Are we headed for another recession?

A great explanation by Forbes in this article. When you consider ALL the factors that lead to a recession, and this is certainly only one indicator, you must at the very least put this on your radar screen.


Have we passed the peak of this cycle?

Real estate markets typically operate in predictable cycles, but because they are subject to so many unique external factors, those cycles are often interrupted. For example, since 1980 the cycles have been remarkably predictable, with increases lasting 5-7 years, and declines from 3-5 years. The dot com bust/9-11 period offered us a unique interruption of that cycle, whereas the rebound commenced in one year instead of 3-5 years.
Because so much of what we do is now impacted by global events, at any time an unexpected interruption could occur, but since we have little way of anticipating those events, most of us stick to what we do know…data.
Here in northern California, typically whatever happens in the SF Bay area is a precursor to what will occur out in the San Joaquin valley.
For the past several years, sellers have enjoyed what I call a hyper-seller’s market, as inventory levels remained consistently around .75-1.5 months. A lot of buyers and not much for them to fight over. In the past several months, I’ve noticed a subtle change. Inventory levels have crept up to nearly 4 months of supply, passively taking that once-enjoyed leverage away from the sellers. We’re a more balanced, or neutral market now, with neither side having a leverage advantage due to supply and demand.
If you examine the Bay Area, they have now surpassed all previous “peaks” in their prior real estate cycles, in all three housing categories…low, moderate, and high priced homes. I think we can all agree that this is not sustainable.
Our local market is cooling, overall, which may or may not impact your micro-market (your specific neighborhood). The only way to know for sure is to run the data. Ultimately, market corrections, crashes, etc., are triggered by an event…in our case, we don’t know what that will be, when it will be, or if it will be…but the indicator around us are that it may be sooner than later.
If you’d like a free, no cost or obligation assessment of your specific neighborhood, simply drop me an email at:

and I’ll create the report and send it to your inbox.
No pressure, no face-to-face meetings…just good information.

Take a look at the chart below, and pay special attention to the “previous tier peaks,” and where we were at the end of 2017.

We’re now 6 months beyond that.



Image result for peak of a real estate cycle



1% listing fee-It’s not new , folks

The explosion of internet marketing companies like Zillow and Redfin has no doubt changed the face of real estate…a face that quite frankly needed some tweaking. The newest darling, Purple Bricks, has spent a ton of money trying to convince its audience that home sellers have been getting screwed, and they’re parachuting in to save the day. Not so fast.
They, along with Redfin and others, are now trying to launch themselves into the brokerage arena by offering home sellers a low flat fee to list their home…1%, $3200, and other price points.
This is not new stuff, folks…it’s been around for decades. Don’t be fooled by clever marketing tactics…home sellers have always been able to negotiate the rates they pay, and they still can. In fact, the law dictates such.

What these internet marketers are NOT telling consumers is that they’ll be paying well above that 1% fee, because that 1% fee is just to “list” the home. They don’t disclose in their marketing that there will be other fees, bringing them right back in line with what the average agent would otherwise charge them. But why settle for “average?”
Real estate commissions, by law, are negotiable…and they should be. There is no one-size-fits-all, and there is no “standard fee.” Every single transaction is unique. The seller that has prepared their property for market, and has set a price that will command heavy traffic, should pay less than a home seller whose property will require a great deal more effort.
In addition to that, home sellers should consider “the value” of the service provided. A good agent will normally be able to offset their fee through effective marketing and negotiations, increasing the offer prices as well as reducing the expenses for the seller. At the end of the day, only one thing matters…your bottom line. If I charge you more but give you more, isn’t that a great value?
Consider the following comparison:

Seller Mike finds an agent to sell his home for a 1% listing fee, and a 3% broker co-op fee (what is offered to the broker community to entice them to bring a buyer)
Because that listing agent only received a 1% fee, very little was done to market the home, and it took nearly 3 months to sell.
List price=275,000
Selling price=258,000
Seller-paid closing costs=9030 (3% buyer credit)
Total commission=10,320 (4%)
Seller’s net before loan payoff=238,650

Seller Jan was a little more savvy, She understood that using an experienced agent would provide better results.
Her agent spent more money in advertising, held more open houses, and paid for a professional photographer as well as a digital floor plan.
She actually paid more to list her home, but let’s see what her bottom line looked like:
List price=275,000
Selling price=281,000
Seller-paid closing costs=1,500 (rejected the 3% credit)
Total commission=16,860 (6%)
Seller’s net before loan payoff=262,640

Seller Jan, who paid $6,540 MORE in commission than Seller Mike, actually took more to the bottom line than Mike did…$23,990 more.
Same list price, but two different agents. The point is, find an agent that can deliver, and don’t just focus on the commission paid…it could cost you dearly.
In this case, Jan’s 6% turned out to be better than Mike’s 4%…almost $24,000 better.

The final point to make here is how well your agent will manage the transition process. Are they assisting you with the relocation, and are they able to balance the two subsequent escrows in a way that takes stress out of the equation? You can’t put a price on that.

Should you make an offer prior to viewing a property?

Well, at least a third of the buyer pool appears to think so…and the trend is growing, not shrinking. 35% of home buyers last year made offers on properties sight unseen, up from 19% in 2016. LA and San Diego lead the way in this trend at nearly 50%. As surprising as this might seem, the metric does not differentiate between investors or owner-occupants, and these big metro areas are prime targets for investors.
Most would agree that the face of home buying has changed dramatically in the past 5 years. Buyers have so much more information available to them today. Access to the MLS and home search apps that continue to evolve and deliver critical information right to their fingertips, almost rendering a viewing unnecessary.
Here’s a few points to consider, though. If you’re relying strictly on photographs and video, do you trust the integrity of that medium? Have you ever looked at photos or video online, and then went to physically look at the home…and were surprised that it appeared unique to the photos you viewed? Many of us have, that’s why we go look at them.
However, in high-competitive markets, making offers sight unseen can be a fruitful strategy. In most contracts, buyers have a due diligence period built in…an opportunity to inspect, appraise, and learn all of the information needed to make an informed decision. Until those buyer contingencies are released, they have no real exposure or obligation, other than the cost of those inspections…but that could be upwards of a $1000.00. In a buyer’s market, the seller may pay for those, but in a seller’s market, it’s not likely that a seller will pay for those…so you’re on the hook, and most people won’t take the risk. That said, In highly competitive markets, waiting a few days until you can schedule a showing may cost you an opportunity at that property. So what do you do?
At the end of the day, you should do what is comfortable for you. Although the trend appears to be growing rapidly, like anything else, it’s not for everyone. Consider all factors, including market conditions, and make an informed decision that best suits your needs.


As a seller of a property, it must be confusing these days to be flooded with advertising from agents and investors like these, SELL YOUR PROPERTY IN ONE DAY, or SELL YOUR PROPERTY FAST.
Even Sellers who participate in such programs are often seen bragging to their neighbors, ” I sold my home in two days, and for top dollar.” Unbeknownst to them, they probably left money on the table, so it likely was not “top dollar.” Fast? Perhaps. But is that a good thing? Let’s look at it from a different perspective.
By the time you’ve made the gut-wrenching decision to sell your home, there are still many things to do. Prepare the home for sale, decide whether you’ll use an agent or not, plan and execute the replacement property purchase, and of course, plan the move. During that time, you will invest a great deal of time and energy getting all of this done…so most would agree that you’d want to realize the greatest result possible on the sale of your home.
You’ve spent weeks or months preparing the home, and now you’re going to have complete strangers walking through it, identifying every defect possible with the hopes of making a great deal on your property. It’s finally on the market. Your agent brings you a “full price” offer, and suggests that you jump on it. Not so fast.
*How do you know that “full price” is the best you can do?
*Of the buyer pool you expect would have some interest in your property, how many have had the opportunity to see it?
*Is it possible, since I received a “full price” offer in two days, that more offers may be coming?
*With multiple offers, my leverage increases as a seller in the negotiations…isn’t that what I really want?
*If I do accept this offer, what are the odds that the buyer will cancel the transaction, or not be able to close?
After all, I’m tying it up for three weeks with no vested commitment from the buyer.

As a general rule of thumb, don’t accept any offers until your property has had adequate exposure. Generally speaking, that’s going to be 10 days or more, but depending on your market conditions, it may be prudent to leave it out there longer. Communicate your intent to the buyer pool and agent community. Sure, that may cost you a buyer, but let’s face it…someone that anxious is not likely to deliver you the strongest offer anyway.

Don’t do that upgrade until you read this.

Whether you’re considering selling your home soon, or not, it’s a good idea to understand what improvements will provide a return on investment, and which could be a waste of your hard-earned money.

I often encounter people considering a move, and the immediate inclination is to fix everything, and worse, make improvements to the home because they think it will add value to the sale. In most if not all cases, those repairs and improvements will not even give you your money back, let alone add to your profit. Look at these results from the 2017 Cost vs. Value report below, showing you the local data, regional data, and national data. It’s remarkably consistent. See that report here.


In case you don’t have time to look at it, the average across the board is about 64% return on investment. For every dollar you spend on a home improvement project, you can expect an average of 64 cents back in added value.  Sure, improving your home will add value, but if it doesn’t even return the money you spend on the improvement, maybe you should reconsider, based on how long you intend to stay there. If you spend $25,000 on a kitchen remodel (average 59.9% return), and it only adds $15,000 in value, and you’re getting ready to sell the home, you’re effectively leaving $10,000 on the table. Where could you go for $10,000?

That covers the financial side, but what about the emotional side? If you’re going to be in the property for several years, and you realize that your return on investment comes in the form of enjoying the upgrade, then make the decision that’s right for you.

However, if your motivation for spending the money is profit, save it…take a vacation.

Sellers-have you missed your window of opportunity?

For five years or so, home sellers have enjoyed the benefits of what many call a “seller’s market.” Although the definition varies a bit among analysts, a seller’s market is generally defined in part by the amount of available inventory for ready-willing-able buyers to choose from…typically 1-3 months of inventory. A neutral market is typically defined as 4-6 months of inventory, and a buyer’s market anything above 6 months of inventory.
For a long time the level of inventory has remained extremely low…hovering around 1 month of inventory, giving the sellers generous advantages when selling their property.
In the past several weeks, I’ve noticed a slight pumping of the brakes, so I wanted to investigate myself.
In Riverbank, one of the markets I serve, 151 homes sold in the past six months, giving us an average of 25.2 home sales per month. Pretty consistent with the past history. However, there are now 93 homes on the market, rendering us in a state of 3.69 months of inventory. That’s a borderline neutral market, folks, which may be diluting the seller’s advantage.
I wanted to see if the same results would be found expanding the assessment to a county level…and they were. 2850 homes sold in Stanislaus County in the past six months, or 475 per month. Today, there are 1610 active properties, or 3.4 months of inventory. This is a far cry from where we were just weeks ago…and an indicator that the market is shifting.
While I’ve only broken down two specific areas, I believe the data will show the same consistency in most neighborhoods. If you want to know your specific neighborhood, call me and I’ll research your specific area and advise you of the results. 209-505-8679.
If you’re still thinking of selling, it’s not too late…but you’ll need to be priced right and hire an experienced agent who can negotiate on your behalf. We can help you with that, and even offset some of the “loss” you may feel you incurred by missing your window of opportunity.
Visit for more details.

There’s a war on for your contact information

It’s no secret that the real estate industry has seen its fair share of change in the past decade. With the introduction of large information portals like Zillow, Trulia, Redfin…the list goes on and on, the way information is shared today is light years away from just a mere decade ago. While I believe change is good, and I firmly support the access the general public has to information that was once solely controlled by real estate Brokers and attorneys, there is perhaps an ugly side developing…one deeply rooted in corporate greed.
The introduction of all of these new options for consumers is going to come at a price. The question is, who will pay for it?
Until recently, these companies made their money the old fashioned way…they earned it through fees paid by third parties and advertising. However, it didn’t take them long to realize that they could actually make money a different way. A lot more money.
One must remember that the information shared on these portals comes from a source, and that source is real estate agents. Realtors syndicate their listings through these portals to increase national exposure…which is a good thing, right? The portals get the traffic so they can get more advertising, and the listings get seen by more prospective buyers. It’s a win/win.
However, that’s simply not good enough for some of these corporations, so in an effort to capitalize even more, they now have found ways to “sell” the leads derived from the very information provided by real estate professionals to…you guessed it…the same real estate professionals.
Wait a minute. You’re telling me that the same companies whose sole existence relies on the information provided by real estate agents are now selling back to the same agents the fruits of that information? Yes, I am. You give your name and phone number to the likes of zillow, and they will sell that information to the highest bidder (a real estate agent), whether you buy a home or not. Not a bad gig, huh?
Just how much money are we talking here, I mean, twenty bucks here, twenty bucks there, who cares, Curt?
Would you be surprised to hear that your name and number are being sold for as much as 30% of the total commission earned by the agent? On a $400,000 dollar sale, at a 3% commission (half of the total), that company is going to charge the agent 30% of their share earned…or in this example, $3600. For a name and a phone number.
Now, not to sound like I’m bitter about this, because I’m not. I refuse to do business with these companies any more than I have to. Here is where the rub lies.
At one point in time, it was common for a homeowner to pay 6% to list their home, and they were happy to pay it. It represented a good value for the service. Along came the crash of 2007 and we saw banks controlling much of the inventory, through foreclosures and short sales. They saw an opportunity to slash commissions to 5%, because they had a captive audience. Today, 5% is almost the norm anymore, although commissions are 100% negotiable.
Now, if a real estate agent is paying 30% of his/her commission out to an “internet marketing company” just to get your name and phone number, the homeowner’s leverage to negotiate a lower commission just got destroyed. By the time everyone takes their portion of that commission…the Franchisor, the Broker, MLS companies, insurance companies, etc., there’s often very little left for the agent. Take another 30% away and it’s an insult to the effort put forth.

I have my own way to deal with this latest development in our industry, and it doesn’t involve participating in a pay-to-play scenario. But make no mistake, it’s not going away, it’s only getting bigger. More players, more dilution. More reselling of the same information. The likes of corporate behemoths like Amazon are jumping in, anxious to leverage their own internet traffic into easy profits for simply gathering a name and phone number. Think about this…over 46 million “leads” were sold to real estate agents last year, but only 5 million homes were sold nationally. It’s not uncommon for the same lead to be resold 5-10 times.
Based on your own interpretation, you could say that real estate agents will pay the price for all of this. I say it will be the same people that typically pay for it…the consumers. There’s only so much pie, and when it’s gone, it’s gone.
So next time you enter your name, phone number, and maybe an email address, ask yourself this…”I wonder how much money is being made from this information?”
Then ask yourself this…”How much did I get?”
Someone has to pay for all of that…and real estate agents can’t afford to give up much more. That only leaves you at the table.

Pricing your home

There is no greater challenge you’ll face when selling a property, than to price it correctly. Pricing it too high will create a stagnant listing and perhaps draw low ball offers. Pricing it too low, hoping that buyers will compete for your property, may backfire on you if you’ve over estimated the demand.
As I’ve stated in prior blog posts, online valuations have become increasingly popular, because they don’t require talking to an agent, and they’re relatively easy to obtain. However, any valuation created by a computer matrix is going to be off the mark…the question is, how far off? As a Broker, I’ve seen online valuations off by as much as 30%. That’s a lot of money to leave on the table.
Online valuations were never meant to be a replacement, but a simple guideline. That computer doesn’t know that you’ve updated your home, versus the same floor plan down the street who has not. It hasn’t walked your property, or heard the story of your property. There are too many variables to consider.
Aside from the statements above, it’s important to identify other factors that may affect your pricing decision. What’s the absorption rate in your specific area? Do the current conditions indicate a seller’s market, a balanced market, or a buyer’s market? How does the prior 6 months activity compare to the last 30-60 days? Does it indicate a trend in a different direction? Based on the attributes of your property, who is most likely to purchase your home? Is that a broad audience or a narrow one?
You see, pricing a property is not as simple as logging on to zillow or redfin, or by pulling a few comparables. If you want to sell for top dollar, and have more control over the timeline, take the time to gather all the data needed to make an informed decision.

Water conserving plumbing fixture-legal update.

2017 Water Conserving Plumbing Fixtures – What You Need to Know

In January, 2017, new laws became effective regarding plumbing fixtures in homes built prior to 1994, but it essentially affects all homes not in compliance, whether you’re selling or not.

Q. What does the law require?
A. In a nutshell, starting in 2017, the law requires installation of water conserving plumbing fixtures if you own a single-family home, and it is built before 1994 – whether or not it is being sold.

Q. I am selling my house. Are there any special disclosures that I must make?
A. The law requires you to disclose whether there are any non-compliant plumbing fixtures on the property. The form on the other side of this FAQ [portions of the new WCMD] has the specifications. But if you are unsure, then you should consult with someone who has expertise in the matter like a contractor or plumber.

Q. I am selling my house. Are there any installation requirements under this law?
A. No. There is nothing in this law that requires installation of water-conserving plumbing fixtures as a condition of sale. However, if you haven’t already installed water conserving plumbing fixtures on your pre-1994 single-family house, then you are in violation of the basic requirement of the law.

Q. I own a property in a city where there is an existing retrofit law for water-conserving fixtures as a point of sale requirement (such as Los Angeles, San Diego or San Francisco). Are those retrofit laws still in force?
A. Yes. Local laws passed before July of 2009 requiring retrofit of plumbing fixtures remain in effect. The state law also allows a locality to pass more restrictive requirements at any time.

Q. I would like to install water conserving plumbing fixtures. What can I do?
A. Call an expert such as a contractor or plumber. You can also go to your local home improvement store. You may wish to contact your local water service provider to find out if they offer low-cost or even no-cost plumbing fixtures.
(courtesy of CAR)

As always, before you take any action, consult with the appropriate professionals so that you make an informed decision.