The Real Estate Market Continues to Change: Agents Need to Change, Too!

Much of my real estate success has come from my ability (or luck) to stay a step or two ahead of the changes in the marketplace.  Often I have been ridiculed for my forward thinking actions, like when I started doing BPO's in 2006; or after I listed my first Short Sale in April, 2007 I was humiliated at an office meeting; and my favorite was at the Christmas Party that my then broker hosted and left him making a drunken fool out of himself as he tore into the stupidity of listing REOs.

I guess I'm qualified to be classified as a forward thinker (I started blogging in 2006, too).

HOW TO WRITE OFFERS IN TODAYS MARKET

REALTORS® learn very early in their career how to do the paperwork to write offers in their local jurisdictions that comply with the local rules and broker requirements.

Here in the Hemet - San Jacinto, CA Valley our real estate market today is dominated by bank owned homes, or REO Real Estate.  I say dominated, because over 90% of all closings are indeed REO Listings of homes for sale.  Most of the other 10% are Short Sales or Standard Sales (typically an Investor flip).

Although Short Sales only represent about 10% of the closings, they continue to dominate the active listings in the local MLS; short sales represent approximately 60% of all active listings in the Hemet - San Jacinto, CA Valley.

THE MARKET CONTINUES TO CHANGE

Last month (October 2009) has seen a rash of low appraisals, despite the fact the home prices have been inching up over the last couple of months.  In the last month, my sellers have had to renegotiate contract prices 4 separate times due to low appraisals.

Based on this scenario and my understanding of local real estate I have started to advise buyer agents to do their homework and only submit offers for what they believe the home will appraise for - providing me with actual comps.

REED AND HEED

A well-respected real estate blogger, Broker Bryant Tutas. from Poinciana, Florida published a blog over the weekend, about the importance of Buyers Agents preparing a quality CMA for their buyers.  You can read his insight and preview a sample by reading The Buyer CMA. Do you use it?.

I'm taking his suggestions a step further and advocating that Buyer Agents actually submit the CMA as a part of their offer documentation.

I have suggested this several times over the last week or two with a rash of offers that have come in.  Most have not listened to me but a coup0le have and they are happy today.

The problem is my listings today average a list price of $150K, as were the 2 of the 4 I mentioned earlier that had to be renegotiated - the other 2 were listed at over $225k and both reduced by close to $50K!  But lets focus on the bread and butter $150K deals.

The sad truth is the appraisals are coming in from $125K to $140K.  I have agents calling me as if I have the negotiating power to change the price in the MLS - I don't.  When they follow my queue and submit the documentation to support their offers, the bank has countered back with less that a $1500 difference in the asking price.  When the agents just submit an offer with a low ball offer, that's how the banks look at it - low ball and counter back within $1,000 of list price.

THE NEXT LEVEL

I was particularly impressed with one agent in particular who not only submitted comps but a complete market analysis justifying the offer that was being submitted.  Guess what?  The seller accepted the offer without any additional counter offer on price.

WHAT IS NORMAL?

Personally, I am tired of the whining about when we get back to a "NORMAL MARKET" - whatever that is.  The truth is this is what we got today...so make the most of it.  You can follow my lead of do things the way you have always done them (wasn't it Einstein who said that doing the same thing over and over again expecting different results is the definition of insanity...or something like that)

Looking forward to seeing your next offer for Hemet - San Jacinto Real Estate