Why Use a Realtor for Buyer or Seller?

San Francisco Bay Area Housing Market 2014

by Rick Turley, President of Coldwell Banker Residential Brokerage, San Francisco Bay Area

Four Reasons 2014 Could Be A Very Strong Year for Local Housing Market

Happy New Year! As we kick off 2014, it's a good time to take a look at what might be in store for the local housing market in the coming year. While I don't claim to have a crystal ball, I feel very optimistic about the potential for a strong housing market in 2014.

The Wall Street Journal reported this week that home prices across the country ­ – but especially in Silicon Valley and other parts of the Bay Area – have zoomed back to near record territory. Valuations jumped 25% or more in some communities over the past year, nearing or even exceeding their pre-recession highs. Prices in Palo Alto are nearly 40% above their 2007 peak, one of the largest gains in a recent survey.

So what do we do for an encore in 2014? I see four major reasons why the Bay Area's housing market will continue to be strong in the coming year:

1. A robust local economy. The Bay Area economy is one of the strongest in the country. Silicon Valley, the Peninsula and San Francisco are the high-tech, Internet, VC and social media centers of the world. CNNMoney's tech job forecast for 2014 is "Hot and Getting Hotter." Tech job site Dice.com reports that 55% more employers — a record high — say they're ready to hire a large numbers of techies, up from 42% in the second half of 2013. These well-paid knowledge workers will provide an even stronger, better-capitalized pool of buyers for our housing market in the coming year.  Just noted in USA Today, the bay area’s fourth largest city, Fremont, has seen a  return to a strong housing market, and is regarded as one of the best run cities in the country.  http://usat.ly/1crnbWi   From the Wine Country in Sonoma, south to Carmel and Pebble Beach, and across to Livermore, we are fortunate to have healthy, diverse, and prosperous cities and towns in our nine Bay Area counties.

2. Supply and demand. While the demand side of the equation was extremely strong last year with buyers out in force, the supply continued to be historically low. This resulted in prices getting bid up in multiple-offer situations and many would-be buyers walking away empty-handed.  No one knows for sure what will happen to inventory in the coming year, but our agents are telling us more listings are expected in the coming weeks. I suspect homeowners are reading the same news stories we are and seeing that prices have been shooting higher, and they may finally be ready to cash in. Rising prices also change the dynamics for many homeowners who had been underwater in their mortgage as recently as six months or a year ago and weren't in a position to sell. With prices jumping, many of these homeowners now have positive equity once again and have the option of selling and walking away with cash for the first time in years.

3. Interest rates. Interest rates remain historically low, but make no mistake about it: They are moving higher once again. Some economists are forecasting mortgage rates could rise a full percentage point before the year is over. This is a clear wakeup call for those buyers who have been on the sidelines waiting for the perfect time to get into the market. The time is right now before mortgage rates move higher.  An increase of just one percentage point on a $500,000 mortgage adds $300 to a monthly payment or $3,600 a year. Buyers know that and will be rushing to beat the next rate hike.

4. Increasing costs of renting.  As the Bay Area economy comes roaring back from recession, available apartments are drawing long lines of potential tenants and rents are spiraling higher, according to a recent story in the San Francisco Chronicle. "Rents in San Francisco are escalating at breakneck clips this year, largely driven by an influx of tech workers. Oakland and San Jose likewise are seeing steep run-ups," the article notes. Median asking rents for San Francisco apartments listed on www.livelovely.com hit a record $3,398 in the third quarter, up 21 percent from 2012, according to the Chron. Such huge rent increases continue to make buying a home a better financial proposition. My sense is that buyer demand will only increase in the new year as renters see their personal economy improving with a better job market and higher salaries.

Three of the four above are particularly unique to our Bay Area.  Few cities around the US have this same alignment of economic conditions. NAR is predicting growth in the 5+% range across the nation in 2014 and I feel that number is conservative for us.  Every one of our offices expect a strong first quarter as some new inventory comes to the marketplace.  

Visit www.RealtorLisaWu.com or Email to RealtorLisaWu@yahoo.com

For Sale By Owner (FSBO): The Drawbacks of Going it Alone on a Home Sale

With housing on the upturn, multiple offers and rising sales prices are being reported in our market. Some potential home sellers might think that selling their home simply requires placing a “for sale” sign in their front yard. Many sellers have learned the hard way that selling a home in today’s marketplace is much more difficult than they imagined; their efforts to save money on commissions may have been more costly than they anticipated.
Before venturing into doing the do-it-yourself option of being a for-sale by owner (FSBO), you need to fully understand what is involved in the selling of real estate and then compare the perceived advantages and the actual disadvantages of trying to sell your property on your own.
Here are seven good reasons why hiring an experienced professional REALTOR® may actually net you more money on the sale of your home when all is said and done – as well as save you countless hours, headaches and stress in the process:

Being a FSBO may not actually save you as much as you think. While you might save some of the cost of hiring a professional real estate agent to represent you, you may still need to pay 2 percent or more to the buyer’s agent in order to attract a larger pool of buyers. Additionally, the true “savings” may be far less after you add all the other costs associated with selling – advertising, brochures and flyers, for-sale signs, attorney fees to draw up documents, etc.

You may get less for your home. The National Association of REALTORS® found that the typical FSBO home sold for $174,900 compared to a sales price of $215,000 for agent-assisted sales. That equates to an 18 percent loss for those do-it-yourselfers hoping to save a 6 percent commission. In addition, prospective buyers of a FSBO property, looking for a bargain, may automatically reduce their offer by the amount of the real estate commission the seller is attempting to avoid paying.

A LOT goes into selling a home. Less than 10 percent of sellers sold their home on their own last year, according to NAR®. Novice sellers may think you just stick a for-sale sign in the front lawn and buyers will beat a path to your door. Guess again! Professional agents develop comprehensive marketing plans, take professional photos, manage inspections and appraisers, oversee staging, hold open houses, place print and online ads, seek out potential buyers and negotiate with the buyer’s agents to get the best price possible for their seller. Homeowners need to ask themselves if they are ready and capable to do all of that work on their own.

FSBOs limit their potential pool of buyers. FSBO properties are usually not listed on as many of the home search engines and websites as listings handled by real estate agents. This is problematic given that 90 percent of buyers use the Internet to commence their home search, according to NAR®. Also, FSBOs typically can’t put the advertising, marketing and networking resources into reaching as many potential buyers as real estate professionals do. And with commissions reduced or even eliminated for buyer’s agents, there’s little incentive for real estate agents to show your home to their clients.

Setting the right listing price is hard to do. Real estate professionals review comparable sales and local market conditions, as well as the pluses and minuses of your home as they suggest the list price. As an owner, you may not have a clear or objective sense of what that price should be. The right price may get your home multiple offers and perhaps even bids over the asking price. However, if the list price too high then many potential buyers may not even look at your home, let alone make an offer. On the flip side, you could undervalue your home’s features that may justify a higher sale price.

It’s not always easy to be a “closer.” Getting a potential buyer to make an offer isn’t the end of the process. It is not uncommon for agents representing buyers and sellers to negotiate back and forth on many of the terms in the purchase contract, including price, occupancy requirements and other conditions of sale – and there are often additional negotiations regarding credits and repairs during the escrow process. FSBOs may find themselves sitting across from an experienced “closer” looking to drive a hard bargain and cut the best deal for themselves rather than working to reach a “fair” compromise between both parties. This is a critical part of the transaction; FSBOs should ask themselves who is looking out for their best interests? Working with a professional REALTOR® could help sellers avoid several of the pitfalls during the negotiation and closing processes.

Legal landmines in selling a home. There are a myriad of potential legal landmines for FSBOs. Who will write the purchase contract? What if a buyer’s contract proposal has clauses and other terms that could be detrimental to you? Sellers are obligated to disclose all material facts about their property and any omission or incorrect information could later be grounds for a claim or lawsuit. A REALTOR® can help you through that process by providing you with the correct advisories and disclosure forms.

Selling a home is a lot harder than most people realize, even in a good market. And it’s very easy for non-professionals to make mistakes along the way that will end up costing them in the long run. With the sale of a home being the single biggest transaction most of us will ever make, this is the time to use an experienced REALTOR® to manage the process. I’m ready to help. Visti me at  www.RealtorLisaWu.com