I remember reading a rather difficult book in grad school entitled The Structure of Scientific Revolutions by Thomas Khun. Basically the book was how changes in scientific thinking tend to happen rather quickly resulting in a phrase you’ve no doubt heard before: “Paradigm shift.”
Well, it seems scientific thinking and our everyday activities can intersect in such a way that we can experience our own paradigm shifts at times. Something like that happened with our never-ending real estate situation. If you’ve been a faithful reader to this blog (and thanks a bunch for if you are!) you know that Julie and I are trying to sell our place so we can get a little extra square footage by purchasing another house (or in our case, another townhouse). After our meeting with Mr. “Don’t Analyze. Act!” we decided to terminate our contract with our agent and take our place off the market for a bit and re-list with a new agent. Right now we’re interviewing potential agents and hope to make a decision on who we are going with by the end of the week.
In a way, I feel bad because our agent is someone we’ve known for years (she’s a neighbor of ours) and she served with me on our homeowners board. She’s a very genuine person who gave it her all in trying to sell our place, but because she’s very new to real estate, she doesn’t have the experience we need to sell our place in the market conditions we’re in. But the biggest factor for us in canceling our contract was her boss. He really pissed us off and we didn’t want him to have any of our money when the place sold. So, we said “See ya” and started making calls to other agents (both of whom we know from their reputation).
So in the space of 24 hours our house was taken off the MLS, the signs were taken down, we had a meeting with a new agent about marketing, and we’re in the process of selecting some things for upgrades. I like to think we’re a bit more savvy now, and during our meeting yesterday with our potential new agent Julie and I made sure he (the agent) knew that we are quite aware of the current market conditions. At one point we basically said: “Okay, most agents do the following 1. Listing on the MLS. 2. Have open homes. 3. Advertise on a number of websites that run the gamut of Yahoo to Craigslist. 4. Go to the weekly agent’s meeting to promote the property. 5. Get the property on a broker’s tour. 6. Send out flyers targeted at specific markets. What are you going to do that different than other agents to get our property exposure and, of course, sold.” He had some suggestions ready to go, but he also said that he needed to do a long-term market analysis of our “comps” (i.e., properties in our price range and of similar quality) to get an accurate price. He played it safe by not giving away the store in terms of all his marketing ideas, but gave us a sample of what he would do differently.
So, we’ll see what happens….
Here are a few things we’ve learned while traversing the rocky terrain of real estate. The long-range forecast for our slice of the Bay Area (and it’ll probably happen in many other parts of the country as well) is as follows:
1. The number of foreclosures are going to go up in the next two quarters.
2. Prices are going to dramatically drop in the more economically volatile areas.
3. The media is going to latch on to “The sky is falling” angle which will make people even more skittish about purchasing property.
4. As prices drop, there’s going to be a tremendous opportunity for people to buy property at good prices.
5. Now that there are a number of loan “products” (don’t you love that term) available, people who are willing to buy and sell real estate will do okay if they looking to buy and hold their property — which seems to be bad news for house flippers.
6. Location still drives demand (and lucky for us we’re in a good location).
7. Banks are not lending money to first time buyers for improvements to a property. So that means homes with upgrades are selling faster while those that need a few new things (like ours) will either sit or sell for a lot less than the comps.
Granted these are just forecasts, but these are things we didn’t know until we started talking to other folks with more experience.
So, what have we learned? Well, don’t hire friends and neighbors as agents. If someone in the real estate process pisses you off, you have the power to end the relationship (if you desire). Get advice from people who know your market and learn as much as you can about what’s going on in your area. For example, we live in Walnut Creek where you have to price a home just right to attract a buyer. In San Francisco, Oakland and Berkeley, however, agents are pricing homes $100,000 below the market price to get a bidding war going. You know what? It’s been working. Many sellers have been getting quite a bit over the market price. “Frenzy” works in Oakland and Berkeley, but it doesn’t work here. If we priced under the market price, buyers would try and pull us lower than what’s being offered. It’s odd, but that’s the mindset of the average buyer in our part of the Bay Area.
Well, this has gone on longer than I intended, so I’ll stop now. And yes, I realize I sound like a real estate agent in this post and that’s kind of scary to me.