Manhattan Beach/Beach Cities: Finding the Right Sale Price

I am working with a number of home buyers who are looking in every Beach City.. Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo. My clients' price ranges vary widely as do the types of properties they want to purchase.

There are some things all Beach City home and townhome buyers have in common.. trying to figure out what to offer on the homes they want to buy. Smart sellers don't want to overprice their homes... but they want a reasonable price for their property. Sellers who put their homes on the market are usually not doing it as a way to meet new friends.


Smart Buyers don't set out to insult a seller with a low ball offer; they just want to buy at a fair price.. or market value. Buyers really don't go to open houses because they have nothing better to do on the weekend. They go to open houses because they want to buy a house.

So that brings us to the dilemma of making an offer. How do you decide the right price that will make both the seller and the buyer happy? This is where you need to look at all the aspects of the market.. properties that are for sale, sold and pending.

The old rules said that comparing similar properties that sold within the last 3 months is the way to determine price. In very stable markets with a lot of similar homes that might still work but I'm not sure that thinking applies in our local Beach Cities real estate market. Most home sales close in 45-60 days from the acceptance of an offer which could be 30-90 days from the date of the listing. The time lag between listing the home and closing escrow can make the data old and no longer useful. This happens in both up and down markets as the market is changing faster then the data.

Some experts advise looking at active listings to help determine a price. But if the active listings have been on the market for a long time and haven't sold then they aren't the best source of data. 25 homes at about the same price that have been on the market for 3 months are obviously not at market value.


I think the best indication of market value is found in pending sales. The best gage is properties that were on the market less then 21 days and may have had multiple offers. This is the hot market. This is where buyers and sellers have found common ground and agreed on a price. This is true market value.



This is where savvy sellers are pricing their homes. Savvy sellers know they won't get more then market value for their home and price it at that level. This is the data smart buyers are using to determine their offering price. If a buyer likes a home he wants to buy it. Most buyers do not want to get in a bidding war or go through 15 counter offers. The savvy seller will price his home to sell and a smart buyer will appreciate that and respond accordingly. Sure there will be negotiating but it will be the type that leads to compromise and a sale.



My Dad always said that a good deal was one where all parties to the transaction walked away feeling good. I think that is still very wise advice..




Manhattan Beach/ Beach Cities: The Sellers Lament

Buyers: 7 Things to Know When Buying a House


South Bay Beach Cities: Sold June 2007

Beach Cities: Sold May 2007

Beach Cities: Sold April 2007

Beach Cities: Sold March 2007

What Makes Buyers Return to the Market?

The New York Times had a rather provocative article about what happens When Rents Get too High. The premise being that people will buy real estate when the amount of rent they are paying begins to approach the cost a monthly mortgage payment.

I know that's when I decided to buy my first home. I had been living 4 houses from The Strand in Manhattan Beach. I had a one bedroom apartment that rented for $400 a month. The owner decided it was time to raise the rent and I decided I wouldn't pay any more then the current rent... so it was time to buy.

Now granted that was a long time ago but the premise remains the same. No matter what the Bubble Bloggers preach... paying a high rent when you can buy something for a similar monthly amount makes no economic sense. Actually these guys push renting so much that I have often wondered if many of them own income property and just want to keep their tenants.

In the last year rents increased all over the South Bay but especially in the Beach Cities. Interest rates started going down around the middle of October. Since that time we have seen an increase in sales activity in all the Beach Cities... but especially in Manhattan Beach and Redondo Beach... which represent the higher and lower end of the spectrum. So I'm wondering if the New York Times isn't right... when the rent gets too high people will start buying.

As a side note...The building where I rented recently sold and my little $400 apartment is now renting for $1700 which is well below comparable market rent( should be about $1950). I'm sure the new owner will raise the rents to cover his debt service. Hmmmm...I wonder if the tenant in my old place might be thinking of buying a new home....

Selling Your Home.. How to Stand Out in a Crowd

Last year we saw big changes in our Beach Cities real estate market. The days of selling your home in a day with multiple offers is a thing of the past. As a seller you can expect a market time of 6-12 weeks.. and that's if the home is in reasonable condition, not over priced and has a decent location. Welcome to 2007!

Can you increase your chances of selling before your neighbor does? Yes, but you have to be smart about it. This is not the time to test the waters on price or decide the old carpet is good enough. It is also not the time to get cute with offers of BMW leases or trips to Bermuda.

You are dealing with Buyers who know the market better then you do.... as most have seen every property that is for sale in their price range. They have a definite idea of what value means to them. Not one of them cares if Ralph Lauren personally created the color in your bedroom. It doesn't add value and value is what today's buyer expects to receive.

So how do you stand out? Here's 10 ideas aside from... clear the clutter, paint and new carpet ... You know you need to do the basics.

1. Price it right.. don't test out a price you know is over the market value.
Seriously,would you pay more for a house then it was worth in today's market?
Neither will anyone else.

2. Pay the buyer's closing costs... Yes..you can establish a maximum that you
won't exceed.

3. Buy down the points on the loan for 3 -5 years.. Again establish a maximum.

4. Hire a professional stager.. Add some punch to your home

5. Hire a landscaper... buyers make half their decision on a home from the exterior.

6. Give a bonus to the buyers agent.. if the agent is smart they will give it to
the buyer via a reduction in price and everyone wins.

7. Fill the rooms with fresh flowers

8. Turn on the lights and heat if it's cold.. who wants to walk into a cold dark
house.

9. Keep it clean.. I'm not talking kids toys... There is nothing worse then
looking at a home with a hefty price tag and dirty windows or mold in the
shower. Hire someone weekly... it will pay off.

10. Make sure it can be seen.. restricting showings to one hour a day or on
week-ends just isn't workable. Buyers won't come back in 3 hours and
certainly not in 3 days. It it can't be seen it won't sell.

Staging: A New Twist on an Old Marketing Idea

If you are not familar with the term staging you soon will be...especially if you plan on selling your home in the near future. We all know that the first 30 days of marketing a home are the most important. If the home is well priced, in good shape in a good location this is when the most excitement is generated. Think of it like going on a first date. We want to make a great impression. We want to be seen at our best. This is the time frame when staging is most effective.

Anyone who has visited a new home tract has seen staging. Many people visit new homes to pick up ideas on colors, cabinetry, new trends, and ideas about furnishings. Until recently the model home appeal was only available to those in the trade, those with lots of money or who had connections. For the normal seller the cost of having someone come into your home was prohibitive and sellers relied on an experienced agent to help guide them on the best ways to spruce up their homes. An experienced agent can offer many valuable tips on marketing your home but we just don't have the resources of a good stager. My favorite stager has a vast array of accessories and furniture at her fingertips.

Today there are a number of stagers available for consultation with homeowners. The prices vary as to services offered and the needs of the job. If you just need furniture rearranged and better placement of pictures and decorating items prices are very reasonable. For larger projects that require new paint, landscaping and adding furnishings and decor the price rises based on the amount of services needed.

Whatever your needs obtaining the services of a good stager can add thousands of dollars to your bottom line.

My October Challenge... January Results.. MB Home Sales

On October 27 in a post on Making Housing Decisions from Headline News..
I posed the following challenge:


So here's a thought... In Manhattan Beach there are currently 215 single family homes on the market. 70 have been listed since October 1; 23 have gone into escrow since October 1; and 18 have closed escrow in the same period. So let's say that by next week perhaps another 10 homes are in escrow and 5 new ones have been added so we are 5 down in inventory to 210 as of Nov 1. As we get closer to the holidays about 15% (30) of the homes now available will be taken off the market each month. There will be a few new listings maybe 8 added per month. So... 30-8= 22 x 2 months 44 homes off the market in November and December. Perhaps another 15 a month go into escrow.. that's 30 gone. Not a lot of sales but the inventory level would go from 210 as of Nov 1 to 136 in January. That's about a 35% change in inventory. Would a 35% change and low interest rates bring out buyers? Let's compare notes in January.

Well it's a little past mid January so what happened in Manhattan Beach since November 1, 2006?
There are 103 homes currently listed. 42 are in escrow and 60 have closed escrow since November 1, 2006. 51 homes were withdrawn from the market and have not returned active. Let assume that 30% (16)of those withdrawn return to the market by the end of this month. That would make make a total of 119 available listings which is about 55% of the number that were available October 27,2006.

In two months almost 50% of the inventory in Manhattan Beach has disappeared..... and most of the decline is due to sales not withdrawn/expired properties. Rates were very low from Mid November through the end of December. It looks as if if many people took advantage of sellers who were willing to negotiate and low rates.

I wrote this in the same article in October:
Trying to time a housing market is almost impossible and usually depends on luck more then skill. Often by the time the general public realizes a market has changed it is too late to get in at the right time.

Just something to think about over the next few months for those of you who are still waiting for prices to drop to 2000 levels.

*** These numbers are for single family homes.. but numbers are similar for townhomes.. inventory is very low and a lot of property has closed escrow.