Podcast

CA & WA Market Update- September 2022

Market Conditions in your Area

Transcription

Fred:

It is September 13th, 2022. And basically, the pandemic is over in most people’s mind, thinking that I’m not going to wear a mask anymore, I’ll risk it. If I get it, I get it because I’ve been vaccinated 72 times already, so I have enough strength to get away from it and I’ve had bad colds, so I can deal with it kind of environment. So that’s the medical report. We’ve been away from these podcasts and we need to get back to it. And now there’s been an obvious market shift from insanity to what we’re going to tell you today based on different markets. With me is Rene Perez Jr. licensed real estate salesperson in California, soon to be a broker if he ever takes the test.

Rene:

Still working on that.

Fred:

Great. Okay.

Rene:

Yeah. I’ll do it after the podcast. How’s that?

Fred:

Yeah. After the podcast, that could be the rest of time, but no, no worries. So we are the best priced, fixed priced, full, full, full, full, full service brokerage that we know of, right?

Rene:

In the States, and this is actually going to be official in the next couple of weeks, and soon enough, in Mexico. So we’ve got a lot of stuff going on here, a lot of updates really. And we can also, we can see the rebrand of the bird there, right? We got away from that old-

Fred:

Yeah. Well, I guess it’s really the first little mascot that I’ve done. We opened in this company in 2017 and had logos, but never had a logo with a mascot on it. And that is the toucan in three different colors. And you’ll notice on the toucan, there’s a circle where his wings are. So the idea is that we’ve upgraded the toucan to turbocharge. So it’s actually jets in there, there’s a jet engine. So it’s to make us look different because we’re a little different than everybody else and we like it that way. So we’ve been working in the markets, primarily the Bay Area, and I mean the whole Bay Area, the big circle around it. LA to Orange County, a little bit of San Diego and this general Seattle area. And we went through the real estate, I don’t know what you want to call it, lunacy over the past couple of years where people killing each other to get houses and overpaying by gazillions of dollars.

Fred:

And now what has changed is the interest rates have gone up, inflation has hit, the media loves to just blurt out all the bad news every day. And so what’s happened, especially in California, is instead of 30 people downloading the disclosures and are interested, and 15 of them submitting offers, you got maybe 10 people interested and three people submitting offers to, and I’m talking generically here, to the kind of houses that are in very good school districts and in very good condition. And now repriced, and by the way, the realtors have all kinds of words for how they’ve lowered the prices. Repricing is one thing. What’s the other one? Transparent pricing? I love that.

Rene:

That’s a big one, right? Yeah, well I love and I hate that concept, right? It’s like real estate should be where, when you go to a store, you go to the grocery store, you don’t look at tomatoes or bread and say, okay, I’m going to go and purchase this. And then, it turns out that you have to pay $5 more, right? You know what you’re going to pay for. And that’s how real estate should be, but I mean, and I can tell you all day long about the open houses that I went to last weekend, but it’s like, oh yeah, we have changed the price to transparent pricing. Well okay, what does that mean?

Fred:

That means they were long beforehand, right?

Rene:

Exactly. Exactly. And it’s this idea where listing agents want to put a house up for sale for a price that’s two, $300,000 below what the sellers and what the comps are saying. So then a lot of people go to this property thinking, wow, this is a great price. And it’s a stupidly crazy bidding war that’s unnecessary because the offers again are going to be lower than what you would actually accept.

Fred:

Yeah. And you’re wasting real estate agent and buyer’s time writing up agreements that are never going to happen. And unfortunately, a lot of real estate agents just have no idea that they’re going to lose because they’re untrained, they’re new, or they just don’t have a clue as to what’s actually happening in the market. But let’s go through some of the markets. And I want to start with Palo Alto. I think it’s a nine or eight school district. I mean, it’s really good. It is the capital of the Silicon Valley. It’s where all the cool kids live. And we had, after the drop, and by the way, this all peaked March, April, so I think this was in June or July that we had a house that somebody wanted to bid on. The listing price was four eight. We bid five three and it ended up going what, five, six or something like that?

Rene:

I think it went close to six million.

Fred:

Oh, really?

Rene:

Yeah.

Fred:

I mean, you could rebuild the house somewhere else where the land is cheap for a hundred thousand bucks, but this is what people were doing. One thing that you got to know is there’s not a lot more on the market in California like other places because some people are just like, oh my god, I got to get out here, I got to sell quick before it collapses kind of thing. And I’ll get into a little later the economics. Remind me to talk about that, so we can put in perspective between now and ’08. But the point is there’s still, all it takes is one or two people and they bid it up because they know other people are interested. And that’s what you have to realize as a buyer. The buyers who’ve been looking for two years who didn’t find anything didn’t go away. They’re still there. They’re still looking because they still want to get into a school district. And that’s what this market is all about, school districts, and are willing to pay reasonable, and then in the case of Palo Alto, unreasonable numbers for the right place.

Fred:

So it’s all about location, it’s all about the property, it’s all about the seller. So it’s a combination of everything. It’s not like you hear in the media, oh, because we’ve had a couple people like this lately. Oh I want to come in and I want to buy this house and I want to get it under list. Well dude, it’s in a 10-school district, it’s a really nice house and they’ve already had three offers on it, so no, it’s not going to happen. And the other part of this is that also people think they can now bid unprepared, which is also a massive mistake because if you want to get a property for a lower price, pretend you’re the seller. Why should they take your bid at a lower price with you having a 17-day mortgage contingency and a 14-day inspection contingency, having a pre-qualification that some loan officer said yeah, you’re okay and gives you some letter based on nothing.

Fred:

You’re not in a good position to tell the seller I want a cheaper price. But if you come up with a cheaper price and you say to the seller, look, I’m waving the mortgage, I’m waving the inspections, or I’m only going to do inspections in very short period of times if they haven’t done them, and I’m waving the appraisal value and I’ll close in 17 days. But in return for that, you’re going to take 50,000 less. And you know what the seller might say, you know what? This mortgage is clear, I don’t have to worry about anything, and I got to get through the inspection with anybody, and I’ll just take this offer and get out.

Rene:

So the biggest thing there is, I mean there’s a lot of “fear” in the air, right? People are getting outer contracts, they’re using the contingencies to leave a deal, to try to over-negotiate deals. And I have had these conversations in the last two weeks with agents almost every other day about how, look in the other markets, we were really focused on the higher price really and we could do that, but right now, if I get a clean deal where I don’t have to worry about the mortgage stuff being done, I don’t have to worry about the inspections, and I think some agents have been a little bit better in doing inspections.

Rene:

I’m starting to see more foundation inspections and more mold reports in the newer listings that I’ve seen because, I mean, this is not a market where you want to go under contract in a more limited pool of buyers and then have to go back to market, right? So agents are not going to accept, I mean, I would not suggest you taking any offers if they’re going to be under list and then with all these bunch of contingencies everywhere, so that’s the ticket.

Fred:

Yeah, because what you should counter with, if I represent a seller, I would say, look, let’s counter at, you got two choices. Either we raise the price to what we want with all your stupid contingencies or you wave them and I’ll take your price. And so, go back to the buyer and let them choose. And then they’re like, hamana, hamana, hamana because this is their secret negotiating ploy. That’s the other thing. And no disrespect to anyone, but we get buyer clients that, well not clients, prospects, that call us and they think they know everything, and they think they know how to negotiate, and this is the way they always negotiate, and blah blahdy blahdy blah. It doesn’t work.

Fred:

It’s got to adjust to the specific market, to the specific seller, even to the specific real estate agent because sometimes that can make a difference, and it’s how it’s presented, and everything you’ve got to present with it. So we can go on with this forever, but let’s move on. We were talking about Palo Alto, and just stretching out to the other areas in the Peninsula that are of the higher price nature, the Los Altos-

Rene:

Woodside.

Fred:

Appleton, Woodside, right, Cupertino, and the parts of Sunnyvale where the good schools are, close to Apple. Apple’s now going to have people back. I hear they said everybody’s going to be back on Tuesday and Thursday and it’s up to the manager to pick the third day. If you got a manager that says Monday or Friday, go look for another job. It’s like okay, I got to be in three days a week. That means that house I bought in Santa Cruz, I could come up to the city close to where we are, maybe get an Airbnb or a hotel for two nights to make life easier so you don’t have to commute. But if he does it Monday, Tuesday, Thursday, I mean come on.

Rene:

I mean that’s just evil. That’s just evil.

Fred:

So moving on. So those areas are still going to have multiple bids on the nice houses priced right. And the idea is you want to see a house super fast and you want to bid on it super fast. Sometimes they have bid dates, sometimes they take them as they come. Even with a bid date, we’re seeing people just submitting offers because if you blow the doors off the seller, there’s no rule that they have to have to bid. They just cancel it. Say we got a great offer and we took it. So the whole-

Rene:

I mean, yeah. Go ahead.

Fred:

Yeah, let me just finish one thought on just price, and everybody, I don’t want to overpay. Unfortunately, you want to live somewhere, if you want to be in the Peninsula, and South Bay, and East Bay saying I’m in the Bay Area generically, you got to pay to play, and interest rates are going to come down. Nobody’s massively laying off from many major companies, Meta, Apple, Google, et cetera, Salesforce. Stuff will always go back up at value. It might take two, three years. It’s just a matter of time. When most people are buying this house knowing they’re going to live there 10, 15 years. So the fact that you overpaid by 20 grand, it doesn’t matter in the long, long, long run.

Fred:

And by the way, just a quick commercial and then we’ll go back to Rene is you have to use to buy the house with. So a million-dollar house, yeah you got 15, 20, you got 40, 50 on a two million-dollar house to play with, give it back to the seller in your offer. Your offer is that much better. It’s money that’s completely tax free no matter how you use it. And it just makes sense to just do it. Blows everybody out the doors away because they’re all forced to pay their broker two and half percent, which ain’t us. We’re fixed fee at $9,750. Anyway, go on, Rene. Why don’t you talk a little bit more-

Rene:

Yeah. And I’m going to say there’s a little bit of everything, right? I mean, just putting this as an example. I went to a party maybe two weeks ago at a 20 million-dollar house in Atherton. And I mean, you walk in, and sure it’s a beautiful house, but when you’re in the 20 million-dollar range, you’re just playing the guessing game. You’re not even doing accurate comps. And I walk in and it’s overpriced. It just, it’s overpriced. And what happened I think yesterday, they lowered the listing for three million. So you’re still, even in these markets, yes, you’re still going to see things that are overpriced. And what’s going to happen, they’re going to stay in the market 20, 30 days. Now, even if they are overpriced because the homeowners are more than likely higher incomes, that means that they probably don’t need to sell unless they’re over leveraged in their other financial pursuits.

Rene:

And even when the house isn’t up to standards where it’s not moving, where the floors are really scratched and the pool is not functional, you’re paying for the land. And that’s what some people sometimes don’t realize. It’s like, yes, if the property, and we saw this maybe with someone earlier this week. We were running comps, then it’s like yeah, if it was updated and renovated, it would be 1.9. Okay. Well the property right now, it’s not functional. It’s almost, it’s barely livable. Okay, well it’s still going to be around 1.3 just because you’re paying for the land. So obviously, it’s a case-to-case, and this is going to be a market where we have to take a deeper dive of what’s going on. And that’s the bottom line there.

Fred:

Yep, totally. I mean, the California premium, that’s what it is. It’s the land value. But don’t think you can get the land value physically appraised for that is the other thing because lots are all over the place. There’s not many lots. And that’s the other thing about Northern California especially. There’s nowhere to build and there’s nowhere in great locations to build massive amounts of houses. The building’s going to come far in the East Bay and San Jose. So that’s why values are just going to continue to go up especially for single family. That’s what we’re talking about people by the way, single family, detached, great schools.

Rene:

Oh, the East Bay.

Fred:

Oh, the East Bay.

Rene:

Did you see, I mean, I think they hit 120-degree weather a couple weeks ago. I could not do that. So one suggestion for everybody. In the last couple of weeks when everybody was melting in this heat wave, I was nice and cozy in the foggy San Francisco. So it’s like people are sleeping on San Francisco. I was on 70-degree weather while everybody else was melting.

Fred:

Yeah, I’m down in LA at the beach area and it still got up to high 80s, low 90s at worst because you have some breeze coming in, but yeah, uncomfortable. But obviously you live near the coast, you’re going to get the coastal breezes in the coastal weather. It’s a beautiful thing, but you pay for it. That’s the bottom line. The quick economic thing, while I remember that, let’s compare this event, whatever, we’re not calling a recession yet, to ’08 ’09, 2010 cetera. What happened there was that something you had to dig out from that was massive. You took an entire industry that had been lying, cheating, faking, and stealing from people about the 1% stupid mortgage. And you had tons of them out there in crappy paper.

Fred:

Here’s my question. Didn’t Alan Greenspan and Ben Bernanke understand how bad these loans were? I blame them for the whole thing. How brilliant are they? Not brilliant enough to figure that out and they should have regulated the hell out of those things. Anyway, so what happened was you had people losing their houses left and right. And that caused everything to go down on the tubes, down the toilet. And you had new industries that has spring up with short sales people and then the foreclosure people who normally do one deal a month were doing a hundred, so they had to gear up.

Fred:

What’s happened here was actually really good I got to give everybody credit. When the crap hit the fan, they had the rental embargo and they had the mortgage embargo. So they said look, you don’t have to pay your mortgage payment, and this was even on investment property, until they stopped doing this, and we’ll just add those payments onto the back end of the mortgage. So if it goes for a year instead of a 30-year mortgage, you got a 31-year mortgage and you had a year off of payment. That saved the economy from collapse that would’ve been like ’08 ’09. So now it’s a matter of we have two jobs, two people available for every job. I mean, there’s plenty of jobs. The economy’s actually good, people are still spending money, and they’re just freaking out about housing. Inflation’s cuckoo for cocoa puffs for August.

Fred:

I predict this is the peak. This is absolutely inflation peak because things are starting to open up, things are starting to get produced quicker, prices are coming down, gas prices are coming down, and Putin’s losing. Mark this date down in your calendars, kids, that I said the inflation is over. So six, 12, 18 months from now, we’re going to be back in a situation where the economy’s still going to be chugging along, the rates are going to be coming down because we don’t have the inflation. And then things are going to build back up and we’re going to get more consumer confidence, and then people are going to come back and buy, and then it’s going to get a little crazier again. So by 2024, it should be looney tunes again because of the supply. Because here’s one thing about the supply, people like living here, so they’re not moving. So it’s got to be a darn good reason.

Fred:

Job may make a difference now because people are going back to work. So there might be more people moving to Seattle to take a job with somebody up there and need to buy a house and need to sell a house down in California. There’s a lot of people moving, who will move, and we’re talking more people in condos and townhouses, will move because they don’t have to be anywhere, so they move to Seattle or to Texas because there’s no state income tax. And if you’re making three, 400 grand, that’s a big chunk of money that California takes. And so they’re losing those kind of people. Condos and townhouses, pretty much all of them, you can get at list price or maybe below because they’re not selling like single families.

Fred:

With the exception of a small place in Fremont that we’ve seen to get, we’ve gotten tickled on two of them in a row where they went a little bit over, which was unusual. So that’s the quick economic lesson. Oh, let’s talk about some other places. Let’s talk about San Francisco itself. And, Rene, you can talk to this better than I because we just had a listing that’s sold there, which was a goofy property. But you’ve seen traffic on some of this other stuff that we’ve been trying to get for our buyers. So what’s up there?

Rene:

So the San Francisco market, I mean, it’s a market that was really hit by the pandemic, right, and now we talk about the pandemic as if it’s over, but the recovery isn’t quite there in the actual condo, town homes in San Francisco. It never really came back. Now for single family houses, it’s a different type of market because in San Francisco, you’ll find a lot of un-permitted items, you’ll find things that are attached with no parking. So it’s going to be a matter of what type of house it is. I mean, I’m repeating myself here again, but it’s a lot of renters. I mean, in the last maybe two or three days, what I’m starting to see is quite a good amount of people saying, hey I’m going to move to San Francisco. Do you know of any rentals? So as, let’s see the market completely shifts into the only being a buyers market. That’s going to be fine because people are still going to need to rent and live in San Francisco.

Rene:

So it isn’t like, oh everybody left San Francisco forever. No. There’s plenty of people here. I have personally have seen a good amount of layoffs in the tech world. So my mindset on the way that the economy is going is a little bit different than Fred’s. We won’t go too deep in that because obviously Fred’s Mr. 40, 50 years of experience, and I was a baby in ’08, so don’t really have much to say there. But there’s a lot of people looking to rent, and people that have been renters for a long time that want to make the move to owning their first house. A lot of people in the 800K range, I mean, that’s, I mean, when it came down to it in our listing, we had a good five, six offers in the 700K range, right? So people are just getting there and it’s just not enough for a single family house.

Fred:

Let me input something here that’s important. The new Fannie Mae limits, and Fannie Mae and Freddie Mac are the quasi-governmental organizations that buy all, pretty much all of the loans that are called conventional loans under their maximum amount. So the max has now gone to 715,000 nationwide. But in certain parts of California, San Francisco, and LA, and the Bay area, but not in San Diego, it’s a little lower. The number now for a single family house is 1,073,000. And from that number, you can put 3% down, 5% down. I mean, if you get to five because of the mortgage insurance, you want to do that. So 5% down brings in a lot more buyers. It’s crazy. And obviously, the interest rate’s going to be actually a little better with a loan over 80% loan-to-value. Why? Because you’re paying mortgage insurance and the mortgage insurance company is taking the risk.

Fred:

So the lender says, hey, this is less risk for us, so we’ll give you a better deal. So a lot of people don’t realize that, but with the PMI makes it different. The PMI comes off when you get to 78% loan-to-value of the original value, the original sale price, or depending on the mortgage insurance company and the lender, you can sometimes get it off with the appraisals, maybe you have to hold it at least two years. So I’m not going to go into the details, but if you have PMI, it might be a temporary thing because values continue to go up in San Francisco and the Bay Area, and it’s just that number’s insane with the small amount of down payment you had because you go a dollar over that you got to put at least 10% down with some lenders. But the majority of them get the good deals at 20% at the banks.

Fred:

So now, I mean, I could see we do mortgages too and we can get fully underwritten pre-approvals in two, three days on these conventional deals. And by the way, we’re fixed fee there. Just the wholesale price we get plus $3,750, and yes, the lender can pay it so you don’t have to pay it, but that’s what we make. Every mortgage company has to tell you what they make and it’s fixed. One and a half percent is usually what most companies do. But we’re fixed because we’re fixed. Where was I going with this? So yeah, the loan amount, I mean, that’s going to make a difference between also people thinking about renting or buying if they see there’s value there and the value is places like San Francisco, the condos. I haven’t priced them yet, but I mean it’s still get a decent one-bedroom for 650 downtown near other train station.

Rene:

I mean, what kills you in those condos are the freaking HOA fees.

Fred:

Yeah, I know. Well, they got five elevators, and they got people downstairs, and they got enormous insurance.

Rene:

Yeah. Yeah, yeah. Whatever.

Fred:

Yeah, HOAs are nonprofits. I mean, the only place you can really skim is the management fee. And that’s now changing around. I know at Poplar Homes, they’re trying to buy up HOA management companies. They’re crazy because those guys are just in, you think your real estate agent’s in the Dark Ages, these guys invented the Dark Ages. I mean, why does it take 15 days to get a package of documents they already have that they don’t need to update because they’re already updated? You tell me. And charge $500 to do it.

Rene:

Yeah, it’s crazy.

Fred:

HOA management companies are just ridiculous and got to do everything in paper and nothing’s digital, so that age is slowly coming to an end hopefully.

Rene:

So I want to go back to the mortgages again. So here’s my thought. And I think, to a certain extent, and just wait till I finish this statement, Fred, I think mortgage rates are going to get to 7%, but that doesn’t mean that it means anything because if 30-year fixed, 7%, you don’t take a 30-year fixed mortgages, you take an ARM loan. So I think-

Fred:

Yeah, five or seven. Yeah.

Rene:

Exactly. Exactly. If you want to talk a little bit about that, Fred, because the media’s going to tell you, oh we’ve reached seven. And I mean, even if you were to hit some crazy thing like 10, it doesn’t really mean anything, right?

Fred:

Well, if it gets a 10, it really means something.

Rene:

Yeah.

Fred:

Okay. Thank you very much. Now everything is, if you notice, there’s no the mortgage rate, they take this average thing and whatever. The mortgage is changed all the time just like stocks do. Now, they don’t change every minute for every 23 basis points or something. They change when there’s a movement in the market, big movement one way or the other. But I’ve had three, four rate changes in one day on some crazy ass day. So the other thing you can do with the rates and why it’s not as bad is if you use our rebate, this is how I have all of our ads just into our conversation as opposed to separate ads where we split up time. So if you use the rebate, you can use it towards buying down the interest rate.

Fred:

So as I said, there’s not the rate, you can get, and I’m just making these numbers up. If you have 5% with no points, you can get five and a quarter, and the lender will give you $3,000 towards closing costs. So that’s one way to cut down on your fees by paying a high rate, but also if you want four and a half percent, maybe the lender charges you upfront fees to lower the rate. And those are called points, which are fully tax deductible on a purchase for your primary or secondary residence. Please check with your accounting professional. But you take our money, well not our money, the rebate money, really, you’re paying for it, you’re paying the seller for it, they’re giving it back to use, and you use it. Say, it’s 10 grand to get four and a half, use the 10 grand. The 10 grand now becomes a tax deduction even though you didn’t physically pay for the tax deduction. It’s one of the best tax deductions out there. And then you got four and half percent so you don’t feel as bad.

Fred:

You can do the same on an ARM. If the ARM’s at four and a half but you can buy it down to four, great. Do that too. And then you don’t feel bad when you refi and maybe roll some closing costs in to get the lower rate. In a million dollar loan, rate goes down by a quarter with no closing costs it pays to refinance. So I had my share of addicted refinance years during the last rundown. But there are ways to not make it feel as bad and we just tell everybody, stop listening to the news because it’s so generic. It means nothing for this individual market. And even the local papers like to aggrandize how one little thing is amazing or bad. Talk to a professional. Talk to somebody who does it every day for a living, and look at the individual deals, and figure out your individual monthly payment. Just don’t go by the headlines. One other market I know you wanted to cover, Rene, is Sacramento, so I’ll let you just fly on that because I have not much, to be honest.

Rene:

Oh, Sacramento. Yeah, I mean, so-

Fred:

Oh, Sacramento.

Rene:

Never going there again. So during the pandemic, one of the things that, I mean, even before the pandemic, I actually, let’s go back a little more. I used to live in Sacramento. And what I would hear a lot is a lot of people who would live in Sacramento and commute to go to work in San Francisco. And when the pandemic happened, a lot of people just decided to move to Sacramento. I mean, we actually had a few of our clients who were selling properties and going out to the Sacramento area. So anyway, I was out there this weekend and there’s a shift in, obviously, a dramatic change from the Bay Area where it’s location, location, location. Everybody wants to be here to Sacramento where prices are much lower than the Bay Area, so you see an average price of around 500K for a single family detached house with a 7,000 square foot lot size.

Fred:

And you probably get no money down too. That’s the other thing.

Rene:

Yeah. No. I mean, these are great deals. I mean if you’re a new homeowner, I know that San Francisco is nice and shiny, but I went to a lot of properties that were really just nice and clean out there. So for 500K, I mean, me living in San Francisco, I’m like wow, it’s pretty much free. You pay any cash, right? So I was out there and you see, I mean, the agents that I spoke with this weekend, it’s doom and gloom. I mean, they’ve empty open houses. I’ve spent a good amount of time with a lot of people out there, a lot of agents who are losing their listings in the next couple of days because they just weren’t getting any traffic.

Rene:

So one piece of advice that I can get for those of you that have been renting for a while, look at properties that, or that are maybe not yet buyers, but need a place somewhere, look for properties that are on sale, 40 plus days, and say, hey look, you know what? Maybe I can’t afford them just yet, but are you willing to rent them out? Because there’s going to be a lot of, that’s a transition that you’re going to see in places that are not as, they’re not as prestigious I guess. I don’t know if that’s, that’s not the best word to use actually, but Sacramento, you’re going to …

Fred:

Rene:

Sorry.

Fred:

I think the word is cool.

Rene:

Yeah, I guess. Yeah, I didn’t want to use the word cool, but yeah. I think I went to around 16 open houses this past weekend in Sacramento, and two listings confirmed. Yeah, today is going to be our last open house. We’re going to rent it out for $2,400, which is pretty affordable for a four or five-bedroom house. You’ve got people that, and sellers still, that are, I look at these listings and it’s like they didn’t finish painting one room or they just didn’t mow their lawn. And it’s just in this market, especially when it’s a little bit of a slower market, you want to make sure you do everything in your hands to make sure it’s presentable to the buyers, right? That’s-

Fred:

It’s got to be pretty. You’re selling the sizzle and the steak. And what sells, here, anybody selling a house, just listen to this. It’s very simple. How to sell your house? Make a buyer not have any second thoughts about anything. Meaning, get all your stuff done in advance, get all the inspections done. Matter of fact, one of our best sellers, they went down the checklist that the inspector got and did absolutely everything, so that there’s absolutely nothing in the property. Make that property smell nice, look nice, feel nice, absolutely be perfect.

Fred:

Have the lawn cut, spray paint the lawn green if it’s not green, and you get the paint at Home Depot, it’s easy. And it looks better actually. Or replace all your greenery with this new AstroTurf they have. It’s fabulous. We sold a nine million-dollar house that had AstroTurf on the lawn. It’s just there’s no maintenance and it looks perfect and pretty. So that’s all it is. You do that and you price it right, and people, someone will come and buy it. If you can transpose it to a really good school district, that would help, but we’re not there yet.

Rene:

Yeah. And that’s the other thing, right? You still have a lot of properties that are being priced as if the mortgage rates were at 3%, and yes, if the buyers were still on the market like how they were back in February. So the transition of pricing more accurately for the times, they’re getting here. So hopefully-

Fred:

Here’s the problem. It’s 95% the sellers because they think, oh my house is worth so much more. We had a guy call us, well our house faces Mount Diablo, and it’s so much better location. And it’s on a street with 10 other houses that have the same view. It’s like, no, you don’t have anything unique and they’re all track houses. Well, so-

Rene:

I want to bring- yeah.

Fred:

They are visions of what they’ve done. They put in this special tile that cost them a hundred thousand. Great. It’s at the house now. You can’t take it with you. But that doesn’t make the house worth gazillions of dollars to anybody anymore. It’s not where it’s at. And the agent doesn’t want to give up the listing because they don’t want to give up the listing-

Rene:

That’s what I was going to say, Fred. I don’t know if I want to blame the sellers, right, because the people who should be speaking out is the agents. If you are a good agent, you should say, and that’s the real estate industry in general. You should be like, no, I’m sorry, but this is an overpriced listing. And I think we do a pretty good job at saying, look, you know what, that’s just not how the market is. We’re not going to lie to you and tell you we can sell it for this amount because it’s just not going to work out. And we’re not trying to just push to be sneaky and get these listings because that’s what happens, right?

Rene:

You get a seller that wants a price, okay fine. But then you got an agent that obviously probably doesn’t have a lot of business, so they’re like, look, I’m going to say whatever I have to say to get this listing. And that’s the game of I’ll say a high price, it won’t work out, and then just say, oh, well I guess I’m sorry it didn’t sell, but let’s lower the price now. And that’s just a gimmick.

Fred:

Yeah, the market’s changed, nothing I can control, blah, blah blah. But no, some of these, well it’s the agents. But I’m just saying I think it’s more the sellers now than it was before because before, it didn’t matter. You just made up a number. But the sellers just, they think there’s something that much special about their house. You talked about that 20 million dollar one. Especially there, that’s an ego buy. So of course, this has this and that and this and that and I can’t do it for less because it’s this great land. It just goes on and on. This is what drives us crazy.

Rene:

Yeah. I mean, it’s-

Fred:

This is time because we have to deal with overpriced, idiotic scenarios. I don’t even want to get into the responsible returning call, returning emails, and giving us truthful information. It’s sad, this industry. It’s totally sad. And there’s no accountability.

Rene:

I mean, I will say that I do enjoy going to these parties with all the free food, so I don’t know.

Fred:

Yeah. And they’re twiddling their thumbs. They don’t know what to do. They don’t know where business came from. I mean, what did we close? Five deals in the last two weeks? I mean, we’ve been busy. It’s because we’re realistic and the rebate people are starting to show up because they want the rebate because their broker didn’t do anything for them and won’t give them back a dime because the company they work for like Compass, Berkshire Hathaway, and Terry Sereno, The Agency, blah blah blah, on and on and on. They all have a minimum commission on each side of a transaction. So if you represent a buyer, you need to get two and half percent. If you represent the seller, you need to get two and a half percent for the seller and you have to give away two and a half percent as a buyer broker fee.

Fred:

And we’re like, no, not going to do it. It’s just crazy. But that’s the whole industry. And you can Google the United States Justice Department versus the National Association of Realtors and read all about it. Anyway, Los Angeles, while we’re here, 80 and sunny clear skies, it’s called normal. The market here is interesting. I have a client who’s looking in Silver Lake. And the Silver Lake broker’s still either overpriced by a little bit or underpriced by a lot. But either way, stuff is just sitting there. And this is an area that’s “cool and hip” and “up and coming” and “younger crowd coming in”, and it came to, I won’t call a screeching halt, but a massive slowdown. And these are houses say a million to two million range. So you’re still dealing mostly with jumbo loans. So that’s an interesting market.

Fred:

We just put under contract a condo that was listed at two. Ocean view, right on the beach in Marina del Rey that we got for one eight. It was one of the worst looking listings I’ve ever seen. The pictures were absolutely terrible. But it was on for four months and nothing. If you’re going to hire a listing agent, ask them to show you previous listing pictures because this was just pathetic. So there are some buyers here. You’re always going to get ocean fronts, it’s always going to be busier. Venice is starting to pick up a little bit because the prices have come down to a reasonable level for smaller houses. There’s lots of two ones there. But traffic is down and there’s still the same number of houses, so it’s quiet. So if you’re interested in LA, this may be the time. Start taking a look down there.

Rene:

I don’t know if I believe that the traffic is down in LA?

Fred:

Yeah, because I’ve gone to some open houses and I’ve talked with my buyers, and they said there was nobody there or one other person there and I always-

Rene:

You mean, okay, so you mean people are traffic. I thought you meant vehicle traffic.

Fred:

Oh God. We need a second deck on the 405. And that’s my goal living in the LA area is to never get on the 405. When I got to go down to Orange County, different story, nothing I can do about it. But in traffic, got to get somewhere? No way. No way. Yeah. So even The OC, we have, well not The OC. LA County up in Arcadia, we got a buyer looking at a three million dollar house and put in a bid. When they had an offer date, he didn’t get it, neither did anyone else. And we waited a week, we put in another bid, a little bit higher, 50 grand under list with waiving stuff, and we still haven’t heard back from the agent in two days.

Fred:

It’s like, I don’t get these people. But there was a decent amount of activity on that in Arcadia. So again, it’s just case-to-case. The best way that you can tell, because look on Zillow, and they will tell you how many people have looked at it and what the activity is. And you can compare that to the way things were few months ago, it’ll give you a relative idea. Redfin used to do it, but they don’t do that anymore.

Rene:

Do you know what’s interesting about Redfin? It’s like they have just completely changed their tone. I mean, you don’t see any more hot listings, hot and homes anymore.

Fred:

Oh yeah, yeah.

Rene:

It’s just like there’s just so much fear in the entire industry.

Fred:

You know what? No, no, no. I don’t think they changed anything. They’ve kept the same algorithm of however they figured out if it was a hot home or not. It’s just not hitting the mark. I think it’s that simple.

Rene:

I don’t know, I’ll have to check about that. But I mean, come on. I mean, you price it low enough and it’s going to generate a lot of interest.

Fred:

Well, whatever. And they also have, what we do use there is they have a score on there of how competitive it is. So take a look at that on the Redfin site. So you should be looking at both Google and Zillow. It’s the same basic information, but they have a little bit of nuances depending on the house and where it is and what it is. So it’s another way to help look. All right, so we’ve hit the major San Fran, LA, Sacramento, Seattle’s, our transaction coordinator lives about, I don’t know, 30 miles north of Seattle. And she works for a couple different companies. And in the last month, she says they’ve been busy, busy crazy. And the range has been 600 to a million.

Fred:

So it’s still happening up there. You want to buy a condo downtown, no problem. But in the little farther out, I know Amazon’s building a whole giant facility up there, so that might be contributing to it. But again, case-to-case, neighborhood-to-neighborhood, city-to-city, block-to-block, house-to-house, you got to look at everything. You can’t take on national numbers. That’s the lesson there. Are we done or we got anything else to say?

Rene:

I mean, I’m sure we actually kept it pretty professional here. We didn’t go on any rambling for the most part. So I don’t know. I think we’ve got a good one.

Fred:

Okay.

Rene:

I’m sure

Fred:

Yeah. It’s informative and it will be on our blog, our YouTube, our Twitter, our LinkedIn, our whatever, all the socials, blahdy blah. You can ping us wherever, find us, and we’re happy to help. Or you can go to arrivva.xyz and schedule 15 minutes phone conversation with me and Rene about your situation. We’ll tell you about the market conditions in your area, how to be a better buyer. We’ll prep you. We’ll get you ready to jump in if you want to jump in. And we’ll get the pre-approvals done super fast. Or if you want to sell your house, we’re a flat fee, go list your house, and we’ll do all the inspections, we’ll take care of coordinating any repairs, anything you got to do. We have people we can get that you pay at closing, so there’s nothing upfront. We’ll get every inspection known to man done.

Rene:

Oh no, did we lose you, Fred?

Fred:

To make sure that a buyer who comes into your house is going to feel confident about property, which just makes the house looks fantastic. Rene and his drone will circle in your neighborhood and make your house look beautiful from up top. And then we’ll take care of absolutely everything. Just the big discussion we have to have is what the buyer broker fee will be, but that’s a whole different conversation. Depends on the market, case-to-case, blahdy blah. Anyway, so happy real estate everybody. And this is Fred and Rene signing off for another period of time.

Buying a Home? Get Cash Back.

Curious to see how much you could save? Our intuitive rebate calculator provides an estimate of the cash back you could receive when buying a property with Arrivva.