How about a new set of wheels with that house?
How about a new set of wheels with that house?
In a tough real estate market, Len Lindstrom aims to survive as an agent by giving away a Honda Civic sedan to whomever buys the three-bedroom, one-bath stucco home he has listed in central Gilroy.
“What can we do about this market?” Lindstrom asked rhetorically as his voice echoed throughout the vacant house on Dowdy Street Thursday afternoon. “A lot of guys are shutting down, but we’re in it for the long run.”
Lindstrom, who works for the San Jose-based William Jefferies Company, is one of hundreds of real estate agents in the county competing in what many describe as a buyer’s dream. The number of single-family homes sold in Gilroy last month fell by more than 50 percent compared to December 2006, according to REReport.com, a database that reports local statistics from the nation’s leading real estate advertiser, Multiple Listing Service.
Rapid foreclosures have contributed to the plethora of home choices throughout the Bay Area. That is how Lindstrom and Bill Scozzola found the Dowdy Street property. As a “flipper,” Scozzola purchased the white house at an auction in May and then began fixing it up with energy efficient appliances. The home, built in 1948 and refurbished last year, has been on the market for 108 days, Lindstrom said.
Auctions are the last resort, though, because only about a third of properties that receive foreclosure notices actually end up in a bank’s hands. The rest of the time struggling homeowners either find a way to meet their payments or they strike a deal with lenders to cut the latters’ losses with a “short sale,” according to Stu Carson, a long-time local broker and president of Realty World in San Martin. A short sale is a way for a lender to recoup as much money as possible after a house has lost value since the initial loan. There is a correlation between homes priced below about $700,000 and short sales because these homes were more likely 100 percent financed, Carson said, meaning the homeowner has more to repay, percentage wise.
Money isn’t the only thing people are losing, though.
The South County Realtor’s Association, an offshoot of the 10,000-member Santa Clara County Association of Realtors, will likely see its roster shrink from more than 600 Realtors last year to about 450 later this year, according to SCRA President Julian Mancias. The National Association of Realtors, on the other hand, has seen its membership blossom to 1.35 million this year, but the NAR acknowledges that its swelling ranks could be the result of agents looking for more accreditation in a tougher market.
Clubs aside, Mancias and a handful of other real estate professionals who attended the SCRA’s weekly meeting at the Hilton Garden Inn in Gilroy Thursday said that a myopic media and a finicky public tend to forget that the market is cyclical. Sales may be grinding to a halt compared to the boom days a few years ago, but they cannot grind on forever: Now is the time to get in, Mancias and others said, before an upswing takes off thanks to high inventories and low interest rates and prices.
The NAR also sees the silver lining. The nation’s pending sales pattern suggests existing-home sales will steady early this year and then rise slowly in 2009, according to the body’s latest forecast as reported by Reuters Tuesday.
But, Mancias himself is waiting out the market in the last of his Coyote Creek houses in Morgan Hill, a 4,500-square-foot residence that he said should sell for about $1.9 million. Despite the steep decline in sales of lower-priced houses like Lindstrom’s, the sale of high-priced homes has not dropped as severely, so the county’s median sales price has technically increased since last year.
Still, Mancias cautioned against “gimmicks” like Lindstrom’s and said agents should instead cover the closing costs on a deal, replace the carpet and make any repairs. But leave the sales tricks be, he said. Other seasoned brokers and agents agreed that Lindstrom’s tactic is a natural salesman’s reaction to a sour market: National home prices dropped precipitously in 2007, breaking the record 6.1 percent annual decline in 1991, according to Standard & Poor’s house price index.
Despite all of the bad news, Shanna Boigon remains confident.
“This is what real estate’s all about,” said Boigon, a Realtor at Coldwell Banker in Morgan Hill. “We know how to do this, though most people have probably forgotten.”
