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The magic question: WHEN is the right time to sell?

I get this question quite a bit – how do I best time the sale of my property? It seems as though sellers are looking for that “magic window” of time that will give them the best possible outcome. This answer may come with some controversy – there is no secret formula or magical window of time. Here’s what I can share with you – the data.

Let’s take Pasadena as an example and look at the key market indicators: inventory, average price/SF, median days on market. The numbers are quite astounding. Inventory remains extremely low at 79 homes, the average price/SF continues to rise and now is $799/SF, and homes are selling faster than ever with the median of 21 days on market.

What does this all mean? The seller’s market is still very strong. Even as interest rates climb slightly, buyers are continuing to write offers and bidding wars are commonplace.

Have you been thinking about selling and, perhaps, putting it off for one reason or another? My suggestion – don’t wait any longer.

We have market reports for any zip code in LA. Shoot me a message and I’ll send you a report for your neighborhood.

You didn’t receive my deposit?? But I wired it this morning…

You didn’t receive my deposit??? But I wired it this morning…

We all know about hackers and have heard the term, “wire fraud”. It’s easy to think, “that’s not going to happen to me”. Think again. Wire fraud is one of the most prevalent cyber-crimes in the US and it’s not slowing down.

In fact, personal friends, who live in another state, just fell victim to this terrible crime. They finally found their dream home and were under contract, anxious to close without any hiccups. After receiving wire instructions for the down payment, they completed the process of sending the funds. What they didn’t realize is that a hacker had intercepted the email from escrow and changed the account number ever so slightly.

So, what happened? They sent their down payment to a thief. To add insult to injury, they were still under contract to close on the house. Luckily, they were able to borrow money and purchase the home. There’s an ongoing investigation in search of the hacker who stole their money.

Most folks in this situation would have a hard time coming up with another $300,000 to close on the home. So, what can you do to prevent this happening to you?

– Before sending any money, always verify the wire instructions by phone using the phone number you’ve previously called and speaking with a person whose voice you recognize.
– Never directly respond to the email that contains the wire instructions and never call the phone number that is contained within that email.
– Avoid using your personal email account for any wire transfers – it’s best to use the secure website of the bank.
– Secure your devices and accounts with dual-factor authentication.
– Be suspicious of any changes to wiring instructions, rush requests, or requests right before a weekend or holiday. Hackers use those times because you can’t reach an escrow company or bank over the weekend or holiday, giving them extra time to move the funds out of the country.

If you are a victim of wire fraud, it’s critical to take action IMMEDIATELY. The digital world affords us many conveniences, but we also need to be vigilant in protecting ourselves and our assets.

Photo by Yan Krukov

The House Sold: How to Keep the Money!

You sell your property for a lot of money.  But as the saying goes, it’s not what you MAKE but what you KEEP that counts!

Wouldn’t you like to know upfront how to net the most out of your sale? 
 
Get an Estimated Seller of Proceeds aka a NET Sheet.  What are the costs of selling?  I will work with the Escrow officer to get you this important information for multiple price points. 

It’s important to put together a list with all money you’ve spent on capital improvements during the entire time you’ve owned the home, even if it’s been for thirty years. Yes, it’s a lot of work but it’s super important in establishing your basis for capital gains.

Then what?  Talk to your CPA.

Based on your estimated net proceeds, perhaps there might be a situation where you could offset some or even all of your capital gains?  Expecting a loss from a business or other investment that will flow through to your personal return?  Appropriate timing of a sale could allow you to write off some of your gains, making a big difference in what you keep.

Timing is everything in life! 

Photo by Skitterphoto on Pexels

Selling Real Estate with the “Click of a Button”

Real Estate NFTs, cryptocurrency, blockchains. No, this isn’t some futuristic, far-off concept. It’s real and it’s happening today. But, when it comes to real estate, are there true advantages or is this all just a novelty? And what exactly is a Real Estate NFT?

NFTs are unique digital tokens purchased with cryptocurrency and are most commonly used to buy/sell digital assets like digital art and music. NFTs grant sole ownership of a digital asset and that ownership can then be publicly tracked and easily sold.

When it comes to Real Estate NFTs, these are used to buy/sell physical assets, such as real property. For example, a developer in Portugal recently sold two luxury homes for a type of cryptocurrency and made the ownership of the homes available via NFT, which would allow the new owners to resell the properties digitally.

The selling point of NFTs is the ability to buy/sell quickly with the “click of a button”. But when you peel away that shiny new promise, it’s a bit more complicated on the back end. There are many important questions that emerge, like “how is title officially transferred?” or “what is the recording process and how will property taxes be calculated?”. What happens to all those important steps during the escrow process such as ensuring clear title, identifying any liens or defaults, conducting inspections, etc.

I think it’s safe to say that the ease and speed of this new digital world is attractive, but it will take some time for the other key steps in the buying/selling process to catch up.

Click here for a great article on Real Estate NFTs

Photo by Worldspectrum from Pexels

The Terrible “What Ifs”

PICTURE THIS:
A buyer looked for years. He knew exactly what he wanted, but he just couldn’t find it. Prices were too high, the stock market was going down or up too fast, the election was coming up, the crime rate was rising… Also, he might change jobs, he might lose his job, he might get married. He’s so ready to buy, but the market wasn’t quite right.

Postscript: he’s still looking. It’s been 10 years.

NOW PICTURE THIS:
A seller has been wanting to move on for years, but the bathroom needs remodeling and he has plans to fix the landscaping. Also, how has so much stuff accumulated? This house was never big enough to begin with, but now the kids are moved out. It would be nice to have a fresh start. Where to begin?

Have you heard the term, analysis paralysis? It sounds a bit like this: What if we get outbid? What if home values decrease? What if they increase? What if another war breaks out? What if mortgage rates keep increasing? What if… What if…

Understandably, some folks become obsessed with making the perfect decision. When you’re faced with too much information and so many options, the answers become murky. So, what can you focus on? Control the controllables.

As a buyer:

1. Decide on a location. It will do no good to find the perfect home in the wrong place. Not sure? Start by visiting different neighborhoods to see what feels right. Go to the grocery store or the dog park. Talk to your future neighbors.

2. Know your financing limits (you can’t get champagne on a beer budget).

3. Determine how much cash you have available for down payment and closing; and get it ready to deploy.

As a seller:

1. The best time to sell is when you’re motivated!

2. Get help with the process. Too many sellers don’t move because they can’t face dealing with the “stuff”.

3. Decide where you’re going. And if you aren’t sure, consider renting.

4. Calculate the estimated net proceeds and talk with your accountant before you sell.

It’s a journey, but one worth taking. The best part about buying or selling a home is that it’s so personal. You can actually see and enjoy your investment every day in every way.
 

The Hoarders are Controlling the Market

There’s a new market mover in town: The Hoarders.  This is a different type of hoarder – it’s not the person with lots of stuff, stacked floor to ceiling.  It’s the “property hoarders”.  Let’s look at two different types: the Gen X’ers and the Investors.  

The Gen X’ers are 40-55 year olds: successful, in the core years of their career, making good money.  A lot of them want to buy a bigger, better home.  Here’s the difference: they don’t have to sell their first home, opting instead to keep it as a hedge against inflation and the option of valuable rental income.  After all, Air B&Bs are the most popular for this age group, seeking out a vacation rental home wherever they travel.  

The second group of hoarders are the investors.  Not flippers.  This group of hoarders are the ‘buy and hold’ crowd.  They have been around longer and have flipped properties in the past.  Now, they are bemoaning the fact that they sold too quickly: the old “if only I still had that property, it would be worth $XX now!”  They really don’t care what they buy as long as they think it’s in an up-and-coming area. They have cash in the bank from selling other properties and are true cash buyers.  They buy up the properties and keep them – taking them off the market, effectively reducing inventory.

Sure, there are still flippers out there. And here’s their game-plan: buy the property, do a quick remodel (think lipstick on a pig), then sell it to young buyers who are in the market for their first home. Today’s flippers focus on a new kitchen (add a huge island wherever possible), updating bathrooms, flooring, and windows. Don’t forget painting interior white and a quick landscaping of the yard. These things can be done expediently and, many times, they don’t pull permits. Flippers can be in/out in a couple months. They use OPM, getting investors lined up once they’ve won the bidding war. But, they prefer to buy off market. Their pitch to investors centers around the rising prices and the fast turn. A pivotal change in laws has sweetened the deal – single family zoning is a thing of the past.

Net, net – Hoarders are keeping the housing inventory low.

A recent listing of mine (now in escrow) at 2002 El Sereno Ave, Pasadena CA, exemplifies the above trends in spades. Huge lot, fixer, high level of rentals in the area, and zoned 0-2 units per lot. Investor buyer will likely remodel, build another unit on the lot, and rent the properties.

Photo Credit: Altaf Shah from Pexels

National Association of Realtors® Chief Economist’s Predictions for 2022

National Association of Realtors® Chief Economist’s Predictions for 2022

While none of us have a crystal ball to predict the future of the real estate market, it’s interesting to hear what the National Association of Realtors® chief economist, Lawrence Yun has to say about next year.  During a recent conference, Yun expressed tempered optimism for 2022.  To quote Yun directly, “All markets are seeing strong conditions and home sales are the best they have been in 15 years.  The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.”  He went on the express that while the 2022 housing market may not exceed this year’s, he expects house sales to outperform pre-pandemic levels.

My personal experience this past year has been anything but slow.  Mostly all listings have received multiple offers above asking price.  Buyers are coming prepared and properties have been moving quickly.  Through my 30+ years in this business, I’ve seen many ups and downs and it’ll be interesting to see what 2022 has in store.

Click here for an article with more details on Lawrence Yun’s predictions for 2022.

Photo by Michael Tuszynski from Pexels

Virtual Real Estate – The Wave of the Future?

Virtual Real Estate – The Wave of the Future?
 
By now we’ve all heard about the METAVERSE and how people are creating virtual worlds to live out their dreams.  But, did you know that you can now purchase your own virtual real estate using crypto currency?  The Sandbox, a virtual world, just recently sold a virtual yacht for about $650K (in crypto currency).  The asset was sold by a company called Republic Realm, a developer in The Sandbox metaverse.  That’s just the beginning.  Republic Realm owns 19 metaverse platforms and has developed six metaverse real estate projects.  For example, they developed a grouping of 100 islands – called Fantasy Islands – which sold out in 24 hours.  Some are saying that virtual land could be the biggest commodity currently being sold in various metaverse platforms at the moment.

I’ve seen a lot in my career, but this is certainly a new world!  It will be interesting to follow the developments within this virtual realm.

Click To Read More

Photo by Andrea Piacquadio from Pexels

Price Per Square Foot – Keep it in CONTEXT

In real estate, there are numerous factors to ponder when determining the fair market value of a home.   One measurement that everyone seems to use is price per square foot, but it’s important to consider this data point in context.

The calculation is basic – list price divided by the square footage.  But, prices per square foot can vary significantly based on several factors – lot size, overall condition, age of the home, location, upgrades, and many other characteristics of a particular property.

How do you use price per square foot to help make an informed decision?  It should be viewed as a barometer of whether the home is priced appropriately for the area.  If it’s on the high side, that’s a tip that there may be something special or unique about the home that would warrant a higher price.  If it’s extremely low, perhaps the home’s condition or location is not as desirable as others in the area.

Here are two examples – both high water marks for their neighborhoods:

BURBANK: I recently sold a property in Burbank for $1100/SF.  That’s the highest price per square foot sold in 91501 this year!  If you were to look at the home, you may scratch your head and ask – how/why?  There were major factors that added to the desirability of the property and propelled the price per square foot to the level of other, more updated houses in the area:

  1. The lot size was considerable – 9000+ SF lot in an area where the average lot size is smaller – offering upside potential.
  2. It was located in a sought-after neighborhood, positioned in the middle of the block and surrounded by remodeled homes.

SAN MARINO: My recent San Marino listing closed at $1194/SF – a record high in this particular neighborhood of San Marino.

  1. The home needed updating, but the lot was large and offered privacy, as well as opportunity for expansion.
  2. Boasts an excellent school district – one of the highest rated in LA County.

Most times it’s not just about the home itself, but the lot, location, and nearby schools and amenities play a major factor in determining value.

The Real Estate Flop of the Year – Zillow

Zillow has exited their e-buying platform. Why? Because they relied on their own Zestimate – and guess what, it set them up to lose money.

Their famous Zestimate is not accurate, and never was. This tool was an effort to give a value estimate for every home in the US – and literally every home buyer, attorney, or just nosey neighbor used the estimate to establish a value. But, of course, they only liked it if it was more than they thought. When the homeowner found the Zestimate to be lower than what they expected, they decided “something must be wrong”.  These Zestimates only told half the story and corrupted the data.

Zillow wanted to play the role of buying low and flipping houses quickly, but their own algorithms didn’t accurately predict the right level to buy, and they ended up overpaying.

The result?  Well, now you have it officially from Zillow – it was a flop.

Savvy real estate agents already knew this, but explaining that a home’s value is not a simple number created by a robot had its challenges.  I watched the Zestimate of my own home go up and down like a bouncing ball every week. Really? I don’t think so. It’s not just square footage of a home. Value is complex!

An experienced agent knows how to price a property to sell and how to maximize the value. An app simply cannot.   While Zillow is still around and offers some interesting services, agents keep a close eye on the market, house by house. Each is unique and must be evaluated accordingly.