate Results for November 2007

November has come and gone and Thanksgiving dinner is well behind us. There is still time to report on what happened in Long Beach real estate for November.

So let's take a look at what happened this past month.

  • Number of Active properties at the end of the month: 1998
  • Number of Expired Properties: 242
  • Number of properties that sold: 141
  • Number of new listings: 381

So what does all of this mean?

Well the number of properties that are being sold within a month continue to decline. It is the time of year where less properties are being sold overall as some buyers do not want to move during the holidays. However some of the most motivated buyers are around this time of year and that is an important thing to keep in mind.

Our overall inventory declined. This is a good thing. Sellers who were not completely motivated removed their property from the market.

The number of new listings was also down meaning that the number of properties that were newly listed declined from October. This also is a great sign that only sellers who are motivated to work with buyers want to list their homes for sale.

Even though the pace of buying has stopped it still appears that with interest rates staying low and motivated sellers it is a great time to be a buyer.

Tuesday, December 11, 2007

Life Of A Short Sale...When You Owe More Than Your Home's Current Value

If you're a seller in a short sale situation you should always seek legal council before starting a short sale, NEVER let anyone advise you to stop making payments!

When working with a Real Estate agent you must provide them with a written statement authorizing them to represent you in any negotiations with the lender and make sure to show the loan number on all contacts.
As a seller you MUST send a hardship letter to the lender advising them that you can no longer make payments on the loan. (This is most important!)

Here's an example:

Dear Sirs,

As a result of very poor health condition we are unable to continue to make any payments on our obligation to your company.
Since the real estate market will not support the amount of the loans on our home we are asking for you to reduce the amount of the loan so that we can sell the home.

Thanking you in advance,
Mr. and Mrs. Jones


Dear Sirs,

We are no longer able to make any more payments on our loan with your company. We have the home listed with a real estate company however every agent agrees that our home is over priced due to a change in the real estate market. We need to sell our home however we owe more than we can sell it for.
We are asking for your company to reduce the amount of the loan so that we can sell the home.

Thank you,
Mr. and Mrs. Smith

Once you have an agreement with an agent to take on your home as a listing make sure all loans and marketing costs including commissions, even if they are grossly overpriced, are shown with the remark "subject to lender approval." The agent's listing (copy) must be sent to the lender.

Next, a B.P.O. (Broker Price Opinion) letter must be sent to the lender showing all current homes for sale in the area of the subject property including comparable sales within six months. Pictures of the subject property and comparable sales are always helpful. At this time you realtor should ask for a commitment from the lender to allow you to reduce the sales price. Your realtor should contact their Title Representative to order a listing preliminary title report!

Remember the seller's net sheet showing all costs including commissions is very important because you are asking for a reduced loan amount. It's also very important to remember that as a seller you CANNOT receive any proceeds from a short sale.

If you're Real Estate agent finds you a buyer, make sure they get a loan approval letter from the buyer's lender before they submit the offer to your lender.

Several lenders might offer different options to the seller, the most common are:

A forbearance agreement
A reduced loan amount
Foreclosure or a deed in lieu

Ask your Real Estate agent more about these options when offered. If you're having trouble finding a great short sale agent I strongly recommend The Global Trust Team. They're expertise and experience in short sales will save you both time and money. Contact them immediately if you feel it's time to start the process.

Landlording tips!

Here are a few tips that I have found helpful as a landlord.

1. Follow up with a potential tenant in a timely manner! When someone wants to see your unit for rent, they usually want to see it TODAY not next week! I have had the best luck renting my units when I get back to the potential tenant in a timely manner. When I show the unit and it looks like they may be a good fit, I will then follow up with references usually the same day. Acting quickly allows me to place the right tenant in the right unit.

2. When checking references on a potential tenant, also call their place of work to see if they actually work there! If you can, get a character reference from a co-worker. Are they always late? Are they a responsible employee? These are things that may help you determine whether or not they would be a good tenant.

3. Again, when checking references, also call a previous landlord. Getting a reference from their current landlord is not enough. Current landlords may give good references because they in fact have a BAD tenant and they want them out of their unit!

4. Make sure that your unit is the right fit for the tenant! The worse thing that can happen is you place the right tenant in the wrong unit. If you have done your due diligence and you think you have a very good tenant, you want to ensure they end up in a unit they will be happy in for a while (this reduces vacancies!) For example, placing a quiet, clean tenant in a run-down or noisy building or neighborhood usually means that the tenant will not be around for long. (Not that we as landlords should have run-down buildings!)

5. Remember, it is the tenant that is your asset! Tenants want to be treated with respect just like everyone else. Properly screen them, and once you have decided to rent your unit to them, treat them like gold! After all, they are looking after your piece of real estate and building your wealth! Lastly, keep your units maintained. Maintaining your units attracts a better quality tenant. This is a win-win situation for everyone.

More landlording tips to come…

Wednesday, December 05, 2007

5 ways to show your home in a buyer's market

In today's competitive environment when buyer's have options there are some steps that sellers should keep in mind when their homes are shown.

  1. Don't be present - Buyers generally won't feel comfortable looking around a property if the seller is home. They want the freedom to open up closets and see what the property really has to offer.
  2. Don't show the home your own home - Should be obvious if you follow step 1,but just in case you are home :) - A seller who thinks their upgrades are unique and that they require 45 minutes to show their home is HURTING themselves. Let the property speak for itself and let the buying agent do their work to show the property.
  3. Allow for Previews or Broker Opens - Sellers should make their properties available to the broker community so they can see the properties without their buyers and report back to the buyers they are working with. These are generally done during the week so buying agents can become more familiar with the inventory and show prospective buyers later.
  4. Clean - Sounds obvious but a clean good smelling home will do wonders to help buyers fall in love with your property.
  5. Avoid Clutter - Buyers don't always have the vision to see what a property could look like. Avoid the clutter so they can see there is plenty of room in your property.

These tips may sound obvious, but in this market paying attention to the little details can make a difference between your home selling in under 40 days or being on the market over 180 days.

Tuesday, December 04, 2007

7 Crucial Steps You Must Take To Get Top Dollar For Your Home:

1. Understanding the “Total Market” concept of positioning your home to attract the greatest number of buyers.

2. Using the “Total Market Overview” concept to accurately appraise the value of your home. (The standard CMA is simply not enough!)

3. Pricing Your Home to Appear lower than market value, yet actually asking for more than market value (This one crucial step will get buyers and agents flocking to your door!)

4. Properly advertising and marketing your home. (Don’t use the same old boring ads everyone else is using and nobody looks at!)

5. “Detailing” your home for sale. (Your goal is to set your home apart from every other home on the market - instantly attracting buyers to your home.)

6. Learn how to qualify buyers and negotiate offers. (Since we are talking about your money here, the risks of not knowing how to properly qualify and negotiate are too great to ignore or leave to chance!)

7. Understanding and helping the buyer obtain financing, removing contingencies, and closing the sale. (You need a strategy to avoid and eliminate potential problems in escrow which can undermine your sale!)

Years have been spent refining, applying, and proving these seven steps in the real world where they have worked time after time and I can assure you -

The better you understand and systematically apply these seven steps, the better results you will get.

And better results means more money, in less time, and with the least amount of hassle possible.

And isn’t that what you ultimately want, whether you decide to sell your home yourself or use the professional services of a licensed agent to help you?

Of course it is!

And that is why you must insist on timely, accurate information and facts...not just a bunch of pretty pictures, fancy brochures, mere opinion, and empty promises.

You should insist upon and expect to get straight answers to your questions - not just a lot of sales mumbo jumbo and marketing “hype” that does nothing to ensure the proper marketing of your home but serves only to extol the virtues of a company or agent by stating how they are the “biggest” or the “best” or the most “highly visible” or whatever.

It’s one thing to say “we’re the best, we provide the highest levels of quality, integrity, and service” and quite another to prove it by backing up each and every statement made with facts that relate to the market and outlining an exact, step-by-step system designed solely to market your home.

“Trust me - we’re the best” - does not get your home sold!

Marketing skill and precision gets your home sold.

Excuses like “the market is soft right now” or “it only takes one buyer to make a deal” - does not get your home sold!

A proper understanding of total market conditions, making sure all the numbers add up, proper positioning and advertising and an aggressive, systematic marketing plan of action will get your home sold.

Empty, vain “promises” - will do nothing to get your home sold!

Facts, facts, and more facts - and marketing prowess - that is what sells homes.