LISTING AGENT "DOUBLE ENDING" HOME SALE

Unlikely -  Your (Listing) Agent “Double Ending” Your Home Sale

During the first six months of 2017, the MLS reported two hundred ten (210) Arcadia (detached) home sales. Of those 210 sales, the listing agent also represented the buyer in thirty-six (36) of the sales. An agent representing both the seller and buyer in a transaction is commonly called “double ending”. In other words, from January thru June, 17 percent of Arcadia SFR sales were double ended.

After relating this figure to a number of agents in my office, many were surprised and thought the percentage would be higher. Most did agree that double ending usually occurs when a prospective buyer with no existing agent relationship becomes interested in a home via an Open House or other advertising medium. Subsequently the prospective buyer asks the listing agent to represent them  and draw up an offer which is accepted.

What does this 17 percent figure mean to a home seller interviewing prospective listing agents – discount agent statements “I have many buyers for your home” (list with me). More importantly, select an agent who is experienced, is ethical, knows the market, is a good communicator/listener and will execute a sound marketing plan.

By double ending a home sale, an agent will in most cases double his/her compensation by earning  a commission from “both sides”. It must be stressed that a listing agent who is representing both buyer and seller has the fiduciary responsibility to represent the best interests of the seller  and also has a fiduciary responsibility to the buyer.  Sellers that are concerned about a potential conflict of interest double ending scenario should discuss this concern with their agent before executing the listing agreement.

Zillow ZESTIMATES

Zillow ZESTIMATES

In today’s real estate world, home  buyers, sellers and shoppers routinely go to internet online real estate information and listing sites such as Realtor.com, Redfin, Yahoo Homes and Trulia. The most popular site is Zillow.  In addition to active listings of properties for sale, the site provides square footage, lot size, room counts, tax data and other key information on millions of homes.  It also provides, the often misunderstood “Zestimate”, Zillow’s proprietary AVM, automated (property) valuation model/estimate. AVMs use mathematical modeling to digest the subject property’s physical characteristics, publicly available data and mountains of local market property data to arrive at a value estimate.  Millions/”Zillions” of data points go into a Zestimate.

Zestimate accuracy most depends on the conformity of properties and the availiability (and accuracy) of data in an area. The more accurate  data available,  the more accurate the Zestimate. As an example, AVM estimates are generally more accurate for homes located in “newer” large Planned Development communities where variances for age, lot size, room counts, condition and architectural styles are relatively small versus homes in Arcadia which generally have much larger variances for the same property factors. AVMs utilize physical property data but cannot yet factor “emotional” market factors such a property finish, floor plan, flow and exterior appeal. Zestimates for higher priced home areas are generally less accurate. Nationally, Zestimates now have a median error rate of 4.3 percent. The error rate for some locals can be much greater! Think of Arcadia where the median sales price exceeds $1.3MM+.  A 4.3 percent error  is “big money”. One other thing to think about – the Value Range contained in the Zestimate shows the high and low estimated value of the home. A wider  range should alert one that the area volatility is greater and the value estimate reliability should be questioned even more critically.

In my opinion, the Zestimate for our home fell at the low end of our homes’s value range. Probably most owners have the same parochial thoughts. The Zestimate accurately reflected the physical characteristics of our home (e.g. sq. footage, room count, age …) but failed to reflect a permitted 600 sq. ft. plus loft guest house we built on the property.

The good news, most area sellers and buyers do not accept Zestimates “as gospel” and understand that the Zestimate is just that, an estimate of the value of the home. It is a good starting point but should not be the center point for pricing a home.  Advice – work with an experienced real estate agent who is active in the area, physically inspects the real estate and takes special features, location and market conditions into account. Lastly, make sure your agent is a good communicator and has your objectives as a number one priority.

NUMBERS COUNT AND CAN COST

NUMBERS COUNT AND CAN COST

Many buildings do not have a 13^th floor. It is twelve and then fourteen. Where did that “unlucky” 13^th floor go?  In Nevada the number “7” is very popular in residential  real estate listings. When my wife and I visited Shanghai, our hotel, the Meridien, did not have a 4^th or 13^th floor. Try to find a number “13” in an Arcadia street address.

In real estate superstition can play a large and costly role. Number “considerations” are very strong in high demand Asian neighborhoods.  Eight is a very popular number because its Chinese pronunciation is very similar to the word that means “wealth” and “prosperity”. The Chinese word for “death” sounds similar to the word for “four”. Consequently, the “eight” shows up in many Asian neighborhood property listing prices. The number “four” is avoided in listings.

More importantly, street address numbers can significantly affect property marketability and values/prices. In an address “4’s” are a negative and “8’s” are “good”. Addresses ending in “44” are really “bad”.

Brent Chang, a successful real estate agent in Coldwell Banker’s San Marino office was reported by the Wall Street Journal to have stated about 85% of his Asian clients use numerology when buying or selling.

On my street block in SW Arcadia, four homes which were subsequently torn down (to accommodate new construction) were purchased between July 2011 and March 2012. All of the lots were rectangular in shape and contained 16,909 to 19,451 sq. ft. All of the properties were within 200 feet of each other. The three lots with no numerology issues (street address nos. 21, 37, & 52 sold for $66.83 to $89.25 per lot square foot. It does not appear to be chance the fourth property with a “44” street address  number sold for $60.48 per lot square foot, a $100,000 plus reduced price/discount.  Prior to the sale, the seller of the “44’ property, a long time Arcadia resident and retired nurse requested the City to allow an address change. The request was rejected by City Council and this policy is still in effect. It could be argued an address change from “44”” to “50” would have added tens of thousands of dollars to the selling price.

The cities of Sierra Madre, Pasadena, Azusa, Bradbury, Duarte, Alhambra, Temple City, Monterey Park and Rosemead permit address number changes. The process usually involves a completion of a request application, field inspection to confirm the requested number change is in sequence and after approval  notification of change to approx.. 13 city or county agencies/departments. Fees charged to cover the cost of processing ranged from $106 to $806, depending on the city. None of the cities voiced “problems” with the process.

In Arcadia, there are 350 homes with address numbers ending in “4”. Of those 350, 110 homes have addresses ending in “44”. When the owners of these homes decide to sell, they will be subject to a numerology discount costing them tens of thousands of dollars. I think it is time for the City of Arcadia to entertain and permit address number change requests. Costs incurred during the process can be offset by fees charged which the homeowners would enthusiastically pay.

The home directly across the street from our home has an “88”” address.  When the property sold in 2000, the new owner requested the address be changed  from “84” to lucky “88”. At that time the City of Arcadia approved the request. Over the years I kind of believe our family has received good fortune by being so close to lucky “88”.

ACADIA NEW HOME SALES PACE SLOWER BIG INVENTORY STRONG PIPELINE BUT......

ARCADIA NEW HOMES – SALES PACE SLOWER –BIG INVENTORY – STRONG PIPELINE BUT …..

The pace of Arcadia (detached) new home sales continued to decline in 2017.

2015 was the “peak” year for Arcadia new (detached) home sales. In 2015 the MLS reported 68 new Arcadia homes sold, 5.6 sales per month. In 2016 sales declined 19 percent. Sales totaled 55, 4.6 sales per month. So far this year new home sales have continued to slow. The MLS reported 43 new Arcadia homes closed escrow in the ten month period of January thru October. This 4.3 sales per month pace conforms to the declining sales trend.

New (detached) home inventory is at a very high level. At the end of October, fifty-one (51) homes were listed for sale on the MLS, four (4) of which were in escrow.  Those fifty-one homes translate to more than a ten (10) month inventory given recent new home sale velocity.

Even with the high inventory the pace of new construction should be steady (FOR AWHILE).  The Arcadia Building Department reported 112 single family home (detached) building permits were issued in 2016. Through September 2017 fifty-nine (59) SFR building permits were issued. This is a strong pipeline but THINGS ARE CHANGING. During the months of August and September only seven (7) permits were issued. This is a big drop-off. It is reported demo and building permit applications/requests are “way down”. It appears the slower new home sales and large inventory are finally having an effect on the market.

Many factors contribute to the steady decline in new and upper end Arcadia home sales. Chinese individuals have always faced Chinese government constraints to overseas investments. For years wealthy Chinese have figured out ways to get around these  constraints  – a kind of “cat and mouse’ game. The Chinese government has been tightening its monetary policy and further increasing restrictions to slow outbound capital flows. It has had an impact. Chinese home buyers have extended their  reach/search beyond Arcadia/San Gabriel Valley to “more affordable” US cities  in the last few years. Seattle, Portland, Bay Area, Dallas and Florida cities are generating more interest and investment.

Credit Suisse estimates there are 1.6 million U.S. dollar millionaires in China. These millionaires will continue to figure out how to invest in overseas markets in order to diversify assets and hedge against potential Chinese economic and political uncertainties. Arcadia/San Gabriel Valley will continue to be a primary destination for these millionaires’ capital.

HUD SUSPENDS RECENT MORTGAGE INSURANCE PREMIUMS REDUCTION

An hour after President Trump was sworn in Friday, the Department of Housing and Urban Development announced it suspended the recently initiated one-quarter percent reduction of Mortgage Insurance Premiums. Concern regarding the credit quality of FHA originated home loans has been expressed by many. The suspension of the one-quarter percent reduction should have a minimal effect on FHA loan origination volumes.

MID-JANUARY - SERIOUS BUYERS OUT THERE

A very successful agent in our office recently listed a home in the Upper Highland Oaks area of Arcadia. It appears this beautiful late 1950's built ranch style home  with 4 BR's 3 BA was listed at the lower end of the price pattern for this wonderful property. The marketing strategy worked! To date, twenty-four offers have been received. The agent definitely got the market's attention. IT IS MID- JANUARY AND THE BUYERS ARE OUT THERE.

HIGH HOME PRICES DRIVE PEOPLE OUT OF CALIFORNIA

By Kevin Smith, San Gabriel Valley Tribune  POSTED: 11/09/16

California’s warm weather, sunny beaches and world-class schools have lured people to the Golden State for decades but rising home prices are turning that equation around.

Data analysis firm CoreLogic says that for every home buyer coming into California another three are selling theirs homes, packing up and moving out.

The trend of out-migration was also noted in a trio of reports released earlier this year by Beacon Economics. Beacon noted that 625,000 more U.S. residents left California between 2007 and 2014 than moved into the state. The vast majority ended up in Texas, Oregon, Nevada, Arizona and Washington.

The search for more affordable housing is sending low and middle-income workers out of the state, while higher-wage workers continue to move in, which argues against the theory that high taxes are driving people away.“California has an employment boom with a housing problem,” Christopher Thornberg, a founding partner with Beacon, said the reports were released. “The state continues to offer great employment opportunities for all kinds of workers, but housing affordability and supply represent a significant problem.”

Recent figures from CoreLogic reveal how much home prices have risen over the past year. Azusa’s median home price for September was $449,250, up nearly 20 percent from the year-ago price of $375,000. But bigger year-over-year increases were seen in such cities as Foothill Ranch (26.9 percent), Westlake Village (25 percent), La Canada Flintridge (22.3 percent) and Chino Hills (20.4 percent), among others.

Mel Wilson, broker and owner of Mel Wilson & Associates Realtors in Northridge, said many people who are near retirement or living on a fixed income are looking for a less costly lifestyle. “I see that more in some areas of the baby boomer population,” he said. “As they retire they are trying to figure out how they can live but not outlive their money. If you are a boomer and have owned your home for 20 years or more you will have quite a bit of equity built up.”

Many baby boomers are moving to Nevada, Arizona, Idaho, Georgia or North Carolina where home prices are considerably lower. Still others are relocating to Texas. Home prices are cheaper there, he said, although property taxes are higher.

Wilson said high housing prices are also impacting younger Californians. “Some people in their early to late 20s are living with their parents after they get out of college because they’re saddled with so much student debt,” he said. “When they get to their mid to late 30s they’ll get help from their parents or grandparents with buying a home.” Wilson said California home prices have risen in part because of a lack of inventory.