Doug Buenz
Real Estate Broker
Alain Pinel Realtors
(925) 463-2000
I am a local Real Estate Broker with
Alain Pinel Realtors serving the
Pleasanton and the Tri-Valley
area. I am an avid watcher of the
local real estate market, as well as
cultural and political events.
But that is what I do, not who I am... » read more
Real Estate Q & A
Unreasonable buyers asking for more money from Seller
I entered into a contract to sell my house a couple of weeks ago. Because the market is slow, I ended up taking a lot less for my house than I was planning on. Now the buyers have had inspections, and they want me to credit them $3500 for repairs, most of which are complete B.S. I am really mad about this. Should I tell them to take a hike? Fred W.
Fred, take a deep breath and relax. In some ways this market can be called "Revenge of the Buyers". Remember 4 or 5 years ago when Sellers told buyers things like "take it or leave it" or "don't ask for anything to be fixed... we have 2 other buyers who want it". Now the tables have turned. Don't get hung up on the details of what the buyer wants. Some may be legit, and some might be categorized as outright extortion. But so what. If you want to sell you house, swallow hard and sign it. If you think you can do better in this market, tell them no. It is really that simple. But tread carefully, because working with buyers today is a little like trying to feed a squirrel. They don't really trust you, they are skittish, and at the first sign of trouble they go scampering for the woods. If you refuse the $3500, it could end up costing you $5000, $10,000, or even $20,000 more to get the next buyer in contract.
Stubborn Seller Won't Move Out?
I am buying a house in Pleasanton, and the contract is signed and the escrow is getting ready to close, and the seller decides he does not want to move out at close of escrow, but wants a week after close to move out. When we express the fact that this will not work for us, he threatens to cancel the contract. Can he do this? Ben in Pleasanton
Ben, I have good news and not so good news. The good news is that no, the seller can not unilaterally cancel a ratified contract just because he doesn't get his way. If all contingencies are removed and you are coming down to the wire, the seller can't arbitrarily start changing the terms. And he certainly can not cancel a contract. Real estate contracts are bilateral. they require the agreement of both the buyer and seller. If he attempted to cancel the contract, you could likely tie up his property so he could not sell it to someone else, and take him to court to force him to sell to you under the terms of the contract. That is the good news. The not so good news is that this course of action is time consuming, emotionally draining, and costly. If the seller becomes difficult to deal with, try to relax and work around him if you really want the house. You can always take him to small claims court after the close to recoup any out of pocket expenses you incur. Unfortunately, there is virtually no protection in a contract for an obstinant seller. You can either put up with him as best you can, and then seek renumeration in small claims court, or threaten him back, but it is difficult if not impossible to physically force the seller out of the premises. As always, consult an attorney about the specifics of your case.
Confusion on Commission Agreement?
Doug, my friend listed her house with an agent with the understanding that if one of her friends (named specifically) buys her property, the agent would be compensated at 4% commission. So one of her friends has made an offer. When the agent sent my friend the estimated pay out from the transaction, the agent put in her commission as 6%. Her explanation is that the original deal was only good until she listed the house in MLS. Is this ethical? Or legal? Or standard practice? Ginny C.
Ginny, that is a great question. As is often the case, the devil is in the details. Any agreement involving the sale or transfer or brokerage of real estate in California must be in writing to be enforceable. So if there was no written clause regarding the friend, then your friends are out of luck. So is it legal? I think a better question is the agent legally entitled to the 6%. Based on what you have described, the answer is yes, since there obviously is no written agreement regarding this situation. Is this ethical? I always have a problem with any party that does not honor the spirit of an agreement, even if the details are not specifically spelled out. But keep in mind that neither you nor I heard what was actually said. Again, this is why all agreements dealing with real estate must be in writing. I this standard practice? Again, I am not sure what you are referring to, but if there is an exception or exclusion to the commission agreement for one party, there normally is a time limit during which the party must act. Whether or not that was clearly stated in writing, or clearly explained, is a matter of conjecture at this point. The lesson here is to always get agreements in writing, especially if they are modifications to standard agreements.
I remember meeting with a seller who’s listing with another agent had expired. I asked the seller how the traffic had been. “Great!” the seller exclaimed. “We have had an open house every weekend, and we are getting tons of traffic!”. “How about showings by Realtors?” I asked. The seller looked puzzled. “Well… er… not too many” was the reply. “Okay, so what has the feedback been from the open house traffic?” I inquired. Here comes the puzzled look again. “Well, er, I’m not really sure. I think they all liked it”. “Then why no offers?” I asked. The seller had no answer.
In real estate, not all traffic is equal. Showings from brokers is the best traffic you can get. And Open Houses can be fools gold. They often trick a seller into thinking they are in the game, when in reality they may have no chance of selling. In fact, if you want to get a real read on where your house is in the marketplace, stop doing open houses.
The difference is this. In order to see a home that is for sale but not open on weekends, the potential buyer has to take some action. They have to contact the listing agent, or contact their own agent, or send an email, or take another step to arrange a viewing. And each step is a litmus test for the buyer’s motivation level. So as a seller, when you get a showing from an agent, at least you know there was some effort involved in the decision to see your home.
On the flip side, you don’t need to take any action to see an open house. You don’t even have to be in the market to buy, and many visitors are in fact not buyers. You don’t have to be qualified, have a down payment, or a credit check. Open house visitors can come in, wander around aimlessly looking at pictures, gathering decorating ideas, and just plain kill time. I am convinced that many people who come through open houses are just plain bored, and looking for an excuse to get out of the house. Not the type of viewings that are going to result in an offer any time soon.
The other compelling reason not to do open houses, but rather aggressively seek showings from agents, is that you get far better information and feedback from the agent showing. The listing agent has the opportunity to interact with the showing agent to find out what the buyer thought, what they liked, any concerns or negatives, and in general how your home ranks in the mind of the buyers. This is very valuable information. At open houses, even if you make a determined effort to solicit feedback from visitors as they leave, you are often greeted by blank stares or shrugs, or puzzled looks that seem to ask “why in the world would you care what I think about this house… I have no intention of actually buying this or any other house”. Not the type of market information that has any value. And asking an open house visitor to sign a guest register seems to be like asking them to fill out an IRS form. They scribble down illegible names and fake email addresses. In fact, just last month I discovered to my amazement that “Elvis Presley” and “Jimmy Carter” had recently visited my open house. Funny, I think I would have remembered them.
Okay. By now many of you are saying “yeah, but there are buyers who come through as well”. And you would be correct. However, if they really are buyers, and they have some level of interest in the house, and it is not being held open, they will take another action to set up an appointment to view the house. So they will see the house, and the sellers agent will actually have a chance to extract information and point out the benefits of the house to the potential buyer, either directly or via their agent.
So back to my premise. The seller is probably thinking if you stop doing open houses, you might not have any showings at all. My point exactly. If you are not getting showings from agents, then that is telling you something… namely, buyers are not interested enough in your home to take the minimal steps involved in setting up an appointment to see the home. You probably need to change something… price, condition, staging, etc. You are not getting dozens of visitors, but you are getting a real indication of how your home stacks up in the market. For example, I have a listing that has received 4 offers in the last 2 weeks, and we have not had one open house. I did receive a number of calls from people asking if it was going to be open. And I was able to set up appointments for a private showing with the serious parties, where I had an opportunity to actually show them the house and explain the many features and benefits without being interrupted by some random visitor saying “excuse me, do you know where they got this painting? I LOVE it!”
So if you want to get serious about selling your house, stop doing open houses. Unless of course you want to brag to your neighbors that “Robert Redford” came through.
The real estate market in Pleasanton CA in July looked a lot like the market in June. The activity level is remarkably steady, though not brisk. Inventory is up slightly, especially in the under $1 million price bracket. But for now the market seems to have settled into a slow but steady pattern. The good news is that there are sales occurring… 45 pending sales in July to be exact, down slightly from 49 pending sales in June. The bad news is that there are now 269 houses on the market, which is up from 243 houses available at the end of June.
For sellers this means you will have to be competitive with other homes on the market. You need to be one of the best values in your price range to attract the attention of buyers, which is no easy task. In fact, buyers today have an attention span seemingly measured in hours or even minutes. “Yes, I kind of like that house” in the morning turns into “It’s okay, but let’s see what else is out there” by mid-day, and by evening they have completely moved on. For buyers, this is a prime opportunity to get a great house in a prime neighborhood for prices well below the peak of 2005. So here is what the market looks like at the end of July (click on graph to enlarge)
In the under $1 million bracket, inventory increased to 146 homes for sale at the end of July, up from 120 at the end of June. There were 33 pending sales in July, which has remained fairly steady (30 in May, 32 in June). There is a 4.4 month supply of homes on the market now at the July sales rate (click on graph to enlarge)
In the $1 million to $2 million bracket, inventory has crept up slightly, with 33 homes on the market at the end of July, up from 32 at the end of June, and 30 at the end of May. However, sales have declined, with 9 pending sales in July, down from 14 in June and 20 in May. (Click on graph to enlarge)
In the luxury home bracket over $2 million, there were 36 homes on the market at the end of July, down from 42 at the end of June. Some of these were the result of price reductions, and some sellers simply decided they no longer wanted to play in this market. There were 3 pending sales in July, which is the same level as May and June. Overall, conditions in this price bracket remain sluggish, and there is currently a 12 month supply of homes at the current level of inventory and sales. (Click on graph to enlarge)
I expect inventory to edge up slightly as we get towards the end of Summer, and sales to remain fairly stable at current levels. Still a great time to buy. And if you are going to sell, you had best price your home to reflect the current market, or be very, very, very, very patient.
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