We culled everything from the San Mateo County Multiple Listing Service for San Carlos home sales in the past six months with a limiting parameter of a minimum price of $998,000 as we wanted to stay away from sales with stimulated financing.

As is apparent from the spreadsheet there are quite a few homes which have sold in the last six months for over the asking price (44%) for on average $54,000 more than seller’s asking price with a high of $187,000 and a low of $2,000 and a median selling point of $46,000 over what the seller was asking.

Not surprisingly these homes were only on the market an average of 6.4 days with the seller receiving 104% of their asking price.

Homes which were apparently priced at what they were probably worth fared less impressively with the seller receiving their asking price in 18 days on average. These homes accounted for 19% of all the homes sold.

Those homes where the seller missed the sweet spot by pricing too high did even worse as would be expected. These homes were on the market an average of 48 days and sold for on average $37,000 less than the seller’s asking price. These sellers received only 97% of their asking price with the worst case being a home which sold for $145,000 under the asking price in 131 days and the best case a home which sold for only $3,000 less in 16 days. These homes accounted for 37.5% of all the sales.

It's fairly easy to see that homes which are priced well will sell in a shorter period of time and for more. This can only happen when there is sufficient demand (as there currently is in San Carlos) and the seller doesn’t take any offers until the home has been marketed for a sufficient period of time—typically one week-ten days. The difference is staggering when you see that homes which are slightly under what the market will bear sell for on average 105% of the seller’s asking price and homes which are overpriced sell for only 97%. That seven percent difference is more than the commissions most agents charge.

If we break down the sales by days on the market we see further evidence of homes selling fast and for more when they are priced aggressively.

Homes which sold in the first two weeks of market exposure accounted for 67% of all homes sold with the sellers receiving 103% ($32,000 more) of the seller’s asking price on average.

Those homes which sold anywhere from 15-21 days on the market accounted for less than 1% of all homes sold. These sellers received on average $14,000 less than their asking price (97%).

Homes which were sold after 21 days on the market accounted for about 27% of all homes sold with the seller’s receiving on average $39,000 less (97%) of their asking price.

Based on these statistics we can rather safely conclude that the best strategy to price a San Carlos home is to price it aggressively and obtain a sale in the first two weeks. This is backed by our empirical evidence of being in the trenches and seeing buyers vie for a home with fervor.

Ultimately, a home will sell for what the market will bear. We control the marketing, not the market. Our goal is to price a home so that the seller will receive the most money from the sale.

Throughout our years of successful transactions we have been focused on the three important steps to achieving this goal—Preparation, Pricing and Promotion—The Keys to a Successful Sale.^sm

The information contained in this article is educational and
intended for informational purposes only. It does not constitute real
estate, tax or legal advice, nor does it substitute for advice specific
to your situation. Always consult an appropriate professional
familiar with your scenario.

The Pitfalls of Over Pricing A Home

Why is that home still on the market? That’s a question many people ask as they drive by the same for sale sign in their neighborhood week after week and sometimes month after month. Why do some homes fly off of the shelf and others languish for months?

Whether or not a particular home sells quickly or not has often little to do with the market and more to do with the presentation of the home—including the pricing. In today’s tech savvy real estate world, home buyers have nearly unfettered access to listing information. With all of the tools available it’s hard for buyers to miss out on seeing a home and equally difficult for buyers to not have a good idea what a home is worth.

The first issue for homes which languish on the market is often that the promotion is at times lackadaisical. A newly listed home without photos is often overlooked by many buyers. Knowing how to promote and price a home are key ingredients in selling a home quickly.

But why is selling a home quickly important? First and foremost it’s about price. Most sellers want to get the most amount of money they can for their home. Statistics demonstrate that selling a home in the first several weeks will accomplish that goal.

Looking at all the single family home sales in Belmont for 2010*, homes that sold in the first 14 days—an adequate time to market a home to an eager audience—accounted for 36% of the total sales.

These homes on average sold for $10,000 over the seller’s asking price—often with multiple offers. Homes which sold between 14 and 21 days on the market accounted for only 9% of the homes sold in 2010 and they sold for on average $20,000 less than what the sellers were asking.

Homes which languished on the market after 21 days accounted for a whopping 55% of the total homes sold and the sellers received on average $90,000 less than their initial asking price while averaging a painful 88 days on the market. These numbers are actually very understandable. When a home is first on the market a buyer who may be interested in the property cannot affix an absolute value to the home. If there are multiple offers from multiple buyers the price is often bid above the asking price and the winning bidder is usually the highest bidder and thus has paid more for the home than any other willing and able buyer on that particular day. Once a home is on the market for several weeks, buyers still might not know exactly what the home’s value is but they know it’s not what the seller is asking or the home would have sold. And that is where the damage begins. Time will do more than anything to hurt the sale of a home. After weeks of marketing buyers assume there must be a reason why nobody has selected that home and they invariably infer that there is something wrong with the home itself. Counteracting this misimpression is difficult since your agent can’t proclaim “there’s nothing wrong with the house except the price” since most surely there is always something wrong with every home.

Agents Don’t Create Value.

It’s the listing agent's job to inform the seller of comparable values in the area by reporting on what homes have been selling for and what their competition is but agents do not create value, although they can add value. A good agent will typically give the seller a range at which point they can expect to attract a reasonable number of willing and able buyers in a reasonable amount of time. This is why it’s difficult to under price a home and easy to miss the mark by pricing too high. A home underpriced and allowed sufficient marketing time can and almost always will be bid up and often above what might be considered fair market value at the time, while an overpriced home will most surely garner less than what it would have had it been initially priced in the sweet spot.

If you’ve missed this spot it’s not too late. Making a price reduction quickly can thwart the dreaded doomed house syndrome tip the scales your way and bring a fresh batch of buyers to the bargaining table. Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont. MorganHomes.com The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

The media helps keep us informed about the world we live in. They tell us what is going on globally, what our government is up to and on a local level what the weather might be like (even though they bat just over 500 on that one), and they can even tell us the best route home when there’s traffic. We trust the media to give us accurate information and they have a duty to ensure that it is. But what about the stories they just choose not to report?

Let’s face it. Bad news sells and the media know it. They also know that sensational news sells and can afford to devote little space or time to reporting “feel good” stories.

In the real estate industry we are keenly aware of how the media focus on certain issues while choosing not to report others. And when they do report sensational news, often it is fraught with poor investigation—why ruin a good story with the facts?

Such is the case for our local housing news. We’ve been barraged with the doom and gloom stories for the past several years. One might think that when there’s some good news they’d be tempted to reverse their course of tenebrous stories. If the market continues on a course of recovery as it has been doing so far this year (ahem—six months have ggone by hello…), they just might be forced to report the bright side of San Mateo County’s rebounding housing market else be scooped by their competition. This is our report for June 2011, assessing the housing situation both nationally and locally—comparing the national housing news with our local market. We’re been waiting for the news to break about the staggering median price increase in San Mateo County but alas we are relying on our own reporting to bring you the facts: Interest rates are reaching 50 year lows again. Rates this week were unchanged. A 30 year fixed rate was hovering around 4.5%. Time to refinance if you haven’t already. September 30th is the drop dead date for the $729,750 conforming loan cut-off. As of October 1, 2011 it drops down to $625,500. Rumors that Congress may extend the temporary high cost area cap are doubtful. “The February report to Congress by the Departments of Treasury and Housing and Urban Development (HUD) stated “the Administration recommends that Congress allow the temporary increase in limits that was approved in 2008 to expire as scheduled on October 1, 2011 and revert to the limits established under HERA [Housing and Economic Recovery Act].” As such, we do not expect any further extensions.” Case-Shiller report for May showed that the U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels. The San Francisco MSA (metropolitan statistical area) which encompasses the counties of San Francisco, San Mateo and Marin fell 5.1% year over year, 2.6% for Q1 ’11 and .1% from March 2011-April 2011. Meanwhile San Mateo County fared much better. The median home price rose for the fourth straight month in a row—up 15% in Q1 2011 over Q4 2010, up 13.8% over last month, and up 10% over May of 2010. And here’s a staggering statistic which the media has managed to ignore—the median home price in San Mateo County is up 40% since January 2011. Stabilization appears at hand with more local job driving the demand for housing. San Mateo County home sales were up 14.8% over last month. Don’t compare May home sales to last year—the $8,000 tax incentive skewed the numbers for May and June last year—the drop dead date for the rebate last year—but on a side note, the same number of homes 418, sold last May even with the now expired incentive. Are buyers jumping in to catch the higher conforming loan limits and pushing up sales/prices? Perhaps. This October’s year over year sales should be a good indicator. Watch for July’s housing report—the first year-over-year comparison devoid of government incentives. *Data from the San Mateo County Multiple Listing Service. Interested in keeping up on Belmont home values visit monthly published stats on our web page: MorganHomes.com Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont. (650) 508-1441 The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Belmont Home Sales for May 2011

Belmont home prices slipped back a bit in the month of May 2011 while sales continued to be less than impressive.

Home sales in Belmont were down considerably from May of 2010 and for good reason—home sales last May were buoyed by the last minute deadline for the $8,000 tax credit which lifted sales across the nation. Our sales analysis for May of 2010 addressed the temporary nature of the uptick in homes sales for the month of May 2010.

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SALES

Last year in May there were 34 home sales in Belmont as compared to only 15 this year. That’s one less sale than last month and two less than in February. Looking at the big picture, over the last 13 years the average home sales in Belmont has been 25 for the month of May—of course many of the last 13 years were boon years as well.

MEDIAN PRICE

The median price for a home in Belmont for May 2011 was $949,000, an increase over April of 14% and an increase over last May when the median home price was $848,500. We could stop right there and change our headline but looking a little closer we see that the mix of homes which sold in these periods varied dramatically.

Last month, and in May of last year, the median size homes which sold were smaller than homes selling in May of 2011. Part of the reason for so many smaller homes selling last May was the $800,000 purchase cap to qualify for the $8,000 tax credit. This rebate lured many first-time buyers into the market but had an incidental effect of lowering the median home price with many smaller homes selling.

The median size home that sold in Belmont in May of 2010 was 1,845 square feet and in May of 2011 it had increased to 2,157. The increase of 312 square feet represents a 17% increase in the size of homes selling in the two periods while the increase in median price represents only an 11.8%. At the going rate of $478 per square foot in 2010 that could account for $149,136 of price differential—the actual differential in the two periods was only $100,500. This could loosely be translated into a real decline in median home price of $ 48,636 or 5.1% year over year.

While the median home price may have slipped back a bit the average time it took to sell a home dropped from 25 days in May of 2010 to 17 in May 2011.

PRICE REDUCTIONS

Four sellers in May of 2010 lowered their asking price by on average $64,750 in order to attract a buyer while this May only one seller lowered their asking price by $30,000. These fewer price reductions might be attributed to sellers (and agents) pricing their home more accurately to reflect the current market conditions.

PERCENT RECEIVED

May of 2011 found sellers netting more than last year during the same period. Seller’s received 101.3% of their asking price this year as compared to sellers netting only 99.8% last May.

A correlative effect of pricing one’s home right is that offers will usually come in closer to the asking price. This May five (33%) of the home sales were under the asking price for on average $22,000, four homes sold at the asking price and six (40%) sold for on average $40,000 more.

In May of 2010 15 homes (44%) sold for on average $26,000 less than what the seller was asking, three homes sold at the asking price and 16 (47%) sold for on average $22,000 more than asking.

The peninsula market appears to be picking up some steam, though the numbers have yet to reflect what we see occurring locally.

Homes which are priced right are often snapped up within days with multiple offers while sellers (and agents) who push the pricing envelope quickly lose market enthusiasm and are more often than not relegated to months of marketing, open houses, showings and multiple price reductions before finding a buyer.

We’ve also noted that many more people are contacting us for rentals than in the past several years. This increase in demand for rental housing has created a shortage in the supply and rental units are harder to come by while rental prices are skyrocketing. And when rents rise (and the number of units unavailable to meet the demand) people look at purchasing as an alternative. We suspect that the peninsula housing market is poised for a rebound sooner than the rest of the nation but don’t expect to hear about it in the news just yet.

Increased affordability in the housing sector with lower home values and historically low interest rates makes considering buying VS renting very attractive.

Investors of rental units are simply giddy at locking in historically low interest rates for 30 years and will reap handsome rewards when inflation returns.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

San Mateo County Market Snapshot--Are We Treading Water?

Those of you who follow our market updates know we put our hometown, Belmont, under a market microscope every month to get a glimpse as to where the market appears to be headed.

Of course that really is living in a Petri dish when it comes to the real estate market as a whole.

Real estate is very local—what goes on in even one part of a city could be entirely different from another. That said eventually positive market trends trickle down and negative ones up.

As evidence of this phenomenon one can go back and look at our charts from 2007 when Palo Alto was still doing famously yet Daly City may as well have slid into the ocean (many homeowners probably wish it had).

Today we visit the numbers—year over year—for San Mateo County as a whole, hoping to see some trends that will give us an inkling as to where consumer sentiment is, as reflected in sales, median price, etc.

SALES

It’s easy to see that the ripples of consumer uncertainty could easily capsize the boat of recovery if the tides of low interest rates come in too fast.<!--[if gte vml 1]><v:shapetype id="_x0000_t75" coordsize="21600,21600" o:spt="75" o:preferrelative="t" path="m@4@5l@4@11@9@11@9@5xe" filled="f" stroked="f"> <v:stroke joinstyle="miter" /> <v:formulas> <v:f eqn="if lineDrawn pixelLineWidth 0" /> <v:f eqn="sum @0 1 0" /> <v:f eqn="sum 0 0 @1" /> <v:f eqn="prod @2 1 2" /> <v:f eqn="prod @3 21600 pixelWidth" /> <v:f eqn="prod @3 21600 pixelHeight" /> <v:f eqn="sum @0 0 1" /> <v:f eqn="prod @6 1 2" /> <v:f eqn="prod @7 21600 pixelWidth" /> <v:f eqn="sum @8 21600 0" /> <v:f eqn="prod @7 21600 pixelHeight" /> <v:f eqn="sum @10 21600 0" /> </v:formulas> <v:path o:extrusionok="f" gradientshapeok="t" o:connecttype="rect" /> <o:lock v:ext="edit" aspectratio="t" /> </v:shapetype><v:shape id="Picture_x0020_7" o:spid="_x0000_i1025" type="#_x0000_t75" alt="Cast-of-gilligans-island" href="http://beautifulmountainblog.typepad.com/.a/6a00e54ede755a8833014e5f299d1f970c-popup" style='width:240pt;height:150pt;visibility:visible;mso-wrap-style:square' o:button="t"> <v:imagedata src="file:///C:\Users\Drew\AppData\Local\Temp\msohtmlclip1\01\clip_image001.jpg" o:title="Cast-of-gilligans-island" /> </v:shape><![endif]--><!--[if !vml]--><!--[endif]-->

Sales are certainly better than the low of 2009 and remain steady as they did in our Belmont example. But as in the Belmont report the median price showed a decline in home values since last January. That’s not necessarily a bad thing, especially if you are a potential home buyer and it doesn’t mean values are still dropping, just that they did drop year over year.

Interest rates are going up, and have done so rapidly in the last few months—around ¾ of a point. That hurts the ability for people to qualify for a home and with less demand there’s a potential for prices to decrease further.

But as we cautioned ourselves, we are comparing 2010--a year of government sponsored tax rebates to 2011 without. Let's see if our minnow of a recovery can weather the storm without a life raft.

Thanks for checking back in with us.

*Data San Mateo County MLS.

Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.