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Week of July 1st-7th
Property Tips and Tricks
De-Risking Properties, Purchases, and Sales: A Strategy for All Markets
Real estate properties are inherently diverse, with each one possessing unique characteristics. While this diversity makes it challenging to offer universally applicable advice, one constant remains true across the market: uncertainty can be a deal-breaker.
Whether you're a buyer eyeing a property with potential or a seller looking to maximize your home's appeal, understanding how to "de-risk" can be your secret weapon. Let's explore how both buyers and sellers can use this strategy to their advantage in any market condition.
For Buyers: Turning Unknowns into Opportunities
As a buyer, you may encounter properties that seem undesirable due to certain unknowns. However, these uncertainties can present unique opportunities if approached strategically.Identifying Value in Uncertainty
Look for properties where:
- There are unanswered questions about the property's condition
- The current use doesn't match its potential
- There are zoning or permit issues creating hesitation in the marketThe Due Diligence Deep Dive
Use your due diligence period wisely:
1. Investigate thoroughly: Hire experts to assess specific concerns
2. Research local regulations: Understand zoning laws and potential for changes
3. Estimate costs: Get quotes for necessary repairs or renovations
4. Consult professionals: Speak with architects, contractors, or city planners about potential solutionsMaking an Informed Decision
By the end of your due diligence:
- You should have a clear understanding of the property's true potential
- Be prepared to walk away if the unknowns can't be satisfactorily resolved
- If solvable, use your findings to negotiate a better price
Remember, the goal is to uncover value that others might miss, without committing to more risk than you can handle.
For Sellers: Eliminating Uncertainties to Boost Appeal
Focus on what buyers can see immediately:1. Exterior Improvements
As a seller, your task is to make your property as attractive and "risk-free" as possible to potential buyers.
Visible De-RiskingFocus on what buyers can see immediately:1. Exterior Improvements
- Fresh paint or siding repair
- Landscaping and curb appeal enhancements
- Roof inspection and repairs if needed2. Interior Updates
- Replace worn carpeting or refinish hardwood floors
- Update dated fixtures and hardware
- Deep clean and declutter all spacesHidden De-Risking
Address the less obvious but crucial elements:1. Systems and Infrastructure
- Have HVAC, electrical, and plumbing systems inspected and serviced
- Provide documentation of any recent upgrades or repairs
- Consider a pre-listing home inspection to identify and address potential issues2. Structural Integrity
- Assess and repair any foundation issues
- Ensure proper drainage around the property
- Check and repair any water damage or mold issues3. Unseen Components
- Verify the condition of radiant heating systems
- Inspect and certify waterproof membranes in critical areas
- Document the age and condition of the roof, even if not visible from the ground
Legal and Financial De-Risking
1. Clear Title
- Resolve any liens or encumbrances on the property
- Provide a recent title report to potential buyers2. Permits and Compliance
- Ensure all renovations have proper permits
- Resolve any outstanding code violations3. Transparency
- Disclose known issues upfront to build trust with buyers
- Provide a detailed property history, including past repairs and improvementsFinal Thoughts
Whether you're buying or selling, de-risking is about transforming uncertainties into clear, manageable factors. For buyers, it's an opportunity to uncover hidden value..uncertainties can be a buyer's best friend. For sellers, it's a way to present your property in the best possible light, potentially speeding up the sale process and maximizing your return.
By addressing unknowns head-on, both buyers and sellers can navigate the real estate market with greater confidence and success, regardless of current market conditions.
Remember, in real estate, knowledge isn't just power – it's profit.
Real Estate News
Real Estate Rhythms - Different Decades, Different Beats
Following my mid-year recap of the Monterey County real estate market, today I'm expanding the aperture to include broader trends and developments influencing the market today.
The topic of recession—whether it’s an actual recession, a so-called "recession," or a looming one—remains a constant in the news. Even experienced economists struggle to define the current economic situation, and it’s something I think about frequently.
For those anticipating a housing market crash similar to 2008, it’s important to manage expectations. Currently, only 1.8% of homes are underwater, a stark contrast to the 23.1% in 2010. This significant difference, along with the equity-rich status of many homeowners, greatly reduces the risk of foreclosures. Additionally, the average days on market is now less than one month, compared to over 100 days in 2010.
On a national level, the median sales price has increased by 4.9% year-over-year, and mortgage rates have declined for the fourth consecutive week. There is little evidence of risky subprime mortgages, and builders are not overproducing homes—both of which were significant factors leading up to the 2008 crash.
Recent employment reports show a decline in full-time employment in June, while part-time employment has increased. The unemployment rate is edging up and is close to rising by 0.50 percentage points from its low over the past 12 months. Historically, this has always preceded a recession, a pattern known as the Sahm Rule, developed by former Fed economist Claudia Sahm. However, I am hesitant to place too much emphasis on this, as definitions of a recession have evolved over time.
Despite low inventory, we are approaching an economic environment that may support a rate cut, which could improve conditions for homebuyers and potentially benefit sellers as well.
Worked with me in the past? Share your experience.
Jonathan Balog
DRE# 01980970
Broker
M: 831.747.0310
[email protected]
Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.
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