Tag Archives: market

How To Get Top Dollar For Your Home


How does a seller get top dollar for their home? Every seller wants the assurance that his/her house will sell at the highest price possible. But, real estate, as with most industries, is a highly inexact science. There are many factors at play within rapidly changing market terrain. While there are no concise answers as to how one ensures a house sells for top dollar, there are some important considerations to deliberate as the seller that can help you maximize profits, maintain control and reduce the stress that comes with home-selling.

  • Know why you’re selling and keep it to yourself.

The reasons behind your decision to sell impact the process greatly. Do you already have another house in escrow? Do you need to sell quickly? Or is profit your highest priority? All of these questions will factor into your pricing strategy. However, do not reveal your motivation to anyone else other than your agent or they may use the information against you during negotiations.

  • Set your price appropriately.

Setting the right price is the single most important decision you will make when you decide to sell. Price too high and you will turn off potential buyers. Price too low and you may leave money on the table. Make sure you do your homework by looking at comparable sales in your neighborhood in the last 3-6 months. Visit all the competitive offerings and see how they’ve been priced relative to the condition of the home. It’s always good practice to know your competition. While pricing, stay as objective as possible, and really look at your house from a potential buyer’s perspective. Emotional attachment to the house tends to drive pricing higher than necessary.

  • Maximize your home’s sales potential.

You may not be able to change your home’s floor plan or location, but you can make cosmetic updates that will enhance buyer impression. Assess your home, again, through the eyes of perspective buyers, and determine what can use updating. Fresh carpeting and/or a paint job can transform a space dramatically. If possible, avoid showing the house empty. You want to help potential buyers envision the home as their own, so provide neutral staging or de-personalize your existing décor. Furthermore, make repairs to visible damage. And don’t ignore the exterior. Buyer impression starts upon arrival at the house, so make your home appealing from the curb.

  • Consider a pre-appraisal and a pre-inspection.

A pre-appraisal will provide you with an objective basis for pricing your home. Additionally, a pre-inspection can identify any issues with the house that you can address ahead of time rather than during escrow as re-negotiating during escrow can be more costly since you’ll have less leverage and the transaction can be at stake.

  • Know your buyer.

While you shouldn’t disclose much about your reasons for selling, you should try and find out who your buyers are. Why are they moving? Do they need to move quickly? Are they in good financial standing? Having some information on the buyer’s motivation and personal situation will give you the upper hand in the negotiations process.

  • Time your sale.

If possible, watch market conditions carefully and time your sale. Typically, spring and summer are good times to sell. But specific to your market, be mindful of supply and demand. Are there more buyers than sellers? Are interest rates reasonably low? When there are more buyers in the market, sellers can get better pricing and terms, especially if there are multiple parties interested in your property.

  • Hire the right listing agent to represent you.

Truthfully, nothing is more instrumental to your successful home sale than the right real estate agent for your needs. Not all listing agents are created equal. If you hire an experienced agent, they will perform all the research necessary to advise you on all the points listed above: pricing, home improvements, negotiations, timing of the sale, etc. Get a few quality referrals from friends and interview several agents. As part of the interview, make sure you understand how each agent’s marketing plan for your property differs.

To sell your home for top dollar requires proper positioning of your property to the maximum number of prospective buyers. Educating yourself on market conditions and having an experienced agent as your representation will increase the likelihood of a successful transaction for top dollar.


Household Formation: What Is It?


Since the housing bust, everyone is trying to get a handle on what’s happening with the economy.  In conversations regarding the “big picture”, economists tend to talk a lot about consumer confidence and employment.  Specifically when it comes to real estate, forecasters frequently point to interest rates and new home sales to determine if we are well on the road to recovery.  But there’s one economic indicator that plays a huge role, particularly in our industry, but gets less airtime, and that is household formation.

A household, as determined by the Census Bureau, is a group of people living together whether it be roommates in college, or a newlywed couple setting up shop together, or a nuclear family consisting of mom, dad, 3 kids and an grandparent.  These are all separate and unique households.  Formation occurs when person previously in a household leaves the group to set up a brand new residence.  It tends to suggest that the person has gained more financial independence warranting an apartment or new home, and on the path to getting married and having children.  Formation is a positive occurrence.  It additionally implies greater disposable income to express financial independence, potentially increasing spending to furnish new residence.

Unfortunately, household formation is at an all time low.  Historically, the U.S. has witnessed an average of 1 million household formations per year.  In 2013, that figure was less than 400,000.  What is happening is that young adults are experiencing weak job growth and have a harder time obtaining credit, forcing many millennials to move back home with Mom and Dad.  Raw Census data shows that in 2013 over 30% of this demographic continue to live with parents, relatives or roommates.

The irony is that the last few years should have been prime time for home buying with interest rates at its all time low and falling home prices, but the truth is that speculating home builders and all-cash foreign investors have been reaping in all the rewards and snapping up available inventory.

While many economists have been optimistic about the 2014 forecast, until the job market provides the younger generation with greater financial footing to leave their parents’ homes, recovery will continue to be slow.  The good news is that with rising prices, some investors holding properties for rent will be enticed to sell, adding much needed inventory to the market.  Additionally, should the economy recover with steady job growth, many project that these millenials will jump at the opportunity to create new households, unleashing pent-up demand which will drive homebuilders to build more units and home prices upward.

Housing is paramount to the health of the economy.  And household formation is key to housing demand.  Job growth is the catalyst to formation.  In future deliberations regarding the direction of the housing market, add household formation to the list of indicators to monitor.  While often overlooked, it may be the most relevant factor to consider.


Real Estate and the Internet


Back when I first started in the residential real estate business, listings were made available to agents via a large volume newsprint book much like a phone book.  A good portion of the information in it was obsolete by the time it rolled off the presses.  No one had an efficient method for gathering relevant data like neighboring comp sales or tax records.

But along came the Internet.  And the real estate game changed.  A lot.

Every client I work with today has done a significant amount of research online prior to meeting me.  Buyers have already walked through most listings within their criteria via virtual online tours, and sellers come to the table with a deep comp list of recent sales and existing inventory.  For me, giving the consumer access to the world of home buying/selling information is actually a great thing.  And here’s why.

People once speculated that the Internet would kill the need for real estate agents.  But the truth is that buyers and sellers need us more than ever simply because at the end of the day, experience and expertise is still necessary to complete the complicated transaction. The California Residential Purchase Agreement is 8 pages of check boxes, fill-in-the-blanks, signature lines, and that’s before we start adding in addendums, disclosure documents, and counter agreements.  Most consumers know that a real estate transaction is so infrequent, expensive and highly emotional, that after the initial online research is completed, they turned to a professional.

Plus, of all the major dot-coms in the real estate space, only Redfin is trying to challenge the existing business paradigm by employing their own army of agents and then undercutting commissions.  Zillow and Trulia provide the platform for a consumer-driven search, but both sites refer out to a traditional local agent to execute a deal.  After years of closely following Redfin’s business trajectory, industry experts have yet to see them become a threatening player.  Nationally, Redfin saw only 3% of total transactions last year.

So instead, the Internet has elevated the business in a really positive way.  For one, the transparency provided by these websites holds all agents far more accountable.  Every consumer can fact check the statistics we arrive with at our initial meeting, so we better make sure that our information and numbers are correct.  Additionally, the business is hyper-efficient at this point.  By the time a client gets in my car to go house hunting, because of the extensive research he/she has already done, we are only seeing homes with the greatest potential.  The benefits of efficiency also apply to the ability to keep clients apprised of market activity and changes.  New listings can be automatically emailed to clients as soon as it becomes available.  Another practical benefit is that when I make a suggestion for sales price, rarely are people surprised because they have already studied comp sales in the neighborhood thoroughly.

And finally, with the explosion of real estate Internet activity, agents are able to cast a wide net in terms of listing exposure.  Potential buyers from all over the globe have eyes on our Newport Beach market.

Bottom line is that the Internet evolved and streamlined the real estate business.  It has forced agents and brokers to be at the top of their game.  By acknowledging how well-informed their clients have become, real estate professionals are finding ways to provide real value in the process.  Afterall, the buying and selling journey is an arduous and winding road, and no two transactions are remotely identical.  So a seasoned agent can facilitate the process, creatively solve for your residential housing needs, and potentially save you a few headaches and dollars along the way.  And while forces that challenge that notion exist in the digital space, the general public clearly still value a good real estate agent.

Changes to Lending Laws. Good or Bad for You?

Mortgage application

Last week, changes to current lending laws took effect.  These reforms seek to prevent the housing crisis of the late 2000s from happening again.  As we all vividly recall, millions of homes across the country during that time went into foreclosure because homeowners found themselves with loans they simply could not afford.

So, what are these changes and how do they affect you?

First, there’s the Ability-To-Repay Rule aimed at tightening the bank’s underwriting process.  Borrowers without a lot of debt won’t be affected by this new rule, but those who have a debt-to-income ratio above 43% will find it harder to qualify for a loan.  Self-employed borrowers will have to show more proof of income.  This rule attempts to hold banks more accountable by increasing the due diligence work required to qualify their clients.  While there are opposing opinions on whether this Ability-to-Repay Rule truly benefits the homeowning public, it does mean that borrowers from this point forward will likely have to jump through a few more hoops to secure a loan.  It potentially could mean that there are less qualified buyers in the market place as well.

Under this rule, you may start hearing the term “QM” which stands for Qualified Mortgage.  A QM loan meets the new guidelines.  So as a borrower, go and get yourself “QM-ed!”

The other changes to lending laws are likely to be less impactful.  For instance, there’s now a cap on loan origination fees.  Fees are to be limited to just 3% of the loan amount, which is great because borrowers won’t be paying an arm and leg for their loans.  But, this potentially could mean that lenders may not be interested in offering smaller loans.

Also, mortgage servicers are required to provide borrowers with a far more detailed statement on a monthly basis.  Statements must clearly show interest rate, loan balance and escrow balance.  Again, this is a consumer friendly rule trying to provide more transparency for the borrower.

A few things have not changed.  $625,500 is still the borrowing threshold at which it becomes a jumbo loan.  In a luxury market like Newport Beach, most buyers are seeking jumbo loans with a 20% down payment minimum.  Also, guarantee fees were scheduled to rise, but newly appointed FHFA head Mel Watt delayed the hike until further evaluation.  So for the time being, the guarantee fees remain unchanged.

Mostly, these changes imply more paperwork for the lender. While the intent of these changes is to avoid another foreclosure crisis, how these changes ultimately trickle down to the borrower and their impact on the greater housing market has yet to be fully determined.  What we surmise is this: it will be a little harder to qualify for a loan, more paperwork will be involved in the process, unconventional loans will be less available, and quite possibly, the market will have less ready and able buyers.

Goodbye 2013. Hello 2014.


New year, new ventures. This year, in an attempt to keep up with how technologically savvy the real estate business has become, I am trying my hand at blogging and expanding our social media efforts. So, without further ado, welcome to my very first blog post.

2013 was an interesting year. For the most part, all the major headlines were positive. “U.S. Housing Prices Up 22%.” “Sales of New Homes Rise.” “Jobless Claims Down.” “U.S. Housing Valuations Remains Relatively Attractive.” In our micro-market of Newport Beach, we certainly saw our fair share of rising home prices, an influx of foreign investors, and a healthy dose of remodel and homebuilding activity. Typically, these three “thumbs up” indexes portray a productive exchange of buying and selling. However, if we took one step back and looked at our market with a slightly more macro lens, the truth is that overall prices are still down from the peak of 2006 by nearly 20%. And, our biggest ground zero obstacle continues to be low inventory.

In 2013, our team at the Tim Carr Group spent a lot more time looking for sellers. Many of us had buyers who were pre-qualified and ready to bite, but had to wait week after week for the right house to hit the market. What we found while pounding the pavement is that many homeowners took advantage of low interest rates and refinanced their homes. Some interpreted the rising home prices as a sign to start investing in their homes with much needed remodel and repair work. But the fundamental issue that we kept hearing from homeowners who might have wanted to capitalize on higher resale values was… “where would we go?” Low inventory is the real estate catch-22. If you sell a house to make a pretty penny, you may not find a house to buy with that penny.

2014 is gearing up to be an interesting year as well. Early indicators say nothing new about the real estate landscape. All vitals signs are still positive and yet we are still faced with inventory challenges. Additionally, changes in lending underwriting rules may be limiting to those looking to buy. The outlook here at the Tim Carr Group is positive but cautious. We anticipate that 2014 will bring new challenges for our clients on both the buying and selling side and have already been digging in deep with our community of lenders, homebuilders and other real estate professionals to survey the terrain on our clients’ behalf.

So goodbye 2013. Hello 2014! New year, new ventures. We are excited.