How can knowing who the buyers are in today’s market be helpful to sellers?

As has become very evident, the number of local homes for sale is not nearly enough to meet the current demand. In fact, the inventory level is below four months at the current rate of sales, which indicates this to be a strong “seller’s market”. In last month’s article we reviewed the several reasons why the surprising shift from “buyer’s market” to “seller’s market” occurred.

As we begin 2013, the number of homes available for sale in Pacific Palisades is as low as it has been since the end of 2004.  There are only 52 homes on the market, which is 28 percent less supply than at the beginning of last year.

The local real estate market has been steadily improving since the beginning of 2012. However, it has also been experiencing increasing difficulties with appraisal and financing of the home purchases. Some of these issues are directly related to stringent lender guidelines, and many escrows are challenged by problems because of the appraisal process. The appraisal process is often slower than it used to be, which has delayed escrows beyond the closing date.

I recently received a call from a local homeowner asking for a quick home evaluation. After I explained why I would need to see inside and around the home in order to provide a professional estimate of value, I was pressed to at least provide a range of possible value. The homeowner reacted to the conservative range that I gave her by telling me it was “way off,” because she had already gotten online figures from Zillow and Trulia and felt they were more accurate.

I have recently been asked how it was that I was able to identify the month in which the Pacific Palisades real estate market began a gradual upward move having reversed a downward price movement a few months earlier. The inquirer wondered if there might be some source of information that could be helpful in identifying such future price direction changes.

In the past few months, the stage may have been set for a possible nationwide real estate recovery. The Federal Reserve has determined to do everything possible to maintain 60-year low levels of interest rates for the next two years. Lenders have finally begun to loosen up underwriting standards for the approval of home financing. Many lenders are now willing to provide financing with 20% down in price ranges they had been limiting to 25% down. The widely-expected flood of foreclosure properties has never occurred in the Palisades. Many potential sellers have chosen to remain on the sidelines until prices show signs of increasing, thus limiting the inventory of homes available for buyers to select from.

As we begin the year 2012, the number of homes available for sale in Pacific Palisades is quite low.  There are only 70 homes on the market, which is 22 percent less supply than at the beginning of last year. 

We are often asked by both sellers and potential buyers what the various expenses are in the process of their sale or purchase of a home. The following is a summary of the traditional distribution of expenses associated with these transactions. It should be noted that many of these items can be negotiated by both parties as part of the Purchase Agreement, excluding some expenses that may be required by the City or the buyer’s lender to be paid specifically by the seller.

Previous subjects we have covered in this column include the value of working with a buyer’s agent, some of the risks of buyers being represented by the seller’s agent, and home searching on one’s own versus with the assistance of a real estate agent.