How to Stop Agents from Behaving Badly at Your Expense

If you’re considering selling your home, you’ve probably also been thinking about how to go about finding the right real estate agent to help.

Choosing precisely the right real estate representation makes a bigger difference than you might ever imagine. So where does one begin?

DEFINING A TOP AGENT

REALTORS banter around the term “Top Agent” quite loosely—Top 1%, Top 10%, etc. They earn that title for dollar volume in sales—not any independent measurement of the quality of their work or survey from past clients. In the Bay Area, most agents surpass any threshold for earning the Top award distinction due to the median sales prices—not the they are any better than their colleagues in Kansas who need to sell 10 times the number of homes to garner that distinction.

Discard any idea of using on-line companies that recommend agents or say they will “find” you a perfect match. These are nothing more than companies extorting money from agents to be in their directory. They are not recommending the best agents, but rather the ones willing to pay to be recommended.

YELP tends to do the same thing. Although the reviews are organic in nature, agents must pay to be listed at the top of the search, even though they are often far from top agents.

Agents with the most listings or yard signs in a neighborhood are also not necessarily the agent doing the best job, they’re just getting the most attention.

Doing a native on-line search is more time consuming, but it will yield you the best results. Search for local agents that have been in the business long enough to have learned the ropes at someone else’s expense. Any real training of agents happens in the field, not the classroom. Look for examples of their work product on their own web sites—video tours, photos, and descriptive informational pieces.

THE MEET

Once you’ve found an agent you’d like to meet with, reach out and set up an initial meeting. Don’t call three of four agents all at once. It takes hours to prepare for a meeting and you’re wasting agents’ valuable time.

If you’re not happy with the first agent you meet, by all means contact another.

No two REALTORS are the same and each one acts essentially as their own independent contractor. They develop a business plan on their own and so you’re really hiring the agent, not the company they work for.

Are their differences in the companies’ agents work for? Sure, but far less important than the agents you’re hiring.  Most agents will focus on how big (or small) their company is—how much “market share” and how much “technology” they have but how does that really benefit you?

The fact is most agents are capable of selling your home in this seller’s market, but the service they offer and the attention to detail and marketing varies greatly.

With that invariably comes differing degrees of success and results.

SELECTING AN AGENT—WHAT QUESTIONS TO ASK

These are the questions most sellers are prepared to ask:

  • How much do you charge?
  • What do you think my home is worth?

More detailed sellers might throw in a few more:

  • How long have you been in business?
  • In what cities do you specialize?
  • Do you work with mostly sellers, or buyers?
  • Do you have referrals with whom we may speak?

And that’s pretty much the extent of most sellers’ questions. The two which paradoxically seem to carry the most weight are two sellers always ask—how much is my home worth and what do you charge. These are two very important questions, but they should have little to do with choosing an agent. You can always find a discount agent to sell your home and you will most certainly get cut rate service and results as well.

The price the agent tells you your home is worth should also have little to do with whether you hire them. You get to pick the asking price for your home and if you’ve watched sales in your neighborhood, you probably have a pretty good idea at what price homes are selling.

Be careful not to decide on your agent based solely on the highest estimated sale price you hear, since that agent may not know your market or could be trying to “buy” your listing—meaning they are trying to get you to list with them under the pretense that they can magically get more for your home just by asking for it. Unfortunately, it just doesn’t work that way.

Buyers choose the price they are willing to pay for your home—not you as a seller or your agent!

We’ve heard sellers say, “We’re going to hire the REALTOR that sold our friends house—they said that they liked him and felt that he did a good job.”

And perhaps they did do a good job, but then again maybe the seller just thought because they received multiple offers well over the asking price that they must have done a good job. But could they have done better? 

THE MOST IMPORTANT QUESTION

Results. Before you’d consider having any important surgery done, wouldn’t you like to know what your Doctor’s survival rate is for his patients? How many operations has she performed? How much they charge would probably be the least of your concerns, so long as you survive to pay the bill.

Wouldn’t it be nice before booking a flight to know how long the pilot has been flying and how many hours they’ve logged?

Any agent can proclaim to be the best, or sell their listings for more in a shorter period of time, but you need to ask for proof. 

IT DOESN’T GET UGLIER THAN THIS

These sellers probably thought their agent did a good job as well. After all, they received $126,000 over asking!

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When the sellers hired these agents, they no doubt never expected this shoddy work product would be what they received—and we can all but guarantee that it’s not what was promised.

This is what is referred to as a Moral Hazard—wherein under the contractual protection of a listing agreement an agent takes advantage of their client—promising one thing and doing another.

But as bad as the photo of the home on its side may be, the agents went on to boast in the private comments (in red) to all agents, that had they waited to hear offers, they would have received three more—and one back-up offer was for $25,000 more than the early offer they may have steered their seller into accepting. To add insult to injury, when they went back into the listing to amend the comments with self-aggrandized accolades once it closed, they still never took the time to fix the photo. So great job Dino!

This may be a gross example of agents taking advantage of a seller, but many agents are guilty of taking the path of least resistance, (e.g. work), to get paid.

We can’t count how many times we’ve represented a buyer, delivered an offer only to receive a call late at night that the seller accepted a different offer. Many times, if the agent had reached out to us, our buyers would have stepped up in price and the seller would have received even more for their home.

We often download disclosures for our buyers which is an indication that we have a very interested party. An offer date is set and we rarely if ever receive a call from the listing agents asking if our buyers are interested in making an offer, and if not, why.

BROKER TOUR, OPEN HOUSES & ADVERSE SELECTION

Agents will probably tell you that they will hold open your home for all agents to view on a special day referred to as “Broker Tour Day”. They may even tell you that they will serve food to attract the masses. And unless you ask if they will be present—they usually won’t. Agent Teams that have someone different for every aspect of the job are especially guilty of this. Many times, they don’t even go that far—they have a vendor such as a mortgage company hold open the home so they don’t have to bother being present. Other times we’ve seen the “Catered Broker Tour Lunch” promised to the seller relegated to a tray of stale sandwiches on a counter with the agent nowhere to be found. Being present at an open house is critical to answer other agents’ questions about the home. 

Unfortunately, these breaches in moral behavior are more common than not.

YOU CAN DO BETTER

Do your homework. Research agents organically on-line to see what work product they are capable of and delivering. Then, be armed with the best questions most agents are ill prepared to answer.

If you’re interested in receiving a list of questions every seller should be asking, we’d be glad to deliver 35 of the best questions when we meet in-person for our initial visit.

Here’s a preview…

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

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

A LOOK AT 2021 HOUSING AND WHAT LIES AHEAD IN 2022

Unless you’ve been living under a rock the past two years, you’ve no doubt heard that home values climbed their assent into the stratosphere.

Stratosphere

But as local agents for over 25 years, even we have a hard time wrapping our heads around the staggering numbers.

You may have also heard that there’s “no inventory”. Well, that’s not exactly true.

Then what’s causing the spike in prices? High demand, not lack of supply—unlike the overall economy that’s suffering from a lack of supply and high demand.

Comparing the annual number for 2020 to 2021, we’ll start with the inventory of homes for sale.

The number of new listings that came on the market in 2020 was 234 in 2020 and 249 in 2021 which is an increase of 6.4% more homes available for sale in 2021. Then why is everyone talking about low inventory? Because sales went from 183 units in 2020 to 254 in 2021—a whopping 38% increase—so there are no homes left to buy.

One might ponder, “How can that be?” If you only have an increase of 6.4% in new listings, how can you have 38% more sales. The answer is everything is selling in 2021 while in 2020 some of those new listings never made it into escrow.

That’s evident in the days on market, which dropped 45%, from 20 days to only 11, and the percent a seller received over the asking price climbed from 105% in 2020 to 114% in 2021. 

Another indicator of the scant number of homes available at any given moment is the “Months of Inventory” statistic, that measures how long it would take to sell all of the available inventory at the current rate of sales. That dropped from a meager .4 months, to an almost immeasurable .1 month, (overall, the U.S. stands at around six months of inventory at any given time).

What effect did this have on home values? Nothing, but it had a lot to do with home prices. They hit their highest level in history recording a median home price of $2,245,000 up from $1,888,000—a 19% increase YOY and a 28% increase in the past two years—while the size of homes selling in the last two periods stayed statistically similar at 1,968 and 1,962 square feet respectively. 

This is an article we did back in 2018 on the supposed crest of interest rate hikes.

There is some cooling off of the astronomical climb in prices as noted by the Case-Shiller study for the Bay Area’s metropolitan area, but that may not reflect our local hot spot trends in the mid-peninsula.

What to Watch Out For

Rising Interest Rates

Rising interest rates may give buyers some relief from a super-heated market, may also serve to quell their purchasing power while softening prices. The irony is just when buyers may be able to compete in the market, even if they were to pay less for a home, they’ll end up paying more in interest in their loans.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomesand on Twitter @ https://twitter.com/morganhomes

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

BELMONT HOME VALUES CONTINUE THEIR ASCENT AS SALES DECLINED

It wasn’t just Sir Richard Branson and Jeff Bezos that have shepherded in a new era. Belmont single family homes values have continued their pandemic born steep ascent.

First, the numbers:

Belmont home values continued their astronomical ascent as sales declined in September of 2021. Belmont sales of single family homes fell 9.6% from September of 2020 to the same period in 2021. Compared to September of 2019, pre-pandemic, sales were up this year more than 53% in 2021.

The average time it took to sell a home went down from 19 days to 12.

The Months of Inventory—the time it would take to sell all the homes on the market at the current rate of sales—went from .8 months down to .5, and the available inventory of homes to choose from went from 21 in 2020, to only 11 in 2021. To put this into perspective, the U.S. housing inventory sits at 6.1 months.

The median home price rose from $1,925,000 to $2,235,000, close to a 12% increase YOY. It’s important to note that the size of homes selling in these two periods went down, from 2,150 ft² to 1,737 ft², a 19% decrease, which serves to only magnify the cost to the consumer. 

The price per ft² in 2020 was $979 and increased to $1,299 in 2021. It’s typical for the price per square foot to go up when smaller homes are selling, since it does not take into consideration the lot which the homes sit upon.

What is noteworthy is while the size of homes selling in these two periods went down 19%, prices went up 12%—illustrating that for 12% more in 2021, one could only get a 19% smaller home.

The percentage sellers received also went up from 101% of the asking price in 2020 to 112% in 2021, underscoring the strong demand.

Due to the increase in home values, the cost of home ownership, while borrowing money at 3% interest, went up $1,000 per month in just the last year. If interest rates were to rise to just 4%, the median price home in Belmont would cost ~ additional $1,000 per month.  

According to Mike Farrell of Wells Fargo, a person wishing to buy the median priced Belmont home with 20% down in 2020 needed to earn ~$225,0000 a year, while in 2021 that rose to $300,000 per year. That’s assuming the borrower has no other debt, such as credit card, car payments or school loans.

For buyers with stock options, puting a larger down payment may be an option to increase their buying power without worrying about needing more income to qualify for a mortgage. But for buyers with traditional salaries—essential workers from Teachers, Police, Firefighters, and hospital workers to grocery store employees, and restaurant workers who, without help from outside wealthy family members, will have little hope of ever buying into the dream of home ownership in the Bay Area.

Unfortunately, we see the same story playing out in San Mateo County as a whole.

The most important take-aways from these numbers are the median home price, which jumped 6% YOY, while the size of homes selling were 2% smaller, and the percentage the seller received of their asking price jumped 6 percentage points from 102% of asking to 108%.

As a direct result of the pandemic, many apartment renters, and condominium owners, found to work from home—and in many cases home school children, they needed more space. Since public gatherings were off the table—they wanted a yard as well as no common areas such as elevators. This created a glut of condominiums on the market.

It goes without saying, that we are in unchartered waters in terms of housing demand. Looking at this data from Case-Shiller®️, as compiled by FRED®, which covers the San Francisco MSA (Metropolitan Statistical Area) comprised of five of the nine Bay Area Counties, one can see the dramatic spike in home values beginning in 2020.

If you have considered selling your home and would like to maximize the proceeds from your sale, please contact us for a no obligation assessment.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

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

The Forbidden Fruit is Thy Neighbor’s Tree

Do you have a neighbor that’s a nuisance? Many do, yet they may be unaware. We’re talking about nuisance trees. Say your neighbor’s tree has limbs over your fence, or the neighboring tree’s roots are damaging your driveway. What can you do about it?

The good news is you do have rights—but they’re limited. You can’t just walk on over to your neighbor’s property and start cutting the offending tree down, or roots back, as that could be trespassing. But California Civil Code 3346 does consider the encroachment of branches or roots onto your property to be a nuisance. You are allowed to trim the tree or roots from a neighboring property that are encroaching onto your land so long as that tree is not destroyed or permanently damaged. If your actions destroy your neighbors’ tree, or even cause substantial damage so that the tree’s value is impacted, you can be held liable for treble damages (three times the actual amount).

picking an Apple Tree

What about the fruit from your neighbor’s tree? This time of year your neighbor’s tree could be bursting with peaches, pears, lemons, and limes—almost falling off of the trees. Almost, being the operative word. If your neighbor has a fruit tree that overhangs your property, the fruit on the tree belongs to that of your neighbor, even if it’s on your side of the fence. Any fruit that has fallen from your neighbor’s tree onto your property is considered the fruits of your labor for picking them up. In other words, they’re all yours.

Case Law regarding trees.

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

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

Critical Steps to Financial Planning

Financial planning is an integral part of any successful portfolio.

We don’t pretend to offer financial advice, but we do offer real estate advice and the two often overlap.

For example, every two years a married homeowner filing joint tax returns can sell their primary residence and enjoy the first $500,000 of capital gains tax free. We’d be remise if we didn’t remind those to whom we’ve sold homes about this option to keep more of their equity in their own pocket.

Of course, we realize that most people don’t move every two years just to save on capital gains. 

First, homes don’t appreciate that much in two years to realize the savings, and people get entrenched in their neighborhood, while others just love their house and have no plans to move, but failing to plan ahead, could cost one hundreds of thousands of dollars.

When Might One Consider this Option?

If you have lived in your home in the Bay Area for more than five years you’ve probably already surpassed the $500,000 capital gains abatement threshold. 

Are you outgrowing your home? With interest rates are still at historically low levels, now might be an ideal time to consider a move up into the space you need.

If you’re retired or near retirement and would like to downsize, selling your home while the market is at record highs might be the time to employ that exit strategy you’ve been considering.  Afterall, when the last market correction occurred it took 7 years for the median home price to return to the previous high. Seven years is a long time to postpone retirement just to wait for home prices to rebound to current levels.

Worried about higher property taxes on a larger home? The recently passed Proposition 19 in California just might help mitigate the hit of higher property taxes with the ability to carry your existing low tax base to your replacement property and pay only a small increase if buying a more expensive home. 

If you’re downsizing, you can carry your existing tax base without adjustment.

We’re here to help answer any of your questions on how to make a move possible if you choose to do so.

If you have questions about tax implications or estate planning please seek advice from your attorney, CPA or other professional.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

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

Why Must we Barbecue on the 4th of July?

Finally, we can get back to the American tradition of having friends and family over for a BBQ—and what better day to do it than on the 4th of July.
Traditionally we celebrate our nations’ independence from Great Brittan on this day, and this year we add to that our independence from isolation during the pandemic.
You may already have decided what you will be cooking for your celebration, but do you know why we carry on the tradition of cookouts on the 4th?

The theme originated when politicians would hold rallies on the 4th of July (which was not yet a national holiday) to commemorate our nation’s independence and have a captive audience. To feed the throngs of people they resorted to barbeque—whole hogs in particular.
The move from barbecue rallies on the fourth to backyard cookouts probably had less to do with people not wishing to endure the preaching of politicians, than it was simply more people were choosing to live in the suburbs after WWII.


GRILLING VS. BBQ—What’s the difference?

Barbeque cooking is typically cooking meat low and slow over indirect heat whether over an open pit or in a covered box where wood is used to create smoke for flavoring and preservation.
Grilling is typically done using direct heat in a gas grill or open style kettle grill using charcoal wherein the food is cooked more rapidly.

Trivia for your get-together:

DID YOU KNOW…
It wasn’t until 1941 that Congress declared Independence Day to be a paid federal holiday.
5% of all US beer consumption takes place on the 44th of July.
The name barbeque came from the Arawak tribe of the Caribbean and South America who used sticks to create a flame over a fire and place the meat on it. They called this method of cooking “Barbacoa”. The Spaniards eventually brought this form of cooking to the southern states where it took on the name Barbeque.
Kingsford charcoal was invented by Edward G. Kingsford who helped Henry Ford—yes, the car manufacturer—procure a stretch of timberland to supply wood for his auto plants. The burnt wood was repurposed as it is today into briquets for grilling.

Happy Independence Day, and thanks for reading along.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

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

Housing Market’s Unbearable Heat

The Bay Area housing market is as hot as it’s ever been for sellers, but the real heat is on buyers to get a home as throngs enter the market. It’s no longer race to get a home, it’s a marathon.

Frustrated buyers are using low interest rates which have empowered them to bid higher in multiple offer situations. The result, prices are rapidly rising.

Take San Mateo County for example. We compared May of 2020 to this year and across the board, the numbers show high demand and higher prices.

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Reports of low inventory creating the feverish market are simply misreported. Low inventory implies there are no homes for sale, but looking at the numbers, one can easily see that the number of New Listings are up 14.2% over last year, while inventory of available homes to purchase is down 36%. There are scant homes to choose between, because more homes are selling and faster than before, not because fewer homes are coming to market.

The Months of Inventory in the last column says it all. Months of inventory represents the time it would take to sell the current inventory of homes at the current sales pace. That’s down from 2.4 months of inventory last year to less than one month of inventory in 2021 (the national average is typically six months of inventory).

The YOY median home sale price increase of a staggering 26% YOY illustrates the effect of demand outstripping supply, as buyers outbid one another to secure a home before interest rates rise, and their buying power is reduced, or their mortgage payment goes up.

In our town of Belmont, we see a similar pattern, but since it’s a smaller sample size, some of the numbers are more pronounced. 

Take the number of new listings for sale—up 53% over 2020, yet the available homes to sell are down 35%. This is clearly due to the 122% increase in closed sales.

It’s understandable to question why then did the median home prices rise half of what they did in the overall San Mateo County stats? Simply put, Belmont started with a higher median home price, and has less elasticity in the price threshold to increase at the same rate as less expensive areas included in the San Mateo County Statistics.

What could cool this superheated housing climate? Any number of things, but higher interest rates could be the first to show on the horizon.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

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