Starter Home or Forever Home?

This weekend's New York Times had a very informative article titled "So Much for the Starter House".....and it went into an explanation of why so many folks are opting to stay in their homes and remodel, as opposed to moving "up" into a larger home or better neighborhood.  Much of the article hits home as it goes into detail about why a lot of people make the choice to "not" move up. For example,  many millennials are saddled with student debt and are buying their first homes later in life.   And, with inventory very tight, home prices are higher and interest rates have been rising.

Frequently,  when a young couple bought their first home, it was a "starter" home where they thought they'd probably stay for a few years,  build up some equity, sell that home  then buy in the neighborhood they "really" wanted to live in.  Their "forever" neighborhood and home.  Well,  statistics show that hasn't been the case these past several years.  According to the National Assoc. of Realtors,  folks are staying in their homes for an average of 10 years......when, historically, that number used to be 6 years.

Being I've been listing and selling homes for 40 years now,  I tend to believe much of what was stated in this article.  Wages have increased, but so have home prices.  When I first started in the real estate business I could barely even say "$100,000" !!!  Now, all these years later,  you're lucky if you can even find a home for $100,000.  It would certainly be a challenge to find one in California anyway.  And when 2 bedroom homes started selling for $200,000 in Land Park my first thoughts were "no way"!  Well,  "yes, way".........and when the first home on my block sold  many many years ago for $400,000  none of us could even believe it!  You would have thought it was a million dollars.

As a result of buying in what one might think of as "not their first choice neighborhood",  they're seeing a great resurgence of others doing exactly the same thing.  Not only are buyers moving in and sprucing the house up,  new businesses and restaurants are moving in as well.
Folks are moving in,  painting, remodeling and fixing up their "starter" homes.   I've seen it in several areas right here in Sacramento.  With rents going sky-high,  it makes sense to buy a more modest home where your payment probably isn't going to be much more than what you'd pay in rent someplace.  Really!   (Especially if you've checked out what some of the lofts and/or small apartments are being rented for in downtown/midtown Sacramento!)  And,  you'll be gaining equity in owning your own home.  And taking pride in your new neighborhood.   And,  if the New York Times article is correct,  you're going to stay there for close to 10 years.

Yes,  when families grow, their housing needs grow too....so there will always be "move up" buyers. And there will always be divorces and older folks moving into senior housing or moving closer to their children,  but knowing that there are still "marginal" neighborhoods that appear to be "up and coming" is wonderful for those seeking to buy their first home.  And who knows,  this may be their "forever" home as well!

If you're looking to buy or sell...or have friends or relatives who are, call email or text me. Or if you know someone who is being relocated and needs a great Realtor in the city they're moving to, I can help you with that too.  I can put them in touch with a Realtor in the city they're moving to!

FSBO's

In a market that favors sellers,  I occasionally hear someone say "Oh, I've bought and sold several homes on my own without a Realtor".....Really......and was it easy?  Did you get your price?  How did the inspection process go?  Are you sure you haven't left any of the details out of how it "really" went?  Granted,  our inventory is down, interest rates are still pretty doggone good, and there are many buyers out there wanting to get into a home.  So there's a good possibility that if you "did" try to sell your home yourself,  you may very well find a prospective buyer willing to buy it.  But wait!
According to a recent Wall Street Journal report,   only 8% of all home sellers in 2017 were for sale by owner or FSBO (according to a survey of 7,866 home buyers released by the Nat'l Assoc of Realtors.) BUT,  homes listed by a Realtor  typically netted the seller MORE money than the sales that were actually completed FSBO.     I'm sure too, that the transaction proceeded smoother and more timely when a Realtor was involved.  Oftentimes a seller is unfamiliar with how important an Earnest Money Deposit is.....how important it is to keep track of contractual deadlines and contingency removals,  the appraisal process and inspection process. And even if a seller paid a fee in order to list their home on the Multiple Listing Service,  it would obligate them to pay a fee to the selling agent.  Then there's the question of "Agency".  The buyer would be represented by a Realtor and that Realtor would have an Agency agreement with him or her.....but when the seller has no representation or Realtor representing him,   I can assure you that the chances of having a successful closed sale are practically nil.  The same applies if the seller has a Realtor list their property and has found their own buyer....but just wants to make certain they are represented .... but the buyer (who may have been a tenant in the property) has no representation, the same outcome is predicted.  Maybe a seller thinks they can save money by only paying one end of a commission.  I don't know the odds on this one, but I would guess it to be very very low!

 I'm speaking from a recent experience whereby the seller wanted me to represent them, but a tenant wanted to buy the property and the owner thought it would be a slam dunk.  Not the case at all.  The buyer had all the usual inspections,  then proceeded to request that the seller complete all of the request for repairs or drop the selling price by thousands (and I mean THOUSANDS!)....and, of course, the seller said no.  However,  had the buyer been represented by a Realtor,  there is no question in my mind that we would have been able to work out an agreement so both the buyer and seller were happy.  That buyer needed an experienced Realtor to explain the process as well as review the inspection reports to make suggestions as to what the buyer might reasonably expect a seller to repair.

I wouldn't go to a plumber to have my car repaired.  I wouldn't ask my doctor how to unclog a drain. We pay professionals or those who are experts in their field to help us in "their field of expertise"....which is why it makes good sense,  when you're trying to sell one of your most valuable assets,  to get  professional help  when you're ready to sell your home.  Do it right. Get it done and get your money in the bank!

*40 years of listing and selling homes in the Sacramento Valley....PattiMartinez.net
(916)  768-3157  pmartinez@golyon.com  

OK,  help me out here.  I'm puzzled as to why a seller wouldn't jump  for joy at an offer that it  over  asking price,  large down payment, pre approval and 30 day closing??  Only one offer,  not multiple offers.  You say they're hoping for an even higher, better offer?   My question is,   "is that always a prudent move" ?   Before you answer,  think about this.

It is said that the first offer a seller receives is normally the "best" offer.   If you get multiple offers at the same time,  and the buyers and their agents "know" there are multiple offers,  you'll likely get some excellent offers and one or more may even be over asking price (in the hopes that their offer will be the highest and best).  But when you only get one offer and that offer is over full price and excellent terms,  it seems foolish for sellers to drag their feet and not respond quickly.  To hold on to that offer and not respond in a timely manner "may" suggest to the buyers,  that "the sellers are hoping to pit their offer against any other that may come in".....  which may or may not be the case,  but if you were a buyer and your offer wasn't responded to right away,  what would you think?  And usually, when a buyer makes an offer they're very excited to learn whether theirs was the accepted offer. When I've written offers for buyers,  they're on pins and needles anxiously awaiting word.  Sometimes they're disappointed, but if they do get the house and their offer is accepted,  they're delirious.

It's never easy to determine what would be the "successful" offer if you're the buyer and there are multiple offers.  It's equally challenging, if you're the seller,  to know when to "counter" if it's not exactly what you were hoping for.  In this market,  with low inventory,  it's not an easy decision for the buyer or the seller.    Sometimes the highest offer doesn't necessarily mean it will end up being the "successful" offer if the house doesn't appraise at that value by the buyers' lender.  You could offer $600k on a $570,000 listed price, but if the house doesn't appraise for $600,000, based on recent "comps"  you're back to square one.  The seller doesn't have to sell and the buyer doesn't have to buy.  So you may have  lost 2 or 3 weeks time "waiting" for the appraisal to be completed by the buyers' lender, and you're back to the negotiating table.   IF there were multiple offers on that particular sale and IF the buyers are putting several hundred thousand dollars down,  the lender may excuse the appraisal if they're comfortable with the buyers ability to repay the loan.  It's a crap shoot though, because the buyers still have the option of backing out if the property doesn't appraise at the selling price.  (*And sometimes buyers make higher offers in order to  get the house and then nickel and dime the sellers once they do their home inspection...thinking the sellers owe it to them being they came in at a higher offer.)

Because a seller gets an offer within a week or so after going on the market, doesn't  mean a house was under-priced.  It means buyers have access to umpteen million websites showing houses that meet their criteria for location, size, price, etc. and they're ready to jump on a listing that meets that criteria.  They don't have to watch newspaper ads,  head to every open house, or wait for their agent to call.  They see those properties the minute they hit MLS because they've signed up online to get those alerts.  They're watching and they're ready!  If you don't believe me,  ask any prospective buyer how they're finding new listings. In fact our deadline  for putting ads in  newspapers is often a couple weeks "out", and by the time the ad comes out , the house it usually in escrow already! Great news for sellers but not so good news for newspapers.

Just wanted to give you something to think about,  whether you're a buyer or a seller. Trust your instincts and trust your agent.....make it a win-win whether you're a buyer OR a seller.  It's an exciting time for both of you!

OK I think we've now heard everything!  I was reading Sunday's NY Times and saw an article labeled "Is an Ugly House Grounds to Sue" ??  In North Carolina, neighbors are having a confrontation over how a neighborhood should "look"......now I know we have folks in Land Park who raise their eyebrows on occasion when they see plastic lawn chairs on someone's porch....or someone who leaves their garbage cans out too early or too long....but suing over whether you think a neighbor's home is ugly or not, just about takes the cake, in my opinion.

It seems a homeowner had already received his building permits and all the necessary approvals and the home was 85% completed when the neighbor across the street filed appeals and stopped the construction.  Seems the neighborhood features a variety of styles but this neighbor felt the home violated the neighborhood's "historical character" and that it's completion "posed a threat to the community".  Oh  goodness! In areas like historical neighborhoods and gated communities of course there are specific guidelines for building,  but in an already-established neighborhood, if the homeowner has gone through the necessary channels for permits and approvals, one would think that would be adequate to begin the remodel or building.  (Provided of course that the plans follow the CCR guidelines of that community too.)  Evidently that isn't the case.

This case is still pending and not resolved yet....but I had to laugh at the builder's comments about the home the protester lives in across the street.  He said his home would probably have a positive effect on the neighborhood, whereas the "protester's" home is two-thirds bungalow and one third Victorian cottage...."like putting strawberries and broccoil in a blender together"...He said he loves strawberries and he loves broccoli,  but surely not together.  Let's see how this turns out......we'll follow up in the future.  My goodness,  just about the time you think you've heard it all.

Hey,  no real estate news today...... California Chrome hits the finish line!!!  Hurray hurray!! Go California Chrome!!  What a fabulous horse!

Now here's something we probably thought we'd never hear........Drone's are now being used to take videos and photographs for marketing homes in the Bay Area!  Say what?!!  SF Chronicle has an article today talking about some Bay Area Realtors who are now using Drone's to take expansive videos of some of their properties that may otherwise be overlooked by prospective buyers who are looking for particular "scapes".....like views of water,  parks, lights of the city.   Who would have thought,  right?   Now before we all jump on to the bandwagon to get these special videos and photographs,  the article also mentions involvement by the FAA regarding certain regulations which may or may not crack down on the commercial use of drones.  It seems there's still some ambiguity as to whether you need authorization by the FAA in order to operate these drones for commercial use.
The article goes on to state that the FAA "rarely goes after commercial drone operators" .... unless it's with a "warning call", "warning letter" or "cease and desist order".......   After reading the article,  it sounds alot like an advertisement for the company currently doing these videos, even going so far as to mention exactly how much they charge for doing the photos or videos.....  I'm not sure how you feel about it,  but as someone who has been a professional, ethical Realtor for over 35 years,   even though we always strive to keep up with all the current technology and gadgets that will help get our listings sold,  I think I'm going to pass on doing "drone videos" until there's clarification on the legality of it.
I'm sure most of the big real estate companies will have their own "policy" out on use of drone's sooner rather than later too. It sounds kind of "gimicky" to me......if there's such a word.

OK what's the deal with what's happening with some of these "under $200K"  sales??  I was having a discussion with several agents in my office about the challenges we've been thrown trying to get these "under $200K" sales closed.  I thought I was the only one having difficulty with some buyers, but I'm now learning that there's a common thread running through sales in this price range.

I have a darling home in the Fruitridge area that is only $156,000 and appraised at $156,000 and we had what we thought we very good buyers for $156,000.   A week before closing, lender does their last minute checks and low and behold, they learned one of the buyers was still married and didn't bother to mention it to anyone (he wasn't buying the house with his spouse) because he didn't think "it mattered" ???   Well, it did, being California is a Community Property State and after trying to work it out with the lender, the deal died.

Then another agent brought a good buyer who was putting 20% down on an owner-occupied loan and was made aware that the property had already appraised for the $156,000 selling price and we were mid-escrow closing when the buyer asked for a pest clearance not only on the house BUT ON A DETACHED SHED as well.  The property had always been listed as a Trust with the sale to be "as is" and the sellers had already agreed with the first buyers to complete some relatively minor repairs they'd asked for.....now when we got the new buyer and he received copies of not only the appraisal but the home inspection as well,  he decided to get a pest inspection (which was absolutely his right)....after which he then asked for a pest clearance on not only the house but the detached storage shed as well.
The home inspection had noted that there was some termite damage in the shed, but didn't think there was any in the house.  The pest inspection concurred that indeed there were no termites or termite damage in the main house structure.  The sellers did though, then agree to an additional $1500 worth of work called for on the house (ie some dry rot,  side garage door, etc).....so they went beyond what they had originally agreed to do and were now doing a full pest clearance on the house as well as some miscellaneous other repairs.  Shed was to remain as is.  Afterall,  it was a SHED for storage, not a dwelling.

Buyer is now cancelling the contract because the seller wouldn't make the repairs to the detached shed.
So this is the second deal falling apart on a super, darling, well cared for home in a great little neighborhood in Fruitridge.

After fretting and discussing this with a couple agents in my office,  I found out that we were not the only ones having challenges in this price range.  So what's causing this?  Are buyers thinking prices are falling? (which they're not).....are their agents getting their own egos in the way and causing roadblocks?......are buyers nervous?   Let's get to the root of this problem and get it solved.  There are some excellent properties out there in very affordable price ranges.  This is a golden opportunity for buyers to find good little homes in wonderful neighborhoods for very very affordable prices!!