Prices Dropping on Lamorinda & Walnut Creek High-End Homes

Sellers are cutting prices on the million-dollar homes in the communities of Lafayette, Orinda, Moraga (Lamorinda) & Walnut Creek.

According to the Contra Costa Multiple Listing Service (MLS) as of April 1, 2009 there are 467 residential properties listed for sale in the communities of Lamorinda & Walnut Creek. Of these properties, 180 units (38%) are priced above $1,000,000. Since January 1, 2009 only 35 of these million-dollar plus homes have entered into a purchase contract (gone pending) or closed escrow (sold) . That's an average of about 12 homes sold per month. At this rate, that means there's over 15 months supply currently on the market (a balanced real estate market typically carries about 3-5 months of inventory).

Although we're in the prime season for selling real estate, "move up" buyers who typically purchase high-end homes have seen the equity in their current homes & their stock portfolios crushed. Adding insult to injury, lenders have all but shut the doors on large real estate loans.

To get their homes sold, seller's are taking a page right out of the giant retailer's play book - they are cutting prices. So far this year, of the 17 homes in the million-plus price range which have closed escrow (Sold), the average discount from the seller's asking price has been 7% . On a percentage basis this may not sound like much, but it adds up to hundreds of thousands of dollars. And with only 20% of the existing inventory selling so far this year, and more units expected to hit the market, more price discounting is sure to come.

To search for homes in Lafayette, Orinda, Moraga and Walnut Creek visit my web site at http://www.darfler.com/

Brentwood, CA Foreclosed Homes Look Sweet!

Recently, I took a client on a tour of "bank owned" foreclosed properties (REOs) currently for sale in Brentwood, California. Much to my client's surprise, the houses we toured were in very good condition and were located in well maintained neighborhoods. Almost all of the homes we looked at were in "move in" condition - a few needed fresh paint and/or carpet; but for rental properties it was a dream come true, especially after touring much older homes in the San Francisco Bay Area.

NOTE: Since we were looking for rental properties, we set the following search parameters: Detached homes, built on or after 1999, priced below $250,000 with 3+ bedrooms. Our target rents were in the $1,400 - $1,700 per month range.

With interest rates in the 4.75-5.75% range a real estate investor can put 20% down and generate positive cash flow on almost every home we looked at. It's no wonder that since Jan. 1, 2009 over 250 homes have either sold or gone "pending" in Brentwood. Other real estate investors see the opportunity as well. If you are considering a real estate investment, I'd highly recommend Brentwood, California.

And with the stimulus bill allocating money for improving the Vasco road corridor & the construction of the high-speed train system an investment in Brentwood could be a very smart move.

If you'd like to learn more about this incredible opportunity, give me a call at 925-330-7507 or e-mail me at mark@darfler.com You can also search homes in this market, and other Bay Area markets, by visiting my web site at http://www.darfler.com/

Rough Ride Ahead

Short term (2-3 years) it looks like we're in for a rough ride. Even if the Federal Reserve lowers interest rates further, there's still the issue of much tighter lending requirements, which effectively takes many prospective buyers out of the market. If this were the only issue, we'd probably be o.k., but, adding insult to injury we're right in the middle of ARMs adjusting to their fully indexed rates. As rates increase, many borrowers can't make their mortgage nut, and with little or possibly negative equity, they're walking (or running) away from their homes in droves. Increasing supply combined with lower demand means...you got it...lower prices.

What's a seller to do? If you buy my argument above,...price ahead of the declining market, have a rock solid marketing plan with an emphasis in online marketing & consider financing part of the sale.

In this case, "pricing ahead" means pricing below comparable homes that have VERY RECENTLY SOLD. No, not homes that sold 3 months ago... you'll need to find comparable homes that have closed escrow in the past 30 days! FYI - SOLD means homes that have CLOSED ESCROW, not homes that have recently been listed for sale. Price 3% below the most recent comparable sale and make sure you have your home in tip top shape.

According to the National Association of Home Builders & the National Association of Realtors approximately 80% of home buyers start their search using the internet. So use internet search engines to get the word out. A good Marketing Plan focuses on getting your home listed on the following web sites (at a minimum) Google, Yahoo, MSN, Zillow, Realtor.com, Homes.com, craigslist.org, Trulia. Although listing your property on the MLS does help get your property online, your Realtor will need to link, post & advertise directly with the major online engines to maximize your online exposure.

Point the search engines to a dedicated Property Specific Web Site, so you can measure the traffic patterns. Make sure the Property Specific Web Site you select offers a graphical traffic analyzer. Have your Realtor make adjustments to the online campaign for optimal performance.

More to come...

For Seller Financing, check out this link:
http://www.circlelending.com/smartseller/index.asp

Mark Darfler Photo