In real estate, as in life, it’s important to live and learn. And boy did we do a lot of living in the Southern California real estate market in 2015.
The New Year is the perfect time to take stock of where you are and how to improve. Thats why we decided to take a look back at the most important takeaways from 2015 and how these lessons can help us dominate the real estate market in 2016. For our 2015 takeaways weve included advice for buyers, sellers and real estate agents.
So lets look at the hard facts and statistics from the year, as well as advice from our own expert agents, and learn how to succeed in 2016.
Buyer Lessons
Seize the day – and low mortgage rates
Mortgage rates hit all time lows in 2015, remaining below 4 for nearly the entire year. Good news is, they’ve remained in that range into 2016. Bad news is, as the market continues to normalize, rates are likely to rise.
The Fed warned of a rate hike at the end of December, but lucky for homebuyers, rates have remained mostly steady across the spectrum. This week’s Mortgage Watch shows that 30-year fixed rates are at 3.97.
Because mortgage rates dropped in 2015, todays buyers can afford 7 more home as compared to the start of last year. If you could afford a $400,000 in 2014, in 2015, you could afford a home for near $428,000. That’s how much more bang for your buck you get with a low mortgage rate.
So stop stalling and seize a low mortgage rate today, before they inevitably start rising in 2016.
Be prepared
Simply put, when there’s more demand than supply (i.e. homes on the market), it’s a seller’s market. It’s still a sellers market in Southern California based on months of inventory, so as a buyer you’ve got to be ready to make an offer when that perfect home comes along.
Less than 3 months of inventory is considered a seller’s market, and 6 or more is considered a buyers market. Based on the Trendgraphix report above including OC, LA, Riverside and San Bernardino county data, inventory is still slow to recover.
How can you prepare?
Get pre-approved before going house hunting.
A mortgage loan pre-approval is a written statement from a lender stating you would qualify for a particular loan under your current qualifications and the lender’s guidelines. It’s good for 60-90 days and the loan amount is based on a full and complete look at your income and credit information.
When you walk into a showing with a pre-approval letter, you’ll be prepared to make an offer and secure that home if you fall in love. Here’s how you can get pre-approved for a mortgage loan.
Be ready to sweeten the deal.
A seller’s market can easily lend itself to bidding wars so be prepared to sweeten the deal when you put in your offer on a home. All deal sweeteners have various levels of risk that not all buyers are willing to accept, so consult with your agent and loved ones before you decide what you are willing to do to get the house you want.
Deal sweeteners include, but aren’t limited to, an escalation clause stating you’ll automatically be willing to pay above a competing bid if it comes to that, and foregoing contingencies like your own home sale if you’re also selling or an appraisal, etc.
Advice for Sellers
It’s the little things that count
Location, price, bed and bath count – those are the big that determine how well your home will sell. However, seemingly small things can also make a HUGE difference in how much buyers are willing to pay for your property. Those little things are: Photography, Staging and Curb appeal.
Photography
Professional photography sells listings 50 faster, 39 closer to the list price and generates 118 more online views according to a recent study.
Buyers spend about 60 of their time viewing photos while only 20 on property description. That’s why your photos need to be professional and polished. The best place to start is these 5 prep steps to make your listing photos instantly look better.
Staging
According to the 2015 NAR Profile of Home Staging, 46 of buyers are more willing to walk through a home they viewed online, and 28 of buyers are more willing to overlook other property faults if a home is staged.
Staging also can also increase the amount buyers are willing to offer. 48 of buyers’ agents believe staged homes increases the dollar value buyers are willing to offer by 1-10.
Curb Appeal
The fact is, buyers won’t even get out of the car to view your home if the exterior isn’t visually appealing. Cur appeal is your first impression and you don’t want to blow it with a yard full of weeds and peeling paint.
Built trust
People want to buy houses from people that they trust, so built that trust by being upfront as possible. That means everything from fixing holes in the wall instead of trying to cover them up with wall art to making sure you have a full and complete list of disclosures.
You might be surprised by everything you legally need to disclose when you sell a house. A good rule of thumb when it comes to disclosures is that you should disclose anything that you would want to know if you were buying a home. When you start questioning, “Do I need to disclose…”, the answer is almost always yes.
Go with the statistics
This 2015 takeaway comes from First Team agent Bruce Brown, Anaheim Hills real estate specialist. “First Team has amazing statistical support for analyzing local markets. As the pundits state the market is changing, we refer to our local statistics and set our marketing strategy to fit that market. The proof of the value of incorporating pre market analysis to market plan is our results.”
Our local statistics come from our handy Market Trends tool built by our very own team of developers here at First Team. Updated with the latest numbers from the MLS, our hard facts and data take the guesswork out of selling and pricing homes by providing you with past and present market indicators.
For a look at the latest stats, check out our December 2015 Real Estate Market Reports. Every month we update these with the latest data to give you a quick and easy way to keep up with your local market.
Takeaways for Agents
Nextdoor Social Network
In addition to his passion for vintage real estate and green homes, Lincoln Park specialist and First Team agent Fred Van Allen, grew his business in 2015 using social media – and it wasn’t Facebook.
“Nextdoor is a social network based on geography. A condo complex, a neighborhood or a zip code can choose to be mapped out and added. Then invites are sent out to resident to join. As a agent, I am now communicating to tons of people in my farm daily.”
Nextdoor users can share all kinds of neighborhood info from updates on lost dogs, to suspicious persons and community events.
“I found it to be a great tool, I think I have gotten two or three leads from it With Nextdoor, everybody knows who you are. I am the founder of Lincoln Park Nextoddor. As other contiguous Nextdoor groups start, you can communicate to the also. I had 119 people accept my invite. Members then invite others, and now there are 400+ members for the Lincoln Park Nextdoor group. I can reach out to 900+ people right now all within 3/4 a mile of my farm.”
Never give up
As the real estate market continues to change and the realities of buyers and sellers with it, persistence is key. Millennials are slowly but surely entering the recovering market and baby boomers are finally starting to tip toe toward downsizing. That’s why Susie McCollom, First Team Laguna Beach agent, says her biggest takeaway from 2015 was to never give up.
“Never give up and keep your clients always engaged in the transaction and process. Be open, frank and forthright in your conversations. They will be appreciative in the end.”
Focus on mobile
According to the OC Register, 85 of Californians used a mobile device to help buy a home in 2015. That means buyers are searching on their phone for a home and for a real estate agent - so you need to be on top of your mobile game.
What worked in 2015 and what agents should continue to focus on in 2016 is perfecting your mobile optimized website, honing an iron clad follow up system for online leads, and implementing mobile friendly tools and systems to help you stay on top of transactions while you’re on the go.
That’s why here at First Team our mantra is lifelong learning. Our University not only helps new agents get licensed and trained, we also help seasoned agents master the most important elements of real estate sales and implement company sponsored tools. For more info on how we stay ahead of the game, take a look around the First Team University.
What real estate lessons did you learn in 2015? Leave a comment and share your takeaway from 2015.