Sacramento Real Estate Blog

Vicki just took some nice new pictures of our listing at 4032 Birchgrove Way that show off the interior a bit better than some of the old pictures did. Here are some shots both inside and out. This is one of the nicer “start homes” we’ve had listed in awhile, with newer roof, and (as the pictures show) new laminate flooring and dual pane windows. It’s quite affordable as well at $320,000. If you’re a first time buyer, please be sure to call to learn about special financing that may be available — we may be able to do this with very little down.

Anyway, here are the photos:

I’ve been writing some new ads for the discount broker program today, and tweaking my log files so I can understand which of these ads are performing best.

I’ve got the logs where I want them, but the ads still have a long way to go. To date, for example, all the teaser ads are still going through the Savings Calculator, so maybe a better approach would be to simply say, “To get your home listed for a 1.5% listing fee by my favorite broker, call (800) 767-1975″.

No, that strikes me as too easy. Where would the wheel be if it had never been re-invented? We never would have discovered inner tubes! Or then tubeless tires!

Anyway, if you want to see two versions of the ad, here’s one and two. (Reminds me of an optometrist visit — now which ad is clearer… One… or Two… One? or Two…).

It’s important to get good performance on your ads if you’re going to be discounting, of course, since the whole point of discounting is that you can spend more time servicing the customer instead of chasing sales (that’s what’s in it for the client, other than the savings). What’s in it for the Broker of course is that you make it up in volume.

Hopefully this story doesn’t end up being about me, but meantime I’ll tell it because I like it:

Two discount brokers get fed up with the real estate business and decide to sell apples instead. So they go up to Apple Hill in Camino and buy apples for 25 cents each, then drive their truck down to Rancho Cordova and sell them, at two for 50 cents. After about a month, one ex-discount-broker says to the other, “You know, we’re not making any money.” And the other one says, “You’re right. We need a bigger truck.”

As I mentioned earlier, I’ve been thinking for some time about offering discounted listing services, and I’ve finished the first draft of some of the literature about this service offering.

The best part of this to-date (I think — you tell me) is the Savings Calculator, which shows just how much you’ll save with my discount rate structure compared to a standard, full-commission broker.

I’m very excited about being able to save local sellers thousands of dollars when they list their home. We’ve published a lot of information about how the market is slowing somewhat, so in a way it’s a crazy time to be doing this (listings are taking longer to sell and requiring more work — so one would think I should charge more, not less). But if I look at this from a homeowner’s perspective (not my own), then the slowing market means you’re already losing enough equity to price reductions — you don’t need to be spending more on full commission listings.

Anyway, check out the savings calculator and the Sacramento Discount Broker - Frequently Asked Questions. It’s pretty newly minted, so please let me know if you have questions or problems.

Well, I promised I’d work out some figures on the loan for a hypothetical buyer who purchased a home in El Dorado Hills in July of 2005 versus July of 2006. Let’s assume that each buyer purchased a 2900 square foot home and that the purchase price was that number times the average cost per square foot for each July. So our 2005 buyer got a 2900 square foot home at $738,247, while our 2006 buyer paid $729,000.

And let’s also assume that they locked their loan in the middle of June — a reasonable assumption for a thirty day escrow. As luck would have it, Freddie Mac’s web site is being kind to us, since it turns out that for a thirty year fixed loan, the rate quoted for June 15 2005 and June 15, 2006 both are quoted at the rate a buyer would pay with at .5 points. This means we don’t have to adjust the quoted rate based on different points, we can just ignore points for our purposes and use the rate Freddie Mac quoted, which is, for June 2005: 5.63% and for June 2006: 6.63%.

So, let’s assume both buyers finance 80%. Buyer one back in the bad old “seller’s market” days of 2005 had a monthly (Principle and Interest only) payment of $3,401.67, whereas buyer two pays $3,736.22, i.e., $328.55 more per month. Over the course of a thirty year loan, buyer two will pay that $328.55 more a total of 360 times, which works out to be $120,437.22.

Well, OK, that was a little unfair, since what buyers actually bought was smaller by 5.8%. So let’s work it based on the real average prices of what buyers really bought, i.e., $758,103 in 2005 versus $704,868 in 2006 for 174 square feet less. OK, that’s a little better. Being more fair about it, our 2006 buyer got his 2804 square foot home for 3612.54, only $119.37 more than our 2005 buyer paid for his 2978 square foot home. So living in that 174 square foot less home cost our buyer only $42,973.35 move over the life of the loan.

El Dorado Hills real estate sales in July were down from last year. That’s no surprise to anyone who’s picked up a Sacramento Bee or been reading along here. Indeed, it should be no surprise to anyone not living on Tralfamador.

On the bad news side, expired listings rose from 14 to 41, while the expired to sold ratio went from 19.4% to 78.8%. (A 100% ratio means as many listings are expiring every month as selling. Recall that a real estate broker’s listings have to have a definite expiration date). At the same time, unit volume is down, from 72 units to 52. (This number is a 27.8% drop, which actually belongs in the “good news” column since we’ve seen these numbers drop as much as 50% or more).

Inventory is up — yes, we have a bad news column entry here for sure. 9.9 months is where it currently stands, with 514 units actively for sale and 52 units having been sold last month. The average home in El Dorado Hills has been on the market seventy-seven days.

So far, however, we’ve yet to see the huge price drops that many of the buyers I talk to have been waiting for. To be sure, the median price dropped 7.3% from last year to this, and the average is down 7.0%. But with interest rates squeezing buyers somewhat, we’re seeing a typical phenomenon at the same time: buyers are going smaller in their home purchase. This July’s sold crop of El Dorado Hills averaged 2804 square feet, down 5.8% from last year. With this factored into the mix, the average sold price per square foot works out to be only a 1.3% drop from last year ($254.57 versus $251.38).

In our next installment, after we’ve gone out to the car to grab our loan calculator, we’ll look at how a hypothetical buyer would make out on a 30-year fixed loan closed at the end of either month, so we can see how interest rates have affected the picture.

I have been giving some serious thought to providing discount listing services for some time now. When I was at my earlier company, our advertising policy prevented us from advertising low commission rates. Now that I’m an independent broker, that issue is no longer a concern. However, I do need to spend some time spelling out exactly what services will be provided at each commission level.

I do think that actually spelling out a fee structure fits in well with what I’d like to see on an Internet site for a Broker that I’d call to list my house with. Let’s face it, the sort of open source, open information, open everything that one finds here doesn’t lend itself well to the sort of vagueness we usually encounter when we talk about commissions.

So — among other projects — I’m off to work on that, but if you can’t wait for the fully developed material because you need to now, give me a call and let’s discuss it.

Meantime perhaps a few words from one of my inspirations in this regard are in order, from one of my link partners, Fraser Beach at the Toronto Real Estate Guide

…So, after years of working with the big names in the business Fraser decided to establish an alternative brokerage service. He would provide a full range of professional services but reduce much of the overhead expenses which burden the established firms. He could then offer the same services at a very attractive price.

Fraser reasoned that if he didn’t have to spend time chasing after listings and could focus on the productive activity of marketing listed properties, he could afford to offer effective service at a much lower fee. And there would be equal incentive for all of the other Realtors to sell the company’s listings because they would get the customary “co-operating” selling fee for their effort.

Often when one is stuck in traffic, the cause of the slowdown is not an accident that’s actually blocking a lane, but an accident in a lane going in the opposite direction. That’s because your fellow human beings love nothing more than to to see the accident. There’s nothing like a good beheading to have a tale to take home to the missus. The same principle applies to the news business, where they apply that infamous editorial principle: “If it bleeds, it leads”.

I was a little behind on this month’s numbers, and the rubbernecking began about a week ago.

Well, take heart, accident fans. I’m not sure if there was a beheading, but July’s Sacramento County residential real esate numbers show the statistical equivalent of a good case of whiplash at least, so you can go tell the wifey all about it.

Still, the median sale price of a residential property in Sacramento County dropped somewhat less than the Sacramento Bee reported, according to MLS statistics. I believe the Bee reported a 5% drop, which could either be due to rounding or the fact that they rely on Dataquick data, which — unlike the MLS — would also include private sales (FSBOs). Anyway, it’s fairly close, my excel spreadsheet gives the number at a 4.5% drop from July to July in the median price — from $377,000 to $360,000. Meantime, my own favorite statistic, sold price per squre feet, dropped 3.4%. The average home sold in July for $402,337, down .3% from last year’s average of $403,591. The average list price was $407,970.

Both expireds and inventory are up significantly. Inventory is at 9.5 months. The expired to sold ratio, at around 11.6% last year, is now up to 83.3%. (The significance of this number, once again, is that a 100% ratio means as many homes are expiring as selling). 1176 units sold in July, with 980 expiring. This year’s unit volume was down 47.3% from last year.

Well, here it is, Fabulous Friday already.

Call me easily amused, but the most fun I’ve had in a month up here was the Denio’s post.

I’ve been thinking of a lot of things. One of them was that I didn’t want to admit that I had gone briefly back into the software business, for fear one of my nemeses would pop out of the ground and say, “See, market’s awful, told you so.”

Sic semper nemeses. (Did I just mix up two languages? Dang).

Actually, I’m getting lots of business off my site — the question for me always is do I want to grow more such opportunities and behave as a broker with other folks doing a large portion of the heavy lifting, or do I want to get 100% of the pie for doing all the baking all weekend.

Lately the other things that have been going on are that I’ve been writing an email contact autoresponder and drip marketing system in .NET 2.0 and SQL server. Talk about mixing your software business interests with your real estate business interests. So that’s been a bit of fun, and getting something just about up and running will probably fit into the estimate I had made for myself.

According to the Bee, the median price of a home in Sacramento County is down some 5% from last year. I wonder how the average and average cost per square foot are doing. Yeah, I should write something.

“See, the market’s awful, told you so. You don’t even want to admit it any more.”

Yeah, whatever. Actually what I don’t want to do is be bored. The market in the aggegate gets old after awhile. Hey look, it’s up 3%. Hey look, it’s down 5%.

We’ll get to that presently. For now, welcome to Fabulous Friday. Anyone have donuts?

I recently had the following question posted as a comment to an earlier entry. I thought I’d put answer it here since it’s of general interest:

Hi, I had a question actually, I recently graduated and I am moving out with seven other roomates, we are buying a big house, its price is $800,000, I was wondering if you would do me the favor of taking the time and leting me know about how much the payments per month would be if we put it to pay it in 30yrs, among 8 people, just to be informed and be sure that my roomates nor myself are having to pay too much to the two roomates who are signing for the house, I would really appreciate it, thank your for your time…

If you’re buying a house with seven other people, you should have a written agreement drafted up by an attorney, if you’re not already signing paperwork created by the real estate agent, the loan company, and the title company.

Finding out the loan payment is simple — get a copies of the loan paperwork and the settlement statement from the two people who are signing. Or if you need to ballpark it, a good estimate to use for a payment (Principle Interest Tax and Insurance) on a thirty year fixed is $6.50 per month per $1,000 borrowed. But that doesn’t mean you’ve protected your interests.

You should be concerned by the idea that eight people are buying the house, and six aren’t signing. It sounds to me like there are two people buying the house, and six tenants who think they are. You need a written agreement, and if there’s ownership involved, there should be a deed recorded with the county.

Well, a scant two short years after the demise of the once celebrated Sacramento Things To Do blog, I finally realized my adulthood dream of going to Denio’s Farmer’s Market (And Swapmeet).

What a hoot!

I love a good flea market. Denio’s has table after table of junk one might buy, or not. Like dentist tools, in case you want to be your own dentist — two bucks or so. (Disclaimer: Do not be your own dentist). Or swords. Magnifying glasses. Kitchen items. Toys. Ugly couches.

You name it.

There’s even a Farmer’s Market there. Go figure. Named after “Denio’s Farmers Market”.

We bought two dollars worth of teaspoons, which works out to be about eight of them, and $50.00 worth of seven foot tall plastic decorative plants, which works out to be one of them. It’s surprising when you’re carrying it how much a plastic seven foot tall plant acts as a sail, even if it’s not yet unfurled.

Part of the fun was bugging the wife on the way up with my rendition of the Denio’s Farmer’s Market and Swapmeet song, which one author claims is the work of Tracy Walton of Mumbo Gumbo. Well, I dont’ know, I went over to the Mumbo Gumbo site and wasn’t able to find a copy. You’d think with a hit like that on their hands they’d put it right up front on the home page or something.

I love that tune.

Here are the lyrics:

What’s new at Denio’s Farmer’s Market and Swapmeet
What’s new at Denios this week…

Sorry, that’s all I remember, but if anyone is pals with Tracy maybe she can be talked into sending us a wav file for the benefit of our readership.

I’ve updated our lists of Condos, Duplexes, and New Homes.

Enjoy.

I was going to have at the usual go-look-something-up in Metrolist and put it in Excel, then turn that into an article, when I suddenly became embarrassed.

There are so many excellent blogs out there, and often in comparison my little Metrolist to Excel to English formula makes me feel like just a hack among Hemingways. Just clicking on a couple of the folks linking to me was enough to begin the “You’re OK I’m Not” wheels turning.

Sacramento Landing, for example, has all kinds of different market statistics and analyses going, info on what builders are doing, etc. Really good stuff. And Kris Berg over at San Diego Home Blog has a really interesting article about how we as professionals are supposed to get along with a wide range of people. Well of course, “duh”, etc., but it’s surprising how often I hear agents talking about wanting to pick their clients. And I suppose in an industry where one can easily burn one’s gas and one’s Saturday on someone who turns out to be just looking, there’s no big surprise there.

Anyway, my hat’s off to those intrepid bloggers who manage to not just look up their blog in their local MLS every day. And with that, let me get ready for tomorrow’s post. Sorry, gotta go open MLS…