10962 Kittridge - amazing activity in North Hollywood

This is 10962 Kittridge, in North Hollywood.  It looks like a townhouse, but it is really a single family home and was built under L.A.'s small lot subdivision ordinance.  It closed yesterday for $575,000.

This home is newly built (2014) and has three bedrooms and three baths in over 1600 sf.  It has a double garage but no yard.  Since it isn't in the "nice" redeveloped part of North Hollywood (some people call this area No-No Hollywood) we weren't sure what the activity would be, and we priced it along with the comps -- at $530,000.

Within four days after listing, we already had seven offers, and the price started to climb.  In some cases, agents and their buyers were not even waiting for counter offers, they were just throwing new, higher offers at us instead.  The seller and I finally cut off all the bidding at $575,000 and accepted one of the offers.  Would their be an appraisal problem? Probably, but all of the high bidders had removed the appraisal contingency.  This means that even if they couldn't get a loan for the whole amount, they'd bring in the extra funds to bridge the gap between the loan and the sales price.  For what it's worth, we did not select a cash offer and picked one with a loan instead.  The buyers had written a very sincere letter to the seller -- yes! that helps -- and the lender was a known entity, so we did not believe there was a risk.  Who knew that No-Noho was so hot? I'm sure the buyers will be really happy in their new home, and needless to say, my seller was delighted with the results.

7720 Goodland closed and multiple offers are no fun

7720 Goodland in North Hollywood closed last week for $31,000 over asking.  We had fourteen offers.  I know that multiple offers aren't fun for buyers, but they are not fun for sellers either.  Of the fourteen, half were cash and half required a loan.  Half were above asking, half were below.  I had about 25 individuals asking me if I would write an offer for them.  I said no, because I hate doing dual agency in that situation -- the folks asking me to write are just looking for an angle in order to get their offer pushed.

If you're in a multiple offer situation, here's what NOT to do:
- Come in with a low price if the comparables don't warrant that.  Unfortunately, sellers are more interested in dollars than they are interested in your pretty face.
- Turn in incomplete offers.  Please make sure your agent checks all the boxes.
- Don't provide enough proof of funds to close.  I was surprised at how many buyers turned in offers without proof of enough liquid funds to cover the down payment and closing costs.  Or turned in old financial statements -- please make them current.  Or turned in financials that didn't have any of the actual buyers' names on them.  Yes, I know your parents love you but I need to see money in your name, not theirs'. Yes, we Realtors do look at that and, surprisingly enough, most of us can count.

The transaction went...okay.  The agent turned everything over to an unlicensed, untrained assistant, so that was a challenge.  And the buyer wanted to do additional inspections after she had already removed her inspection contingency.  But the transaction closed.

And by the way, we did NOT take an all-cash offer -- we took one with 20% down and a conventional loan!

Good news for buyers re low down payments and lower mortgage insurance! And a teeny bit of bad news.

As you may know, low down payment loans are back.  Yes, 3%-down conventional loans (not just FHA loans) are available to buyers.  Before anybody gets all "slippery slope" on me, think about this: in L.A. and the SFV, with average home prices hovering around $500,000 to $600,000 for modest homes, who has $100k to put down on one? Or even $50k? Not young buyers, who are usually saddled with debt from student loans, have been paying high rent, and are usually salaried a little lower than older buyers.  Not move-up buyers, who have been paying a good part of their salaries for their existing homes and haven't been able to save.  (Only one buyer has to be a first-time buyer.)  Here's an article from Forbes about the new program.  Also, it's almost impossible to get a condo complex FHA-approved -- there will be far fewer condo approval issues with the new lower conventional loans.

And if that weren't enough, mortgage insurance has been lowered, too!  As many of you know, this is the premium that you pay if your down payment and loan-to-value is lower than 20%.  Here's an article from the Chicago Tribune about it.  I've always thought this was a rip-off -- this insurance sure didn't help anybody that was in trouble with their mortgage during the 2008-2009 recession.  But anyway, it's lower now, and will help buyers.

Here's the teeny bit of bad news for those of you buyers that live here.  It will still be hard to get a low-down loan accepted by your seller if you're in a multiple offer situation.  That's because sellers perceive -- rightfully so -- that high-down loans have a better chance of closing.  There are other ways to make your offer stand out, though, and we'll discuss that in future posts.

Letters and pet pictures from would-be buyers

So far on the offers I've gotten on 1034 N. Evergreen in Burbank, I've received some compelling pictures from would-be buyers.  The pics are of the would-be buyers, their families, their dogs, their cats, their babies in front of the house for sale, and one toilet-trained cat named Allegra* hovering over the toilet. Keep 'em coming, people and pets!

*The picture above is a stock image -- Allegra has privacy issues and hasn't given permission for her likeness to be used yet.

Multiple offer winners

Our manager has helped this week with several multiple offer situations.  Here's what she tells us are the winning combination of elements for the buyers who ultimately bought the properties:

1.  Contingency removal forms accompanying offers.
2.  Buyers releasing money upon removal of contingencies...some earlier than that.
3.  Lots of letters and family pictures.
4.  Buyers making clear no repairs, no credits.

San Fernando Valley real estate 2012 year in review - part one

I'm jumping on the end-of-year list bandwagon here.  If you real estate news in Studio City, Burbank, Sherman Oaks, Hollywood Hills or anywhere else in L.A. for that matter, here are the big news stories -- to me, anyway -- for the year.  You'll know most of these already.

1.  Return of the real estate market.  Thanks to the feds and the super-low interest rates, buyers are out in droves.  Unfortunately, housing stock hasn't kept up and everything is going in multiple offers.  I am hoping that we'll have more inventory coming on to the market as rising prices catch up to what would-be sellers owe on their houses.

2.  Cash is king, and there's a lot of it out there.  It's mind-boggling as to how many all-cash transactions are out there now.  Where is all the money coming from? Foreign countries (the U.S. is still looking like a safe bet to stash your cash), investor pools, and boomers who have recently inherited money from their recently deceased parents.

3.  Trusted brands -- can they be?  As we all know, internet-based real estate sites like Zillow and Redfin are the trusted brands in real estate these days.  That's not surprising as their websites are very user-friendly and contain a lot of information on each page.  And people believe what they read, especially from big sites.  But is the info accurate? Be skeptical, friends -- Zillow, especially, can be way off on their zestimates from what a value really is (and they admit it in the small print).  Actually working with Redfin can be a mixed bag but yes, it can be with non-Redfin agents too.

The next post will include my personal favorite and not-so favorite transactions and clients, so stay tuned!

What happened to the 3 Thanksgiving offers?

I've been asked about the property offers I had out for three separate clients when I left for Thanksgiving.
- One offer died in a multiple offer situation with 15 other offers.  The sellers took an all-cash offer considerably over the asking price. Quite a disappointment, but not unexpected.
- Another offer was in a multiple offer situation with 7 other offers.  The sellers accepted an offer considerably over asking with no appraisal contingency.  This, too, was a major disappointment for my buyers, and was less expected since they offered over the asking price.
- The third offer is a go.  Whew!  We had to jump through hoops to get it, including putting the buyer's current home on the market and selling it in two days.  And even then it took the sellers several days to say yes.  Stay tuned...

Ask the home appraiser

Have you been curious about some of the finer points of home appraisals? I have -- and although I deal with them all the time, things change.  My office recently brought in an appraiser to speak, and here are some of the more pertinent questions and answers.  Remember, these answers were given for a Realtor's perspective.  The comments in italics are mine.

• Is there a difference between independent appraisers and bank approved appraisers? How do you get to be an approved appraiser? Answer: Banks get their appraisers from appraisal management companies.  For an appraiser to get approved he has to submit a resume package like anyone else looking for a job.
• What do you do if you get what you consider an undeserved bad appraisal? Should you challenge it with comparables or demand another appraisal? Answer: It is very much better to challenge it with your own comparables.  The management company will ask the appraiser to respond and defind his values.  (Personally, I always give an appraiser comparables before the actual appraisal.)
• On second appraisals (often done if there is a value question), does the 2nd appraiser know what the 1st appraiser came in at? No.
• How much does an appraiser credit a house for on the following? Answer: extra bedroom $5-10,000; extra bathroom $5-10,000, pool $10-15,000 (except in Beverly Hills, where it's $50,000 (the extra bedroom credit is much lower than I had previously thought).
• How do you define baths? What does it have to have? Answer: 1/4 bath means sink only, 1/2 bath means sink and toilet, 3/4 bath and full bath are the same for valuation purposes and mean shower and/or tub, sink and toilet.
• Under what circumstances does a convertible den count as a bedroom, assuming there is a closet? Answer: If it has a closet it counts as a bedroom if it is larger than 80 square feet.
• When looking for comps, would an appraiser extend the radius of surrounding comparables or would the appraiser go back further than 90 days. Answer: The appraiser would extend the mile radius.  He would NOT go back more than 90 days.
• What is the value of "multiple offers" on a property to the appraiser? For the appraised value, only the closed sales figures can be used.  Actives and Pendings are important for the appraiser to note on the appraisal as a matter of interest for the big picture and to see how the neighborhood is trending.
• Can you use new construction as a comp for non-new construction? Answer: no.
• Can you use non-new construction as a comp for new construction? Answer: yes, with an adjustment for the age value.
• What about a total remodel? Answer: No, you cannot use new construction as a comparable.
• Can you count unpermitted structures, unpermitted work, or unpermitted useage or square footage in the value? Answer: No.  All the appraiser can note is that the work was done in a workman-like manner and there is no health hazard.
• What can a seller do to make the property the most appealing? Answer: Appraisers are now required to take a picture of every room, so sellers should prepare the house as if they were having it re-photographed...it must look as good as possible for the appraiser.

Scenes from a crazy local market

You've heard me complain that everything is selling for over the listing price these days.  Here are some examples from the past week.  Some were my transactions and some were my colleague's transactions.

Tujunga - Five offers on an unapproved short sale, all over the list price of $499k.
Studio City - Six offers on a home listed for $649k.  We offered/countered at $685k and it still went out higher.  In my opinion, there may be appraisal problems there, but I'm obviously the only one who is concerned.
Burbank - Cute home got three offers/counters at least $20k over the list price but it still went out higher.
A home on Hartsook in Valley Village had 31 offers.
And best yet: a home in Westwood that went out at $2,700,000 in multiple offers. 

The other thing I'm seeing: although it seems like it takes no time at all to get offers, it seems to take forever to get a response on them.  It's taken about a week to hear back on everything which seems like an agonizingly long time to wait. I know; I'm guilty of this too.

1021 N. Lima in Burbank - talk about multiples!

This is 1021 N. Lima, Burbank 91505.  It just went on the market a few days ago and it is the perfect "granny" house.  By that I mean that it is original but spiffed up -- no bumped out kitchen, no weird additions, no redone floors (orange pile carpet in this one) but still in basic excellent shape.  It's a 2 bedroom, 1 bath, about 1100 square feet, with a grassy back yard.  It is being sold by a family trust for $429,900.

I am not the listing agent, but clients of mine made an offer on it.  So did 14 other groups.  15 offers!  Yes, buyers are back out in full force thanks to low interest rates.  Alas, my clients did not get this.  I am told it went out over $450k.

(The market is back) and so are multiple offers

...says the Wall Street Journal here.

The rental market in the San Fernando Valley is hot

In the last few weeks, I've been working on getting a long-time associate a place to rent. I don't usually handle rentals as most landlords don't go through Realtors to rent their places. Anyway, it's been very difficult. Rentals are going in multiple offers, often with (ridiculous) landlord demands. For example, at one house, the tenants are forbidden to use the laundry, garage or driveway although on-street parking is restricted. And that house is renting for $2400 a month. At another home for lease, the landlord didn't want to remove a beehive. Yikes. Our friends at Agentgenius.com have written an article about this new, emerging market -- click here to read.

Kendyl rocks multiple offers

My friend and top producing colleague, Kendyl Young, wrote a great blog post last week about how to deal with multiple offer situations.  It was so succint that I asked and received her permission to re-post it here (the italics are mine):

Last week I told you about a hot Glendale Home on Ridge. It was 3 bedrooms, 2 baths and had a pool with a lovely view. My friend, Anne, listed it for $499,000. She had multiple offers. The home is now in pending status and I thought a few details of what happened could help those of you who are active buyers.


First of all, Anne set a low price on purpose. This home was sold as a trust and the attorney wanted an auction-like scenario. Frankly, she could have created that with a price of $599,000- but $499,000 worked.

She received 40 offers.


Now, Anne is a true professional and she is not about to tell me what price was accepted, but she indicated that it was “high”.

There are some useful insights to be learned, here.

* With proper marketing and exposure, it is impossible to underprice a home


* There are a lot of buyers who have the ability to buy- don’t assume you are the only one.


* If you think it is a great deal everyone else does, too.


* Processing 40 offers is an insane amount of work. Make an offer designed to appeal to the listing agent as much as the seller.


* Know home values in the area you want to buy. Your offer should reflect exactly what you think the home is worth and not a reaction to the list price. (I would add that a low offer probably won't work and may not even get you to the counter-offer stage.  Brutal, but true. - Judy)

So here is a question for you. If the home of your dreams has 40 offers- what would you do? Make an offer or walk away? Would the number of offers influence your feeling about that home’s value?

Real estate gods bring multiple offers back. With a vengence.

Twice in the last week, I've submitted offers on properties that were over the asking price. Yes, each home was "priced to entice" -- listed low in hopes of getting a lot of offers quickly. Unfortunately, this strategy seems to be working all too well.

Each offer was from well-qualified buyers and was definitely in line with the comparable sales. One house was in the $750k range and another was in the $500+ range. And each offer was blown out in a multiple offer situation where the prevailing offer was much higher.

Colleagues tell me about 48 offers on a house on Margate, or 18 offers on this or that one in Reseda, 8 on a West Hollywood condo, etc., etc.

This isn't supposed to be happening. Aren't appraisals tightening up? Aren't buyers sitting on their hands? Well, obviously not. The real estate gods have turned this back in to a sellers' market.

This all may change if a lot of foreclosures come on the market soon. That should produce increased inventory, which will have a downward effect on prices.

Buzzwords for the week: multiple offers and deliberate underpricing

They're back. Just when we thought we'd never have to deal with multiple offers again. In the areas I serve, including Burbank, Toluca Lake and Studio City, homes are selling in days again with many offers.

Of course, it doesn't help that certain Realtors are underpricing homes in order to get a bidding war going. How does this serve the buyers and sellers? It doesn't, but the Realtor saves time and money on marketing.

And you'd think that full price, all cash offers would be enough. But no. A client of mine just lost a condo in a bidding war situation like that.

I'm glad to see the market come back, but not like this.

Multiples! Still!

This is a picture of 600 E. Walnut in Burbank. It listed six days ago for $699,000 and is now pending after multiple offers! So multiple offer situations still do exist, but they are increasingly rare. This home is such a likely candidate because it was completely spiffed up for sale, has five bedrooms, 2400 square feet, and loads of character, obviously. Although I must say I'm surprised, with all the bad economic news, that any buyer was willing to pull the trigger in the last few days. This home is right next door to a home I sold on 6th last year, and one house away from another character home that I blogged about a few weeks back. That home listed as a short sale for $499,000, which I thought was really low. I would imagine that it, too, has multiple offers.