I am often asked how I think the market is doing now and what will it do later?  My crystal ball broke but I do have some thoughts based on what I and the other agents associated with our company are experiencing.

• Single buyers will become active as softer prices create opportunities.  This includes those never married and those divorced or widowed.
• Prices in San Diego will remain neutral.  Buyer confidence seems to be improving but is not yet at the point of pushing prices upward.
• Agreements will be harder to reach, requiring more patience on the part of clients and agents alike.  This will probably mean more counter-offers and tougher stances from some sellers relating to repairs if prices are not what they expected.
• Overpriced properties will sit until buyers feel the value matches the property.  The old adage of location, location, location has been replaced by location, condition and quality of amenities.  In other words, the best quality for the money will sell first.  It is becoming more common for listing agents to pre-negotiate automatic price reductions on a scheduled basis.  This allows agents to take listings they feel are overpriced in the beginning if they know the price and value will eventually match without major hassles over pricing.  Absent this agreement it is not unusual for the 2nd or 3rd listing agent to actually make the sale once the seller has become "educated" by the market's negative response to their offering.  The problem for the seller is this can take many months if they start out with a hard-line price objective that does not match the market's attitude or comfort level.
• Upscale features sell.  The latest and greatest "creature comforts" are important, especially when they are priced fairly.  Nice kitchens, well designed entertainment nooks, computer wiring to name only a few.
• Home staging will continue to be an important tool.  It is amazing how much better a home shows when it has been de-cluttered, cleaned, painted and the furniture has been thinned out to make it easier for people to see the house through the clutter.  Buyers get the mental impression that the seller doesn't care about their home if it has not been properly prepared and this feeling often causes enough concern to disqualify a property.
• The development of tools on the internet makes it imperative for each home to have attractive media attached to the listing so potential buyers can inspect the home from anywhere in the world.  This also eliminates much of the "wrong" traffic for a home because the buyers have already seen what is being offered.
• Buyers will be careful when choosing their agent until they find one that is comfortable, competent and careful about communications.  I think we'll probably see fewer agents chosen because they are in the buyer's family, especially when the market is so complicated and technologically advanced.

Just my thoughts based on my experience...

California/San Diego Outlook: No Recession but Tepid Growth; Continuing Real Estate Weakness

By Alton Gary Simpson

The UCLA Anderson Forecast, a report from the UCLA Anderson School of Management on the state of California's economy, reveals that California has weathered the beginning of the real estate slowdown better than originally believed. San Diego County remained healthy last year despite the slowdown. Real estate-related sectors saw significant declines in job formation in 2006, but the rest of the economy has so far managed to pick up most of the slack.

Senior economist Ryan Ratcliff paid particular attention to revised employment figures, noting that in the group's last report they were concerned with a construction sector that was bleeding jobs at the same time the service sector was losing momentum. New estimates released in March 2007 reveal a much brighter 2006, with job growth up 52,000 and job creation rates up to 1.8% from 1.1%.

"We still expect to see the pattern of deepening real estate (job) losses combined with a slowdown in the rest of the economy," said Mr. Ratcliff. "Now it's just the first half of 2007 instead of the second half of 2006."

Looking at San Diego County, the "San Diego Outlook for 2007-08" stated that the county's economy remained relatively healthy through 2006, with low unemployment and job growth only slightly slower than the California average.

Mr. Ratcliff noted that the San Diego economy has presented somewhat of a paradox, while sales and home prices were falling in 2006, the overall economy barely noticed, it's only now that sales and home prices have leveled off that weakness in construction and mortgage finance have begun exerting some drag on the county's economy. He argued that part of the explanation lies with the leisure and hospitality sector. As real estate-related employment slowed in 2006, job growth in the leisure and hospitality sector accelerated, keeping overall job growth only slightly slower. In 2007, this offset to real estate weakness has started to disappear as the boom in leisure and hospitality slackens.

Mr. Ratcliff also acknowledged the impact of the subprime meltdown on the state. He said the collapse of the subprime mortgage market has implications ranging from the soundness of international financial institutions, to job creation in the Southern California. He addresses several key questions on this topic, including whether the tightening of lending standards will further depress home sales and whether or not a wave of foreclosures will bring down home prices as bank sellers generate substantial pressure on prices. "… the historical record suggests that a spike in defaults does not automatically imply a surge in foreclosure sales," wrote Mr. Ratcliff. While it is too early to tell, he suggested that the current combination of financial excess in an otherwise relatively healthy economy may resemble the 1980s, when many households experienced delinquencies but avoided foreclosure.

The California forecast calls for job growth in the state to slow below 1% through the middle of 2008 while real taxable sales slow to 2% through this period. "If the professional/business services sector can sustain its momentum longer in 2007," notes Mr. Ratcliff, "we might see a more mild slowdown, but if the carnage in the subprime markets turns out worse than we expect, job losses in Southern California could make things a bit worse. But the essential logic of the no recession forecast remains. While there's some wiggle room on how weak real estate will be and how much other sectors will offset this weakness, there is still no other sector that looks poised to combine with real estate to generate enough job loss to cause a recession."

According to Mr. Ratcliff, the combination of slower population growth, a subprime credit crunch for first-time homebuyers and a continuing level of record foreclosures makes the forecast for the San Diego housing market less building, weak sales volume and flat-to-slightly-falling home prices with some improvement seen by mid-2008.

Demographics serve as a useful and reliable research tool for many fields and industries, including marketing, entertainment, and even politics. David Lereah, the Chief Economist for the National Association of REALTORS® (NAR), says demographics can also reveal a lot about different real estate markets. In fact, David believes that demographics can help predict future activity in certain real estate markets, including, in some cases, home value and appreciation. The following are some examples of key demographic indicators.

"Baby Boomers" – The largest generation to date, members of this demographic have now reached their peak earning years. In areas with a greater number of Baby Boomers, expect significant purchases of larger primary residences. In addition, Baby Boomers are likely to buy investment properties and vacation homes, leading to a substantial increase in property values for certain regions of the country.

Children of "Baby Boomers" – Born after 1980, this is the second largest generation to date. This age group has entered the workforce and is becoming established. In areas with large numbers of this demographic, look for sales of starter homes and condos to rise.

Immigrants – Different areas experience large influxes of immigrants at different times. It typically takes a full generation, however, for this demographic to begin buying homes and having an impact on local real estate markets.

Retirees – With advances in medicine and technology, we are living longer than ever before. In areas with large numbers of this demographic, or areas where retirees tend to move, expect inventories to drop and prices to rise.

Although negotiations can change the "normal" method of payment of closing costs the typical schedule is as follows in real estate transactions:

Generally, the SELLER pays for...

• Real estate commission
• Escrow fees (50%)
• Document prep. fees
• Documentary transfer tax ($1.10 per $1000 of sale)
• Any loan fees required by buyer's lender (government loans)
• Payoff all loans in seller's name
• Interest accrued to lender being paid off
• Termite inspection (per contract)
• Home warranty (usually 1 year)
• Any judgements, tax liens, etc. vs. seller
• Real estate tax proration
• Unpaid homeowner's dues
• Recording charges to clear all documents of record vs. seller
• Any bonds or assessments
• Any and all delinquent taxes
• Homeowner's title insurance policy premium
• Homeowner's association transfer & doc fees
• Zone disclosure report

Generally, the BUYER pays for...

• Title insurance premium for lender's policy
• Escrow fee (50%)
• Document prep. fee if applicable
• Recording charges for all documents in buyer's name
• Termite repairs, usually limited to Section 2.
• Any new loan charges except those paid by seller
• Interest on new loan from date of funding to 30 days prior to first payment date
• Assumption or change of records fee for take-over of existing loans
• Inspection fees
• Fire insurance premium
• Next month's HOA dues

All terms and conditions in a real estate purchase contract in California are negotiable, so sometimes the above is changed.  All homes in California are sold in "as-is" condition but the seller often makes certain repairs after receipt of a copy of the buyer's inspection report.

We can provide copies of an estimated closing cost statement prior to closing an escrow to give you a better idea of what to expect.

16 Mistakes Sellers Make When Listing Their Home

...And How To Avoid Them

Pricing Your Home Too High

A real estate agent can help research comparable sales and make recommendations based on the direction the market is moving at the time.  Pricing a home to net a certain amount seldom works if the buyer does not agree!

Taking an Inflexible Position on Financing

Your agent can explain the various financing scenarios that exist, some of which could involve you being asked to assist the buyer.

Errors in Timing

Selling in a downswing vs. an upswing presents entirely different situations.

Not Providing Easy Access for Showings

Making it difficult for prospective buyers to see your home forces them to visit other homes which are easier to access.  Once you decide to put your home on the market you need to be ready for unexpected showings anytime.

Not Utilizing Current Market Technology

Your agent needs to be current on all the current tools available to both agents and prospective buyers in order to be sure no stone is left unturned.

Not "Staging" Your Property Correctly

Put items in storage, clear counters, remove clutter to make it easy to see the house through everything.  Disorderly homes create a negative impression with buyers that force them to overlook important details.  Your agent can give good suggestions.

Believing That Selling Property is Seasonal

San Diego's excellent year-round climate makes the whole year the buying season.  It sometimes gets a little busier in the spring or summer but we have no "dead" periods due to bad weather.

Pricing Your Property Too Low

You obviously don't want to leave money on the table, but something can also be said for generating many showings due to the perceived value which usually results in a sale at market price anyway.  This is a common strategy in northern California.

Not Re-Evaluating the Marketing Plan

You and your agent should be in constant contact about what is working and what isn't.  It is important to note that no marketing plan will sell an over-priced home in a neutral or soft market.

Believing Your Agent Isn't Doing Their Job When There Are No Offers

The vast majority of showings and offers come from other agents showing the property after finding it on their MLS.  A lack of showings usually means that other agents perceive your price to be high.  In a normal market it usually takes 10 or more showings to generate 1 offer, more in a slower market.

Ignoring The Importance of First Impressions

A sale can be lost due to an unspoken objection or negative impression from a qualified buyer if the lawn is not mowed, gardens not trimmed, closets are cluttered, light bulbs are blown out, stains remain on walls or ceilings or countless other items that can give the buyer the impression that the seller has not properly cared for the home.  Once in a while a buyer has the ability to see through these things, but more often they move to another property.

Not Making The Right Kind of Repairs

Consult your agent about which repairs to make before going on the market.  Don't forget that the buyer will order his own property inspection that will uncover repairs you might have missed, causing you to go through the process again.  In a neutral or soft market I feel it is unwise to force a buyer to take the house without any repairs from you, it is just another thing they need to deal with during a stressful move.

Not Giving the Sales Effort Enough Time

Homes take time to sell in any normal market.  Don't get too nervous if yours doesn't sell in the first few weeks.  My normal advice to my clients is to re-evaluate the pricing every 30 days with price reductions designed to generate showings.  Remember, no showings means the price is too high most of the time.  Houses are always selling no matter what the market is doing.

Not Screening Prospects Adequately

Good agents know how to screen prospective buyers and their agents.  It is very important to know as much as possible about your buyer, including their family and financial situation and any contingencies that could affect your sale.

Believing that You Can't Make A Difference

Your contacts and personal network sometimes result in a sale, so don't forget to let them know your home is on the market!

Testing the Market

Never put your house on the market unless you really want it sold.  Your house can develop a history of being on and off the market which can create hesitation in the mind of buyers and agents.