If you want to know the real deal on the current real estate market, a recent sale in Olde Carlsbad illustrates the answer.
A single level foreclosure home was listed for sale the morning of Friday, April 10. The first three agents were at the property at 8:30 a.m. to inspect it and take pictures for their clients.
By 4 p.m. that afternoon, more than 29 agents had previewed the property and left their business card. On the following Monday, the listing broker stopped taking offers because she had collected nearly a dozen.
Many buyers who were busy enjoying their Easter weekend raced out to the home on Monday only to see a pending sale sign. The sale price is expected to go over the asking price by at least 10 percent.
The real estate market is moving fast in Carlsbad. Between March 15 and April 14, more than 100 homes went under contract. With only 382 single family homes for sale, Carlsbad has four months of single family home inventory.
For sellers, this is a welcomed change from the eight to 10 months of inventory Carlsbad had throughout 2008. When sellable inventory passes eight months, it takes longer to sell a home and forces motivated sellers to reduce their asking prices.
But with the current inventory levels, buyers are fighting over a smaller number of homes. Part of the credit can be given to low mortgage rates.
Homebuyers are securing 30-year fixed mortgage rates as low as 4.5 percent. This is a powerful change from the 6.5 percent average 30-year fixed rate available throughout 2008.
For example, the monthly payment for a $500,000 home with 20 percent down is roughly $2,500 a month at a mortgage rate of 4.5 percent. Last year, that same house would have cost $3,000 a month at 6.5 percent.
To get the same reduction in monthly payments in 2008, that same $500,000 house must be reduced by $80,000 or 16 percent. Since a majority of the homes in Carlsbad are 15 to 20 percent less than the high values in 2005, many buyers are seeing this year as a great opportunity.
Contrary to common thought, it's not easy being a buyer in this newly competitive market. Homebuyers tour homes for months and make offers on a half dozen.
They find that many of those homes are short-sale, which are subject to lender approval and overbid. This means that while they wait months for bank approval, another buyer can outbid their offer or the lender can pull the sale and go to auction.
Buyers discover that many of the low-priced foreclosures have multiple offers from cash buyers with flexible terms. When those buyers offer less than the asking price to a traditional seller, they find the seller less willing to negotiate and more prepared to wait for the right buyer.
Seller's plight
With the current sales numbers, it might be tempting to celebrate an early market recovery and price your home at a 2005 or 2006 year high. A seller is ill advised to list high just because there are fewer homes to purchase.
Today's homebuyers have expectations of finding a deal and they will not make an offer on a property that is perceived to be overvalued. Also, inventory is expected to increase through this summer as the bank moratorium on foreclosure proceedings is lifted, resulting in more distressed properties coming onto the resale market.
For more information, contact Tyson Lund at (760) 438-0800 or [email protected].
A single level foreclosure home was listed for sale the morning of Friday, April 10. The first three agents were at the property at 8:30 a.m. to inspect it and take pictures for their clients.
By 4 p.m. that afternoon, more than 29 agents had previewed the property and left their business card. On the following Monday, the listing broker stopped taking offers because she had collected nearly a dozen.
Many buyers who were busy enjoying their Easter weekend raced out to the home on Monday only to see a pending sale sign. The sale price is expected to go over the asking price by at least 10 percent.
The real estate market is moving fast in Carlsbad. Between March 15 and April 14, more than 100 homes went under contract. With only 382 single family homes for sale, Carlsbad has four months of single family home inventory.
For sellers, this is a welcomed change from the eight to 10 months of inventory Carlsbad had throughout 2008. When sellable inventory passes eight months, it takes longer to sell a home and forces motivated sellers to reduce their asking prices.
But with the current inventory levels, buyers are fighting over a smaller number of homes. Part of the credit can be given to low mortgage rates.
Homebuyers are securing 30-year fixed mortgage rates as low as 4.5 percent. This is a powerful change from the 6.5 percent average 30-year fixed rate available throughout 2008.
For example, the monthly payment for a $500,000 home with 20 percent down is roughly $2,500 a month at a mortgage rate of 4.5 percent. Last year, that same house would have cost $3,000 a month at 6.5 percent.
To get the same reduction in monthly payments in 2008, that same $500,000 house must be reduced by $80,000 or 16 percent. Since a majority of the homes in Carlsbad are 15 to 20 percent less than the high values in 2005, many buyers are seeing this year as a great opportunity.
Contrary to common thought, it's not easy being a buyer in this newly competitive market. Homebuyers tour homes for months and make offers on a half dozen.
They find that many of those homes are short-sale, which are subject to lender approval and overbid. This means that while they wait months for bank approval, another buyer can outbid their offer or the lender can pull the sale and go to auction.
Buyers discover that many of the low-priced foreclosures have multiple offers from cash buyers with flexible terms. When those buyers offer less than the asking price to a traditional seller, they find the seller less willing to negotiate and more prepared to wait for the right buyer.
Seller's plight
With the current sales numbers, it might be tempting to celebrate an early market recovery and price your home at a 2005 or 2006 year high. A seller is ill advised to list high just because there are fewer homes to purchase.
Today's homebuyers have expectations of finding a deal and they will not make an offer on a property that is perceived to be overvalued. Also, inventory is expected to increase through this summer as the bank moratorium on foreclosure proceedings is lifted, resulting in more distressed properties coming onto the resale market.
For more information, contact Tyson Lund at (760) 438-0800 or [email protected].