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LA Westside Sales Highlights - April 2012

by Craig Whitlock

This report will provide a quick overview as to how the Westside micro-markets are currently performing and then compares that data to the same period a year ago.  The key market indicators are:

Pending Sales Activity - sometimes referred to as the 'Number of Properties Under Contract'.  This is a forward-looking indicator of current sales activity where there has been an accepted offer and escrow has opened.

Median Sales Price - that point at which half of the properties have sold for a greater amount and half have sold for a lesser amount.  This indicator pinpoints where in the price spectrum homes have sold rather than reflecting home value.  There is a common misperception that a drop in the MSP directly indicates a drop in home value.  It is far more likely that the drop indicates either smaller, older and/or homes in lower-priced areas have sold during the period.

Months Supply of Inventory (MSI) - a leading indicator of market supply, which directly impacts pricing.  Generally, a five to six month supply indicates market equilibrium while anything less signals a 'seller's market' and anything above a 'buyer's market'.  

LA Westside Homes For Sale - Sales Highlights Chart - April 2012   Information not guaranteed.  © 2009 Terradatum and its suppliers and licensors (http://www.terradatum.com/metrics/licensors)

To view a portfolio of four additional reports trended over the past 12 months:  Properties For Sale, Days On Market, New Properties For Sale and Supply & Demand, visit the Market Sales Data section.  If you have any questions or would like to discuss this data at greater length, just drop me a note or call.

Popular Real Estate Myths And Their Remedies

by Craig Whitlock

I came upon an LA Times article from last summer that nicely highlights some common misperceptions about buying a home. These myths can effectively defeat a buyer's dream of home ownership and bear mentioning.

MYTH NO. 1: A buyer should keep looking until they find the 'perfect' home. REALITY: A perfect home doesn't exist. Every home whether it's a Condo or SFR has its share of blemishes - even new construction.

MYTH NO. 2: A home on the market for a long time signals that the seller should be more willing to negotiate. REALITY: This is not necessarily the case as the seller could be stubborn on price and/or has lost their motivation to sell from 'marketing fatigue'.

MYTH NO. 3: Buyers can make a lowball offer because it's a buyer's market. REALITY: Not true largely because the Westside has been a seller's market since January. See my post from May 4th.

MYTH NO. 4: Buying a distressed property is cheaper and easier than negotiating with a seller in a Standard Sale. REALITY: Short Sales are anything but what this title implies. Short Sales take a tremendous amount of time to close if they ever even close at all. The buyer risks losing time, money (spent of inspections) and emotional capital. Further, the buyer could miss out on other solid buying opportunities that may well be ignored while fixating on the distressed property.

MYTH NO. 5: Applies primarily to first-time buyers who should always seek the advice of friends and relatives (who know just as much about the market as the buyer's agent if not more). REALITY: Many of them haven't been in the market for years and worse, do not have any experience/knowledge in the specific area the buyer is considering.

What's the take-away? 1. Home buying is the art of balancing objectives through compromise. 2 and 3. If you find a home that meets a balanced agenda, write an offer that makes sense in relation to current market conditions and see how the seller responds. You just never know. 4. Dealing with a bank on an REO (property that has been foreclosed upon) affords much lower risk than a Short Sale and Standard Sales offer discount opportunities (such as credits for defects and repairs) that generally don't exist with distressed properties. 5. Listen to your agent. They do this for a living and are the professional with the specific knowledge you need to make the wisest decisions.

Sellers call them 'lowball offers' while buyers usually consider them 'aggressive offers'.  No matter which, they're not working anymore in high-demand real estate markets according to a recent article in the LA Times.  This fact is a vivid illustration of the market recovery process well underway in some areas.

It was noted that lowball offers are considered to be those with pricing at about 75% of asking price.  Many buyers feel that it's worth a try and maybe they'll get lucky.  Of course this mindset really comes into play when there's an abundance of inventory on the market and the buyer really has a great selection and thus holds the upper hand.

Buyers in markets with tight inventories are finding that this strategy no longer works.  Either their offers are flat out rejected, countered at pricing very close to asking or discarded in favor of a stronger competing one in a multiple-offer situation.    

Nowhere is this reality more evident than here in the LA Westside which has been a seller's market' (generally defined as having less than 6 months of available inventory) since January.  Generally speaking, an offer of less than 85% of asking price would now be considered a lowball offer in this market.  

These new realities should prompt buyers to target properties within their affordable price range and be a wake-up call for sellers who've been waiting for the market to stabilize.  

 

 

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Craig Whitlock
COLDWELL BANKER BRENTWOOD
11661 San Vicente Blvd., 10th Floor
Los Angeles CA 90049
Mobile: (310) 488-4399
Fax: (310) 820-1457

Broker/Agent does not guarantee the accuracy of the square footage, lot size or other information concerning the conditions or features of properties provided by the seller or obtained from Public Records or other sources as presented in this website.  Interested parties are advised to independently verify the accuracy of all information through personal inspection and with appropriate professionals.  Information herein deemed reliable but not guaranteed.

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