Selling a House in a Down Market

So we know buyers can get some great deals right now, if they only take advantage of it. The problem is people in the US have been taught to be like sheep and to follow.  In other words, if everyone is not bidding on the same house, then there must be something wrong with it. “So we’ll wait”, the buyers say. 

I some time ago discovered that the wealthy people in the world did not follow and do what everyone else did. Books like “Think and Grow Rich” show how people who really made fortunes did what no other people were willing to do. They stepped out of the herd mentality and took action that others were not willing to take. People right now are waiting, thinking that house prices are going to drop even more. Maybe they will, maybe they won’t.  If this is you I am describing, the question I have for you is do you want to take advantage of a time in history where prices are low, or wait for them to start climbing up again, wait for more people to jump on the bus and start those multiple offer bidding wars again? In many markets the home prices are what they were prior to 2005. It is a very good time to buy, even if it doesn’t end up being the very rock bottom place to buy. 

For those buyers who like the houses where there are still multiple bids, we can still accommodate. In fact, the sellers who can still take advantage of a good market to sell in are those selling in the Rockridge section of Oakland.  Here there is still a frenzy of activity at open houses. One I did 2 weeks ago reminded me of the old times with people coming with their measuring tapes and hanging out for a good part of the open house.  That home (a duplex condo converted) got 2 offers for both units by a week after the second open house.  Other areas where things are still moving strong are North Berkeley and Elmwood in Berkeley, Albany, and Piedmont.  Montclair in Oakland has also stayed pretty strong for the right house.  Again, not all houses in those areas are selling in multiple offer situations by any means. Some are sitting for long periods on the market. But those that are really nice houses, with good floor plans, on great streets, marketed properly and priced right are selling and doing well.

What other situations are advantageous to sell at this time?  If you have owned your home for many years you have had appreciative gains in the east bay market over the long haul. Therefore the down turn cycle causes less harm to the overall gain you have had through the years than those people who have owned for a shorter time. It still can be a good time to sell in this case, especially depending on what you want to do on the other end.  If you are looking to move up to a bigger better house this can be a great time to sell as you will reap the benefits of a lower priced market on the purchase of your new home.  It is especially good for people who, for example, want to sell their lovely craftsman home in Rockridge because it feels a little too small for them and buy a bigger house with a view of the bay in Oakmore, Lincoln Heights, or Redwood Heights.  The San Francisco market is still very strong so selling in the city to get more house and land can be a very good thing to do where it ends up a win, win situation on both ends.

The most important factor in assessing whether your home might be in an area that will generate more activity and a higher selling price is the homes easy access to shopping, public transportation, and coffee. Yes, we need our coffee and we do not want to have to get in the car to get it.  Some examples of this are in Berkeley at 1641 Francisco priced at $650,000 for a 2/1 had 10 offers.  It was a remodeled charming home with a plus studio in the garage but its closeness to BART clearly added to the numbers.  2648 Stuart Street priced at $879,000 for a 4/3 attracted 3 offers. Again lots of charm and easy stroll to many things Elwood has to offer.  2846 Fulton Street is a 3/1 and a half bath home priced at $629,000 and had 7 offers. Here again is the homes close proximity to Berkeley Bowl and Ashby BART.  1355 Berkeley Way is a 3/2 priced at $650,000 close to North Berkeley BART and University street shopping had 4 offers.  In Oakland 511 Montclair Street, a 2/1 with a kitchen that needed updating priced at $495,000 had a bustling 4 offers. This is again due to the homes easy access to the new Trader Joes and Lakeshore shopping area. 131 Capricorn in Montclair area, a 3/2 with nice yard and easy stroll to the village got 3 offers.  32 Arbor Drive, a 3/3 in Piedmont, received 6 offers. Again the home was close to Lakeshore and Piedmont Avenue shopping and coffee. I’m telling you, its the coffee!!!  Of course this is also due to the house being in Piedmont priced at $1,495,000. This one closed quickly and sold for $1,700,000. Several other homes worth noting are 749 Cragmont in Berkeley. This home is a 2/2 with loads of charm and architectural features, lots of tasteful remodels, and great San Francisco and Bay views.  This home had 8 offers.  12 Littlewood in Piedmont which is a 5/4 distinctive contemporary on a half acre lot with a pool and beautiful gardens was listed at $2,195,000 and got 3 offers and sold quickly for $2,350,000.  So if you live in Piedmont and have the right house, you can attract buyers with all cash offers that can close quickly.  49 Castle Park Way was another stunning mid-century modern house in the Piedmont Pines section of Montclair with bay views and a beautiful setting. It was priced at $1,295,000 and received 3 offers.  In Redwood Heights where things have generally been a little slow, for the right house multiple offers can be had. 3422 Jordan Road, a 3/3 that feels like a country retreat had a snappy 5 offers.  The schools and the homes suitability to a family added to its desirability.  So mostly the moral of the story is, location, location, location.  Not all sellers are suffering in this market by any means.  

What about sellers who bought after 2004? If you are not in one of the places where market activity is still pretty high you might want to try to hold on to your house for a few years.  You will most likely lose money and you could end up in a short sale situation if you try to sell at this time. Don’t panic. This does not mean doom and gloom. As I have spoken about in previous articles the market goes in cycles. There will be another cycle with appreciating values. For most of you in this position you will want to live your lives and wait it out.

Sometimes circumstances occur that are out of our control and force the sale of a home.  Job losses or transfers to a new area, relationship changes, death of a co-buyer, etc. all are situations where a seller might have to sell even if they did buy the house after 2004.  In these circumstances, it is very important that you speak with a qualified and competent agent early on in order to plan a strategy to negate losses. 
What is a short sale? A short sale occurs when there is not enough money to pay off the mortgages on the property and the selling expenses for a house. The name short sale comes from the fact that you are short money to close, not that it takes a short amount of time to do.  In fact, a better name for them would be “long sale” as buyers, sellers, and agents wait and wait and wait for banks to approve them.  If you bought after 2004, took out loans for 90% or more of the value of the home at the time of purchase, and you need to sell now;   you will want to speak as soon as possible with a competent agent, preferably someone like myself that has had some additional training on short sales and the foreclosure process.  There are many things to know about short sales and it deserves a whole article written just on that process. 

Edited by Dan Joy