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“Wait-and-See” Buyers May Lose Out

By Michael Edlen, Real Estate Consultant

Published in Palisadian-Post and Santa Monica Mirror

Real estate agents have seen increasing numbers of prospective buyers repeating what has become a familiar pattern.  In the current slower market, many buyers hesitate to make a purchase decision even when their search criteria have almost all been met by a property they have viewed. However, many prospective buyers may look back with regret if they are not prepared to make offers when a home meets their needs.

Of course this reluctance has served well from one point of view. Clearly prices have been in a downward trend for quite a while even in relatively stronger market areas such as the Westside of Los Angeles. 


However, it has long been noticed in real estate as well as other financial arenas that no one “rings a bell” at the bottom of the market. In some neighborhoods the bottom may already be occurring, despite the overall general news and market statistics. In fact, it is not uncommon for there to be multiple offers in some of the more desirable areas when a home is priced very competitively. In recent months we have had multiple offers on two of our listings north of Montana, both of them sold for more than the list price.

Another example occurred in the Palisades with a new home that had been on the market for several months. The seller finally decided to adjust the asking price by approximately 10% with the intent to make it extremely attractive to buyers so that at least one of the prospective buyers with a “wait-and-see” attitude might be incentivized to present an offer. Within a few days three buyers wrote offers, and within the week it was sold at a higher price than the reduced price point. One of the unsuccessful buyers was very sorry they lost out because they waited too long to decide. This put them in the middle of a bidding war that they lost in the end. During the two-week contingency period they even offered to increase the price.

Many buyers seem to feel that nothing is well-priced today, and eventually can be purchased for lower prices. While this may be true of some listings, those which are well-priced to begin with are sold rather quickly even in this slower market. Moreover, decisive buyers usually do not regret negotiating the best terms on purchasing a home that meets most of their criteria. A client of ours recently thanked us for encouraging them to move forward rather than continuing on the sidelines in the hopes that an even better opportunity might show up. They also benefited from their timely decision because of the historically low cost loans still available.

No one has an infallible crystal ball to know when the best timing for a purchase will be. However, unless someone intends on selling within a few years, odds are that they will look back and feel good about having bought sooner rather than later.

For more articles about the home buying and selling process and current real estate trends see MichaelEdlen.com

The Benefits of a Real Estate Team

“We interviewed a ‘stand-alone agent’ and another who has two assistants. The single agent pointed out that we might never hear from the other agent if we hire her because the assistants do all the work. We know you have a team approach and would appreciate your comments.”
- A prospective home seller

Have you seen the paperwork required to sell a California home recently? The listing forms and disclosures now total fifteen pages, eight reports, and one booklet. The sale process includes thirteen pages or more, three certificates, several pages of disclosures, and supplemental escrow paperwork. Home inspections may take three to four hours and produce reports up to twenty pages. Supplemental inspections of roof, fireplace, plumbing, etc. can add further reports. Pest control reports are several pages, and preliminary title reports can be lengthy. By the time an escrow closes, the file may be over an inch thick!

Can you visualize the time it takes to process, organize and monitor all of these details? Are you aware of the current contingency removal process? It requires keeping track and taking affirmative action by specific dates, and there are often several different issues and time frames to deal with, as well as three to four inter-related forms.

If a “stand-alone” agent is meeting with a current or prospective new client, or is out for two to three hours showing properties to a buyer, who is available to answer phone calls and coordinate marketing activities in the office? Who is going to assure that advertising details are completed, digital photography done, and publication deadlines are met? How will brochure boxes get put up, and who has the time to keep them stocked?

If a single agent is at a lengthy property inspection, who can make the calls for a last minute appointment? And who can do a short-notice showing? When an agent is involved in family activities, may be out for a day with the flu, or is otherwise occupied for several hours, who is available to cover the office? If the agent has an arrangement where another agent will cover such times, how familiar might the other agent be with all the details of your home and property showing routine? The “team agent” also is much more able to be involved in networking with buyers’ agents to increase the attention and energy about your home.

I could never provide by myself even half the level and quality of service my team and I offer. Each of us has areas of specialized skills as well as being able to cover each other’s activities when necessary. We have systems and checklists for handling nearly every aspect of the sale from start to finish, including effective marketing, advertising and escrow management.



The business model that many “team agents” use is similar to a doctor’s office, where a different individual is primarily responsible for reception and information gathering, preliminary measurements and temperature reading, obtaining of any lab samples needed, record-keeping and invoicing. Certainly, the doctor could do most or all of the functions and activities, and probably does in some small towns or rural areas. But in most practices, the professional level of service requires at least two to three other people in the office.

Would a baseball team thrive with just one coach? Could a CPA provide high-quality service for more than a few clients if he was also the receptionist, bookkeeper and file clerk? Would you hire an attorney who did all his own research, computer entry, copying of documents, office records and filing? Also, would you rather have an attorney who is in the courtroom every week, or one who is there three or four times a year? The median average agent serving the Palisades does only one sale a year.

I suggest that you get a list of sellers represented during the last few years by both of the agents. Call and ask them to describe their experience, and find out if they would use the same agent again.

If you would like some guidelines for interviewing agents, please call me for a booklet of some suggested questions and other issues to consider.

Is The Bottom Coming Soon?

Statistics always trail what is actually happening in a marketplace, and thus it is difficult to predict market tops or bottoms. However, there have been many recent reports of increasing sales in various areas of the country, gradual stabilizing of price levels in the lower-priced sections of many states, and other potentially beneficial responses to the government programs and loan industry actions.

A review of local price trends over the past year between decreasing home values and the increase in the unsold homes inventory shows a clear relationship. Since September 2008, the steady increase in numbers of homes available for sale has accelerated the general decline in market values. Comparing the price per square foot of properties sold may be a more accurate indicator of price movement than using the average or median price level differences. Depending on specific time periods and individual Palisades neighborhoods, prices are lower by 25-30% from their highs of 2007.

For homes for sale in different price ranges, there is a significant difference in the rate of sales compared with inventory levels. For example, while it would take 11 months to sell all the homes now listed in Pacific Palisades below $4 million, it would take about two years to sell all of the homes for sale over $4 million. As of May 11, there are a total of 30 escrows open in the Palisades, only three of which are above $4 million.

A recent sign of improvement benefitting sellers is that for the second month in a row we have seen an increase in the number of Palisades homes in escrow, with more contracts pending than there have been since September 2008. This in turn has resulted in a slight decrease in the growth of inventory and diminishing of sale prices in the Palisades. While obviously this is another way of saying the news is not as bad as it was in the preceding several months, it may indicate a possible shift in the market.


What was thought to be a leading indicator of a turn in the market in September 2008 was the ratio of escrows opened as compared to new listings coming on the market. This ratio had generally ranged between 90-100% for the past six years, before dipping below 50% in September. After hitting a low of 22 and 24% between October and January, the ratio has been between 40-68% for the past three months. This may be the first sign of the local market turning towards more balance between sellers and buyers. The anecdotal observation of greater number of showings, larger turnouts at open houses and more offers written on well-priced properties is a trend that has continued into the middle of May. Multiple offers have continued to occur and buyers’ perception of good market value has steadily become more apparent month-by-month.

For Home Buyers – Opportunity Knocking Louder

As we enter a new decade, buyers who have hesitated are increasingly discovering that there are some very compelling reasons to make the move now. After an initial shift from a “seller’s market” to a “buyer’s market” at the end of 2007, home sale prices weakened considerably in 2008. Single-family home sale prices in the Palisades have dropped another 17-20% in 2009, although at a much slower rate in the fourth quarter.

The current housing market is a puzzle with many moving parts. There are periods when the moving parts appear to be ambiguous. Although buyers have fewer homes to select from at the start of 2010 than we have seen for more than a year, sellers whose homes have not sold for many months are often willing to accept prices lower than most people would have expected. As long as interest rates remain relatively low, buyers are likely to continue finding that the market is in their favor and be in a position to purchase homes that even six months ago would not have been affordable. Of course, buyers need to have sufficient liquid assets and income, a secure job, and good credit scores in order to qualify for financing.

The total number of local homes sold in 2009 was almost identical to the numbers in 2008. However, in December 2009 there were 18 sales as compared with only 9 in December 2008. This surprisingly large increase has obviously contributed to there being an inventory of 19% fewer homes available.

Areas such as the Palisades have felt very little impact due to foreclosure sales. The overall increase in such types of sales has had some negative effect, however, even if only on a psychological level. If the level of sales continues to be higher in 2010 than it has been, buyers may absorb the housing inventory even if the inventory is somewhat increased by homes for sale due to financial pressures.

Buyers who hesitate to actually make a purchase may miss this golden opportunity of optimizing their home purchasing power with low prices and interest rates. As has been observed, no one will ring a bell at the optimum moment, and it is only by looking back later are we able to see when the market turned. It may encourage buyers to remember and appreciate that they are primarily buying a home, not merely making an investment. Although real estate has proven to be an excellent long-term investment, homes are where people center their lives, make future plans, and create their dreams.

This is the time for serious buyers to be getting pre-approved by an experienced loan source so they are prepared in advance to make purchase offers. This will also give them more leverage in negotiations with a seller. Most prospective buyers already are doing considerable research on the internet, and many stop by open houses on weekends to become familiar with the inventory in person. It can also be helpful to use various property search sites such as Realtor.com, Search.LALuxuryHomesNow.com, and theMLS.com.

Once a buyer is ready to identify a specific home, they would do well to select a knowledgeable realtor who is an expert in that particular area. Such an agent can provide important information regarding specific neighborhoods, schools, and other important details about the various properties. A wise buyer will carefully interview prospective agents to be satisfied as to their experience, level of negotiating skills, and familiarity with the present challenging market.

With the anticipated increase in the number of new homes available which typically occurs in the early part of a new year, 2010 is sure to present some excellent opportunities. Happy home-buying!


For the past 24 years Michael Edlen has provided real estate counseling services to prospective buyers and sellers. More tips and information are available on MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.