[00:00:10] Speaker A: The Michael Hatfield re Max team presents real estate and more.
[00:00:15] Speaker B: Bay Area real estate is different than in all of America.
[00:00:19] Speaker C: And why?
[00:00:20] Speaker B: What's up with homebuyers? What's on sellers minds?
[00:00:24] Speaker C: How is the market?
[00:00:25] Speaker B: And much, much more.
[00:00:27] Speaker A: Now here's your host, Michael Hatfield. Welcome back to the real estate and more shows, and thank you for listening. Our next guest is a person who has been a Bay Area resident for more than four decades, knows the value of homes here. Very knowledgeable. But now, due to the ever increasing home values, he has questions about the Bay Area housing market. Not afraid to ask those questions either. Is this the best time to buy or to sell my home? This gentleman goes by the name of Mister Charles. Load your questions, Mister Charles, and welcome to the show.
[00:01:06] Speaker C: Well, thanks, Michael. We can have a good time with this portion of the show, and I'm here to help you along and answer some of your questions.
[00:01:15] Speaker A: Well, I like it when you're here.
[00:01:16] Speaker C: To help me along and ask some of your questions.
[00:01:19] Speaker A: You know, Charlie, I need all the help I can get. It's good to have you here.
[00:01:23] Speaker C: You do, Michael. That's okay.
[00:01:25] Speaker A: Well, mister Charles, did you ever end up owning a home in the Bay Area and enjoying it, or has it always been kind of a tax to keep it nice and neat? What's your thoughts?
[00:01:35] Speaker C: Well, I was living in San Francisco with my wife at the time, and we wanted to buy a home, and my sister lived in Arinda, and so we looked out there and, yeah, we bought a home in Arinda. Little bit different price range back in those days, but that's the first home that I ever owned was in Arenda.
[00:01:59] Speaker A: Did you have any children that you raised in the east Bay at all?
[00:02:04] Speaker C: Yeah, not when we moved, but that's where my two sons were born in Orinda, and we grew up there, and that's kind of where it all started. And, of course, I still live in the east bay.
[00:02:20] Speaker A: So you're, in essence, a bay Area, a person that has been here so long that he's domiciled here and he wears the brand of the San Francisco Bay area.
[00:02:31] Speaker C: Well, that's probably true. I know a lot more about it than, you know, than anywhere else, and I'm just happy to be here. For heaven's sakes, back in the day.
[00:02:42] Speaker A: Do you think, did you feel like you and your lady paid a lot for your home when you bought it?
[00:02:47] Speaker C: Oh, we did. I mean, it was a staggering amount. $36,000.
[00:02:52] Speaker A: Oh, wow.
[00:02:52] Speaker C: You can imagine that.
[00:02:53] Speaker A: But it was scary, was it not?
[00:02:55] Speaker C: Well, it was. I mean, back then it seemed. It seemed like a lot of money. And of course, you hardly even thought about the interest rate because the payment was going to be a lot. The difference between 5678 9% for $36,000 is not a whole lot of difference.
But then that's what it was. We had an interest rate, I think, eight and a half, but didn't think much about it. You have to think a little more about it these days.
[00:03:24] Speaker A: Yeah. And that's because of the higher prices of the homes that we have, I guess.
[00:03:28] Speaker C: Well, for sure.
[00:03:29] Speaker A: I remember, and I've said it before, that my first home was twelve and a half percent interest. And I didn't think a whole lot about it at the time. I just wanted to know that I could make that payment.
[00:03:41] Speaker C: That's all that mattered.
[00:03:42] Speaker A: Not get thrown out. It's a little embarrassing to get thrown out of your home, but things happen in life. And I do remember it wasn't seemingly as big of a deal back then as it is now. Our buyers are just overwhelmed by looking at 6.5% to 7%. They think that the end of the world has happened. Don't you agree?
[00:04:03] Speaker C: Well, maybe so. It's a lot different than back in the day. And, of course, the prices of houses. I was just thinking not too long ago that where we lived in Arinda, for the price we paid, if it was now, we could buy the entire neighborhood.
[00:04:26] Speaker A: It's a little bit funny the way things have changed, is it not?
[00:04:30] Speaker C: It's a lot different. It sure is.
[00:04:32] Speaker A: Well, you had a question for me, I think, and I'm sitting here ready for it.
[00:04:37] Speaker C: Okay. Well, I thought we would begin with a little perspective, and let's say you wanted to buy it. You know, kind of a typical house now in the Bay area, let's call it $1.5 million. You put 20% down, that's $300,000 wherever you get the $300,000. So you want to finance 1.2 million in today's world, with a 30 year fixed mortgage, let's say that's going to be around 7%.
I mean, 7% now, compared to what it would have been not that long ago. At 3%, what's the difference in the mortgage payment about?
[00:05:17] Speaker A: It's a lot of money.
[00:05:19] Speaker C: It's a lot of money. Okay.
[00:05:21] Speaker A: Yeah, it's a lot of money.
[00:05:22] Speaker C: You got that down.
[00:05:23] Speaker A: But the important thing to realize is that the 3% was the lowest ever. You know that in my six decades of looking at it as well, as looking back at the historical numbers of it, and I don't think we're going to see, you know, 3%, two and a half percent for some period of time. We're just not going to see it again. So the buyers have to look at their own game at the time. The game being what is the market, what is the mortgage market, and what do they have to pay to borrow money? What are they going to pay as rent on the money? So, you know, let's live in the real world. And the real world is 6.85% payments on a $1.2 million loan at 6.7585%, about 7700 a month principal and interest, a bit more than you'd be paying at 3%.
And I just don't want to think about it too much.
[00:06:22] Speaker C: People don't. I mean, I have one of those, one of those low mortgages, and I don't even like to think about it anymore. What would, you know, what we'd have to do if we had to refinance at 7% or whatever it is, which we don't?
[00:06:37] Speaker A: Just hold onto it, Mister Charles.
[00:06:39] Speaker C: That's the easy, that's the easy answer. Michael.
[00:06:42] Speaker A: Yes, sir.
I like easy.
[00:06:46] Speaker C: It's easy, that's for sure.
Now, you work with a lot of sellers, a lot of buyers, just a lot of people. And if you're working with a seller, let's say, then how do you determine what price to price the house, and then if you're working with a buyer and then what price to pay, how do you kind of balance all that out a little bit?
[00:07:08] Speaker A: Well, first of all, with a seller, what we do is we go in and do a comprehensive, what we call a market analysis, and we go through a little bit of the same process that an appraiser would. We would take a look at the homes that have sold in that exact area within the last 90 days, or we can expand that a little bit if it needs to be in order to get enough comparisons. So we look at the homes that are sold, we look at the homes that are pending. That means that they're in contract for sale. And then we also look at the number of actives. We take a really close look at that and say, well, the home that we're going to sell, what do we have to do to match it closest to those? We make adjustments, and then we take a look at the actual market itself. What month are we in? What seasonal time of the year are we going to get more sellers right now? Are we going to get more buyers right now has the interest rate dropped 25 basis points to where the money is a little bit less expensive. And then we come up with a number as close as we can to what we feel that the value is worth. We do the same thing for buyers and we also take into account the condition of the property, which is very important.
[00:08:32] Speaker C: You get very many people that, let's say their home is, you have a selling price of one and a half million dollars. Do you get very many people that will bid under that can say, well, we like it, but we'll give you one too. Do you get many people that do that?
[00:08:50] Speaker A: You know, it's very interesting you brought that up.
Some people, some cultures, they're going to try as hard as they can to get a deal. And they don't live in the real world of the real estate market. We do.
We see our buyers take a look at the Internet and the Internet gives them some information, right, wrong or different or outdated, and they come to us and say, okay, let's make an offer on this home. Let's pay $1,000,300 thousand for this one that's on the market for $1,500,000. The realistic approach is to see, hey, what are these homes selling for? Because if you give an offer for 1.3 to a seller, that's asking 1.5 and it's a seller's market, I think the word is somebody is going to be upset.
[00:09:45] Speaker C: They're probably waiting for the buyer that comes in and says, well, I'll give you 1.8 for it right now. So let's close the deal and see what happens.
[00:09:54] Speaker A: Exactly correct.
[00:09:55] Speaker C: It's a tough one.
[00:09:57] Speaker A: Exactly correct. And that's just another reason why you need to have an experienced realtor working for you. An experienced agent. There is a lot to the process and you really, I hate to say it, you don't know what you don't know. You have to use some faith. And that means get an agent that you trust, that is experienced and that you believe what they say, not what you read from the z sites, the r sites, those kind of things. I mean, it's good to take, but take it with a grain of salt. Then ask the boots on the ground person.
[00:10:33] Speaker C: And then what about, you know, you hear a lot about closing costs, whatever they are. And who pays that? Is that the buyer, the seller or you is the agent? I mean, who pays the closing costs and what are they?
[00:10:47] Speaker A: Well, Mister Charles, you're asking some really great questions here. I gotta watch myself with you. The lion's share of closing costs are. They consist of the proration of the taxes. But that's not really closing costs. What really closing costs are, are the escrow fees and escrow fees and the title insurance, the miscellaneous costs of couriers. This kind of thing is what's included. When you look at a closing statement, you will see, you know, that the compensation to the agents on both side is included on the seller's closing statement. On the buyer statement. You don't see that at all. So your question was what exactly are closing costs? I would say primarily they are the escrow fees as well as the title insurance.
[00:11:44] Speaker C: Okay. I remember a long time ago there used to be contingencies. You'd walk into some home and say, you know, I really like this home, but I want you to just fix up the bathroom. I want you to completely fix up the bathroom. We'd like a different shower and all of that. So we're not going to buy the house without, without that happening. And how much of that do you get these days?
[00:12:10] Speaker A: We're going to take a short break. We'll be right back.
[00:12:16] Speaker D: Welcome to the real estate minute with re Max expert Michael Hatfield. Michael, what traits should we look for in selecting an agent?
[00:12:23] Speaker E: Look for a deal maker with a positive attitude who will work tirelessly for you. An agent who is adept in multiple offer situations, drafting contracts, marketing and advertising. A client's home is familiar with multiple cultures experienced in mortgage financing, inspections and escrow is a huge asset to his client.
[00:12:43] Speaker D: What can you do as a plus for clients?
[00:12:45] Speaker E: Your agent is your eyes and your ears, one who works behind the scenes on your behalf. A great attitude, working well with others and keeping clients priorities. Number one is a given for us.
[00:12:56] Speaker D: Call 925-32-2775 now to schedule an appointment or complimentary home analysis for excellence in real estate. Call the Michael Hatfield remax team at 925-32-2775 or go to michael hatfieldhomes.com dot.
[00:13:13] Speaker A: Now let's get back to real estate and more with your host, Michael Hatfield. We don't get a lot of it from buyers because buyers that are smart, that we represent, recognize that at this moment we are in a seller's market. The last buyers that we represented, there were eleven offers. We were fortunate to win that offer. That's another reason you could use an experienced agent in this market. But they don't ask for more than what is realistic as buyers where sellers, they know where the market is and the buyers know where the market is. So you know you want to go about getting that deal put together over and above the other ten offers that come in.
[00:13:59] Speaker C: So you wouldn't get somebody that says, I'll buy this house, but you need to put a new roof on it.
[00:14:05] Speaker A: Yeah, well, sometimes what they will do is that if the home looks like it's going to go for, let's use your number, 1.5 million, they'll say, oh, this home needs a new roof. The seller may be sympathetic, increase your sales price to cover a portion of that, and make that well known through your agent to go to the other agent to go to you as the seller, and then you can participate in something like that. That makes sense in a seller's market. Sellers don't want to do what they would do. Like back in 2008 when there were tons and tons of homes around.
Back then it was different. That was a buyer's market.
[00:14:42] Speaker C: Okay, so the situation today is then there's just not a whole lot of contingencies to get into because you feel the person behind you is not going to have that contingency and you're just not going to buy the house.
[00:14:55] Speaker A: You know, interesting. When you say contingencies for a buyer and seller, and in the contract, the actual residential purchase agreement is an as is agreement. It's 16 pages, just the basic agreement alone. And it has three contingencies in there. Three basic contingencies. And meaning that in times where the buyer might want to ask for those contingencies, certainly in this time right now, they may not want to ask for them, and they may want to take the risk of releasing their contingencies. Those contingencies are one investigations. That means that the buyer wants to take a look at everything that they can, such as a pest report, such as a home report, such as something like a roof report. And if it has a pool, a pool inspection, there's a few other ones that can become contingencies underneath that term, investigations, contingencies clause. And lately we see buyers that are offering that have seen the reports because the seller's smart enough to put those reports out there ahead of time and have them done, and they will go in without that contingency. Second one is an appraisal contingency, because if the appraisal doesn't come in at the value of the contract, the buyer will have to come up with a little more cash to put into equity to make the deal work. That's the appraisal contingency. The last contingency is the loan contingency. What happens? You get down the road, the bank says, hey, mister Charles, I don't want to loan you that money. You know, your hair is gray, and we don't like you today, and it doesn't go. And then you can.
You can remove yourself from the contract and not lose part of your earnest money deposit. That earnest money deposit usually is put into escrow within about three days of the time that you agree to a contract.
[00:16:58] Speaker C: Okay. If you were representing a buyer, is it a good idea to stage a home? And what does that mean? I mean, what all you do. And how much could that cost?
[00:17:12] Speaker A: Well, you know, staging a home is something we, I would say, always do. I could always say always, because then something will come up and we don't. But a normal home that's in decent shape, we definitely want to stage. We've had stagers on the show. They are also. And people don't really realize that those people are interior designers. They have an idea far and beyond what most people do of what is most desirable to the best and the most number of buyers. So we definitely stage. We get them in there right at the very early. We're actually having it done on a very nice townhouse that we have on Concord Walnut Creek border.
We're having that done. The home is getting ready to get on the market real soon.
[00:18:04] Speaker C: Well, typically, what would a staging cost? Tell me. Some of the things would include. Would it include, for example, painting the inside of the house and things like that, or putting in new carpeting or. Or a new kitchen floor or.
I guess that may be a little above staging, but I suppose the buyer could ask for anything.
But then the buyer has to be careful that there's not somebody standing behind him that's saying, we don't care about that. We'll buy it sight unseen.
[00:18:38] Speaker A: So you have it down to a t? Absolutely not.
The staging does not include painting floors, cleaning the windows, cleaning the house, anything other than having a really nice package buy room of what is determined that would be best for most of the buyers that would be buying that particular type of property.
[00:19:05] Speaker C: Okay. And you would be one to help with all that. You kind of. You sort of know what people are like, and you figure out all their furniture has to go out or not other furniture comes in, and there could be some other things that you suggest. And so it's not one size fits all for this.
[00:19:24] Speaker A: Absolutely not. And the level of improvements that you need to make in order to make the home palatable, before you add, the staging is absolutely the biggest part of what we do as agents. We see the property and say, well, you know, this thing needs to be, this house needs to be torn down and build another one, and then here's what the value will be. No, I'm just kind of pulling your chain on that one. But in essence, we take a look at it. We have one now in Pleasant Hill that we just went through and inspected. It's part of a truss sale.
The older lady had passed and the home has all of her belongings in there. What we do is we, and we have people that can help with this. We have the contents and the personal belongings removed and taken away to storage or to an heir or beneficiaries home.
[00:20:26] Speaker C: Or to, or to your house?
[00:20:29] Speaker A: Not my house. And then once they've done that, then we make a recommendation. Do we do the floors and the painting, the landscaping, and then do we go into it deeper? Do we do something that is more, more extensive? Well, that's one of the things about being an experienced realtor. It sounds simple, but what you're doing is you're constantly keeping an eye on the real estate market in that area that's fluctuating. And in this area, there's a, I wouldn't call it a glass ceiling, but there's a number that you do not want to go above when you list the home. If you do, then you're likely to have it sit on the market for more days than you would like. And that's nobody's joy, having it sit on the market and not be sold. So we look for a value that returns what has been put into it, cost of painting, cost of floor, cost of landscaping. And stop there.
Don't. At nest aging, of course, and we stop there. We don't need to retotally design and remodel the entire kitchen, the bathrooms or whatever. That doesn't mean that that's the case in all, it's not one size fits all. It's every property that we go to that we need to take a look at that and decide what to do.
[00:21:54] Speaker C: Well, that's a tough call. If you get some realtor that doesn't, doesn't know what to do. I mean, you've been in this business a long time. You can probably walk into a house and kind of look around and say, all right, well, if we're going to sell this house, I've got it figured out in my mind. You know what we're going to do? We're going to do this, we're going to do that and this and that and so forth. But if somebody doesn't know that it could cost the buyer quite a bit of money because it doesn't look that good to, you know, to, you know, to. I'm sorry. To sell her lots of money because maybe it doesn't look good enough for a series of buyers. So it's an important step in, you know, in the home to make it look good when you walk in the door.
[00:22:38] Speaker A: Well, currently we have a difference in what the makeup is of the greatest percentage of our buyers. Our buyers today are people that are younger, you know, 28 to 38 years old. We call them millennials. It's an affectionate term. They have two teslas in the garage and a baby on the way, or maybe two. They like things differently than what the sellers of the homes today do. So they're looking for homes, and they're really focusing on this interest rate, which I've advised against, you know, making. That's the paramount priority. And then we've got the sellers that are of retirement age. These are the people that have, like you, 3% mortgage or paid off, and where am I going to go? So they hold on to the home. The mortgage interest rates yet have not come down to really activate all of the millennial buyers. So we have this seller's market equilibrium.
It's really kind of crazy, but this is where we are.
[00:23:44] Speaker C: It's a tough call. I mean, there's. And you're right, somebody's sitting in a house that's worth x amount of dollars, and they have a, you know, a 3% mortgage, or even less in some cases. I mean, that's a tough call to move out. Where are you going to go and get anything like that? But you may have some specific reason to go there. Maybe you need to go to a, you know, a care facility or something, but it's a tough call to just pack up and move to another house when you're sitting on a two and a half or 3% mortgage. You got, you know, unless you're. You're moving somewhere. I don't know. I can't think of a reason to do that. But, you know, unless you have some, you know, some crazy reason to. To do that, so, you know, people will hang on to it, and the younger buyers will have enough money to. So a seven or 8% or maybe not 8% yet, 7% mortgage could be, you know, they can do that because that's what it is, and they can afford a payment like that.
[00:24:52] Speaker A: So I think one of your questions that we talked about before we went on the air was, is it a time to buy or is it a time to sell?
You know what? I think it's both. I think that in the San Francisco Bay area, we are going to continue to see growth and especially increases in property value. Home value.
In March, as an example, the home values versus march of last year, they actually went up 10.3% for California alone.
[00:25:26] Speaker C: Well, okay. And then. Oh, the other thing I was going to ask you too, is you do see here a lot of radio and tv ads that say, we want to buy your house in any condition. We don't care if it's falling apart, if there's tenants in there that aren't paying their rent, whatever it is, we'll buy it. You don't have to do anything. Don't worry about a thing. So how does that work? Is that going to be. Is that going to be a problem? Does anybody do that?
[00:25:55] Speaker A: Not too many people. I'm not saying don't entertain a look at it, but again, you know what they proposing.
I just think that it's best to vet your home on the market, or at least be in a position to where people that you're discussing that want to buy your home are people that you trust with this type of operation.
I think that a lot of people end up receiving less in proceeds as a seller than what they would by using a full service real estate professional.
[00:26:32] Speaker C: Well, I guess if they're in a situation where, look, that they just have to get out of there. They're moving to France or whatever it might be, and they just don't care that much about it.
The place could not be good, but they don't care. So they just want to. They want to get out of there. And so the idea of somebody coming in there and just doing it, they don't have to do anything at all may appeal to them. Certainly. Probably not most people, but I guess that could happen.
[00:26:58] Speaker A: It could happen. Who knows? To know what is in the seller's mind or in the buyer's mind. Our job as real estate professionals is to get the maximum amount of proceeds for the seller and for the buyer. Keep as many of those coins in the piggy bank as possible. That is our job.
[00:27:20] Speaker C: Simple enough?
[00:27:21] Speaker A: Absolutely, Mister Charles. In summary, have you gleaned anything from today and being a resident for the last 150 years, what words of wisdom would you like to say to our listeners?
[00:27:34] Speaker C: Well, you know, I mean, owning a home is certainly a lot of fun. Fun.
And if you can do it, fine. But I think you really have to. You know what, you know what you need, you know how much money you have to spend, but you have to, you know, talk with a realtor that knows where to go in the Bay area. If you've lived around the Bay area for a long time, you may have some ideas, but you need some help. You just can't do this yourself unless you just like to do that. And you don't care much about money, but if you want to get the best value, they've got to find somebody like you that can help them get there.
[00:28:11] Speaker A: Yeah, that doesn't mean that they have to use us. Just find someone that is experienced in this.
When you get into an airliner, you don't want to sit down and start telling the captain and the crew how to fly that machine. That's taken years and years of training to get to that point. Don't let people fool you and say, oh, the airplane flies itself. Yeah, it flies itself on the mundane actions of the flight. But you need those human talents to take over when things don't go right. So if you're buying or selling a home, one of life's largest investments, can it be either a struggle or can be a joy filled occasion? When we buy a home, buyers struggle a little with the things needed to make it their own, the payments, the upkeep. And when sellers, you know, they struggle to make the home attractive to buyers so that they receive the most amount of proceeds from the sale makes sense. Thank you for your questions today regarding is this the best time or the best time to sell or buy? And for being on the show, mister Charles, you got it.
[00:29:19] Speaker C: It was a lot of fun.
[00:29:20] Speaker A: Michael, you're a great guy. You've been listening to the real estate and more show. I'm your host, Michael Hatfield. Important topics like Bay Area real estate, important topics. Interesting people listen to the archived real estate and more
[email protected]. Radio that's Michael hatfieldhomes.com radio. The real estate and more show is available on demand on Spotify, Amazon, Apple, iHeart, Pandora and most major podcast platforms as well. I hope you'll tune in next week. And in the meantime, have a blessed week.
[00:30:09] Speaker B: The views and opinions expressed are based on current economic and market conditions and are subject to change. Information on the show provided for illustrator purposes only and does not constitute professional or legal advice. Information from sources deemed reliable but accuracy and completeness not guaranteed. Michael Hatfield and the Michael Hatfield remax team have no liability for information discussed on the show. Consult with qualified professionals prior to taking action.
