Mike’s Real Estate Show

As a Realtor here in Sonoma County for 28+ years the interesting thing about this “slump” or “market correction” ( I won’t use the “B” word-as is Bubble or Bursting!) is the huge amount of vacant listings. We have over 3200 listings currently on the market in Sonoma County (Single Family detached and condos) and some 1100 are now vacant. Throw in another 250 of “tenant occupied” and you’ve got a prime case of major profit taking.

I’m advising my buyers to concentrate more on the “deal” than the house. I advise them to look at the vacant house first and the longer time on the market the better. And now with our more sophisticated computer MLS system we can determine at a click if the subject property has really been on the market 14 days or was it re-listed after 180 days with another firm!  
            The relisting of a property skews the market and doesn’t give us a very clear idea of how long properties are actually taking to sell. As I mentioned, you can be relisted and appear to be a new listing and if the property sells during this listing period the DOM or Days on the Market, is totally out of whack to the actual time. I MLS does not compute the “real” time for marketing. This is also true with the “sold to listed” price percentages. Say our example had been listed with another agency for 180 days at $750,000. They relist with another agency for $695,000 and sell for $650,000. Our MLS only reports the % as the difference between the $695K vs $650 and not the original $750,000.
            I placed an offer on a property last week which had been originally listed for $3,950,000 and is now listed for $1,950,000. We might get together at around $1,800,000 so it doesn’t look like they came off their price too much—right!  I remember in the early 80’s having properties on the market for months. We didn’t have a falling market so no one came off their prices too much. We didn’t appreciate either. We were pretty much flat for 5-7 years. Then boom! We were off and running once again only to die with the defense industry implosion in the late “80’s early 90’s”  We lost a bit there but came roaring back like I had never witnessed before.  So it’s been a fun ride. I thought this year’s Fair theme was very fitting! 
The big ugly out there is the lurking default market. I’ve heard the words “Short-Sale” and shudder. One instance we have is a property in the southwest area. Listed for $575,000 and coming down. The sellers could have gotten more 9 months ago. They could have priced it right then and there, made the sale and be out of Dodge. But they “needed” more and did not heed the words of their Realtor. They began “chasing the market”.  A new price would be set and they’d grudgingly move to there but then a new price would pop up and the cycle would continue. Instead of setting a new bench market initially they kept “chasing the market” and now their loan of $512,000 is coming into play as they are dropping their price finally to $535,000. Throw in a 5% brokerage fee, Seller’s document stamps and most likel a credit for seller’s closing costs and your proceeds are negative. They’ll either need to bring in more cash to close or go to the lender and request a “short-sale”. They are “Short” of the payoff relative to the loan. Our Realtor is going to slash her fee. The home is vacant and the sellers have bought a new home in L.A. If you drop your fee below 2.5% to the Selling office you might as well hand the keys to the bank for agents are being lured to other properties with brokerage fees of 3-5% to the selling office and like I stated, we have over 3200 listings available in Sonoma County.
Making manners worse is if the property is a refinance, the note becomes a “recourse” loan. This means the lender can look to other assets for payoff of the note! Then the other double whammy is debt relief and tax issues!! Yeeeeeeeeeeeech!! Welcome to my world!
Here’s to living and working in interesting times!!