Well, we’ve reached an interesting observation point. Sellers in Foster City and elsewhere can actually overreach. After hearing about how crazy the market has been some sellers are putting their houses on the market at prices that aren’t realistic even now. It’s fascinating to me. Here’s a couple of examples, in San Mateo there’s a 2 bedroom, 1180 sq ft house on Huron that’s listed for $599,000. That struck me as a bit high when it came out…and the market seems to agree. No offers even though there was an offer date last week. Meanwhile, I had a listing just around the corner for $579,000 and we got 9 offers last night.

There were two different places in Foster City that also fell right into that equation in the last few weeks who’s names and addresses I’m not mentioning. Their prices were too high and the market sensed that. Quite often sellers now are hearing the good news about home values and think their pie in the sky ideas about how much they can get will become reality simply by showing up on the MLS. If a house is well priced and prepared it’s going to get attention…and offers. If it’s overpriced then you can still be stuck. I’m actually sort of glad this form of sanity is happening. It get’s REALLY scary when folks buy overpriced, problematic house just because their for sale.

Seems like a lot of us have gotten used to the pace and flow of this heated up market and sort of know it’s rhythms a bit…sort of. Every once in awhile there’s a phenomenon called the preemptive offer that sort of throws a wrench into that awareness. When a house hits the market it’s not unusual to have  somebody suggest that they want to write an offer and present it right away. Most of the time the listing agent will have created a game plan for reviewing offers and that will typically take it’s course within a 10 day period following the listings arrival. When I say most of the time I mean about 98% of the time. Occasionally the seller and agent will agree to look at an offer right away and not wait. This is called a preemptive offer.

The vast majority of preemptive offers are pretty much accomplished by writing a very attractive, over asking, non contingent offer. An offer that the seller most likely would receive if they waited. Of course there’s no way to be sure of that if you’re the seller but some sellers are anxious to sell their house. Maybe the idea of having groups of folks always showing up all week seems intimidating to them and they would just as soon have it all over with.

For what it’s worth, right now I think a seller probably makes a mistake taking an offer like this. I’ve been consistently surprised by what shows up on offer day and it’s pretty hard to determine on day one what will happen. I also think that if the buyer is so fired up about a house that he wants to  write a fat preemptive offer the odds of that buyer not being interested in a week or 10 days are slim. They’ll be there then too.

I have to say that it’s a pretty weird feeling showing a house on day one of it’s listing and seeing it sold that night in the MLS…just as I’m going to call to ask for disclosures. I saw 2 of these happen last weekend. I guess if you’re a buyer it never hurts to ask, but if you’re a seller I’m really thinking you’ll be better off, and at minimum at least as well off, by waiting.

It’s never a dull moment in this market and I really am seeing things I’ve never seen before. The market forces at work are really quite remarkable and sure do shape the way things are. Take the house at 223 Puffin for example. It’s a very nice 2945 sq ft 4 bedroom, 4 bath house that was listed for $1,168,000. It looked at offers, got 5 of them and then decided to opt for a different response. Here’s what’s printed in the agent notes on the MLS:

5 offers received on offer date. In light of resulting sales price of 221 Puffin Court, Sellers have elected to re-price the property accordingly.

It’s now priced at $1,308,000. The house at 221 Puffin is a 2460 sq ft 4 and 3 that was listed for $1,198,000. They looked at offers on April 26. It closes on May 21 so we’re not sure what it sold for. I have no doubt the folks at 223 Puffin do know…what do you think? I’m also thinking they didn’t get $1,308,000 when they looked at those 5 offers they got. This practice is fascinating because it sure could never happen in any other market. The market speaks and you say “no thanks…I want more”. I hope they get it! Everybody likes a rebel after all!

So I spoke to a nice couple last week who have a house to sell in San Mateo and it was the house that the gentleman here grew up in. It’s in trust, but has a probate connection because of a brother who was on title and also passed. These folks explained to me that they’ve been inundated by real estate agents who have swooped down upon them…wanting the listing of course. I’m not sure why this surprises me, it’s just that I NEVER have sought out clients this way. Sort of feels like ambulance chasing to me but I realize that I do not hold the corner of the market on knowledge of how to find business. It’s just the stories they were telling me!

Agents just walked right into the house without knocking. Some brought contractors back to get bids for repairs…without asking. More than one told them they could happily sell the place for them…right now, to one of their clients for $750,000. It’s in an area that I just sold a listing last month for $1,460,000. “Folks why don’t you just forget about the hassle of fixing this place up and just let my buyers take it off your hands?” Great…at a SERIOUS discount! Just to watch it get flipped in about 2 months.

I guess the point is that sellers should beware. There’s nothing like letting a property be exposed to the market so that the market can determine it’s value. There’s also nothing like preparing a home for sale to maximize it’s return. Patience and planning really are virtues.

If there’s anything that will eventually hurt this market it may just be the unbridled greed that some sellers are showing lately.  Understandably, there are sellers out there that have heard all about the multiple offer, enormous overbid insanity that’s permeated the market this year and want that experience for themselves. I get that. What I’ve been hearing though takes things way over the top…in my opinion.

There are folks out there who put their homes on the market and feel entitled to a huge overbid. No matter how crumby their house is or how grossly overpriced it was to begin with. I heard an example of this the other day in San Carlos where a house came on the market on a small 400 sq ft lot, needing lots of work and only 1300 sq ft. It was listed for just under $1,200,000. Unfortunately for the sellers, they didn’t get the offers they were expecting. In fact they didn’t get an offer. When one eventually did come in it was $40,000 under asking (about what it was really worth!). The sellers wanted to counter at $1,300,000. After all…they were entitled to an overbid like that, right? I mean, how dare the market not anoint their house like it did with others.

I’ve heard this a few time this year. I’ve actually heard it in scenarios where there actually was multiple offers and the price went more than $200,000 over asking. The sellers were disappointed…because they expected $300,000 over asking!

If you’re thinking of selling…here’s some simple rules:

1) You are NOT entitled to overbids

2) If you’re lucky and you prepare correctly you MIGHT get them.

3) Your overbids may NOT be $500,000 over asking…be prepared.

4) The market is telling you what the house is worth…no matter what you get.

5) If you get a nice clean offer you probably did great.

6) If you sell your house for 20% more than the last comparable sale for your floor plan but the buyers don’t offer you free rent…that’s OK. You did great. Really.

Simple rules.

A client of mine asked me the other day about whether it was better to list this fall or wait until after the first of the year when the inventory situation could be better. Their goal is to move up from their condo into a single family house and they’re rightfully concerned about being able to accomplish that with an escrow and a rent back without being made homeless. Buying being as tough as it is and all.

It’s a great question really, because there is certainly a feeling that buyers have that lots of new inventory will save the day. That shining horizon of the first quarter of 2015 seems like it’s filled with possibilities too. It’s also true that November and December tend to be slower and folks tend to not list their homes then. The problem is, so many more buyers enter the market after the first of the year. Seems like every year January and February are very hot months for selling. Indeed, there’s new inventory, but there’s tons of new buyers as well. In December of 2013 a nice house on Verdun in San Mateo sold with 3 offers and went over asking. In January another nice house on Verdun in San Mateo sold with 34 offers and went WAY over asking.

It’s all a crap shoot, but I really think that selling now is better than waiting on the potential mirage of vast new inventory on the horizon. We’ve been waiting for that for years now…and it’s proven to be pretty illusory.

So I have this adorable listing at Edgewater Isle and my client is a very gifted DIY guy who’s done wonderful work in their place. It’s really gorgeous. Of course he can’t resist the temptation to carry the DIY thing into the home’s listing as well. In an effort to be helpful with the sale he went ahead and listed the place on Zillow as a For Sale By Owner listing. There’s two listings on Zillow actually, the MLS listing and the FSBO listing. They’re sort of competing with each other on that site.

What’s amusing is that the seller put my cell number in his FSBO listing for contact. Would you suspect that I might get some calls from interested buyers? Not a chance actually. What I have got are calls from real estate agents who, apparently , just got their licenses…and want a listing. First thing Monday morning it started. “Hello Sir, this is Ignatz with Coldwell Banker and I’d like to speak with you about selling your home.” At first I didn’t understand…then after the 4th call before noon I figured it out. What’s amazing is that NONE of them were from even close to around here. I actually got a call from an agent in Palmdale!! In southern California for crying out loud! They all want the listing!

My favorite was from a guy in San Jose. I missed his call and it went to voice mail. His message said “Sir, this is Paris Hilton (I made that name up..duh) with Intero and I have an extraordinary opportunity for you today. Please call me back at your earliest convenience.” Since I have several listings right now…I call him back. He says: “Sir, what I wanted to speak to you about is the incredible marketing opportunities available to you via the Intero system that will guarantee you receiving TOP dollar for your home in the blistering 2015 marketplace.” Now imagine that spiel in a deep baritone, Don Pardo kind of voice…and also obviously being read from a script. I was driving on 101 when I got that pitch. I was laughing so hard I almost had to pull over. I said; “Um, I hate to tell you this…but I’m an agent with Sothebys and the place your speaking about is listed on the MLS, by me, and it’s really NOT a FSBO. Sorry.” I thought the poor kid was going to cry.

I imagine rookie agents scouring the internet looking for For Sale By Owners to pounce on. Turn over every stone I guess.

In real estate it’s never a dull moment.

I’ve always heard that the single most important thing that we do as agents is to establish expectations. At the end of the day I think that’s about 90% of the job. Of course that means telling the truth. A lot. What’s also really important is knowing what the truth is! Weird idea, huh?

Nothing I hate worse that being exposed as being wrong, but that’s life. Given enough time and I’ll be wrong about something. Of that fact, I know I’m right. There’s two things I know right now to be true about real estate. 1) It’s kind of slow if you’re a seller. It would be unwise to bank on the idea of multiple offers. The odds don’t favor you actually. Right now at least. I had a really close friend of mine text me last week to ask me if her house is worth $2,500,000. That was her sincere expectation. I almost passed out when I read the text! Then she said…”but at least $2,250,000…right?” The comps are actually about $1,800,000 for her type place…and fat overbids aren’t happening. I know this is kind of a tough pill to swallow because sellers seem to feel like it’s a birthright or something to get $200,000 over asking for their places. If you’re thinking about listing your place between now and the first of the year you should be ready to a slower process. Maybe you’ll still get multiple offers, who knows, but I wouldn’t expect it.

The second thing that I know to be true is this…this is a pretty seriously healthy market and will continue to be. Right now today in this horrifying slow spell there’s only 7 single family houses on the market in Foster City and 14 condo/townhouses. That’s really no different than it was in May. Sorry, but there’s more than 21 set of people who want to live in Foster City. If it takes a bit longer that’s OK. These places will sell. Also, all those jobs haven’t disappeared. All that construction you see is real. That growth we always hear about isn’t a fantasy around here. Oh, yes…rents are still pretty freaking high.

Maybe I’m in denial, but I think this fall is an aberration. Maybe it doesn’t go up 25% in the first quarter again…but it’s going to be fine in 2016. Our investments in real estate around here are about as solid as they can be.

Probably as long as there has been a multiple offer environment there have been folks interested in finding a way around that kind of competition. Totally understandable really. Typically, the agent who is selling the home lists the place in the MLS and either right away or after the first weekend’s open houses sets a date to look at offers. Most of the time that date is published in the MLS itself and thus everyone knows what the game plan is for making an offer there. Sometimes a buyer and their agent wants to circumvent this process and make an offer immediately. The buyer’s agent calls the sellers agent and tells him/her that their client has an offer and wants to present it right away…not wait for the offer date. Sometimes the agent simply sends the offer via email directly to the sellers agent and asks that it be presented immediately. On almost every listing I’ve had in the last several years an agent (or 2…or 3) will call and ask if they can bring me a pre-emptive offer. The thinking with the buyer who has this type of offer is that they’ll write something FAT enough that it will motivate the seller to forget about waiting and just take their offer.

Honestly…I hate this pre-emptive thing. I think it’s way risky for everybody. You’re going to usually decide to write this type of offer after the house has been on the market only a couple of days, well before it’s scheduled offer date. From my standpoint, representing a buyer, there’s really no way to tell how much competition the house will get that soon in the process and you could easily overshoot on your offering price by acting early. From my standpoint representing the seller…you might take alot less than you could have gotten.

A month ago I had a listing in South San Francisco that was offered at $850,000. An agent told my seller directly that they wanted to bring them a $1,000,000 pre-emptive offer on the second day of the listing. They called and asked me what I thought and I told them I thought we should wait and let nature take it’s course. Risky you think? 8 days later we ended up with 10 offers and the house sold for $1,175,000.

I guess the other thing I hate about it is losing a potential home for my own buyers when somebody else gets it via their pre-emptive. In other words I hate losing!! This has happened to me alot lately too…my clients see a place, like it and ask for disclosures. On day 2, the listing agent replies that the home is sold. Huh? In one recent case the seller took a pre-emptive 2 days before the scheduled offer date…7 days into the listing! The place closed $75,000 UNDER the price we were going in at. In other words, the seller left money on the table over 2 days!

I guess that, ultimately, I believe in letting nature take it’s course. When that happens everybody has a fair chance.

Yes, folks…we’re indeed in the impervious market. See this adorable house above? It’s a very cute 2 bedroom house in San Bruno that I sold earlier this week. It’s an estate sale and it required some preparation prior to going on the market (like most all houses now!). Of course I have a fairly large team of folks that help prepare these listings and my absolutely fabulous assistant Jane has a great eye for color and design when it comes to paint colors. In the case of this house, she recommended a couple of Kelly Moore colors…”Old School” for the trim and “Mallard Lake” for the front door. She was very specific with the painters about which colors went where too. Of course, the guys who actually do the painting don’t speak English…and got it all backwards. Mallard Lake is the light blue paint and Old School is sort of a navy color….it’s on the door.

What do I know? Nothing!! When I saw it, I thought it was different but it seemed OK to me? I heard a few comments about the unusual color choice…but nobody complained. Until Jane saw the virtual tour photos! She wasn’t happy. To quote: “I’m not claiming this”. Also: “I’m so miffed, it would have looked so much better as it should have been. %$# needs to get his shit together.”

Sheesh! Oops. I really thought it was too late to change things. We were ready to launch. So….how did it go, you ask? Three weeks ago the identical floorplan was listed on the next block. Fully remodeled kitchen and bath. I mean REALLY nicely remodeled. Listed for $899,000, it got 16 offers and sold for well over a million. What did that mean to the baby blue (I mean Mallard Lake…excuse me!) gem up there? My listing had a much older kitchen and bath and needed work in other areas. We got 9 offers….and it sold for almost $40,000 OVER the house a block away!

Maybe it was the paint? It’s almost impossible to make a mistake right now if you’re a seller. Well….you CAN make them I guess. But the market sure seems impervious to being punished for them.