Nancy Moeller's Blog

In case you were wondering - the bottom is NOT falling out of the market in Orange County. Remember that the economy is strong, Orange County is a great place to live and people need housing. We are simply in a stalemate.  There are not enough sellers in dire need to sell, so they are holding strong on their prices.  Buyers are sitting on the fence waiting for someone to announce the "bottom has arrived".  Of course, the experts can't even pinpoint the true bottom until years later, so that's a pretty silly thing for so many buyers to be doing. 

So here's the reality of demand.  It's low right now.  However, "pent up" demand is growing - fast!  Let's say we would normally have 4,000 each month people buying in Orange County in our current economic climate, but only 1,800 are actually buying, that means 2,200 people are waiting - each and every month! They still need or want to buy, but they are waiting for the "Perfect Market".  Unfortunately, that will eventually turn into the "Perfect Storm".  Let me explain. 

Once the newspapers convince the general public that the worst is over and real estate is rebounding, all of the people who were waiting (pent up demand) will enter the market and eat up our inventory.  It's like waiting until Christmas Eve to do your holiday shopping - everyone else is out there competing for the same product. 

So how should a buyer approach the market? First, realize that the sky is not falling.  The major advantage for buyers is that there are so many choices out there compared to just two years ago. This IS the market to be a buyer. Now through the end of the year is the time to buy. The Orange County real estate market will thrive for years to come just as it has HISTORICALLY.

Good success!

Nancy Moeller, CPA, Realtor

As Realtors, we always talk about the pitfalls of selling property "FSBO" without an agent.  It's not just the marketing and negotiation expertise that professional Realtors bring to the table, but also our ability to navigate the 3 inch stack of paperwork, disclosures and risk management issues that come with every transaction.  One "T" left uncrossed can easily lead both buyer and seller to court for any number of reasons.  Depending on the statistic you believe, 60 - 80% of FSBOs will eventually see the light and list their home with a professional.

What we rarely discuss is FRBOs (For RENT by Owner).  My partner and I attended a two hour summary training session this morning just on the legal issues that owners and tenants both face when entering into a Residential Lease Agreement.  We just barely scraped the surface of the issues in this short review session.  Owners must understand what they are legal required to provide to tenants, the maximum deposits that can be secured, the legality of pet deposits, prepaid rent and discriminatory practices.  What if a tenant wants to do an inspection?  Can smokers be turned down?  Can the number of occupants be limited?  How much notice is needed to terminate a lease?  What happens if the sellers wants to sell?  Does the tenant have allow potential buyers into their home?  What is the point of a Move In/Move Out Inspection?  What forms should an owner use? How about disclosures?  What does an owner have to disclose to a tenant vs. a buyer?  Does the owner have to keep all the applications s/he receives?  What happens if a Notice of Default is filed on a property?  How does the eviction process work?  How long does an owner have to return the deposit?  What documentation is necessary for deductions from the deposit?  What rights does a tenant have when a home is foreclosed upon?  What recourse does a tenant have if the owner stops making payments on their mortgage?  What terms should a prudent tenant negotiate on their lease?  Should a tenant record their lease to protect themselves from future eviction from a superior interest in the property?  What does it mean when a bank offers "cash for keys" to a tenant?  Why would they do this?

If any of these questions leave you scratching your head as a home owner or potential tenant, you must contact a Realtor to represent you.  For homes listed for lease on the MLS, the commission to the agent is usually paid by the seller.  As a seller, the commission paid to make sure the lease is handled with the same care as a sale is critical and worth every penny.  Every one of us reading this has probably heard more "nightmare" tenant and leasing stories than purchase/sale stories.  The reality is the lease transaction lasts much longer - usually 12 or more months - and the opportunities for complications and problems is exponentially higher.

Don't put yourself at risk.  Hire a professional and experienced Realtor or Property Manager to help you with your next lease transaction, regardless of whether or not you are the home owner or tenant!

Have a great day,

Nancy Moeller, CPA, Realtor

In our marketing meetings, we are constantly talking about "new" and improved ways to prospect for new business.  The obvious choices are working FSBOs, calling expireds, door knocking, networking, generating internet leads, developing a fancy website and of course, pouring a ton of money into advertising.  The reason?  Every Realtor is looking for today's buyers and today's sellers.   

One day, my partner and I decided to create our new business marketing plan for next year, instead of this year.  We decided to let this year take care of itself from our daily activities, and invest our marketing efforts on next year.  We asked ourselves, "How can we find next year's buyer's today?"  The answer was leases.  Because agents typically dislike working with leases for the obvious reasons - low commissions, wasted gas and time expended, we found ourselves with no competition and a ton of prospects. 

The best part is our new clients love us because we invested the time and helped them when no one else would.  Helping people with leases allows us to demonstrate our level of service and create a meaningful relationship.  With good follow up, next year, when they are ready to buy or have someone to refer, they will remember us.  It's working so far and we thought we'd share our approach.

Have a great day,

Nancy Moeller, CPA, Realtor

Here's the scenario:  Steve and Susie each own a condo in Anaheim Hills, California. Steve moved in with Susie 3 ½ years ago and rented out his condo.  They are engaged to be married next year and want to sell their condos and buy their dream home this year.  Each condo has appreciated about $400,000 since they bought them.

Instead of just calling a Realtor, they also called their CPA (me in this case since I am a Realtor and CPA).  I advised them to wait until next year to sell Susie's place, move into Steve's place for 2 years and then buy their dream home.

The strategy will save them about $192,000 in unnecessary taxes.  How many Realtors do you know that would save "no" to 2 of 3 transactions this year to save their client's money?  Hopefully, all of us. 

Just remember, buying and selling real estate has huge tax ramifications, including capital gains, 1031 exchanges, limits on deductibility, property tax issues, etc. Before you call a Realtor, be sure you have already consulted with your tax advisor.  Realtors out there - protect  yourself and your clients and have them speak to a tax advisor before they make their next real estate decision.

Have a great day,

Nancy Moeller, CPA, Realtor

A few years ago when a seller wanted to price their home over recent comparable sales, it was an easy decision to support.  The market was on an upswing and pretty soon, the market would catch up with the seller's desired price and it would quickly sell.  In June 2006, that strategy started to backfire.  Inventory started to stack up and prices began to level off.  Homes that were overpriced just sat there.  Finally, overpriced homes were reduced to actual market value and the best ones sold.  Throughout 2006, everyone saw "price reductions" but the reality was that seller's were just readjusting their price to market value instead of waiting for the market to come up to their desired price, which clearly was not going to happen.

Now, one year later, we are faced with a market which is clearly declining.  For those of you that would argue that median home prices are stable or even improved, you must remember to adjust for the entry level market below $600,000 (in Orange County) which has suffered and not moved because of the Sub Prime fall out earlier this year.  As a result, the median home prices are distorted and appear to be strong/

Here's the hard reality for sellers.  While we must look at recent comparable sales when determining the best marketing price of a home, the reality is that homes that are selling today are under market or highly unique.  Successful sellers realize we are in a declining market and are pricing their homes slightly (or greatly) BELOW market in order to attract the small number of buyers currently in the market.  Stubborn sellers are waiting 30 - 90 days to "test the market" before reducing their price.  When they finally do reduce their price, they are once again at "market" price and their home still does not stand out.

Let's look at a home that compares with 5 recent homes that sold in the last 90 days for $700,000.  Assuming the homes are identical in every way - condition, location, upgrades, view, etc., where should the seller price their home?  The answer depends on the competition.  How many other homes are available in this price range with similar features?  If there are 20 other properties that are comparable to this property all priced from $675,000 - $750,000 ... what are the chances of a seller successfully pricing their home at $700,000?  To stand out in this scenario, the seller should be at the bottom of the price range and hire an agent who will aggressively drive traffic to their house.  After one week (NOT 30 to 90 days), the agent and seller must evaluate the traffic and feedback and make quick staging and/or price adjustments.  There is no time to waste.  Homes that sit on the market too long are victims of low ball offers and low showings.

Bottom line, do not chase the market down - it will cost you tens of thousands of dollars!  Either price it to sell or don't sell it in this market.  While it's a great time to buy, it's not the best time to sell unless you are also buying in this market.

Have a great day!