Agents: AFTER Service, THEN Paid

Here’s a fantasy thought: “What if our teachers, doctors, or politicians only got paid AFTER they finished their service, to their client’s satisfaction?” And, the professional gets paid nothing until those they serve are satisfied with an acceptable conclusion. Can you imagine?

Abraham Lincoln said:  “A lawyer’s time and advice are his stock in trade“.  Their income is based on two ‘tools’ used to serve their clients: their time and advice (knowledge). 

It seems many people don’t stop to consider how their real estate professional gets reimbursed for their time and knowledge.  Perhaps, because the client is on an hourly wage or salary, they assume agents must have a similar revenue basis?

Your real estate agent typically receives no reimbursement for their expenses (gas, time, advertising, time, promotion, time, etc.) until several days AFTER their client’s escrow closes.  If the sale does not close through him/her, the agent gets nothing for their ‘time and knowledge’.

Just imagine: At your job you don’t get paid  until you completed all of the tasks.  If there is no successful conclusion to your work, you get paid nothing. You might understand agent’s frustration when that happens to them.

Oh, and BUYERS, you typically pay nothing for your agent’s services – the seller does, through their contract with the listing agent. Make sure you have an experienced agent with a proven track record to represent you. They will “cost” you the same as a rookie agent will – zero.

Hollister Homes Highest Value Gain

Hollister, CA

Of the 3 cities which make up ‘ South County‘, the City of Hollister, CA single family residences saw the highest appreciation from 1st quarter 2013 to 1st quarter 2014.

The average Hollister single family residence (SFR) value rose 23.1% whereas Morgan Hill, CA experienced 21.9% and the City of Gilroy, CA saw their SFR rise by 11.2% from 1Q13 to 1Q14.

However, Hollister’s typical SFR value dropped 43% from 1Q07 (when many say the bubble burst) to 1Q13. Morgan Hill dropped 32.5% and Gilroy 30.6% during this same period.  Hollister’s ave.  SFR value in 1Q07  was $302,383, down to $240,798 in 2013 and up to $274,309 1Q14.

Another indicator of Hollister’s recovery is the time it takes homes to sell.  The average days on the market in 2007’s 1st quarter was a whopping 148 days.  In 1Q13 the time dropped to 124 days on the market.  That is a 69% improvement!  Then, this year we watched the average days on the market drop even further to 24.

Finally, the average Sales to List price ratio was 99.5% in the 1st 3 months this year compared to slightly over 96% in both ‘o7 and ’13 first quarter.  They are selling faster and virtually at their asking price.

What do you think this trend will do?

(data source: MLSListings)

A Key to Sagging ‘Jumbo’ Home Sales – A.I.D.T.s

When Ronald Reagan became president, Disco was hot, and home loan rates reached 19%!  Out of necessity agents became creative with financing for the few real estate sales being done.  One such tool was a “Wrap Around” or “Wrap”.  More home  sales closed because of  the development of “creative financing”; which typically turned out to be a Wrap.

Today, we again find ourselves in need of creative financing.  Up-scale homes, requiring ‘jumbo loans’ are not experiencing the same resurgence as the lower cost, “conforming” group of homes.  In fact, homes with prices over $700,000 are selling at a much slower pace, if they sell at all.  Their prices are still falling while lower priced, ‘tract’ homes are rebounding.   It’s all about the financing or, lack of it.

Lenders are requiring at least 20% down from the buyer on prices above $463,300.  With the ‘Jumbo’ limit of $729,750 and minimum of 20% down many buyers simply don’t have enough cash.  Previously helpful, second loans offered by sellers must be over and above the minimum 20% cash from the buyer. “Willing sellers and qualified buyers” (without 20%+ cash) for jumbo sales are being held at bay do to a significantly tightened lending atmosphere.

Even if an upper-end home finds a buyer with a large down payment good luck in the home appraising.  Lender’s are now being required to accept only those appraisals with 2 comparable sales within the last 90 days.  So, with fewer comparable sales, and dropping prices many higher priced home sales don’t close due to very low appraised values.

However, the “Wrap” is making a come back (more properly called an “All Inclusive Deed of Trust” or A.I.D.T.).  A willing and capable buyer can pay the seller’s price and avoid the lender limits and appraisal constrictions.  Additionally, since there are no lender fees the money normally spent on closing costs can be added to the down payment.

In the last 30 days I proposed 4 AIDTs for stagnant Hollister and San Juan Bautista up-scale homes.  Morgan Hill and Gilroy ‘Jumbo’ homes could also benefit form an AIDT sale.

When one of these AIDT sales records there will be a new comparable property appraisers can use to justify the higher prices nice homes should bring.  THEN, we’ll begin to see the ‘Jumbo’ home sales moving toward their earlier values.  I love problem solving!

Hollister Home’s Prices Moved UP In June

If you have been waiting to buy a home in Hollister review the following sales activity and then go buy your Hollister home.

The Average Sales Price (ASP) increased 15.2% from May to June! Hollister’s ASP in June was $287,900 whereas a month earlier the average was $249,900.  Compared to June 2008 however, Hollister’s ASP was down 14.7% .

A valuable indicator: the “Closed Sales to New Listings ratio” (CS:NL) is actually in conflict with the jump in ASP.   June’s CS:NL ratio dropped to 56.9% from May’s 89.6%.  We saw the same drop in Gilroy for June however, their ASP also dropped.   The harbinger of things to come, may lie in the nice increase of Hollister’s CS:NL over 6/08’s ratio of 40.2%.  Just wait and see.  As our CS:NL ratio increases so will our ASP.

Nearby Morgan Hill’s homes experienced an increase in both the CS:NL ratio and ASP.

My strong advice: if you plan to buy a home this year do it now.  We see nothing that suggest prices will drop or even level off in the foreseeable future.  Likewise I think interest rates for home loans are about as low as they are going to get.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

Gilroy’s Home Prices Slipped in June

Here’s the good news Gilroyans: Our Closed Sales-to-New Listings-Ratio (CS:NL) nearly doubled that of the same time last year.  June’s CS:NL ratio was 87.3% vs. 47.6% in June last year.  The “bad” news is that June’s CS:NL ratio was down from May’s 93.5%.

As you would expect, Gilroy’s Average Sales Price (ASP) of $395,900 dropped 3.8% in June from the month prior ($411,500).  Likewise, the ASP was down 32.5% from 6/08’s $586,800.

While  interest rates and prices are still down buyers who want the American Dream, Gilroy-style, should jump on the shrinking inventory of homes.  Gilroy’s home prices will go up.

Down the road in Hollister the CS:NL ratio also dropped from May to June but the ASP went UP 15.2% in that same month!   Compared to ’08 Hollister is following Morgan Hill and Gilroy’s trend of an increasing CS:NL ratio.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

Morgan Hill Sales and Prices Up

The Morgan Hill housing market is beginning to show some promising signs: The Closed Sales-to-New Listings-Ratio (CS:NL) rose nicely to 89.2% in June from 51.5% in May.  June’s ratio nearly doubled 6/08’s of 47.2%.  As you would expect Morgan Hill’s Average Sales Price (ASP) also rose in June, up 10.2% from May. However, the ASP of $614,500 is down 31.5% from last year’s average of $898,200 in June.

The best hint of what’s to come is the nice increases in CS:NL.  As that indicator continues to increase the ASP is bound to go up.

Next door: Gilroy’s activity seems to be headed in the right direction.  While June’s CS:NL ratio dropped slightly from May to June, June’s ratio nearly doubled over last year’s figures.  The Average Gilroy Sales Price was lower in June than May by 3.8% and down 32.5% from a year ago.  Stay tuned however.

As I update these ’09 figures I predict an increase in ASP in both Morgan Hill and Gilroy.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

Hollister’s 151% Jump in Closings

Hollister’s housing is HOT!  Last month (5/09) saw 27 more Closings than 5/08’s 33.  That is an increase of 81.8%!  Each month this year our number of Closings has leaped ahead of ’08’s.  To date there has been a 151% increase in Closed Sales! In fact, try to buy a home in Hollister now.  “Multiple Offers” is once again a standard phrase reported to buyers by their agents.

Contributing to this hot market: New Listings of homes for sale in Hollister are down 27.9% so far this year over last year.  Last month alone we saw a drop in New Listings of 29.5% over 5/08.

The Gilroy housing market is experiencing a similar recovery with a 128.9% increase in closings and a 32.7% decrease in New Listings.

Make sure your Realtor knows all the current methods in getting an offer accepted.  You are going to need that if you want to buy a home here in Hollister.