Selling in order to buy?

October 2, 2013 by Edwin Baloloy

Can you apply the same marketing strategy to every home?

Every home is unique in it’s own way. If I were to identify (2) extremes of classifying a home, it would be: 1.) the Niche home, and 2.) the “bread and butter” category. This is important because agents and sellers will often apply the wrong marketing strategy and have the wrong expectations. Of course, the wrong expectation will often produce the wrong result.

tract home — Although the “bread and butter” home may appeal to most, it can also feel very cookie-cutter like.

The “bread and butter” home is what the nickname implies: it’s something that appeals to almost everyone. In North Orange County, that usually translates into the following characteristics: newer built (after 1990), good schools, at least 3 bedrooms, at least 2 bathrooms with a direct access garage. You’ll also hear some cultures place additional requirements on “Feng Shui” or the way the home’s layout flows from room-to-room.

On the other hand, the “niche” home is sometimes a “love or hate” type of property. Some examples of this could include a historic home, a taste-specific home, a home with only one bath, or home that isn’t remodeled to today’s trends.

Although this condo shown is a single level, it only had 1 bath and faced a busy street. Niche-type marketing can apply in this situation.

Historic homes are a good example of a "niche" home. — Historic homes are a good example of a “niche” home.

August 27, 2013 by Edwin Baloloy

What can we learn from New Home Builders? Can we apply the same strategies to resale homes?

Everyone loves viewing brand new homes for a number of reasons. For myself, the near-perfection of a model home lets me imagine a near-perfect life.

All of my senses are pleased when entering a model home: My eyes are pleased with the professional decorations and strategically selected furniture. My ears hear the sound of a tranquil fountain blended with classical music piped in through speakers in every room. My nose smells carefully selected fresh fragrances. My feet feel the supporting firmness of brand new carpet.

Emotionally, I feel overwhelmed suddenly consider buying a new home in this development.

Although my rational self is somewhat drunk in all of this indulgence, I still can get a sense of value. I view the home price sheet and the prices appear to be reasonable over the resale homes in the area. I convince my wife that the monthly payment is within our reach and we start conversations with the salesperson in the office.

Similar to buying a car, we are shocked at the price we would have to pay when we add the lot premium, minimal upgrades to even remotely resemble the model home, and how much it would cost to have the surrounding dirt professionally landscaped. By the time everything is taken into consideration, we would be paying anywhere between 10-20% above a similar-sized resale home.

Knowing that the “newness” of the home will be short lived, we decide to take the plunge anyway.

FACT: After taking into consideration the cost of landscaping and upgrades, a new home in North Orange County will cost over 15% more than a comparable resale home.

What can we learn from the New Home Builders to achieve the most money for a resale home?

While there are obvious things we can’t duplicate such as the “newness” of the area, bank canvas of the neighborhood, and minimal upkeep the first few years, there are still aspects that can maximize the emotional appeal of a home:

Builders make sure everyone knows about their community. Why shouldn't you? — Builders make sure everyone knows about their community. Why shouldn’t you do the same?

Market Exposure: If there’s any one thing large home builder knows, it’s how to market a new development. You’ll see large billboards, commercials, full-page ads in the newspaper, and tons of internet sites to promote the neighborhood. They even give it a fancy name that many can’t pronounce.

For a resale home, a local agent can carefully select professional photography, create property brochures (not “flyers”), and maximize website exposure by paying extra for premium positioning.

Plan 3 in the Castillian, Blackstone in Brea

Home Staging: Model homes are decorated with one purpose in mind: to convince a homebuyer that this home is perfect for their life. Most buyers are terrible at using their imagination. When furniture and even fake food on the counter is displayed, it brings the buyer closer to thinking the home is destined to be their home.

With resale homes, there are common mistakes of having the home either too empty or too cluttered. Too much furniture and family photos will distract the buyer and they will always feel it belongs to someone else. On the other end of the spectrum, a completely empty home can feel “cold” to a buyer. Many Realtors offer the option of having the home professionally staged.

Careful Control of Supply

Ever wonder why a builder releases their home in “phases” as oppose to just building the whole development at once? One of the reasons is to control the amount of homes available. Scarcity is a fundamental aspect of value. Pushing buzzwords and cliches such as “limited release”, “priority waiting list,” or “only 3 homes left” reinforces scarcity to the buyer.

The release of your home has to take into account the competing inventory nearby. If there’s a home down the street with similar square footage, why not wait until it enters escrow? If nothing is for sale in your neighborhood, why not make an extra push to have the home ready on the market?

Availability of Showings

Many builder sales offices and models are open 7 days a week with common hours of 10 AM to 6 PM. This allows everyone’s busy schedules an opportunity to view the model homes.

With a resale home, making the home available for showings with a lockbox is a must. Anytime you restrict showings, it can possibly result in the top-paying buyer going elsewhere, regardless of market conditions.

Market Seasoning

Home Builders NEVER place an ad in the paper one day only to sell the home the following day. Similar to a movie release, they follow a timetable that has milestones and announces dates well in advance. Some examples include, “First Phase released this weekend” or “Waiting list starts this Saturday”.

This ensures that the all the interested homebuyers will know about the new development and ensure the highest-paying buyers will have a shot.

In resale, I always shake my head every time I see a home sold in a single day or even two days immediately after inputting the home into the MLS database. Even with today’s seller’s market, you’ll want to season your listing properly. A good agent would know the perfect balance and timing.

Cooperation of local broker community

Just like anything in life, this is a relationship-based business. While Home Builders spend tons of money on advertising, they still offer compensation to local brokers. In many cases, a buyer needs to sell their own home and a broker can manage their transition. Furthermore, working with local Real Estate agents has a “multiplying effect” on the exposure through word of mouth referrals and occasional entry into the local Real Estate board’s Multiple Listing Service (MLS).

Case in point: When builders struggle to sell homes, one of their common options they’ve used as opposed to reducing the price, is to increase the Realtor commission. This not only creates an extra incentive for agents to get the word out, but it also protects values for the homeowner who recently purchased in the development.

With a resale home, make sure that your agent has a track record of selling their listings with outside offices. Unfortunately, there are always greedy agents who only care about their commission — not the best offer on your home. In my opinion, an agent who’s always looking out for their seller’s best interests doesn’t “double end”, or sell their listings without another agent more than 10% of the time.

We can go on and on, but you get the point. Homebuilders have been selling homes for more money for decades. Why not copy some of their techniques?

Ask Edwin what he would do to make your home appeal more to buyers at 714-501-2732.

August 26, 2013 by Edwin Baloloy

Have you outgrown your current home? Check out these popular “Move Up” Neighborhoods within the Placentia Yorba School District

Just landed your dream job, promotion at work or achieved a breakthrough in your business?

Homeowners who purchased a home a few years ago and are looking to upgrade have the option to stay in their own backyard. While many would love to escape to a beach community, there are several advantages to staying put within your current Placentia Yorba School district.

With many homeowners getting excited with an increase in their home’s value and improving economy, many are thinking of selling in order to “move up” into a larger home. In a prior blog, I mentioned the options a homeowner has for selling in order to buy.

Here are a few of my picks for someone currently living in less than 2,600 square feet in living space looking to expand to luxury home over 3,000 square feet in Yorba Linda, Brea, and Placentia.

Within the Placentia Yorba Linda School District

1. East Lake Village – with homes built in the late 80s to early 2000’s, these ageless designs by S&S (now named Shapell Homes) can be either a rare single story home or all the way up to a 2 story with 4,000 square feet in the heart of Yorba Linda. Since many of the homes were built in the early 90’s, lot sizes are generous and there are plenty of greenbelt spaces to create an open feel of the community. There are countless amenities within the association such as a banquet room, full exercise room, private lake, tennis courts, and several pools. The 57 freeway is about 15 minutes away while the 91 is a 10 minute drive.

Schools: Glenknoll Elementary, Benardo Yorba Middle, Esperanza High (Southeast of Village Center & Paseo De Las Palomas)

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Village+Center+Drive,+Yorba+Linda,+CA&aq=0&oq=village+center+&sll=37.269174,-119.306607&sspn=8.756229,16.018066&t=h&ie=UTF8&hq=&hnear=Village+Center+Dr,+Yorba+Linda,+Orange,+California&ll=33.887945,-117.777177&spn=0.008925,0.015643&z=14&output=embed&w=425&h=350]

2. Alta Vista South – With designs by HQT homes built in 2002 and Lyon homes in 1999, 2 communities within this area called Torrey Pines and Ironwood have floorplans over 3,000 square feet around the Alta Vista Country Club. HOA amenities include a pool and spa.

GetMedia.ashx — Alta Vista Country Club surrounds both the Ironwood and Torrey Pines communities within Alta Vista South

3. Bel Maison – located at the front of the Placentia Community “Alta Vista South”, these French-themed, tudor styled homes have the most unique curb appeal in the area. Floorplans range from 2,750 square feet to 3,200 square feet. A few lots on UnderHill Drive look upon the private Alta Vista Country Club and several streets end in a less traveled cul-de-sac.

Bel Masion is known for its unique curb appeal

Homes along Underhill Drive have golf course views

Schools: Tynes Elementary, Kraemer Middle, Valencia High

[googlemaps https://maps.google.com/maps/embed?pb=!1m18!1m12!1m3!1d3312.608380907034!2d-117.84916749999998!3d33.87398219999999!2m3!1f0!2f0!3f0!3m2!1i1024!2i768!4f13.1!3m3!1m2!1s0x80dcd6a6b6d002bd%3A0x127d51c6aec598c5!2sDunnavant+Dr!5e0!3m2!1sen!2sus!4v1396537957000&w=425&h=300]

4. Vista Del Verde – this high end community surrounds Yorba Linda’s Black Gold Golf course and is dominated by luxurious designs by famous luxury homebuilder Toll Brothers. With their vintage double sweeping staircases and impressive exteriors, these designs seem to command some of the highest values per square foot. Other possibilities include “Greenbriar” by MBK homes, “Corte Bella” by Shapell Homes, and other communities up to 5,100 square feet in living space with many view lots to Catalina.

The flagship model of the premiere "Legends" community by Toll Brothers features outdoor living spaces and views to Catalina. — The flagship model of the premiere “Legends” community by Toll Brothers features outdoor living spaces and views to Catalina.

Schools: Lakeview Elementary, Yorba Linda Middle, El Dorado High

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=lakeview+and+bastanchury,+yorba+linda,+ca&aq=&sll=33.874727,-117.846876&sspn=0.004463,0.007821&t=h&ie=UTF8&hq=&hnear=Bastanchury+Rd+%26+Lakeview+Ave,+Yorba+Linda,+Orange,+California+92886&ll=33.89947,-117.811656&spn=0.017845,0.031285&z=14&output=embed&w=425&h=350]

5. Rose Crest – with floorplans up to 3,500 square feet, these modernized designs by Shapell Homes were built in 2005 and is walking distance from the Placentia Sports Complex. Compared to other newer homes in the area, lots sizes are generous.

Schools: Tynes Elementary, Kraemer Middle, Valencia High

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=rose+and+alta+vista,+placentia,+ca&aq=&sll=33.904438,-117.819614&sspn=0.017845,0.031285&t=h&ie=UTF8&hq=&hnear=N+Rose+Dr+%26+Alta+Vista+St,+Placentia,+Orange,+California+92870&ll=33.875756,-117.843197&spn=0.008926,0.015643&z=14&output=embed&w=425&h=350]

6. Kerrigan Ranch – This high end community features a county-like setting with modern designs built in 2005. Directly across the street from Yorba Linda High school, the hilly landscape allows many lots to either be private or have a panoramic view toward Catalina. This is arguably Yorba Linda’s premiere tract home community.

Kerrigan Ranch appeals to buyers with modern designs in a country-like setting in the hills of Yorba Linda

Schools: Mabel Paine Elementary, Yorba Linda Middle, Yorba Linda High

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=bastanchury+and+clydesdale,+ca&aq=&sll=33.87266,-117.841566&sspn=0.008926,0.015643&t=h&ie=UTF8&hq=&hnear=Bastanchury+Rd+%26+Clydesdale,+Yorba+Linda,+Orange,+California+92886&ll=33.900391,-117.7986&spn=0.008923,0.015643&z=14&output=embed&w=425&h=350]

7. Hidden Hills – known for the neighborhood with the “big white house on top of the hill”, this neighborhood contains several custom estates with the best views of North Orange County.

Schools: Travis Elementary, Travis Middle, Yorba Linda High

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=hidden+hills,+yorba+linda,+ca&aq=&sll=33.874086,-117.706404&sspn=0.008926,0.020514&t=h&ie=UTF8&hq=&hnear=Hidden+Hills+Rd,+Yorba+Linda,+Orange,+California+92887&ll=33.889085,-117.739004&spn=0.017848,0.041027&z=14&output=embed&w=425&h=350]

8. Parkhurst – as one of the premier luxury gated communities of North Orange County, Parkhurst offers all the amenities of a luxury resort while having several lots with views of the Tri-City Park lake. HOA amenities include large greenbelt spaces along walking trails, playgrounds, 2 pool areas with junior olympic-sized pool, spa, volleyball court, basketball courts, and club house.
These homes were built in 2001 and have floorplans that range from 2,800 to 4,600 square feet. All designs offer open spaces where the living room or foyer has high ceilings to the 2nd level roof line. Lot sizes are generous for a newer home. The community actually belongs to the City of Fullerton while residing within the Placentia Yorba School District.

Schools: Golden Elementary, Tuffree Middle, El Dorado High

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Blackberry+Ct,+Fullerton,+CA&aq=0&oq=blackberry,+fullerton,+ca&sll=33.833641,-118.011148&sspn=1.142987,2.625732&t=h&ie=UTF8&hq=&hnear=Blackberry+Ct,+Fullerton,+Orange,+California+92835&ll=33.905724,-117.872808&spn=0.008922,0.020514&z=14&output=embed&w=425&h=350]

Outside of the School District

A. Blackstone in Brea – featuring numerous communities with designs over 3,000 square feet, Standard Pacific and Shea Homes currently have 3 brand new communities for sale: Coral Ridge, Emerald Heights, and Montserrat. The communities built a year ago are Jade and Castillian. My prior blog has additional information on those communities.

Many of the larger Blackstone homes by Shea and Standard Pacific might now look impressive from the outside, but interiors are maximized for flow and appeal — Many of the larger Blackstone homes by Shea and Standard Pacific might not look impressive from the outside, but interiors are maximized for flow and appeal

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Standard+Pacific+Homes+-+Sorano+at+Blackstone,+Tapia+Lane,+Brea,+CA&aq=0&oq=blackstone,+brea,+CA&sll=33.907056,-117.868581&sspn=0.008922,0.020514&t=h&ie=UTF8&hq=Standard+Pacific+Homes+-+Sorano+at+Blackstone,&hnear=Tapia+Ln,+Brea,+Orange,+California+92821&ll=33.926056,-117.862294&spn=0.006295,0.006295&output=embed&w=425&h=350]

B. Olinda Ranch – several builders such as Christopher Homes, Van Daele, and KB Homes have designs over 3,000 square feet. This community has several greenbelt spaces, walking trails, nearby museum, and private park with low HOA dues. Most homes were built around 2001.

Some lots within Olinda Ranch offer backyards with no neighbor behind you. Plenty of greenbelt and undeveloped areas give you plenty of space.

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=valencia+and+lambert,+brea,+ca&aq=&sll=33.92707,-117.861607&sspn=0.00892,0.020514&t=h&ie=UTF8&hq=&hnear=E+Lambert+Rd+%26+Valencia+Ave&ll=33.92707,-117.861607&spn=0.00892,0.020514&z=14&output=embed&w=425&h=350]

C. The Presidential Collection – this newer built gated neighborhood consists of homes from 3,700 to 4,300 square feet within a prime area of Fullerton. Within a short walk is Fullerton’s famous “Fullerton Loop” desired by active individuals who enjoy hiking, jogging, and biking. Historic Downtown Fullerton is only minutes away. These 2002/03 constructed designs have many of the modern amenities and desired layouts.

[googlemaps https://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=1613+Tyler+Dr,+Fullerton,+CA+92835&aq=&sll=33.92414,-117.847663&sspn=0.00892,0.020514&t=h&ie=UTF8&hq=&hnear=1613+Tyler+Dr,+Fullerton,+Orange,+California+92835&z=14&ll=33.900411,-117.897368&output=embed&w=425&h=350]

For more information regarding upcoming listings and current pricing within these neighborhoods, you can call Edwin at 714-501-2732.

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May 1, 2013 by Edwin Baloloy

The FOURTH option for moving: Timing the market

In a prior blog, I explained that if you’re a homeowner waiting for home values to increase, it will actually cost you more money. Especially in the example where a homeowner is looking to “move up” into a larger home, the gap can widen significantly between your home and your replacement home. Additionally, loan costs, commissions, and property taxes will be higher.

Of course, the ultra-conservative, zero risk-type of person will always find a reason to stay put and never sell. It’s a miracle they aren’t a lifetime renter. For the others who want to upgrade their quality of life, don’t worry — you still have plenty of options.

[youtube http://www.youtube.com/watch?v=c0hBMi58zCA&w=420&h=315]

For the homeowner who wants to transition immediately into their replacement residence, they can choose from the following:

Buy & Sell “non contingent” – in most cases, the homeowner will first place their home on the market and close escrow in order to use the proceeds for their upleg home. The best terms and price are possible because you aren’t placing any restrictions on your sale or your purchase. This will require moving twice: once into a temporary residence until you find your replacement home then moving again once you close escrow on your purchase. The limbo period with this option will be the longest, but you don’t have the worry of having a deadline to purchase.
Sell with a rentback – in this option, you’d sell to a buyer who’s willing to let you rent from them until you close escrow on your replacement home. The lease period is usually capped at 30 days due to lending standards (unless you find a cash buyer). As you can imagine, it can become quite stressful if you can’t find a replacement home when your home is in escrow. Once your home is under contract, you can’t back out unless the buyer allows it.
Sell contingent upon your purchase – especially for the homeowner that’s concerned most about not finding a suitable replacement home, you can place restrictions on your sale. In this option, you’d place your home on the market and sell to a buyer that’s willing to cooperate with your transition. This will likely cost you money as it usually will eliminate the most motivated buyers. If you can’t find a replacement home, you can cancel with your contingency.

For the homeowner who doesn’t need to sell in order to buy, they have the option of completing their purchase then having the option to make their existing home a rental property or sell at a later time. It’s very important that you know upfront what commitment you’re making.

For you risk-takers, I have a fourth sexier option: Time the market. You would do something everyone advises against: predict when home prices have peaked and cash out your equity by selling. Then, you watch on the sidelines (while renting) until you feel selection has improved or prices have fallen enough. In most cases, the proceeds would be protected against capital gains due to primary homeowner exemptions.

Screen Shot 2013-05-01 at 11.48.50 AM — Timing the market: Sell high, buy low

This will require a thorough understanding of the market. Don’t rely on what the public and media thinks — they’re always telling you to do the opposite anyway (i.e. – they said 2005 was a good time to buy and 2008 was a “bad” market). Look at the following indicators:

Screen Shot 2013-03-19 at 9.03.48 AM — “Months of Supply” should be one of your indicators when to take action

Supply & demand: “Months of supply” – a metric that uses prior demand into today’s supply number. In Southern California, 4-5 months of inventory is classified as a “par” market. Anything higher is a buyer’s market and lower than 4 months is seller’s market. A Realtor should know this number in their local market.
% of distressed inventory – even when supply will indicate a seller’s or buyer’s market, it shouldn’t be used alone to determine if prices will rise or drop. Since maximum price isn’t the main priority of a distressed property, having over 40% of short sales and REOs can wreak havoc on values due to condition, lender’s lack of attention, and higher fraud rate over traditional equity sales. Two good sources of data are ForeclosureRadar.com and RealtyTrac.com.
Government intervention and lawsuits – recent tinkering of the market through foreclosure moratoriums, first time homebuyer incentives, and large-scale settlements are some of the recent ways the home supply was either severely limited or demand was increased.

Even with this knowledge, you must know that you will be off with your prediction. A realistic goal is to be within 12 months of the peak.

I’ve met a small handful of homeowners who were able to pull off this feat. One of them was an Engineer named John who thought 2005 was the best time to cash out his equity and it turned out to be a good decision. He rented for 2 years and re-entered the market in early 2008 as foreclosures and inventory levels were rising. While his timing on the purchase side was off by a few years, the difference in saving compared to if he simply “traded equity” in 2005 was over $150,000. Additionally, he had absolute control of terms and selection when placing offers.

As you can imagine, if you sell at the wrong time while prices continue to rise, you can become a renter indefinitely. This isn’t the end of the world. At some point, when affordability becomes unattainable to the public, the advantages to home ownership can be reduced significantly due to a widened gap between would-be mortgage payments and rent payments.