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Oak Park

Sellers, you don’t need 20 offers

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Sellers, getting twenty offers is the dream, right? That way you can be choosy about accepting the buyer with the strongest terms and probably a higher price too. But do you really need that many? In other words, can you get the same price with just a few offers? Let’s kick around this idea today.

THE SHORT VERSION:

1) No surprise. Getting more offers tends to lead to a higher sales price.
2) Sometimes just one offer can go way above the list price.
3) Homes with one offer also more regularly close way below the list price.
4) You don’t need 20 offers (but it sure does help).

THE LONGER VERSION:

Let’s look at some visuals and then consider some takeaways.

County Visuals: First off, I’m concerned these visuals are going to be confusing, so sorry if you’re thinking, “Dude, I only see dots and I have no idea what’s going on.” The goal is to show how much higher the sales price is compared to the original list price while considering the number of offers. Basically, when a dot is at 100%, it means a home sold at exactly the original list price. Or if a dot is at 110%, it sold 10% above the list price. Or 95% means it sold 5% lower than the original list price.

Question: What happens to prices when there are more offers?

The big plain truth: The truth is properties with more offers tend to close higher above the original list price than properties with fewer offers. Duh, I know we could have said that without the research, but it’s good to see what stats actually show rather than going with what we feel might be true. With that said, sometimes a home with just one offer can actually close at the same high percentage above the list price as a home with ten offers. So technically you don’t need ten to twenty offers to command a huge price (but it sure does help).

Neighborhood Visuals: Let’s check out some neighborhoods too instead of just the county. What do you see?

Conclusion: There are fewer data points to consider in the neighborhood visuals, but the takeaway is the same as the county (see above).

QUICK THOUGHTS:

1) 20 offers: If you’re getting 20 offers, it’s probably because you’re priced too low unless that’s what every listing is getting.

2) Aim for a few: Price it reasonably and you’re more likely to command a few solid offers and statistically be in the zone to compete above the list price. The reality is you don’t need 20 offers to get a huge price (but it helps).

3) Hang in there buyers: It’s not easy out there right now, but it’s worth noting not every sale is getting ten offers. It may feel true, but the stats don’t show it is.

4) Not everything is getting bid up: While many properties go 10% to 15% above the original list price, many homes sell below the list price. The narrative is Bay Area buyers are swooping in, paying cash, and everything is getting bid up, but that’s not true when looking at how many homes recently sold below the original list price (basically any dots below the 100% line).

5) Clear advantage: Having lots of offers gives sellers a huge advantage to be selective and accept contracts with the best terms (and probably higher prices).

6) Layers of the market: Not every price range is experiencing the same dynamic when it comes to multiple offers and getting bid up. This is why it’s so dangerous to take an experience with just one property and call it a trend for the market. Maybe. Maybe not.

I hope that was helpful. Thanks for being here.

Questions: How many offers do you think is ideal for a seller to get? Why are some listings able to command a huge price even though they only get one or two offers? What is it about those ones? Any other insight? I’d love to hear your take.

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The Golden State Killer’s house, selling lower, & price changes

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I have three things on my mind today. Let’s look at the accused Golden State Killer’s house, a new visual I’m testing out, and some fresh stats.

Huge thanks: First off, thank you for reading my blog this year. This will be my last post of 2019, so I wanted to say I’m truly honored to have you here and I hope you’ll continue to journey with me into the new year. As always, I’m open to your ideas too, so hit me up if you have topics in mind.

GOLDEN STATE KILLER: There’s no holiday cheer with this topic, but we’ve been wondering what would happen if the accused Golden State Killer’s house came to the market. Well, now we know. Sort of. This property sold as a private sale to an FHA buyer a few weeks ago. The SacBee did a piece on it here.

What do you notice about the final price?

Unfortunately the home wasn’t sold on MLS, so we don’t really know the details of how the price was established, but it clearly sold at the lower end of the market. Was the low price due to stigma? Could it be due to condition or lack of upgrades? Or maybe it was the owner selling at a discount? We may never know the details, but it’s interesting nonetheless to see.

House History: It’s sobering to think Joseph James DeAngelo, the accused killer (aka East Area Rapist), was pursuing the “American dream” of home ownership while destroying people’s lives. Here’s a history of the house:

  • 1980: Bought the house for $77,000
  • 1993: Refinance
  • 2003: Refinance
  • 2012: Refinance
  • 2019: Private transfer to family member
  • 2019: Private sale for $320,000

SELLING LOWER (NEW GRAPH): I’m testing out a new graph and I wanted to see what you think. Here’s a look at Roseville and East Sacramento. Would you like to see other neighborhoods? The goal is to see how close a property sells to the original list price vs how long it’s on the market. Thanks Braden Gustafson, MAI for the graph inspiration on Twitter.

The takeaway? The longer a property sits on the market, the further it sells from its list price. I know this is what we’d expect to see, but it’s still cool to visualize. By the way, I used the original list price instead of the most recent list price because it’s a more complete picture of the market.

PRICE CHANGE IN NEIGHBORHOODS: Last week I pulled some stats to prepare for an interview with Channel 10 about price dynamics in Oak Park. So I crunched numbers in about a dozen neighborhoods to help get a wide view of both higher and lower-priced areas.

The Sacramento Bee actually did a piece on my stats too.

I looked at both the dollar change and percentage change on purpose as this helps give a well-rounded view of the market. I also looked at huge chunks of data too as this compared almost an entire year in 2012 vs the same time in 2019. The problem with neighborhood data is if we look at one month only, the numbers can end up being all over the place. 

NOTE: If you want this data in a PDF, just send me an email.

Again, thank you for being here. From my family to yours, Merry Christmas and Happy Holidays. In coming weeks I hope you get a little time off to connect and reflect. Blessings to you.

Questions: Would you feel comfortable buying this house? Would you expect a discount? Any thoughts on the new graphs or price stats? Anything to add?

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That place where fame & real estate meet

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How does fame impact a home? Does it matter for value if a famous person lived there? What if something notorious happened at the property? Let’s talk about this and consider a few examples. Please note there are entire books written on this subject, so don’t expect an exhaustive dissertation here. Any thoughts? I’d love to hear your take in the comments.

Here are a few examples:

Breaking Bad: The house where the TV series Breaking Bad was filmed was all over the news last month because the owner is building a 6′ front yard fence to keep people out of her yard. According to Albuquerque KOB4 there is a constant stream of visitors and fans have even thrown pizzas on the roof to reenact the main character Walter White doing so in an episode. The owner is clearly not thrilled, and I can’t imagine neighbors are either unless they can somehow monetize the situation.

Kurt Cobain’s Baby House: Brandon Turner at Bigger Pockets is an investor and he accidentally bought a home where Kurt Cobain lived as a baby. The duplex was purchased as an investment without any knowledge of the lead singer of Nirvana’s connection to the property. But tenants began complaining about photos being taken of the front of the house, and that’s how the connection was discovered.

The Almost Governor’s Mansion in California: The State of California built a Governor’s mansion in the 1970s in Carmichael, which is about 10 miles from Downtown Sacramento. This mansion began construction under Governor Ronald Reagan’s leadership, but it was not completed until Jerry Brown took office. Brown actually refused to live in this house, which he dubbed “The Taj Mahal”. This home sold for 4.1M in 2004 and has 8 bedrooms, 8 bathrooms and is 11,984 sq ft. The mansion is still there today, but some of the site has been subdivided for a few custom homes. This is literally one of a few residential homes EVER in Sacramento County that sold above $4M.

Reagan House in the Fab 40s Neighborhood: Governor Ronald Reagan and his family chose not to live in the old Governor’s mansion in Downtown Sacramento back in the 70s, so they moved to East Sacramento on 45th Street to lease a home in the “Fabulous 40s” neighborhood. The home boasted over 6,000 square feet with six bedrooms and four bathrooms (according to Tax Records). The home last recorded for $1,765,000 in May 2000. Not everyone can say, “The future President used to live here when he was Governor”. Do you think that matters for value?

Here’s a look at the price point of the Reagan house. What do you see?

Homicidal Handyman House: There is a property in Oak Park where a serial killer dubbed “The Homicidal Handyman” murdered someone in the later 80s. This property was purchased last year by an investor and I’m waiting to see if it comes on the market (it has a choice location). This murder occurred about 30 years ago though, and the reality is that stigma associated with gruesome crimes fades over time. In other words, it might be a big deal for value to buy a property right after a murder, but much less of an issue if the crime occurred 30 years ago. I observed a recent murder property in the Sacramento market and in this case there was a 5-10% hit on value, though it might not have been an issue at all had the murder taken place 30 years ago instead of recently. Architectural Digest actually did a great piece on stigma recently and I was pleased to see they interviewed Jonathan Miller.

Dorothea Puente Murder House: Seven bodies were discovered at a duplex on F St in Sacramento in the late 80s compliments of Dorothea Puente. She lured victims to her “boarding” home, drugged and buried them, and then cashed their social security checks. This Victorian duplex has some charm as you can see, but it definitely has a dark history too. There was a documentary made about this house in 2015 and the owner has even given tours through the years too. This just goes to show it may be possible to monetize a famous house. Though in this case the owner has donated tour proceeds toward organizations working to alleviate homelessness (way to go).

Here’s a sales history of the Puente duplex. What do you see?

Lady Bird House: A recent movie called Lady Bird is set in Sacramento and had some filming done in the city too. Here is the front of one of the home’s shown in the movie (located in Fab 40s). This was not the main character’s dwelling, so it may not attract much of a following, though it’ll be interesting to see if people snap selfies here. For reference, the San Francisco Chronicle shared Lady Bird filming locations so fans can visit. In this case the owner probably has some bragging rights to say, “My home was in Lady Bird”, and I’d imagine any future listing would mention this fact. But will the market as a whole pay more for a house like this because it had a minor role in a movie? I’ll give you my opinion in the comments if you give me yours.
 
And here’s my Lady Bird selfie.  🙂
 
Closing thoughts: It seems like fame can either be good or bad when it comes to real estate values. If a house is famous for something gruesome, it could easily harm value (duh). But part of it depends on how long ago a crime occurred. On the other hand if a home is historically important, it could be a huge bonus for value (duh again). Yet fame can come at a cost too by increasing foot traffic and looky-loos. Would an owner have to disclose the stream of unwanted visitors to potential buyers? Could this potentially limit marketability? Could it impact rental value if there were camera flashes happening at night? Would tenants get fed up over time? These are important questions to ask. Lastly, we would be wise to not overthink a property’s value that had “15 minutes of fame” so to speak. Thus just because a home had a cameo in a movie or was previously owned by someone famous does not mean at the end of the day the market is going to pay anything more for the property. It’s true certain fans might offer more for a particular home owned by a celebrity or athlete, but what would the market as a whole pay? That’s always the bigger question. 
 

Think Like an Appraiser Class (I’m teaching): By the way, I’m doing my favorite class on Dec 7 from 9am-12pm called How to Think Like an Appraiser. We’ll talk through comp selection, making adjustments, tips for talking about value, and what to do in various scenarios. Details here.

Questions: Would you buy a house that was famous in a movie or owned by someone famous? Why or why not? Have you seen any measurable impact to value for a celebrity property? I’d love to hear your take.

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The smell of gentrification in Oak Park

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Gentrification is either a dirty word or something wonderful depending on who you ask. One of the best examples of gentrification locally is the Oak Park area of Sacramento. Let’s take a deeper look at this neighborhood that is in the process of change. I’d love to hear your take in the comments below.

Oak Park high sale

Seriously, $428,000? When telling a few locals on Twitter last week that a property on 34th Street recently sold for $428,000, the responses were mostly, “What the heck? Really? Wow!!” I know that doesn’t sound like much for certain areas of the country, but it gives pause for Oak Park because it seems symbolic of what is happening in the neighborhood as well as indicative of values that have risen dramatically in recent years.

What is gentrification? According to Merriam Webster, it is the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents.

1) Neighborhoods Have Life Cycles:

Growth: A period during which there are gains in public favor and acceptance. Demand increases.
Stability: A period of equilibrium without marked gains or losses. No real obvious change.
Decline: A period of diminishing demand and acceptance.
Renewal: A period of rejuvenation and rebirth of market demand.

2) The Good & Bad: Blight needs to be cleaned up, so it’s a good thing when that begins to happen in neighborhoods. However, it’s a bad thing when native residents are displaced because they can no longer afford the neighborhood.

An Example of Gentrification: The Oak Park area of Sacramento has been gentrifying for more than a decade. In some portions of the neighborhood there are signs of revitalization as residential properties are rehabbed, chain link fences are removed, and commercial businesses along Broadway are starting to attract outsiders (which is something that rarely happened in previous years). Overall a shift in attitude is taking place, and that is being reflected with greater demand and higher home prices. There are “gentrification pockets” so to speak in various areas of Oak Park, but not all areas.

Oak Park Sales in Sacramento - by Sacramento Appraisal Blog

Here are all Oak Park sales over the past 6+ years. This graph shows all portions of Oak Park including North Oak Park (not Med Center). These are residential sales from MLS (no private sales). The highest sale in Oak Park recently closed at $428,000. On one hand this sale is higher than anything else, and that gives us pause, but on the other hand it is larger in size and new homes tend to command a value premium.

Oak Park and Med Center Sales in Sacramento - by Sacramento Appraisal Blog

Med Center Thoughts: North Oak Park has been a very hot market, and some would say the line between Med Center and North Oak Park has been blurred in recent years, meaning higher values of the Med Center area have trickled throughout North Oak Park. If you are a buyer, would you pay a premium for Med Center or do you not care? As an appraiser I like to graph Med Center separately because some properties in Med Center can still command a premium. However, the graph does show the highest prices in Oak Park are more readily competing with Med Center prices.

SNL’s Gentrification Skit: By the way, if you haven’t seen Saturday Night Live’s skit on gentrification, they nailed it. Watch below (or here). There is some language, so be careful about kids being present.

Questions: Any thoughts, stories, or points to share? I’d love to hear your take. How has your perception of Oak Park changed over the past decade? Do you think there is a price difference between Med Center and North Oak Park? What are the strengths and weaknesses of gentrification?

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