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You are not alone if you are in the process of getting your home refinanced or are purchasing and the appraisal is lower than what it should be.  Many people are stuck in the same boat with appraisals trailing the market 3 to 6 months and reluctant to accept the recent upward momentum of Westside real estate.
 
If you are in the refinancing boat and as long as rates stay low as anticipated, you will be in a solid position to get a higher appraisal in the next 6-9 months so staying patient is key.

Another important aspect with refinancing and purchasing is working with a lending representative with local knowledge.  Banks randomly assign appraisals and you can end up with an appraiser without local knowledge or an understanding of the Westside/South Bay markets.  

A lender with local ties might have a sense the appraiser assigned might not understand the area as well and help you figure out ways to get a different appraiser before they come out to the property.

In terms of a purchase appraisal, it is extremely important the listing agent meets the appraiser at the property and provides them recent comparables and neighborhood tidbits that add value.   Some appraisers will not engage in these conversations but most appreciate the info, especially when it comes to off-market activity. 

Please let us know if you have any questions related to this topic as we know of some excellent loan representatives at different banks we would be happy to put you in touch with.

The Santa Monica City Council voted in July to move forward with a construction project that will replace the aging California Incline Bridge connecting Pacific Coast Highway and Ocean Avenue.  Construction is expected to start sometime in the fall or winter of 2013!

A major access point into downtown Santa Monica, it is a major artery into the heart of the city.

Under the proposed project, the existing structure will be replaced by a 750-ft.-long by 52-ft.-wide concrete bridge and will require a 12- to 18-month closure of the popular connecting byway.

City staffers are asking that construction take place from 7 a.m. to 10 p.m. Monday through Friday and 7 a.m. to 9 p.m. Saturdays. They estimate the extended hours would expedite construction by about 25 percent above the option of working during standard city construction hours.

Major redo of California Incline Approved – Santa Monica Patch

Palisades Post Article on Impact of California Incline Construction

Like Santa Monica and Brentwood, Pacific Palisades also finds itself in a strong market with quite a few listings going out in auction like fashion:

1147 El Medio – 3 bed/3.50 bath, 3,144 sq. ft. Mid-Century on a 12,820 sq. ft. lot. The low list price of $2.365M created a ton of interest in the property with the listing agent receiving 16 offers. The captivating ocean and city light views combined with recent updates helped push the final sale price of this home to $3.080M, 700K over the asking price and at 979.63 per sq. ft. Rumor has it that counters were issued to the six highest original offers.

745 Swarthmore – 4 bed/2.75 Bath, 2,477 sq. ft. Traditional on a 9,000 sq. ft. lot. Located blocks from the village and recently renovated, this home with a desirable open floor plan received 4 offers and sold just above the $2.495M list price at $2.5M. The final price per square foot= $1009.29

1039 Las Pulgas Road – 3 bed/2.50 Bath, 2,021 sq. ft. Traditional on a 11,425 sq. ft. lot. This Marquez area home provides a great example of the current marketplace and what has been happening over the past 5 years. In 2007, this home was completely remodeled with a gourmet kitchen and providing great indoor/outdoor flow and sold for $2.150M in multiple offers. The house resold 3 years later off the market on 9/23/2010 for $1.759M, representing just over an 18% drop in value. On March 21st of this year, the home was listed at $1.759M and immediately received over 6 offers and sold for $1.825M, about a 4% price increase and it would probably have been 6% if it the market in the past few weeks.

From the LA Times:

“Financial institutions are agressively seeking to move through their inventories of homes in default or scheduled for auction,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at UCLA. “This is a positive sign in the sense that clearing out this shadow inventory is a precondition for the full healing of the housing sector.” 

As mortgage rates sink deeper into record territory, homeowners are refinancing into 15-year loans at a pace not seen in a decade, aiming to pay off their debt in time for retirement.

Check out the LA Times article.

How about 35 offers on one house followed by a neighboring house coming on weeks later and receiving 15 offers! What about almost a million over asking? Here we go-

1750 Westridge Road- 3 bed/5 bath, 4,754 sq. ft. Traditional on a 32,246 sq. ft. lot – Fellow Partner Scott Carmody had a firestorm of buyers on his hands with a $2.195M list price. The property received around 8 offers for the rare opportunity to build or remodel on a lot this size and that rarity apparently drove some to bid over $2.5M (350K over asking) for the property. The escrow is still very young so we will be tracking this one.

117 South Medio- 4 bed/5bath, 5,365 sq. ft. Traditional on a 8,000 sq. ft. lot – This stunning traditional home created an unbelievable buzz when it first hit the market due to a ridiculously low list price of $3.295M. Many agents felt the property was worth over $4 million and it ended up selling for $4.251M almost $1M over asking! In total they received over 11 offers and countered back to 6 of them. Congrats to Partner Vicki Driscoll for helping her client see the value of the home in this marketplace despite the deceptive list price.


1353 Beckwith- 3 bed/2 bath, 2,259 sq. ft. Ranch on about a 9,000 sq. ft. lot – The polo fields of Brentwood are getting a ton of attention but no one expected the property to garner 35 offers at the $1.495M list price. This major remodel/teardown is rumored to be in escrow between $1.650-$1.7M with an all cash buyer.

 On the heels of 1353 Beckwith going into escrow, fellow Partner Richard Stearns listed 1341 Beckwith a tear-down with an 11,140 sq. ft. lot at $1.595M. The trust sale was only open for the broker caravan and garnered 15 offers and an offer was accepted this past Thursday.

One of the best kept secrets in Los Angeles, located just south of Santa Monica and east of Venice, Mar Vista has been a multiple offer factory lately:

12425 Indianapolis Street- 3 bed/2 bath, 1,487 sq. ft. Mid-Century modern on a 5,700 sq. ft. lot – Listed for $799K and received 6 offers right away and it is rumored to have sold for $860K. The home was remodeled in the past year and had a nice feel to it appealing to buyers who do not want to deal with a project.

Down the street and a few weeks later… 

12624 Indianapolis Street – 4 bed/3 bath, 2,391 sq. ft. Contemporary on a 7,150 sq. ft. With a list price of $1.179M they received 4 offers with the accepted price coming in around $1.240M.  The final price will probably come in lower due to the request for repairs and other reasons. The house was completely remodeled and expanded on in 2006 and has some very nice architectural features.

3631 Barry Avenue- 3 bed/2 bath, 1,853 sq. ft. California Bungalow on a 7,800 sq. ft. lot – Listed at $1.050M and received a ton of interest right away. The spacious and open floorplan appealed to a wide range of buyers and the word on the street had this receiving 5 offers and going well over asking.

3437 Halderman- 4 bed/3 bath, 1,882 sq. ft. Contemporary on a 7,323 sq. ft. lot – The disappointed bidders on 12624 Indianapolis immediately flocked to this property with a similar lot size and in great condition with a phenomenal indoor/outdoor flow. With a $1.199M list price they apparently received five offers and went out around $1.240M.

 3664 Boise- 3 bed/2 bath, 1,534 sq. ft. Traditional on a 5,767 sq. ft. lot – Despite the house needing some updating that didn’t keep buyers away thanks to the great lay-out and location. With a list price of $799K they received multiple offers and are reportedly in escrow above the list price.

Per my recent post about the Westside real estate market in general, Santa Monica is red hot and here are some prime examples. Enjoy some of the behind the scenes info and chatter:

534 10th Street- 4 bed/2.5 bath, 3,554 sq. ft. Mediterranean on a 7,500 sq. ft. lot – This beautiful Mediterranean revival earned rave reviews when it was on caravan and the rumored sales price of almost $300K over the $3.288M List price confirms that. The property received 9 offers within the first week of showings and word on the street is it went to an all cash buyer. The list price sq. ft. was $925.15 and a sales price of around $3.550M lifts that # to around $1,000 per sq. ft!

709 10th Street- 4 bed/3.5 bath, 3,326 sq. ft. Craftsman on a 7,500 sq. ft. lot – Just like 534 10th, this contemporary craftsman with a stunning second story with a beautiful great room across from a sizable master suite hit the market with a $2.495M list price. They received 9 offers and sold for $2.6M on May 18th.

339 20th Street- 4 bed, 3.5 bath, 2,760 sq. ft. Spanish on a 8,940 sq. ft. lot – At first glance this home felt like a tear down and immediately went into escrow as such well over the $2.095M list price which surprised some of us who didn’t see the market turning so quickly. However, it was listed on the City of Santa Monica historic inventory list immediately turning it into a major revitalization project. Usually this can hurt the value of a property in the eyes of a developer which might have been why it originally fell out of escrow. However, another buyer quickly stepped in and paid 200K over the ask price and it closed at $2.320M. Congrats to fellow Partner John Hathorn for orchestrating the deal at this price point.

 2418 Washington- 4 bed/2 bath, 1,716 sq. ft. Traditional on a 5,060 sq. ft. lot – The caravan and 1st open house combined for over 200 visitors thanks to a great North of Wilshire location and a floor plan that could easily work for a young family seeking Franklin Elementary school. The house definitely needs some work done in the coming years but that did not keep at least five people from offering and bidding up the house to around a rumored $1.35M sale price over the $1.298M list price.

 2401 31st Street- 3 bed/2.75 bath, 2,116 sq. ft. remodeled traditional on a 6,000 sq. ft. lot – A beautiful Sunset Park house that definitely is the jewel of the street apparently received upwards of 7 offers with a $1.299M list price and went out somewhere in the mid to high $1.3 range. The quality of the remodel appears top notch and appealed to the fussiest of buyers.

As I reported in the Skinny last year the real estate market was showing signs of strength thanks to low interest rates, tightening inventory and an influx of new wealth into the area thanks to the Silicon Beach phenomenon and the Westside always being an attractive second home destination for the international elite. In late 2011 many well respected financial analysts were touting this as a strong buying opportunity calculating that if you take the current interest rates combined with the drop in value of the past five years in actuality you have more like a 40-45% drop in Westside real estate value from the market heights.

Even knowing all of this, it would have been difficult to predict what the Westside market has experienced this year despite all of the worldwide economic turmoil. With inventory getting even tighter and interest rates continuing to drop to new lows the market flipped in almost overnight fashion and we are seeing double digit appreciation in many areas and price points over last year with multiple offers being presented on the majority of properties priced at market value. Make sure you read the Multiple Offer Mayhem posts below providing you with the inside scoop of what is going on.

Why so few properties? 

 Despite this strong value increase, many Westside owners are still underwater thanks to buying at the peak and then refinancing themselves to an even greater debt before the nation’s economic collapse. Many seller’s who are not in economic trouble are unwilling to take a significant loss to the property they currently occupy and even if they wanted to sell the tight inventory has left those looking for a home at a higher price point with very few options.

Standing out in a crowded pack of buyers

Agents are back to advising clients looking to purchase to do anything they can to create attention to their offers in a positive way. Ideas that were employed at the height of the market (personal notes written with flowers or baked goods, removing financing and physical inspection contingencies, picking up seller’s costs) are back in vogue as desperate buyers do whatever they can to get their hands on a property. Furthermore, agents must also present a clean and professional offer package with all the documentation along with having a solid reputation for the offer to be taken seriously.

Numbers tell the Story

In the highly coveted North of Montana market (90402) in Santa Monica, the number of days on market has dramatically shortened from 85 to 38 days and median sales has climbed to $2.694M compared to $2.441M in 2011. Further supporting the Seller’s market is the high listing to sales price ratio for the area – currently 97% and climbing higher. In a Seller’s market, this ratio hovers close to 100% and in a declining or Buyer’s market, the ratio can drop below 90%.

Patience is Key

Frustrated buyers need to stay patient and be ready to move on a property right away. The non-existent inventory should improve in the coming months with seller’s seeing this as a potential opportunity to get a price they didn’t think possible a year ago along with a presidential election looming. Though the Westside does not have nearly the amount of bank owned properties as other areas that are still struggling mightily, the banks still have properties they need to unload and that should provide a little relief as well.

The LA Times reports that “30-year mortgage rates have fallen below 3.8% for the first time to average 3.79%, down from a then-record 3.83% a week ago.

The 15-year fixed loan also hit another new low, falling from 3.05% last week to 3.04% this week.

The start rates on adjustable mortgages rose slightly in the survey. Quotes are for solid borrowers with 20% down payments or equivalent equity in their homes if they are refinancing.

The borrowers would have paid 0.7% of the loan amount on average in upfront fees and discount points to obtain the fixed-rate loans, and slightly less for adjustable-rate loans.”