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"The agent refused?" Who's working for who here?

Jim, So what do you think it's going to take for the agents and sellers, particularly in the high priced areas with fewer distressed properties to capitulate? I too have seen lots of agents who believe a better offer will come along, but I too agree that for the vast majority of them this isn't going to come to pass. But what will cause them to throw in the towel?

Spotty

This business about agents wanting to hold out for higher prices even though the sellers want to lower their price makes zero sense to me.

I have always assumed that agents just want closed transactions. The lower the price, the better. They only get a fraction of the "extra" amount. Bird in the hand....

I am skeptical that this is the typical situation. I would expect sellers holding out for a higher price despite what their agents are suggesting/pleading/begging them to do ("lower your price" so you/we can sell!) to be the norm.

I'd agree that it is mostly the sellers' fault, but how many agents at least present a compelling case why they should lower their price? Hardly any. My guess is most just shrug their shoulders and say, "OK, somebody will come along."

In this market, as the sun sets on the selling season, if your listing agent isn't demanding that you lower your price, they aren't doing their job. Whether sellers do it or not is their choice, but at least they were informed.

I've been working the CV area lately, and it's crazy. A house listed for almost 90 days for $1.5+ got an all-cash offer today for $1.4 and close in 21 days - and the sellers turned it down. It wasn't a loan problem either, the sellers' mortgage was well under $1M, and the house is just sitting there vacant.

RE: "The rental market appears to be alive."

Jim, the rental market is *always* alive. It's only a matter of price. If you can't rent a place in reasonable condition, you just need to improve it or lower the rent and you'll find a customer.

Likewise, the real estate market is *always* alive. If you lower your price enough, someone will buy it.

When people start talking about the real estate market or the rental market being "dead," what they really mean is that no sellers are willing or able to lower their price. "Dead" isn't the right adjective to describe that situation. The word people are looking for is stubborn.

"I've been working the CV area lately, and it's crazy. A house listed for almost 90 days for $1.5+ got an all-cash offer today for $1.4 and close in 21 days - and the sellers turned it down. It wasn't a loan problem either, the sellers' mortgage was well under $1M, and the house is just sitting there vacant"

We made "all cash, fast close" offers on two different properties in Kauai last week. Both turned us down.

One has been on the market off an on for more than a year. I don't know where they started out price-wise, but for much of 2007 they were asking $1.575M; lowered to $1.475M last fall until this April, then let the listing expire (but still "for sale" with agent's sign in the front lawn). They turned down $1.2M (with no realtor expense). They live there, but are trying to move back to Calif (apparently in no hurry).

The other has been following the market down, starting at $1.65M, passing through $1.399M to $1.299M listing price over the course of almost a year. They turned down $1.1M (again, no realtor expense). That one is an empty second home, with a significant monthly maintenance expense.

I guess we under low-balled...

>>The word people are looking for is "stubborn."

"Stupid" also comes to mind.

The August 08 edition of the San Diego magazine contains a full page ad (p. 83) from the "no bull agent" as follows:

________________________

What Would You Do With An Extra $250,000?

My client closed on his home on July 18, 2007 for $1.9 million. The same unit three floors up just sold for $2.15 million on January 29, 2008. Six months in a down market, my client's property appreciated $250,000.

"Good deals can be found, but great deals are negotiated."

(This isn't hype, these are the numbers. What else needs to be said?)

__________________________

Well, let's see...

1.) "just sold" in January when it is July. What has happened in the interim to both properties in terms of value? Is your client going to be excited about saving $250k over the other guy when they are both 30% down?
2.) Three floors can make a difference. Apparently here it did.
3.) Were both buyers represented by realtors? Uh huh. Is the seller's agent trumpeting the $2.15 mil sale (in a down market)? Presumably that is the guy to represent me (I bet Mr. "no bull" did not think of that).

It is funny when a 13% increase in price in six months, that accrues to someone else's property, is viewed as a negotiated success. The real issue is what the guy will get when he sells. Anyone want to bet he gets less than $1.9 mil? Me too.

#5 is right on.

Jim: The rental market seems very active to me as well. I've mentioned this on piggington, but many bubble-watchers assume that the rents will go down as the housing bubble hits full steam. I've always said this was a false assumption. I postulated that you would instead see a situation where foreclosed owners are competing with the renters for rental properties, while the foreclosed homes would remain empty. This scenario would remain until there was some way to quickly convert foreclosed homes into rentals. So far, this hasn't happened. Even with the high foreclosures, there aren't a huge amount of investors converting them into rentals. Yes, there are investors who are actively bidding on properties, but there is not many of them to affect the rental price.

With all of this, I anticipated that rents would go up in the bubble and would continue to go up (although I did speculate that rents above $2000 would be soft).

One of my tenants did leave San Diego for Texas because it was getting too expensive here. However, they immediately referred a friend who moved in right away so I never suffered any vacancy.

I think that the rental market will be very tight for the next few years. Those properties with low rents (below $1500) will be very difficult to get. Foreclosed properties remaining empty, foreclosed owners competing with renters, and now gas prices making San Diego properties more wanted are all factors that I think will make rents continue to go up for the next few years (at least for San Diego).

My personal experience, which is totally anecdotal from talking to RE agents at open houses in LA, is that many of them are also "investors" in real estate, and may have a good reason aside from delusion to try to keep market prices high. If I were selling now, I think I'd try to get an agent without any investments in my area, given the ones I have talked to. It would be understandably difficult for an agent to be objective about price if he (or she) was himself a speculator in the area trying to stay above water.

As for rental prices, personally, I do think rental prices will go down eventually, due primarily to increased density while renting (ie: more people have roommates, living with family, etc.). However, that's not going to happen until investors are buying/converting faster than foreclosures are piling up REO inventory, which isn't going to happen until we clear through all the knife catchers, that wave of defaults pushes through, and we really see prices fall. I'd guess a couple years in a free market, but it's really beyond the event horizon in terms of estimations (because the next president is likely to push through many large New Deal type socialist bailout programs, and I don't know what form they will take and what effects they will have yet).

"An agent this week said she has had two short sales in process at Countrywide for FIVE months, and no response yet."

- do you think that there is anything an experienced agent can do to speed up a short sale? I saw a listing the other day, boasting "experienced short sale agent" How is that going to make a difference, if the bank is dug in on their wish price?

I know of a short sale situation where the bank sat on the one and only offer for 4 months (right through the spring season!), and when they finally reacted to it, they decided to counter at 30K over what the buyers were offering. Hello?! What do they think their chances are, after all that time, to get a higher offer?

I guess nobody noticed that things seem to be improving as measured by this graph.

If I'm not mistaken August will be the peak of subprime/interest only re-sets in San Diego County. Time to leave this crater and head back to sanity.

Also, I think there will be sufficient political will and government action that will prevent the neg-ams from failing en-masse like the subprimes did. The neg-ams wont start showing up until sometime in 2010. And, more than likely the market will have improved by then to allow for a normal market with sales and appreciation.

What a great market for a first time homebuyer. Alot of people are going to regret not buying right now.