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Entries Tagged as 'Choosing an agent'

Bob and Betty Buy a Home (Part 2): We See Some Homes, But Bob and Betty Get Spooked

March 29th, 2007 · 8 Comments

Let’s continue the saga of Bob and Betty, our hypothetical first-time home buyers who were introduced in the first of a series of articles I’ll be writing.

We met at 9am sharp on Saturday morning at my broker’s office in downtown Palo Alto. Though it’s easier to view homes with clients during open house times, I prefer to do first time tours when nobody else is around.

I had an ambitious tour planned: 12 homes in 4 towns along the 101 corridor. Always exhausting for everybody involved — every time I do this I have more liking for the part of the Redfin business model where clients do this bit themselves! — but nonetheless an important part of the whole process.

While driving, I pointed out important things about the neighborhoods we were in: The typical types of homes, the price ranges, which school district it belonged to, whether it was unincorporated or not, whether it was in a flood zone, where the nearest parks and public services were. I asked them to comment on what they liked and didn’t like in each neighborhood.

At each home we went through the same process, slowly at the first couple of homes, and then more quickly. “What did you like? What did you not like? What did you think of that kitchen? Do you like skylights? Fireplaces?”

By the 5th home I’m usually able to “get it” about what clients are looking for, and with this new knowledge, I crossed out 3 of the remaining 7 homes we had to see.

Suitably tired, we pulled back up to the office around 1pm to review what we had seen, what they had liked, and what they had not liked. I explained the next bit of the process: getting pre-approved. I’m happy to spend a few hours as a sort of “interview” with prospective buying clients, but before I invest too much more, I need them to put some skin in the game too by getting pre-approved. I generally find that if they’re not ready to dig up their financial records and go talk to a mortgage broker, then most likely they’re not ready quite yet to buy a home.

Betty was quite excited about three of the homes we had seen, but it was clear that Bob was losing interest pretty quickly. “Yeah…but nine hundred thousand dollars?” was his most common refrain.

We pressed in on that. Bob had been doing his homework the last week and pulled out all the discouraging figures he had found. Housing starts are down. Interest rates are up. Affordability is down. Condo developments in Las Vegas and Miami are being cancelled. How in the world could prices stay where they are here?

Prices in the Bay Area are indeed a pretty head-scratching discussion topic as they continue to defy gravity, pessimism, and seemingly the laws of economics year after year. I told them bluntly that neither I nor anybody else could guarantee anything about prices here. It is indeed possible that prices could collapse…by 40%…overnight…immediately after they bought a place. Possible? Yes. Probable? No.

I pulled up my secret weapon, Google Earth, on the flat screen wall monitor in the conference room. I zoomed in on the Peninsula and asked two questions: 1) How much land is technically available to build on? 2) How much land is actually available to build on.

Map of the Peninsula area in the Bay Area

The answer to the first question is: tons! From the Bay going west pretty much to Highway 280, nearly every square inch of land is already filled in. From the 280 west to the ocean, there are only a smattering of towns, like Half Moon Bay, Pescadero, and La Honda. The mountains make it difficult to build in that area, but we could certainly fit several hundred thousand more homes there.

However…it ain’t gonna happen! Most of that land is owned and/or protected by Federal, State, County, or City governments, private trusts, conservatorships, parks, and so forth, and not much building is going on.

If you can’t go West, then you have to use the Manhattan strategy: go up. Again, that ain’t gonna happen. San Francisco and San Jose have modest but growing skylines of high-rise buildings, but in between it’s rare to find any structure taller than 8 or 10 stories, and for the most part it’s only up to 3 stories tall. Those zoning restrictions aren’t going to be changing any time soon.

Essentially, 50% of the classic economic supply/demand equation is pretty much fixed, so the real question is what will happen with demand?

Again, at least for the short and medium term, the answer to that is pretty clear: demand is, and will likely remain, robust. Google and other local tech companies are doing well. Venture capitalists are pulling out their wallets again. Start-up nirvana 2.0 is here. Immigrants from across the country, and indeed the whole world, continue to move here.

So, could prices fall by 40% overnight?  Absolutely! But in the only scenario I can come up with in which that happens — a scenario which involves an earthquake, a terrorist attack, and bankruptcies of the top 5 tech employers in the area…all within 3 months of eachother — falling equity may not even make the top 10 list of concerns for many people.

We parted company, and they promised to get back to me within a few days about whether they were ready to proceed. I had my doubts, mostly about Bob.

Sure enough, a few days later I got a phone call from him. “We’ve decided to wait it out,” he said. “We’re just a bit nervous about these prices, and we’re not in a big hurry to buy.”

We agreed to keep in touch every few weeks and see how things developed.
Welcome to real estate in the Bay Area.  Prices are high, and you need a certain amount of faith and intestinal fortitude to dive in for the first time.

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Tags: Buy vs. rent · Buyer and seller tips · Choosing an agent · For buyers · Google Earth · Home buying · Previewing homes · Real estate · Redfin

Shopping for Houses Isn’t Like Shopping at Nordstrom’s

February 13th, 2007 · 9 Comments

nordstrom.jpgStanding at my open house the other day, I decided to make a study of how buyers shop for their dream homes. To each person or couple entering the condo open house I was hosting, I said, “Are you looking to buy a house today?” Some laughed, grabbed the flyer I was holding and marched past me; others giggled, replied yes and with those, I held conversations; and then there were those who said, “We’re just looking!” hoping their reply would be enough to make me go away. But standing in front of the door I had no where to go.

So I asked, “Do you have an agent?”

“No! We don’t need an agent yet.”

“Well okay, then tell me what are you looking for? Maybe I can help you find it.”

“We’ll know when we see it.”

“Well build me your dream home.”

“Really, we’re just looking. Would you mind if we just had a look?”

Receiving similar replies such as these from “lookers,” it finally dawned on me that either buyers have become so jaded by the agents jumping on them at open houses or they think that going to an open house is just like shopping for clothes at a department store.

When I go shopping, I don’t like to be bothered, unless of course I can’t find anything or want to make my purchase NOW! I race through shopping malls swatting sales people away until I really need them. And I get the feeling that that’s what most buyers are doing when they go to open houses. They drop by each property hoping they won’t have to talk to an agent. But what, I wonder do buyers do when they find their dream house? Ask the listing agent holding the open house to double end the deal? Ask the agent holding the open house for the listing agent to represent their offer? Would you go to just any doctor and ask him to do surgery on your heart? I encourage you as a buyer to consider that maybe at the moment you find your dream house, that that isn’t the best time to need an agent.

Here’s the deal – shopping for houses or condos isn’t like shopping at Nordies! Buying property is – as we all know – a really big deal. There’s big bucks – especially here in Silicon Valley – at stake. When people buy houses, they get emotional; their transactions require facilitation; and it requires an expert – someone you are comfortable with and trust – to make sense out of the mounds of paper work necessary to negotiate and close a deal.

Are you one of “those” buyers who are waiting to find the perfect agent at just the right moment? You’re just out there on Saturdays and Sundays looking at property – without an agent – and thinking you’ll find the agent when you find the property! If so… reboot your search. In the market we’re in here on the Peninsula between San Francisco and San Jose or anywhere for that matter, you want an agent working for you from day one. When you find that property, you may only have two – three days to receive disclosure documents, review and understand them, as well as be prepared to get in the ballgame of multiple offers. So instead of swatting agents away at the door of their open houses, start interviewing them next Saturday and Sunday. Use the web they are trying to catch you in as an opportunity to interview them. You don’t have to keep them. But get a sense for how they will serve and work with you if they were your agent. How can they make your search easier? Ask them about the real estate company they work for? What do they know about the market in which they work? What your goal is, is to find an agent who is going to go to bat for you; someone who has YOUR best interests at heart; someone who is going to be in your real estate life for life. Your agent needs to be a negotiator; familiar with contracts; and most of all they need to understand your wants and needs because as your agent it’s all about you and getting you what you want at the best possible price.

So the next time you’re at an open house, interview the agent guarding the door and find out if that agent is right for you. That way when you find your dream house, you’ll be poised and ready to make an offer that gets you exactly what you want.

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Tags: Choosing an agent · For buyers · Open houses · Real estate