Bottom Feeders

Anybody in the real estate business these days know what I'm talking about - take a listing and then here come the bottom fishing calls. "How low will they go?" "How desperate are they to sell?" It's interesting to see how indoctrinated everyone is by the newspapers. That's the major reason I cancelled my newspaper months ago. I was tired of starting my day with their infuriating and inflammatory headlines.

I realize it's a buyer's market here in San Diego, but only for certain properties. The property I listed was a beautiful 3 acre estate in Fallbrook with a 4 car garage, a vanishing edge pool, and a view to die for. A property like this will always be in high demand and will hold its value better than a run-of-the-mill property, or a property with a problem. This is why I always advise my clients not to buy a house on a busy street or near power lines. or with some other negative, because if it is a buyer's market when they need to sell, the discount will be deep. And indeed. there are some deep discounts on problem properties right now.

But not every home. If my bottom fishing caller had done some homework, he would have seen that the home was a premium property and was priced very attractively. But no. all he cared about was how much discount could he get. I told him the price was already good, but he turned his nose up at that and said, "I'll call you in a few months, I'm sure it will still be on the market."

Well, we had two offers the first week, and we're now in escrow. I can't wait to tell Mr. Bottom Feeder if he calls back, that the property is sold. He'll still be looking for some piece of junk on the bottom, because he hasn't learned that shrewd buyers buy quality homes when prices dip.

How To Predict a Real Estate Trend

In a rising market, each house sells for more than the one before. The news of the new sale is received enthusiastically by the neighbors, who immediately revise their opinion of their own home's value up to at least that number. That sale now becomes the "floor" price, and each subsequent sale is expected to meet or beat that number.

In a falling market, each house sells for less than the one before. The new sale now becomes the "ceiling" price, and each future sale of a comparable property will be lower than that number. This is the logical way to view the ups and downs of any market. But what happens is that the neighbors do not revise their their opinion of their home's value down, but instead deny the validity of the sale. I hear "Yeah, but they gave it away", or "they priced it low because he lost his job." So rising prices are received with enthusiasm, while falling prices are explained away.

Of course I understand that we are not totally logical creatures, and we don't react the same way to positive and negative news. However, to be a successful home seller, we must take off our emotional hats, start thinking like a stock market day trader and see the market as it is and not as we wish it to be.

I just sold a property in Florida and I had to write a $27,000 check to close escrow. Ouch, that hurts! But what made is especially hard was that the house had $100,000 equity in it a year ago! The market really did fall that far that fast, and it was hard to get my head around it, to mentally accept it. Not only did I lost the $100K I thought I had, but I had to write a $27K check as well! That stinks! But the take-home message is that I'm out of there because I saw the market as it was and took action, while many are still stuck in that declining market.

Robert Campbell, in his book "Timing the Real Estate Market", gives the 5 indicators that predict a market's direction. They are:
1. Existing home sales
2. New Home Building Permits
3. Mortgage Loan Defaults
4. Foreclosure Sales
5. Interest Rates

Currently in San Diego County, the first two are falling, and the last three are on the rise, so we are still in a buyer's market and we have not seen the bottom yet.

Carlsbad's Strawberry Fields

Did you know that Carlsbad has it's own strawberry fields? Located on the Agua Hedionda lagoon, you can "pick your own" berries at the end of the strawberry season, so my granddaughter Grace and I decided to go picking!


Grace is happy to be here!


She found the first one!

Never made it into the bucket.

By the way, I took these pix with my awesome new Nikon D70 camera! My most generous "rock star" photographer son Nate gave it to me for Father's Day. If you haven't seen his work yet, you're in for a treat - catch his latest at http://www.theblogisfound.com/.

Home Prices Dip as Sales Remain Anemic

The median price for single-family, re-sale homes in San Diego County fell 0.9% in May from April, but were off 1.7% year-over-year. The average price for homes continued to rise as the number of higher priced homes is garnering a larger share of all home sales: up 2.3% month-over-month, and up 3.3% year-over-year.


Home sales rose minutely in May, up 1% from April and down 18.2% compared to last May.
The median price for condos rose 0.7%, down 0.7% compared to last May. Condo sales fell 8.8% month-over-month, and were off 29.8% year-over-year.

Year-to-date, home sales are off 15.9% and condo sales are off 11.3%.

The sales price to list price for single-family homes fell 0.3 of a point to 95.2%. The ratio for condos rose 0.5 of a point to 96.6%.

Days on market for homes fell six to 65 days. Days on market for condos dropped three to 65 days.

My advice? For buyers, many sellers are still behind the curve. The trick is to find a seller who is ahead of the market or really, really has to sell. Also, don't forget to have your loan in place before making offers.

For sellers, it pays to put your home in tip-top condition. Inventory is increasing, which means your competition is also. Make your home stand out.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home's worth, call me.

What to Know When Buying a Home

Buying a home is one of the most complicated transactions you will ever do. So many people and companies are involved that it is easy for mistakes to be made. Freddie Mac offers a number of tips:

· Get pre-approved for a loan. With competition fierce, you'll want to be ready to make an offer. With a pre-approved loan, you'll have more clout as the seller considers your offer.

· Make sure it's in writing. Don't settle for verbal agreements. If the seller says he'll replace the carpet or leave his washer and dryer, get it in writing.

· Get a good-faith estimate. Your mortgage lender is required to provide you with a good-faith estimate of closing costs within three days of receiving your application. They need to provide it in writing. If you don't have to pay loan application fees, you may want to compare lenders and compare closing costs.

· Don't settle for the first lender you come across. Contact at least three lenders and compare rates.

· Lock-in your rate. One of the most stressful parts of the loan process is watching rates inch up and down each day and trying to figure out when to lock in your rate. Once you do lock in, be sure to get a written statement that outlines your interest rate and length of the lock.

· Get a home inspection. A professional home inspector will examine the house's major systems and let you know if there are any problems or defects. You can then use the information in your negotiations. Look for an inspector who is a member of the American Society of Home Inspectors. Members are required to have completed at least 250 paid professional home inspections and passed two written exams that test the inspector's knowledge. Also, ask for references.

· Shop for homeowners' insurance as soon as your offer is accepted. The National Association of Realtors recently cautioned homebuyers to not take homeowners insurance for granted. You and your spouse may have a clean claims history and a stellar credit history - something insurance companies use to determine whether they will insure you - but it's not just you they're looking at. If the house you're eyeing has had claims, there's a chance they won't insure you, especially if it's a water-related claim.

· Read everything. When you have the closing meeting to sign the mountain of papers, make sure you read through everything carefully and don't hesitate to ask questions if there is anything you don't understand.

Finally, give yourself enough time between your closing and your move date, just in case there are delays in the closing process.

Elfin Forest Recreational Reserve

It was a great day for a hike here in San Diego! The day started off cool, around 60 degrees, with a nice marine layer that broke up a bit as the day wore on. Crytal and I decided to get our exercise today by taking a 5 mile hike up to the Olivenhain Reservoir. It's between Carlsbad and Escondido, and at only 20 minutes from my house, it makes for a quick trip into the wilderness.

Yes, horses are allowed on the trail too.

This is Escondido Creek crossing the Botanical Trail. This is close to the parking lot, so I think I'll take my granddaughter here on a hot day!

One of the more unusual signs I've seen on a hike.

Crystal taking a break at the Ray Brooks Overlook.