Home-buying Competition Picks Up in January -- From California Association of Realtors

Home-buying Competition Picks Up in January, Still a Far Cry From Last Year’s Frenzy

by Rachel Musiker | February 20, 2014    

58.1% of Redfin Offers Faced Competition in January, Down From 70.4% Last Year

Bidding wars across Redfin’s 22 markets increased in January for the first time since the peak of the 2013 home-buying frenzy in March 2013. Redfin agents faced competition in 58.1 percent of offers they wrote in January, up from 52.8 percent in December but a far cry from the 70.4 percent recorded last year. January often brings a resurgence of bidding wars, after the holiday lull and as new homebuyers enter the market in the new year.

 

This lower level of competition is just another sign that limited supply and higher prices are hindering demand. Just after the number of homes for sale hit a four-year low in January, we reported a soft start to 2014 in terms of yearly growth in Redfin clients making offers. With home prices now 30.9 percent higher than they were two years ago, the allure of “getting a deal” has faded. And for those who are simply frustrated with a lack of inventory, patience may be a virtue. Redfin listing consultations and requests for real estate photography services indicate that things may begin to pick up. “In January, we saw a significant year-over-year decline in home photography and videography appointments,” said Matt Murphy, president of Boston Virtual Imaging, LLC. “But we’ve already had a distinct uptick in appointment requests for the second half of February, leading me to believe that sellers are just waiting a little longer this year to put their homes on the market.”

Redfin analysts expect competition to remain a prominent fixture in the early 2014 market, especially for well-priced homes in popular neighborhoods. In the coming months, softer demand and loosening inventory will likely prevent bidding wars from becoming as common or as fierce as they were last year.

 

Other findings include:

Multiple Offers

• Month over month, competition increased across all markets covered in this report.
• Chicago was the only market to see a year-over-year increase in competition, with 42.6% of offers facing bidding wars, up from 41% in January 2013.

Price Escalations

• Across 22 markets, 22% of homes sold for more than the seller’s asking price, but the average home still sold for 0.9% below the list price.
• San Jose and San Francisco were the only markets included in the report where the average home sold for more than its asking price. In San Jose, 53.3% of homes sold for higher than list price last month, with the average seller enjoying a premium of 2.9%. Meanwhile, 50% of San Francisco homes sold for more than their asking price, with the average purchase price being 2.1% above asking.

Competitive Strategies

• Despite increased prevalence of bidding wars, all of the measured bidding war strategies were used less frequently in January than in December, except for all-cash offers. In January, 8.8% of successful Redfin offers were all cash, compared to 7.8% in December.

Table 1: Competitiveness by Market

Market	Current Month	Prior Month	Prior Year	Sold Over Asking	Sale-to-List Difference
San Jose	90.0%	85.3%	97.9%	53.3%	2.9%
San Francisco	85.7%	78.7%	94.1%	50.0%	2.1%
Los Angeles	76.0%	73.6%	85.2%	22.2%	-1.7%
Orange County	72.0%	57.4%	88.0%	10.5%	-1.8%
San Diego	67.5%	56.0%	79.8%	25.9%	-0.5%
Boston	53.9%	31.1%	62.3%	7.7%	-4.0%
Washington, D.C.	51.6%	51.3%	55.6%	20.0%	-1.4%
Seattle	50.0%	40.3%	67.4%	20.3%	-0.5%
Chicago	42.6%	40.4%	41.0%	20.0%	-2.5%
Baltimore	28.6%	23.8%	36.7%	14.3%	-0.7%
22 Markets	58.1%	52.8%	70.4%	22.0%	-0.9%

Table 2: Features of Redfin’s Winning Offers – What Percent of Winning Offers…

Market	All Cash	Waived Financing	Waived Inspection	Cover Letter
San Jose	6.7%	40.0%	40.0%	40.0%
San Francisco	10.0%	20.0%	13.3%	53.3%
Los Angeles	16.7%	5.6%	0.0%	44.4%
Orange County	15.8%	0.0%	0.0%	73.7%
San Diego	0.0%	0.0%	0.0%	51.9%
Boston	0.0%	7.7%	0.0%	38.5%
Washington, D.C.	0.0%	5.5%	9.1%	34.5%
Seattle	11.9%	5.1%	15.3%	13.6%
Chicago	10.0%	10.0%	0.0%	10.0%
Baltimore	0.0%	0.0%	0.0%	35.7%
22 Markets	8.8%	7.8%	8.1%	35.9%

* Competition data is preliminary and subject to change.

从11月份起至今SD销售强劲

要出去了，匆匆一码 -

从去年11月至今，房地产销售强劲，而上市房屋数量依然有限。从我关注的好多地方来看，房子状况还可以标价还合理的，大约有20%是高于要价销售的，其余的则均在要价附近1-2周之内被要走。我每天收到的redfin通知里，大都是pending和sold的notification. 难道我原本对于今年大约5%的上升估计保守了？ 一季度将公布的数据will tell me more。

你的 Monthly HOA DUE 涨了吗？

For those live in town house / condo, has your HOA assessment gone up starting from January? If it hasn’t, congratulations! 60% of the properties I help manage or have myself, HOA has gone up from as little as $ 3-5 to as much as $ 30-50.

HOA assessment is up-front fee every month, it is also known as HOA due or HOA fee. If the property is your primary residence, HOA assessment is NOT tax deductible.

San Diego is the most HOA-dominated county in the state after Los Angeles. For history and operations of HOA as well as various horror stories, you can pretty much get them by searching internet. Here I’m just going to focus on things that you should pay attention when buying a home.

First, you need to know what HOA assessment covers for a particular home. Seller agent does not necessarily specify in entirety in a listing. I would suggest you contact HOA Management directly to get that information, asking what are included, such as water, trash pickup, exterior termite, HO-6 (a few HOAs cover this one, or before the close of escrow, as long as you mortgage, lender mandates you purchase HO-6 coverage). HOA fee runs roughly between $ 250 to $350 if water  bill is included. An HOA fee of $ 350/month is considered above average. If you could find a home with low month HOA due below $150 and that home owners are responsible for their own water and HOA is only responsible for common area, it would be fantastic, though sometimes you don’t have much choice.

Then, you have to confirm the fee in the listing is really the one. Recently I saw a condo in Carmel Valley listed $ 200/month HOA due, but in reality it is $ 310. The seller agent wrote "Up to buyer and buyer agent to verify all information" to unload her job at ease. There is another situation that if the property was listed last year, you better call to find out if there is any change in the new year. 
 

Some buyers may not aware about special assessment. When there is something comes up that needs expensive repair and replacement and was not budgeted in the reserve fund, after board approval, special assessment will be placed to each home owner either based on unit or number of sqt. Special assessment ranges somewhere between 2-3 grand to 7-8 grand. If the special assessment has been approved, you should be able to read that from the HOA Documents seller provides you during transaction. However, if it is still in discussion, you might or might not find it in the HOA document’s meeting minutes. But even if you happen to see that, you’re already in escrow, and most possibly, you have had home inspection done and the loan process started, money has been spent and effort has been made … now you’re in dilemma as to stay or move on. I won’t blame you if you didn’t detect that in the HOA documents at all. After all, how many people would take time to read through hundreds of pages of HOA Documents?! Again, call the HOA no later than offer acceptance, explain that you are purchasing a unit in this complex, and then ask about HOA due, what it contains and not contain, if there is any special assessment, and any pending special assessment. Such homework is very necessary.

For those who are buying investment properties, it’s even more so crucial as this part of the costs is paid by home owner.

Short Sale is Not A Good Buy Anymore

Unlike 2 years ago, short sales are not a good buy any more from the 3rd quarter of last year.

Lenders normally use 6-month's data to come up with their BPO price. 2 years ago, when the market was experiencing a sudden surge from the down turn, the previous 6 month's data gave a lower than then current market price, so buyers got very good deal from short sales. But now, lenders not only are appraising the value according to 6-months back data which was literally the highest of 2013 (In 2013's May, June and July, properties were priced the highest), but also factoring the appreciation thinking that the properties ought to appreciate every month which pushes the final approval price even higher. No wonder I heard a lot now that lenders are getting greedier. I've seen bunch of listings recently that the previous buyers walk out because bank's final approval price was way above the offer price and in a few cases even higher than that of a traditional sale and the properties had to be put back onto the market.

It's a pity to see that banks are legging behind on the appraisal process. When the market was up, their appraisals didn't reflect the up trend, and when the market is gradually running towards the course of balancing, they think the property value is going to be up double digits as what happened in the last year or two.

I recently had a case with Chase. With my previous experience with Chase, this bank is quicker on approval and lenient on the appraisal price. My client offered the full asking price @353K with all cash. Both the listing agent and I used the same comparable of a very same one sold as a regular sale @351K, so we thought this price is reasonable and should be approved without problem. 2 months later, the approval price came back @380K. Listing agent and I were appalled. Of course, the listing was back to market and is still in the market after weeks.

In short sale, homes Sell "As Is", lenders ask buyers to purchase the home in its present condition. Lenders typically will refuse to pay for suggested repairs disclosed on a home inspection, termite inspection or work necessary to issue a clear pest report. Lenders don't pay for home warranty. And buyers incur higher closing cost because lenders rarely pay for any extras (like a seller would be willing to do) if you want any of those extras, you will pay for them yourself. Sometimes lenders will refuse to pay for standard seller closing costs such as transfer taxes and HOA documents too. If you want specific inspections, home warranties or a termite treatment you will more than likely pay for them yourself.

So, when you see a short sale that is priced well, it doesn't mean you will get it. The sellers' bank may not accept it. These types of listings receive many offers. To get your offer accepted, it will need to be priced near or at market value. If you're not prepared to pay above a superficial price on a lowball short-sale listing, then pass. In my opinion, short sale is not worth waiting any more.

TOP 10 TURNAROUND TOWNS

 

 

SOURCE: CALIFORNIA ASSOCIATION OF REALTOR'S DECEMBER NEWSLETTER

5 Costly Mistakes When Selling Home

Did you know that many homeowners lose thousands of dollars by the time they close on their home because of simple mistakes they make... and could have easily corrected BEFOE putting their home on the market?

Mistake 1: Putting the home on the market before it's ready. Most times this happens because the seller gets impatient or is thinking right now is seller's market and the home will go anyway, and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything -- so get the house clean and tidy before marketing the property.

Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it's an anomaly, instead of a nice addition to the community. Well, truth is, you might get more showings and offers, but that doesn't mean the offer price counts what you paid for those upgrades. Most of upgrades worth no more than 50% of the cost during selling time.

 

Mistake 3: Pricing the home based on what the seller wants to net. This pricing strategy always ends in failure. Sellers can control the "asking" price, but they don't control the "sales" price. The market does. It doesn't matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market.

 

Mistake 4: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it's no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn't matter what you "want," only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can't get emotional about how they may or may not appreciate the nuances of your home of seven years.

 

Mistake 5: Trying to cover up problems, or not disclosing them. California has a property disclosure form -- use it wisely. Just because you disclaim doesn't mean you cannot be sued later for the leaky roof, or dilapidated heating/air system that's discovered 30 days after settlement.

 

Selling soon? Call me when you are ready to sell your home!