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What to expect if home mortgage interest rates drop into the 4%'s next week · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: Good day everybody.
• 0:00
  SPEAKER_00: We're September 10th, 2024.
• 0:02
  SPEAKER_00: This is your Santa Clarita real estate update.
• 0:05
  SPEAKER_00: You can go to Santa ClaritaOpenhouses.com to see all the information.
• 0:09
  SPEAKER_00: Also, check out my blog where I post daily talking about the local market and what things you can do to take better advantage of your current position, whether you're selling or buying, because there have been a lot of contractual changes.
• 0:22
  SPEAKER_00: There have been changes to the commission structure, at least the way that it's offered.
• 0:26
  SPEAKER_00: And there have also also been some other changes.
• 0:29
  SPEAKER_00: In the upcoming update, we'll talk about some price changes.
• 0:32
  SPEAKER_00: The numbers for the last seven days are ringing in at 92.
• 0:36
  SPEAKER_00: 92 properties have had their prices changed.
• 0:38
  SPEAKER_00: As I said on a podcast a few days ago, as I was talking about the market in Santa Clarita, typically we're around 50 to 60 per every seven days.
• 0:47
  SPEAKER_00: That's usually about how many properties have their prices changed.
• 0:50
  SPEAKER_00: And depending on the market, it's going to depend on whether it's a price increase or decrease.
• 0:55
  SPEAKER_00: In this particular market, even though it is a seller's market, we are finding that a majority of these price changes are reductions in listing price.
• 1:05
  SPEAKER_00: It could be that the sellers at the very beginning were somewhat overzealous in their pricing strategy.
• 1:11
  SPEAKER_00: It also could be that maybe they used one of those online systems of value to establish it, and the agent that they were employing didn't offer them any other information that might have them modify their decision to be more market appropriate.
• 1:27
  SPEAKER_00: The local agents typically have their fingers on the pulse.
• 1:31
  SPEAKER_00: If you look at any of the information online in the news, you're going to see that people are talking about houses are flying off the shelves, they're moving so fast, oh my gosh, you better hurry up and get out there and buy.
• 1:43
  SPEAKER_00: I'm actually seeing a slowing trend in the real estate listings as they're being for sale.
• 1:48
  SPEAKER_00: Usually the days on market time frames were 10 to 15, depending on the city and the type of residence and the pricing strategy.
• 1:56
  SPEAKER_00: But usually they just kind of bet on that property going into escrow in that period of time.
• 2:01
  SPEAKER_00: Now we're seeing that that time is starting to increase.
• 2:04
  SPEAKER_00: 1520 days-ish.
• 2:06
  SPEAKER_00: So we're seeing that being one of the biggest changes here locally.
• 2:10
  SPEAKER_00: Alright, so of the 525, we have 12 coming soon listings.
• 2:15
  SPEAKER_00: 80 new listings have entered the market for sale.
• 2:17
  SPEAKER_00: 92 properties have had their prices changed.
• 2:19
  SPEAKER_00: We have 22 properties that have gone back on the market, 42 have gone active under contract, 52 pending, 50 closed, 8 expired, 8 canceled, 11 put on hold, and 4 have been withdrawn from the real estate market.
• 2:31
  SPEAKER_00: That brings that total inventory again for residential properties.
• 2:35
  SPEAKER_00: This is going to be single family residences, condominiums, and townhomes to 525.
• 2:41
  SPEAKER_00: Here in Santa Clarita, we do see this market changing, and we're watching as the interest rates continue to flux.
• 2:49
  SPEAKER_00: And then we also have the Fed meeting coming up on the 17th and 18th of September.
• 2:54
  SPEAKER_00: And I'm sure that's going to be all over the news as it has been in that cycle almost daily, talking about what if, what could happen, are they actually going to change the interest rate?
• 3:04
  SPEAKER_00: And that's going to be the Fed funds rate, which is different than the home mortgage rate.
• 3:09
  SPEAKER_00: But usually when that's modified or changes, usually that does have some sort of an impact on the home mortgage rate, and that's what people are talking about and betting on, trying to bet on, saying that here in the coming month we're going to have lower interest rates.
• 3:27
  SPEAKER_00: What does that look like?
• 3:28
  SPEAKER_00: It's going to depend on how low it goes.
• 3:30
  SPEAKER_00: If it goes into the fours, we're going to see the market kick off and it's going to be very reminiscent of the last super hot cycle where we had people overbidding on properties, multiple offers on every property.
• 3:42
  SPEAKER_00: We had people removing their contingencies.
• 3:45
  SPEAKER_00: So if you had a right to conduct your inspections and investigations of the property, let's say 17 days, that's what a typical contractual time frame is in Santa Carita Valley, and you've been making offers on real estate, and you're seeing that your offers aren't being accepted, and potentially, get centered here, potentially your agent's going to say, well, maybe we should change our strategy.
• 4:08
  SPEAKER_00: We're going in at list price or above, so we have that covered.
• 4:13
  SPEAKER_00: Maybe we should condense our time frames in order to do inspections.
• 4:18
  SPEAKER_00: Maybe instead of telling the seller we want 17 days, maybe we can get it all done in 10 days.
• 4:24
  SPEAKER_00: Thereby shaving down that time frame.
• 4:26
  SPEAKER_00: Why would that be advantageous to a seller?
• 4:29
  SPEAKER_00: Well, my sellers would look at that as I would have explained it to them if, and just as part of the explanation process in my listing time frame, my listing seminar when I'm putting these on.
• 4:40
  SPEAKER_00: But that information is something that was going to be incredibly important when it comes to the buyer investigations.
• 4:49
  SPEAKER_00: If they decide to shave that down and can get it done great, the seller's going to find an advantage of that because if they come in with something that they've discovered that the seller's unwilling to fix or it's going to be a make it or break it for the buyer, that could be where that buyer's going to step away.
• 5:06
  SPEAKER_00: But the seller didn't have to wait 17 days to get that.
• 5:10
  SPEAKER_00: He was able to at least get it done in 10, depending on how the other parties adhere to the contract.
• 5:16
  SPEAKER_00: And that's another whole wormhole.
• 5:19
  SPEAKER_00: You can ask for things to happen in real estate, but nothing's usually immediate.
• 5:25
  SPEAKER_00: When it comes time for contingencies to be removed, usually it has to be asked for.
• 5:32
  SPEAKER_00: It's not assumptive.
• 5:33
  SPEAKER_00: It is something that's required to ask for in writing and have the buyer say, okay, I'm removing all of my contingencies.
• 5:41
  SPEAKER_00: Without that, and that might go past 10 days as well, as sellers, you should know that, because even on the day when the time's up, it doesn't necessarily mean that now the buyer's contingencies are all removed, and now if the buyer chooses to cancel escrow, then the seller is able to retain their deposit for damages.
• 6:02
  SPEAKER_00: Usually it does not mean that.
• 6:04
  SPEAKER_00: The buyer has to sign an additional document.
• 6:07
  SPEAKER_00: That is the formal removal of contingencies.
• 6:10
  SPEAKER_00: Then after that, if the buyer cancels, then usually their deposit is forfeited to the seller.
• 6:17
  SPEAKER_00: What does that look like?
• 6:18
  SPEAKER_00: Well, it could be 3% or more depending on the purchase price.
• 6:23
  SPEAKER_00: So that's a big chunk of change.
• 6:26
  SPEAKER_00: You got 3,000 bucks for you know 100 grand and so on and so forth up the ladder we go.
• 6:31
  SPEAKER_00: If the buyer cancels in that time frame, then of course, you know, that$30,000 if they're buying a million dollar property, that$30,000 would be the property of the seller if they if they excuse me didn't cancel, but if they canceled after the removal of contingencies.
• 6:50
  SPEAKER_00: All of that is subject to litigation.
• 6:52
  SPEAKER_00: All of that requires all parties' approval.
• 6:55
  SPEAKER_00: I mean, so if it comes down to where the seller's gonna get to keep the buyer's deposit, it doesn't magically happen.
• 7:02
  SPEAKER_00: There's gonna be some questions asked, there's gonna be a little bit of oversight looking to make sure all the I's have been dotted and the T's have been crossed.
• 7:11
  SPEAKER_00: When that happens and they get agreement from all parties, maybe the buyer says, you know what, there's no way I can lose it.
• 7:18
  SPEAKER_00: I'm gonna get an attorney, and then everything changes.
• 7:21
  SPEAKER_00: Usually it doesn't go that far.
• 7:25
  SPEAKER_00: Usually in a real estate transaction, buyers' deposits aren't forfeited, and if they are, it wasn't a surprise.
• 7:32
  SPEAKER_00: It was something that all parties knew, and sometimes, most times, it works out.
• 7:38
  SPEAKER_00: Whether the seller says, you know what, I get it, I understand something happened.
• 7:42
  SPEAKER_00: Maybe somebody died.
• 7:44
  SPEAKER_00: Maybe it was something so traumatic that the seller couldn't the other part of the purchase, you know, maybe two buyers, one of them happened to croak or pass on, that's an issue.
• 7:54
  SPEAKER_00: When that happens, excuse the police vernacular, it's uh I'm still more that than I think anything.
• 8:00
  SPEAKER_00: But with that, that could actually stop the transaction.
• 8:02
  SPEAKER_00: It could be after the contingencies have been removed.
• 8:05
  SPEAKER_00: Now, even the loan contingency, where now they can't get the loan because one of the parties is deceased, even that scenario is going to come into play where they're not gonna be able to get the loan, therefore they have to cancel.
• 8:17
  SPEAKER_00: However, they've already removed that loan contingency because of course the lender didn't know somebody was going to die.
• 8:24
  SPEAKER_00: And then as a result of that, that again, their their deposit could be forfeited.
• 8:30
  SPEAKER_00: Lots of information in a real estate transaction, make sure that you're getting good advice from your source, your real estate agent.
• 8:37
  SPEAKER_00: All right, where are we?
• 8:38
  SPEAKER_00: So we did this, we put together the the 92 price changes.
• 8:41
  SPEAKER_00: That's something that I'm gonna keep an eye on.
• 8:44
  SPEAKER_00: Those, a majority of those, like I said, uh over 90% were reductions in listing price.
• 8:49
  SPEAKER_00: And these are properties that have been on the market a little bit longer than what was typical, even up to a couple weeks ago.
• 8:55
  SPEAKER_00: So the market slowed a little bit, maybe it's the sellers getting a little nervous, but that price reduction or the change does implement a cascade of effects online with regard to the syndication sites.
• 9:10
  SPEAKER_00: So you're gonna start seeing those listings pop back up to the top.
• 9:13
  SPEAKER_00: And in addition, any buyers that have been receiving those listings as a result of working with one of the local agents here, they will find that their start, that listing will then pop back into their system and they'll see it yet again.
• 9:27
  SPEAKER_00: And maybe now the price point makes more sense.
• 9:29
  SPEAKER_00: Maybe they didn't even want to look at it before because it was outside of their comfort zone, but now their comfort zone, it's well within.
• 9:36
  SPEAKER_00: Hey, let's go take a look and see what's going on with it.
• 9:38
  SPEAKER_00: All right, so from there that brings us to sellers.
• 9:42
  SPEAKER_00: Make sure your price is right from the beginning.
• 9:45
  SPEAKER_00: With any of the real estate websites, a lot of them use an algorithmic approach.
• 9:49
  SPEAKER_00: They have a program that's been put in, they're looking at data, but usually it's not hyper-local.
• 9:56
  SPEAKER_00: Hyperlocal data is going to make the difference for a seller, and that data a lot of times isn't going to be available in the public record.
• 10:04
  SPEAKER_00: It's going to be the local agent's knowledge of a particular neighborhood, and let's say how much a pool is going to add to the value, how much having a remodeled kitchen is going to add to the value.
• 10:15
  SPEAKER_00: Maybe that agent has seen a majority of the homes in the neighborhood, like most local agents that have been doing the business a long time, and they can really give you a good idea as to what others have been doing in their residences, so you can at least keep up and maybe even surpass them and have a premium demanded, which is going to skew that online system that gave you a particular value that your agent didn't have the wherewithal to explain to you and show you the actual listings that can be held in higher comparison rate to the ones that the online systems are using from the tax records and so on.
• 10:51
  SPEAKER_00: That's something that's important to have that human oversight for each one, but not just any human, but actually the local agent that understands the local dynamic, the dynamic of the local market and is able to put that into writing and explain why a particular listing should be priced in a particular manner.
• 11:09
  SPEAKER_00: And even if that's different from online, being able to justify it, but then of course understanding that it's the seller's choice and the seller is going to move forward with whatever price the seller decides, they're the boss.
• 11:21
  SPEAKER_00: If the agent doesn't agree so venomously that he believes the seller's harming himself, that agent could potentially walk away and say, I'm sorry, I'm not the agent for you, but I do appreciate it and I wish you well.
• 11:34
  SPEAKER_00: That's it.
• 11:35
  SPEAKER_00: Or they can say, Okay, we will try it your way, but understand that after 10 to 15 days, we don't want to be on the lot market much longer than that without doing some sort of a price change.
• 11:47
  SPEAKER_00: And in that regard, I would recommend a price reduction to the number that I believe we should be listing the property for.
• 11:55
  SPEAKER_00: How does that sound?
• 11:56
  SPEAKER_00: And if I get an agreement, great.
• 11:58
  SPEAKER_00: If I don't get an agreement, I understand.
• 12:01
  SPEAKER_00: The seller knows the next move.
• 12:04
  SPEAKER_00: The seller understands it.
• 12:05
  SPEAKER_00: I've explained it.
• 12:07
  SPEAKER_00: If the seller wants to take a while, just in case, that's fine.
• 12:11
  SPEAKER_00: It's the seller's option.
• 12:13
  SPEAKER_00: I'm Connor McIver.
• 12:14
  SPEAKER_00: Thank you so much for listening to today's show.
• 12:16
  SPEAKER_00: For you buyers out there, you have those buyer broker agreements for every property you want to view.
• 12:21
  SPEAKER_00: Make sure you're looking at those and finding out exactly what your signing length of time, how many different properties, one property, specific property type.
• 12:30
  SPEAKER_00: Is this the agent that you're selecting to be your buyer's agent, represent you on everything, or is it just a one for somebody just want to see the one for one property and nothing else from them?
• 12:41
  SPEAKER_00: Again, my question would then be why haven't you gone forward to find that agent that's gonna work for you?
• 12:48
  SPEAKER_00: And buyers do have a lot of reasons why they haven't made that level of commitment.
• 12:54
  SPEAKER_00: But when you're ready, let's talk about it.
• 12:56
  SPEAKER_00: I hope you're well.
• 12:57
  SPEAKER_00: Thanks for watching.
• 12:57
  SPEAKER_00: I'm Connor with Honor.
• 12:59
  SPEAKER_00: Over and out.