Author: Chris

Things to Avoid When Pricing Your Home for Sale

Home sales are never easy and there are so many challenges to deal with before they can be done correctly.  However, hard does not mean impossible. By avoiding certain common mistakes, it can be a smooth ride for the seller at the end of the day.

A common mistakes that sellers makes is in pricing the home. In most cases, pricing determines whether a home is sold quickly or remain on the market for a long time.

Even with the help of the most seasoned real estate agent, if you overprice your home, no one will buy. The kind of price you settle for has an impact on the marketing plan.

If the home is listed at a fair price, it means more people may be interested in buying or making an offer sooner. Choosing the correct price is not easy so it is worthwhile that you put in more effort to do this right.

To sell your home easily and quickly, avoid these common pricing errors:

Overpricing the home simply to create some negotiating room

Many sellers assume that buyers usually offer a price that is much lower than what is listed. For that reason, they choose to overprice and leave some negotiating room, however the reality is quite different.

If you list your home higher than what the agent recommends, but this is a big mistake because buyers can easily check the internet for the right information, and therefore they may not make any offers.

Choosing an agent who offers a list price that is higher than all others

This is another common mistake. As is the case with other professions, there are some agents who excel at their jobs compared to others, there are the average agents and finally those that are terrible.

There are also agents who tell sellers that their home is worth an unrealistic amount, just to help them obtain the listing. While interviewing agents, never settle for those who offer the highest price. Research the facts and choose accordingly.

Not engaging the services of a real estate agent to do comparative market analysis

Pricing is never easy and there are many things that real estate agents consider before they offer a price. Professional agents spend time looking at available data and researching before they give a listing price.

Comparative market analysis is an essential part of the research that needs to be done correctly. The best real estate agent should be able to do this.

Overpricing just because you have time on your side

Some sellers feel that since they are not pressed to sell they can simply list the home higher than what current market analysis suggests. However, just because you are not in a hurry to complete the sale, it does not make sense to overprice.

The house may sit too long on the market and finally people may not really want to buy. These are the four pitfalls that every seller should be aware of and try to avoid as much as they can.

Facts About Real Estate in a Recession

Ever since the Great Recession from 2008-2009, Orange County, California’s housing market still hasn’t completely come back.  The number of home sales is still low, as well as employment gains.

Each kind of residential construction category continues to have challenges in this high-cost county, leaving prospective home buyers looking for more quality in existing homes for sale. Not everyone wants to buy a home and then start a home renovation project. Most of the time searching for a home is a challenging task.

As the recession in 2020 passes through, savvy and experienced agents already positioned for the slowdown in sales volume and home appreciation continue their job here in Orange County and across the state. In the next three decades, it’s estimated that mortgage rates will be rising. The reason why is because lowering interest rates is not possible anymore since we are basically at zero in early 2020.

Here’s the trends ReportsOnHousing found in the region’s counties …
Los Angeles County: Listings of 8,648 residences, a 32% drop. Escrows of 5,387 — a 12% increase. Market time of 48 days, down 31 days.
Orange County: Listings of 4,161 residences, a 35% drop. Escrows of 2,583 — a 14% increase. Market time of 48 days, down 36 days.
Riverside County: Listings of 6,762 residences, a 27% drop. Escrows of 3,140 — an 18% increase. Market time of 65 days, down 39 days.

With the Corona Virus shutting down the US economy and other countries worldwide, it goes without saying what the next few months will bring is anyone’s guess. The economic impact of the virus will be wide ranging, influencing everything from the desire to go to open houses by home buyers and real estate agents, employment rates, to whether sellers decide to list their property for sale or hold off until the economy improves.

Lots of home buyers were trying to analyze numerous factors back in 2008 as well. Home prices in the US, including California, and the stock market fell precipitously. The S&P 500 eventually lost half its value from its all-time high.

Recessions and falling home prices aren’t anything new. Housing prices took a nosedive during the Great Depression of 1929 and in hindsight, that housing recession wasn’t really a good time to buy real estate in the short term because it lasted 10 years.

Each recession on average lasted a period of 11 months.
1 A lot of these periods featured high interest rates, declining home values, double-digit rates of unemployment, and very low levels of consumer confidence. What each downturn offered was a great time to buy real estate.

It’s advised that you be well aware of the advantages and disadvantages before deciding to buy.

Buying Homes in a Housing Recession
Your thought process should not be how low will prices go in a recession. It should be before prices go back up in Orange County how much home you can afford to buy.

Advantages of Buying During a Recession
Sellers listing their homes for sale too high in a down market is not uncommon; Sometimes they are simply in denial. The local market determines the price you will sell your home.

Although, it might be a good idea if you find a home that’s been sitting still on the market for a longer than 90 or 10 days. At that time, the seller may be prepared to agree to a lower price reduction, even if their list price was basically unchanged the last few several months

Downsides to Purchasing During a Housing Recession
Not every home you find for sale is going to be a good deal. Some homes will need to have wide-ranging repairs, or the neighborhood is not acceptable. The major point when buying a home is the location, no matter the state of the current economy.

What You Should Know When Purchasing a Condo in Orange County

Condominiums are an individually-owned housing unit usually found in a multi-unit dwelling and sometimes are built as separate one-story buildings with no common walls in Orange County. The difference between an single family home owner and a condominium owner is that the condo owner does not own the land or common areas jointly with other owners. However, each type of owner holds sole title to their property.

Condo owners share common property jointly with other condo unit owners such as exterior hallways, stairs, roof, gym, pool, elevators, etc.) . The cost of maintenance is also shared among the owners. So, if a roof repair, exterior painting, or other necessary maintenance is necessary, all owners share the expense.

The homeowners insurance may be separate or included in the HOA. It all depends on how it is set up. Property taxes however, are each owner’s responsibility to pay on time.

Unlike a large majority of single family homes, the owner of a condo is not able to freely rent his or her unit to anyone without permission from the HOA. Putting your condo up for sale does not require HOA approval.

A Condo that doesn’t meet the guidelines of a traditional lender will have a higher interest rate than a condo that does meet underwriting guidelines. In addition, in some cases a single-family detached home may be offered a slightly lower interest rate.
• This is because lenders view condos as slightly riskier investments due to them being run by an HOA association or condo management company
• Higher rates tend to occur for condos when the lender learns the financial and ownership type ratio of the development is not considered as a “Warrantable” condo. Therefore the condo is referred to as a “Non-Warrantable” condo.
• In most cases, a condo is regarded as “warrantable” if no single person or entity has a 10% or more ownership in the project, a minimum of 51% of the units are primary residences, under 15% of the units are in default on their association dues, there isn’t any pending litigation against the homeowners association (HOA), and commercial space is not more than 25 percent of the total building square footage.
• A condo or co-op unit is considered “Non-Warrantable” if the project has yet to be completed, its developer has not turned over control of the HOA to the owners, the community allows short-term rentals, a single person or entity owns more than 10% of all units, or it’s in a project where the majority of units are rented to non-owners.
*A high number of vacancies can also negatively affect the condo’s status
• Condotels, time shares, fractional ownership properties, and other projects which require owners to join an organization, such as a golf club are considered non-warrantable units. This simply means financing options are less abundant and therefore lenders add a premium to the interest rate
• If you are in the market to purchase a condo, ask your mortgage originator or real estate agent if the development is warrantable prior to going under contract.

How to Get the Advantage in a Bidding War in Orange County?

Bidding wars are one of the annoying situations when you’re trying to buy a home. A bidding war may happen when there’s multiple buyers very interested in buying the same home listed for sale.

Sellers and listing agents love it because these are motivated buyers competing against each other. It is very similar to an auction, where the highest offer ends the war and one buyer gets to move-in while the others must continue their search.

Not surprisingly, a bidding war isn’t a process that most prospective home buyers look forward to subjecting themselves to. With that being said, buyers should still take the time to learn how to put themselves in the best possible position as the winner because bidding wars could take place in practically any market.

Plus, major metro areas in California, such as Irvine and Orange County, have more bidding wars than other cities. If you’re thinking about buying a home in Costa Mesa, Newport Beach, or Irvine, it’s a very smart strategy to know how to be ready for a highly desirable home that will receive multiple offers.

Despite the fact that Southern California markets have cooled down in the last year, there is still a good possibility that buyers may experience a bidding war. Irvine and South Orange County are highly desirable areas for schools, work, overall quality of life.

Quick Look at the Orange County Market
As of December 2019, Orange County has a median home value of roughly $733,900 according to Zillow. That figure actually represents an increase of 1% from the prior year.

It is predicted that Orange County will experience an increase in home values of about 1.6% following another 12 month period. During the 2013-2017 period when Orange County had double-digit price gains on an annual basis, buyers were bidding against each other for a home most of the time.

Glimpse of the Irvine Market
The Irvine real estate market currently has a median home value of about $864,493, as of January 2020. This represents a decline of 0.8% from the past year. However, the city of Irvine is forecasted to have homes rise approximately 0.5% in the next 12 month period.

If you’re looking to buy a home in Irvine, you should be well prepared if a bidding war takes place. The public schools, UC Irvine, and it being an employment hub are very attractive.

Tips for Success to Outbid other Buyers in Orange County
While the Orange County housing market has officially been in a cooling phase for about a year, buyers are still prone to very motivated buyers with strong offers in certain neighborhoods. One strategy – which makes logical sense – is to put in an offer with your highest price. If the seller counters your offer along with other buyers, simply respond by raising your offer price aggressively to the list price or slightly above.

The problem is sometimes even if you come out as the winner, just hours or days later it’s at a price that makes you a bit insecure.  It feels like you paid a premium price simply due to other buyers.  To deal with this issue, you may want to use a different method.

An additional method is to write a personal letter to the seller.  Create a letter that clearly lets the seller know that owning a home in this particular neighborhood has been a goal of yours for a long time. Tell the seller what they should already know that the nearby park and schools are great for your young kids.

Also, if your job is positive for society let them know the commute time is shorter and it would be a perfect transaction. Another approach you can use is to remove any loan contingency periods. Oftentimes, the other buyers make an offer which includes a contingency on the appraisal value, loan terms, physical inspection, or selling their own existing home first.

Not surprisingly, sellers prefer to accept an offer from a buyer without a lot of stipulations.  Therefore, you can improve your chances of getting an accepted offer by waiving some of the usual contingencies.

However, there are risks involved with this tactic because if you can’t secure financing or the appraisal comes in low. Your earnest money deposit is likely to be awarded to the seller if you cannot complete the transaction.

Last but not least, one more strategy you can use to beat out other buyers for a home in Irvine is to insert an escalation clause in your offer. How this works is you are promising to raise your offer above the competing offers by a certain percentage but only up to a maximum limit.

For example, if your offer is $875,000, you could have an escalation clause that is .50% above other offers and with a maximum bid price of $925,000.

An escalation clause can be a very helpful tool in situations where a bidding war may arise. It lets the seller know you have the funds to close and are extremely motivated to buy the property. This is precisely the kind of buyer they want to purchase their home no matter if the market is competitive or not.

Reasons to Buy Orange County Real Estate in 2020

2019 was still a competitive year for Orange County home buyers, and it left a lot of prospective buyers frustrated as they continued to be renters. However, since the summer the market has become more balanced for both buyers and seller, setting up new possibilities for those seeking a home, townhouse, or condo in Orange County for sale.

Interest rates remain historically low and are less than they were at the end of 2018. With that in mind, there are quite a few beneficial reasons 2020 could be the year you become a homeowner in Orange County. Let’s dive in more.

Less Demand for Orange County Real Estate
After several years of practically extraordinary levels of demand, there’s been a change in the Orange County housing market, and it’s positive news for home buyers. In 2017 demand had sellers reviewing multiple offers, which brought on bidding wars and some buyers would simply pay noticeably above the asking price.

Because of this market condition, a lot of buyers decided to search outside of Orange County in Corona, Long Beach, or even North San Diego. They were motivated as they did not want to continue renting with landlord raising rents. This mass departure of buyers has helped correct the extreme demand that’s been discouraging home buyers for the last couple of years.

A Lowering of Mortgage Rates
Most prospective home buyers hear about interest rates moving lower or higher and either step forward or back depending on the market. So, during periods when rates are forecast to remain low, like they are estimated to in the first few months of 2020, the pool of buyers rises considerably and the quantity of days a house is listed for sale drops. This type of market condition changes the buyers and seller balance.

New Residential Construction
Not many cities are seeing the surges in residential home building that Irvine or Trabuco Canyon are having in Orange County. What does this mean for home buyers? Buyers have more supply as well as additional options in South Orange County that are very nice.

In Southern California, many communities may all look the same. That is the not case with the new luxury detached condos in Deco at Cadence Park in Irvine. These 3-story new homes are distinct  in a number of ways; offering homeowners a great rooms, stainless steel appliances and a large island in the kitchen with quartz slab countertops, subway tile in the master bathroom walk-in shower and private courtyards or decks and close proximity to UC Irvine, Woodbury Town Center and Disneyland. Deco Park, one of the newest condo buildings in the Irvine will provide its residents access to a 77-acre park, junior Olympic pool, yoga lawn, and sports park with bocce ball, basketball, and volleyball and shuffleboard courts.

Home Property Tax Deduction
If you are a homeowner in Orange County, the city offers a residential tax exemption as long as you live in the property as your primary home. The exemption gives Orange County homeowners a reduction on their yearly tax bill, basically lowering the annual tax rate by a minimum of $70 per year.

In 2020 home buyers can expect to see a larger supply of Orange County homes for sale, and because they will have considerably less competition than the past few years, they’ll have additional negotiating power on the asking price. So if you’ve been delaying the purchase of real estate in Orange County, 2020 may be your opportunity to make the most of economic conditions and shifts in the market that will cause Orange County homes to be more affordable compared to previous years.

For more information regarding Orange County real estate, or to speak with an agent about what to expect from the home buying process and the 2020 Orange County housing market, simply contact us.