Everybody has an angle

Today’s has a picture of my house on it and an offer to pay

  • No commissions
  • We pay the closing costs
  • No repairs
  • Moving assistance if needed
  • Fast, Fair Cash Offer

Interestingly enough, today’s missive came from a real estate office, although it was not identified as such.

Nonetheless, I see two things going on here.

First, there are people out there ready to separate you from your home. There is no way an investor is going to readily give you a fair cash offer. None. They may start with one, many investors do, but by the time their contractor is done writing up their bid, you’ll have expensive bids for repairs you never knew you needed being deducted from the purchase price. Why? Because they need to make money and they’re going to make it by squeezing you. Think you’re a great negotiator? Unless you are negotiating every day in your business, the answer is probably not. The experience is just not there for you and you’re going to get your pocket picked. End of story.

I am a decent negotiator. Even I think I leave something on the table from time to time. My current favorite negotiation story involves a home that needed some repairs that were not disclosed. My client wanted $9000 in credits. That was it. Ultimately, I never actually asked for the $9000, because the seller’s agent, a few minutes into our conversation offered me a $30,000 price reduction. I positioned the $9000 so well that she gave me $30,000 without me asking for anything. Most people are not good negotiators, was there another $5000 in there to be had? Possibly but my buyers were happy.

Knowing that you would think that I would negotiate the purchase of my new car, right? Nope. I’m not used to playing in that sandbox and while I think I could have done quite well, I used a concierge who got me everything I wanted and saved me $50 a month.

The second thing going on is that these guys are giving us insight on where they think the market is going. They are doing mass mailings into neighborhoods looking for houses to buy. If they thought we were in a bubble they’d be holding cash, but they’re looking to spend their cash. These investors are bullish on the real estate market right now.

Right now there are entire neighborhoods out there where every single house is in an equity position. Every one. That is not what a bursting housing bubble looks like. Remember, a bubble is caused by a fundamental flaw in the market, something akin to an aneurysm. With every home in an equity position, that’s a healthy neighborhood. That’s not to say that something happening in another market sector can’t create the flaw in the market, just that currently none exists.

Finally what does that mean to the Bay Area housing market? For the time being, it means our market will remain vibrant. If you’ve been on a freeway in the last six months, our full employment is evident by the traffic. There is plenty of talk of a housing crisis and there is a problem with affordable housing. Some cities are making it easier for builders to add more affordable housing, or even more housing. It’s a supply and demand problem solved by more supply. Some cities are loading the builders up with fees and nonsense. They are understandably choosing the build elsewhere and that does not help the situation. I believe if we allow them to build more units regardless of the price of those units, the supply will catch up with the demand and that will be what finally puts some downward pressure on prices of homes and rents. If they want to build $1.5 million homes, fine. Eventually there will be too many of them and the homes that should be selling for $750,000 but aren’t due to demand will go back to $750,000 where they belong.

Wild card: Interest rates. Today’s buyers are spoiled rotten by 11 years of artificially low interest rates. Traditionally a great interest rate was about 6%. These buyers have shown their disdain for interest rate upticks and in response to their disdain, rates softened a bit at the end of the year. The stock market has ceased its rapid ascent but as of this writing seems to be capitulating within an expected margin showing signs of stabilization.

Wild card: Tariffs. The market reacted predictively poorly to the tariffs. They are currently on hold. It is my hope that they are never revisited. I thought they were going to be a problem and they were. The minute they were stalled the markets are responded positively and in my mind predictively.

Wild card: Government shutdown. Day 32 and it trudges on. If this starts turning into something like the Air Traffic Controller strike, we’re going to have a problem. Some key players who are working but aren’t getting paid: Coast Guard, TSA, FBI, and Border Patrol. A lot of these folks own homes and may not have the savings to hold on. If this gets past a second month, all bets are off. I have clients who are USCG, TSA and FBI. I can’t imagine the stress they are going through right now. For everyone’s sake and the sake of our economy, I hope this ends soon.

Time keeps on slippin’ into the future

According to the AARP, 10,000 baby boomers are reaching retirement age every single day right now.  Morgan Stanley will tell you we are witnessing the largest transfer of wealth in the history of this country.  Baby Boomers control almost 2/3rd of the disposable income in this country yet, time is marching on for them.

Part of that unrelenting march of time is the inevitable aging and passing of the last of the Greatest Generation and the Baby Boomers.  That means ownership of their real estate will be changing hands and that’s where it gets tricky.

The final stat I’ll share is that few baby boomers are prepared for retirement or the inevitable.  I’m a baby boomer.  I’ve got a few years until retirement.  I’m not as prepared as I’d hoped I would be.  That being said, if I were run over by a bus this afternoon, my home is in a trust.  It’s full of stuff that shouldn’t be here, but at least once it’s empty, it can be sold by my heirs.  And that is today’s subject, emptying a home for sale.

One of my favorite articles that I didn’t write is “Sorry, No One Wants Your Parent’s Stuff“.  That is the sad truth.  This was the struggle when we liquidated my own mother’s home.  I knew no one wanted her stuff, I had to wait for the rest of the family to catch up.  And I am painfully aware that no one wants my stuff either.

Very rarely can you sell a home full of stuff.  Occasionally a developer will take it on knowing the dump fees will be a few thousand dollars and that is a term they can take off the seller’s plate.  Those homes are rarely sold on the open market and are usually sold at a deep discount.  I supposed if everyone in the family is cool with leaving a lot of money on the table that’s one way to go.

If the family wants to maximize the return on the asset, it is imperative that a strategy is put into place to empty the home and prepare it for sale.  I have developed a downsizing system to help seniors and their families work through the stuff that needs to be dealt with.  It works, I’ve utilized for my clients and have used it in my own family with great success.

The first and most important step is for the senior or the heirs to remove the important family heirlooms.  Those are the things that the senior wants to spend the rest of their life surrounded by.  Pictures, Grandma’s bible, Dad’s uniform from WWII, the letter from great great Grandpa from the Civil War front, those things must be addressed first.  If Mom is going to assisted living, that might not be where those things go.  In the case of my family, Mom went to a memory care facility.  Things come and go there pretty regularly.  They disappear and reappear, things that don’t belong to my Mother appear in her room.  Her stuff shows up in another room.  Sometimes she put them in another patients room, sometimes they took them not knowing what it was.  No family heirlooms went with her.  We made copies of old family photos and framed the copies for her.  In a situation like that, the family heirlooms need to be distributed to the family.

Once that step is complete, we move on to the things the senior needs in their next home.  Clothing, cookware and personal items.  If Mom hasn’t baked cookies in 10 years, no need taking the bakeware.

If the senior has passed, the next step is things that the family wants.  I took some things that reminded me of my father.  An old Hickory knife that he probably paid a dollar for back in 1945 when he got out of the Navy and needed to cook.  He also had a small cast iron fry pan.  My brother took that because it reminded him of Dad.  When I use that knife I think of my old man.

Once that step is complete, I promise you there is a ton of left over stuff that no one wants or needs.  That’s when the estate seller needs to come in.  We couldn’t do one because my mother lived in a condo, so that can be a consideration.  We moved everything out of my mother’s condo that was left over and put it in storage until we could get everyone together for a garage sale.  Then we had the mother of all garage sales.  It was a nightmare.  I highly don’t recommend it, but in our case we had no choice.  If you can get an estate seller to come in and do a large sale, that’s the next step.

The final step is to donate what’s left and dump the remainder.  This is the toughest step.  The family is looking at what’s left of someone’s life knowing it is worthless.  It is the hardest and most painful step of all.  It is the step that brings on the feelings of hopelessness.

We are not our stuff.  We are the love we’ve shared, the children we’ve raised, the contributions we’ve made and the lives we’ve changed.

The problem with the entire process is if the senior has passed there tends to be an attachment to their stuff.  “If I just hang on to Grandma’s <insert item here> I can keep a small part of her with me.”  That list of items grows and grows with the grief and pretty soon the family is paralyzed.   And almost every family has that one family member that won’t help but wants all of the money.  Thankfully, I don’t, but that theme has been consistent in doing this kind of work.

I have run this system for families over and over again with success.  I had a daughter that was so distraught over her mother’s passing that I had to call her every day and make sure she was out of bed and had a plan for the day.  I’ve had a daughter whose father passed unexpectedly young and as a young woman she was faced with liquidating her father’s life.  I sat on the porch with her while she talked about her father, crying ugly the whole time.  It happens.  Eight years later I still tear up when talking about my father.  I’ve helped many seniors wrap up the Bay Area chapter of their lives and move on to be closer to their grandchildren. The thing is, the system is kind and it works.

If you are faced with downsizing or liquidating a home to go to market, I can help.  I will tailor a system to you or your families needs, write you a calendar and get you through this transitional phase of life.

Valerie Crowell can be reached at 925.381.2998.

A penny for my thoughts, oh no I’ll sell them for a dollar

They’re worth so much more after I’m a goner
And maybe then you’ll hear the words I been singin’
Funny when you’re dead how people start listenin’

~The Band Perry

Last week the real estate community lost an icon.  Carole Rodoni was an economist, a real estate guru and the toughest sub five foot woman you will have ever met.  I know real estate and I’m smart, I bowed to her insight.  She was the President of Fox and Carskadon, COO of Cornish and Carey and the President of Alain Pinel Realtors.  Most Realtors were not qualified to have a conversation with this little fireball.  Whenever I asked her a question I was always mindful to not sound like this guy.

Isn’t it true….and I would be the worm.

She gave out some of the best real estate advice I’ve ever received.  She understood how the bay area worked and how the world worked.  She would start with a view of the world’s economic situation and chunk it down to the United States and then chunk it down to California and ultimately to the bay area and Contra Costa County.

I would have liked to have heard her thoughts on the tariffs.  I am deeply concerned that they are the canary in our collective coal mines.  Most go into effect starting October 1, 2018.  I’ve had business owners tell me that their cost of goods will be going up.  Spun Bicycles in Cincinnati has received notice from several providers that various bicycles are parts will be going up in cost by 25%.  I spoke to the owner of Chase Customs who told me that a roll bar that used to cost around $350 was now costing him $700.  Steel parts were already doubled in price in some situations.

Our economy is not strong enough to withstand this kind of rise in COG and I am doubtful that it can continue to grow under that pressure.

We are used to Presidents who negotiate in a certain manner.  I believe this President is a brash, bare knuckles type of negotiator and that’s what is happening right now.  He is blustering to get the Chinese to the table and the tariffs will not ultimately be in effect long, if at all.  If I am wrong, we could be in for a long cold winter.  I wish I could give Carole a penny for her thoughts on tariffs.  She will be missed.