Tracy King's Blog

In a recent Sunday Los Angeles Times, the discussion regarding the Zillow Zestimate of home values continued, as it does on Facebook and in almost every conversation that includes the question "What is my home worth?"

I love Zillow, because it embodies the essential truth of home valuation--no one really knows what a home is worth. What does Zillow know about your home? It knows the public record of its square footage, bedroom and bath count, and where it is on a map. That's about it. It doesn't know that you legally added 1500 square feet of exquisitely appointed master bedroom suite including spa bathroom and vast walk-in closet that somehow hasn't shown up on the tax records yet. It doesn't know that the house down the street that sold for $200,000 less than you think yours should was a tear-down. 

All you self-employed, small business ownrs, entreprenuers, and nontraditional career works - take heart! Privlo, a new mortgage startup, just launched in California last week and they cater specifically to small business owners, entrepreneurs, Millennials with nontraditional career paths, or seasonal workers with spiky incomes - namely people with complex incomes that can't be proven on a tax return or W2, and are increasingly turned away by their banks even though they may be creditworthy.

It's an option that self employed homebuyers haven't truly had until now, as Privlo takes into account a far wider range of alternative documentation and credit criteria than a traditional lender. Here's their press release along with more info.

Some people are very excited about selling their homes "off-market" these days. They say it can save time and hassle and not invade one's privacy as much a regular marketing plan.

Some Realtors would even have you believe that you can make more money this way, that people will be so excited about buying a house without all the competition that they will pay you top dollar.

My question to these people is, How do you know what top dollar is without exposing it to the market? We recently had an Echo Park home for sale that ended up going just over 20% above the asking price of $799,000.

After almost vertical price increases beginning at the first of the year, summer has brought a small lull in the market. We are actually seeing a number of price reductions appearing all across our Los Angeles marketplace, including the Westside.

Why? As prices jumped up, more homeowners who had been waiting for the market to "recover" put their homes on the market and our inventory of homes for sale increased from breathtakingly low to just very low. This, coupled with an uptick in mortgage interest rates, caused buyers to step back and think. Properties that came on the market priced to take into account the expected price increase all of a sudden seemed a little overpriced. Only the very best properties are still going in crazy multiple offer bidding wars (best in this case can mean an incredibly well done or well located house, or incredible deal for a house.) Those homeowners who have less than the best are finding that they are not going to be swept along with the buyer stampede as they had hoped.

We are also seeing a couple of interesting trends in how escrows are going. There seems to be an uptick in the number of escrows falling out, and largely over some aspect of buyer remorse. I've heard from escrow officers that they are averaging 30% fallout in the escrows they have. Why? Buyers are hugely afraid of overpaying. At the same time, there is much less willingness on the part of the seller to put up with renegotiating the price over conditions that come up during the inspection period. There is also less and less tolerance for letting contingencies drag on past their due dates. 

What to make of these trends? Buyers now have an opportunity to be a little more thoughtful about the home they purchase as long as they are willing to shop in the second tier of homes for sale (the best of the best still go for the most.) But once they go into escrow, buyers need to be more business-like in their behavior and keep up their end of the contract, or they might just be bounced out of escrow by a more business-like seller.

The Northeast LA real estate market is an ever-changing beast.  Here are the main elements of what's driving our market today:

Increased Interest Rates

The big news in the real estate market is that rates have jumped up quickly. Most of the market volatility is stemming from speculation that the Fed will eventually be discontinuing its QE3 program. Rates have increased approximately 1% across the board on all products.

Although no one really likes higher interest rates, it is normal in a recovering real estate market to see rates rise. Also slightly higher rates will allow new lenders to enter the arena making for a more efficient market through increased competition. However, rates are still at historical lows compared to the 13.4% 30 years ago! The market is filled with opportunity and we cannot emphasize the importance of good strategic advice with access to innovative products to thoughtfully structure the right solution for clients.

Increased Inventory

The number of homes for sale in Northeast Los Angeles has definitely increased in the last few weeks. We are now averaging about 30 homes currently for sale in Eagle Rock. While significantly higher than the 12 we had earlier this year, we are still a far cry from the 75 homes for sale back in 2010. In Highland Park we are averaging about 40 homes active on the market, compared to 159 back in 2009. We are still seeing multiple offers on our listings.

Instead of perhaps attracting 10-15 offers, we are receiving 5-6. This of course depends on pricing strategy and what else is available when we come on the market.

The under $500,000 market continues to move very quickly. We received 10 offers on our one bedroom listing at 1915 Chickasaw (listed for $389,000).A house on Avenue 54 in Highland Park received 60 offers (listed for $299,000) and sold for 33% over asking price.

Increased Average Sales Price

The average sold price in Eagle Rock in June 2013 was $590,000, which continues the upward trend we’ve been experiencing. That’s 7.5% higher than the average of $549,000 in June 2013, and 27.4% higher than the average of $463,000 in June 2009.

In Highland Park the average sales price has reached $439,000, which is 44.9% higher than the average in June 2009, and 17.7% higher than the average of $373,000 just last year.

What does this mean for you?

This is still the best time to sell your home that we’ve seen in the last 5 years. While we are not experiencing the dramatic price spike that we saw earlier this year, prices have gone up considerably year over year. With more inventory available, the ability to move up into a bigger home, or down-size, while selling your home is more achievable. Our sellers are getting strong prices for their homes.;Our buyers are starting to see more opportunities in the market.

Call us today to discuss your real estate needs.

Foreclosure inventory is down nationwide (according to Corelogic’s National Foreclosure Report), and by almost 20% on a year-over-year basis.

What difference does this make to the value of your home, you ask? As the number of homes in distress goes down, the price of homes selling in your neighborhood is more likely to go up. This is one important piece of the housing recovery puzzle.

At the same time, buyers today are very well educated about the local real estate market. Did you know that you can find out what properties are in some stage of the foreclosure process on Zillow.com for free? As with many facts today, this raw information can lead people to some flawed conclusions.

If you look at Eagle Rock, 90041, on Zillow, you see a number of homes in some form of distress -- 82, in fact. These homes are what is called Shadow Inventory (properties that are in some stage of mortgage default.) Since there are only 17 properties currently for sale in 90041, this would seem to indicate that the Shadow Inventory is 4 times the current inventory. Doomsayers might say this means that if all or most of the shadow inventory came onto the market at the same time, it would have the effect of flooding the market with distress sales and would bring prices down. Therefore, they conclude, prices are depressed in Eagle Rock.

That’s kind of like saying if everyone who came to a traffic light suddenly decided to run the red light, we would have a whole lot of accidents and insurance rates would go up. Probably true, ifthat happened, but the idea of everyone losing their minds at the same moment is unlikely. The likelihood of all or even 10 of the 82 distressed properties coming on the market at the same time is also practically non-existent.

But some people like to look at the worst possible outcome. Many buyers are hoping that the housing market will continue to be distressed so that they can still jump in and get “a deal.” Many of these same buyers have been looking for a home off and on for several years and have passed up many “deals.” I have talked to a few of these people and many of their friends who have discussed how Joe Smith should have bought that cute little house on XYZ street last year when he had the chance because now he is going to have to settle for a much smaller house for the same money.

It is very difficult to know how much a home is “worth,” especially when you are a buyer in a multiple offer situation. It’s almost as difficult when you are the only buyer about to make an offer on a house. But ponder this: what would you be thinking about the deal you made on a house if you bought it 2 or 3 years ago?

Too much information can be a bad thing. If you are expecting all this Shadow Inventory to give you the opportunity to get a great deal on a house, you're going to be waiting awhile. The reality of today's real estate market, at least in Eagle Rock, Highland Park, and the surrounding neighborhoods, is that there is low inventory available to buy, there are multiple offers on most homes, and sales prices are typically going over the asking price. Yes, even that house that you think needs a new kitchen is getting multiple offers - because there are buyers who realize that they want to buy a house now, and the longer they wait, the less house they can buy.

Not a super exciting choice at first glance, but the Ford Focus Electric has a range of 100 miles, top speed of 100 MPH, is in stock and the list price is about $40,000, which is barely acceptable with the tax rebates figured in on top of that. It is hard to get past the fact that the electric version is over twice as high in sales price as the gas version. But in reading reviews of the Focus, several people talked about leasing it. Why lease? The electric car battery technology is changing and improving so fast, people are unsure of committing to a purchase at this time. News flash! You still can qualify for tax rebates and pay about $450/month for a 3-year lease contract. This sounds like a pretty good compromise. Especially when our  gasoline prices are spiking up by pennies a day, over 50 cents per gallon in one week!

I’m a Green Realtor. That means I’ve taken the time and spent a bit of money to learn about energy efficient homes. I’ve taken the test and received the Green Realtor designation from the National Association of Realtors. I care about environmental issues on many levels, and our dependence on oil and petroleum products is disturbing. Let’s get it all out on the table: I do think we are experiencing Climate Change and that humans have a lot to do with it and we need to immediately reduce our dependence on petroleum and the emissions that come from burning it.

Since I’m “green,” when I saw a notice that the film “What Is the Electric Car?” was premiering at the Eagle Rock branch of the public library, I dragged my husband down there to see it. What a life-changing experience for us both! Every objection to the electric car was addressed in this film. In brief, the main reasons to own a plug-in vehicle are that it is not dependent on foreign oil, and it is cheaper and cleaner to run -- even with some electricity produced by coal-burning power plants and even with electric cars being more expensive than gasoline-powered cars. I left a believer, an advocate, and an eager purchaser of my electric car!

I went to the website www.pluginamerica.org and checked out their vehicle tracker, which they said had a list of all the new electric vehicles, when they would be available, and what their range, cost, and speed are. The vehicle that excited me most was the Toyota Rav-4, because it is a popular car having most of the features I want, and from what they said, it sounded like it would be affordable. There was no price listed on the website, so I went to the Toyota website and discovered that the Rav-4 is going to cost $49,000! Whoa! Even with the $7500 Federal tax rebate and $2500 State tax rebate, this is too rich for my blood.

So now what? I thought perhaps a journal of my search for the right plug-in car arrangement might make a good series of blog posts and help you and me figure out the best way to go. Stay tuned as we consider the pros and cons of a few plug-in cars.

I'm primarily a listing agent. That is, I mostly represent sellers of residential real estate. But we do work with buyers so we hear their side of it, too. Buyers today are overwhelmed by fear: fear of overpaying, fear of their friends telling them they made a mistake, fear of their parents thinking they were stupid, fear of the market going down after they buy, fear that something will go wrong that they should have known about...the list goes on about another foot or two.

In our neighborhoods, the market is shifting right now, and it is going in the direction of a seller's market. That means that inventory is very low and prices are beginning to go up. Buyers do not want to hear this, they are remembering all the bad news of the last four years and think it is still a buyer's market with high inventory and a tidal wave of distressed properties looming on the horizon, ready to flood the market and bring the prices down more. Then they lose out on a few multiple offer situations and decide they'd better offer more in order to get the deal. Or maybe they find a property that has been on the market awhile and scoop it up. Then it is time for inspections. They pay for every possible inspection and further inspection that is recommended to them. This is good, you should understand the condition of the house you purchase.

This is where it gets complicated. Sometimes an inspection turns up a big problem that no one knew about. If the buyer has paid over market for a house that has a major foundation issue, it might make sense for a seller to negotiate some kind of compromise with the buyer. But to expect that the seller should also repair the sewer line, upgrade the electrical panel, and replace the old but working heating system is questionable. Every situation is different, there are no rules, and the eventual resolution runs the entire spectrum from no concessions to paying for everything, from arriving at an amicable agreement to canceling escrow.

I think it comes down to who is negotiating in good faith and how much experience they have. I find it hard to believe that a first time buyer is re-negotiating the price entirely of their own volition--their agent, friends or family are advising them. In several cases, after clearly and emphatically agreeing to an “as-is” sale where the buyer agrees that the seller will make no repairs, we have heard the buyers’ agent tell the buyer that the next step after the inspection is the request for repairs. Unfortunately, it has become customary for a buyer’s agent to advise negotiating for repairs--they believe that this is their value to the buyer.

If you are buying a home built in the 1920s, you should expect that there will be items that are older but still functioning. There will be items that were up to code when installed, but not up to today’s code. No house is in perfect condition, not even new construction. Yet, many buyers expect sellers to deliver a perfect house or give a discount.  Did it occur to anyone that the price was already discounted to cover any defects? Some buyers are convinced that the seller must have known about the issue and is lying about it.

How about looking at it from the seller's point of view? I have sold so many properties in the last couple of years for people who paid more for the house than they are selling it for, who have decided that the best thing for them to do is to take the loss and move on. If it's a short sale, where the seller owes more than they can sell it for, there is no question of repairs--the seller isn't doing any. It's the seller who has equity enough or resources enough to sell it without having to ruin their credit and go through the pain of a short sale who seems to be the magnet for the fearful buyer.

It's time to move on and just live with the loss of $20,000 to $150,000. This could be due to misfortunes like divorce or job loss, or good stuff like marriage or needing a bigger house for their growing family.

Interest rates are shockingly low...much lower than when they bought it in say, 2006. And they cannot refinance into these current rates because they have no equity to qualify for a new mortgage. They did inspections when they bought and spent some money fixing the problems or remodeling because they knew that the house they bought wasn't perfect. They were just glad to get a house that had much of what they wanted.

And now here is a buyer who offered the most to buy their house, just like they had done. And this buyer promised to buy it as-is, just like they had done. But now this buyer is asking for $10,000 to $40,000 back to pay for things that were not played up as issues when they bought. It seems as if the buyer offered a lot to get the house and now is trying to get the price back down.

Does this sound familiar to any of you out there? See how suspicious buyers and sellers are of each other today? But I know these people. These sellers are not intentionally hiding problems or being unreasonable. And I don't think these buyers are really as cunning about re-negotiating price as they seem to be. So what's up?

Standards have changed. With the proliferation of investor "flips" that have freshly updated marble counter tops throughout, dark-stained wood floors, white interiors, and minimal but stylish landscaping, a dated but well-built older home looks tired and in need of lots of repairs.  HGTV is another influence that has taught many that original tile and practical, period-appropriate materials like Marmoleum are no good. Liability has changed. Where an inspector 6 years ago might have said that a less than 100-amp electric panel and 60-year old wiring was serviceable, today they will call for an electrician to evaluate. Guess what, the electrician recommends an $8,000 re-wire and updated panel. Chimneys and sewer lines that would be called old but working would now be referred to chimney masons and plumbers for their replacement costs.

But also, here is a seller who has lost a good amount of money being asked to pay out some more so they can move on to the next phase of their life. They see a buyer who is paying less for their house than they did several years ago, obtaining a loan at an interest rate they can't get on the house, trying to get them to pay for repairs or upgrades that they either didn't know were issues, or were things that they hadn't been able to afford to do. And they are being treated as if they are lying about such things, or at least were stupid for paying more for a house that needed so much work.

Is it really any wonder why everyone is unhappy?

We just closed escrow on this short sale in the hills of Highland Park.  Perched on a hill in Highland Park, 5318 Raber Street has the privacy, views and potential to make a fantastic hideaway in the city.

We brought this sweet 1926-cottage on the market in March, and after receiving multiple offers, put it right into escrow.  It took four months to navigate the short sale process.  We received short sale approval in July and were able to complete the escrow process with a final sales price of $290,000.  We look forward to seeing how the new homeowners transform this house!

If you would like more information on short sales and how they work, email us or give us a call.

Looking for a reasonably priced rental is a frustrating experience for many, and it is currently a world filled with unscrupulous people trying to steal your money. If you see a 3-bedroom, 2-bath home in Eagle Rock listed for rent for $1200-1500 per month, ask yourself why would someone throw away at least $1,000 per month? Could this be a scam?

Lately the story has been a missionary in Africa who wants a good honest person to rent his childhood home, another is a missionary in Texas, and there's another one up in Oregon.

Live by this motto: If it sounds too good to be true, it probably is. That means, as much as you want it to be true, it’s not!

I’ve spoken with dozens of people over the last few weeks who have seen ads in Craigslist, Hotpads, and now Trulia that are claiming to be rentals but they are actually my listings for sale. They tend to be vacant houses but not always. I am not the only listing agent with this problem, believe me.

Some of the people who have called me have argued that the house is really for rent. No, it’s not. I am not a disgruntled agent whose seller has decided to rent out the house for cheap rent instead of sell it for enough to get on to the next step in his life. Today, the calls were about a property that is actually in escrow and due to close in about a week. Why would I lie about that?

If you look for rentals on these websites, be careful. I wish I had some good alternative places for you to look for a rental. Maybe the time has come for Realtors to list rentals because prospective tenants can’t trust regular prospective landlords. You can at least be certain that a rental listed by a Realtor is for real.

Many callers have thought that I should do something about this. Well, the police don’t want to hear about a scam unless you have actually lost money on it. Would you like to do that? So this blog post is my doing something about it. Don’t send a deposit check to an absentee landlord. Don’t believe that a person who texts and emails with you is the real owner of the home if he can’t meet you at the property and show it to you. Do feel free to call me if it’s my listing and check if it’s really for rent. I don’t want you to lose your money. I want you to save up and eventually buy one of my listings!

The adage "Pretty Costs More" applies to a number of subjects, but especially to the current real estate market.

Buyers in today’s market are being bombarded on all sides with confusing stories about what a home might be worth, whether it’s a good time to buy, what to look for in a home, and especially whether the market is going up or down from here. What to do?

Many buyers go for looks. Just like a pretty girl gets more attention at the high school dance than the brainiac, a house that looks like it stepped out of Dwell or House Beautiful gets more attention and subsequently more money than the house with good bones, solid construction, but tired or out-of-date bathrooms and kitchen.

One example of the pretty theory: a 3-bedroom, 2-bath house in Highland Park recently came on the market for $379,000. It was a trust sale and the house needed a lot of work.  So the agent had inspections done, had the sellers clean, paint, and stage it, and hoped to get a few offers and a bit more than the asking price. Perhaps you saw it on the front page of the Los Angeles Times.  This property captured the attention of the media because it was cute and charming -- and at a great price. The paint and staging brought out the unique character of the home and buyers came running.  Seventy-three (yes, 73!) offers later, the property ended up selling for $542,000.  And that was even after the agent provided to all prospective buyers disclosures and inspection reports that showed the house needed lots of work, including foundation, electrical, plumbing.  Basically all the expensive, not fun items that make for a smooth-running, low-maintenance home.

Here’s another example: a cute little 2-bedroom, 1-bath cottage in Eagle Rock was listed for $419,000. At the time (the start of the spring buying season), it seemed like a reasonable price for a small house in a good but not the best part of Eagle Rock. Seventeen offers later, the house sold for $505,000 cash. This was an investor flip and all the investor did was polish it up a little -- new kitchen counters and a dishwasher, refinished the hardwood floors, painted and landscaped. The inspections showed that the chimney was completely unusable, the HVAC was at the end of its life, and the sewer line was invaded by roots to the extent that the camera couldn’t get through the whole line. No matter, the buyers were happy that they were able to buy the charming home.

The perfect example of how pretty is worth more is 2035 Ridgeview Avenue, which was perfectly updated and exquisite, but only 1353 square feet. We came on the market at $649,000, which was what the sellers had paid for it in 2006 before putting about $200,000 into in, and we ultimately sold it for $760,000, the highest price per square foot for a home sale in Eagle Rock since 2007.

The final example is where all the factors came together at the perfect time: a good 1920s house on a large lot with views, a wonderful private setting, a tastefully updated floor plan, and a seller who did everything the stager dictated. We priced it at $699,000 because that was a number the seller could live with, and at our first open house we were asked by some people why it was priced so high. There were no comparables for a house that size in that location, but the house had such emotional appeal that we ended up with 23 offers and the property ultimately sold for $865,000.

On the other hand, there are a couple of good solid homes in good locations that are currently sitting on the market. We priced them $80,000 to $100,000 less than the prettiest listings, and we have no offers. These are properties that a buyer could put their own designer touches to and have great properties for less money, but buyers obviously don’t see it that way. Why?

Buyers have no imagination. If it isn’t gorgeous already, they don’t see the potential. Sorry, buyers, this sounds harsh, but I have seen it time after time.

In today’s market, the pretty houses that are well-priced are going for more in multiple offers. If you are a buyer, tired of losing out in the intense competition, what can you do?

• Find some more money and offer more on the next one.


• Look for properties that have several good features, see if the ones you don’t like are ones that you could improve yourself, and make an offer.


• Give up and stay where you are.

Another option that I have seen many people try is to keep looking, thinking they will surely find that needle in a haystack, that great house that nobody else has seen that is in a great neighborhood, has a great price, and is really charming and pretty besides. If this is the option you are pursuing, maybe you should ask yourself if you really want to buy a home right now, or do you just think you do.  This is the subject of another article that is coming up soon, so stay tuned.

If you’ve been sitting on the fence about whether to proceed with selling your house as a short sale, you should read this article by Lew Sichelman.

A short sale is a transaction in which the homeowner owes more on the home than they can sell it for. What is owed includes the mortgage debt owed to the lender as well as the closing costs they will incur when they sell, such as commissions, title and escrow fees, taxes, etc. The property can’t be transferred unless the lender agrees to take less than they are owed because the lender has a recorded lien against the property that has to be satisfied before the title can be transferred to the new owner. Of course, a lender isn’t going to forgive the debt unless there is no hope of having it paid in full, and that’s where the homeowner’s distressed financial situation has to be evaluated. Also, there is a penalty to be paid which has been both a big black mark on the homeowner’s credit score and a tax penalty by the government for what is called “debt relief.” This tax penalty has been lifted for the last 5 years because of the severity of the economic downturn.

As the article points out, this 2007 tax relief law expires at the end of 2012, but short sales and foreclosures can take several months to complete. If you have been hanging on to your house, hoping for the market to return to 2007 levels so you can sell it, you may want to reconsider your strategy. In our market area of Northeast Los Angeles, Pasadena and surrounding communities, the average sales prices are mostly still down 20% to 30% from 2007 levels.

There are buyers looking for properties to buy now. Mortgage interest rates are still very low. Inventory is very low. These conditions make it a perfect time to put your house on the market–if you can sell it for what the market will bring you. We are experiencing the best time in the last four years to sell a home. Some homeowners have had the pleasant experience of thinking they would have to short sell their home and finding that it sold for enough to be a regular sale! We would be happy to meet with you confidentially to discuss your own situation.

Tracy King 626-827-9795 This email address is being protected from spambots. You need JavaScript enabled to view it. DRE#01048877

Keely Myres 323-243-1234 This email address is being protected from spambots. You need JavaScript enabled to view it. DRE#01834633

5022 Mount Royal Drive received quite the flurry of attention when we brought it on the market mid-April.  Offers came pouring in for this adorable 2 bedroom, 1 bath cottage.  As we mentioned before, the market has exploded in Eagle Rock. The highest offer (we received 17 total) we received for this flip was $505,000, all cash.  We closed escrow (in 20 days) today at that price.  Welcome to the neighborhood, new homeowners!





Property Details:
Listed for $419,000
Sold for $505,000
2 bedrooms, 1 bath
996 sq. ft. on a 6,953 sq. ft. lot
Built in 1922

For more pictures and details visit www.5022MountRoyalDrive.com.

We brought this Midcentury Ranch home on the market at the end of March for $549,000.  Featuring three bedrooms, two baths, plus a den and a private cul-de-sac location (north of Hill Drive), 1143 Arbor Dell Road quickly went into escrow. This week we closed escrow with a sales price of $549,000.  Our seller has lived in this home since the 1960s and is ready to move on to something new.  We welcome the new homeowners into the neighborhood!





Property Details:
Listed for $549,000
Sold for $549,000
3 bedrooms, 1.75 baths
1,840 sq. ft. on a 9,090 sq. ft. lot
Built in 1953

For more pictures and details visit www.1443ArborDell.com.