It’s interesting and sometimes funny what people think about our local real estate market. A common question from Sellers and Buyers is “Aren’t the Chinese buying up all this real estate at inflated prices?” Here I give you my perspective on Chinese investment and a few other common misconceptions.
- Chinese are the largest segment of Buyers here now.
Over the last couple of years, there was talk of Chinese buyers buying up property in California in droves. It became an issue for the Chinese economy which resulted in some regulation. Many believed the regulation would cripple foreign investing from China. My experience has been that 95% of all sales in California are not to Chinese buyers. Of the 5% segment, the majority already live here and are not investors from outside of the country.
- Open houses are crucial.
Contrary to popular belief, while open houses can be useful and sometimes good to have, they aren’t the most important part of marketing and selling a property. According to the NAR (National Association of Realtors), only 2% of homes are sold as a result of an open house.
This doesn’t mean they’re not worth doing, but are mainly useful as part of a bigger, more aggressive marketing strategy.
- The highest price is always the best offer.
Sellers and agents can sometimes be seduced by offers that are higher than they expected or higher than another competing offer. Very often these high offers are not destined to close at prices anywhere near the original offer amount. The motivation and methods that a Buyer uses, as well as the integrity and reputation of the agent representing the Buyer, are a far better measure of the likelihood of a closing. Having sold real estate for 30 years I am keenly aware when the best offer on the table is being made by someone I just know is going to close the transaction. Of course there are certain situations when I advise Sellers to take a chance on someone with the higher offer, but only with a very strategic set of rules in place.
- Price reductions are not a sign of desperation.
The whole purpose of price reductions is to make the price, competitive with the current state of the market. It’s sometimes the right thing to do when a property is not getting as much traffic or interest as we would like. There is an old saying: “If the house is not getting shown, (as long as it is being exposed to the market properly) the price is wrong, and If a house is getting shown regularly but no-one makes an offer, it is overpriced”. We can usually tell if the price is correct within the first 20 days of the marketing period. Listening to what Buyers and other agents say, and listening for what they don’t say, tracking other similar homes and nuanced micro market conditions (reading the tea leaves) is critical. On the rare occasion where we missed on the IPO, we must pivot quickly as time becomes your enemy when you are trying to get your home sold.
- I don’t need to prepare my house for sale – they are just going to tear it down.
Land value has exploded and almost all homes 15 years old, or older, are now looked at primarily for the value of the land. That said, most buyers of these homes still expect that the home looks presentable, clean and tidy. I am not saying you need to remodel an older kitchen or bathroom but maybe a coat of paint and clearing clutter will make a difference. Every situation is different but don’t rule out doing a bit of prep work before showing the home.
We take pride in creating a customized marketing plan for each property we sell. anticipating and managing expectations will help ensure that the process is as painless as possible for all parties involved.
In real estate news, there are two new listings this week.
475 23rd Street– Listed at $3,495,000. Lot value; developer/owner-user opportunity to build! 60 foot wide corner lot in Franklin School district. Original house was built in 1936 and this is the first time on the market in many years. This will be an interesting sale as this is the first tear-down to hit the market since the IZO became effective. My guess is that it sells for $3.5+
2320 Alta Avenue– Listed at $3,995,000. If you are wondering why a 4 bedroom, 3 baths of 4,299 sqft. Could be so affordable, if you see this you will understand. It was built in 1930s but somewhere along the way someone did some strange additions that have made the floor plan a little wonky. It is a nice corner lot and most likely not an issue to bulldoze if someone wanted to.
One property went into escrow this past week:
446 25th Street – Re-Listed for $5,998,000. Originally listed in July of 2017 at $6,498,000. Contemporary Spanish, newly completed with impeccable finishes, wine cellar and billiard room, a lovely indoor/outdoor flow. Nice grassy backyard with a pool, spa and bathroom. Approximately 4,911 square feet, 5 bedrooms and 6.5 bathrooms. Last sold April 27, 2016 for $3,333,000.
One closed MLS sale to report:
530 17th Street– Sold for $6,096,000. This sale price exceeded my expectations by $96,001 as I predicted when it hit the market months ago that the price would not go over $6M. I am happy to be wrong as this shows the buoyancy of the Santa Monica 90402 market.
I have a great little investment property that is not yet in MLS. A duplex can be had for under $3M. Plus a couple of upcoming attractions – including one on La Mesa, that are not yet listed in the MLS, priced from $1.9 million to $16 million.