Thursday, December 16, 2010

Humboldt County, California November Real Estate Statistics

I’m a little late getting these stats our, but the real estate market in Humboldt County, California is hanging in there during the month of November!

There are currently 568 homes on the market, which is just a hair higher than our “normal” 500- 550, and close to our recent low of 550. Fewer homes on the market, of course, supports prices and keeps them from falling. That’s good.

The bad news is that we only sold 57 homes in November in Humboldt County, a recent record low for the month. Fewer homes sold puts downward pressure on prices. Perhaps these 2 figures balance each other out?

We’ll have to wait and see, because there were 6 homes over $500,000 that sold in Humboldt County in November, one for $2.2 million! That really skewed our average sale price up to a 30 month high of $325,809!

And the median home sale price in Humboldt County jumped up to $250,000, which is right in line with the average median home sale price all year!

Overall, this report, like so many others this year, points to a bottoming out of the market. When is the market going to improve? Nobody knows, but there’s only one direction to go from the bottom; up!

Wednesday, November 10, 2010

What Are Closing Costs?

First time home buyers often ask about closing costs, and it can be very confusing, especially when they have limited funds to bring into escrow for closing, or when they are shopping multiple loan products with different costs structures. It’s important for all home buyers to remember that there are 3 different types of closing costs.

Title and escrow fees, and county (or city) transfer taxes comprise the first general category of closing costs, often know simply as escrow fees. These are fees that must be paid to sell a home; and all three items are specifically addressed in the California Real Estate Purchase Agreement. While the responsibility of paying these fees is completely negotiable, in Humboldt County, California these fees are most often split 50/50, with both the buyer and the seller each paying half.

The second general class of closing costs is prorations or prepaids, most often taxes or insurance payments. If a home is sold on Nov. 30, but the seller has paid his taxes through the end of the year, then the buyer must pay the seller back for the December taxes he has already paid; these are paid back on a prorated basis. Similarly, lenders often require that a new home owners insurance policy be paid up a year in advance. This is prepaid at the closing of escrow. In Humboldt County, these are typically thought of as buyers expenses, as they go to service the home during the period after the buyer has taken ownership.

Similarly, the third class of closing costs is the buyers’ loan fees. Each lender will charge a variety of up-front loan costs that range from small administrative fees up to much larger commissions or origination fees to pay the loan officer. These are fees a buyer pays for the privilege of getting a loan; a cash buyer would not pay any of these because he’s not getting a loan. Therefore, in Humboldt County, they are most often seen as a buyers’ expense.

Prorations and loan fees are not specifically addressed in the California Real Estate Purchase agreement, but they, as well as title and escrow fees, can be negotiated in the contract. The buyer can pay them all, or the seller can give a credit to pay them at the close of escrow, or they can be split in any way agreeable to both parties. It is important for a buyer to know what the different closing costs are and how much they will cost so that they can have confidence that they can meet all of the terms of the agreement.

If you’re not sure whether you have enough money saved up to buy your dream home, give me a call at (707) 499-7111, or email me at, and we can discuss options.

Thursday, November 4, 2010

October 2010 Humboldt County Real Estate Market Statistics

What do our October 2010 Humboldt County, California real estate statistics look like?  We seem to have started a downward trend in prices again in Humboldt County, California. The number of active homes on the market, while not a huge number, is creeping up in relationship to previous years. We now have 677 homes active on the market; that’s much closer to 2008 levels than 2009 levels. And more homes on the market will mean downward pressure on prices.

Especially when the number of homes sold is down as well. At 72 homes sold, we’re just a hair below 2008 levels, but well below the 88 homes sold in 2009. While not by much, this is the lowest number of homes sold in the month of October in recent memory. This, too, will put downward pressure on prices.

The average home sales price for the month of October was $256,572; not the lowest of the year, but the lowest for any October in a long time. It also continues the downward trend started from the most recent peak in July.

And the median home sales price in Humboldt County was $236,375, which does represent a new low for the year and for recent history.

It seems that the large number of short sales and bank owned properties, or REO’s, in the market is causing our downward trends. 26% of the homes sold in October were either short sales or bank-owned properties; that’s up from 18% for all of 2009. And not only do short sales and bank-owned properties sell for less, they compete with regular sellers, thereby putting downward pressure on all real estate prices. While the rest of the country has been dealing with this level, and even higher levels, of bank controlled sales, this is a first for Humboldt County. Is there a bright spot in the clouds? Yes: it is a great time to BUY real estate!

What questions do you have about short sales or bank-owned properties? Give me a call at (707) 499-7111, or email me at

Wednesday, October 20, 2010

A Lesson for Victorian Homes from the Eureka, CA Earthquake

Many of you will recall that Eureka, California made national news on January 10, 2010 when a 6.5 earthquake rocked the city. We counted our own blessings, and were promptly forgotten by the rest of the world, when 2 days later when a 7.0 earthquake destroyed the country of Haiti. We in Eureka were truly fortunate, as there were no injuries, and relatively little property damage. My family lives in a 1902 Queen Anne Victorian home in the Henderson Center neighborhood of Eureka, and we sustained some property damage as our home rolled with the ground – lots of broken glasses, some dumped bookshelves, and our spice rack got de-alphabetized. (tear, sniffle)

Like all Californians, though, I know the “big one” is coming, so I immediately vowed to put a concrete perimeter foundation under my Victorian as soon as I could afford it. When a friend asked me how we had fared during the earthquake, I mentioned my plans. He gravely told me that was a bad idea, as the rigidity of the concrete perimeter would transfer more of the force of the earthquake to my home, thereby causing more structural damage; but the original post and pier foundation would allow the home to roll with the ground wave, and minimize the structural damage. “Why in the world do so many other updated Victorian homes have concrete perimeter foundations?” I thought. Hmm. What to do?

A couple of months ago I was visiting with a local civil engineer, Neale Penfold Sr., about the home of a client, and it was evident to me that he was in the talking mood after a long day. I decided to make it productive talk, so I asked his opinion; “Which is the better foundation for a Victorian home to survive the next big Eureka quake, a post and pier foundation, or a concrete perimeter?” He said, “Neither.” Mr. Penfold confirmed that post and piers allowed a home to flex, and that a concrete perimeter did indeed transfer more shock to the home.

He went on to explain a 3rd way. He said that lots of folks in the Eureka area have had lots of luck with a reinforced, braced post and pier system, whereby the posts are set on structurally enhanced concrete footings much bigger than the originals. The house is then attached to the posts, and the posts to the piers. Finally, the piers are cross-braced pretty extensively to one another. He said that this combination had the flexibility of the post and pier foundation, and the strength of the concrete perimeter foundation, and with the added bonus of being cheaper to boot!

Any other California Victorian owners out there? What experiences have you had with your home and earthquakes? Send them to me at!

Friday, October 8, 2010

Humboldt County, California Real Estate Statistics, September, 2010

What is the state of the real estate market in Humboldt County, Califorina? Our "Active" homes, while starting out the year lower than last year, crossed over 2009 in August, and have been tracking slightly higher than last year since. While this certainly isn't bad news, it does neutralize one of the good pieces of news we had through the first half of the year. If real estate inventory is down, it would certainly seem to put upward pressure (or neutralize any downward pressure) on home prices. Moving from under to over 2009 just removes a little reason we have to be optimistic.

Similarly, our monthly "Sold Homes" numbers were running higher than last year until July. They dipped under 2009, and started tracking pretty closely with 2 of the 3 most recent years. Again, this isn't bad news in itself, but it does take away one of the main real estate market factors for keeping home prices flat or rebounding. It seems to indicate that the same ooze south we've been seeing for the past 2 years is not finished.

Sure enough, while it's not a lot, the average home sales price insists on tracking just a bit below last year. Indeed, our real estate sales prices do seem to be going ever so gradually lower.

Our median home sales price is a little more decisively lower. It has been below our psychological $250,000 floor for over half of the months so far this year. It is pretty clearly indicating that Humboldt County home prices, while not falling dramatically by any means, are in a pattern of gradually lowering.

Does any of this worry me? No. One day in the future, you will be sitting around with your friends, and someone will say, "Dang, I wish I would've bought real estate in Humboldt County back in ____." And there will be a date in that blank. It could be September, '10. It could be October, '10. It could be January '11. It could be May of 2013. We don't know, but I am relatively sure that, with the elections coming up in a month, that both the Federal and California state governments will be making some changes that will improve our economic situation, and with that improvement will come a bottom and a turn up for the real estate market.

Friday, August 6, 2010

Getting Ready to Sell Your Home

So you're going to sell your home and you need to get ready. What do you do? The first thing is to call me ((707) 499-7111) so we can sit down together, evaluate the value of your home and your goals in selling, and then plan a strategy to accomplish those goals. After that's done, you can start on this list.

1) Go through your home room by room, inside and out, with 2 pads of paper. On one pad write everything you love about your home. Start with the physical features, but then go beyond them. How does the morning sun come through that window? Where do you put your Christmas tree? How does it feel to have your family over for Easter dinner? What are the neat things about living in your neighborhood? Think about the highlights of your home in each season of the year. I will use these items in preparing my marketing materials so we can hook those buyers' hearts and minds and give your home a competitive advantage over other listings.

2) On the second pad of paper, write down every problem or repair you've made on the home. You'll need this list for your disclosures. Under California law, a seller must tell the buyer about every known problem with the home, even the ones that have been repaired. And there's nothing worse than being dragged into court after the sale to confront a lawsuit over non-disclosure of some item. So disclose until it hurts. If you think you might, maybe, just possibly need to mention something, do it.

3) Start packing. You ARE selling your house, so you WILL be moving. Start now. Pack up personal items first - pictures, trophies, all those quaint figurines that collect on our end tables. Next, move out all of the stuff that's not going with you. You can yard sell it, give it away, or take it to the dump - just get it out. Then, pack out those extra appliances and pieces of furniture that are cluttering up your home. De-cluttering can be the biggest money-maker you do in getting ready to sell your home. And don't put it all in the garage! Rent a mini-storage unit if you must. It will be worth it.

4) Clean, clean, clean! This is the 2nd biggest money maker you'll do. Clean the carpets, the walls, the ceilings, the top of all the light fixtures, behind the fridge and stove, the windows - everything! Hire a professional if you need to. Not only will cleaning make your house look crisper, it will smell better, and feel better. Smells can be one of the biggest turn-off's to potential buyers, and they will touch things you never touch - window frames, door trim, bath-tub caulking. So get it clean so the buyers can focus on your positives and not get distracted.

5) Lastly, after consulting with me and our sales plan, make any repairs or improvements that will add to your bottom line. Some repairs will pay dividends; others will cost more than they bring in, so we must be careful. Full kitchen and bathroom remodels almost never pay for themselves. But fresh paint, in a neutral color, almost always turns a profit. Updating the landscaping can pay big dividends. Even flooring can be done relatively inexpensively. But call or e-mail me first. (707) 499-7111,

Getting the house ready to sell can easily make a 10% difference on the purchase price. For more tips, drop by the Sellers page of my website or become a fan of my real estate Facebook page. Then, get started early, be consistent, and follow through. You'll be glad you did.

Tuesday, August 3, 2010

July 2010 Humboldt County, CA Market Statistics

The statistics show that July was a good news/bad news month for the Humboldt County, CA real estate market. First the bad news: inventory is up and sales are down.

As with the rest of the country, the expiration of the federal home buyers’ tax credits has created a lull in the market, with many people that would have bought in July deciding to buy in April and May to take advantage of the tax credit. A month later, there are fewer buyers, leading to fewer sold homes, and more homes left on the market.

The good news is that it didn’t affect prices much at all. The average home sales price actually rebounded from June, up to $287,939, the highest in the last 12 months.

The median sales price also rebounded, but to a more modest $246,000.

What will the future hold? There is still a great selection of homes on the market, and interest rates are at historic lows. One day we will all say, “I wish I would have bought real estate in Humboldt County back in _______!” What will be the date in that blank? It could be today! If you like the idea of buying at low prices with low interest rates, give me a call at (707) 499-7111, or search the available properties on my website.

Friday, July 16, 2010

Should I Use a Broker, a Realtor, or Someone Else?

Who should you use to represent you in a real estate transaction? An agent? A broker? A Realtor? Here's a brief explanation of real estate agency.

An agent is someone who acts on behalf of another person. A real estate agent acts on behalf of his client to buy or sell real estate. In California, the "agent" is the agency for which the individual "agent" works. I am an agent, but I work for the agency, Ming Tree GMAC Real Estate. Ming Tree GMAC is the agent of record.

Per California law, each agency must be run by a Broker of Record. This is a person who has been licensed as a real estate broker by the state, and who takes responsibility for all of the real estate activities that occur under the license of the agency, or brokerage. A Broker of Record might choose to hire no one, and to operate as an independent agency. In that case, he is the broker of record, and the salesperson; he must keep up with the latest court cases and laws about real estate, the latest technology, the latest marketing strategies - he is a one man shop! He does it all.

Other brokers of record might choose to hire other real estate agents to work as sales people within their agency. These sales people can have a brokers' license (often they are called broker associates) or a salesperson's license. In this type of agency, the broker of record concentrates on the legal issues, institutional marketing, and support systems of the agency; the salespeople focus on meeting with clients and selling real estate. While a brokers' license does give a certain amount of additional credibility to a salesperson, it doesn't necessarily make them a better agent. One of the top agents in our office only recently got his brokers license, after he had a successful 15 year career as one of the top agents in the county!

Brokers of record, broker sales people, and licensed sales people are Realtors if they are members of their local Realtor association, like the Humboldt Association of Realtors, their state association (California Association of Realtors) and the National Association of Realtors. These associations are trade associations, and all of their members are designated as Realtors.

I am a real estate sales person licensed to sell real estate throughout the state of California. The agency for whom I work, Ming Tree GMAC Real Estate, has approximately 30 sales agent, an office manager, a transaction coordinator, an agent education coordinator, and a marketing coordinator. All of this help means that I can focus on my clients and meeting their real estate needs. Call me at (707) 499-7111, or drop by my website so I can help you with your real estate needs.

Wednesday, July 14, 2010

How Much Is My Home Worth?

Clients always ask me, “How much is my home worth?” The first step is remembering that neither you as the seller, nor I as the real estate agent, have the power to make your home sell for a certain price. It is the market that determines the fair market value of your home. What is the market? It is the price at which 2 buyers are willing to argue over your home. How can you ascertain what that price will be?

The most general way is to look at the asking prices of homes that are similar to yours. Go to the search page at, type in the general characteristics of your home, including the neighborhood, and discount the prices by 10%. This will give you a pretty good rough estimate of the value of your home.

As you get closer to selling your home, give me a call (707.499.7111) and I will prepare a CMA, or Competitive Market Analysis. In a CMA I gather the most recent sold homes, pending sales, and active homes that compare closely to your home in regard to house specifications and selling features. I make adjustments, and am able to determine a price range where your home is likely to sell. In general, sold homes will tell you what you are likely to sell your home for, while homes actively on the market tell you what your home will not sell for.

I provide CMA’s for my clients free of charge, so if you are wondering what your home is worth, give me a call at (707) 499-7111, email me at, or drop on by the website!

Tuesday, July 6, 2010

June 2010 Humboldt County Real Estate Market Statistics

The numbers are in, and our real estate market statistics for June 2010 here in Humboldt County, California are hanging in there. Our "Active Homes," while rising, are still staying below the levels of the last couple of years. “Normal” for this time of year is up to around 650; we’re above that at 709.

Our level of "Sold Homes," 89, is as high as it's been in 2 years. The combination of lower inventory of homes on the market, and the higher volume of sales should support prices, keeping them from going lower, and perhaps even encouraging a modest price increase.

But not this month. Our "Average Sales Price" is down, considerably lower than any recent years, but at $261,265 it's still pretty close to the $275,000 to $300,000 range we've seen for the last 18 months. The trend line is erratic, and only time will tell if this is a downward “bounce” or a trend.

The "Median Sales Price" is down as well. I suspect these averages are down because of a higher rate of "starter home" sales caused by the government home buyer credits than any fundamental shift in the market. Only time will tell.

Friday, June 25, 2010

As a Buyer, Can’t I Save Money by Approaching the Seller Directly?

Can a home buyer save money by approaching a home seller directly, without a real estate agent? A first time home buyer looking for a starter home in Arcata, CA called the other day, and we had a great discussion about first time home-buying. “Why would I want to use a buyers’ agent,” he asked, “when I can go to the seller, offer to save him the commission for the buyer’s agent, and get a better deal?” I appreciate this client’s honesty and directness! Many buyers and sellers of real estate don’t really understand how the process works!

Typically, when a home owner wants to sell his home, he calls a real estate agent and signs an exclusive right-to-sell listing contract, in which he agrees to pay the agent a commission, 6%, for example, if he successfully sells his home. That real estate agent then enters the home into the local Realtor multiple listing service, or MLS, with on offer to split that commission.

Typically, in Humboldt County, California, that offer is a 50/50 split; both the seller’s and buyer’s real estate agents would get 3% each. Additionally, under California law, a real estate agent can’t split his commission with someone who is not also a licensed real estate agent. So the listing agent will get a 6% commission, no matter who the home is sold to, and he will either split that commission with another agent, or keep it all to himself; he can’t pass it on to a buyer who is not a licensed agent.

So, if the seller is not able to pass any commission “savings” on to the buyer, why would a buyer want to try to represent himself? The seller has agreed to pay a buyer’s agent through his listing agreement; why would the buyer want to turn down professional representation by a Realtor that’s already paid for?

My first-time home buyer has hired me, and we are looking for their first home as we speak!

Wednesday, June 16, 2010

Humboldt County Real Estate Market Statistics for May, 2010

Our Humboldt County, California residential real estate market shows continuing signs of stabilizing and recovery!

Our active homes continued our seasonal rise to 682, above our “normal” market of 650, but well below the 720-740 range of the past 2 years.

The number of sold homes in May of 2010 also increased to 81, well above the figures from the last 2 years, 69 & 65 respectively. 81 is below our “normal” range here in Humboldt County, which is around 100.

This lower number of active homes on the market and higher number of sold homes should encourage stability in the pricing of Humboldt County homes. Sure enough, the average sales price of a home was $279,724, right in the $275K - $300K range we’ve seen over the last 18 months. Our median home sales price was $255,000, well within the $250K - $275K range we’ve seen over the same time frame.

The next rock we need to navigate is the ending of the Federal home buyers’ tax credit. With these solid numbers heading in the summer selling season, hopefully we’ll see a smooth transition back to a stable, independently supported real estate market here in Humboldt County, California!

Monday, May 24, 2010

Marijuana Co-ops and Distribution Centers in Eureka, CA?

I’m on the Planning Commission for the city of Eureka, CA, and on Tuesday, June 1 from 2:00 – 4:00 we are looking at a city planning ordinance to deal with medical marijuana. The ordinance has 2 parts. Part 1 is about individuals with a 215 card growing their own marijuana in their own homes; it’s pretty straight forward. State law and subsequent court cases say we have to allow them to grow their own pot, so the ordinance sets up guidelines about how that can be done. I encourage you to read the text of Prop. 215.

The 2nd part of the ordinance, though, is more controversial. There are those 215 permit holders who aren’t able to grow their own marijuana (health impediments or lack of permission from landlords, for example) so we are discussing whether the City of Eureka should allow for 215 Cooperatives to grow marijuana on larger scales, and whether they should be allowed to set up distribution centers for their members.

Theoretically, the 215 card holders would set up a cooperative that would grow the marijuana in an industrial building somewhere, for example, and then set up a distribution center in some place like an office complex for their members to pick up their marijuana. The questions are 1) Does the City want marijuana cooperatives and distribution centers at all, 2) Does the City want to allow a limited number of them, or 3) Does the City want to allow an unlimited number of them.

The first time this came before us we had a lot of “unlimited” proponents, folks who have 215 cards, and some health professionals that promote the use of medicinal marijuana. We didn’t have any of the following:

1) Health professionals that don’t support medical marijuana
2) Community members concerned about the sociological impact of marijuana coops and distribution centers
3) Law enforcement folks concerned about crime associated with marijuana coops and distribution centers
4) Youth/Education folks concerned about access for young people

So if you or someone you know falls into one of these categories, either pass this blog's link on to them or send me their name and contact info so I can contact them directly.

Also, if you have strong feelings on this issue, show up at the City Council Chambers in City Hall on Tuesday, June 1 at 2:00 to voice your concerns.

Monday, March 15, 2010

Is Print Advertising Dying?

One of the hot questions in real estate is this: “Is print advertising dying?” While many think so, I don’t. What is dying is “traditional” advertising. What’s the difference?

Traditional advertising is more of a mindset rather than a medium. Take the standard glossy real estate magazine. It will have 48 pages of ads from different Realtors, each page filled with a small photo of a home and 20 words or so of text. The debate rages about whether addresses should be added or withheld in order to get the buyer prospect to call the Realtor. Can a small photo and 20 words of text, address or not, really help to sell a house?

Similarly, many agents use a local real estate cable channel to advertise their listings. Ours uses 3 photos and a 21 second voiceover. Certainly 3 photos are better than 1, but could you adequately describe your home in those confines?

I practice “Non-Traditional Traditional Marketing,” a concept I’ve developed to use traditional media in a non-traditional way. With the advent of the internet, I can use a traditional newspaper ad, a Home Magazine ad, or a real estate cable ad to direct potential buyers to a custom website of your home, where we have all the time and space and photos and floor plans and virtual tours and voice-overs…anything we want to tell buyers about your home, we can tell them! And all beginning with one photo, a couple of selling features, and a web address in a print or broadcast advertisement. Heck, I can put more information about your home, via a web site address, on the back of a business card than a “traditional” Realtor can put in a full page magazine ad!

So the question is, “What kind of mindset do you have?” Are you happy with “traditional” real estate marketing, or do you and your home deserve cutting edge, “Extreme Marketing?” I’d love to visit with you and share more of the difference.

Wednesday, March 10, 2010

Do a Floor Plan; Make Your Client Say “Wow”!

One of the first questions buyers often ask after seeing photos of a house is, “What’s the floor plan like?” A custom 3-D Floor Plan answers that question, and makes buyers say “Wow!”

A 3-D Floor Plan enables a buyer to “move into” your home; they can assign rooms, move their furniture in, and envision a lifestyle – family dinners, birthday parties, barbeques with friends, etc. It lets them see how the individual rooms fit together to form an organic “whole.” And it provides a great outline on our web sites and our flyers…

Every listing I serve has a flyer box out front filled with dual-sided flyers printed on glossy, extra-heavy paper, and featuring full-color photos, a floor plan of the home on the back, and key selling features. The best part of the flyer, though, is the web address to the property’s custom website, where potential buyers can get every last view and detail of your home. Many buyers have started viewing my websites on their internet-connected smart phones from inside their cars in front of the home after getting the website off a flyer from the flyer box.

A 3-D Floor Plan serves as a great tour guide on my custom property websites. When buyers hit the site, they see the layout of your home, and as they click on each room of the floor plan, they are presented with a slide show displaying the room from every angle, and focusing on the special features of the room. At the same time an audio track shares the special features and unique charms of the room. (For an example, go to

As buyers view all of the photos, the virtual tours, and the floor plan, and as they hear of the special features of your home on the audio track, their hearts and minds are engaged, and they will begin to see the value in your home that you see. Then they will be more likely to pay the price you want for your home.

Wednesday, March 3, 2010

Update on Humboldt County Residential Sales

I just shared statistics for sold residential real estate in Humboldt County, California, and it seems that prices, both average and median, are plummeting. Is this really the case, or are there some anomalies or structural changes affecting purchase price?

A while back I explained the different layers of homes available in the Humboldt County market, and how each is responding to the different economic conditions in the marketplace. (see You might recall that I divided the segment into 5 key layers.

          2009 Humboldt County Housing Market Segments
• Fixers –                 up to $225,000           24% of the market
• Starters -     $225,000 - $275,000           31.3% of the market
• Mid-range - $275,000 - $400,000           29.7% of the market
• Executive -   $400,000 - $500,000             8.2% of the market
• Luxury -       $500,000 and up                    6.8 % of the market

As I explored the details of our Humboldt County market for January and February 2010, I discovered the following details:

Jan-Feb, 2010 Humboldt County Housing Market Segments
• Fixers –                    up to $225,000           41% of the market
• Starters -        $225,000 - $275,000            15.2% of the market
• Mid-range -    $275,000 - $400,000            32.4% of the market
• Executive -      $400,000 - $500,000              4.8% of the market
• Luxury -          $500,000 and up                     6.7 % of the market

The huge movement from the “Starter” segment of the market into the “Fixer” segment, as well as the significant drop in “Executive” homes sold, are the best explanations for the significant change in average and median home sale prices in the first 2 months of 2010. So, rather than seeing this new data as the beginnings of a new slide in real estate prices, I’m thinking it’s an anomaly in the market, one that will be corrected over the coming months. It sure does emphasize the opportunity for killer deals in the bottom segments of our market, though!

Monday, March 1, 2010

You Trust Your Realtor, but for What?

When I visit with people about selling real estate, they often tell me that the number one factor in working with their Realtor is trust; they’ve had a relationship with their Realtor for many years, and they trust him. I always want to ask, “What are you trusting him to do?”

Most people mean that they trust their Realtor to deal with them honestly and to look out for their best interests. And I agree! Integrity is the number one criteria I recommend that clients look for as they search for a new agent. Without it there is no basis for any business relationship. Clients must have confidence that their agent is putting their best interest ahead of the agent’s own desire for a paycheck.

But, I have never met a Realtor that said up front, “I’m not trustworthy, and I will put my own paycheck ahead of your best interest any day!” Every agent sees themselves as having integrity, or at least wants you to see them that way. You can get a glimpse into the true trustworthiness of an agent by looking at other things they do.

Can you trust your agent to go above and beyond the call of duty in marketing your property? Almost any agent will take a half dozen photos for the MLS and put a sign in the yard. Will he put 30 or 40 photos? From the inside and outside of your home? Will he put a virtual tour together, so buyers can walk through your home at their convenience? Will he put a flyer box on the property, filled with custom flyers to show the selling features of your home? Will he produce a 3-D floor plan for the back of the flyers, so buyers can see the layout of your home? Will he make a custom website for your home? And will he advertise it on the internet, on cable, and in local print publications? Will he hold an open house for your home? Can you trust that your agent is giving your home a competitive advantage next to other homes for sale on the market? If he’s willing to work this hard to service your listing, you can probably trust him to look out for your financial best interests, too.  (For samples of some of the items above, go to

Can you trust your agent to give you a weekly update on the sale of your home? One of the most common complaints I hear from clients about Realtors is that they don’t ever tell the client what’s going on. Can you trust your agent to call with showing feedback? Can you trust him to e-mail you new, competitive listings that come on the market? Can you trust him to update your competitive market analysis with the most recent sold comparables in the MLS? And when an offer comes in, can you trust your agent to tell you how low of a price is too low, rather than trying to sell you an offer just because it’s going to close quickly?

Trust in an agent is of supreme importance, but what are you trusting them for? Get a written guarantee for the concrete, specific things he is going to do for you, and trust him for those, as well as his integrity. If you can’t trust him to do the concrete, specific things required to sell your home, can you really trust him to look out for your best interests over their own paycheck?

Wednesday, February 24, 2010

Virtual Tours Help Sell Homes

Wow!” I regularly hear clients say that when I show them a virtual tour of one of my listings, yet I’m surprised that so few Realtors use them. They’re relatively cheap, easy to produce, provide tons of info to potential buyers, and wow potential sellers. And the bottom line – they help sell a house.
Through advanced computer software, I can take a series of photos and stitch them together to make a panorama of a home, up to 360°. I can link these panoramas together using hot spots to enable buyers to walk through a home on their computers any time of the day or night.

Normally I will make a panorama of the front of a home, and put a hot spot on the front door. That hot spot will be linked to another panorama taken just inside the front door, with hot spots on it linked to each of the doorways seen from there. Buyers can click on the hot spot to the living room and see a panorama. Then they can click the hot spot in the opposite corner, walk across the living room, and look back across to where they were. They can click on the hotspot that leads through the door to the dining room, or they can go back through the front door back outside the home. In this manner, buyers can virtually walk through an entire house on their own computer, from the comfort of their own homes any time, day or night, from anywhere in the world!  (See here for an example:

I have taken virtual tours of neighborhoods so that prospective buyers can “walk through” the neighborhood to see if it suits their tastes. With large acreages, I will make virtual tours from each of the property corners or other property landmarks so potential buyers can “walk the property.” I can even take vertical tours of features like stone mantles, vaulted ceilings, or redwood trees in the yard.  (See here for an example:

The primary benefit of virtual tours is that potential buyers get a very clear view of the look and layout of a home any time and from anywhere they want. Secondarily, I have the ability to “show” a home without my sellers having to spend hours cleaning it and getting it ready to show. The actual showings we receive are from people that have already walked through a home virtually, have liked what they have seen, and are ready to see if it looks as good in person as it does on the computer. I’ve actually spoken to one client who found his home through web searches, and didn’t look at any listings that didn’t have virtual tours. So when you decide to list your home, make sure you demand virtual tours from your agent. Your buyers will love you for it.

Thursday, February 18, 2010

Humboldt County’s Best Chinese Food Restaurant

One of the things I love about working with buyers from outside of Humboldt County is introducing them to this spectacular place. There is so much to see and do and experience…for example, tonight Janine and I had dinner at our favorite Chinese food restaurant, Hunan Plaza in Arcata. There are a plethora of fabulous restaurants in Humboldt County, lots of locally owned, personally managed places, but we go out of our way to drive from our home in Eureka into Arcata to each Chinese food at Hunan Plaza.

Part of it is the atmosphere. Thick clay tiles, massive, open beams in the ceiling, and lots of wood trim remind me of traditional country Chinese architecture. Heavy wood tables with simple wood chairs hint at the simple (but good) Chinese food. No frills here; blue-collar Chinese! And lots of traditional Chinese art: a large Buddha greets you at the entrance; golden wooden relief paintings on the wall remind you of Chinese history and nature. And more festive decorations change with the seasons.

But the food is what we go to a restaurant for, and this food is great. The hot-spicy soup is the best in the county. The egg-flower soup is our kids’ favorite. Spicy kung-pao chicken is one of our favorites, with bold dark flavors dripping over the chicken and carrots and other veggies. The kids (and I) love the sweet & sour chicken, with lots of chicken in the breading. Pork fried rice - not too wet, not too dry – has a great balance of flavors as well.

Ching always takes good care of us, too. She brings the tea before we even ask, and the soup always surprises me, it’s out so fast. Our dear friend Kirby keeps our water glasses full and updates us on her family. Then the dishes are cleared and big, heaping plates of steaming food arrive. Almond chicken is not too sweet; beef broccoli is tangy and tender. Oh it’s all so good!

So if you’ve just moved to Humboldt County, or are just passing through, drop by and see Ching at Hunan Plaza in Arcata. Bring a big appetite, and enjoy the balanced flavors, pleasant service and peaceful atmosphere.

Thursday, February 11, 2010

Short Sales and Foreclosures are All the Rage...

but are they a major component of the real estate market here in Humboldt County, CA?

Currently (2/11/10) in Humboldt County there are …

• 517 total homes on the market

• 16 active REO (or bank-owned) homes on the market (3.1%)

• 47 active short sale listings on the market (9.1%)

In the past month (1/11/10 – 2/11/10) there have been…

• 54 total homes sold

• 9 REO properties sold (or 16.7%)

• 2 short sale properties sold (3.7%)

So together, short sales and REO's account for about 12% of the active homes on the market, and about 20% of the sold homes. Other communities in California are reporting 50% of the homes sold as being REO's, so while it's certainly a significant part of our market here, it's not the major component it is in other areas.

Friday, February 5, 2010

Starter Homes, Fixers…What’s in a Name?

While I am a full service Realtor here in Humboldt County, California, I specialize in listing luxury homes. I sell mobiles, starter homes, fixer homes, apartments, businesses, commercial space, raw land – you name it. But my passion is marketing executive and luxury homes on the internet. And while all of this stuff is easy to say, what exactly does it mean? What is the difference between a starter home and a fixer home? And why are starter homes so hard to find, while luxury homes sit stagnant on the MLS?

The first step is to define our terms. Single family residential real estate can be divided into 5 basic groups: fixers, starters, mid-range homes, executive homes, and luxury homes. In a perfect world, mid-range homes would occupy the middle 40% of the price curve. On the down-money side, starters would occupy the 20% below mid-range homes, while executive homes would occupy the 20% above. Fixers would get the lowest 10%, while luxury homes would get the highest 10%. Of course, the world isn’t perfect, and to create arbitrary lines at exact percentile points is not very informative. It doesn’t really help answer why starter homes in Eureka are so hard to find, while luxury homes in Trinidad are everywhere.

For example, in 2004 in Humboldt County, there were 1531 homes sold. Within the cheapest 115 of them, up to a price of about $160,000, the majority were in less than comfortable condition. They needed work. They wouldn’t have qualified for FHA financing. They were fixers. These homes occupied the lowest 7.5% of the market instead of my ideal 10%, but pretty close.

Somewhere around $200,000 and house # 380 the size of a typical home started bumping up against 1500 square feet. Three bedrooms and two baths and 2 car garages became very common. If this is the line between our starter homes and our mid-range homes, that would put us at the 25th percentile, a little shy of the 30% in my perfect world, but pretty close.

At $300,000 and house # 1045 the typical size started settling around 2000+ square feet, and custom features started appearing, such as granite counters and larger lots. This would put us at 68% of the homes sold that year, really close to the 70% we would have predicted for executive homes with my model.

At $400,000 and house #1328 exclusive features like ocean views, large and private lots, exclusive addresses, and square footage in excess of 2300 began to slowly dominate the listings. This would put our luxury home market beginning at the 87th percentile.

To summarize, Humboldt County’s 2004 real estate market could be described like this:

2004 Humboldt County Housing Market Segments

• Fixers – up to $160,000                     7.5% of the market
• Starters - $160,000 - $200,000       17.5% of the market
• Mid-range - $200,000 - $300,000   43% of the market
• Executive - $300,000 - $400,000     19% of the market
• Luxury - $400,000 and up                 13% of the market

When you remember that 2004 was 3 years into a real estate boom where prices were going higher and higher, in many cases doubling, it makes sense that homes would be moving from one category into another simply based on increased sales price, not increased quality of the home. Prices went up in 2005 as well. There were 1,432 homes sold in 2005, broken down like this:

2005 Humboldt County Housing Market Segments?

• Fixers – up to $160,000                     2.8% of the market
• Starters - $160,000 - $200,000          3.9% of the market
• Mid-range - $200,000 - $300,000    38.3% of the market
• Executive - $300,000 - $400,000      30.8% of the market
• Luxury - $400,000 and up                 24.2% of the market

Many of the homes selling in the starter home range were clearly fixers. Many of the homes with mid-range amenities were selling for executive prices. There were more “luxury” homes sold than fixers or starters combined. With rising home prices skewing our market segments out of proportion, an adjustment is necessary.

Adjusted 2005 Humboldt County Housing Market Segments

• Fixers – up to $225,000                   14.4% of the market
• Starters - $225,000 - $275,000        20.1% of the market
• Mid-range - $275,000 - $400,000    41.3% of the market
• Executive - $400,000 - $500,000     15.4% of the market
• Luxury - $500,000 and up                   8.8% of the market

Moving our price brackets up a bit restores our percentage breakdown to something resembling our model, and brings home features more into line with our segment criteria. And it gives our market some room to move up. In 2006, our break down looked like this:

2006 Humboldt County Housing Market Segments

• Fixers – up to $225,000                    12.2% of the market
• Starters - $225,000 - $275,000        19.4% of the market
• Mid-range - $275,000 - $400,000    44.6% of the market
• Executive - $400,000 - $500,000      10.2% of the market
• Luxury - $500,000 and up                  13.6% of the market

Pretty good breakdown, with the anomaly of having more luxury homes sold than executive homes. Let’s look at 2007 and see if our breakdown continues to work.

2007 Humboldt County Housing Market Segments

• Fixers – up to $225,000                    14.8% of the market
• Starters - $225,000 - $275,000        17.2% of the market
• Mid-range - $275,000 - $400,000    43% of the market
• Executive - $400,000 - $500,000      10.8% of the market
• Luxury - $500,000 and up                 14.2% of the market

In 2008, the market decline began in earnest. We went from 1200 homes sold in 2007 to 876 homes sold in 2008. How did that affect our prices within various market segments?

2008 Humboldt County Housing Market Segments

• Fixers – up to $225,000                     22.8% of the market
• Starters - $225,000 - $275,000         18.9% of the market
• Mid-range - $275,000 - $400,000     38.6% of the market
• Executive - $400,000 - $500,000       10.7% of the market
• Luxury - $500,000 and up                    9% of the market

Our fixer homes increased as a percentage of the market, but not because of price deflation or blurring of segment features. Rather, the number of fixer homes sold remained stable relative to the number of homes sold in the market overall. Similarly, both starter home sales, mid-range home sales, and executive home sales remained relatively stable. But luxury home sales fell 37%, from 14.2% to 9% of the total market.

2009 Humboldt County Housing Market Segments

• Fixers – up to $225,000                     24% of the market
• Starters - $225,000 - $275,000         31.3% of the market
• Mid-range - $275,000 - $400,000     29.7% of the market
• Executive - $400,000 - $500,000         8.2% of the market
• Luxury - $500,000 and up                    6.8 % of the market

In 2009, luxury homes and executive homes continued their decline in sales volume, as did mid-range homes. Starter homes ballooned in number, and fixers increased even more. With such a large deviation from our model market, one might ask, “Is it time to adjust our segment parameters?” Perhaps. One must be careful, though. We could arbitrarily adjust every single year so that the market matched our model perfectly, but then it would be less helpful in looking at the dynamics within the market. Are huge variations from our model justified by other, more objective data?

I would argue that in 2009 our range of fixers should stay the same. Up to the $225,000 mark, most of the homes are physically in need of some type of serious repair, making it difficult to get pest clearances and to qualify for FHA loans. The fact that they are such a large percentage of sold homes has more to do with underperformance in the other segments of the market than anything else.

If we reduced the upper threshold of starter homes to $250,000, that would bring that segment’s share of the market down to 19.2%, and the midrange segment’s share up to 41.8%. This corresponds to our model market almost exactly, and fits with the physical qualities of the homes like lot size and square footage and bed & baths. It does make for an exceedingly skinny starter home price segment in the market, though. It’s amazing that such a large share of the market can sell in such a narrow price range.

• Starters - $225,000 - $250,000         19.2% of the market
• Mid-range - $250,000 - $400,000      41.8% of the market

The telling numbers, though, are how the top end of the market has been hammered over the past 2 years. While they account for 32% of the active homes on the market, they account for only 15% of the sold homes. And while starters comprise 19.2% of the sold homes, they make up only 8.2% of the active homes on the MLS.

Jan 2010 Active Humboldt County Housing Market Segments

• Fixers – up to $225,000                     19.2% of the market
• Starters - $225,000 - $250,000           8.2 % of the market
• Mid-range - $250,000 - $400,000     40.6 % of the market
• Executive - $400,000 - $500,000       13.7 % of the market
• Luxury - $500,000 and up                   18.3% of the market

In short, the excess demand for fixers and starters keep those prices stable and those segments of the market active. The relatively balanced supply and demand for mid-range homes is a positive environment for both buyers and sellers, providing choices and options for buyers, and giving sellers confidence that their homes will indeed sell for predictable prices. The lack of demand for executive and luxury homes, coupled with the excess supply, makes it very difficult for these sellers to sell their homes at what they perceive to be fair market prices.