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  • Chasing the Real Estate Market

    Posted on July 24th, 2013 acimetta No comments

    Typically when Realtors talk about “chasing the market”, we are referring to a seller who has priced his home to high. The property sits on the market for some time without offers, and then the seller decides to reduce the price. This new price may have been attractive when the house was first listed, but now the market has changed – prices have dropped further, and even though the property is sporting a new, lower price, it’s ultimately still overpriced. This can happen again and again… price reduction, wait, price reduction, wait… but with each price reduction the seller never seems to catch up with the changing market, and he ultimately chases the market down hill. This trend is what drives Realtors to recommend to their sellers to price the home right at the beginning. They may be asking for less than what they would like to get for their home, but it will be more money than what they will ultimately make if they start too high.

    But these days “chasing the market” can also be applied to buyers. There has been such high demand in so many markets with extremely low inventory that competition has spiraled out of control. Buyers lament that they went $20, 30, 40 thousand over the asking price and they still didn’t get the house. And after missing out on property after property, they learn their lesson. On the next listing, they come in like gangbusters, make the offer of the century, and blow everyone else out of the water. Ultimately, each home that is sold sets a new benchmark. And the next listing can start at the new level and go up from there. The sooner a buyer gets super aggressive the better, because she will secure her home and get out of the race while prices continue to go up. The buyers that continue to hem and haw and make conservative offers will chase the market up and possibly price themselves out of the market or pay a great deal more money than they would have had to pay just a few months prior.

    As a Realtor, I don’t enjoy having the conversation with my buyer clients that they need to make an offer over the asking price. I’m much happier when my clients feel like we did a good job negotiating and they got a good deal. But not all markets work that way. And when you find yourself in a market that has rising prices, the sooner you are aggressive, the better.

     

    Redondo Beach, CA 90278

    For instance in North Redondo, the price of a 4 bedroom, upgraded town home was selling in the mid to high $800,000s at the end of 2012 and into early 2013. They are currently selling for low to mid $900,000s, and in a couple of cases close to $1,000,000. It’s a big price swing in a short amount of time. If a buyer was aggressive back in January, he could have purchased 2109 Huntington Lane, #B for $829,000 or new construction at 1905 Plant Ave, # B for $859,000. (These are sold prices.) In the past 6 weeks, buyers have paid $998,000 for 1906 Morgan Lane, #B, $960,000 for 2208 Warfield Ave, #B, and $950,000 for 2118 Pullman Lane, #B.

    The key to buyers “chasing the market” is that at any time it can stop. Once buyers decide enough is enough and they feel prices are too high,  they will pull back and prices will come back down again. But until then, the competition is stiff and sellers are in the driver’s seat. And for once they are not the ones chasing the market.

     

     

     

  • Making Home Affordable Program Has Been Extended

    Posted on July 20th, 2013 acimetta No comments

    The Obama administration has extended the Making Home Affordable Program until December 2015 in an effort to still help homeowners who are in danger of losing their homes to foreclosure. This also includes the Home Affordable Modification Program (HAMP) and Home Affordable Foreclosures Alternative program (HAFA). The former handles loan mods and the latter is for short sales.

    South Bay

    In the South Bay, we have seen far less REOs and short sales this year. However, there are still a number of homes in pre-foreclosure. Here are some current stats as of July 20, 2013:

    Redondo Beach: 34 homes in pre-foreclosure, 30 homes are bank owned

    Manhattan Beach: 7 homes in pre-foreclosure, 7 homes are bank owned

    Hermosa Beach: 14 homes in pre-foreclosure, 8 homes are bank owned

    Torrance: 24 homes in pre-foreclosure, 30 homes are bank owned

     

  • Listing of the Day – 1208 Fontill, Torrance 90503

    Posted on July 18th, 2013 acimetta No comments

    I saw a really cute 4 bedroom in central Torrance today (Are 126) during Brokers’ Open. It’s 1208 Fonthill Avenue. What I like about it is this typical floor plan has been nicely updated and given a fresh look. The kitchen is well done and opens to a dining area off the living room. And there is a large master suite in the upstairs addition. It has 4 bedrooms and 2.5 baths with 2,342 sq. feet. It’s priced at $818,000. This is definitely one to check out!

  • Real Estate Advice: I’ve been waiting a week for my prequal letter. Normal?

    Posted on July 16th, 2013 acimetta No comments

    It sounds like you’re actually getting a preapproval letter and not a simple prequalification letter.

    Here’s the difference:

    Prequalification  Letter

    The prequal letter can be done relatively quickly – you could have this within the hour if the lender gets to it right away.  It’s a cursory look at your numbers without an underwriter looking at all your financials. It’s not as reliable as a preapproval. For example, I had a listing a few months ago in which a buyer submitted a prequal letter from Bank of America. I spoke to the lender and he confirmed that the buyer could get the loan. But it turned out that when she eventually handed in all her financial documentation she was, in fact, not qualified for the loan. The initial prequal process involved the lender simply asking her a few questions. He took her at her word and  provided her with the letter. The deal ended up falling through because she didn’t go through the preapproval process up front and she was poorly prequalified.

    Preapproval Letter

    In order to get a preapproval letter, you need to submit all your information which is then sent through the underwriting system. This can definitely take a week. However, the difference is that the preapproval letter is stating that you are pre-approved for the loan. This letter holds more weight with sellers so it’s more valuable to you.

    I would suggest that you call the lender and ask them explain to you exactly what their process is. Ask them to clarify if you will be getting a prequal or a preapproval. Ask them if your file is with an underwriter. If it’s with the underwriter, then try to hang in there a little longer.

    Side Note

    By the way, if you’re not happy with the customer service you’re getting from your lender or you don’t feel like your lender has built a good rapport with you, you don’t have any obligation to work with them. You can always use the preapproval letter, and still get a loan from a different lender. You are free to shop rates.   You should feel comfortable with the lender you are working with. Make sure they communicate well with you because this is crucial during a real estate transaction. Also, if you do decide to talk to another lender, I suggest you get a copy of your credit report from the first lender. They are supposed to send you a copy of it, but if for some reason you don’t receive it,  just ask and they will send it to you. You can then give a copy of this credit report to other lenders so that they don’t need to pull your credit again. The credit bureaus are not supposed to penalize you for pulling your credit multiple times within a 30 day period (I believe) when you’re shopping lenders, but if you can avoid it altogether, I would.