On Wednesday, I found myself talking with delightful Anna Kagarakis, a producer for local station TV30. Anna interviewed me for a show called “Slice of Life” that will air in March. The interview took place at a home that is a pending short sale, and I fielded questions about short sales, bank-owned homes, and the advantages and disadvantages of each for both buyers and sellers.
I have no idea what I said, standing like an awkward tree next to pretty, petite Anna, squinting into the sunshine, trying to figure out what to do with my hands. But hopefully I conveyed my thoughts coherently regarding buyers seeking value. I talk to so many buyers that want to focus on a short sale or an REO (bank-owned) purchase. They perceive that this will translate to a bargain. And often enough, this is true. But what they are really saying is that they want value, and there is no need to limit this search to distressed properties.
I try to encourage buyers to focus on value--and finding the right home for their family--while examining the entire inventory of homes available. If you are shopping for a home today in San Ramon (for example), 48 percent of the inventory is either a short sale or bank-owned. So if you rule out distressed, or only want to look at distressed, you are only going to see half of what is available.
Non-distressed home sellers are competing with the distressed sales, so prices are adjusting accordingly. Buyers will find value when they are negotiating with a motivated seller. Banks are a great example; they don’t want to own real estate. But anyone who puts their home on the market is motivated to some extent—it’s hard! It’s emotional and stressful to sell your house. No one is doing it for fun. Some sellers are more realistic and more motivated than others—so in the right circumstances, a buyer can find a great value in a traditional sale.
The home where the interview took place is a pending short sale, as I mentioned. It’s a great case-in-point of why a short sale doesn’t work for everyone: the timing is very uncertain. This home came on the market in May 2011. It went pending in June 2011 and it has yet to close. At this point, it seems likely to close later this month, an eight-month escrow.
Meantime, a home three doors down came on the market in November. It was a regular sale. It’s a bit larger (200 more square-feet, one extra bedroom) and the price a bit higher, accordingly. But remember, they have a pending short sale on their street, so they are realistic about their price. The house sold in two days, and closed in December. Both homes are nicely updated and both buys seem to be a very good value.
Let’s not forget the sellers out there. There aren’t very many, as you can tell from the freakishly low inventory numbers. To sellers, I hope the message in my interview was something along the lines of: If you need to sell or want to sell, don’t be afraid of the market. Inventory has been incredibly low and buyers are out there.
Pleasanton, San Ramon, Alamo, Danville, and Walnut Creek all started the year with three-year historic lows in the number of homes available for sale. I am getting calls from other agents asking, "What do you have coming soon? Can I show it tomorrow?"
We are all struggling to find homes to show to our buyers.
Speaking of inventory, here are recent numbers, and the change from last week:
- Alamo – 65 (0)
- Danville – 142 (+3)
- Blackhawk – 31 (+1)
- San Ramon – 124 (-1)
- Dublin – 79 (-1)
- Pleasanton – 111 (+3)
- Lafayette – 51 (+1)
- Orinda – 31 (+5)
- Pleasant Hill – 72 (+5)
- Walnut Creek – 112 (-9)
- Rossmoor – 96 (0)
- Antioch – 199 (-4)
I mentioned that 48 percent of the inventory in San Ramon is distressed. In Alamo it's 20 percent, 23 percent in Danville, Livermore with 40 percent, Dublin at 37 percent, and Pleasanton with 28 percent (see chart).
On the other side of Contra Costa County in Antioch, the distressed properties make up a whopping 66 percent of the inventory.
Real estate is a different story depending on your location. Antioch and Alamo, just a 30-minute drive across the same county, and the market is completely different. There's a good reason why location has always been cited as the three most important things to consider: Location, Location, Location.