Monday, October 29, 2007

San Diego Real Estate Will Bounce Back

By Joel Persinger
YourRealEstateDude.com

As with congregations all over town, my church got together this past Sunday and held a service in which the minister addressed the tragedy caused by wildfires throughout our beloved San Diego County. Following the service, I had time to visit with some friends, and the subject of the fires and their effect upon the real estate market came up.

This is not my first exposure to devastating wild fires. That came in September of 1970 when I stood on the porch of my parent’s home in Harbison Canyon and watched as the fires, which would eventually kill six people and destroy 175,000 acres, raced threateningly down the mountains some two miles on the other side of the valley toward us. The fire reached our land in less than ten minutes.

We were foolish in the extreme back then. My stepfather and a few of the neighbors decided not to evacuate, choosing to stay and try to save their homes instead. With little knowledge or understanding of wildfires, they tried to clear brush around the houses as my mother and my brothers and I watched helplessly through the picture window from our living room. By all rights, the fire should have burned up the house and the rest of us with it. Miraculously, both my family and our home survived. 382 other homeowners were not so lucky.

Over the almost forty years since that day, I have seen many wildfires in San Diego County. Obviously, none of them have risen to the severity of the Cedar fires of 2003 or the firestorm of last week. But in each case one bit of similarity has held true. Rather than shrink back from the challenge or adopt a “that’s their problem” mindset, the people of San Diego County, as well as many companies and corporations, have rallied around the victims with just about every kind of support. And, in each case, while the real estate market was effected in the short term to one degree or another, it has bounced right back.

I spoke with several clients and business associates on Thursday and Friday of last week. It may be the parent in me, but I just wanted to make sure they were in one piece. During my conversations I was told of the many plans to help the families who have lost their homes or whose homes have been severely damaged. A senior executive at one lending institution told me how frantically her company wanted to help the victims of the fires. I must admit that this response came as a complete surprise to me. It lifted my spirits to see the hearts of those with whom I work day after day and their earnest desire to help following such a tragedy.

There is a lot of bad news out there and we all know that the home loan and real estate markets have slowed to a crawl. It may well be that this past week’s events will slow things down further. But, have faith. The people of San Diego County are resilient and so is the Southern California real estate market.

Sunday, October 28, 2007

Will This Week’s Fires Effect Real Estate?

By Joel Persinger
YourRealEstateDude.com

With San Diego County experiencing the worst fire storm since the Cedar Fires just a few years back, it seems almost mercenary to talk about real estate. A much better thing to be thinking about at present is how to make certain our families are safe and what we might do to support our first responders and those who have lost their homes. Nevertheless, it is important to understand how this tragic event might affect the market for those whose homes are for sale and survive the fire.

As we all know, bad news for the real estate market has been all over the place this past week or two. Just two weeks ago the California Association of Realtors released its California Housing Market Forecast for 2008. In it, the association detailed its prediction that home prices and sales will continue to decline in the coming year, although to a lesser degree that in 2007. In addition, frightening front page articles appeared in both the San Diego Union and the Los Angeles Times detailing this year’s drop in home values and the agonizingly slow speed of the current market.

It is true that the real estate market is not doing well in San Diego and that next year, while expected to be slightly better, is still likely to be quite challenging. The fires probably won’t help matters and are sure to have some effect. Exactly how they will affect the market and to what degree nobody knows for sure.

Loans may be more difficult to cash in on in the short term. For example: I received a call from a mortgage banker this afternoon urging me to take any money I might need from my equity line as soon as possible. I asked why and he said, “Because lenders are freezing equity lines as fast as they can because of the fires.” It seems the lenders don’t want you to take money out since there is a chance that your house might burn down.

Homes sales and prices may decline further. Many folks are put off by natural disasters. Buyers may hold off from moving into an effected area immediately after such an event. People who live in the effected area may move away out of fear or as a result of emotional trauma. Homes may be more difficult to buy. Following the Cedar fire, some insurance companies refused to issue home owner’s insurance in San Diego. If the buyer can’t get insurance, the lender won’t lend and the buyer can’t buy the house.

On the other hand, homes which have been damaged or destroyed are going to need to be repaired or rebuilt, debris will need to be cleared and Infrastructure (such as power and telephone lines, roads, fences and so on) will need to be replaced. This means business for contractors and jobs for their employees. Insurance companies (and perhaps the government) are going to be spending quite a bit of money putting San Diego County back together.

Folks whose homes have been damaged or destroyed will need places to stay. Rentals may be easier to rent and some folks may just buy another house and be done with it, rather than move back to a fire hazard area.

The only thing we know for sure is that, while many of these short term effects may hurt, the real estate market will march on. We are in a down cycle in the market for sure, but, sooner or later it will come back up.

Tuesday, October 09, 2007

Tips for selling your rental property

By Joel Persinger
YourRealEstateDude.com

Many of the people I meet in my career have a desire to own rental property. They have read all the books, watched all the late night infomercials, attended “Hype” seminars and listened to friends or family talk enthusiastically about how well they were doing investing in real estate. Still, running a rental “business” is not quite as simple as the infomercials make it appear. One of the most challenging aspects of the business often rears its ugly head when it comes time to sell the property while the tenant still lives there.

It is an inescapable fact that tenants aren’t generally pleased when their landlord puts the property they are renting up for sale. Even the nicest tenants can become nasty and uncooperative once the “For Sale” sign goes up. Uncooperative tenants will make both you and your Realtor miserable. They will argue with your agent, make unrealistic and sometimes downright ridiculous demands and often make the property very difficult, if not impossible, for prospective buyers to see. When and if they do allow a buyer to be shown the property, they will leave the place such a mess that the buyers cannot possibly imagine purchasing the place.

Though the situation may seem impossible to overcome, there are some steps you can take that may improve your chances of getting your property sold without starting World War III. The first step is to hire an experienced Realtor. It is best to hire one who has extensive experience selling tenant occupied property.

It is also positive to make a deal with your tenant. I generally suggest my clients take a shot at selling the property to the tenant at a slight discount. This saves time, trouble and effort and gets the home sold to someone who is already happy to live there.

If the tenant doesn’t wish to buy, you may be able to strike a deal with your tenant by offering a monetary incentive. For example: you may offer to pay the tenant some money when the property sells in addition to returning the security deposit, so long as he allows the property to be shown and keeps it clean and presentable.

Some tenants are going to be difficult no matter what you try. When faced with such circumstances, there are two more approaches that may work for you. The first is to remove the tenant and sell the property once the tenant is gone and the property is vacant. The second is to examine your lease to see if you have a clause which allows you to enter the property with some length of written notice for the purpose of showing it to prospective buyers. If the clause exists, then instruct your real estate professional to post a written notice on the tenant’s door with the required amount of notice and show the property. Once you have shown the property a couple of times using this approach the tenant may move out of his own accord, taking the problem with him when he goes. Regardless of the approach you chose, the most important advice I can give you is to stick to your guns and treat your rental property and your relationship with your tenants like a business.

Wednesday, October 03, 2007

What Do Agents Say About Their Clients?

By Joel Persinger
YourRealEstateDude.com

This past weekend, I had the opportunity to hear the opinions and laments of several real estate professionals who took a few moments to share their concerns for and about their current clients. I thought you might be interested to hear what real estate agents say to each other when their clients aren’t around, so I have included their statements here for your review.

I was leaving church on Sunday when one of my skeet shooting buddies, who also happens to be a Realtor, started telling me about one of his clients. “I told her she is going to have to lower the price if she wants the house sold”, he said. “She doesn’t want to listen to me, but the house has been sitting for months. I have to push her constantly to make any price change and by the time she makes a change, it’s too late. All she’s been doing is staying one step behind the market. She never lowers the price enough to catch up with the decline in pricing”, he lamented.

Just about the time we had finished our conversation, I found that I had run myself out of time and needed to get started on my trip to Imperial Valley. My wife and I have a property in that area and I needed to check on it. Somewhere along the way I turn on the radio and found myself listening to a program focused on financial news and opinion. The fellow who was hosting the show spent thirty minutes ranting about the real estate market. He quoted figures from just about every expert and association known to man illustrating the agonizingly slow speed at which the current market is moving. Then he announced, “The only reason houses are not selling is because sellers refuse to reduce their prices. I don’t care how much you paid for your house. It doesn’t matter. I don’t care how much money you spent improving your house. It doesn’t matter. I don’t care how much your house was worth a year ago. It doesn’t matter. The only thing that matters is how much a buyer will pay, period.” His words were harsh, but his conclusion was accurate.

While I was in Imperial Valley, I thought I might stop by and visit an old friend of mine who owns and runs a real estate brokerage in that neck of the woods. Our conversation drifted across many subjects, but as you might expect we eventually got around to real estate. When I ask him if he was still having clients referred to him by out of town brokers, he replied, “If it’s a seller, don’t even have them call me. I don’t want ‘em. They won’t price their houses so I can sell them. All they do is burn up my money advertising their homes and drive me nuts nagging me constantly because their houses won’t sell the way they’re priced”.

I have shared this with you because story after story is written about the frustration felt by home owners who cannot sell, but nowhere is mentioned the frustration of agents who work in utter futility to sell homes for sellers who will not listen to advice. As your real estate dude, here’s my advice. If your house isn’t selling, reduce the price until it does. If you don’t, you may well end up selling it for even less a year from now.