Phil's Blog

Top 10 Reasons To Hire A Real Estate Agent

August 30, 2013

NAR: Millennials in the Market

August 29, 2013
NAR: Millennials in the Market
Posted: 29 Aug 2013 04:00 AM PDT
Today, we are honored to have Justin DeCesare, CEO of Middleton & Associates Real Estate in La Jolla, as our guest blogger. Justin has written a manual for new agents that is a must read for the new technology centered Real Estate market. It is available online in both print and Kindle editions. – The KCM Crew
young cool guyAccording to the National Association of Realtors’ 2013 Home Buyer and Seller Generational Trends study, the average Millennial home buyer (32 years old or younger) purchased a home within 8 miles of their previous home, whether leased or owned.
To put icing on the cake for all of the incredible lead converters out there:
69% of Millennials contacted and worked with just one agent in the home buying process.
This is a higher percentage than any other age group in the survey.
Furthermore, 59% used the same agent to sell a home as when they purchased. Again, the highest of any generational group.
Why is this important?
It proves once and for all that there isn’t some mythical land where young home buyers will come from.
We are right in front of you, working in the communities we live, and where we plan on staying for a while. No media article or pundit can take away from what quantified studies prove.  Contrary to certain media opinions, Millennials are not fickle narcissists who only care about themselves:
We as a generation want an agents’ experience in negotiations, not their beliefs about what THEY think we need.
Millennials are an important part of the market, and like anyone else, we will use the agent that best suits our needs.
Most likely, that agent will be someone who listens, understands why young home buyers are purchasing, and understands they are an advocate for their clients.
You don’t need to reinvent the game.  Do what you do best. Take young home buyers seriously, and be visible…on the internet AND in your community.
Now, when a young home buyer approaches you at Starbucks with Beats™ by Dre headphones and Rayban Clubmasters® on, don’t dismiss them.
They may have invented a website worth billions or just be hard working professionals. But, at some point, they realize it is time to buy their first home and start a family as has every other generation throughout history.

Latinas and the Financial Power Shift

August 28, 2013
Latinas and the Financial Power Shift
Posted: 28 Aug 2013 04:00 AM PDT
Hispanic Latina Woman or BusinesswomanAccording to a recent report published by Nielsen, Latinas have rapidly positioned themselves as
prominent contributors to the educational, economic, and cultural wellbeing of American Society and consumer marketplace”.
The report mentioned that Latinas are outpacing Latino males in their educational pursuits and career development and for first time exceeded non-Hispanic females in college enrollment.
A record seven in ten (73 percent) Hispanic high school female graduates are enrolling in college. This is how the number compares to other groups:
  • 11 percentage points ahead of Hispanic males (61 percent)
  • 1 percentage point higher than non-Hispanic females (72 percent)
Latinas in households making $75,000 or more also increased by 5 percent over the past 10 years, showing gains regardless of the recession. Over the past ten years, household income for Latinas 18 years of age and older has also risen out of the lowest income category and is holding position in other income groups among blue and pink collar segments:
 Latina Power
With this advanced income and education, a Latina’s ability to invest in long term assets has increased.  As we mentioned in previous blogs 3 in 4, Hispanics agree that buying a home is the best long-term investment. This also applies to the Latina segment of the population as they are more likely than the overall female population to buy a home for the first time.

However, There is One Concern

Though the report revealed many positives surrounding the Latina market, one revelation from the study really caught my attention. Here is the quote directly from the report:
While twenty-first century Latinas are advancing their consumption of major assets, we cannot fail to note the Latina segment resists banked financial products and lives in a primary cash market.”
When I read this, one of KCM’s mantras came to my head:
“We need to educate them; not with a heart of a salesman, but with the heart of a teacher.”
Many Latinas need our help in understanding the benefits of building a financial history if they want to be able to reach the American Dream of buying a home.
Are you doing your part?

The COST of a Home: Last Year, This Year & Next Year

August 26, 2013
The COST of a Home: Last Year, This Year & Next Year
Posted: 26 Aug 2013 04:00 AM PDT
Same Price, Lesser CostThe cost of a home is determined mainly by two components: price and mortgage rate. Today, we want to show how the monthly cost of purchasing a median priced home has changed over the last twelve months and how it might change over the next twelve months. For the first two examples, we will be using the National Association of Realtors’ (NAR) Existing Home Sales Report to establish median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate. We also assumed a 20% down payment in all examples.


The median priced home in the country was selling for $187,800. The 30-year fixed mortgage rate was at 3.5%. Here is what it would cost to buy a home last year:
Last Year


The median priced home in the country is selling for $213,500. The 30-year fixed mortgage rate is at 4.5%. Here is what it would cost a purchaser to buy a home today:
This Year
The monthly cost increased by: $190.78!


Projecting into the future in real estate can be rather tricky. To establish future pricing, we depended on the over 100 housing experts surveyed for the Home Price Expectation Survey who called for an approximate appreciation rate of 5% over the next twelve months. For the interest rate, we took the average of the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae. Here is what these experts project will be the approximate cost of a home a year from now:
Next Year
The monthly cost will increase by about: $97.32!

NAR’s August Existing Sales Report [INFOGRAPHIC]

August 23, 2013
NAR 8.2013

5 Ridiculous Seller Sayings

August 22, 2013
When I need a good laugh, I like to read Vanity Fair magazine’s ‘Actual Complaints from Actual Rich People’ column. The monthly column is a super-short, super-funny compilation of woes of the very rich, as overheard by the author. My guess is that most of these sayings seemed totally sensible to the person who said them in the course of the conversation. In retrospect and out of context, though, they seem crazy and out-of-touch, even ridiculous.
Here’s a recent example: “I don’t ask my wife how many horses she has, she doesn’t ask me how many cars I have.”

Ridiculous, right? Well, while these folks are easy to poke fun at, many of us say things during a heated moment or emotional experience that we have a hard time standing behind later. Selling your home is one of those experiences that causes even the most stable, calm human being to feel panic, outrage, anxiety, and sometimes all of the above, all at the same time.
These volatile emotions give rise to a handful of seller sayings that seem silly when seen in a sober light. Here they are, along with some insights to help you ensure you don’t let them foul up your home selling decisions.

1. But I spent X years or $X on that! The ability to customize your home to your personal tastes and your family’s wants and needs is one of the biggest non-financial perks of home ownership. Creating a soundproof meditation room or a floating pool theater is your right as a home owner.
I encourage owners to make changes to their homes that will improve their quality of life while they live there, rather than fixating on whether they’ll be able to recoup their investment when they sell it 20 years down the line. (Of course, if you’re planning to sell in the near future, it might not make sense to invest in super-personalized home improvement projects.)
That said, the fact that YOU loved the idea of having a sports court, billiards room or Japanese garden enough to spend tens of thousands of dollars on it does not necessarily mean that your home’s buyer will place the same value on it - or anyvalue, for that matter. I was once involved in a sale where the sellers had spent decades cultivating a beautifully complex Japanese garden which the buyers, busy professionals, had no time or interest in maintaining.
Not only were they not willing to pay a premium for it, they planned to rip it out and replace it with low-maintenance, low-water landscaping.
Let it go. Understand that other than the kitchen, bathroom, amenity and decor upgrades that appeal to many home buyers, if you’ve invested your time or money in customizations for your own personal enjoyment, then your enjoyment is your return on that investment. If your home’s eventual buyer also happens to love them, fantastic! But don’t approach the home selling process expecting every buyer to share your value system and pay through the nose for them.

2. We just need to find a buyer who understands my tastes. There are certainly occasions, with rare properties, where there is truly a narrow niche of buyers that will have to find, understand and appreciate a property. In cases like that, with acreage, converted warehouses, horse properties, and the like, this saying is not ridiculous at all.

But this saying is ridiculous when it is uttered by the owner of a home with potentially wide appeal as a reason for not staging or preparing their home for sale, or in the effort to avoid neutralizing highly, uh, personal design and decor choices.
If your home is lagging on the market while others sell, and your agent has suggested that you tone down the polka dot paint job or delete the Al Pacino mural on your dining room walls, think about how much time and money your decision to wait for the buyer who understands these design choices is costing you.

Rethink your position: as the ultimate marketing decision-maker in your home’s sale, your job is to maximize your home’s appeal to a broad segment of ready, willing and able buyers (not to find the one needle in a haystack who likes the Godfather as much as you). You’re moving on from the property, so move on emotionally, too. Don’t let your emotional attachment to your decor decisions or stubborn refusal to spend on staging keep your life or your finances stuck.
3. I want to price it high, so I have room to come down. Now, in all fairness - there’s a time and a place for this. By that I mean that there are certainly local markets where it’s very much standard practice for buyers to expect to come in below asking, and sellers can price their properties a few thousand dollars higher than the target price point without killing their deals. If you live in a place like this, your agent will surely work with you to price accordingly.

That said, when the market is slow enough that buyers are routinely paying below asking for homes, pricing your home above-market is actually dangerous. It runs the risk of causing no one to view your home as a good enough value to see it in the first place.
If other sellers are pricing appropriately and yours is priced too high over what the market will bear, many buyers won’t even bother trying to negotiate you down. Rather, they’ll go find one of the homes on the market with a more realistic price, they’ll wait until you lower the price or they’ll wait until your home has been lagging so long they sense you might be desperate, and will swoop in with a lowball offer of their own.
Even in a relatively hot market climate like today’s, the aggressively priced homes get the most buyer traffic and, accordingly, get the most offers. In turn, these bidding wars drive the eventual sales price up. If you want to sell your home in a buyer’s market, or sell it at top dollar in a seller’s market, overpricing it might actually sabotage your success.
4. That offer is an insult - I won’t even dignify it with a response. Your home might be very personal to you. It represents a massive investment of your money, time, hopes and dreams. It probably also represents your personal tastes, style and some precious memories of your family’s life.
But once it’s on the market, get a thick skin and decide not to take anything - anything- personally. If someone offers to pay many thousands of dollars for your home, it’s not an insult, even if the offer is far afield from what you are willing to sell the home for, or from what you believe it is worth. They might be deeply misguided, and not yet experienced enough in the market to know that the offer was unreasonable. Or they might just love your home and be going for it, even though it’s really outside of their personal resources.
Finally, they might actually just be trying to get you to come down a bit on the asking price. Some buyers see making a very low offer as part and parcel of negotiations.
In any event, you should always respond to an offer made by a qualifed buyer. If you have another offer or offer(s) that are more realistic, just respond with a pleasant decline. If you have no other offers, respond with what you and your agent formulate as an appropriate counter. You might be surprised at how even a very low offer can come together with a respectful, reality-based counteroffer and a little negotiating.
5. I need $X to get the home I want and take my Australia trip - let’s list the place for that. There are lots of respectable strategies for setting a list price, but all of them have their basis in one thing: data. They all start with a look at the nearby, similar homes that have recently sold, and what they sold for; this is what agents call “comparable sales data.”

Depending on market dynamics, trends in inventory and home values, how similar/dissimilar your home is to the recently sold properties and what your own priorities are (e.g., sell fast, sell for top dollar, etc.), an experienced local agent might advise you to start with “the comps” and adjust your home’s list price down a bit, or to start with “the comps” and adjust upwards to get to your home’s list price.
But never will a savvy, experienced agent tell you that the proper way to price your home or understand its value is to do the math on how much cash you want and need, and set your list price by that.
Of course - you need to do your “move up math” in the process of listing your home in order to know whether your home sale is feasible or not. And you might actually have to factor in what you need to pay off your mortgage and move into your pricing decisions - that's not bizarre.

But you should do so only with the awareness that your home’s ultimate value is based on what a qualified buyer is willing to pay for it - not what you need to move.

ALL: Heard any ridiculous sayings uttered by sellers lately? Do tell!

P.S.: You should follow Trulia and Tara on Facebook!

Housing is Helping Rebuild the American Economy

August 20, 2013
Housing is Helping Rebuild the American Economy
Posted: 20 Aug 2013 04:00 AM PDT
iStock_000004828128XSmallFreddie Mac in their report, August 2013 U.S. Economic & Housing Market Outlook, explained the three reasons why housing is the key driving force to the overall economic recovery.

The Challenge

The report explains that the path to recovery has been historically slow:
The Great Recession officially ended in June 2009 and, with the release of the second quarter GDP, we now have data on four full years of economic recovery. The data release confirmed what many have felt: four years of recovery have only brought lackluster growth. Compared to all prior postwar recoveries, this expansion has been the weakest. Real GDP has risen by only 9 percent since the recession officially ended, while it grew an average of 17.4 percent in the four years following the end of the previous ten recessions.

The Answer – Housing

Freddie Mac explains that housing drives the economy in three ways. Here are excerpts from the report on each:
Demand for Housing Will Drive Employment
Increased demand for housing will help stimulate new single-family and multifamily construction and boost home sales. We expect starts to hover just below one million (SAAR) over the second half of the year, the best six-month building pace since the first half of 2008. This increased building and sales will add approximately 3/8 of a percentage point directly to GDP growth through residential fixed investment and will employ many more workers in construction and at other housing related firms.
Rising Prices = Increased Family Wealth = Increased Spending
With housing being the biggest asset of most American households, rising house prices directly affect the balance sheet of homeowners. Home equity is the largest component of net wealth for many families. As wealth rises, households generally increase their consumption spending. They may even tap into their equity through a home-equity loan, using the proceeds for either consumption or investment spending. Some evidence that home equity lending has picked up was found in Freddie Mac’s Refinance Report for the second quarter, which saw $9.5 billion in home-equity cashed-out as part of a refinance, up from a year ago.  
Small Business Development is Funded through Home Equity
Rising house prices will help the economic recovery by spurring small business formation, as a business owner’s home often serves as collateral for a start-up. Small business growth has been very weak during the recovery…Recent research by analysts at the U.S. Census Bureau and University of Maryland indicated that slow house price growth has been a key contributing factor to anemic small business growth. According to their analysis 42 percent of the decline in the performance of young firms (relative to mature firms) is due to declines in home prices.
As Freddie Mac explains, the housing recovery is crucial to the recovery of the overall economy.
To see the economic impact of a home sale in your state, click here.

House Pricing is Still about Supply and Demand

August 19, 2013
House Pricing is Still about Supply and Demand
Posted: 19 Aug 2013 04:00 AM PDT
iStock_000009109354XSmallKnowing how much inventory is for sale is crucial to determining where home values are headed. Pricing of any item is determined by supply and demand: how many items are available in relationship to how many want to buy that item. The reasons for the strong year-over-year home appreciation numbers we have been seeing is simple to explain: demand for housing is up and the supply of homes for sale has been at historic lows. But that is beginning to change.
The months’ supply of available housing inventory, as reported by the National Association of Realtors, has increased from 4.3 months this past January to the current number of 5.2 months. And it seems inventory will continue to increase as we move forward.
Last week, released their National Housing Trend Report which looked at the movement in inventory levels of homes for sale across the country. Here are two major findings of the report:

1.) Dramatic year-over-year inventory declines have evaporated.

Nationally inventories in July are only 5.24 percent below the level of a year ago compared to being down 16.47 percent year-over-year in January.
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2.) Inventory declines decrease in local markets.

The number of markets with decreases in year-over-year inventory declined from 125 in June to 118 in July. This suggests that fall inventories in some markets may return to levels of a year ago.
In the report, Steve Berkowitz, CEO of Move, Inc. explains the impact of these findings on home values:
The recovery is entering a new phase where inventory shortfalls are no longer the driving force behind changes in housing prices in many markets. Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers’ choices and helping to moderate price increases.
Don’t get carried away with recent news headlines when pricing your home. Let a real estate professional explain what the above information means to the current value of your house.

Real Estate Prices over 30 Years [INFOGRAPHIC]

August 16, 2013
Real Estate Prices over 30 Years [INFOGRAPHIC]
Posted: 16 Aug 2013 04:00 AM PDT

A Message to Millennials for Our Future

August 15, 2013
A Message to Millennials for Our Future
Posted: 15 Aug 2013 04:00 AM PDT
Today, we are honored to have Justin DeCesare, CEO of Middleton & Associates Real Estate in La Jolla, as our guest blogger. Justin has written a manual for new agents that is a must read for the new technology centered Real Estate market. It is available online in both print and Kindle editions. – The KCM Crew
Extended family in living room smilingI spend a lot of time defending the work habits and dedication of my generation. Yet, I still wonder at times why we aren’t all as cynical and jaded as the media would like to portray us.
Everything from the PRISM scandal to the everyday politically motivated Washington gridlock on items such as student loan rates have left many of us feeling weary of our place in the political and economic infrastructure.
In Walter Hickey’s article on Business Insider, he quoted President Obama in his recent interview with Zillow CEO Spencer Rascoff as saying:
“Jacob looked like a pretty young guy, renting is probably the best option.”
While I don’t think this quote was meant to minimize the economic struggle of Millennials, it just seems to add to the stream of media attention that fails to see the impact we will have on the overall recovery.
We are at a turning point in our society. Prices have bottomed, affordability indexes are low, and jobs are coming back on line.
No matter your age, if you have the financial ability to buy a house, do so right now. Not a year from now…right now. By the time the media finally says Millennials are buying houses, they will be a year behind in their reporting.

Take Action. Today.

Whoever thinks they have a crystal ball is lying to you. No one knows exactly what will happen with the government’s bond buying programs or new housing starts and inventory. However, we do know this:
  • For Now, Money is still Cheap
  • Rental Prices Will Keep Rising
To my Co-Gen-Yers who may come across this blog:
Lifelong wealth is created with a certain amount of risk; however, if you fail to take that risk you will always be stuck in your present situation.
Years from now, there will be people who look back and think to themselves, “I should have bought when I could…That was the perfect time to buy.”
Every type of Real Property is going to appreciate over a 10-20 year period, from commercial buildings, to multi-units, to single family homes.
Our generation is set to play an important role in our economy as there is an ever-growing necessity for technologically advanced degrees and laborers. It is up to you as to whether or not you want this economic growth to shape the rest of your own personal life as well.
Much like the greatest generation at the close of WWII, we have a duty to re-establish a vibrant economy. No one else will do it for us. I realize the economy has not yet fully recovered. But, if everything the media and the politicians say is true, none of us will own houses or have babies until our 50s.
No matter what any pundit says, it is going to take young business people, humanitarians, laborers, and entrepreneurs to take the lead and recreate an America that the Greatest Generation would be proud of.
Leave the cynicism to someone else. It fails in action as much as it does in belief.
Now, it’s our turn.

Real Estate without Freddie and Fannie

August 13, 2013
Real Estate without Freddie and Fannie
Posted: 13 Aug 2013 04:00 AM PDT
“The good news is right now there’s a bipartisan group of senators working to end Fannie and Freddie as we know them. And I support these kinds of reform efforts.”
- President Obama, August 6th
money disappearingEnding Freddie Mac and Fannie Mae will mean two things to the housing industry: higher rates and probably shorter mortgages. This will result in larger monthly mortgage payments.
Fannie Mae and Freddie Mac are government run agencies that have propped up a troubled real estate market over the last several years. The agencies always had a place within the mortgage sector but over the past several years have been involved in over 90% of new mortgage originations. As they wind down this involvement, the mortgage space may change dramatically.
David Stevens, CEO of the Mortgage Bankers Association and a former Obama administration housing official, in a recent AP article explains what will be the result of winding down Fannie and Freddie:
“You have to assume that almost in any future model being drafted, loans will be more expensive.”
This will be felt in two ways.

Higher Interest Rates

In the same AP article, Mark Zandi, chief economist at Moody’s Analytics, reveals:
“It will mean higher mortgage rates. The question is how much higher.”
According to Zandi, borrowers could pay about ½ point higher in interest rate ($75-$135 extra in interest payments per month to the average purchaser on a $200,000 loan).
Why a projected increase in rates? The average 30 year mortgage rate over the last three decades is 8.69%. From 2003-2008, it was 6.06%. Part of the government’s stimulus program was spent on keeping mortgage rates low while the economy recovered. Many think that rates will return to the 6-6.5 range should Fannie and Freddie cease operations.

Shorter Loan Terms

Once Freddie and Fannie no longer exist, the question becomes whether or not the private sector will any longer feel comfortable issuing a fixed rate loan for 30 years. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout with the interest rate being renegotiated every five years. If rates go down, the borrower will wind up with a lower rate. If rates go up, the borrower ends up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.
Some believe that the private sector will no longer make the 30 year mortgage option available for at least a portion of borrowers.
Bottom Line
It will be interesting to see how the winding down of the two agencies impacts the housing market going forward.

5 Demands to Make on Your Real Estate Agent

August 6, 2013
5 Demands to Make on Your Real Estate Agent
Posted: 06 Aug 2013 04:00 AM PDT
number 5Are you thinking of selling your home? Are you dreading having to deal with strangers walking through the house? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of selling. A great agent is always worth more than the commission they charge just like a great doctor or great accountant. You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish the average agent from the great one. Let us help.
If we were hiring an agent to sell my home today, we would require that they:

1. Tell us the truth about the price

Too many agents just take the listing at any price and then try to the ‘work the seller’ for a price correction later. Demand that the agent prove to you that they have a belief in the price they are suggesting. Make them show you their plan to sell the house at that price – TWICE! Every house in today’s market must be sold two times – first to a buyer and then to the bank.
The second sale may be more difficult than he first. The residential appraisal process has gotten tougher. It has become more difficult to get the banks to agree on the contract price. A red flag should be raised if your agent is not discussing this with you at the time of the listing.

2. Understand the timetable with which my family is dealing

You will be moving your family to a new home. Whether the move revolves around the start of a new school year or the start of a new job, you will be trying to put the move to a plan. This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. I am not suggesting that your agent can pick the exact date for your move. You just want the agent to exert any influence they can.

3. Remove as many of the challenges as possible

It is imperative that your agent know how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.
Remember: If you have an agent who was weak negotiating with you on the parts of the listing contract that were most important to them (commission, length, etc.), don’t expect them to turn into Superman when they are negotiating for you with your buyer.

4. Help with the relocation

If you haven’t yet picked your new home, make sure the agent is capable and willing to help you. The coordination of the move is crucial. You don’t want to be without a roof over your head the night of the closing. Likewise, you don’t want to end up paying two housing expenses (whether it is rent or mortgage). You should, in most cases, be able to close on your current home and immediately move into your new residence.

5. Get the house SOLD!

There is a reason you are putting yourself and your family through the process of moving. You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with selling. Do not allow your agent to forget these motivations. Constantly remind them that selling the house is why you hired them. Make sure that they don’t worry about your feelings more than they worry about your family. If they discover something needs to be done to attain your goal (i.e. price correction, repair, removing clutter), insist they have the courage to inform you.
Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT!

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