Clayton Living & Real Estate

Clayton does not have a lack of beautiful homes and this one falls in the nicer category. It’s in the Oakhurst Peacock Creek area, 5 beds, 5 baths, 4,100 square feet, all the upgrades with wonderful views of our rolling hills. Here’s the challenge though: the neighborhood average home value (these days) is around $1.1 Million, and this one is listed for $2.15 Million. It may even be the nicest home in the neighborhood, but in this market I am concerned about their ability to find a buyer willing to pay double than the value of their neighbors’ home. You are essentially getting the same view, street, neighborhood, lot size and construction type as the guy next door, but paying twice as much in property tax and mortgage payment. I’ll watch this one closely for you, but I’m predicting one of the larger price drops for the area…

It looks like most everyone involved in the real estate industry has experienced a lot of pain over the past year. The Sellers, the Real Estate Agents, the Homebuilders, the Mortgage Brokers, the Speculators, the Lenders, and many Investors. What is becoming increasingly annoying is the never ending overly optimistic outlook for real estate given by many industry spokespeople. Statements like “the worst is over” and “we are projecting profitability next quarter” are constantly being disproven as we move forward in time. In addition, their unrealistic predictions are no longer giving consumers confidence and resulting in activity. They are making people suspicious and less likely to generate activity because of the contrasting arguements and countless “moving parts” of the real estate economy. I vote we all say it like it is, review the actual sales numbers and determine how we can best react to the situation. They say that nothing gets better quicker than from the moment we all know and understand the truth.

Some people think that 90 days on the market is excessive these days. Several homes in Clayton’s Oakhurst neighborhood have been on the market on and off for a year. In reality, if your home sells within two months, you’ve priced it well. However, most homeowner’s have a really hard time swallowing that big pill, yes, the “right price” pill. Despite most Clayton residents understanding that the market has taken a dive, when it comes to their own homes, they still hang on to a number that is unrealistic (”my house is extra special”). These days, I spend all my time upfront with sellers giving them the bad news. I’d rather them hear it from me now, than hear the bad news after 4 months on the market. This strategy has worked out fairly well for me recently…the homes I get to sell are priced right and sell, the homes that insist on the higher number, get listed with other agents. Those are the properties that are still listed today.

I’m starting to see more and more “We Buy Houses” signs around Clayton, Concord, and the other cities off Highway 4 like Pittsburg, Antioch, Brentwood and Oakley. Not sure if most people know how these buyers work. Essentially, they are looking for equity in your home in exchange for buying it from you quickly. No agents, no time on market, but also no big cash-outs usually. If the homeowner doesn’t have at least $100,000 equity and is willing to let it go for at least 20% under market, the buyer most likely will not go for it. These signs are most useful for those in danger of foreclosing on their property. It’s a lot better to rid yourself of a loan going bad, and giving up a chunk of equity, instead of watching the bank take ALL your equity, kick you out of your home, and destroy your credit for many years to come. It doesn’t take a lot of fancy investor knowledge to save someone from a home going into foreclosure, just someone with the ability to buy it from you. If there’s at least $50,000 in equity for them, it’s a fair deal to get someone out of a potentially catastrophic situation. Email me if you know of someone in this situation and are in need of advice. It can be a tricky situation, therefore it is best to work with someone who is financially strong, aware of market conditions, and sensitive to the homeowner’s needs.

It looks like most of the neighborhood is aware that it’s not the time to sell. However, many aren’t seeing the opportunity to buy (even if the market may level off for many months). I sent out an invitation to everyone in Oakhurst a few days ago to consider buying investment property. I heard from a few, but was expecting a lot more.

My proposal includes making a low ball offer on properties on the Highway 4 corridor (Antioch, Pittsburg, Brentwood, Oakley). There are so many properties on the market now, that deals are readily available. What I do is search the MLS for active properties that have been on the market a long time, or have experienced multiple price drops. Then, I ensure that they are desireable homes, in good neighborhoods, that will rent easily and for a solid number. Then I dig with the listing agent to find out how “motivated” the seller is. The more motivated, the more excited I get about making an offer. I then make an offer for considerably less than the current list price. The bottom line looks like this:
- List Price $500K
- Purchase Price $400K
- Downpayment $40K
- Rental Income $2K
- Monthly Cashflow $153
Ok, not a ton of cashflow, but cashflow. Do this and watch your monthly income increase every year for the rest of your life and don’t forget that your property will double in value in the next decade. Not bad for the price of a car. If you’re interested, get in touch with me and I’ll show you how it works in further detail.