So Cal Real Estate News

Disclosure (added 4/2/08) : To fully understand this post, you need to read through to the end. But it’s best to resist the urge to scroll down there now. Begin at the beginning, but if you decide not to read it all, then scroll down to the disclosure near the end before you leave this post.

“Enjoy:”

Sometimes you just get lucky. Or “blessed,” as my mother says.

Maybe this time we all did.

In following up on yesterday’s post, “Pragmatic White House Ready to Help Out?” we stumbled across what could portend, at long last, really good news for the housing and credit markets.

It looks like our leaders may finally be setting aside their egos and personal agendas to work together for the common good.

Behind-the-scenes discussions between Congressional leaders and the Bush administration may be about to bear fruit. And that fruit would be a pragmatic Housing Relief Act of 2008 which combines the best ideas from partisans of all stripes to provide both immediate relief and long term reform.

The comments off the record are almost unbelievable: “The collapse of the American housing and lending markets is an impending crisis that compels us to lay aside partisan differences and work together,” one Senate leader has discovered. “Ultimately, we’re all in the same boat, and if it sinks, we all drown!” she continued.

“We need to recognize that we are all on the same team,” according to a key administration figure. “We need to stop acting like the Shaq and Kobe Lakers and start acting like this year’s UCLA Bruins. You don’t see Collison and Love fighting for the ball!”

The details are still being finalized, but they involve major concessions and some unique innovations from both sides of the aisle.

Both sides apparently understand that runaway federal spending must be controlled. “We can’t borrow our way out of a borrowing crisis,” as one Democrat put it. “The government can’t continue unfettered spending. No more blank checks–not even for Iraq,” said an administration spokesperson.

Amazingly, Democrats have agreed to end Congressional earmarks and authorize a Presidential line-item veto. In return, Republicans are offering deferred automatic increases in some corporate and individual taxes when deficit targets are exceeded.

And the politicians seem to be succeeding in persuading their allied special interest groups to join the bipartisan parade to national unity for the common good!

The AARP has agreed to back an automatic one year suspension of the annual Social Security cost of living increase when budget targets are exceeded by 10% or more. “This will unite our Seniors to control runaway spending.” Meanwhile, the pharmaceutical industry has agreed to back drug imports from Canada. “Competition is the American way,” their spokesperson told us off the record.

Even the presidential candidates seem ready to climb aboard this “Friendship Train.” “There are things more important than me being elected President,” Hillary Clinton is said to have remarked. Talks are underway between the three camps for a “national unity ticket” with Obama running as McCain’s Vice President.

We know. “Wait just a minute!” you’re thinking.

OK, we don’t really expect to see a McCain/Obama ticket this fall–but we really don’t see why our leaders can’t work together a whole lot more and fight a whole lot less. After all, we’re the ones who pay their salaries!

As we said on our “history lesson” on the mortgage crisis (“How We Got Into This Mess”), stupidity and greed got us into this mess. And selfishness, partisan fighting, and greed sure won’t get us out of it!

Maybe you think we’re the April fools for suggesting that those in power could learn to work together for the good of the nation.

But we think they are the greater fools if they don’t.

And “we, the people” may be the greatest fools if we don’t start insisting they need to begin now, and reinforcing our words by our own unselfish deeds.

Time to lead by example.

“If we don’t hang together, we’ll all hang separately!”

–Benjamin Franklin

“I dream of things that never were, and say, ‘Why not?’”

–J.F.K.

Disclosure # 2: If you briefly scanned this article, or are reading it on or after April 2, make sure you noticed the day it was originally posted.

Then check out “So Maybe It Wasn’t an April Fools Post” to see how much of this is coming to pass, and what we think about it.

Now you may want to scan the postscript to see what we do on “normal” days. (As if there have been any “normal” real estate days in this millennium!)

Postscript: For several reasons we’ve gotten a lot of new visitors today. The above post is sort of a once a year thing, if you get our drift.

What we normally try to do here is to give you our “front line” perspective on what we see taking place in the market. We also try to lend a historical perspective that comes from Dave’s over 30 years involvement in real estate.

Here are a few of our more typical posts:

“How We Got into this Mess:” Our summary of events and human foibles that led to the current mortgage and real estate melt-down.

“How Low Will Prices Go? ” We wrote this last November, & the events since then have pretty much borne out what we said, but it’s probably not the answer you’re expecting.

“Top 5 Ways NOT to Pick a Listing Agent” The most common reasons sellers end up with the wrong agent. Reason #1 is a technique that works for the agent almost every time, if he decides to use it.

“How to Sell Your So Cal Home for Top Dollar in 30 Days:” A course we’ve been teaching for about 20 years, adapted to today’s market, buyers, and technology.

“What to Do When Nobody Knows What’s Next:” Our thoughts on balancing market timing with real life priorities in a turbulent market.

“So Cal’s Real Estate Cycles:” A new post that help you make your own predictions about what’s likely to happen next in So Cal Real Estate. The first in our new “Real Estate 101″ Series, along with “Gentlemen, This Is A Football.“

We also think you might find our direct link to the So Cal M.L.S. useful, located near the top of the column to the right (a fair amount of scrolling at this point). For tips on how to get the most out of your search, check out “A Better Way to Search for Home Listings“

We’re pretty new to this blogging thing, and really appreciate your thoughts and comments, even requests for input. Blair and I both share backgrounds in Education (even Masters’ Degrees, mine being from the school that’s been to the Final 4 3 years in a row), and we consider this an electronic extension of the educating & prognosticating we’ve done for years with our clients, via Newsletters, and through classes.

In 35 years of tracking the Southern California real estate market, I’ve never seen anything remotely like the mess we’re in right now. . . but the basic causes are as old as humanity.

Greed, stupidity, and a lack of integrity got us into this mess. But we’re not talking your average, run-of-the-mill greed or stupidity. We’re talking greed and stupidity on a scale unseen since. . . the late 1920s?

Like the rest of our blog, this isn’t the researched opinion of some economist in New York, but the personal perspective of an agent who watched this whole mess unfold from the So Cal real estate trenches.

We could start all the way back with Moses, who laid down some pretty straightforward rules that would have avoided the whole mess (See “Moses’ 10 Rules for Success“) But for time’s sake we’ll start where the last boom went bust back in 1991, which eventually led to another boom, . . .

A Boom that Lasted Way too Long

We’d just finished another furious run-up in prices, fueled by multiple offers and overbidding after a rough downturn (sound familiar?) Then the end of the Cold War led to massive layoffs in our So Cal defense industries, which rippled into the construction business and then through the whole economy.

If you’re over 30, you probably remember the stories of all the U-Haul trucks leaving the state as homeowners and renters followed the jobs across the country. 1991 – 95 were four dramatic years of price and sales declines, a classic overcorrection fed by a massive local recession. In the real estate business, the cry was “stay alive ’til ’95!” A few of us did. Barely.

In 1995 prices and sales finally started moving upwards again. By September 10, 2001, it looked like we were peaking & due for another correction. Things changed the next day.

Alan Greenspan took action to avert a post-9/11 depression, dramatically lowering short term rates. The long term bond markets, sensing a recession, cooperated & long term rates dropped too. Then the Fed dropped rates again. And again. And again. The real estate market cooperated & just kept moving up. And up. And up.

Late in 2002 Greenspan figured out things had gone too far, and belatedly began raising short-term rates. The long term bond markets, sensing that would cause a recession, failed to cooperate, and kept long-term rates low. Even lowered them a bit. Greenspan suddenly discovered the brakes on his economic sports car weren’t working!

So a correction that should have started in 2001 was put off even more. Eventually the brakes kicked in and real estate started slowing. Prices actually started dropping in the summer of 2004.

But then, for some unknown reason, prices began moving up dramatically in the spring of 2005. Every local economist except for Gary Watts was confounded. Cal State Fullerton’s annual negative Economics Forecast was beginning to look like a broken clock. (Just like a broken clock, it would eventually be right.) And more and more people forgot all about economic cycles and started believing that So Cal real estate really does only go up.

Insane New Mortgage Products

The unknown reason, it turned out, had a lot to do with creative new mortgage products. Creativity can be good, but creativity fueled by greed and aided by stupidity can–and did–create a monster.

Here are some of the parts that went into that monster:

No down: It used to be the only way to get 100% financing was to join the Armed Services or buy Robert Allen’s book, Nothing Down. Then someone figured out that a 13% mortgage for 20% of a home’s value could be “piggybacked” onto a more normal 80% mortgage to allow financing for a purchase with no down payment.

No mortgage insurance: These “piggyback” loans avoided loan review by those darned underwriters at the Private Mortgage Insurance companies by charging a higher interest rate and “self insuring.” But those PMI companies were the ones who kept everybody honest, because they were on the line if the loan went bad.
No documentation: It used to be you had to document your income to get a loan. If you were self employed, that meant tax returns. Which didn’t always tell the full story. So World Savings (I so miss all the old So Cal based S & Ls!!!!) (Pause for a moment of silence for World, Great Western, Cal Fed, Glendale Fed, Home Savings, & any others I forgot. If your old enough, picture those GW commercials with a cowboy riding past El Capitan as John Wayne intoned, “We’ll always be there.”)

Sob. OK, as I was saying, World Savings decided to allow self-employed borrowers with good credit scores and verifiable 20% down payments to get mortgages without documenting their income. “No doc” loans.

Lousy credit’s OK: Well, before you knew it, So Cal mortgage brokers like New Century and Argent were combining “no doc” loans with no down “piggybacks.” Then they decided you didn’t even need good credit scores if you would take a high enough interest rate, which won’t kick in for a year or two. All this after the market should have peaked.

Greedy rookie agents & brokers: At the same time two more trends appeared. The money was so good, everybody and her gardener went out and got a real estate license, which is way easier than getting a beautician’s license. (Some of them even got a broker’s license, because our beloved, “Blow Up the Boxes” governor vetoed a law that would have required real estate brokers to have two years experience as salespeople before getting a license.)

Disclosure about rookies: I don’t hate rookies. I was one once. Long ago, in a galaxy far away. . . .

Both new and experienced agents can be unethical and incompetent. But time does tend to weed out a lot of the worst agents. In a normal market, up to 90% of the newbies are out of the business within two years. In a booming market, they tend to hang around longer. And anyone who got into the business after 1995 did not experience the last big downturn. Some of them actually believed that “real estate never goes down.”

Agent/lenders: Lots of these brand new, do-anything-for-a-buck agents & brokers decided to double their money by acting as their buyers’ Realtor and mortgage broker. So the buyer didn’t have a Realtor looking over the lender’s shoulder, because the agent was the lender.

Bribes for selling bad loans: Interest rates were still low, and lots of people were excited to earn as much as 13% interest on these new “mortgage backed securites.” The investment banks like Bear Stearns that bundled and resold them couldn’t get enough of them. So they started giving bonuses to the brokers and agents for putting their clients into these loans–the higher the rate, the bigger the bonus. My boss says these Wall Street firms were the “pimps” of the whole operation.

Low “teaser” interest rates: Of course, those loans were advertised with their initial “teaser” rates as low as 1.9%. And the ad usually proclaimed “payment fixed for 3 years!” And nobody tried to undo the intended deception that confused fixed payments with fixed rates.

Ineffective or nonexistent disclosures: Of course, all this nonsense–even the negative amortization–was “clearly” explained someplace on the dozens of documents the buyer signed at closing. Whether the buyer spoke English or not. Oh, did I mention that it turns out that these newly minted agents often took the liberty of signing for their clients?

A culture of dishonesty. Unfortunately, lying is pretty much accepted as part of the business by many agents, lenders, sellers, and buyers. Actually, by our society as a whole. Nothing wrong with lying, as long as you don’t get caught, and the “good guys” don’t get hurt. Buyers lie to the lender about their income. Agents lie to the buyers about prices going up forever. Lenders lie to the buyers about the effects of the loan–or at least they neglect to tell the buyer. Investment buyers lie to their investors about the quality of the mortgage-backed security.

Actually, Moses told us not to do this. Over 3,000 years ago he laid down ten simple, straightforward rules for successful living. One of them was, “Don’t lie.” Of course, we’re such a smart, tolerant society that we stopped teaching that rule in public schools over 40 years ago. Too bad. A few moral absolutes would have prevented all this. Moses told us so.

Naive, trusting, desperate buyers: Not necessarily stupid, but unsophisticated. I think of Steve, an independent contractor for JPL who bought near the peak using 100%, no doc financing. We recently completed a “short sale” for him, where his lender absorbed a loss of over $100,000 so we could close the escrow. He simply couldn’t make the payments, which turned out to be $1,000 a month more than his lender/agent promised when he bought the home. “We just trusted her,” he told us.

Government Incompetance: Gee–who’da thunk! From Democrats who over-regulate to Republicans who under-regulate, to a Federal Reserve that drives the economy like my mom drove her car (slam on the accelerator–slam on the brake–slam on the accelerator. . .) nobody in D.C. seemed to be able to get anything right. For some excellent examples, check out SeekingAlfalfa’s excellent comment #1 below.

Let’s review: No down, no verification of income, bad credit, overvalued market, insane belief that real estate will never go down, desperate, naive buyers, brand new agents who got into it for the money acting as Realtor and lender both–and getting bonuses based on how bad the loan was for the borrower, non-English speaking buyers signing disclosure documents in English, everybody thinking it was OK to lie, incompetent government . . .

As my colleague and fellow Realtor Anthony Turner put it, “Any homeless bum could get a loan and buy a house.” And why wouldn’t he–especially if his 22-year-old Realtor cousin knew she’d make up to $20,000 if she sold him a loan & a home? Anybody see any problems with all this??

The Profitability of (Willful?) Ignorance

Jim T., a friend who’s been in the business even longer than me, did. At the time he was a wholesale rep for one of the big lenders. He tells me of pointing all this our to a rich young V.P. in his firm, who had no memory of the 1990′s crash because he was in 3rd grade then. “Relax, Jim,” Mr. V.P. said, “nobody’s ever lost a penny on any of these loans.”

He was right. Then. Because prices were going up faster than the negative amortization, so the houses were either sold for a profit or refinanced.

The biggest pyramid scheme since Social Security. another sad story that’s will eventually to unwind. (The N.Y. Times had an interesting page last year about mortgage backed securities, “Housing Busts and Hedge Fund Meltdowns: A Spectator’s Guide.”)

As long as everybody was making money, everybody had a financial incentive to be stupid. And ignorant.

And everybody in the food change was making money. The flipper or refinancing buyer. The real estate & mortgage salesperson(s). The real estate and mortgage brokers, who were supposed to supervise & train the salespersons. The loan underwriters. The Wall Street Bankers who packaged & sold the loans. Everyone who bought the 13% loans, from Deutschebank to little old ladies. Even the politicians, who bragged about the great increases in home ownership.

Conclusion

Greed, stupidity and dishonesty. A lethal combination. And, unfortunately, a natural product of our materialistic, me-first, live-for-today mentality.

There is a cure. Unfortunately, it’s often ignored. Even those who pay tribute to it often don’t practice it. (warning: the next paragraph could be construed as “religious”–feel free to skip it if you wish.)

Jesus expressed it as well as anyone: “Do unto others what you would have them do unto you.” “Love your neighbor as yourself.” Just treat others the way you’d want to be treated.

This is actually a real estate concept as well: The agent is supposed to be a fiduciary. That means she is to put the client’s interest above her own.

A little Golden Rule or fiduciary-mindedness at any step of the food chain might have kept us out of this mess. But right now we’re right in the middle of it.

For our thoughts on what’s ahead, check out our latest projections post, So Cal home price bottom near? as well as  what you might want to do about it.)

And, next time somebody wants ahead of you on the freeway, wave them in. Put them before your own needs. One small gesture for a man. One giant leap for mankind.

This one seemed to fly under the radar of most media, but C.A.R’s Chief Economist recently revised her 2008 projections from the figures released in Anaheim last October.

Total sales statewide were revised down a modest half a percent to 332,100, but her projected CA decline in the median price for a single family home was increased a whopping 50%, to a 9%! Leslie Appleton-Young also now projects that units sold will bottom this year, but with only modest improvement in 2009. Apparently her jury’s still out on when prices will hit bottom.

We like Leslie & have followed her reports for years, but you have to remember who pays her salary. Last October we indicated that it would most likely be worse than she predicted. Unfortunately, we were right then, & she’s still probably still a bit too optimistic.

Click here for The Register’s summary of Leslie’s recent remarks, and
here for a PDF version of the original, October report. Our most recent projections are here, and our thoughts on who should be buying or selling now haven’t changed from what we wrote in December, a classic piece on balancing market timing with your personal situation, even if we do say so ourselves.

Update added 4/7: Lots has happened since we wrote this post about two weeks ago, but it hasn’t resulted in any major changes to our projections. We did, however, release an updated projections post over the weekend: “A Change in Our Projections?”

The roller-coaster ride continues with this morning’s news:

1. Nationwide February resale closing numbers from the National Association of Realtors mirror DataQuick’s So Cal Numbers from last week: Sales up, prices down.

Why the sales increase “caught economists by surprise” is completely beyond us. January closings were the lowest on record, homes that went into escrow during the Thanksgiving to Christmas slowdown in a terrible year. They had nowhere to go but up as we move into spring.

We’ve been predicting the increase since we saw sales picking up in our market in January, & we also think March will reflect an additional increase in sales and possibly at least some firming of prices, maybe increases.

You read it here first–which is our goal, bringing you Los Angeles and Orange County real estate news from the front lines– not the ivory towers! Click for Blomberg’s reporting of NAR’s data.

2. Bear Stearns’ bad loans apparently weren’t as bad as originally thought, since Morgan-Chase this morning quintupled their bid from $2 per share to $10. Maybe things aren’t as bad as they seem? (Click here for our take on how we got into this mortgage mess & on Bear Stearns’ culpability.)

3. Stocks are up. But so are foreclosures. (For some insights into buying foreclosures, click here for our initial “Foreclosure Tips” post.)

This is just more evidence to us that we were right when we said last November that this downturn was wildly unpredictable. But we also told you What to do When Nobody Knows What’s Next.

Sellers, you may also want to review our summary of our workshop on “How to Sell Your So Cal Home for Top Dollar in 30 Days.”

That said, if you’re still intent on market timing to the exclusion of all else (that is, you don’t have a life?) we continue to expect a window of opportunity for sellers for the next several months, followed by opportunities for buyers through this winter. We still think there’s a significant chance (20%?) of a major price collapse of an additional 15 – 25% , but there’s also a possibility that the worst is behind us.

Sorry the picture isn’t clearer, but we’d rather tell you the truth than make something up. Feel free to post your comments, thoughts or questions, we try to respond to every one. Or call us if you want to talk further (562.430.0262).

Added 4/3: If you want to read excerpts from Ben Bernanke’s April 2 testimony to Congress about where he thinks we’re at and where we’re headed, check out “Bernanke Predicts Bottom Later this Year?!“

We even translated some of his remarks into English, for those of us who don’t speak economist. He pretty much agrees with us, except he’s a little more optimistic. But we think that’s part of his job. Being moderately optimistic, that is, not agreeing with us.

4/7: For our updated projections post, check out “A Change in Our Projections?

The federal government today took another step to help ease the housing requirement, reducing required cash cushions Fannie Mae and Freddie Mac by a third. That frees up over six billion dollars for them to make additional mortgages, which obviously helps real estate nationwide. Unfortunately, it also reduces the cushion they have when they might need it most (click for brief summary).

If it works, however, the need for that cushion might be reduced. To us, it’s more evidence that the decision makers in Washington are doing all they can to stabilize the real estate market. It may extend the spring mini-boom we’ve speculated about here in Southern California. It also might make this spring a good time for refinancing. Every little bit helps!

Earlier today we discussed the stats that showed median prices in Southern California as a whole were down 19% last month from their peak in July of 2007, also touching on our projections for the rest of this year (“So Cal Price Update”).

Frankly, in our primary market areas of West Orange County and Greater Long Beach, we believe prices actually peaked in the summer of 2006, based on comparable homes. DataQuick’s 7 county numbers were skewed by the huge foreclosure problems in the Inland Empire, as well as inherent flaws in their median pricing system. The Orange County Register’s Real Estate Blog has a good summary and explanation of 8 different indexes & their most recent reports for Orange County. DataQuick showed the greatest year-over-year decline (16% in O.C.), while the other indexes ranged from 15% to 6% drops.

Basically, we still believe we’re in uncharted territory & nobody knows what’s next, as we wrote back in November (”How Low Will Prices Go?”).

Our recommendation for Los Angeles and Orange County buyers and sellers is still to focus primarily on where you are in life, not where the market is. Since nobody really knows what’s next, don’t get too obsessed with what the future holds.

If selling makes sense, why roll the dice & wait up to six years (or more?) for prices possibly to just get back where they are now?

As for buying, if you can buy a home that works for you with a 30 year fixed loan, why gamble on rates or prices going up, or waste several years of your life gambling things will get worse before they get better. (see “What to Do When Nobody Knows What’s Next.”)

We’re not saying it’s time to buy for speculative reasons, and we certainly wouldn’t be trying to “flip” right now unless I got an extraordinarily good buy (and that does happen in market’s like this). I’m certainly not saying we’ve hit bottom.

We’re saying nobody really knows, because we’ve never seen anything like this. For example–we think the Fed caught just about everybody by surprise this week with their creative moves to enhance liquidity.

Who know what might come next? If some lenders were smart, they’d just shave $100,000 off the loan if needed to avoid foreclosure. They’d certainly drop interest rates or eliminate the obscene resets they have coming. (Of course, if they were smart, they wouldn’t have made 100% loans to subprime borrowers without income verifications when the market was obviously peaking, but maybe they can learn. . . .)

We’re saying nobody knows what the future holds, especially this time. So if you’ve always dreamed of a home on a lake in Lake Forest & find one that works for you with 30 year fixed financing, & if you’ve got a stable job & aren’t moving, why not make an offer & start living your dream? If it works, maybe you should let your life determine decisions, not speculation. Here’s a novel thought: think of it as a home, not a piggy bank!

Ditto to sellers. Forget what your neighbor got 2 years ago. Prices on your next home are down too, and so are interest rates. Maybe you can’t get the triple garage, but maybe you never would. If everything else works, give it a shot. You’re not getting any younger!

We’ve watched the market and buyers and sellers for 30 years, and we see some unique opportunities right now that may not last. And we see too many people making decisions based on ego or gambling in stead of getting on with their lives.

Feel free to call 562 822 SOLD or simply comment if you want specific input on your situation.

Selling for top dollar fast isn’t all that hard, even in today’s slow market. Last month we took three listings, and had all three in escrow within 14 days of hitting the market.

In fact, our 30 years of experience has taught us that if you don’t sell in 30 days, you almost certainly won’t get top dollar. You’ll also be more frustrated with the whole process.
It’s not rocket science, either. The technology’s changed, but the basic steps to selling fast for top dollar remain the same. We’ve been teaching classes on them for almost two decades. There are only six key steps, yet very few agents or sellers complete even four of them correctly:

1. Preview & plan with a trusted adviser, often a Realtor with at least 15 years experience–one who’s been through a few slumps before. Actually, the most important step seems to be picking the right agent, and then picking his or her brains as early in the process as possible. We recommend starting by checking out our “Top 5 Ways not to Pick a Listing Agent.”

Develop priorities for steps 2 & 3 below, discuss what would be the best time to get the home on the market, and get a rough idea of the price & net you can expect.

2. Prepare the property. By now you should have determined which repairs and upgrades deserve your attention, and the time you have to get them done. Most sellers focus on the wrong things–things that bug them, as residents, but that most buyers don’t even notice.

Concentrate on things that a person would notice when just spending 60 seconds touring the home, because the first 60 seconds are the critical first impression period. That means the front yard, the front room, the kitchen, baths, & master bedroom. Don’t even think about fixing broken things that aren’t obvious, like an inoperable dishwasher. Those will be negotiated after the home inspection, and the buyer may not even care.

3. Stage the home. This is putting your best foot forward–like shining your shoes before a job interview. It usually involves removing clutter and some furniture throughout the home. Sometimes we recommend adding or changing furniture so that the home will appeal to the most likely buyer. For example, many sellers have converted a bedroom into an office or den after their kids have moved out, but frequently buyers need an extra bedroom more than a den. We actually have an inventory of what we call “instant beds” to use in such a situation. The slower the market, the more critical this step is.

We also instruct our sellers how to stage the home before each showing, which usually includes turning on extra lights and moving to the front yard while the home is shown. We usually discuss the questions they can expect from buyers and agents, and the best ways to respond (rule #1 is “Never lie.”)

4. Price accurately. Not too high, not too low. Based not just on recent sales but also on an evaluation of your competition–the best priced, most attractive homes currently on the market. Not based on what the seller values, but on the values of the most likely buyers, who are usually quite a bit younger than the seller. Here’s another place where an inexperienced, dishonest or lazy agent can cost you tens of thousands of dollars. Also one who isn’t familiar with your neighborhood.

5. Wise, aggressive marketing. This involves doing dozens of things right: flyers, Multiple Listing Information & photos, web photos and virtual tours, property search placement, web and print advertising, open houses, etc. There’s a right way and many wrong ways to do each one.

For example, the only phone numbers on our signs and flyers are our cell phones. Sign calls don’t go to an 18 year old receptionist who’s never seen the property, but to one of the two listing agents, day or night. We’re even careful about the time of day and day of the week we input our listings. We shoot our own virtual tours because Blair’s a great photographer and we know what buyers are looking for (for an example, check out LosAlDreamHome.com.  Each home gets it’s own website with an appropriate domain we buy just for it. Our goal is to obtain competing offers the first weekend or two. By the way, we’re counting the 30 days to sell from the day it hits the market to the day you accept an offer.

5. Negotiate wisely. Again, dozens of things that need to be done right. Herb Cohen’s You Can Negotiate Anything is one of my favorite layman’s books on negotiations, but the real secret is to find an agent who’s an expert at it. It’s not just about price–terms, time frames, repairs, deposits, release of deposits, and the buyers’ ability to qualify & intention to close are also critical.

6. Disclose wisely, follow up regularly, and don’t blow it during the escrow. My mentor used to say 90% of our work is done once the escrow’s opened. With today’s crazy news and lending climate, that’s even more true today than it was in 1980.

We’re talking about correct execution of basic fundamentals.

“Gentlemen, this is a football.”

“Back to basics.”

And yes, you still can sell your home for top dollar in 30 days, with the right approach and the right help.

For a real-life example of the sort of teamwork necessary to implement this approach in today’s market, including some of the challenges, check out “The team that made it happen.”

As always, your questions, comments, and feedback is appreciated. You can also call us directly at 562.822.SOLD.

We’ve got foreclosures, federal “remedies,” a weakening economy, low interest rates, high gas prices, and low home prices, all in a presidential election year.  So it’s impossible to know what’s ahead, but we can make educated guesses.

For several months, we’ve said spring will bring increased home sales.  We also think prices will either slow or stop their decline, at least for the next few months.   Beyond that, things get cloudier, but the odds are that sales will slow again later this year.

Our own experience this February is bearing this out.  We took three listings in the last couple of weeks, and now have all three of them in escrow.  In addition, today we are opening escrow on a new home purchase for one of those sellers; the other two do not plan to purchase at this time.

We’d like to think some of this success is the result of our 30+ years combined experience, but low interest rates and an active market have certainly helped.

Our goal with almost every listing is to get it into a solid escrow within 30 days, and preferably within the first two weekends.   Over the years, we’ve found out that’s the key to getting top dollar.  After a month, buyers and sellers both lose interest.  Buyers figure if nobody’s bought it after a month, it can’t be that great a deal, unless the home has some extremelyy distinctive features.  Most sellers can only keep a home looking it’s best and put up with the hassle of showings for a month, if that.  As one wise Realtor once told me, “If it sells in the first month, everybody’s happy.”

However, in a slow market, it’s a lot harder to get a home sold in a month.  And most of Southern California’s real estate agents had never seen a really slow market until this one hit. Blair & I had to revert to what had worked for me during prior slumps:  1980-82, 1985-86, 1989 and 1991-95.  This time we’ve had to adjust for the internet, technology, & the fact that buyers now have direct access to listings, but the basic principals remain the same.

It takes a skillful combination of preparing and staging the home; accurate pricing; effective, targeted marketing; careful negotiating and screening of buyers, and continual vigilance during escrow.   Doing  dozens and dozens of things right.  We’ve got it down to the day of the week our listings go into the local M.L.S.

But all of that works better when the market’s more active.  Which is why we believe our successes overt the last half of February are a good indicator that this spring may provide a window of opportunity for both sellers and buyers throughout Southern California.

7/15/08 update: Lots has happened since we wrote this post back in February. It has certainly been an interesting ride, and plenty of opportunities are still out there. For our latest posts on what’s going on, simply click “front page” in the upper left corner, then scroll down, or check out the “recent posts” in the upper right below our “search” box. We’ll continue giving you straight talk from real estate’s front lines, with the perspective of 30 years experience.

The Federal Reserve’s latest rate cuts may well have just radically shortened the present housing slump. The “bottom” may be a lot closer than anyone suspected just two weeks ago.

That may mean the time to buy is actually now, for several reasons.

First to get the lowest interest rates. Right now, you can get 30 year fixed mortgages well around 5.7%. That’s outstanding. . . but rates were a little lower a few days earlier. Why? Well, the Fed really can’t control long term rates–they’re set by market forces.

So, when the bond market thinks we’re headed into a recession because the Fed hasn’t lowered short term rates enough, long term rates drop. And when the Federal Reserve reduces the risk of recession by aggressively dropping the rates they control, long term rates move up. That’s one reason all the Fed rate increases back in 2003 – 05 didn’t reduce long term rates. And it’s why that much-expected additional lowering by the Fed could mean today’s mortgage rates may be the lowest we’ll see in a long time.

Second, this may be the time to buy because the best time to buy isn’t at the bottom, but a little before the bottom. I know first hand there are tons of potential buyers waiting to jump in once they think the market bottoms. The trick is to jump in before they do. Because the below market properties are the first to go. Plus, once sellers think things are moving up, they become much harder to negotiate with.

The truth is, almost nobody buys at the very bottom, or sells at the very top. And they didn’t know they were doing it until they looked back. I know–I bought several properties near the bottom of the last cycle around 1995, but I didn’t realize how fortunate I was until several years later. Likewise, I also once locked a long term interest rate at a bottom, but had no way of knowing it at the time. I just knew it was an interest rate I could live with.

A third reason this may be the time to buy relates to what we call the “annual real estate cycle.” You see, the forces of supply and demand are influenced by annual events. Buyers are way too busy to look for a home with the holidays around the corner, so demand slackens in December. Once the New Year begins & they’ve resolved to get that first home, demand picks up. Especially after they see how much they’re paying in taxes. As we move into late spring, the push is on for many to move to a better school district. Parents want to get the home in escrow & lock in the address before the school administration is gone for the summer.

But as good weather & summer vacations kick in, buyers get other things on their mind & demand slows. That’s too bad, because that seller who resolved to get her home on the market in January is finally finishing their pre-listing painting & cleaning, & supply is finally increasing.

All of which means that, all things being equal, prices go up dramatically from Feb. – May, level in the summer, & decline in fall & early winter. Which means the annual cycle just bottomed. Then the Fed dropped rates. Twice. And Congress is working on a stimulus package. And maybe it’s time to start looking for bargains.

A while back we discussed some of the unique positive indicators in the So Cal real estate market, & mentioned that we’d discuss some of the negative indicators shortly. Well, shortly wasn’t so short, as we enjoyed Christmas, but here’s our tardy continuation.

Before we go negative, however, we should point out we’re putting our last unsold listing into escrow this week. We think that may be a positive indicator of a nice spring coming, so not all the arrows are pointing down.

However, 3 huge problems do loom on the immediate horizon:

1. Foreclosures. Most of those crazy subprime loans will be “resetting” in the next 6 months. “Reset” is a polite term for “payments zooming,” in some cases doubling. The banks are doing some things t0 help, but most still predict a massive increase in an already high foreclosure rate. They may be wrong, but it still will be a drag on the market.

2. Economic slowdown, or worse. Real estate is generally considered a “leading” indicator, & it may resume that role in the current economic cycle. Most builders and tradespeople we talk too are in a huge slowdown which may well continue to ripple through the economy, as the recent Christmas selling season seems to indicate.

3. Problems getting loans. The lending market has over-reacted to the sub-prime insanity, now making financing harder for everyone, even “prime” borrowers.

For these reasons, most economists predict it will be 2 – 4 years before real estate is back to “normal,” whatever that is.

We can just about guarantee that the December & January median price figures from DataQuick for Southern California will show continuing declines, probably drastic. But those are sales that went into escrow in November and December–old news.

We wouldn’t be surprised to see at least price stabilization locally this spring, for reasons hinted at by our being “sold out” in the middle of winter!

We’ll go into that in more detail in a few days. In the mean time, have a safe and happy New Years’ Celebration. And if you know anybody who needs a couple of good L.A. & Orange County real estate agents, we’re sold out & ready to go to work! Give us a call at 562-822-7653 any time!