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Arguement

“To each his own,” I say. Your perfect house is not mine, and vice versa. Now that the real estate market has shifted slightly to the buyer’s advantage in Southern California, I’m finding more buyers are dead-set on finding the “perfect house.” As house inventories rise in many states and communities across the country, buyers are now reciprocating what they went through in the past, when it was a seller’s market. They’re passing up the “less-than-perfect” homes and continuing to look for the ever-elusive “home of their dreams.”

When the slight number of homes on the open market was at a dirth in the 2003 – 2006 market, buyers were often left hanging out in left field as sellers were combing through multiple offers on their freshly listed homes. “You don’t have substantial dollars to shell out for a down payment? You’re not waiving the loan, appriasal  and home inspection contingency? Sorry Mr. or Mrs. buyer, you’re not even in the running for purchasing my home.”

Skip forward one year. Ah, yes.The tide has turned! Buyers are not settling for anything that is even romotely close to what their dream home is in their minds. That is, unless the price is considerably lower than what the home needs to “meet their standards.”

Sellers, forget about listing your home for higher than what you think it’s worth, just for negotiating sake! Buyers are walking right by homes that are over-priced. They won’t even go to see them let alone consider making a lower offer than the asking price. Hello! There is too much inventory on the market. They move on to the next home that is closer to their price-point and nearer to what their dream home would look like.

The way I see it, we’re at a stand-off between buyers and sellers in the So Cal real estate market today. Some sellers are not willing to be realistic with the price that their home should be marketed at. They’re still thinking that their home is special and stands out above the competition in the neighborhood. “We have to at least try to get our price,” they say.

This is the wrong approach to marketing a home in today’s market. In order to get top dollar in our current market, the seller(s) must be willing to do the following:

  1. Make all repairs that are known to you and man.
  2. Creat great curb appeal by planting seasonal flowers, have GREEN grass, and give your house punch to make it stand out from the rest on the block and your competition.
  3. Pack up all personal photos and items that clutter shelving, table-tops and counter space.
  4. Neutralize paint colors that may not appeal to the masses.
  5. Get rid of pet paraphenalia and pet odors.
  6. Maximize outdoor views and outdoor spaces to add the feeling of more living space.
  7. Make the entire home spotless, including: washing windows, scrubbing out the tub, power-washing decks, siding, etc.
  8. Remove excess furniture in every room to show the actual living space and size of each room.
  9. Return rooms that have been used for their purposes to the intended purpose of the room; ie. dining room used as an office.
  10. Clean up the yard; no toys, yard ornaments, or dead anything left hanging around to turn-off buyers.

Buyers, on the other hand, have to be able to look past some one else’s faux pas. In the beach areas of Southern California, there isn’t much new construction. Many areas, such as Long Beach, are land-locked. There is so little “new construction” unless it is going “up,”  as in high-rise condo projects.  It’s more of a reality than not, that buyers wanting to live in beach communities will have to consider purchasing  homes that were been built between 1920 – 1955. Some up-grades my have been made, but not chances are,  the entire home has not been completely refurbished. Buyers should be asking themselves these questions:

  1. Does the neighborhood and floorplan of the home suite my needs?
  2. With some paint and minor cosmetinc alterations, will this home suit my/the family’s needs?
  3. Is the price of the home comensurate with the condition and alterations that I would like to make?
  4. Is the yard the type of landscaping that I can realistically live with and keep up with?
  5. Can I offer less than the asking price and hopefully come to an agreement with the seller and feel good about my purchase?
  6. Can I realistically afford to make the improvements in the time-frame that is completely necessary for me to live in the home?

The big “Ah Hah!” is that, there is no PERFECT home. Not  with newly constructed homes or with existing homes. Period! There is always something that the you would change; do different; get rid of; turn into something else, if you could, once you’ve lived in the home for a while. That’s just the nature of our beings.  We live with something for a while, evaulate it, and then re-invent it.

My best advice is to work with a seasoned real estate agent, evaluate each home on the criteria above, and then have your agent explain the most recent, comparable sales (comps) to you. After that, make an offer that is best suited to the seller’s criteria for an acceptance with your goals in mind. (An experienced agent representing you will call the listing agent and discuss the details of the offer, including a lot of the fine points that the seller is going to be very picky about.) It doesn’t take much sometimes, to get sellers to see the light and for them to lower their price to accommodate an offer. If you, as a buyer, don’t put pencil to paper and write an offer, you’ll never know what the seller may have conceeded.

Cant find what you’re looking for in the neighborhood that you’re smitten with? I am somewhat of an Home & .Garden T.V.  junkie in the late evenings and on weekends. There is an excellent show on the H.G. network called “Hidden Potential.”  The show highlights 3 different homes that are not up to the buyer’s standards, but are below their price-point. The designer/architect shows buyer’s how they can re-create the space to make it their own, while staying within their budget. Great show! Too many buyers don’t have enough vision as to what the home ccould actually become when they put their own stamp on it. I say, GET CREATIVE! Look outside the box! Or at least learn to look for the “potential” of a home.

To buyers: There are so many fantastic homes for sale from many different eras. What would happen to these landmarks and historic mavens if nobody had vision to turn them into their own “perfect house?”  Look for the home’s best attributes where your criteria is concerned and figure out, with the help of your experienced agent, what you can negotiate on the price with the seller.

Sellers: Put your absolute best foot forward from day 1! The day your house goes active in the Multiple Listing Service (on the open market,) your home should be in primo condition. You want to WOW! buyers and leave them with the impression that they can move right in without doing anything to the home.

Everybody, can we just learn to get along in this housing market?

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Here is the latest real estate market trend report from June 8, 2007:

Long beach currently has 1,920 active listings for single family homes and condos, an increase of 23% over last year this time and 433 properties in escrow, constituting a 4% decrease as compared to last year.

The current statistics by zip code as of today’s date, June 8, 2007, are as follows:

Single-Family & Condo

Zip Code      Active     Pending       Sold (2 mos)    Attrition Rate

90803              184            47                   64                6 mos.

90804              181            37                   32               11 mos.

90807              192            37                   53                 7 mos.

90815              153            47                   46                 7 mos.

90802              343            72                   66               10 mos.

Residential Income (2 units or more) – combined totals for zip codes above:

                         179             32                  28                 6 mos.

*This information provided by the SOCAL MLS

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Federal Reserve Chairman, Ben S. Bernanke, spoke via satellite to the International Monetary Conference gathered in Cape Town, South Africa, June 5th, 2007.  With regard to the Housing Market and the effect that the sub prime lending practices of 2004-2005 ares having on the housing market, Mr. Bernanke had this to say:”Recent developments in the subprime mortgage market add somewhat to the usual uncertainty in forecasting housing demand.  Subprime mortgage borrowing nearly tripled during the housing boom years of 2004 and 2005.  But decelerating house prices, higher interest rates, and slower economic growth have contributed to an increased rate of delinquency among subprime borrowers.  This increase has occurred almost entirely among borrowers with adjustable-rate mortgages; delinquency rates for fixed-rate subprime mortgages have remained generally stable.  Some of the increased difficulties now being experienced by subprime borrowers are likely the result of an earlier loosening of underwriting standards, as evidenced by the pronounced rise in 2006 in “early payment defaults”–defaults occurring within a few months of mortgage origination.  All told, the rate of serious delinquencies for subprime mortgages with adjustable interest rates–corresponding to mortgages in the foreclosure process or with payments ninety or more days overdue–has risen to about 12 percent, roughly double the recent low seen in mid-2005.1  The rate of serious delinquencies has also risen somewhat among some types of near-prime mortgages, although the delinquency rates in those categories remain much lower than the rate in the subprime market.  

Tighter lending standards in the subprime mortgage market–together with the possibility that the well-publicized problems in this market may dissuade potentially eligible borrowers from applying–will serve to restrain housing demand, although the magnitude of these effects is difficult to quantify.  Subprime and near-prime mortgage originations rose sharply in 2004 and 2005 and likely accounted for a large share of the increase in the number of home sales over that period.  However, originations of nonprime mortgages to purchase homes appear to have peaked in late 2005 and declined substantially since then, and by more (even in absolute terms) than prime mortgage originations.  Thus, some part of the effect on housing demand of the retrenchment in the subprime market has likely already been felt.  Moreover, indicators such as the gross issuance of new subprime and near-prime MBS suggest that the supply of nonprime mortgage credit, though reduced, has by no means evaporated.2  That said, the tightening of terms and standards now in train may well lead to some further contraction in nonprime originations in the period ahead.  We are also likely to see further increases in delinquencies and foreclosures this year and next as many subprime adjustable-rate loans face interest-rate resets.

We will follow developments in the subprime market closely.  However, fundamental factors–including solid growth in incomes and relatively low mortgage rates–should ultimately support the demand for housing, and at this point, the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system. ”

More of Mr. Bernanke’s remarks…..

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sold-available.jpg  As of April 4, 2007 – The City of Long Beach had 1591 Active single-family homes and condominiums for sale and 428 sales pending. In the past month the number of listings has crept up by approximately 100, while the number of escrows opened has remained relatively the same. Currently, Long Beach has roughly 20% more inventory than the same time period in 2006 and 14% fewer pending sales.

 The current numbers of Active Listings, Peding Sales and Closed Sales (within the last month) are as follows by Zip Code:

 90803 – 145 Active – 50 Pending – 27 Closed

90804 – 141 Active – 27 Pending – 23 Closed

90807 – 155 Active – 40 Pending – 27 Closed

90815 – 118 Active – 46 Pending – 34 Closed

90802 – 261 Active – 76 Pending – 32 Closed

*This information was taken from the SOCAL MLS

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