Weekly Market Watch

Weekly Market Watch
Week of July 14-20

“If you really want to sell this place, you need to think and act like a salesperson.” I read this well thought-out statement this past week in The Wall Street Journal with interest. The reporter, David Crook, in his article entitled “How to Sell a House, When You Have to Sell it Now” gave sellers seven tips on selling a house in the current market.

While some of the statements are debatable depending on the neighborhood and market, what I liked was the fact that he underscored that sellers must separate their emotional attachment to their family home from their financial interest in their family’s largest asset. He noted something that I think in this market many sellers forego, the fact that sellers must treat selling a house as business, and they must approach the sale in a businesslike manner.

Here is a paraphrase of what Crook wrote as his Seven Tips on Selling a House in the Current Market:

Ø Don’t Wait Around: Even in the better housing areas, it's taking a longer time to sell houses.
Ø Fix it Up and Clean it Up: Buyers are taking your house out on a date. It has to make a good impression.
Ø Price it Competitively: Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.
Ø Hire a Top Real Estate Agent: Get the best, most aggressive selling (listing) agent you can find.
Ø Promote. Promote. Promote.: Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.
Ø Play the Banker: If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.
Ø Take the Offer: If any qualified buyer comes in with a reasonable offer, be prepared to accept it.

For the majority of our communities and most circumstances, Crook’s points are right on the money and all told, should help to synopsize today’s market for sellers and prospective sellers—especially as we prepare listings for market release. The key point to remember is pricing. Pricing is probably the single most important factor in today’s market, regardless of the property’s price point. We need to competitively price our listings based on current comps that are no more than three months old. In our more sought-after neighborhoods –a significant price reduction where warranted can bring almost immediate results. In some others areas where more inventory exists, a decent price reduction cannot ensure a fast sale – all the more need for an attractive price from the get-go. Several weeks ago a large Twin Peaks home with incredible two bridge views closed escrow. It took a major $1M price reduction, and almost immediately went into escrow - considerably higher than the new reduced priced. This was after many months on the market at the higher price.

Another example: a three bedroom, two bath San Mateo listing this week which was competitively priced (as compared to its neighbors) at $567,000. The listing sold in three days with three offers, leaving its higher-priced neighbors languishing on the market. Those “left-over” buyers didn’t seek out the existing unsold listings –they’ll probably wait for another new listing at a competitive price. Sellers need to be aware of this fact when they price their homes. Again, take the emotion out of it. It’s a business deal and we need to think accordingly to see sale success in today’s market. More and more we are hearing that extremely competitively priced homes in high demand areas are getting on average 3 or 4 offers, IF they get multiples, and that normally one or more is under listing price.

Now, let’s move on to our weekly market recap. This week in our market:

East Bay—Can you say “R-E-O”? Yes, that is what is driving much of the East Bay market. But caution. REOs don’t make for a perfect world. Take Castro Valley for instance. While we are consistently seeing multiple offers on most REOs, we are actually now seeing banks come back to the table asking for more money. Yes, they are actually INCREASING the sales price once the offers are on the table. Many buyers are frustrated and just walking away, in hopes that the next great deal is just around the corner. Despite this, Castro Valley went into escrow on six properties this week. Not bad! Fremont is reporting that sales in the under $600,000 entry level market continue to be brisk while the move-up market has slowed dramatically over the last several months. Livermore is definitely a city to watch. Consider this: Year over year, active inventory is down 14.6% and pending sales have increased 79% (and no, that’s not a typo!). Livermore is on our radar and it should be for many of your clients, too.
Monterey County—Monterey County seems to moving steadily along with many of its outlying areas seeing an influx of REO activity.
North Bay—The Marin County market is buzzing with activity though we’re not seeing that buzz translate into closed deals. The good news is that we are seeing a lot of activity at opens. We are seeing a lot of buyer activity and showings. And floor time activity is increasing. Now we wait to see if all of that buzz results in closings. On the flipside, Sonoma County is all abuzz with continued REO activity. Our Sebastopol office reported that one $320,000 REO listing received 13 offers! And in one week they introduced 10 new REO listings to the market. Nearby Santa Rosa reports that the under $500,000 entry level market continues to prosper, often with multiple offers, while the $600,000-$1 million move-up market continues to remain slow.
Peninsula—Foster City and Redwood Shores seem to be enjoying an unusually busy open season. Our Burlingame office is reporting that buyers seem to be taking our counsel and are starting to cautiously make offers. Palo Alto seems to be on fire! Inventory is hovering around 70-75 in Palo Alto, with multiple offers occurring on almost everything below $2.5 million. The Palo Alto luxury market also remains strong, often times the listings are selling before they hit the market. Redwood City and San Carlos are reporting that buyers are very cautious about making offers and seem to still think prices will decline. Have they read the most recent Reality Check message? This may be a good time for a refresher?
San Francisco—Much of the City seems to suddenly be experiencing the summer doldrums. With residents fleeing the City to enjoy much needed vacations and many of our own Agents doing the same, activity seems to have slowed a bit—but of course it is important to point out that this is very traditional for this time of year. Having said that, open houses still remain pretty active which is a good sign that activity will increase over the next month. Typically, once we are through the July and mid-August slowdown, we start to see a strong increase as we head into September and I think this year will be no different. One interesting note I would like to point out, however, is that of our Lakeside office which, despite the summer slowdown, enjoyed seven multiple offers this past week. Not bad for July!
Santa Cruz County—Price seems to be the name of the game in this market. The old adage of “if it shows well and is priced well, it will sell” is certainly holding true. Sellers need to continue to price their home competitively and adjust the price downward in a timely manner in order to get the property sold.
Silicon Valley—Continues to be a mixed bag. One thing we are seeing throughout the market is increased open house activity. It seems buyers are finally coming to the realization that this is the best time to buy and are cautiously moving forward. Our Cupertino De Anza office went up to 21 pendings this week. Our Los Altos First Street office is noting that 33% of its sales went into multiples. And Los Gatos is proudly noting “We are lucky with lots of activity and cash buyers.” The flip side? While activity is starting to increase, the issue seems to be closing the deals. Some buyers are having difficulty qualifying for loans. Others are pulling out with little to no warning. The key is keeping the transaction together which often takes a lot of negotiation on both sides of the transaction.

All in all, the market is continuing rather steadily as it has the last several weeks. Things seem to be moving at a steady pace—even with many vacationing Realtors and clients. Buyers and sellers who are facing the realities of today’s market seem to be the most successful. Those who are living in the past seem to languish.