We met the greatest couple, Zach and Julie, at our open house at 613 N Alta Vista in March of this year. 613 N Alta Vista was listed for just under 2M and it sold very quickly for 2.4M. Zach and Julie missed out on buying 613 Alta Vista but they very recently bought a different comparable house that was also listed for just under 2M and sold very quickly for 2.1M after the market shifted. When interest rates were lower we planned to list Zach and Julie’s house for 100k below market value to generate multiple offers. We modified our price (and listed higher) when the market shifted and their house sold very quickly for 35k over our asking price. Putting all the numbers together, they paid 300k less than the purchase price of 613 N Alta Vista and their sale was 40K less than we thought months ago. With buying and selling in the shifting market, they gained 260,000 over what they would have had they transacted in March. In all likelihood, their mortgage payments over the years at the higher interest rate until they can refinance when rates go lower again will amount to a lot less than 260,000. In the end, they will no doubt save money from prices going down and interest rates fluctuating.
We got an appraisal report back this week for a property we currently have in escrow and the appraised value was significantly higher than the purchase price. We never used to see that. My thought is that appraisers work with comparable properties that sold in the last six months. We’ve seen a price shift in the last six months and it makes sense that going back six months, the price would comp higher at that market given the lower interest rates that were in place back then. Again, it’s pretty clear that the additional payments the buyers will make at the higher interest rate will still be less money than the amount of money they saved by paying the adjusted sales price in the current market. The buyers buying this spectacular property end up buying a trophy property at an attractive price, albeit with a mortgage they will need to carry at a higher interest rate until the time comes to refinance. Once rates go lower, even if it takes some time, they will absolutely win.
We have one of our listings in escrow, contingent on the buyer selling their house in Sherman Oaks. The buyers can’t get a bridge loan and they can’t close on their purchase of our listing unless and until they sell their house in Sherman Oaks. I don’t remember the last time we accepted an offer on a listing contingent on the buyer selling another house. In this market, buyers who need to sell in order to buy can get where they want to go.
We’ve been talking for over six years to a lovely couple who bought their house 40 years ago and like most people, they didn’t do significant construction to it. For years they’ve been dreaming of selling their fixer house and moving into a fully remodeled beautiful house that meets their needs and doesn’t require the inconvenience, time, money, and experience of living through construction. They would also want to do a concurrent sale and purchase. The market is now moving slowly and thoughtfully enough to make this the right time to make their dream come true, as soon as we can find a house they want to buy, in this market of extremely tight inventory.
I remember distinctly a conversation I had with the sellers of 606 N Martel right in the heart of the lockdown of Covid in August 2020. I did 21 private showings of their house over a few days, by appointment, and not one immediate offer came in from those showings. The sellers were astounded that from 21 showings not a single offer was submitted. I told them then that buyers only write offers within 3-5% of the list price because if they write an offer for less, the sellers counter back with the list price anyway. I asked those sellers what they would counter if an offer came in at that time for less than the list price and they agreed that they’d counter back at list price. It was the norm for years that if a buyer wasn’t willing to pay the list price then they just didn’t write an offer.
It’s fascinating how quickly the norm shifted when interest rates went up. Now, buyers feel free to write offers for any number that suits their fancy. This week we got an offer for 1M less than an asking price. We got an offer from a buyer who wants the seller to finance their entire purchase – they put 0% down ever. Another offer wants the buyer to put down 1% of the purchase price and have the seller finance the rest (at last year’s interest rates.) We get offers at all different prices on all the different listings. It feels like people have their fishing poles out and they’re curious to cast a line and see what they can land.
The deals that are happening in our world are not happening that way. Christian just represented the buyer who bought 902 S Citrus. His buyer paid all cash 10,000 over the asking price. Our listings that are in escrow are over asking too. Buyers and sellers need to be at the same place and have a meeting of the minds in order to transact. No one on either side is yanking anyone to a place they don’t want to go. For a deal to happen, both the buyer and the seller need to arrive at a place where they agree on the present value of the home and it’s a number that both can live with and accept.
I love this market because I love working as a real estate agent. I love listing appointments and connecting with people and their needs. I love strategy, thoughtful consideration of different positions, and most of all I love coming to a meeting of the minds between different parties, working toward (and hopefully arriving at!) a mutually satisfactory resolution. What I love most of all is taking really good care of the people I have the extreme honor to represent and treating them like family. Which reminds me that I miss my kids and grandkids like crazy and I am wholeheartedly not a fan of empty nesting (with kids who live far away.) There are 35 days until Hanukkah when the kids come home and the countdown is on!
Wishing everyone an awesome week ahead!