Happy February!
This is a long one as I want to share a great deal of information with you. While we are still technically in the middle of winter, the spring market has begun in the inner East Bay! Yep, we start early here! In January, I brought 3280 Guido Street onto the market, and 6 offers were received. The first week of February, I brought 8033 Earl Street to the market and 8 offers were received. I also tracked a few properties that clients had some interest in:
A house in Albany, (sweet, but you could see and hear the BART tracks and noise) was listed at $1.1M and is pending at $1.4M
A house in Sequoyah Hills, Oakland was listed at $995,000 and is pending at $1.3M
A house in the Glenview, Oakland area was listed at $1,095,000 and is pending more than 60% over the asking price
A house on the Oakmore/Dimond border was listed at $895,000 and is pending more than 50% over the asking price
At the same time, homes that do not show well, are overpriced, or have big challenges that can not be cured, (strong highway noise, next to an apartment building, on a noisy street, or properties that are dark with odd layouts), are not doing as well. Buyers are discerning as they should be, but are willing to pay to land the house they want.
A few tidbits for buyers:
In the inner East Bay, keep in mind that most of the homes for sale tend to be priced under value strategically to help generate as much interest as possible. Sellers, understandably, want to get top dollar for their properties, (just as you will, if and when you sell) and data shows that this type of pricing strategy works. Ultimately a buyer will set the value with what they are willing to pay. This is why buyer agency is important. An experienced buyer's agent can help weed out the properties that you can't afford and help you with properties you can. A good buyer's agent can help you understand the disclosure reports, look for pitfalls, and share insights on how various Realtors, houses, and neighborhoods perform. While I hate telling my buyer clients that a property will go over their budget, it would be far worse to write offer after offer with no luck and not understand why.
One of the houses that I mentioned above was listed for over $200K less than the seller paid for the house 6 years ago and the seller did work on the house to improve it. So the listing price was not only priced lower than its value but well under a price that the sellers could accept without taking a major loss. Many years ago, I had buyers come to me after 6 months of searching for a home in the Glenview neighborhood in Oakland. Their budget was $750K and they felt defeated after losing every house they wrote on with their previous agent. They called me because they felt they needed a new agent who was more attuned to the market and would better help them. During our initial meeting, I shared with them that nothing in Glenview had sold for less than $800K for that past year, market data that had not been shared with them. While it is sometimes hard to hear, the truth is necessary. This takes me to another concept, many first-time buyers are looking for a forever home, I get it. But if you can not afford what you want, and are not willing to look at alternative locations that are more affordable, perhaps you should consider a smaller property that could help you build equity and later move up. There are many alternatives a knowledgeable agent will offer.
Another consideration, 2023 was a fickle year with low-quality inventory so some of the recently sold homes in the area are not good comparables to use to figure out what to offer. For example, there was a home that sold in the Glenview neighborhood last year. It sold off the market as the seller decided to sell the property to a family friend. The seller's Realtor put the house in the MLS when the deal closed for "comp" purposes, but it was not a good comparison. First of all, if the house sold off-market, we have no idea where the house would have landed price-wise if it were on the open market with competition. We do not know if the seller accepted a reduced price due to a relationship and it turns out that the house needs a great deal of work, including foundation replacement, a new roof, electrical, updating, and more. Additionally, the buyer agreed to empty the remaining belongings and debris as part of the deal and the buyer was a Realtor, so she did not take a commission. I learned this when I had a client interested in buying in Glenview and was looking at sold values that were lower than the neighborhood typically commands and analyzing comparable sold data is what a good buyer's agent does.
Buyer agreements have been around for years, but I have never used them. I have always had verbal agreements with buyer clients and those have worked great, but recent changes in the industry are making signed agreements necessary. Previously, buyer’s agents were paid by the seller: the seller pays the seller’s agent and the seller’s agent shares their commission with the buyer’s agent, as specified in the MLS per the listing agreement. While this is still a common practice, because of recent litigation and a change in MLS rules, sellers now can decline to pay buyer’s agents. So going forward, the seller will pay the buyer’s agent or the buyer will pay their agent. So far I have not yet seen a seller refuse to pay a buyer's agent a commission. If the seller does not offer sufficient compensation to the buyer’s agent, the Buyer Representation and Broker Agreement, (BRBC) you signed allows for various options:
If the seller’s agent offers no compensation to buyer’s agents or offers less than what your agent wishes to be paid, in your purchase offer you can ask the seller to pay the amount you would owe your agent and, if the seller agrees, it will be credited to the amount that you owe your buyer’s agent in the BRBC.
If the seller refuses your request to compensate your agent, and you do not wish to pay your agent’s commission or lack sufficient funds to do so, you can decline to purchase that property.
In the second scenario it may be possible to negotiate a compromise with the seller to make the transaction work for you.
In any event, if you request through the purchase agreement that the seller compensate your agent and the seller refuses to pay the amount requested you are not obligated to purchase the property.
Again, at this time I am not seeing sellers not offer to pay for buyer’s agent commission, but we have to be prepared if things change.
As always, I am an email and phone call away and I am keeping a close watch on our market!
Warmly,
P.S. Last month I was recognized by Red Oak as being the top producing agent in the brokerage for 2023. Thank you for your continued trust and support in my business. Also a huge thanks to Nicole who works alongside me. We are here to help!
