What is the Eagle Rock Business Model? It's a unique, usually individually owned, business that offers good style and good value. That's my definition--what might yours be?

Cacao Mexicatessen                    
Another long-awaited restaurant has opened, the Cacao Mexicatessen at 1576 Colorado Blvd. Eagle Rock, CA, 90041. Located next door to Trader Joe's and Eufloria in a very suitable hacienda-style building, there is outdoor seating behind the vines on the covered porch and you will smell the homey scent of fresh-made tortillas cooking on the griddle as you approach the door. Inside, it looks like it's been here for 50 years, but it just opened in the last couple of days. A good sign, I think, and the business looks brisk already. Check out photos, the menu, and contact info at www.cacaodeli.com. They have a number of mole dishes, hence the cacao name. There are imported gifts, coffee, even T-shirts with a couple of great designs on them. The Lujan family has created a unique menu featuring dishes from all over Mexico and a very welcome new Eagle Rock eatery, in my book. I had some guacamole with homemade tortilla chips and I almost ate the whole 16 ounces of it! They cater, you can eat there, or you can take out-something for everyone. Now we need to have CoWineCo twitter the right wine for, say, the Cochinita Pibil (roasted pork with achiote and citrus, wrapped in banana leaf).

Eagle Rock ‘N Roll Farmers' Market                      
How many communities do you know of that has 2 Farmer's Markets every week? Well, add Eagle Rock to your list. This new one is located at the Macy's end of the parking lot at 2700 Colorado Blvd, started in June, 2009, and is a certified Farmer's Market, unlike the Friday evening Farmer's Market at the corner of Merton and Caspar. That means that the Department of Agriculture of the State of California has inspected the farms to ensure the produce
being sold at the markets is California grown. Whereas produce you buy in grocery stores or non-certified Farmer's Markets might not have been grown in California.
From their website: "PD Markets brings you the hippest, freshest and coolest farmers' markets in town. Our markets not only feature organic fruits and vegetables but we have some of the best in hand crafted merchandise, vintage and collectibles, jewelry, clothing and much more. We also have awesome bands playing live and for Free! Our kids area rocks... literally with our Rock Climbing wall and inflatable obstacle course."

I visited there today for the first time and I found a small but friendly variety of vendors. I haven't seen organic coffee sold at a Farmer's Market before, and they gave me a generous and delicious sample. I bought some collard greens at the South Central Organic Farmer's table and there were several vendors with peak of the season stone fruits and grapes at reasonable prices. There were organic goat cheeses, breads, hummus, all really yummy.

The hours are every Sunday, 9 am to 2 pm. Check it out, it's worth your support and I hope this one prospers as well as the Friday night one. This is really a much better location with lots of parking and easy access. Check out their website at www.pdmarkets.com, and you can follow this on twitter @PD Markets.

Why should you buy a house in Eagle Rock, CA? Because you get the best of several worlds in this quiet little corner of the great metropolis of Los Angeles, CA: a home town, neighborly community with access to the jobs, culture, and amenities that a big city offers, as well as minutes away from hiking trails and the Angeles National Forest.

 Once its own city, Eagle Rock was annexed to the City of Los Angeles in 1923, in order to secure access to the City's Owens Valley water resources. Consequently, Eagle Rock has the municipal services that a large city provides like the Department of Water & Power, police, fire, transportation, and public schools. We've retained our original City Hall which was built in 1922, and several other architecturally and historically significant buildings including the 1915 Carnegie Library which is now the Center for the Arts, Eagle Rock, and the Richard Neutra-designed 1954 Eagle Rock Recreation Center.

 Public schools affect many buyers' decision to buy a home in Eagle Rock. Although part of the huge LAUSD system, Eagle Rock prides itself on its local schools. Four elementary schools feed into the one junior high and high school campus located in the heart of Eagle Rock. The high school placed 447^th in the top 1000 high schools in the U.S. based on Advanced Placement tests given.

 More great reasons to buy in Eagle Rock include all the fun restaurants, bars and cafes that populate Colorado and Eagle Rock Blvds, some fun vintage and modern clothing boutiques, a number of kids' fashion and accessory stores, a large number of established churches, and a very active and committed population dedicated to a number of civic organizations. We have a community garden so popular that there is a waiting list to obtain a plot and not one but two weekly Farmer's Markets. Every summer there are free concerts at Eagle Rock Park. There is something for everyone here, from the Eagle Rock Rockers car club to the Occidental College theatre program.

 Only 26 homes are currently for sale in the 90041 zip code, which comprises most of Eagle Rock. A few more are available in the part of the 90065 zip code that is designated Eagle Rock schools, an area mostly known as Sagamore Park. With so few properties on the market, whenever a good home is listed, it commands immediate attention by the serious buyers. This lack of inventory has helped in part to maintain property values a bit higher than some of the surrounding communities. Where parts of Highland Park and Glassell Park may have seen values drop 30 to 50%, Eagle Rock has gone down 10 to 25% from its peak in most cases. Closed sale prices this year have been reported from $129,000 for a burnt-out shell of a house to $800,000 for a Mediterranean on Hill Drive. In the last five years, several homes have sold for over $1 million, and will again soon if I have my way. I currently have a wonderful Mediterranean with a full guest house on Hill Drive listed for $1,195,000.

And I just have to reblog this wonderful piece about the most holy Buddhist monk in the world who gives us the formula for happiness, the Dalai Lama. http://happydays.blogs.nytimes.com/2009/07/22/the-doctor-is-within/

In this market? Are you kidding? I hope you can see that this is a fantasy title-but honest, if you do everything I say, you really will have less stress when you sell or buy a house.

Whether you are a Buyer or a Seller: choose a full-time professional Realtor who has a lot of experience, have an open and honest conversation about what you want to (or have to) accomplish, and then-if you decide to work with that person, follow her advice. If you don't agree with something she suggests, talk about it in an open, collaborative way. Selling your house is a team effort and while you may be the owner, your Realtor is your coach, and if she doesn't know about your trick knee, she won't know that you can't do 350 squats a day. And if you're not willing to do what she says, why did you hire her?

As A Seller:

Nuts and Bolts

Have every kind of inspection you can think of done by a qualified professional including:

General / Sewer / Chimney / Termite

Plus any additional inspections suggested by the previous ones.

Make a punch list from what they recommend and then get all those things done-and with permits, if needed. Keep all the reports and receipts from the work you did and make a copy for your Realtor to pass on to prospective buyers and their Realtors.

Or: Are you willing to have the inspections done, provide them to the buyers & Realtors, and price your house to reflect the work that is called for?

Or: Are you willing to take your chances with whatever the buyers' inspections turn up and adjust your price accordingly?

Good Looks 

Questions to ask yourself:

1.       Does my house look like it could have been pictured in (pick your style) American Bungalow, House Beautiful, Atomic Ranch, Architectural Digest, Sunset, or Dwell? Or does it look a little more like Grey Gardens?

2.       Can I actually see my house, or do I just see my stuff?

3.       Do I have the time and talent to make my house look great?

Pricing

More questions for you:

1.       Would I pay this much for this house if I were buying it in today's market?

2.       Does the price suggested by my Realtor make me want to throw up?

3.       In a declining or bottoming market, do I understand that the longer I wait, the lower the price can be?

4.       Can I let go of how much money I might have gotten 2-3 years ago?

5.       Can I let go of how much money/effort/love I've put into this property? Paid for this property? What I ought to get for this property?

Showing Off:

1.       Can I keep this house in Showtime condition? If not, can I move out?

2.       Is the house tenant-occupied? Can I move them out? Note: You will make more on the sale of your house than you will lose in rent if you move your tenants out, 99 out of 100 times. And you will sell quicker with less headache. I know, you think you can't afford to have it be vacant with no rent coming in, but I'm just saying...

Here ends Part 1. Next stop, being a successful Buyer.

Besides the problem of inexperienced appraisers who don't understand local markets, we now also have overzealous appraisers who now take it upon themselves to over-research properties to a ridiculous extent. When have you ever had an appraiser take it upon himself to go to the city and cross reference certificates of occupancy with permits from over 40 years ago? And in the City of Los Angeles, known for its poor record keeping and slipshod permit process? Some of these appraisers seem to have taken on a crusader cape and are determined to run prices into the ground. Eagle Rock is a case in point. We have multiple offers, prices going over asking, and the appraisal comes back saying we are in a declining market. Of course, the buyer wants the seller to reduce the price to the appraisal price. That just serves to keep prices at the same low level, creating a self-fulfilling prophecy that we are in a declining market. No one who doesn't really have to sell will go on the market and this also serves to keep us where we are. The system is broken when a buyer with over 25% down payment is told the property isn't worth what they've agreed to pay for it. When there are no recent comparables for a particular property, we have to have an alternative to an appraiser using short sales and foreclosures as the only comparables. Especially when we have a home that is l000 feet larger than recent sales of homes that sold for more, and the appraiser won't use the smaller home because it's too small. That is just not realistic.

Does anyone out there have a handle on these issues? I have one escrow where the buyer agreed to have no appraisal contingency, but what can we do about these deals where the buyer has no extra money to put in? Are there other lenders who are able to work with buyers so that we're able to put these deals together instead of drive them apart?

This is a right-on article for those of us with adult kids. We have a rare opportunity this year only, so let's all jump on this!

If you've represented buyers at all in the past couple of years, you have probably experienced the frustration of trying to negotiate an offer on a short sale or a foreclosure. If they are listed at shockingly low prices, they have no doubt produced dozens of offers and you struggle to get some kind of  honest answer about your offer from the listing agent. Many times you can't even find out if they received your offer or if you will be receiving a counter offer, and then the property goes pending in the MLS and your buyer questions whether you even sent their offer in. You lose your buyer because they think you're a lousy agent, and you feel like a failure even if you've been calling the other agent 5 times every day. Another consequence is that the buyer begins to believe that the only way to win one of these bidding wars is to go directly to the listing agent. The stories and fantasies go on and on, but the ultimate result is that we as agents begin to feel like pawns in a losing game.

 As the listing agent on a property that generated 80 offers, I had a little taste of what some of these foreclosure specialists experience: we had at least 100 calls a day on the property, plus at least 60 buyers asked me to represent them. We had several hundred people visit the property, which caused several neighbors to call and complain. It was a scene, and it was a bit overwhelming.

 Then I thought how I had felt when my buyer had made an offer on a property and we couldn't get a straight answer from the listing agent and eventually the property went pending in the MLS with no call from the listing agent at all. So I decided that I would treat everyone the way I would have liked to have been treated if I had brought an offer. I called or emailed everyone who had submitted an offer that we had it and would be presenting it to the seller the next day. Then, after the seller had made her decision, I wrote a thank you letter that told the agents what had happened and thanked them for their efforts, and we faxed or emailed that. It took some time and effort on my (and my assistant's) part, but I felt that I owed the agents who had spent the time and effort to write and submit their offers the same courtesy.  

 The reaction I received was interesting. Quite a number of agents were obviously surprised that I took that time to acknowledge them, and I was even mentioned in an office meeting (not at my own office) as an example of professionalism. Well, I'm honored and glad that my efforts were noticed, but my point in writing this is that this should be the way we treat each other all the time. My real estate coach, Steve Shull, once said that we need to stop criticizing our fellow agents and give each other more respect.  If we really tried to help each other more, stopped criticizing each other's shortcomings and try harder to make the real estate transaction smooth for our clients, we would improve the level of professionalism tenfold. I'm certainly not perfect, I have my cranky times, I get annoyed with other agents, but I have a standard in my own real estate practice that I try to keep, "we treat other agents as well as if they were clients."  We owe each other that. Just imagine how much smoother our days would be if we all did treat each other that well.

For those of you who want a better understanding of how we got into this global economic mess, National Public Radio has several programs that have podcasts you can read, watch, or listen to that summarize and define a lot of the terms we see tossed around in the news today.  They posit some non-accusatory and intelligent explanations both of how financial systems work and where things went wrong. I'm not saying I agree with every word, but I think it's well-balanced and worth absorbing. Knowledge is power. Check it out at:

This American Life:

http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375

How Stuff Works:

http://money.howstuffworks.com/mortgage-backed-security.htm

Planet Money:

http://www.npr.org/blogs/money/

Are You Ready for a Good Deal?

What constitutes a good deal to you?

"I'll know it when I see it," you say. Well, maybe you think you are in the market for a good deal, but you just told me that you are not. What?! Well, do you have a list of what fits in your criteria for a good deal? Do you know what your numbers are for purchasing, monthly expenses, possible repairs? Do you have your financing lined up and your investment money ready? Whether you plan to buy your primary residence or an investment property, you need to have worked out a number of issues before you're ready to look for a good deal.

Right now, we are in the best market for finding a deal that we have experienced in probably 12 years. This doesn't mean that prices are at 1997 levels, but that there are affordable properties available to buy that can make real financial sense in terms of potential for equity building as well as immediate neutral to positive cash flow on your investment.

For example: A property with two 2-bedroom, 1-bath houses on a street-to-street lot in a decent neighborhood of Eagle Rock listed for $269,900. If you put 25% down, even at under-market rents of $800 each, you could have immediate positive cash flow plus real potential for appreciation over time. If you want to live on the property as your primary residence, you can use FHA financing and purchase with as little as 3.5% down! I don't know if you've been able to buy a deal like this since they changed the tax law in 1987! And this property was a good owner-occupied candidate with privacy for both units-it even had separate yards. Wow, does that sound like a deal? Sign me up, let me go talk to my lender.

Nope. Too late. That place had 6 offers within 4 days and is in escrow. And it took that long only because the tenant was uncooperative about showing any other day than Saturday.

If you are looking for a good deal, you must be ready to jump on it right away with no hesitation. Here is your list of what it takes to be ready:

1. Financing:  You must be prepared with a pre-approval letter, documentation of your down payment,  liquid funds available for a deposit, and very likely with a copy of your credit score. Pushy, huh? Invasive, eh? Well, that is what these foreclosing bank sellers of great deals want to see from you, because they know how they got into this mess.
2. You must be open to doing whatever you need to do to get your offer accepted.

•A.      That might mean you make an offer without seeing all of the property. With tenant-occupied properties, you often can't see inside them unless you have an accepted offer. Think about it, the tenant has no incentive to cooperate with people coming through their home. All they see is a good chance they'll have to move or at least to have their rent raised. Why should they make it easy for you? The odds are good you won't buy the property and they will have been inconvenienced for nothing. You will see the entire property when you do inspections, so don't stress out about it. This tenant-showing subject deserves an article of its own, so look for that soon.

•B.      You might need to reduce or remove all your contingency periods up front. A harrowing idea, but some lenders are beginning to require this because they are overwhelmed with offers. How can you make this work for you? You might need to go so far as to do an inspection before you know that you have the deal. Is it worth $500 or $600 to make sure that your sewer line isn't crumbled and rusted away under that driveway, or that the systems are safe enough to make the house habitable?

•C.      Most important, you must be able to act instantly. If there are two or more partners going into this deal, the ideal plan is to assign one person to be the ultimate decision maker, even to the point of giving them a real estate power of attorney to sign for all the parties. Don't you trust that person? Then why are you thinking you're going to invest with them? If you want to have Mom and Dad approve your purchase, you should have them come with you to look at the property first. There is no time to line up a viewing next weekend for them. If it's a good deal, it may well be gone. That's part of it being a good deal!

There is a series of excellent books you should read about real estate, written with Gary Keller, one of the creators of Keller Williams Realty. I'm not interested in their real estate brokerage model, but this guy has co-written some really excellent, knowledgeable books for Realtors, investors, and even one for first time buyers. Shift just came out this year and is right on for understanding and profiting from the current market. Your First Home is for-you guessed it-first  time buyers. The Millionaire Real Estate Investor was published in 2005, so don't take the easy financing ideas seriously, most of them are history. But the fundamentals of investing are quite good. I do have some thoughts on some of the concepts, such as always buying 10-20% below the current market. In Los Angeles, some of these rules just don't apply, but the eventual increase in equity will more than counterbalance that. Yes, even with the economy crashing down around us, I believe that.

You can go to the website, www.millionairesystems.com, click on the Free Downloads, and access worksheets that will help you organize yourself and help you plan how to accomplish your goals. Give them a try and then maybe you really are ready to find a good deal.

What's the story with short sales? (Again, a short sale is where the owner owes more to the bank than they can get for the property, so they can't sell unless the lender agrees to take less). Are they working out for people? In Eagle Rock, 17 of the 47 active listings are short sales, 7 of the 22 properties in escrow are short sales, and 1 of the 9 closed sales so far this year was a short sale.  So the percentage of each goes from 36% of the actives to 32% of the pendings to 11% of the solds are short sales.

Contrast that with foreclosures: 7 of the 47  active listings, 9 of the 22 pending, and 5 of the 9 closed sales are REO. The percentage goes like this: 15% of the actives, 41% of the pending, and 55% of the closed are bank-owned.

So there are a number of short sales that try, few that actually close escrow. On the other hand, foreclosures are selling like hotcakes. And, though it's a very small sample, two-thirds of the closed sales in Eagle Rock so far this year, 2009,  were distress sales, which is almost as high a number as in Highland Park (see my February 7 blog). And actually, one of the "regular" sales was a trust sale, so that reduces the "normal" number even more.

My view is that the short sales you see clogging up the active listing inventory are confusing the general buyer public. You see these artificially low-priced homes, like the one at 4911 Townsend listed for $250,000, and everyone thinks they are going to get a deal. Well, let's follow that one and see how it pans out. It will be a learning experience for us all. My prediction: if it ever sells as a short sale, it won't sell for $250,000, it will be more, because the house is too big to sell for that little, even though it needs a lot of work. It will get bid up to a higher price. Will the bank approve that price? Or will it eventually go to foreclosure? Let's watch that one and find out.

Here is an example of what pricing right will do: I saw 5420 Mt. Helena, which came on the market at $559,000 with a list date of 2/6/09 and by 2/10/09, the listing agent told me it had received 4 offers and was now in escrow. It was a trust sale and the family just wanted it sold. I'll bet that one sold for more than its list price as well, because you cannot underprice a home, even in this price-conscious market. If it looks like a deal, more than one buyer will think so.

Of course we all want a deal, we don't want to pay more than something is worth, especially in today's market. Which gets us into the whole discussion of value, of what is a fair market price? Is the price today the same price it will be worth in a month? If the buyer and seller can't agree on a number today, then we don't have a sale. What will the property be worth in two months? Is the market going up or down? If you are overpriced today, what does that make you in two months if you still haven't sold? Or is it just that the right person hasn't come along?  

It's not simple buying real estate today, is it? Unless you just want to buy a home, need to move, find a place you can afford, and buy it. Oh, that sounds simple. Why is all the rest going on?

And that's why we have the whole real estate industry, my friends. What should be a simple transaction is full of so many questions to be answered.

Market Update Highland Park 90042

From our spiffy Multiple Listing Service that has all the listings in one place, no matter what far-flung MLS an agent might put a listing in, our sales data are now much more complete. The following table is a sales overview comparing 2007 to 2008:

Highland Park has really been through the wringer, as we say in professional Realtor terms. From the beginning of 2007 to the end of 2008, the number of sales dropped 36%, and the lowest sales price dropped 56%! Wow, though the low sales price isn't as meaningful as the median and average prices which dropped by about 30%. The high sales prices of $950,000 in 2007 were mostly in the new development in the Monterey Hills, and that wasn't the case in 2008. In fact, the last house that sold over there was a foreclosure that closed at $705,000, a very significant 25% drop in price in one year.
What I think is really interesting about the trends in Highland Park is that the number of units sold appears to have bottomed out in the first half of 2008, with the second half showing an increase of 43%! The prices actually dropped close to 15% in the last half of the year. This indicates to me that we saw some kind of a bottom at that time in Highland Park, buyers perceived that there were deals to pick up, and the sales numbers, not prices, finally started to pick up.
In 2007, 7% of the sales were foreclosures, 1.6% were short sales, and 2.4% were trust or probate sales, for a grand total of 11% distressed sales. Compare that to 2008, when the sales were 45% REO, 10% short sales, and 2% trust sales, for a total of 57% distressed sales. Whew!
So what do we have going on in 2009? Of the 127 active listings, 39 are REOs, 31 are short sales, and 3 are probates, so 57% of the listings are distress sales. Of the 30 listings that went into escrow since January 1, 2009, 17 are REOs, 6 are short sales-77 % are distress sales. Of the 18 closed sales, 11 are REO and 2 are short sales, which means that 72% of the sales are distress sales. What does all this mean?

· The bargain hunters are out and are buying. If you are a seller and you have to sell, you'd better be really well-priced and ready to negotiate further if you want to sell in this market.

· If you are a buyer and you see something you like, you'd better jump on it. The days of having your parents come the following weekend to approve your choice before you make an offer are over. In fact, if you need your parents' approval before you buy, you'd better bring them with you when you look at stuff.

· If you are waiting for prices to drop further, you may miss your chance to buy anything. Why? Because you won't know when the prices have bottomed out until you see that they have started back up. The minute that happens, sellers will be less negotiable and will wait to put their homes on the market. Simply put, there won't be anything good for you to buy.

• If you are a seller and you want or need to make a move, now is a good time because the buyers are out looking, but prices are still dropping, so price it right to start. That means price it under what the recent sales show. Yikes! (I know).