Posted on January 28th, 2015 No comments
In southern California where the majority of Realtors use CAR’s residential purchase agreement to make an offer, there have been a number of changes to the contract for 2015. (CAR = California Association of Realtors).
One of the biggest changes – which could potentially restructure how buyers and sellers negotiate – is the removal of the WPA form. WPA stands for Wood Destroying Pest Inspection. It’s basically the form buyers includes with their offer that stipulates that sellers will pay for a termite report as well as any Section 1 items identified on that report. Section 1 items must be fixed prior to the close of escrow (lender requirements) and usually include termite infestation and dry rot among other things. These two are usually the big ticket items. And although these points are negotiable (as is everything in the contract), it was standard practice for sellers to pay for Section 1 items. This was handled up front with the offer. Sellers accepted the fact that this was a standard expense to selling a home. Then when buyers come back with a Request for Repairs, all repairs would be over and above the termite work.
But in 2015, the WPA has been eliminated. Potentially, buyers can still request termite work up front in the offer. And this will probably happen for some time to come. Eventually, however, the process will evolve and termite work will become part of the negotiations for repairs.
The biggest impact from this change is that sellers won’t automatically feel it’s their responsibility to do the termite work, i.e. tent their home for infestation, replace rotted wood with fresh wood. And sellers can simply say they won’t do the work. Of course, they will be more apt to do the work in a buyers’ market and probably less willing in a sellers’ market. These can be expensive repairs and buyers may have to get used to incurring this expense as time goes on.
Posted on January 20th, 2015 No comments
It’s the homes that are all dolled up that sell for the most money. I see it time and again. In this market, buyers are flocking to the properties that are plug and play, meaning they don’t need to do any work. There’s an emotional tug that comes with new floors, custom paint, crown moldings, tastefully remodeled bedrooms and baths. Note to seller: if you’re looking for a higher price, you may want to consider some smart upgrades. For many of my listings, I’ve encouraged my clients to do some minor remodeling. If for every dollar they put in, they can get back $3-4, then it’s worth the effort. It may even be worth it if you can double your investment.Case in point, 1918 Farrell Avenue in Redondo Beach came on the market this week. It immediately got a tremendous amount of traffic. This home was purchased at the end of 2012 (just before the crazy growth) for $661,000. The new owners remodeled the home and re-listed it now (3 years later) for $925,000. And it will probably sell for more. For one, there is still very little inventory out there. Two, this house looks all shiny and new. It’s a quality remodel, the owners definitely improved on the house… and they didn’t have to change the footprint at all. Buyers walked through this home and got a warm and fuzzy feeling. By the end of the weekend, there were multiple offers and although the offer prices were not made public knowledge, I can safely assume that they are at least at the asking price, if not higher.
Note to Buyers, if you want a deal, if you have to buy the ugly house. Or maybe I should say, the ugly duckling. Because with some work, it can be just as pretty, but you probably didn’t have to pay as much money. Now, in crazy seller’s markets, you usually have to pay a premium on everything, but we’ve slowed down a little now in the Southern California. There are homes in Hermosa, Redondo and Manhattan Beach that are staying on the market longer. There could be deals to be had, but you have to be willing to pick up a hammer or pay someone to do it for you.
Posted on November 19th, 2014 No comments
It’s official. On March 3rd, Hermosa residents will be able to vote on oil drilling in Hermosa Beach. The vote had been postponed until a mid year ballot. Some people think E&B purposely got the vote delayed because fewer people come out to vote in the mid year elections. So get out there and vote to stop drilling! I would hate to see Hermosa be over taken by the oil drilling. It threatens the integrity of this small beach town, and puts the town at unnecessary risk of oil spills, accidents, pollution, traffic congestion.
This Saturday, November 22nd, you can join in the efforts to get the word out. Canvas the Neighborhood is from 9 am – 1 pm. Meet at South Park at 425 Valley Park in Hermosa Beach.
Posted on July 17th, 2014 No comments
2117 Huntington Lane, #A
My favorite new listing this week is 2117 Huntington Lane, #A. It’s an attached, front unit townhome. It was built in 2007 and has a refreshing floor plan. It gets great light and has a lot of living space. And it should at over 2700 sq feet. It shows beautifully and has been well maintained by the original owner.
For those of you who are cost per square foot conscious, it’s less than $400 per square foot which is great in this market. (Although I would argue that this measurement is not a reliable benchmark when buying a home.)
It’s priced well at $1,079,000.
Posted on July 17th, 2014 No comments
When making your strongest offer on a property, there are other things to consider other than price.
First, you should know what’s important to the seller. Maybe the seller has some specific needs that not every buyer can meet. But if you can craft you offer to meet their needs at the beginning, you stand a better chance of getting your offer accepted.
Second, there are plenty of terms in the purchase contract, making may different opportunities to make your offer stand out from the rest.
You can shorten your escrow period, making it a quick transaction.
You can shorten or eliminate contingencies. Contingencies are a buyer’s “outs”. You can cancel the contract based on several contingencies including a loan contingency, appraisal contingency, investigations contingency, preliminary title contingency, and so on. If you are making an aggressive offer and you suspect you will be paying more than market value, you may want to consider eliminating your appraisal contingency. In this way, the seller doesn’t have to be afraid that the home won’t appraise and you will walk away from the deal. Of course, you have to be prepared to come out-or-pocket for the additional cost.
You can shorten the time period for your investigations and other contingencies.
Seller’s Closing Costs
In a buyer’s market, sellers are often more apt to pay for some of the buyers’ closing costs. Well in a sellers market, a buyer can do the same thing. If you pick up some of the seller’s expenses, you increase their bottom line, making your offer stronger. Sometimes a buyer is not even able to increase the purchase price due loan restrictions, but if he has extra cash, he can pay for some closing costs and possibly win the bidding war.
You don’t need to ask the seller to do termite work. A buyer can take this on themselves at their own discretion. It’s a good idea, however, to still get the termite report in order to determine how much work is needed and what it will cost.
The list can go and, and I’m happy to go over your options with you.
Last, it’s always a good idea to impress upon the seller that you are a motivated buyer to will move quickly with the intent to close. By preparing a complete offer package with all financials, by putting your lender in contact with the listing agent, by giving the seller as much information as possible, and responding in a timely manner will assure the seller that you will be a good partner in the transaction.
Posted on March 20th, 2014 No comments
A couple of new listings that came on the market this week in North Redondo Beach have set price tags that are pushing the envelope. It will be a great litmus test to see if the market is in deed still climbing at a steady pace as we move into the heart of 2014.
2022 Warfield Ave, #1 is a corner, detached townhome. These corner units are extremely popular because they feel like single families with their own, private driveway and what feels like a defined space, separate from your neighbor who shares the lot with you. The townhome on Warfield has a lot of space. The floor plan is not cookie cutter, and the kitchen has been updated. On the other hand, there is carpet throughout instead of hardwood (albeit, new carpet), and the bathrooms are original. This is a 1990 build. No other corner townhomes, built from 1988-1995 with less than 2600 sq feet have sold for more than $836,000, according to the MLS. This was the sales price for 2509 Phelan Lane which sold in October 2013. However, 2023 Nelson Ave, also a corner 1990 build, went into escrow after 12 Days on Market with an asking price of $899,000. This townhome also has an updated kitchen, but bathrooms.
Then we have 2114 Huntington Lane, #A. This is a detached front townhome that was built in 1990 as well. It has the older floor plan with the living room, family room, formal dining room and breakfast nook. The bathrooms haven’t been updated in this one either. The kitchen has granite counters, and laminate floors were installed throughout the downstairs. The home does have a nice feel. It gets good light. The seller is asking $849,000. The last attached townhome that sold with similar condition and square footage was 1908 Havemeyer Lane, #A which sold for $830,000 in June 2013.
The trend is becoming clear. Buyers are spending more money and getting less. If you want to buy a newer townhome or one with an upgraded kitchen and bathrooms, you will be easily pushing $900,000. Case in point, 2517 Huntington Lane, #A is a 2005 built, detached townhome. It shows very well with some nice upgrades. However, it’s only two blocks from Inglewood Avenue. This property still got 7 offers, at least a few of them were over the asking price of $899,000.
If inventory stays as tight as it has been, prices will continue to rise. What you could buy for $905,000 today could be $935,000 a few months down the road.
Once this listings close, I will circle back around to this analysis and confirm if the trend is still moving on up.
Posted on March 17th, 2014 No comments
In a typical real estate transaction in southern California, the buyer has 17 days to do all their due diligence. This includes hiring inspectors to evaluate the condition of the home. Here are some of the inspections that you can consider doing:
This is the bread & butter of inspections. Everyone should have a home inspection. This is a generalist who will assess the following: foundation, roof, plumbing, electrical, appliances. This inspector is not a specialist in any of these areas, but will be able to tell you the general condition of these items and point out any safety concerns and recommended upgrading. The home inspector will recommend you seek an expert in any of these areas if there is some concern about the condition of these items. For instance, if the inspector sees droppings in the attic, he will recommend a termite inspection. If the inspector, sees moisture under a sink, he will recommend a plumber for further investigation. But often, a buyer can base his Request for Repairs on the home inspection report. Keep in mind, that not all home inspectors are created equal. Make sure you use an inspector who is licensed and bonded. Also, it’s a good idea to use someone that either your agent or friend/family member has had experience with.
Mold inspections are not done as regularly as home inspections. But they should be! I always insist that my clients get a mold inspection. Water is a homeowner’s worst enemy and often water damage can go undetected, wreaking havoc behind the scenes. A good mold inspector helps give you a more well-rounded picture of your soon to be new home. And often it can save you from walking into some nightmarish repairs.
Video Sewer Line Inspection
If you want to know the condition of your sewer line, you can have a plumber or sewer line specialist come to the property and put a video camera into the sewer line. You will be able to see if there are any blockages in the line or possibly even tree roots that are impeding the sewer line. I usually recommend this to people who are buying older homes with mature trees on the property.
If you have any questions about the condition of the roof that your home inspector can’t answer or if your home inspector recommends further investigation by a roofer, it’s a good idea to bring someone out who can quote you the cost of a new roof or needed repairs. Often, you can get a roofer to come out for a free estimate.
If you are concerned with some visible cracks or the home inspector thinks there could be some foundation issues, it can be a good idea to hire a foundation inspector. I think it’s helpful to find a foundation inspector who’s also a structural engineer.
Depending on where this house is located, a geologic inspection is something you may want to consider. If there’s concern with the soil or condition of the land, this can be a worthy investment. Areas like Malibu would be a good place to do a geologic inspection.
Normally, the seller will pay for a termite inspection. This report will show signs of termite damage, termite infestation, and dry rot. Keep in mind, when a Wood Destroying Pest Addendum is included in a contract, the lender will require that all termite work be done prior to funding the loan. Typically, a seller will agree to pay for these items. It’s just a matter of coordinating the work prior to escrow closing.
These represent a good number of inspections that you can do as a buyer. Basically, if you have any questions or concerns, you can always bring in an expert for further evaluation. The money you spend on inspections can add up, but it’s a good insurance policy against purchasing a home that will be a money pit of repairs.
Posted on March 14th, 2014 No comments
Brokers Open today in Hermosa Beach had a strong showing. There were a handful of great properties that just hit the market and are sure to fly off the shelf. My favorite was 1018 17th Street in the Hermosa Hills. It’s a townhome built in 2005. I’m dying to know who the builder is because it has a unique look and feel rather than the typical cookie cutter floor plans and generic finishings. There is a master bedroom and 2nd large bedroom on the entry level. Two more bedrooms and bathroom and are located on the lower level. Then on the top floor you have the Great Room. It’s all open but you feel like each area gets its own space rather than all being jam packed next to each other. Well placed skylights keep the room light and airy. The balcony offers an intimate setting for outdoor entertaining with new ocean views.
Posted on March 14th, 2014 No comments
405 S Gertruda Avenue in South Redondo Beach has been on and off the market over the past few years. It’s a lovely home with a lot to offer. And yet it hasn’t had an offer that has sealed the deal. This gives us an opportunity to look at one property over 3 distinct time periods in the South Redondo Beach real estate market.
Here’s the history: The home was purchased in September 2005 for $1,480,000. As we all know, this was a market on an upswing. Sellers could do no wrong. Homes sold themselves and prices climbed quickly. Then in January 2010, the homeowner put the home on the market for $1,765,000. It was on the market for approximately 3 months. It didn’t sell, and not surprisingly. The market had pretty much come to a stand still, and in many cases prices had dropped back down to 2005 levels. There was no way this home would sell for $300,000 more than what it sold for in 2005 – not in this market. And it wasn’t going to sell at $1,685,000 later in the year when it was put back on the market again.
Fast forward three years, and the home was listed for sale in July 2013 for $1,875,000. This was in the middle of a very hot market. But it’s also been a fickle market. Buyers have gone gangbusters on many properties and activity is rather subdued on others. And South Redondo seemed to languish behind North Redondo, Manhattan Beach and Hermosa Beach. After four months the listing was canceled. And now, in March 2014, it’s back on the market for the same price.
Is there going to be anything different this time? One of its neighbors, 413 S Gertruda, sold in October 2013 for $1,700,000. It’s newer but smaller by about 500 sq feet. If 405 S Gertruda ultimately sells close to its asking price, then we are still in a very upward mobile market. But based on this recent comp, I would deduce that the value is below the $1.8 mark and not above it.
405 S Gertruda shows very well. The views are gorgeous and the roof top deck is extremely usable. I’m not a fan of all the spiral staircases. (Loved them when I was a kid… could run up and down them all day long. But now I just get an awesome case of vertigo.) The neighborhood views are also picturesque. The kitchen is beautifully updated. The master bathroom is lovely. This house gives you a lot of space on a great street with great views. But it’s my feeling that it’s going to need to come down in price before someone is ready to step up to the plate. With that being said, there have been plenty of people stepping up this past year, setting new benchmarks. Only time will tell.
Posted on March 10th, 2014 No comments
Joey J. of Van Nuys won my February drawing for a $50 gift card to Target! Thanks to everyone who signed up for my newsletter this month. And if you haven’t done so already, go to www.LuvWhereULive.com and sign up today!
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