Oakland Real Estate News

Buying a home in a Seller's Market can generally be challenging. Buying a home in a Seller's Market in closer proximity to tech boom cities in which your desired city is in top demand can...... well let's just say you must stay confident, creative, and willing to sacrifice. Selling a home in a Seller's Market should be easy, but can be complicated as well if the proper expectations aren't set and greed sets in. 

The Oakland real estate market has always had desired pockets scattered between undesirable areas. This has evolved, and now some comparable homes in the same neighborhoods are selling at up to $200k differences in price (approximately the highest I've seen). In measuring the differences most times, the edge of the higher priced "sold" home may just be nice upgrades/originals and a spectacular stage job. These "sold" price differences can make it frustrating for realtors when looking for comparable homes for a client's Comparable Market Analysis. Some buyers are so frustrated with writing offers just to get out bid that they want to go for it with a very high offer over asking price. The problem that can stem from writing an offer too high however is the appraisal will come back short of the offer price, which will require the buyer to make up the difference. The same frustration sets in for the seller most times when they are excited by the high offer only to get a call from their agent about the buyer wanting to renegotiate down to the actual appraised value. In those cases sometimes seller greed sets in and the property sits on the market only for the listing to expire.

The truth is, some homes (sold price) probably just shouldn't be used as comparables when it comes to creating a CMA (at least in the Bay Area). There are exceptions to this, some that I use each time I create an analysis. For instance, when I create these reports I most times always do two:

One of them being an analysis that includes homes on a top tier (well staged and very nicely upgraded with close comparables such as rooms, baths, and square footage), a mid tier (not so upgraded but originals and comparable features), and a lower tier (tenants, fixer-ish, older looking, and not great condition). If I am unable to find these within a close radius I spread out a bit and sometimes increase room amounts and square footage until I get what I need. The most important thing in this case is letting your clients know not to use the value of the analysis given by the software. Using the method above will have your final numbers somewhat inaccurate but to a certain advantage. This allows your client to see an analysis of a few kinds of properties (condition varying) with similar features. Seems elementary, especially to experienced realtors, but in Oakland this is almost a must.

For the buyer this will help them strategize their buying in being able to be creative with directional ideas to stay in budget with a mid tier or fixer-ish purchase, or consider spending a little extra for a finely renovated home that already shines.

For the seller this will enable them to equally strategize their sale with a possible 203k/similar renovation loan or out of pocket spending to deliver a polished/upgraded home to the market that would sell for more, or sell as is at an acceptable price still with a usually quick turn around.

The other analysis is what I refer to as my Quick and Dirty Comps. With this analysis I basically search out homes with the closest comparison to the subject property condition wise, square footage and sold for square footage, bedrooms and baths etc. Without the use of condition tiers like above this one gives a better perspective of value and should give the buyer/seller a more precise idea of what the subject property is worth. 

Individually, most everyone has their own ways of comparing homes as realtors, appraisers and even sellers and buyers. There can be good and bad comparisons sometimes done by realtors and even appraisers, some traveling from a surrounding city that are not familiar with the local real estate market. If they bring their area specific method from the real estate market in their city 20 miles away, you might get an inaccurate valuation. This can drive any side in the transaction CRAZY if it is from the appraiser, so don't be afraid to dispute an appraisal with your own information. 

The truth still lies in the fact that the fair market value is usually determined by what the market is willing to pay. In the case of the Bay Area there are many residents with higher and growing incomes willing to pay amounts way over appraised value. With that being said evolution of different areas is occurring and we are experiencing extensive change. If you will be buying or selling in today's Bay Area market be sure to do your homework on the trends. 

TRENDING NOW!


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Posted by Harold Thomas Jr. on April 9th, 2016 1:54 PM
Inexperienced and even some seasoned buyers have anxiously asked "How long does it actually take to buy a house?". In truth there is no perfectly right answer. Being that everyone (both on the agent and client side) is different, the experience varies. Funny enough it is not always people's buying power or pre-approval amount either. Different responsibilities come in to play when making a purchase and everything doesn't necessarily fall on the realtor. Buyers are encouraged to be as involved as possible to ensure they get what they want. And that doesn't mean taking over as the realtor buyer and bombarding your realtor with Zillow Zestimates and Trulia  homes either.

Be Prepared to Buy

As an interested buyer, if you don't already know that getting pre-approved by a lender is one of the first things you must do, even just to write an offer to purchase in most cases, you do now. But that is not all if you really want to be prepared. To have a few extra bases covered consider:

A few months to at least a year prior to getting pre-qualified start taking steps to raise your credit score. There are a number of things one can do to strengthen their credit score in a short amount of time. I won't go into much detail in this post but to name a few; make sure you have checking and savings accounts with average daily balances and not $0.00 routinely; if you don't have any, get a credit card or two being sure to continuously pay down your balance to 30% at most of your max credit limit each month; start a department store credit line at Macy's or a like store and keep the credit balance at most 30% of the max, DO NOT GO OVER 30 DAYS WITHOUT PAYING ANY CREDITOR INVOICE.

Start a savings plan in which you are putting extra money aside to assist in your buying expenses such as down payment, inspections, closing costs, appraisal, title and escrow fees etc. It's not cheap buying a house and the more money the better. When you start your savings plan don't be frugal. Without a down payment assistance program you normally need to have at least 3% of the purchase price, and that is only the down payment.

Figure out a good schedule with your realtor to routinely go and look at homes.

Go and Look!

Aside from paperwork and qualification, a buyer needs to realize the emphasis that needs to be put on the basics, which include footwork and actually going to look at homes. We are all very busy and that is to be understood from all angles. But when it comes to the decision to buy a home in today's extremely HOT market one needs to realize that regardless of how busy people are, the smart ones go after one of their most prized possessions aggressively. If you don't go and see homes then you won't get a home (unless you are an absentee investor buyer or have some other situation going on). This means that whenever your schedule permits and your realtor has shared homes that interest you, you should go and check them out. If you are working nights go during the day and vice versa or even try going at lunch. Now in many cases offers will not be accepted until a specified date. If this is the case then fine, you have an excuse. Otherwise do not hesitate to get out there. These days homes go fast, and sometimes even sell below a price that you would have offered.

Thoroughly Study Your CMA and the SOLD Trends in the Area Before Determining Your Offer Price

I know it sounds elementary but I've noticed where a thorough market evaluation isn't being done prior to submitting offers for many buyers. It has become common practice to write offers over asking price in the Bay Area market and people have been under bidding for high priced fixer uppers for as long as I've known. However, research of the present market is still pertinent to coming up with the best and most competitive offer price. Our market is definitely very tricky right now, especially in the East Bay as sold prices are going well above the appraised value in many instances. With just that in mind buyers do not want to bite off more than they can chew and should have knowledge via their Comparative Market Analysis and any other reports that may be provided, of what has recently sold and what can likely be expected when the appraisal comes back. Good realtors should be able to guide buyers and decipher between a situation where there was a buyer with deep pockets on a SOLD home that was able to afford to make up the difference in appraised value and offer amount or not. Definitely do your homework as time is precious. 

Not much in decent areas is being sold for less than $400,000. And anything above $417,000 would be considered a jumbo loan which is a little more strict on terms and for some harder to qualify for. This means that many people buying these homes are getting loans for up to $417k and financing the rest with their own cash reserves or other assets. The harsh creeping reality of our market, at least in the East Bay, now is that you MUST have some considerable extra cash to put down or else you are almost certain to be outbid. The good thing is that the new wave of buyers in our market more and more have higher incomes. The bad thing is current long-time residents are being displaced.


Posted by Harold Thomas Jr. on February 21st, 2016 6:09 PM
In today's real estate market selling a home can happen pretty quickly and produce pleasant results for sellers. The term "a Seller's Market" illustrates the success of many that have chosen to sell their homes and have not only gotten all of their terms without negotiation but also well over the asking price. This is something happening all too often in the Bay Area market as homes are listed and selling within a few weeks, many times even sooner. It seems easy, and it actually is in a Seller's Market for the experienced and even the not so experienced realtor. Regardless of the experience level of your realtor it is very important to establish a good strategy for the sale and to be sure that you are both (or all) on the same page. If the right game plan is established in the beginning normally a sale can not only move quickly and smoothly, but can heavily trump the results of a sale not properly strategized. The difference is the amount of time and effort spent by both parties and if really done right the increase above the asking price. 

Disorganized realtors may still produce positive results in a Seller's Market, but may annoy the seller and end up doing things repetitively. Most realtors try to get as much of the necessary paperwork out of the way in the beginning so they can easily send out  disclosure packets and other information to interested parties right away. This seemingly small act goes a long way and opens the door for time and developing a warm marketing strategy prior to the property even hitting the market. I've been in deals where some realtors would send me different disclosures every other day, and still end up not sending them all until the day of close, or even after sometimes. This can be frustrating, not only to the other agent but also to the clients involved, escrow officers etc., who many times have to go back and sign docs that could have been executed weeks ago. If most of the paperwork is completed initially all one has to think about is the marketing aspect. With less responsibility clouding your mind it is easier to come up with ideas for staging, increasing property value and curb appeal and even going about your regular life.

A good team can produce fantastic results without extreme amounts of effort. It's one thing to have a great realtor with knowledge of the market and ties to professional associations and networks. But when you combine a great realtor with an enthusiastic client willing to participate the sky is the limit. Most times realtors have relationships built with local contractors, landscapers, designers and more. With much of the paperwork out of the way at least a week to two weeks prior to the listing going active one may consider getting things done that weren't initially thought of. When it comes to selling a home a little can go a long way. Always be willing to get quotes and/or estimates for items needed for the home. You'll never know what some professionals would be willing to do for you and what kind of deals and discounts might be out there. The obvious isn't always the case, and we don't know what we don't know. Never guess when it comes to selling your home. Some people find out that they could have gotten work done they thought they couldn't afford, and end up missing out on thousands of dollars in return on investment. 

If your home is not a fixer in a sellers market it would normally make sense to stage it, even if it is a fixer sometimes. A nicely staged home usually produces positive results. Staging can get expensive however. But with a good team and a little creativity I've seen some sellers do a terrific job on their own with the use of their realtors' resources. Definitely something to think about which will sometimes give buyers a more comfortable feeling as opposed to viewing an empty house and having to use their imagination. If it is affordable most definitely use a professional. A better looking anything normally sells for more.

The strategy for the sale would normally be a realtor thing in most people's opinion, and if done right can surely get a realtor more clients. But again with other requirements, like paperwork, out of the way a good team will brainstorm about the pros and cons of the property and focus their strategy on the pros. While the agent is advertising the property through their professional affiliations, social media and other channels, the seller(s) is(are) speaking up as well in their day to day life in addition to distributing marketing material when convenient. Who would want the property and where those people could be found should be thought about and integrated into the strategy. 

All of these things are definitely not a requirement to sell in today's Seller's Market. Nevertheless with so many homes selling for over appraised value, which normally means the buyer has to make up the difference in the offer amount, one may want to consider a blueprint that attracts buyers that really want the home as opposed to window shopper buyers without as much desire. 
Posted by Harold Thomas Jr. on January 7th, 2016 12:06 AM

In my more recent transactions I've had buyer clients react to the non-staging of homes very negatively. Yet when the home is sold it still sells over the asking price but for considerably less than one that was beautifully staged. When you see the home after the new owner takes possession (if it is owner occupied) it turns out beautiful + worth more money (in California's bay area market anyway). Many times homes have been rented out for a long duration of time with absentee owners, most instances outside of the city or state, that could care less about fixing the place up let alone staging it. That sometimes can spell out an opportunity to get a deal, update the home and build instant equity.  In today's market any little bit of help for our buyers is good. Turning the conversation from "This horrible paint and floor job sucks!" to "This home seeks your creative potential" has helped a few of my clients get diamonds in the rough. 

Now from the other end of the spectrum as a sellers agent selling a home worth more than $300,000 (sometimes less) I would most times always recommend staging. Staging works to the benefit of the seller in many ways. One of the biggest in my opinion would be the effect it has on the wealthy buyers with the mindset that there will be a bid war. There are several other benefits of a professional stage job, and normally if one is implemented in today's market it spells out a happy seller in the end accepting an offer well over asking price. I've seen professionally staged homes in somewhat undesirable neighborhoods sell for over $200k over the asking price!

Be also weary as a buyer of the staging jobs when looking at homes and try to figure out what holes are being covered up with a nice painting or throw rug. You'll never know what kind of things you may have missed once you become the homeowner and the staging has been removed  if you don't do your due diligence and ask questions. 


Posted by Harold Thomas Jr. on November 18th, 2015 2:14 PM

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