San Diego Housing Bubble News and Analysis

$300k to $500k in upgrades? Where did they supposedly spend that money? It sure as hell didn't go in the kitchen.

Ask them for receipts to see how they wasted so much money on crappy upgrades. Thats what I would do.

The way this is written, the realtor is a used car salesperson, willing to say anything to get the sale – but how can she be blamed? She is trying to get as much money as possible out of the sale as instructed by her client - heck, she also gets a take of the final figure – so the more $$$ the better. The moment she agrees the market has not doubled in 5 years is the moment she justifies a price reduction, so no way is she going to admit that - I would be surprised if she did.

This is why I'm reluctant to deal with most realtors. Even if I become well versed in home buying to avoid being taken, an equally well or most likely better versed buying or selling agent will be getting a share of my money whether their information is true or not, withheld or exposed.

Buyer beware, in vain.

JustLurking, My experiences at the open houses in La Jolla are similar to yours. Most the realtors are just not willing to admit that the coast could possibly decline in value. I can't decide if they sincerely believe that, (ie they are all drinking the koolaid still) or if they know that things are going down but don't want to admit it.

One thing that I'm really wondering about. If you look at SDLookup's list of closed sales, and scan for the month of June, there are only 9 single family residences that closed in June for 92037. If that is true, that is terrible for sellers. (Given that there are 224 sfr listed today, that would be about 25 months of inventory at that rate!)

But here's the thing I really don't understand. With sales in La Jolla dropping in number, commissions must be way way off. Wouldn't the realtors start to push sellers to lower prices since that would encourage the number of sales to go up? From a conversation I had with a seller the other day, he indicated that realtors wanted him to not go out at a low price. He really wants to sell, but the realtors were really discouraging him from offering at a price less than two years ago comps. Why would the realtors argue that? Given that sales have dried up so much. Are the realtors convinced that everything is going to bounce back? That all they need to do is convince sellers to not give in, and prices will hold? Can someone explain what the realtors are thinking?

XBoxBoy

Isn't a price reduction better than no sale? Seems a sale at the listed price is impossible from the facts given.

I would like to buy a home in that range when it seems logical. Everything I see is listed higher than previously bought- even if bought new in 2006! California homeowners have had a good ride for so many years many can't believe- even today- that their values could decline. I really believe that many feel their home is their primary retirement. Not much savings in the boomer crowd. I will step back in when reality returns- probably in 2011.

I know of a 3,000+ sq ft nicely updated home on a large cul de sac lot with great ocean views that is less than a block to a great beach in La Jolla that was in escrow aroun $1.8M before falling out and could probably go lower than that.

Immunity, shcminunity!

You could probably rebuild that house for $500,000 so the realtor is just pulling a number out of the air. I live in LA and you see the same denial in West LA. The reality is that increased inventory in any area will eventually lead to lower prices. I am sure some of those 64 homeowners will soon become "motivated seller" and the game will up.

Let's be honest, you can't compare an apple to a raisin.

The 4 million dollar house looks like they want to sell it, professional photographs, staged to compare with the market, and it has a view... at least until the conference center get built. It looks ready to get the checkbook out someone's pocket.

The 2 million dollar house... looks Santa Barbara pink on the INSIDE, and green stucco on the outside. It just does not even compare. It looks like it wants to go back to the bank.

Ah, Realtors. An old friend called and said I remember you mentioning you were looking for a property in this price range... but the conversation was three months ago.

LJ Sales chart

I got this from sdlookup LJ inventory

This chart says a lot.

BTW - That is the ugliest color choice ever! And I'm a girl and wouldn't be offended by a peach/pink color ordinarily, maybe even one room - But the whole place. Yuk!

Million Dollar Loss

I met a realtor in an overpriced open house the other day. He actually admitted that the house was way overpriced, but said that the sellers need that money and wouldn't go lower. I was surprised that the realtor would list it when he didn't believe the sale was possible and even wasted a Sunday for the open house...

BTW, the realtor was a very nice guy; I gave him the link to this blog. :)

Okay so here are two sides to the story. First there is the side that pretty much everyone here falls on, and myself as well... I go to open houses all the time in my engineer disguise. I sit there and don't ask questions and listen to the realtor tell me how the home will double in value in 10 years, how real estate is a great investment, blah blah blah... same thing you guys hear, same old story. I never really say much because I may be on the other side of a transaction with these people someday so I pretty much stand there slack jawed and take it all in. Getting into an argument with them reminds me of some of the go rounds with my own 3 year old. BTW my sister in law is a realtor and she is for sure in the we are just around the corner from the bottom... and she BELIEVES IT... whatever...

So now the other side of the coin... Why do these realtors take the listings? Why don't they encourage the sellers to reduce the price. What is going on here? A few things... I have posted before about topics like this so the old timers here can stop reading because it will be repetitive. So there are a myriad of reasons why agents take the listings. First and foremost if the first agent doesn't take the listing the next agent will. While there are some agents who will altogether pass on a listing if the sellers refuse to price in a realistic manner, most will not. They will indeed take the listing and if there is no traffic they will then press the seller to price correctly. Second, never forget the power of advertising. Perhaps the listing agent will not sell the home, BUT the best, the very best source of contact leads for a listing agent is the listing. That LA can have open houses to get more buyers leads, he gets his sign out front, his flyers, he can put it on caravan... see my point? Third, every seller has a different situation. Indeed most sellers are still in denial. I cannot tell you how many listing appts I go to where the seller tells me that they NEED to get this much out of the sale.

Look guys, most people here attempt to apply logic and rationale to how PIGGS would approach pricing the home. Your reality is as foreign to the seller as his reality is to you. The problem is that facts and market dynamics are in your favor but emotion and a sense of entitlement is in his mind. The equation is disjointed and the minds do not meet.

The pricing problem is indeed a problem but it is a free market. I have that problem all the time with clients. Not many times do I have clients who I see eye to eye with on initial pricing. Those who have priced aggressively have sold thier homes and done so quickly. I cannot sit here and say I have declined every listing where I didn't agree with pricing. Some I have indeed taken where I tell the seller, "Look I strongly disagree with your price recommendation but yes I will still take your listing." Since I don't do open houses I do not have to sit and defend the pricing to open house shoppers. Yet have I received business from these homes that didn't sell? Yes I have.

The point here is not to defend lame pricing. Nor is it to defend the tripe that you hear from most agents when you go to open houses. You guys would indeed be surprised how many agents believe that garbage they spew. Yet there are also a good many who don't do that. Anyways, just some food for thought.

Thanks, SDR – I for one will read all the advice you’d like to submit – I know you’ve posted on topics similar before, but even this thread has some new participants, so my apologies if, as we get closer to the bottom (very relatively speaking), newbies like me ask some beginner questions. Maybe that could help pass the time during our ride to the bottom – instead of, like, oh i dunno, posts based on political election-neering?

heheheheh -

Well Portlock sometimes those political election posts and those off topic chargers posts are nice diversions to pass the time.

You know the saying, there are not dumb questions just dumb people. So don't ever worry about the content of the questions.

sd
What about putting in a low bid....meaning as a realtor would you chance offending your peers by putting in a bid 10% lower then asking? If you felt the price was too high? My broker has yet to put in a bid for me but he agrees with me on price.

There are a lot nicer houses in the shores area.

Even if I had the money (which I don't) I wouldn't buy a house ON La Jolla Shores Drive... No parking (beach goers grab it all up), serious traffic, a nightmare to get in/out of that gated driveway.

I'd rather buy Cindy McCain's aunt's condo across from Kellog park.

Realtors seemingly have only one tool is their selling arsenal, that is create urgency and an opportunity to make a fortune.

Of course if the Realtor truly added value they would be aware of the changes in lending criteria, pending defaults, and shrinking SD county job base.

That being said this home is clearly over priced. Why doesn't the Realtor concede that and offer to find a different home for the open house visitor. You could build a clientele and make a lot of money.

aldante -

Another thing that often happens on this post is a massive generalization about realtors, mostly to the negative side. While there are sheer numbers of poor realtors one pleasant side effect of this downturn will be to shake the industry out somewhat.

There is never any harm in submitting lowball offers. What the buyer needs to be aware of is that if you submit a hundred lowball offers don't be surprised if you get a hundred rejections. That doesn't mean you shouldn't submit the offer, you should just be cognicent of the probable outcome. In terms of "offending" the other agent that is never a concern. It is very simple to submit a lowball offer without offending the other agent or the sellers, ESPECIALLY in this market. If they will not entertain the offer then they will tell you.

Once again... Thanks SDR

Excellent post.

I find it hard to believe that you have stayed in either engineering or real estate. You seem to have a bright future beyond those to endevours!

And I have to say it. Anyone looking to make that much money on a home could swallow 10K and get a friggin' painter to take care of those horrible colors. Something isnt right with this listing.

That could be another BS - OT post. Name this color!

My vote is for regurgatated hot tuna maki!

Take Care Piggs...

And remember to post responsible. The post you read just may be your own.

CE

Realtors will say whatever is needed in order to close the deal. Realtor can give no consumer protection. The Realtors E and O insurance is to protect the Realtor from the Consumer. You need to know more about how the Real Estate Industry is hurting the consumer and what you can do to protect yourself. www.SavvyBroker.com