Broker Blog

Instructions for life: A month or so ago, I came across a twenty point list in my “Quotations” file that I think is pretty good. Here are the last of the 20 items.

I N S T R U C T I O N S F O R L I F E (4th bunch)

16. Once a year, go someplace you've never been before.

17. Remember that the best relationship is one in which your love for each other exceeds your need for each other.

18. Judge your success by what you had to give up in order to get it

19. Call your mother (or your father).

20. Approach love and cooking with reckless abandon.

A Tale of Two Markets: I recently completed the following article. I’d enjoy your comments (there is a comment box at the very bottom of the blog, or e-mail me directly).

A Tale of Two Markets or How the Sale of REO and Short Sale Properties is Distorting the Median Value of the Average Home

In the month of July, 50% of the single family homes that sold in Sonoma County, CA, were either bank owned homes (REOs) or short sales wherein the lender on the property received less than the amount due on the loan. In industry parlance, short sales are “REOs waiting to happen” as these homes are generally in the foreclosure process. These are what are called “distressed sales”.

The REO/Short sale home sales for the month had a median price of $320,000 The non REO/Short sale, or “conventional” sales had a median price of $530,000. So my premise is that we are dealing with two real estate markets and that the market cannot be whitewashed with one brush.

People are always asking me how the market is and how the value of homes are holding up. If the median price of all home sales is used, the market is off 32% in value from a year ago and off 36% from the median price in July, 2005, generally considered near the “peak” of the market. If the median price of the conventional home sales is used in this comparison, the market is off just 8% from a year ago and 13% from the peak period of 2005. This is important information. We should not all be suffering that our homes are losing their value and that we are getting poorer by the day when it is banks and institutions who are creating these huge discounts to get these assets off their books and to get out from under being landlords of vacant and typically distressed real estate. They are taking the losses, not the typical homeowner.

I never like comparing the general single family home market to the stock market, but I know that there are a lot of stock portfolios that are off more than 13% over the past three years – just look at the financial industry stocks alone.

I’m finding that appraisers are not taking into account the anomaly that this REO/Short sale “selling binge ” is creating in the market. Because a bank desperately wants to sell an asset on my block, does it mean that my home will sell for that much less, or is worth that much less? I don’t believe so. I had a vendor in my house the other day and he said “this place will never lose it’s value, it’s in such a great location”. If you are in a transaction and the appraiser is not making a distinction between these two markets, I believe that it is up to us as owners, or real estate professionals, to help them with the analysis. The appraising industry is pretty rigid in it’s approach to value, and I don’t believe we have encountered a market such as this one in our lifetimes.

I’ve seen homes that were purchased in 2004 sell in 2008 for more than they cost in 2004 because they are very desirable. I’ve seen a home offered at $4,200,000 receive an offer within two weeks for $4,200,000 because it was very desirable to that buyer. Same with a home listed for $3,300,000 that got an offer of $3,100,000 within the first week of being on the market. One might call these “discretionary” sales and purchases and they generally remained unaffected by the “other” market for REO/Short sale properties.

So my counsel to home owners is that your home may be worth more than you’re thinking, or at least more than you are being told by the media or the appraisal industry. At any one time, a small, small fraction of the housing stock (approximately 1.4% in the Sonoma County in the month of July) is on the market. Does that small amount of activity dictate the value of my home when I’m not planning to sell for five years? Not to any degree that I’m going to worry about. If, on the other hand, I want to sell next week and there are three bank owned properties for sale on my block, well, I’m going to have to reduce my price to compete with those distressed sales. If I can hold on, maybe I might rent the house out if I can afford to, the rental market is strong right now. Otherwise, I’ll sit tight for now.

Don’t be distressed by the headlines, your personal situation is likely extremely different from the bank who owns the house down the block. I suggest you speak with a local Realtor who knows the ins and outs of the local market if you are concerned about the value and marketability of your home. It’s really a tale of two markets.

Launch of Updated Property Websites: You can order the new property websites for your new listings beginning today. The order form will be updated by Lourdes by the end of the week, but in the meantime, fill out the current order form and put in the comments that you desire the new templates. Twenty one choices, larger images, unlimited photos, vertical photo options, and more. Great stuff, and all at no agent cost!

Loan Modification Assistance: Businesses are springing up to help borrowers with their modification process. Some seem a little more “above board” than others, for example check out www.consumerprotectioninstitute.com.

iHomefinder – IDX Provider Update: Here are some updated stats from the real estate search engine portion of our website which is managed by iHomefinders –

General Traffic
• 2405 new visitors
• 2483 searches
• 23791 properties viewed

Your average site visitor conducted 3 searches and viewed 10 listings
• Activity on your site is UP compared to last month
• You are in the top 2.0% of our most active Web sites on a nationwide basis

We distributed 16 new leads to our agents from last month's activity.

Closings: The following agents also enjoyed closings between 8/18 and 8/31: Carol Lexa (Healdsburg); Tammy Owens (Sonoma); Lisa Albertson (Sonoma): Diane Harris and Deke DeKay (Healdsburg); Frank Trozzo (Napa); Corrie Sterbentz (Sonoma); Constance Sharpe (Glen Ellen); Dmitra Sutsos (Sonoma); and Darlene Riddle (Healdsburg). The following agents closed two sides during this period: David Barker (Napa); Ann Amtower (Healdsburg); and Penelope La Montagne (Healdsburg). Daniel Casabonne of our Sonoma office closed three transactions during this period. Doug Del Fava and Susan Parker of our Kenwood office closed seven transactions and Cheri Stanley of our Napa office closed a mighty nine sides over this two week period. Well done, and congratulations to all!